Offering Proceeds And Going Public – Going Public Lawyer

 Offering Proceeds - Going Public Lawyers

A Going Public Lawyer helps the company comply with the expansive disclosures required in registration statements filed with the Securities and Exchange Commission (SEC).  Proper disclosure is critical during the going public process.  SEC disclosures are most often prepared by the company’s Going Public Attorney. Regardless of the venue for listing or trading, the securities laws require accurate and complete disclosure.  A going public lawyer assists the issuer in determining whether it should conduct an initial public offering or a direct public offering as well as whether it qualifies for a national stock exchange and/or the most appropriate tier of the OTC Markets.

An issuer must generally disclose information about its business, operations, financial condition, risks, management, litigation and shareholders, in addition to how many shares it will offer and the share price. Issuers must also disclose the use of offering proceeds if they are registering shares for a capital raising transaction. As such, a going public lawyer reviews a mound of documents in going public transactions.

The Use of Proceeds portion of Form S-1 for an initial public offering or direct public offering require that the Company provide expansive disclosure if it intends to register shares on its own behalf to sell to investors.   Item 504 of Regulation S-K requires the issuer to describe in detail how offering proceeds from the offering will be spent.  The Securities and Exchange Commission often comments on the Use of Proceeds section of the Form S-1. Typically, the issuer and its going public lawyer respond to the SEC comments to the filing.

The Form S-1 use of offering proceeds is presented in a table showing the principal uses of the offering proceeds and the approximate amount intended to be used for each specific purpose.  When an issuer conducts its offering on a best-efforts basis, the intended use of proceeds may change depending on the volume of shares sold in the offering.

Many registration statements receive an SEC comment requesting that that issuer prioritize the proceeds based upon its receipt of certain amounts of the securities sold, such as 25%, 50%, 75%, and 100%. Under each percentage, the issuers should describe how it will allocate the proceeds.

For example, if an issuer intends to use a portion of the offering proceeds to purchase machinery, it must include a footnote to the table which lists the machinery it intends to buy, how much it costs and the priority of each type of machinery.

In contrast, Form 10 registration statements do not require a Use of Proceeds section since a Form 10 Registration Statement is used to register a class of securities and not to raise capital.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855