Form S-1 Filing in 2018 – Securities Lawyers – Going Public

 

Form S-1 Filing - All companies qualify to register securities on a Form S-1 Registration Statement, while only certain issuers qualify to use Regulation A+. This blog post focuses on Forms S-1.

The Form S-1 filing remains widely used by companies seeking to raise capital and go public even after the enactment of Regulation A+.  The Form S-1 filing is the most commonly used registration statement form.  The flexibility of the Form S-1 filing allows for a variety of structures in securities offerings and going public transactions.  All companies qualify to register securities on a Form S-1 registration statement. Private companies going public should be aware of the expansive disclosure required in registration statements filed with the SEC prior to making the decision to go public. A Form S-1 registration statement on Form S-1 has two principal parts which require line item disclosures.  Part I of the registration statement is the prospectus, which requires that the company provide to Investors certain disclosures about its business operations, financial condition, and management. Part II contains information that doesn’t have to be delivered to investors.

This blog post provides a summary of the disclosures required in Form S-1 filings.

General Instructions

The general instructions to Form S-1 include information about eligibility to use the form and applicable regulations. The Securities Act of 1933, as amended (the “Securities Act”) establishes the regulations governing the preparation and filing of a Form S-1 Registration Statement with the SEC:

  • Regulation C contains the general requirements for preparing and filing the Form S-1 Registration Statement, including regulations and procedures for (i) the treatment of confidential information; (ii) amending the Form S-1 registration statement prior to SEC effectiveness; (iii) procedures for post-effective amendments to the Form S-1; and (d) the SEC’s plain English requirements.
  • Regulation S-K  sets forth the disclosure requirements for all the Form S-1 filing.
  • Regulation S-X sets forth the requirements with respect to the form and content of financial statements to be filed with the SEC. Regulation S-X includes general rules applicable to the preparation of all financial statements and specific rules pertaining to particular industries and types of businesses.
  • Regulation S-T requires that all registration statements, exhibits and documents be electronically filed through the SEC’s EDGAR database.

Form S-1 Registration Statement Cover Page

The cover page of a registration statement includes information about the Issuer and the Offering including:

  • the Issuer’s legal name
  • the Issuer’s state of incorporation,
  • the Issuer’s Primary Standard Industrial Classification Code Number
  • the Issuer’s tax ID number
  • the address and telephone number of the Issuer’s principal executive offices
  • the Company’s registered agent for service
  • the aggregate amount of securities proposed to be offered
  • amount of the SEC registration fee
  • the approximate date of commencement of the offering covered by the Form S-1 Filing
  • whether any of the securities are being registered “on the shelf” pursuant to Rule 415 of the Securities Act.

The Prospectus – Part I 

The Prospectus is found in Part 1 of the Form S-1 Registration Statement requires certain line item disclosures included in Regulations S-K and S-X. The following is a summary of each of the items required in Part 1 of Form S-1.

Registration Statement and Prospectus Provisions (Item 501-512 of Regulation S-K)

Items 1-10 of Form S-1 require:

  • Summary Information and Risk Factors (Item 503 of S-K),
  • the Use of Proceeds of the Offering (Item 504 of S-K),
  • Determination of Offering Price (Item 505 of S-K),
  • Dilution (Item 506 of S-K),
  • Selling Shareholders (Item 507 of S-K),
  • Plan of Distribution (Item 508 of S-K),
  • Description of the Securities to be Registered (Item 202 of S-K),
  • Interests of Named Experts (Item 509 of S-K).

Description of Business, Properties and Legal Proceedings (Items 101 – 103 of Regulation S-K)

Item 101 of Regulation S-K requires that the Form S-1 include:

  • a description of the business over the prior 5 years (or 3 years for smaller public companies) or from inception if the issuer has not been in business for 5 years
  • a description of the Issuer’s properties (Item 102 of S-K), and legal proceedings (Item 103 of S-K).

The Issuer’s Securities (Items 201 and 202 of Regulation S-K)

Items 201 and 202 of Regulation S-K require:

  • a description of the securities being offered
  • past and future information regarding the Issuer’s offer and sale of securities including, prior market and pricing activity, rights and preferences, outstanding dividends, warrants, and other convertible securities.

Financial Information (Items 301-305 of Regulation S-K)

Smaller Issuers are not required to make disclosure under Items 301 and 302, which require that the Issuer provide a summary of financial data that is contained in the financial statements.

All Issuers are required to provide disclosure under Item 303 of Regulation S-K: Management Discussion and Analysis of Financial Condition and Results of Operation (MD&A). The MD&A provides narrative disclosures of the following information about the Issuer:

  • Key financial information and changes in those items over the prior 12 months,
  • Future plans and the costs and intended source of financing, and
  • Liquidity and capital resources, industry and competition.

Management and Certain Security Holders (Items 401-404 of Regulation S-K)

Items 401 through 404 of Regulation S-K require disclosure of certain information regarding directors, executive officers, key employees and holders of  5% or more of the Issuer’s outstanding securities:

  • Regulation S-K Item 401 requires biographical information about the Issuer’s officers, directors and key employees. This information includes 5 years of business experience, name, age, familial relationships among other management and shareholders, 5 years of business experience, related party transactions, and involvement in certain legal proceedings over the prior 10 years including criminal convictions, enforcement actions and bankruptcies.
  • Regulation S-K Item 402 of Regulation S-K requires disclosure of past, present and future executive compensation.
  • Regulation S-K Item 403 requires disclosure of the legal and beneficial ownership of executive officers, directors and 5% of the Issuer’s securities.
  • Regulation S-K Item 404 requires disclosure of financial related party transactions.

Part II of the Form S-1

Part II of the Form S-1 filing requires:

  • the Issuer’s financial statements in the form and content as required by Regulation S-X that are reviewed and audited by an accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”)
  • offers and sales of unregistered securities and exemptions relied upon
  • an index of the exhibits included in the Form S-1 filing

The SEC Review & Comment Process for Form S-1 Filings

Upon the Form S-1 filing, the SEC will either review the filing or declare the registration statement effective. If the SEC reviews the filing, the Issuer must file an amendment to the Form S-1 addressing the SEC comments and submit a responsive letter addressing each of the comments. When the comments are addressed to the satisfaction of the SEC, the Issuer can request that the SEC declare the Form S-1 Registration Statement effective.

The Offer and Sale – SEC Effectiveness 

Once the SEC declares the Form S-1 Registration Statement effective, the Issuer can offer and sell the securities registered by the Form S-1 filing.

If you are going to offer and sell securities, or are contemplating a Form S-1 filing, it is critical that you consult experienced securities lawyers like Hamilton & Associates to guide you through the registration process and ensure all required disclosures are made.

For more information about going public, securities law or our other services please contact a Securities Attorney at Hamilton & Associates Law Group, P.A. 01 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected].   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 and compliance 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 Law Group, P.A provides ongoing corporate and securities counsel to private companies and public companies listed and publicly traded on the NASDAQ Stock Market, the NYSE MKT or over-the-counter market, such as the OTC Pink, OTCQB and OTCQX. For two decades the Firm has served private and public companies and other market participants in corporate law matters, securities law and going public matters. The firm’s practice areas include, but are not limited to, forensic law and investigations, SEC investigations and SEC defense, corporate law matters, compliance with the Securities Act of 1933 securities offer and sale and registration statement requirements, including Regulation ARegulation A+ , private placement offerings under Regulation D including Rule 504 and Rule 506 and Regulation S and PIPE Transactions as well as registration statements on Forms S-1Form F-1,  Form S-8 and Form S-4; compliance with the reporting requirements of the Securities Exchange Act of 1934, including Form 8-A and Form 10 registration statements, reporting on Forms 10-QForm 10-K and Form 8-KForm 6-K and SEC Schedule 14C Information and SEC Schedule 14A Proxy Statements; Regulation A / Regulation A+ offerings; all forms of going public transactions; mergers and acquisitions; applications to and compliance with the corporate governance requirements of national securities exchanges including NASDAQ and NYSE and foreign listings; crowdfunding; corporate; and general contract and business transactions. The firm provides preparation of corporate documents and other transaction documents such as share purchase and exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The firm prepares the necessary documentation and assists in completing the requirements of federal and state securities laws such as FINRA and DTC for Rule 15c2-11 / Form 211 trading applications, corporate name changes, reverse and forward splits, changes of domicile and other transactions. The firm represents clients in London, Dubai, India, Germany, India and throughout the U.S.