Regulation D 506 Offering: allows companies to raise capital through the sale of securities with no principal amount
cap per 12 months. The 506 program provides an exemption for limited offers and sales of securities without regard to the dollar
amount of the offering. Most companies use the 506 program to raise amounts from $1,000,000 up to $50,000,000 - although there is no cap on how much capital can be raised via a 506.506 offerings have basic disclosure requirements regarding transaction and company details - our PPM documents exceed the Federal minimum disclosure level.
Only financial statements for the most recent fiscal year need to be certified by an independent public accountant.
If an issuer cannot obtain audited financial statements without unreasonable effort or expense, or if the company is a start-up with no operating history, only the issuer's balance sheet (to be dated within 120 days of the start of the offering) must be audited. An issuer can forgo providing audited financial information if the offering is made solely to accredited investors or if the information on the balance sheet is not material to the investment decision.
A 506 offering allows up to 35 non-accredited investors and an unlimited number of accredited investors. 506's are exempt from State securities laws - the Federal regulations supercedes the State rules, however most States will want a copy of the Form D submitted if you are selling securities to investors that reside in their State. As with the 504 program a company must file Form D in conjunction with a 506 offering to notify the SEC of the offering
