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The Rules Are Live! A Primer for Equity Crowdfunding Under The JOBS Act

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May 16th, 2016 marks a milestone for crowdfunding with the JOBS Act Title III finally taking effect. The rule’s biggest impact will be the inclusion of millions of non-accredited investors to the pool of funds that is powering a new wave of crowd investments. With the JOBS Act Title III, persons earning under $100,000 can now invest a limited portion of their income in retail online investments. While the rule brought many welcome changes to issuers wishing to take advantage of this financing method, new regulations and restrictions are also now in effect. 

The company funding limit under Title III cannot exceed one million dollars in a 12-month period. To start the funding process, the first step is to file a Form C. This form requires extensive information and is the SEC’s way of ensuring that investors have thorough knowledge about their potential investment. In the Form C, the issuer must identify officers, directors, and equity holders that own in excess of 20% of the company. The issuer must also disclose the price, number of shares offered and the deal deadline. The required financial statements will change depending on the amount being raised. 

If the issuer is seeking funding under $100,000 it will have to release certain information from its federal income tax returns and produce an internal GAAP financial statement review certified by the company CEO. For funding between $100,000 and $500,000, GAAP financial statements must be reviewed by a third party CPA. If the raise exceeds $500,000 then a third party CPA must review the financial statements if this is the Company’s first offering under the crowd-funding regulations, and must be audited by a third party CPA if this is the second or subsequent offering by the Company under these regulations.

All of a company’s required information must be submitted to an “intermediary” as defined in the regulations, which will supply a platform on which the information is available electronically to potential investors. Once the issuer has submitted all relevant information and has chosen a platform, there are still many rules to abide by, including SEC general advertisement limitations. General advertising is prohibited, except for certain specific disclosures, including a notice that identifies the issuer and the terms of the offering and provides other limited information, provided that the notice must direct the potential investor to the intermediary’s platform.    

After the funding has begun, the issuer must file a Form C-U at 50% and 100% of the funding target. Nonetheless it is important for issuers to be even more proactive with investor information, which must be provided through platform updates. In this way the SEC ensures that all updates are in one place for all potential investors to access.  Issuers are not allowed to utilize email updates and interviews outside the platform; even events such as demo days may cause problems.

Even though Title III has opened the door to millions of people, there are certain aspects that do not live up to all stakeholder expectations. The one million dollar cap is arguably one of its main constraints with many issuers often needing substantially more in a twelve month period. Investors are also limited in the amounts they can invest in a twelve month period under these regulations through a somewhat complex formula based on net worth and annual income.  For example, an investor with annual income of $100,000 a year and $500,000 in net worth would be subject to an investment limit of $5,000 in a twelve month period for all of his or her investments made under these regulations.  And as noted above, investors are limited in communicating with issuers only through the platform, with such communications available to all with access to the platform.

While these are only some of the changes each party will face, this is not all bad news. The transition toward a better experience cannot come without the hardships of regulation. In a world of increasing economic inequality, providing better options for those previously barred from this type of funding participation becomes increasingly important. As legislators address this in their own ways, it is important for companies to provide the information infrastructure needed to make this disruptive force a reality.

LEGAL DISCLAIMER: This article is not intended to be, nor may it be used as, legal advice or tax advice.  This article shall be used solely for general, non-directed informational purposes.  No attorney-client relationship has been formed by virtue of this article and Ressler + Wynne Ressler, PC has in no way agreed or consented to provide you with legal representation by virtue of this article.


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As Immigrant Heritage Month draws to a close, we wanted to highlight another individual who has come to the United States seeking the American dream, and who has contributed to the diversity of experiences and backgrounds that have been a building block of our proud country. Today, we focus on Jesus “Tito” Salas, the founder of CodersLink, a company that connects the best tech-talent from Mexico and Latin America to great opportunities with businesses in the U.S. that are looking to build or expand their team.

Tito was born and raised in Mexico, and first arrived in the United States as a student attending the University of Texas at San Antonio. Having heard about the difficulty international graduates often have in finding employment and remaining in the United States after graduation, he searched in earnest as a student for internship opportunities in order to build a path for future employment. However, Tito soon learned that finding employment while in school can be complicated due to restrictions the United States and Immigration Services (USCIS) places on students seeking employment outside of the university system.

Nevertheless, in spite of these challenges, upon graduation Tito was able to find work through the Optional Practical Training program (OPT)–temporary employment directly related to a student’s major area of study–and began working at Geekdom, a collaborative co-working space in San Antonio, Texas. When his OPT expired (eligible students may generally receive between 12­–24 months of OPT employment authorization), Tito received a job offer from Geekdom that required him to focus on connecting Mexican startups to the Geekdom ecosystem. This employment opportunity allowed Tito to apply for and receive a TN NAFTA visa for Mexican (or Canadian) citizens who are engaging in professional business activities.

Through his work with Geekdom, Tito developed many connections and identified a need for U.S. businesses to connect with top tech talent. Thus, he created CodersLink, a company that empowers high-growth companies in the United States to connect with the greatest tech talent in Mexico and Latin America. He recently completed the StartupNext program that prepares startup companies to participate in accelerator programs or raise seed funding. In addition to the satisfaction of being able to form his own company in an ecosystem that only the United States can provide, Tito experiences great rewards as he assists Mexican and Latin American talent in fulfilling their dreams of working lawfully in the United States.

Tito’s experience with the U.S. immigration system has allowed him a first-hand view of both its benefits and its shortcomings; while it has presented him with many opportunities, he also believes that it can be improved in many aspects. For example, Tito believes that more opportunities should be afforded to international students, including the ability to seek and accept external internships that are not only limited to those associated with the university. He also advocates for extending the OPT time period to allow students to achieve additional training related to their field of study. Finally, Tito would like to see a new entrepreneur visa for those who do not personally have a substantial investment to make in their enterprise–as required for an E-2 treaty investor visa–but that have secured or are securing investment from qualified American investors.

Tito shares the following belief that so many others who have come to the United States fervently feel:

While starting a business in the United States requires hard work, sacrifice, and great determination, our country provides rewards for those who are willing to put forth that effort. As Tito says, “if you are successful here, you can be successful anywhere.” We as Americans should continue to encourage those who desire to come to our country to seek a better life and pursue their dreams, as their successes will become our successes.

Can I Call My Product Organic?

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When consumers see the word “organic” on a product package or label, they have certain expectations about what is inside the package or container. So how do you know whether you are meeting your potential customers’ expectations? How do you know if you can even call your product organic?

Who Makes the Rules?
The United States Department of Agriculture (USDA) protects the integrity of an organic label by ensuring that consumer expectations are met. USDA manages the production, handling, labeling, and enforcement of all organic products through the National Organic Program (NOP). NOP develops rules and regulations for organic products.

What is Organic Agriculture?
Per the USDA, organic agriculture is the application of a set of cultural, biological, and mechanical practices that support the cycling of on-farm resources, promote ecological balance, and conserve biodiversity. These include maintaining or enhancing soil and water quality; conserving wetlands, woodlands, and wildlife; and avoiding use of synthetic fertilizers, sewage sludge, irradiation, and genetic engineering.

What Are the Basic “Organic” Requirements?
Organic products must be produced and handled by operations that are certified, that is, are in compliance with USDA’s established rules, such as:

  1. Organic products must not be genetically engineered.
  2. Organic products must not be made or processed with ionizing radiation, for example, to extend a product’s shelf life.
  3. Organic products must not be made with certain substances.

What Can Be Certified Organic?
USDA can certify four categories as ‘organic’ products:

  1. Crops: Crops is/are a plant grown to be harvested as food, livestock feed, fiber, or used to add nutrients to the field.
  2. Livestock: Livestock is/are animals used for food or in the product of food, fiber, or feed.
  3. Processed products: Processed products are items that are handled and packaged, for example, shredded carrots; or combined, processed, and packaged, for example, peanut butter.
  4. Wild crops: Wild crops are plants that are obtained from a growing site that are cultivated or conventionally maintained. Herbs, seeds, and nuts are examples.

How Are Organic Products Labeled?
Organic agricultural products are labeled based on the percentage of organic products they contain:

  1. 100% Organic products contain only ingredients that are certified organic and, any required processes involved are also certified organic. You can display a USDA organic seal anywhere on the product label.
  2. Organic Products must contain no less than 95% certified organic ingredients, excluding salt and water. The remaining 5% must be organically produced, with some exceptions. There are limitations on how you may label your product as organic.
  3. Made with Organic must contain at least 70% certified organic ingredients, excluding salt and water. The remaining 30% does not have to be organically produced, with some exceptions. There are limitations on how you may label your product as organic.

Do you want to learn more about how organic regulations work and how they may apply to your product? Contact RWR Legal today; Call us at (512) 320-0601 or email us at

LEGAL DISCLAIMER: This article is not intended to be, nor may it be used as, legal advice.  This article shall be used solely for general, non-directed informational purposes.  No attorney-client relationship has been formed by virtue of this article and Ressler + Wynne Ressler, PC has in no way agreed or consented to provide you with legal representation by virtue of this article.