This document summarizes different crowdfunding options available under the JOBS Act for raising capital. Title II allows "accredited crowdfunding" through Rule 506(c) for accredited investors with no limit on the amount raised. Title III proposes "retail crowdfunding" through Regulation CF that would allow companies to raise up to $1 million from non-accredited investors in a year. Title IV proposes "registered crowdfunding" or "CrowdfundingPlus" through Regulation A+ that would allow companies to raise up to $5 million (Tier 1) or $50 million (Tier 2) through a mini-registration with the SEC. The presentation then compares the pros and

1. Demystifying the JOBS
Act:
How Startups Can
Raise Capital with
Crowdfunding
Center for Social Innovation
March 13, 2014

2. Meet the Presenters
©2013 Seyfarth Shaw LLP2 |
Samuel S. Guzik
Richardson Patel LLP
CA: (310) 208-1182
NY: (212) 931-8700
Email: sguzik@guziklaw.com
@SamuelGuzik1
Georgia Quinn
Seyfarth Shaw LLP
Direct: (212) 218-5599
Email: gquinn@seyfarth.com
@GeorgiaQuinnEsq

3. Introduction and Overview
• Jumpstart Our Business Startups Act of 2012
• Title II – Rule 506(c) – Accredited Crowdfunding a/k/a “Rich
Mans’ Crowdfunding”
• Title III – Regulation CF – Retail Crowdfunding
• Title IV – Regulation A+ - Registered Crowdfunding a/k/a
“CrowdfundingPlus ™”
• Highlights of each title/regulation then Georgia and Sam
coffee talk – Focusing on Practical Use and Outlook
• Audience Q&A
©2013 Seyfarth Shaw LLP3 |

4. Securities Law 101
• What are securities?
• Why are they a big deal?
• Basic rule - ALL sales of securities are required to be
registered under the U.S. securities laws
• What is an exemption?
• Crowdfunding needs an exemption
©2013 Seyfarth Shaw LLP4 |

5. • 506(c) aka “accredited crowdfunding”
• Eliminated ban on general solicitation
• For accredited investors only
• Heightened accreditation standards “reasonable steps”
• No limits on amount that can be raised – no limits on amount
that can be invested
• Bad actor disqualification/disclosure - applies to all Titles
©2013 Seyfarth Shaw LLP5 |
Title II 506(c) Accredited Crowdfunding

6. Title III Regulation CF
Retail Crowdfunding (proposed)
• Regulation CF aka “retail crowdfunding”
• Investment Crowdfunding vs. Other Types of Crowdfunding
• Federal vs. “Local/State” Crowdfunding
• Issuers – U.S. Companies Which are Not “Shells”
• Raise is limited to $1M of CF Offerings in a rolling 12 month period
• Financial information = GAAP financial statements for past two years;
tax returns if raising $100k or <; reviewed if raising > $100k up to $500k;
audited if raising > $500k
• Form C disclosure document filed with SEC
• Ongoing annual disclosure required
• Must use online funding portal or broker dealer (to conduct offering and
for almost all offering related disclosure)
• Securities sold are freely tradeable after one year©2013 Seyfarth offering Shaw LLP6 |

7. Title III Regulation CF
Retail Crowdfunding (cont.)
• Investors
• Offering made to the general public = Do NOT have to be
accredited investors
• Investment amount limited to greater of $2k or 5% of annual
income or net worth if < $100k; 10% of annual income or net
worth if $100k or greater; capped at $100k
• Intermediaries
• Must register with SEC and FINRA
• May not receive equity or other financial interest in issuer as
compensation
• Funding portal may not “curate” the issuers on its website
• Must educate investors and screen for fraud
• According to the SEC: Same liability as issuer
©2013 Seyfarth Shaw LLP7 |

8. Title IV Regulation A+
Registered Crowdfunding (proposed)
• Regulation A or Regulation A+ aka “registered
crowdfunding” aka “CrowdfundingPlus ™”
• Two tiers:
• Tier 1 can be used for offering of up to $5M
• Tier 2 can be used for offerings of up to $50M
• Offering proposed to be open to general public = no
accreditation/qualification requirement
• May only issue equity, debt, or debt convertible into
equity (or guarantees thereof)
©2013 Seyfarth Shaw LLP8 |

9. Title IV Regulation A+
Registered Crowdfunding (cont.)
• “Mini-Registration”: Must file Form 1-A with SEC and receive
affirmative approval prior to any sales but may “test the
waters”
• Audited financials and ongoing disclosure required only for
Tier 2 – “Reviewed” financials for Tier 1
• Issuer may only have 500 unaccredited and 2,000 total
investors before it must comply with ’34 Act disclosure
regime.
• Tier 1 offerings are NOT CURRENTLY exempted from state
securities (blue sky) regimes/ Track 2 offerings are exempt
• Securities issued are freely tradeable
9 ©2013 Seyfarth Shaw LLP

10. Which Method Works for You?
Accredited Crowdfunding
Title II (506(c))
Retail Crowdfunding
Title III (Reg. CF) (proposed)
Registered Crowdfunding aka
CrowdfundingPlus ™
Title IV (Reg. A+) (proposed)
PROS
• Unlimited Fundraising
Amount
• General Solicitation
• No Requisite Financial
Statements/Specified
Disclosure
• No Ongoing Disclosure
• Formal SEC Approval Not
Required
• State Preemption
• Can Offer to General Public
• No Formal SEC Approval
Required
• State Preemption
• 500 Holder Limit Does Not Apply
• Can Offer Up to $5M or $50M
• General Solicitation
• Can Offer to General Public
• Freely Tradeable Securities
• State Preemption for Tier 2
CONS
• Only Accredited Investors
• Must Take Reasonable Steps
to Ensure that Investors are
Accredited
• Restricted Securities
• Fundraising Amount Capped at
$1M
• Reviewed/Audited Financial
Statements May Be Required
• Ongoing Disclosure
• Investment Amount Capped
• Restricted Securities
• Audited Financial Statements May
Be Required
• Formal SEC Approval Required
• Ongoing Disclosure
• Investment Amount Capped
• 500 Holder Limit Applies
• No State Preemption for Tier 1
10

11. Q & A
11 ©2013 Seyfarth Shaw LLP