Jumpstart Our Business Startups Act

1. Jumpstart Our Business Startups Act Webinar Presented to the National Association of Securities Professionals By Bryant Burgher Jaffe LLP May 3, 2012 at 4 PM

2. List of Topics • Emerging Growth Companies • Private Placement Expansion • CrowdFunding • REGULATION A PUBLIC OFFERING EXPANSION • PRIVATE COMPANY SHAREHOLDER LIMIT EXPANSION

3. Introduction • THE JUMPSTART OUR BUSINESS STARTUPS ACT (the “JOBS ACT”) is a significant expansion of the legal tools available to entrepreneurs, small businesses, middle market companies (including those with sales up to $1 Billion), investment banks, broker dealers and new entities called “funding portals” to create and participate in a dynamic, new securities market. This market should facilitate capital formation and expand investment in early stage companies. • The benefits of the JOBS ACT will be available to small businesses, Emerging Growth Companies, Accredited Investors and Qualified Institutional Buyers and to other investors (whose investment does not exceed some stated percentage of income or personal net worth). • The JOBS ACT includes a regulatory structure designed to facilitate capital formation, meaningful, but not overly burdensome disclosure, the use of knowledgeable intermediaries and SEC and other regulatory oversight. • Congress has given the SEC from 90 to 270 days to develop rules for the JOBS ACT.

4. Emerging Growth Companies • An Emerging Growth Company (“EGC”) is a US organized issuer of securities • (i) with annual sales not in excess of $1 Billion, • (ii) that has not exceeded five years after its first registered securities offering, • (iii) that has not issued $1Billion in non-convertible debt, • (iv) that has not been deemed a large accelerated filer, and • (v) that had not sold securities pursuant to a registration statement before December 8, 2011. EGCs are expected to have much more relaxed accounting, disclosure and reporting obligations.

5. Emerging Growth Companies • EGCs have an IPO “On Ramp” • May file Registration Statement on a Confidential Basis with SEC for comment, but must file public Registration Statement 21 days before any roadshow. • Research analysts may work with bankers to publish reports on an EGC and at the same time sell securities of an EGC. • EGCs may engage in general solicitations with Accredited Investors and QIBs to “test the waters” on investment interest.

6. Emerging Growth Companies • EGC status and new rules on capital formation should dramatically increase opportunities for EGCs and for broker dealers that seek to make a market in the securities of EGCs.

7. Private Placement ExpansionGeneral Solicitations The JOBS ACT eliminates the Section 5 restriction on general solicitations for certain private placements. • The JOBS ACT amends Regulation D to allow Rule 506 Offerings to Accredited Investors to be made through general solicitations. • The JOBS ACT amends Rule 144A to permit offerings to QIBS to be made through general solicitations.

8. CROWDFUNDING • The JOBS ACT creates a new exemption from the registration requirements of the Securities Act for issuances of less than $1 Million in a twelve month period. • The amendment permits “crowdfunding” investments by non-Accredited Investors whose net worth or annual income serves as the basis for a formula to cap the investor’s investment. • Transactions must be conducted through a broker or “funding portal” and issuers must comply with ‘watered down’ information requirements, including periodic reporting.

9. CROWDFUNDING • The JOBS ACT “crowdfunding” mechanism is designed to create an easier path to capital for “micro” financings. However, the process and information requirements are designed to facilitate disclosure and investor protection. • Intermediaries, either broker or “funding portals”, must be the conduit for investments by non-Accredited Investors. • Intermediaries are tasked with policing against fraud, providing issuer information to investors, ensuring that minimum fundraising covenants are complied with, etc.

10. CROWDFUNDING Issuers must comply with the following requirements: • File certain information with the SEC – a “prospectus lite” – name and address, names of board members, description of business, capital structure details, etc. • Financial statements must be provided - “reviewed” by public accountants if the financing is more than $100,000 but less than $500,000 and “audited” if greater. • Issuers face Section 12 liability for untrue statements of material facts or material omissions. Investors must hold securities for at least one year.

11. REGULATION A EXPANSION • The JOBS ACT expands the Regulation A public offering limit to $50,000,000 from $5,000,000. • Regulation A allows for reduced disclosure obligations for small public offerings. • Only available for offerings of equity or debt convertible to equity. • Issuers must file periodic reports with the SEC, including audited financial statements.

12. PRIVATE COMPANY SHAREHOLDER EXPANSION • The JOBS ACT amends Section 12(g) of the Securities Exchange Act to increase the threshold for compelled compliance with the 1934 Act periodic reporting obligations. • Section 12(g) required registration once a company exceeded 750 shareholders (and $10,000,000 in assets). • The amendment increases the threshold to compel registration upon reaching 2,000 investors or more than 500 non-accredited investors (and $10,000,000 in assets).

13. JOBS ACT IMPACT • SMALL AND MIDDLE MARKET ISSUERS WILL HAVE MUCH GREATER ACCESS TO CAPITAL FROM MICRO FINANCINGS TO IPOs of EGCs • Crowdfunding • Reg D – 506 and Rule 144A General Solicitations to Accredited Investors and QIBS • Reg A Public Offerings of up to $50 Million • IPOs for EGCs

14. JOBS ACT IMPACT • Investment Banks and Brokers will have new tools to participate in capital formation for small and middle market businesses. • Ability to make General Solicitations to Accredited Investors re EGCs • Ability to tear down the SOX Wall between analysts and traders in connection with EGC sales efforts • Brokers roles as intermediaries in crowdfundings

15. JOBS ACT IMPACT Investors will have greater access to small and middle market companies through • Crowdfundingand funding portals, • relaxed general solicitation rules, • Reg A offerings and • EGC IPOs.

16. NEW MARKET? • The JOBS ACT has the potential to create a new, active market for trading securities of start-ups and small and middle market companies. • Angel Investor Networks should proliferate. • “Micro Markets” could emerge for trading securities. • Banks and broker dealers may develop expertise in certain niche markets, such as MWBE, social media, energy, real estate(???), among others, and support transactions in such markets.

17. Q&A

18. Thank You! Please contact us if you have any questions! • B. Seth Bryant, 212-967-1800x103, bsethbryant@bbjllp.com • David I. Osunkwo, 212-967-1800x125, dosunkwo@bbjllp.com • www.bbjllp.com