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Invest Georgia Exemption Highlights (updated as of April 23, 2020)

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This is a "cheat sheet" that gives a good overview of Georgia's IGE (Invest GA Exemption) as a way for GA registered businesses to raise up to $5MM. This was presented at the April 27th webinar.

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Invest Georgia Exemption Highlights (updated as of April 23, 2020)

  1. 1. 2 Martin Luther King Jr. Drive ● Suite 317 West Tower ● Atlanta, Georgia ● 30334 The Office of Secretary of State Securities and Charities Division GEORGIA INTRASTATE EXEMPTION: INVEST GEORGIA EXEMPTION (“IGE”) Created in 2011. In its original format, IGE allowed for-profit businesses formed under Georgia law to raise up to $1 million from Georgia resident investors. October 15, 2015 amendment: increased the aggregate limit to $5 million. July 11, 2017 amendment: reflects the SEC’s expansion of Rule 147 and the creation of Rule 147A as follows:  Removed the requirement that IGE filers be formed under the laws of the state of Georgia.  Maintained the requirement that the filers be for-profit businesses registered with the Georgia Secretary of State. Issuers that meet the residency requirements prescribed in amended Rule 147 and Rule 147A are eligible for filing under IGE. Issuer must be a “resident” of Georgia – can be foreign filed if deemed a “resident”  “Doing Business Test” – must meet one of the following to be a “resident”: o 80% of its gross revenues are derived from Georgia; o 80% of its assets are held in Georgia; o 80% of the offering’s proceeds are used in Georgia; or o A majority of the issuer’s employees are based in Georgia IGE filers are limited to selling no more than $10,000 in securities to non-accredited Georgia investors, but there is no selling limited to accredited Georgia investors. All funds received during the offering must be deposited into a bank or depository institution authorized to do business in Georgia IGE does not set limitations on the underlying offering, as long as it does not violate state and federal law. Gives the issuer the freedom to set his own valuation for issuing equity or convertible notes, loans, etc. Bad Actor disqualifiers apply (Rule 590-4-2-.06) Noula Zaharis Director Brad Raffensperger Secretary of State Commissioner of Securities
  2. 2. 2 Martin Luther King Jr. Drive ● Suite 317 West Tower ● Atlanta, Georgia ● 30334 FILING REQUIREMENT An issuer must file a notice with the Georgia Securities Division, electronically or via mail, BEFORE conducting an offering. Form: File Form GA-1. No additional documents required – no financials, no investor list, prospectus, marketing material. Amendment Filing: For material changes, 30 days. No continuing reporting obligations. General Solicitation: allowed for its offering but only to GA residents Internet Portal: allowed but not required. TARGET GROUP IGE is designed in mind for emerging business who are struggling with traditional ways of getting funding and seeking ways to raise capital. The majority of IGE filers are small and emerging businesses that conduct an offering without the use of brokers, internet portals, or other “middlemen.” As a result, these issuers are responsible for the solicitation, offer, and/or sale of the underlying securities and potentially not eligible for the broker- dealer registration exemption. GA reduced the regulatory burden on IGE issuers by expanding the broker-dealer registration exemption. WHO USES Breweries, medical technology firms, real estate firms, manufacturers, restaurants, entertainment, movie/television support businesses, cybersecurity firms, insurance firms, tax companies, movie productions, clothing companies, employment agency for film industry. There are 86 filers. 16 use portals: Sterling Funder, Spark Market, Groundfloor, Crowdvested ADVANTAGES Creates a new avenue for Georgia entrepreneurs to connect to additional sources of capital and for Georgia investors to support Georgia businesses. Allows new and small Georgia-based businesses the opportunity to raise capital from interested Georgia investors. Provides Georgia based entrepreneurs to develop new business ventures, expand existing operations and create more jobs in Georgia. Creates a new avenue for Georgia entrepreneurs to connect to additional sources of capital and for Georgia investors to support Georgia businesses. Allows new and small Georgia-based businesses the opportunity to raise capital from interested Georgia investors. Provides Georgia based entrepreneurs to develop new business ventures, expand existing operations and create more jobs in Georgia.

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