State College Startup Attorneys & Lawyers

Updated October 5,2020:

What Is Rule 144?

Rule 144 is the most common exemption that allows the resale of unregistered securities in the public stock market, which is otherwise illegal in the U.S. The regulation gives a specific set of conditions that a shareholder must meet in order to sell unregistered, "restricted," or "controlled" securities in the public marketplace.

For a shareholder to sell securities (such as stock, bonds, equities) on the public stock market, the securities and sale need to be registered with the U.S. Securities and Exchange Commission (SEC). Securities that are not registered or that are labeled as "restricted" or "controlled" generally cannot be sold

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Updated July 8, 2020:

What is a Special Purpose Vehicle?

A special purpose vehicle (SPV) is a subsidiary of a company which is protected from the parent company's financial risk. It is a legal entity created for a limited business acquisition or transaction, or it can be used as a funding structure. It is sometimes called a special purpose entity (SPE).

An SPV has assets, liabilities, and a legal status outside of the obligations of the parent company. The primary purpose of an SPV is to carry out a specific business activity outside of the parent company, therein protecting the parent company from risks such as bankruptcy and insolvency issues.

Why is a Special Purpose Vehicle Important?

SPVs are formed as limited partnerships, trusts,

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Form S-3: What is it?

Form S-3 is a simplified securities and exchange form that registers securities for companies. In order to use Form S-3, certain criteria must be met. Form S-3 can be used by a company that qualifies, in order to register securities under the Securities Act of 1933, instead of using the original Form S-1.

Registrant Requirements

S-3 registration gives investors the right to demand that a company registers their shares using Form S-3. Form S-3 is a shorter registration form than Form S-1, which is used in an initial stock launch or IPO. Form S-3 can be used by a company one year after an IPO. 

In order to use Form S-3 for securities, your company must meet certain requirements:

• The compa

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Updated June 25, 2020:

It takes money to turn a great idea into a great product, but “money doesn’t grow on trees” and you may not have thousands of dollars just waiting to be spent.  So how do you turn your dream into a reality?  Here are some of the best options.  

Self-Funding / Bootstrapping

Many entrepreneurs start with some level of self-funding (also known as bootstrapping) and, in fact, future investors likely will want to see that you have some “skin in the game”.  Even if you can only put in a little money, it is worth considering the benefits. For example, you don't have to worry about keeping investors happy. You also can keep more profits to yourself.  Many founders also hold off on taking a salary, consider tapping into the 401(k) retirement account, and/or have a side job to help make ends meet while they get their business up and running.

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What Is an Acceleration Clause?

An acceleration clause (also called an acceleration covenant) is a provision, often written into loan agreements and promissory notes, that gives the lender, under certain circumstances, the right to require the borrower to pay off the entire loan amount immediately. Acceleration clauses are most commonly found in mortgage contracts and real estate loans. In the case of a mortgage, the acceleration clause is often triggered when the borrower (mortgagor) fails repeatedly make his payments on time.

Acceleration Clauses and Startups

In regard to startup businesses, acceleration clauses can be found in

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