Offering Limitation
Several commenters recommended that the Commission increase the $50 million offering limitation for Tier 2.71 As an alternative, one commenter recommended applying the $50 million limit on a per offering basis rather than on a 12-month basis, and suggested that the Commission consider eliminating the offering limits for certain types of issuers, such as those that have yet to generate revenue.72 Additionally, two commenters recommended that the Commission do more to increase the utility of Tier 1 offerings by raising the Tier 1 offering limitation to $10 million or more in a 12-month period.73 Another commenter suggested that the Commission create a third tier in between Tier 1 and Tier 2 that would have a $15 million offering limitation.74
71 Letter from Salomon Kamalodine, Director, Investment Banking, B. Riley & Co., March 24, 2014 (“B. Riley Letter”); Letter from William Klehm, Chairman and CEO, Fallbrook Technologies, March 22, 2014 (“Fallbrook Technologies Letter”) (recommended raising the limit to $75 million); OTC Markets Letter (recommended raising the limit to $80 million); Jason Coombs, Co- Founder and CEO, Public Startup Company, Inc., March 24, 2014 (“Public Startup Co. Letter 1”) (recommended raising the limit to $75 million); Richardson Patel Letter (recommended raising the limit to $100 million).
72 Richardson Patel Letter.
73 Letter from Samuel S Guzik, Guzik and Associates, March 24, 2014 (“Guzik Letter 1”) (recommended raising the limit to “at least $10 million”); Letter from Christopher Cole, Senior Vice President and Senior Regulatory Counsel, Independent Community Bankers of America, March 25, 2014 (“ICBA Letter”) (encouraged increasing the limit “from $5 million to $10 million”).
74 Public Startup Co. Letter 1.
With respect to offering limit calculations, one commenter recommended that the aggregate offering price of the underlying security only be included in the $50 million offering limitation during the 12-month period in which such security is first convertible, exercisable, or exchangeable.75 This commenter suggested that its recommended approach would accommodate common small business offering structures that involve warrants exercisable at a premium over several years.