Direct Public Offerings Using Rule 504 and SCOR
If a business files a state level registration that includes a formal offering document, such as a SCOR disclosure statement, it can make an exempt 504 intrastate public offering in more than one state. These offerings can be offered in multiple states inside one of the five national regions the SEC has designated for this purpose.
Unlike other public offerings, 504/SCOR offerings have few onerous restrictions. General solicitation is permitted and there are no restrictions on type or number of investors. The SCOR filing is an actual registration, not an exemption. The form used is uniform so essentially the same form can be completed and submitted to each state.
As of this writing, the following states do NOT accept a SCOR filing: Hawaii, Alabama, Florida, Delaware, Kentucky, and New York.
Most other states are “merit review” states. The following merit review states have a reputation for being less tolerant in their review of SCOR filings: California, Massachusetts, and Texas. The following states have a reputation for being more tolerant in their review of SCOR filings: Arizona, South Carolina, Iowa, and Washington.
The following states do not conduct a merit review: Connecticut, Georgia, Illinois, Maryland, New Jersey, and Vermont. In these states, the offering will be automatically approved as long as all the state forms are completed.
You may want to offer securities only in the non-review states and the "more tolerant" states, if practicable.
These offers are sometimes known as direct public offerings (DPOs) or “self-under written” offerings but agents and finders are permitted. Any type of advertising directed to any level of investor is permitted. The investor can invest as much as he wants.
The biggest negative is the fact that real estate blind pools and other investment pools are not permitted.
Financial statements for the last fiscal year should be attached to the Form SCOR, and audited statements are encouraged.