SEC Regulation D, Rule 506(c) + Nevada State Exemption Filing for Security Token

Jesse Adams, Ph.D.
Apr 4, 2018 · 3 min read
Double token + common shares busines model described here.

As part of our double token + common shares business plan for CORCOM INC ( , and as we continue to plan and develop crypto tech, we recently developed a pooled investment fund interests (PIFI) agreement for accredited investors to purchase our digital CRS ( COR Security Token ) . The CRS token has no voting right but does have a profit sharing right. Our COR token (COR Utility Token) is the utlity token of the core component matrix and has no voting right and no profit sharing right. The agreement and function are shown here for reference and use or modification by others.

See the pooled investment fund interests (PIFI) agreement here. Investment registry here. Liquid holding account portfolio balance here. All free to copy, modify, and use as you see fit.

In order to simplify our initial process, keep costs low and reduce registration requirements we evaluted Regulation D exemptions. We found several options and chose our exemption through the process of elimination. Regulation D Rule 505 doesn’t exist anymore, Rule 504 has a funding cap and isn’t honored as exempt from registraion in Nevada, and Rule 506(b) doesn’t allow solliciation .. so we arrived at Rule 506(c) which doesn’t have a funding cap, allows solicitation, and is honored in Nevada. It does require that all investors be accredited and that the securities are restricted and subject to a 12 month holding period. Consdering the risk and newness of these invesmtents, this seems reasonable and like a good place to start anyway.

Here are the links and explanation text from the State of Nevada:

State of Nevada Exemption from Security Registration noting that only Regulation D, Rules 505 and 506 exemptions are honored in Nevada. The rule 504 exemption at the federal level is not exempt from registration in Nevada.
Nevada Regulation D Rule 506 Exception Instructions

And here’s what we sent to the State of Nevada after paying the state exemption filing fee online:

State Filing in Addition to Electronic Filing and Payment Through North American Securities Administration Association, Inc.

The state filing followed the process of filing a Form D notice with the SEC noting Regulation D, Rule 506(c), as described here:

From the SEC Small Entity Compliance Guideline

The SEC has a pretty straightforward website for filing the Form D:

How to file instructions.

This worked well for us after a few tries, so, to save some time, please note that the EDGAR system supports Internet Explorer 8 and Firefox 24 and you run in to errors if the pop-up blocker is enabled. For additional FAQ info and answers go here.

Now that we’ve filed the form D online with the SEC, paid the state exemption fee and filed the exemption with the state of Nevada, we are offering CRS token, as described above, to accredited investors and looking ahead to what’s next: a 12 month holding period and consideration of how rule 144 might apply to the CRS token in some cases:

Rule 144 : Selling Restricted and Control Securities

Stay tuned. :)

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