This topic has come up several times recently, and I'd like to get a straw-poll on the following 4 points.
-A Convertible Debt or Convertible Equity round is, even if no securities are issued, effectively an issuance of equity securities in the eyes of the SEC.
-If you do the above (issue securities, or enter into a contract to do so), you have suddenly gone public unless you fit into one of two exemptions, namely 504 and 506.
-Even with these exemptions, if you fall into a 506 exemption you need to have *audited* financials; for 504 I believe you don't need that.
-In either case, you need to file form D.
So, if I borrow $10K from my Mom to start a company, and promise to give her $10K worth of stock if and when a valuation is set (aka convertible debt), I *probably* don't need to pay $50K for an audit, but I do have to file form D, right?
And....has anyone actually done this (filed a form D for a friends and family round)? Why or why not?
Feel free to reply anonymously ;-)
