John Worley Blog

Regulation D Private Placements

John Worley - Friday, July 25, 2014

reg d private placements regulation d private placements

Regulation D Private Placements

At some point during the operation of every private business, there comes a time to raise money. Perhaps you’re just starting out and need the initial funds to get your business off the ground. Or perhaps your business has proven successful and you need funds to expand. For many private business owners the natural place to seek these funds would be your bank. However, the requirements for a business loan may be out of reach for the person looking to get a startup with little in assets up and running. Another option is a Regulation D private placement offering. The private placement option allows business owners the opportunity to seek the funding they need from individual investors instead of a bank while remaining a private company. As such it is an ideal way for budding entrepreneurs to secure the funding needed for their startup.

In the United States, any company selling securities is governed by the Securities Act of 1933. As such, the company must either register the offer with the United States Securities and Exchange Commission (SEC), which can be cost prohibitive to smaller companies, or be qualified for exemption under the rules of Regulation D. By offering the securities using a Regulation D private placement, a small business may raise funds by directly approaching private investors without needing to register the securities with the SEC. This is obviously a great incentive for the use of Regulation D private placements.

When setting out to raise funds with a private placement, it is important to have a Private Placement Memorandum (PPM). This document contains all the relevant information for the security offering. This is the document that presents your argument for why your company is a sound investment. It will detail the possible risks and rewards; the operating structure of the company; the offering structure, share structure, and securities purchase disclosure to the SEC; and the use of the proceeds. This one document will contain all the information a prospective investor will need to make an informed decision on whether or not to invest in your private placement offering. This document will also include the subscription agreement. The subscription agreement is the “contract” the investor will sign and return with their funds.

A well-prepared Private Placement Memorandum is essential to a successful round of fund raising. This is the document that will show investors that investing in you and your company is a risk worth taking. Having a Private Placement Memorandum is requirement for the offering process, but it is more than just some annoying piece of paperwork. The Private Placement Memorandum can be a major asset to your fund raising endeavors. A carefully prepared and well thought out memorandum shows that you have given serious thought to your plans and helps to establish you as a knowledgeable business professional. It also allows you to approach many more possible investors, drastically increasing the likelihood of reaching your financial goal. On the other hand, a hastily prepared memorandum will undoubtedly harm your attempt.

So for what kind of company is a Regulation D private placement offering suited? A Regulation D offering is ideal for companies looking to raise $25,000 to $50,000,000 from private investors. Regulation D offerings can cover a large range of financial needs, from small startups to larger established companies. This versatility is one of the many reasons Regulation D offerings are a popular means of raising capital.

The simplicity is another. Preparation for a Regulation D private placement offering can be broken down into three steps. The first is to decide all of the pertinent information of the offering. This is the part of the process where the specifics of the offering are decided, including the share structure of the company, the share price, and how much of the company to sell to outside investors.

During this phase it is important to consider which of the variations of the Regulation D rules to use. These rules set different limits on the amount of capital that can be raised in a given period of time, as well as the number and types of investors who can take part in the offering. Types of investor are split between accredited and non-accredited. These classifications are determined by certain financial data related to the investor.

The second step is to complete all of the requisite paperwork. This includes the Private Placement Memorandum, the Subscription Agreement, and an Investor Suitability Questionnaire. This latter form is a questionnaire that determines whether a potential investor is qualified as an accredited or non-accredited investor.

The last step is to complete and file the Form D SEC Notification Filing with the Securities and Exchange Commission in Washington, as well as any state filings required in the states in which the offering is made. This form notifies the SEC and the State Securities Boards of your use of a Regulation D offering and provides details about the company and the offering.

It is easy to see why Regulation D private placements are a popular way for small businesses to raise much needed capital. They are a well-established way to approach multiple investors in a professional manner and avoid the prohibitive cost of an SEC filing. As always, when dealing with regulated business issues such as this, never hesitate to contact your private attorney. Your private attorney can assure that you have followed all the proper regulations so that your offering goes without a hitch.

Starting a Business | Business Entities

John Worley - Monday, June 30, 2014

business entities law

Starting a business is an exciting time in anyone’s life. Once you’ve found that idea you’re passionate about and are ready to share it with the world, how do you proceed? For those starting a business for the first time there are many factors that need to be considered. For many entrepreneurs these are considerations they have not been trained for or ever needed to deal with until this point in their lives. The legal and financial sides of operating business entities are complicated and highly regulated at the state and federal level. For this reason it is a good idea to consult with a trusted personal attorney when forming a business to make sure everything is done properly.

Texas has many options for business entities, including corporations, limited liability companies (LLC), limited partnerships (LP), limited liability partnerships (LLP), and limited liability limited partnerships (LLLP), sole proprietorships, and general partnerships. These business entities each have their own benefits, detractions, and variations. For example, it is possible to form a for-profit corporation, nonprofit corporation, close corporation, or professional corporation. Each of these has its own unique requirements for creation and management. Sole proprietorships and general partnerships do not require a filing with the Texas Secretary of State but the others do. While much of the paperwork for forming a business entity can be completed online and there are general descriptions and guide lines available online, for the new business owner this is a daunting labyrinth to navigate. Even after hours of research, how will you know you have truly picked the best option for your new endeavor?

Another complicating factor is that the formation of business entities is regulated at the state level. While this simplifies matters, in that you don’t have to worry about meeting state and federal requirements for your new business entities, there’s still the IRS to worry about. How will your new state defined business entity align with the definitions of the IRS? Your personal attorney can help you determine what federal tax provisions your new business falls under and if these affect your certificate of formation.

A good personal attorney versed in your state’s business law can help you wade through the details and find the right business entity for your new endeavor. This is particularly useful if you have multiple business entities. In that case perhaps the recently added series LLC might be right for you? Considering the relative newness of the series LLC there are still many legal aspects that haven’t been tested in courts. Your attorney can make you aware of these and inform you about the benefits as well as the risks and unknowns.

The series LLC is a useful and relatively new development in the realm of business entitles. The concept of a series LLC was first put into use less than twenty years ago in Delaware and only recently in Texas. Under Texas Law, a series LLC allows for the creation of a series of members, mangers, membership interests, or assets. These separate entities have their own business purposes, rights, obligations, and liabilities. The series members may conduct business independently but taxes are filed by the LLC as a whole. Because the series LLC is such a recent development, not all states recognize series LLCs. If you are planning to conduct business outside of Texas your personal attorney can help you determine how to proceed.

When forming business entities, your personal attorney a key ally in navigating the intricacies of business regulations. An attorney can guide you through the selection of the specific business entity type for your new venture, from sole proprietorships to corporations. They can help you ensure your formation and filing is done according to local regulations. They can give you insights into dealing with out of state business and local and federal tax issues. With so much to offer, finding a trusted attorney when setting up a new business should be one of the first tasks completed by any entrepreneur.

Estate Planning For Beginners

John Worley - Wednesday, May 28, 2014
estate planning for beginners

Beginner´s Guide to Estate Planning

Estate Planning is simply making a plan for the distribution of your estate while you are still living for when you die. This “leaving life” plan is essential in securing what you leave behind and how you leave it. It is the most vital arena in an individual´s legal planning but most people don’t enjoy that event. Low attendance hurts those we love when that unavoidable event begins.

There are 3 important things to know about Estate Planning:

1. Everyone has an Estate.

Due to the unpredictable nature of life, planning for death has no age requirements. We tend to lean to the side of thinking, “I will do that when I am older,” or “I do not have any assets,” instead of educating ourselves today about the importance of having a plan when death says hello. Do you have a car? You have an Estate. Do you have a bank account? Your Estate is now larger. There is no Estate to small or to large. Whatever you have is your Estate and it will stay here when you are no longer here. A will is needed to specify where you want your belongings to go. Also, a will uses expedited probate procedures to shorten the length of time that it would take to get your belongings into the hands of your loved ones.

2. Estate Planning answers questions.

If you were in an accident that caused terminal injuries, do you desire to be kept alive through life support? Does your family have the power of that decision? A Directive to Physicians is needed for informing the doctors what your desires are even if you are not able to communicate those desires. If you become disabled, physically or mentally, who would be your advocate for your health care? A Durable Power of Attorney for health care is needed for you to have an advocate, an attorney, to stand in your place and fight for your best interests. If you were disabled because of an unexpected accident, what would happen to your finances? A Durable Power of Attorney for you Finances is also necessary for having an attorney to support you and make decisions based upon your desires for your finances even if you were not capable of making those decisions. These are basic questions that a health person living everyday life does not think about. However, this gift can end at any moment and then what? Estate Planning answers the questions of what happens when the unexpected happens and if those questions are not answered what will happen?

3. Death without an Estate Plan hurts family.

If an Estate Plan is not put together through a will or a living trust, then the state will ´write one for you´. Not only are the unexpected questions addressed above left opened but also they are left opened for authorities to answer them. Your property, the direction of the physicians, health care, and finances is now in the hands of the court. This is a scary monster to think about. Without a will the law of descent and distribution is enforced. The state will appoint an Administrator to handle your estate who is then subject to court supervision over your estate. The Administrator will then distribute the estate under the approval of the court to your family. The distribution process will take place according to marital status, children in the marriage or of another marriage, and the type of property. Again, this process will all be taking place without your consent and how the court sees fit.

Estate Planning is the most urgent arena in legal planning. Everyone has an Estate and must face the questions of what to do when the unexpected event actually happens. Without an Estate Plan, your loved ones will be hurt in watching others make decisions for you that should have been made while you were still living or capable to make these important decisions.

What is needed?

A collection of four documents:

  • A simple will
  • A directive to Physicians
  • A Durable Power of Attorney for Health Care
  • A Durable Power of Attorney for Finances

Can I do this myself?

These documents need to be completed with precision and accuracy. Preparing these yourself may save you money, but it will not save time and the serenity of resting assured knowing your family is save in case of your death.

How to set up LLC Tip 001

John Worley - Monday, July 09, 2012

Do I need a Will or an Estate Plan?

John Worley - Wednesday, October 26, 2011

No one wants to think about death – certainly not our own death, and especially not a premature death at a young age. For the vast majority, there is no reason to do so as most folks will live a long and healthy life. However, no one knows for sure how long they have and even though it is not a pleasant subject to think about, if you care about your family, you need to have an Estate plan. This is the only way you can make sure that they are cared for in the best manner possible when you are gone.

Some people think that if they are young and do not have much or are single, they do not need to have an Estate Plan. Most in that situation think – I don’t even have an Estate, so why would I need an Estate Plan? However, everyone has an Estate. Some have small estates with only a car and bank account, maybe a retirement account at work or a savings account. Even with a small Estate, it is important to have an Estate Plan.

So what is an Estate Plan? It is really just a set of documents that express your desires in the event you are incapacitated or die. If you don’t have an estate plan, it just means someone else – usually a judge in a court will decide for you – and it will probably cost a lot more money than it would if you have a will and powers of attorney. This is especially important if you have children, but it is best for everyone to make their own decisions about these important matters.

Most people have simple Estates and so all they need is a simple Estate Plan. In a simple estate plan, there should be 4 documents:

  1. A simple will
  2. A directive to Physicians
  3. A Durable Power of Attorney for Healthcare
  4. A Durable Power of Attorney for Finances

This combination of documents allows you to express your desires for your Estate. A simple will leaves all your Estate to your spouse or children if you have a family, or to whomever you specify otherwise. It also designates who will become guardian of your minor children. A directive to Physicians just tells the doctor whether you want to be kept alive on life support if you are in a terminal incurable condition. Durable Powers of Attorney let you designate who can make health care and financial decisions for you if you are incapacitated.

If you do not have these documents, a judge in a court will make these decisions for you and it will be costly, time consuming and frustrating to your loved ones at a very difficult time.

It is possible to prepare these documents for yourself, but they must be done carefully or they may not be valid. I will prepare the 4 basic documents for $350 for an individual or $600 for a couple. This may seem like a lot of money to some, but if your loved ones have to go to court in the event you are incapacitated or to probate your estate with no will, the cost could be in the thousands or even the ten thousands before it is all over.

The bottom line is to take steps to make sure your Estate and your family will be taken care of according to your wishes. Call me at 972-250-5877 or e-mail me at to set up an appointment.

Trade Names & Trademarks

John Worley - Wednesday, September 21, 2011

One of the most valuable assets a business has is the trade name and trademarks (service and product name) through which the brand recognition and goodwill are built. However, most business owners are unaware that this valuable asset may not be fully protected by incorporation with the Secretary of State, state trademark registration or even filing a assumed name registration. Federal trademark registration (Lanham Act 15 U.S.C. 1072) is constructive notice the right to the use of a name and if you fail to check the federal register prior to adoption, then your business is at risk for infringing a federal trademark registration.

Under Federal Trademark law, a federal trademark registration will usually take precedent over the state laws if an infringement arises as a result of two businesses using the same or similar trade name or trademark. But if you start a business which utilizes a trademarked name, you will likely face litigation or have to pay significant damages and cease from the use of the protected name, even if you have made a substantial investment in your business. Conducting a federal trademark search prior to incorporating or using a name on a product will avoid the expense of litigation as well as the expense involved in changing your name and trademark.

Even if you start out using a name before someone else, if they later trademark the name, they can come to you and limit or prevent your future use of the name. So before adopting a business name or trademark, a business, whether it is a sole proprietorship, partnership or corporation, should take the following steps in order to avoid creating a potential infringement.

  1. Review available literature to see what trademarks or business names are being used in the area in which the business owner is doing business. Review the Yellow Pages and the business section of the White Pages as well as local newspaper advertisements.
  2. Do an internet search to eliminate trademarks that are already being used, then do a screening search at the Patent & Trademark Office’s web site to eliminate names that are being registered.
  3. Search the Secretary of State’s web site for corporate records, assumed name registrations and state trademark records, if any, for the name chosen.
  4. Seek out a qualified attorney to help you pursue and finalize your trademark.
  5. A business builds its reputation under a chosen trade name and/or trademarks. If you lose the right to use that trade name or trademark, you will have to re-establish your reputation under a new name. So, take the steps necessary to protect the investment you are making to establish a profitable business.


John Worley - Thursday, June 02, 2011


If you want to make investments by writing checks from your own Self Directed IRA LLC it will be necessary to complete the following steps:

  1. Form a Limited Liability Company (LLC)
  2. Prepare a specialized Operating Agreement that meets the requirements for Self Directed IRA’s.
  3. Establish a Self Directed IRA account with a Custodian that permits self directed IRA investments.
  4. Fund your new Self Directed IRA custodial account by transfering funds from your existing retirement account to the new custodial account.
  5. Direct your new Self Directed IRA Custodian to make an investment in your new Self Directed IRA LLC.
  6. Find a suitable investment that you want to invest your money in.
  7. Write a check to purchase the new investment in the name of your new Self Directed IRA.

After these simple steps, your Self Directed IRA can invest in real estate, oil and gas, and other investment vehicles without the red tape normally involved in obtaining approvals and without the administrative fees normally involved when using your IRA directly to make the investment. There are some limitations on related party dealings.

John Worley, Dallas Business Attorney

John Worley - Thursday, June 02, 2011

Estate and Gift Taxes – Now We Know?

John Worley - Monday, January 17, 2011

After years of waiting for answers about the future of the Federal Estate Tax, a last minute tax bill established new rates and exemptions for 2011 and 2012. The new exemption amount is raised to $5 million for an individual and $10 million for a couple, and the tax rate on the excess has been lowered to 35%. More good news comes in the form of a “portability” feature, which just means that for couples, no special bypass trust or other sophisticated estate planning is required to take full advantage of the $10 million exemption. The gift tax (on gifts during lifetime) and the estate tax (on gifts at death) have once again been unified, so that lifetime gifts of up to $5 million will be tax free and if less than $5 million is given during life, the balance will remain as an estate tax exemption. Furthermore, for a married couple, the surviving spouse will get to carry over any unused credit that remains from the estate of the first spouse to die. Since there is still an unlimited marital deduction, that means that most surviving spouses will have a $10 million exemption for their estate.

This is all very good news for the vast majority of people. It means that a simple will or trust, along with Powers of Attorney for Healthcare and Finances, along with a Directive to Physicians is all they will need.

At least until 2013.

Unfortunately, these laws are only for 2011 and 2012. Once again, no one knows how this will change in 2013 and we are left with uncertainty beyond the next two years. The possibilities are:

  • Congress could allow the new law to sunset as it is scheduled to do on December 31, 2012, and then a $1,000,000 estate tax exemption and 55% estate tax rate will kick back in on January 1, 2013.
  • Congress could extend the 2010 law in 2013 and beyond and tax exemption would remain at $5,000,000 and the estate tax rate would remain at 35%.
  • Congress might pass some form of an estate tax compromise which will lower the estate tax exemption and increase the estate tax rate to something more in line with the 2009 numbers of $3,500,000 and 45%. This may also include repeal of portability of the estate tax exemption between spouses which is in effect for the 2011 and 2012 tax years.
  • Last but not least is for Congress to completely repeal the federal estate tax. Though not considered likely, there is an increasing number of republican congressmen who have indicated support for the complete repeal of the estate tax.

For now, it is time for anyone who does not at least have a simple estate plan in place to call their attorney and complete the simple documents mentioned above. A simple estate plan can cost as little as $300 for an individual and $500 for a couple and is very important for everyone to have, so don’t delay this important decision any longer.

Faq: Mediation Vs. Arbitration

John Worley - Wednesday, December 29, 2010

What is mediation?

Mediation is a voluntary, interactive process where a neutral, third party, trained to facilitate communications and with negotiation skills, helps all the parties try and reach a mutually acceptable resolution to their dispute. In mediation, the parties, with the help of the mediator, work together and decide how to resolve the dispute.

The mediation discussions by the participants are confidential. Statements made and documents presented in the mediation may not be used in any later proceeding and will not, as in litigation, become public record. Court litigants have to virtually surrender all elements of privacy regarding their dispute. If the mediating parties are unable to reach an agreement, the mediation process can at least narrow the issues in the case should they later select litigation.

Mediation reduces costs to parties as it can eliminate the high expenses and fees associated with litigation. Mediation can consume far less time and expedite settlement. This results in additional costs savings by reducing attorney time. There is also the derivative benefit to the mediating parties as they are able to resolve their disagreement and reduce the stress from uncertainty and costs associated with litigation.

What Happens During A Mediation?

The mediator introduces the process and then invites each side to explain the conflict from their own perspective. This allows the mediator to better understand the dispute in order to ask questions designed to clarify the respective issues that need to be resolved. The mediator is selected by the parties to act as a neutral facilitator to assist and guide them towards a case resolution. The mediator will not decide who is right or wrong in the dispute and will not compel the parties or force them into a settlement agreement. The mediator’s role is to help maintain the parties focus on these issues during the entire course of the proceeding. The mediator will then hold private sessions with each side talking in greater detail about the respective positions of each party.

The mediator will use the private session forum to exchange messages between the parties, foster clarifications, carry questions and proposals to each side. The mediator also uses the private sessions to facilitate negotiations by transmitting offers and counteroffers between the parties. Throughout this process, the mediator must maintain confidentiality and neutrality, stay away from giving advice, and not force parties into settlement, while facilitating communications with the parties.

Should the parties be successful in reaching an agreement, the mediator can work with the parties to draft the terms and conditions of the settlement. In some cases the mediator’s role will continue after the scheduled mediation by providing help to complete the settlement agreement. Any agreement reached during the mediation is intended to be binding with to respect to the issues in dispute.

What happens if there is no settlement agreement?

The parties may end up unsuccessful in reaching an agreement, which many times then lead to the filing of a lawsuit. However, the mediation then is a learning process, and one unsuccessful attempt does not mean the dispute must result in a lawsuit being filed. If a lawsuit is filed after an initial mediation, the court can offer mediation again to be considered by the parties before any trial by judge or jury occurs.

What are the costs and time involved to participate in Mediation?

The mediator’s fee can range from as low as $100.00 per hour and be as high as $500.00 per hour and higher based on a daily rate. This fee is divided equally among the number of parties, unless another arrangement for payment is made. Where a lawsuit has been filed, the mediator’s fee may be paid by the court, depending on the amount in controversy and the county where the lawsuit is pending. The amount of time to conduct mediation is never set to a limited quantity. Many cases, depending upon the complexity of issues, may involve multiple sessions, with each session encompassing 6-8 hours. Some mediations can be completed in as few as 2-4 hours.

What is Arbitration?

Arbitration is another Alternative Dispute Resolution (ADR) process where the parties select an attorney or a retired judge to conduct a hearing. Witnesses are sworn in, and testimony is presented. Evidence can also be offered by way of documents and writings. The same rules of evidence admissibility in court are used during the arbitration hearing. Once the case is presented by all sides, a decision of the arbitrator is provided in order to decide the prevailing party on the issues of dispute. Although arbitrations resemble trials, they offer less formal procedures and the potential for abbreviated presentation of issues.

What are the advantages of arbitration?

Similar to mediation, arbitration as an alternative to litigation can allow for the saving of time and money to resolve a dispute. The parties can set limits on discovery and the issues to be decided by the arbitrator. These limitations can affect who will testify at the arbitration and what type of evidence will be allowed. The parties have more control of the arbitration process compared to court administered litigation, including where and when the hearing will be conducted. Monetary limits can also be set preventing an arbitration award from exceeding a certain value or assuring that a minimum monetary recovery is obtained.

Are there different types of arbitration?

A dispute can be arbitrated because of the terms of a contract agreement. This type of arbitration is usually recognized as binding, where no appeal of the arbitrator decision is allowed. By contrast, a non-binding arbitration allows the parties to seek some manner of appeal, often a request for a jury or judge trial. Non-binding arbitrations more often than not arise from a lawsuit that has been filed. Many times, non-binding arbitrations give the parties the chance to test their case and obtain a neutral evaluation of the merits. This method of arbitration can lead as well to negotiation for potential settlement instead of appeal.

What are the costs and time involved in conducting an arbitration?

The fee of the arbitrator is often times similar to that of a mediator. Arbitrators regularly charge $300.00 per hour and higher. These fees are shared equally by all sides, unless another arrangement is made. Since the parties are able to limit the potential number of witnesses and the breadth of testimony, they can usually set time limits on the length of the hearing. However, the amount of time necessary to complete the arbitration is dependent upon the complexity of the dispute.