Blue Marble Biomaterials to offer Equity Shares to the Public via Reg A+

November 30, 2016 | Jim Lane

In Montana, Blue Marble Biomaterials will become the first biomaterials company to utilize Regulation A+, a type of equity crowdfunding regulated by the Securities and Exchange Commission, and will offer equity shares to the public. Regulation A+ differs from other popular crowdfunding methods, such as Kickstarter. Under Reg A+, investors buy equity in the company.

A natural-biochemical pioneer, Blue Marble intends to use the capital raised through its online public offering to expand production capabilities and research and develop new natural chemicals.

“We’ve seen companies have great success with Regulation A+ and we’re both excited by the future that this capital will make possible and proud to offer equity shares in our company to people who can get behind us and help make a change,” said Underwood.

The financing process

Blue Marble is partnering with Manhattan Street Capital to host the company’s “Test the Waters” campaign and additional activities. MSC specializes in providing businesses with the services and information to raise growth capital through a Regulation A+ offering.

The “Test the Waters” process offers businesses the opportunity to gauge investor interest before committing to the expenses involved in a Regulation A+ offering. Regulation A+ offerings must be qualified by the Securities and Exchange Commission before any sales of shares may be made.

The Blue Marble background

When it comes to Blue Marble’s coordinates in the bioeconomy star-field, think advanced flavorings made from seemingly impossible materials. Most recently we reported that Missoula’s Masters of Metamorphosis this past summer released a highly sought after U.S. and E.U. Natural version of bacon dithiazine (bacon flavor ingredient) for use in food and beverage applications. Made from the above raw materials. We covered this in The Summer of Innovation, here.

“Yes, you heard me right,” Colby Underwood, Co-CEO and Chief Business Officer told The Digest. “The flavor and aroma of bacon, from plants.”

For those in the trade, it replaces JECFA (Joint FAO/WHO Expert Committee on Food Additives) flavor 1048, 2,4,6-triisobutyl-5,6-dihydro-4H-1,3,5-dithiazine, This product is manufactured in Missoula, Montana USA utilizing Blue Marble’s proprietary, non-GMO fermentation technology and is certified vegan and kosher.

That news came on the heels of an announce earlier in the summer that Blue Marble launched their natural ester line of products, aptly named “Natural Solutions” — meeting all definitions for “natural” labeling by the U.S. and E.U. Solving a vexing concern voiced “time and again” by experts in the flavors & fragrances sector — the paucity of natural flavors and that only a handful that claimed the distinction could pass third-party isotopic testing.”

Moving from the Old to the New

Blue Marble Biomaterials produces naturally derived, drop-in replacement ingredients (biochemicals) that replace synthetic, petroleum-based chemicals (petrochemicals)—which can be found in 95% of consumer products used every day.

“When people realize that they are feeding their children products that contain ingredients manufactured from petroleum, they are horrified,” said Colby Underwood, co-CEO of Blue Marble.

Now, people have a certain reaction when you tell them their bacon bits are made from some of the most unloved forms of food waste — old coffee grounds, spent grape pomace (the stems, skin, pulp, seeds. leftover after juice pressing) and so on. It’s a really interesting sound, starting with a “yecch…” and ending with a definitely articulated “yeah…oh, yeah.”

Yecchoyeah. It may sound like an obscure Old Testament festival, but It’s the sound of a mind bending from the old to the new. Oh, yeah.

“Consumers are increasingly concerned about the environment and what they are putting into and onto their bodies and those of their families, and those concerns are driving a demand for change,” Underwood told The Digest. “We’re giving manufacturers a way to meet that demand.”

More about that Reg A+ financing method – is it for you, too?

In the early spring of 2015, the SEC finally got around to issuing regulations for crowdfunding authorized by Congress under the JOBS Act. It took so long, it feels like Congress passed the law in the Hoover Administration, but never mind.

The new rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities. The rules are mandated by Title IV of the Jumpstart Our Business Startups (JOBS) Act. The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements.

“These new rules provide an effective, workable path to raising capital that also provides strong investor protections,” said SEC Chair Mary Jo White. “It is important for the Commission to continue to look for ways that our rules can facilitate capital-raising by smaller companies.”

The two tiers for raising capital

The final rules, often referred to as Regulation A+, provide for two tiers of offerings:

Tier 1, which would consist of securities offerings of up to $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer.
Tier 2, which would consist of securities offerings of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer.

For offerings of up to $20 million, the issuer could elect whether to proceed under Tier 1 or Tier 2. Both tiers would be subject to basic requirements as to issuer eligibility, disclosure, and other matters, drawn from the current provisions of Regulation A. Both tiers would also permit companies to submit draft offering statements for non‑public review by Commission staff before filing, permit the continued use of solicitation materials after filing the offering statement, require the electronic filing of offering materials and otherwise align Regulation A with current practice for registered offerings.

In addition to these basic requirements, companies conducting Tier 2 offerings would be subject to other requirements, including:

A requirement to provide audited financial statements.
A requirement to file annual, semiannual and current event reports.
A limitation on the amount of securities non-accredited investors can purchase in a Tier 2 offering of no more than 10 percent of the greater of the investor’s annual income or net worth.

The final rules also provide for the preemption of state securities law registration and qualification requirements for securities offered or sold to “qualified purchasers” in Tier 2 offerings. Tier 1 offerings will be subject to federal and state registration and qualification requirements, and issuers may take advantage of the coordinated review program developed by the North American Securities Administrators Association (NASAA).

Who can raise capital this way?

Besides, Blue Marble, any company organized in and with their principal place of business in the United States or Canada, excluding SEC reporting companies and some other restrictions you can read about in excruciating detail here.

Bottom line, if you have a fan base, you might well have an investor base too.