Yesterday, November 23, Cloud9 executives filed a “Form D” notice with an offering amount of $3 million in equity, of which $2.86 are already sold to 21 investors.
The offering has not been made in connection with a business transaction, such as a merger or acquisition, according to the document. A nominal value of the issuer size has not been disclosed. The document dates 2016 as the year of Cloud9 Esports’ incorporation, although, the team was initially founded in early 2013.
Form D is used to file a notice of an exempt offering of securities with the US Securities and Exchange Commission. The Commission rules require the notice to be filed by companies that have sold securities without registration under the Securities Act of 1933. Such an offering is based on a claim of exemption, in Cloud9’s case Regulation D – Rule 506(b). To qualify for Rule 506(b) a company must:
- not use general solicitation or advertising to market the securities;
- not sell securities to more than 35 non-accredited investors;
- give non-accredited investors specified disclosure documents that generally contain the same information as provided in registered offerings;
- be available to answer questions from prospective purchasers who are non-accredited investors; and
- provide financial statement information.
Commission rules further require the notice to be filed within 15 days after the first sale of securities in the offering. While the main purpose of a “Form D” filing is to notify federal authorities of the amount and nature of the offering being undertaken, Cloud9’s rationale could be to assure its stakeholders (partners, players, sponsors, etc.) that the organisation is in a good spot.
Aside of that, Cloud9 now has solid financials to strive for a successful year 2017. For instance, with Blizzard’s Overwatch league on the horizon, the organisation has filled its pockets to participate in the bidding for slots—which is expected to start early next year. Following investments like the Sixers purchasing a controlling share in Team Dignitas and investment group aXiomatic buying into Team Liquid earlier the year, many organizations find themselves in fierce competition for big money. Apparently Cloud9 has found some success in that regard.
