Bots Inc (BTZI)

[lesgetrich]

If this placement followed the same format as the one you pointed out, then they may have also been offered warrants with a fixed discounted exercise price and a holding period of perhaps two years or more. Purchasers are required by SEC regs to participate for the purpose of investment and not distribution or resale of the securities. That's why the rules require them to be "accredited investors" with significant assets or income who will be capable of holding a large investment for an unlimited period.

Introduction to Private Placements – A Securities Lawyer Guide

Purchasers in a private placement must acquire the securities for investment and not for the purpose of further distribution. If the purchaser acts in such a manner so as to participate in distribution of the securities to the public, either directly or indirectly as a link between the issuer and the public, he or she will be deemed to be an underwriter and the selling broker-dealer and other participants in the distribution, including the issuer, will be in violation of Section 5 of the 1933 Act. Each of the purchasers must intend to acquire for investment at the time the securities are purchased. Whether or not investment intent was present will be determined from all the circumstances surrounding the acquisition. Such circumstances would include the financial capability of the purchaser to hold the securities for the long term and whether the purchaser signed a letter of investment intent. The amount of time the securities have been held (the holding period) is one of the factors in a hindsight determination that an investment intent existed at the time of purchase. A two-year holding period is deemed to be the bare minimum.

Purchasers of private placements are often insiders, vendors, customers or potential partners of the issuer who intend to maintain a longer term relationship with the company.

Also, keep in mind that purchasers in private placements will generally have access to more information than the general public either by virtue of their insider status or the fact that the issuer must open their books and provide access to their contracts and facilities. All purchasers are required to have access to the same information.