SDR Drone pauses Reg A offering after prior enforcement orders

Rule 506(d) under the Securities Act contains a substantially similar disqualification provision applicable to offerings under Rule 506 of Regulation D. The South Carolina Order is a final order of a State securities commission barring the respondents from engaging in the business of securities within Rule 506(d)(1)(iii)(A), and the transition provision in Rule 506(d)(2)(i), which applies to events occurring before September 23, 2013, does not reach it. Accordingly, the Company is also disqualified from relying on Rule 506 unless relief is obtained under Rule 506(d)(2). The California Order is a final order within Rule 506(d)(1)(iii)(B), but the ten-year period specified in that provision expired on November 25, 2024, and the California Order therefore does not presently give rise to disqualification under Rule 506(d). The disqualification provisions of Rule 262 and Rule 506(d) do not apply to offerings registered under the Securities Act or to offerings made in reliance on Regulation S. Offers and sales in South Carolina By its terms, the South Carolina Order permanently bars the Company from participating in any aspect of the securities industry in or from the State of South Carolina. The Company will not offer or sell any securities in or from South Carolina and has instructed its officers and directors accordingly. The Company is reviewing its offering materials and subscription procedures to ensure that South Carolina residents are excluded. Remedial Steps In light of the foregoing, the Company has taken, or intends to take, the following actions: (1) submitted a Rule 262(b)(3) request to the South Carolina Securities Division and, if necessary, will submit a Rule 262(b)(2) waiver request to the Division of Corporation Finance of the Commission; (2) suspended any activity in the Regulation A offering pending resolution; (3) commenced preparation of an amendment to its pending Offering Statement on Form 1-A to describe the Orders; (4) adopted a bad-actor certification and questionnaire process covering each covered person identified in Rule 262(a) and Rule 506(d)(1), to be completed before any future exempt offering; and (5) excluded South Carolina from the jurisdictions in which the Company will offer or sell securities. Cautionary Note Regarding Forward-looking Statements This Current Report contains forward-looking statements, including statements regarding the Company's intention to seek relief under Rule 262(b), the availability of that relief, the Company's intention to amend its offering statement, and the effect of the Orders on the Company's ability to raise capital. These statements are based on the Company's current expectations and are subject to risks and uncertainties, including the possibility that relief is not granted, is granted subject to conditions, or is not granted in time for the offering to proceed; the possibility that the Orders have consequences the Company has not identified; and the possibility that other r