Regulation A+ -v- Form S-1 Registration By: Regulation A Attorneys

Regulation A v Form S-1

Almost three years ago, the SEC radically changed Regulation A for smaller companies desiring to raise money by going public.  This seismic shift is called Regulation A+.  In this blog post, we will explain how new Regulation A+ can work for you, making it easier to raise money and significantly lowering costs of going and staying public.

However, let’s first examine just how Regulation A+ changed the Raising Money world compared to the filing a Registration Statement on Form S-1.

A correctly designed A+ Offering Program can minimize your financial risk and significantly enhance your ability to raise money, but not how you may think.  The disclosure standards and SEC review process for A+ and S-1 are essentially the same.  But there are other significant differences, as follows.:

  • You can aggressively advertise your offering over social media and elsewhere in all 50 states BEFORE you spend any money to prepare and file a Form 1-A, which is the Regulation A+ equivalent of Form S-1. This is discussed in detail in “Testing the Waters” in this blog post.  You cannot do this in an S-1 offering.  As a side note, you may want to consider a small Crowdfunding Regulation CF offering to start as that will tell you accurately whether potential investors will actually buy your stock at the price you set, which you cannot do under A+
  • You do not have to register your A+ offering by making separate state “Blue Sky” filings, meaning you are free to advertise sell your A+ Offering in all 50 states, even in states that have “merit review.” An S-1 offering, on the other hand, requires separate registrations in every state where you want to sell, practically impossible. Think how well this A+ Offering structure works if you want to sell stock from your website not only to potential investors but also to your customers or visitors to your website!
  • All the securities you sell in you’re A+ Offering are fully non-restricted free-trading, just like those in an S-1 Offering.
  • You can sell to both Accredited and Non-Accredited Investors without securing independent verification of investor financial status just like an S-1 Offering. For Non-Accredited Investors, there’s a 10% income/net worth limitation.
  • With A+, you only have two on-going SEC filings per year rather than four under S-1.
  • Although you have to do audits with an A+ Offering, you do not have to use an expensive PCAOB audit firm but only a competent CPA firm. On-going SEC reporting does not require PCAOB audit firms after going public.
  • With A+, you are not subject to the Proxy Rules and your Stockholders are not subject to Ownership Reporting Rules.
  • Even with these reduced on-going reporting requirements you can secure a qualification for quotation of your securities on OTC Market’s OTCQB, just like with an S-1.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected].   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.