REG A+

What is Regulation A+?

Background

On April 5, 2012, President Obama signed a landmark piece of bi-partisan legislation called The JOBS Act into law. The JOBS Act greatly expanded entrepreneurs’ access to capital, allowing them to publicly advertise their capital raises. Initially, private companies could only fund from accredited investors, the wealthiest 3% of Americans. On June 19, 2015, three years after the JOBS Act was signed into law, Title IV (Regulation A+) of the JOBS Act went into effect. For the first time, Title IV allows private companies to raise money from all Americans, the other 97%.

 

Reg A+The SEC has provided for 2 Tiers under the Rules:

TIER 1

Allows companies to raise 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, unaudited financials, required approval by all states.

TIER 2

Allows companies to raise 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, financials audited annually, no state approvals required.

Reg A+ allows private companies to raise up to $50 million in capital from investors, including non-accredited investors which represent 97% of the investor population.

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What Makes Reg A+ Different For Your Company?

Why Reg A+ is Perfect for Your Company rev1.001

 

Retain Control of Your Company

Reg A+ allows companies to raise a large sum of capital (up to $50 million) from ALL potential investors and raising small amounts from many investors can spread out ownership of the company without giving one investor (i.e. VC or Equity Fund) control or Board positions. VC’s or Equity Funds usually require a certain level of control as a condition to their investments, which can even result in current management getting voted out of their own company. In a typical Reg A+ offering, a company will not need to offer board seats or agree to other potentially adverse conditions like “clawback” provisions that are typical when raising venture capital or private equity.

Lower Cost To Raise Money

The legal costs and ongoing disclosure requirements are much less expensive and burdensome. The fees associated with a Reg A+ offerings are much lower than a traditional IPO. Conducting a Reg A+ offering allows companies to raise money at a much reduced cost than traditional financing.

Potentially Better Liquidity In Public Stock

Conducting a Reg A+ offering allows companies to raise money from many investors which creates a broader base of shareholders resulting in a larger public float of the company’s stock. This should increase trading volume which creates more liquidity. A stock typically trades on news, but if there is limited stock in the public float because there are a lot less shareholders with larger positions, the stock may not trade on news and the price could potentially be easily controlled and result in a less liquid (limited trading), limited priced stock.

Increase Valuation & Create A Currency For The Company

The value of a company can be 5 to 10 times greater as a public company. The result of a successful Reg A+ offering is having a public stock that a company can use to make acquisitions, create a publicly accepted value (Market Cap) and increase shareholder value.

Companies Looking to:

  • Retain Control of Company
  • Lower Costs for Offering
  • Have Less SEC Reporting Requirements
  • Create Higher Valuation
  • Create Public Stock Currency
  • Increase Shareholder Value

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How Do I Execute a Regulation A+ Offering?

A company can do a Direct Placement Offering “DPO” OR, if they qualify for NASDAQ or NYSE MKT, a company can do an Initial Public Offering “IPO”. Reg A+ allows companies to offer shares to the general public, which is 100% of potential investors. Companies looking to raise capital through Reg A+ will need to file with the SEC and get approval before launching their Reg A+ public offering.

 

The Reg A+ Process

Testing the Waters

Reg A+ has a provision to “Test the Waters” with potential investors. The test the waters provision allows companies to get indications of investor interest without filing the formal offering with the SEC.

Although this provision exempts the pre-filing of the offering at a federal level, the states can challenge the company trying to test the waters because they do not know if the offering is a Tier 1 offering, which requires state regulatory filings & approvals, OR a Tier 2 offering which is exempt from state filings. This state issue neutralizes the testing the waters provision.

Tycon recommends filing under Tier 2 with the SEC before testing the waters or offering stock to potential investors, which avoids any state filing issues.

Tycon can assist your company with:

  • Tycon Partners Join us on the Floor of the ExchangeEmployee Stock Option Plan
  • Executive Compensation Package
  • Locate qualified SEC Attorney
  • Locate qualified PCOAB (SEC Approved) qualified Auditor
  • Preparation & Review of Corporate Books
  • Company Website Development or Upgrade
  • Public Relations

Qualification Process

After a company has decided to pursue a Reg A+ offering, they will need to spend the first month drafting a Form S1-A with the help of Tycon while having the 2 year audited financials completed.

Tycon can assist your company with:

  • Preparation & Review of Documents;
  • Branding and Marketing
  • Business Development
  • Social Media & Digital Marketing Plan

Launch

Once regulatory qualification has been received from the SEC, the company may launch its Reg A+ offering and accept investments online, including verifying investor identities, performing anti-money-laundering checks on investors, facilitating investment document execution, funds transfer and regulatory compliance.

Tycon can assist your company with:

  • Applying for Stock SymbolCosmic Forces Reg A+ Presentation.001
  • Sponsoring Market Makers and / or Underwriter(for IPO)
  • Transfer Agent
  • Edgar Filer Service
  • Investor Relations Firm
  • Social Media Marketing Implementation

Completion of the Offering

Tycon can assist your company with:

  • Documentation
  • Applying for Stock Symbol
  • Social Media Marketing
  • Press Release(s)
  • Follow On Support for All Public Market Communications

Ready to get started? Contact us today!