Putting together a Regulation A+ (Reg A+) offering is much more intensive than a standard crowdfunding campaign. It is often referred to as a “mini-IPO” because it requires formal filings that must be “qualified” (approved) by the SEC.
The process is divided into two main parts: the Initial Offering and Ongoing Reporting.
1. The Initial Filing: Form 1-A
The core of your offering is Form 1-A, also known as the Offering Statement. This form is filed electronically via the SEC’s EDGAR system and consists of three parts:
- Part I (Notification): An online fillable form that provides basic data about the company, its eligibility, and where the securities will be sold.
- Part II (Offering Circular): The “meat” of the document. It is similar to a prospectus and includes:
- Business Description: What you do and your 3-year history.
- Risk Factors: Every reason an investor might lose money.
- MD&A: A “Management’s Discussion and Analysis” of your financial health.
- Financial Statements: For Tier 2 (the most common path), you must provide two years of audited financial statements.
- Part III (Exhibits): Legal documents like your bylaws, material contracts, and the “legal opinion” from your lawyer stating the shares are valid.
2. Ongoing Reporting (Tier 2 Only)
Once your offering is live, you are essentially a “light” public company. You must stay current with the following forms to keep your exemption:
| Form | Purpose | Frequency |
|---|---|---|
| Form 1-K | Annual Report; includes updated audited financials and business updates. | Within 120 days of fiscal year-end. |
| Form 1-SA | Semiannual Report; a mid-year update (unaudited financials). | Within 90 days of mid-year. |
| Form 1-U | Current Report; filed for “major events” (e.g., changing CEOs, bankruptcy, or a major sale). | Within 4 business days of the event. |
| Form 1-Z | Exit Report; filed when the offering is finished to report how much was raised. | Within 30 days of ending the raise. |
3. The “Testing the Waters” Phase
One unique benefit of Reg A+ is that you can “test the waters” before filing everything.
- No specific form is required to start talking to potential investors, but you must include a specific “legend” (legal disclaimer) on all marketing materials.
- If you do use written materials (like a slide deck) during this phase, they must be filed as exhibits to your Form 1-A later.
Important Note: “Qualification”
Unlike regular crowdfunding (Reg CF) where you can usually start after a 21-day wait, you cannot sell a single share in Reg A+ until the SEC issues a “Notice of Qualification.” This process usually involves several rounds of back-and-forth “comment letters” from the SEC where they ask for more detail or clarification.
Would you like me to explain the specific costs usually associated with these filings (like legal and audit fees)?