FAQs

Regulation A+ offerings are intended for use by small-medium size companies that are ready to raise capital to cover startup costs, production, marketing, etc. Regulation A+ is best suited for companies that have a great idea, or solve a common problem in a way that the general public can understand, relate to, or get behind.

A Tier 1 offering can raise up to $20 M over 12 months. A Tier 2 offering can raise up to $75 M over 12 months. A Regulation CF offering can raise up to $5 M over 12 months.

All Regulation offerings will require Issuers to secure specialized guidance to ensure compliance with legislation. These include, but are not limited to, legal services, audit firms, broker dealers, escrow agents, transfer agents, and marketing firms.

Issuers undertaking a Tier 2 offering are required to submit to a 2-year financial audit as part of their SEC review process. PCAOB audits are not necessary. After the raise, they are also required to file financial results with the SEC biannually and report any material changes when they occur.

Form 1-A is the offering document required to be filed with the SEC for securities offerings qualified under Regulation A+. A securities attorney is responsible to file this document. It includes information regarding the specifics of the offering – initial share price, number of shares on offer, duration of the offering, as well as more detailed information about the Issuer.

The up-front costs of launching a Regulation A+ raise can be substantial. From a minimum of $160,000 to as high as $250,000. RFS encourages issuers to prepare $200,000 to cover up-front costs associated with the pre-launch period.

From start to finish, the Tier 2 offering process can last upwards of 16 months, including a 3-4 month pre-launch preparation, assuming that the raise period lasts its entire available time. The Tier 2 auditing process can take upwards of 30 days, alone, and the SEC review period following the filing of Form 1-A can take an additional 45-60 days.
Tier 2 offerings maximum length of the raise is 12 months from the day the raise began.

• Database of shareholders information is transferred from platform (portal) company to our transfer agent partner (ongoing)
• Platform company has a shareholder management tool that can be utilized (subscription model) to share company updates or twice a year reports to shareholders. The tool contains all the shareholders emails and information in easy-to-use format
• Transfer agent also provides information to the shareholders directly in form of documents and digital stock certificates
• In both scenarios you can share individual documents to each investor (streamlined) with all notification/alert capabilities
• Again, Issuer (client) has access to all the shareholders information and can use files for bulk uploads. It is NOT overwhelming, and any internal person can use the tools to manage and provide investor relations information while actively manage database.

To contact one of RFS’s Regulation A+ specialists and discuss your options, contact us here.

When President Obama passed the Jumpstart Your Business (JOBS) Act in 2012, it became possible for everyday Americans to invest in startups, regardless of their wealth or status as accredited investors. Because of this, entrepreneurs are no longer tied to venture capital methods of raising funds, and can now pursue investments from anyone.

An individual is considered an accredited investor if their individual income is greater than $200,000, or joint income with a spouse is greater than $300,000 in each of the previous two years with a reasonable expectation of similar earnings in the current year; or their net worth is greater than $1 million, excluding their primary residence.

An offering is a solicitation for funds put forward by a company (Issuer) in the form of a percentage of common stock or shares in that company for sale to the general public.

The result of the 2012 JOBS Act and its 2015, 2018, and 2021 amendments, Regulation A+ allows private, non-accredited investors to invest in startup-level companies. Conversely, it allows companies to source private investments from the general public in order to accrue necessary capital. Regulation A+ offerings are divided into two Tiers, 1 and 2.

All investments carry risk, but investing in early stage companies carries a greater inherent risk than in well-established ones. Not all companies pursuing Regulation A+ offerings succeed, and risks may include total loss of investment. However, the return on investment in companies that succeed and thrive can be significantly higher than other investments.

Regulation A+ investments are not insured against fraud. Investment fraud is a criminal offense investigated by the Securities and Exchange Commission (SEC), however, there is no guarantee of recouping investments lost due to fraud.

Because of the lower minimum investment requirements of Regulation A+ compared to traditional investments, most payments can be made via debit or credit card, check, or wire transfer. The majority of Regulation A+ investments can be made easily online via computer, tablet, or smartphone. How much can I invest?
Regulation A+ allows non-accredited investors to invest up to 10% of their annual income or net worth, whichever is higher, per company in Tier 2 offerings.

All investments carry risk, and there is no guarantee that any investment will yield a substantial return or profit. Investors are encouraged to research companies and market information before investing in order to maximize the likelihood of investing in companies which have a higher probability of success.

As the majority of Regulation A+ issuers are early-stage companies, it is unlikely that any of their offerings will include promises of divided payment. With that being said, it depends on the company, and the shares of stock being offered.

After the raise is completed, there are several options available depending on the Issuer’s decisions. Some companies may choose to list themselves on the NASDAQ, OTC, or NYSE, at which point shares of common stock can be traded like any other stock. However, the Issuer could also choose to pursue another capital raise effort instead.

Possibly. The majority of Regulation A+ offerings do not accept non-accredited Canadian investors. However, the issuer may have filed additional paperwork in order to adhere to Candian provincial and federal regulations regarding capital raise efforts. Each province regulates the process differently, much like Blue Sky regulations in the United States.

Your investment makes you a shareholder in a company, which means that you own a small (or not so small, depending on the size of your investment) portion of that company, so in a way, yes.

If the capital raise is successful, the Issuer must produce annual, semi-annual, and event reports to apprise investors on audited and unaudited finances, business dealings and transactions, managerial discussion and analysis, and any changes to the shareholders’ rights, or nature of the business.