Dennis McCarthy – dennis@boustead1828.com – (213) 222-8260

Companies should consider using a Reg A+ for their IPO because Reg A+ can be more cost effective and more marketing friendly than traditional offerings which use the Securities Exchange Commission’s (SEC’s) S-1 registration.

The rules permitting the use of Regulation A, now dubbed Reg A+, were revised by the SEC after passage of the JOBS Act which was signed into law a few years ago.  So, Reg A+ is still relatively new.

I’d like to share some highlights about how Boustead uses Reg A+ to enable companies to “go public”.

Reg A+ Shares are Freely Tradable

The first key feature which makes a Reg A+ offering work as an IPO is that shares purchased by investors via a Reg A+ offering statement, once it’s qualified by the SEC, are freely tradeable with no further SEC registration required.

Reg A+ Offering Statement Advantage

The Reg A+ offering statement, called a 1-A, is similar to, but simpler than, the S-1 registration statement which is traditionally used for IPOs.

By simpler, I mean, the 1-A requires only two years of audited financial statements, and the general level of disclosure is more streamlined.

As a result, the 1-A offering statement’s preparation time, attorney’s and accountant’s costs and SEC review time are likely less than for a S-1 registration statement.

For many private companies, saving time and money is critical.

Reg A+ Open to a Wide Range of Investors

Another key feature, the Reg A+ rules permit private companies* to raise capital from a wide range of investors without regard to whether the investor is accredited.

As you may know, in a traditional private placement, private companies are limited to raising capital from accredited investors, who have met threshold income or asset tests.

Even when a private company uses an S-1 registration to go public, it faces practical limits on reaching out to investors.

When using an S-1 registration, a private company typically reaches out only to clients of its offering syndicate and not beyond.  Click here to read more.

Now, in order to efficiently inform this broad range of investors and to help process investors’ offering paperwork, Boustead relies on its affiliated platform, FlashFunders, a SEC registered clearing broker-dealer and transfer agent.

Reg A+ Marketing Permits Use of Various Media

A related benefit of using Reg A+ for an IPO is that a company can reach out to that broad universe of potential investors using many media techniques including email, internet ads, broadcast media, influencers, etc.

Also, a type of pre-marketing of Reg A+ offerings can commence earlier in the SEC registration review timeline which is another advantage of Reg A+ over a traditional S-1 registration.

Boustead believes it has honed its use of media techniques and timing to approach a large universe of potential investors cost effectively.

Key Supporters and Affinity Groups

I should point out that Boustead has found that companies with strong support from current shareholders and large and active affinity groups are more successful with their Reg A+ offerings.

It’s just natural that new investors watch to see whether current investors and customers support the company before jumping in with an investment.

Boustead Teams with Experienced Professionals

Also, in order to have a successful Reg A+ IPO, Boustead works with experienced attorneys, accountants, broker-dealers and consultants. It’s a team effort.

Post IPO Trading on NASDAQ or NYSE

Last but not least, while completing an IPO is an important Company milestone, Boustead considers achieving investor trading liquidity after the IPO to be another key measure of success.

Boustead recommends that a company obtain a conditional listing on NASDAQ or the NYSE to enhance investors’ trading liquidity after the IPO.

Conclusion

So, in conclusion, Boustead’s experience with Reg A+ offerings helps us to advise clients considering using Reg A+ as an alternative to a S-1 registration.

Please contact us to discuss your capital market goals.

* Reg A+ is available to US and Canadian private companies, non-reporting pink sheet companies, and OTC voluntary filers, as well as Canadian listed companies.