Regulation A+ Testing the Waters – Regulation A Going Public Attorneys

Issuers utilizing Regulation A+ are permitted to test the waters with all potential investors and use solicitation materials both before and after the offering statement is filed, subject to issuer compliance with the rules on filing and disclaimers.  Using Regulation A+, you can advertise everywhere you want, including all over social media in places where you think you’ll find potential investors.  You can put together a formal ad campaign costing tens of thousands of dollars or just do it yourself.  Of course, all you get are non-binding indications of interest so you can’t hold people to their indication of interest in investing in your company.  However, it gives you the opportunity before spending hundreds of thousands of dollars on the actual filing itself, to see if there’s sufficient interest to spend the money to move forward with preparing and qualifying the offering.

Testing the waters materials used before the Regulation A+ filing must be filed as an exhibit with the first filing on Form 1-A.  Although the SEC does not pre-review pre-filing advertising, you are cautioned to be very careful with what you say in the offering materials.  Solicitation materials are subject to the anti-fraud and other civil liability provisions of the federal securities laws and you can be sued for what you say in the advertising materials, even if you don’t include the information in the 1-A Offering Circular itself. Our general advice is that if you don’t think the SEC will like it in the Form 1-A filing, or investors may sue you for making the statements, don’t use it in advertising materials.

Pre-filing solicitation material must bear a legend or disclaimer indicating that: (1) no money or other consideration is being solicited, and if sent, will not be accepted; (2) no sales will be made or commitments to purchase accepted until the offering statement is qualified; and (3) a prospective purchaser’s indication of interest is non-binding.

Solicitation materials used after you publicly file an offering statement must be accompanied by a current preliminary offering circular or contain a notice informing potential investors where and how the most current preliminary offering circular can be obtained. This requirement may be satisfied by providing the URL where the preliminary offering circular or the offering statement may be obtained. If you use testing the waters materials after publicly filing the offering statement, you must update and redistribute such material in a substantially similar manner, as such materials were originally distributed to the extent that either the material itself or the preliminary offering circular attached thereafter becomes inadequate or inaccurate in any material respect.

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.