Why Use Reg A+ to Raise Capital?

Six Reg A+ offerings filed with the SEC yesterday, but a total of 181 offerings have filed as of January 31, 2017. The SEC qualified 103, while 28 issuers reported selling $259 million in aggregate using the Reg A+ filing process. As the number of companies using Reg A+ indicates, companies are choosing this option more and more for a number of reasons. We explain a few of them in this blog post.

Earlier this year, we quoted an SEC white paper stating that 147 Regulation A+ offerings filed statements as of October 31, 2016, and were seeking up to $2.6 billion in financing. We also wrote in our blog how in the 16 months since the amendments became effective, Regulation A+ securities offerings had outpaced the past rate of Regulation A activity. Perhaps these three motives are the root cause of its popularity.

1.With Reg A+, companies can still raise capital when planning an IPO to the NASDAQ, but can opt to use Reg A+ mid-stream if the NASDAQ minimum for listing is not reached. Companies will then avoid thousands of dollars wasted on offerings that might have otherwise been prematurely abandoned.

2. One other benefit of using Reg A+ for your IPO is that it allows you to go public directly to the NASDAQ, NYSE, the OTCQB or OTCQX, while venture capitals cannot. It has been reported that venture capital firms are more interested in companies that are more likely to deliver a 100X return in about 6 years, but investors still seem pretty interested in companies that might deliver a lesser return. VC firms therefore completely miss an opportunity to work with a growing market.

3. Companies are also pleased to know that Reg A+ allows them to openly market their company instead of undergoing the usual quiet period. Companies get to promote their brand, thus increasing customer interest and attracting strategic partnerships early on in the process.

As a result, Edgar Agents has started to offer new services to its repertoire, in addition to our core products, that are specific to Reg A+ requirements such as marketing services. We have always offered services that comply with the latest filing requirements and now file all the necessary forms for Regulation A+ mini IPOs as well. We also provide financial printing and newswire capabilities.

Edgar Agents is always happy to discuss your specific filing needs and would like to hear from you today. Call our office at 732-780-5036, visit our website www.edgaragents.com or simply send us a message on any of our social networks: LinkedIn, Twitter and Google+, to discuss your next Reg A+ filing.

Why Are REITs So Keen on Reg. A+?

The real estate industry had among the largest number of offerings and the largest total amount across issuers in Regulation A+ activity, according to an SEC white paper. Real estate was also one of the top five, two-digit SIC industries to be listed. Based on these numbers and recent Regulation A+ transactions, it is quite obvious that the real estate market is one to watch in 2017.

Regulation A+ securities offerings have surpassed past Regulation A offerings as of October 31, 2016, according to the white paper, and several issuers reporting proceeds were engaged in real estate “crowdfunding.” The paper also says several issuers in the real estate sector, including real estate “crowdfunding platforms,” have engaged in Regulation A+ offerings. One industry theory not mentioned in the paper is that REITs are attracted to crowdfunding models because both accredited and non-accredited investors can participate in the investment.

Nevertheless, all data points to the same direction, real estate, and an article in Crowdfund Insider confirms it. The Crowdfund article states that more real estate firms are launching their own crowdfunding platforms. In addition, a variety of Regulation A+ real estate funds and traditional investment firms are increasingly using platforms to raise a portion of their capital stack. We agree that real estate should be on our radar, but we must still outweigh the risk factors and valuations with these securities, the paper states. We will also have to see how many additional unregistered online REITs enter the Regulation A market.

Regardless of your industry, you’ll need to work with an experienced filing agent to manage and file all your required SEC forms on time and within compliance. Edgar Agents is one of the pioneers in electronic filings and includes additional services to help with your mini IPO, such as financial printing and newswire capabilities.

To find out how Edgar Agents can facilitate your Regulation A+ mini IPO, call our offices today at (732) 780-5036 or visit our site at www.edgaragents.com. Also visit our social pages on LinkedIn, Twitter and Google+.

Top two-digit SIC industries
Rank Industry	Number of  offerings (%)	Number of  offerings
1  Business services	15%	22
2  Real estate	13%	19
3  Non-depository credit institutions	8%	12
4  Holding and other investment offices	8%	12
5  Depository institutions	7%	10
Rank Industry	Number of  qualified offerings (%)	Number of  qualified offerings
1  Business services	17%	14
2-4  Holding and other investment offices	12%	10
2-4  Depository institutions	12%	10
2-4  Real estate	12%	10
5  Non-depository credit institutions	7%	6
Rank Industry	Aggregate size of offerings (%)	Aggregate size of offerings ($ mln)
1  Holding and other investment offices	20%	$515
2  Real estate	14%	$377
3  Non-depository credit institutions	10%	$253
4  Business services	9%	$238
5  Communications	6%	$161
Rank Industry	Aggregate size of qualified offerings (%)	Aggregate size of qualified offerings  ($ mln)
1  Holding and other investment offices	30%	$445
2  Real estate	10%	$148
3  Depository institutions	10%	$146
4  Business services	8%	$119
5  Non-depository credit institutions	8%	$113

Source: SEC

How Will 2016 Reg A+ Statistics Affect Reg A+ in 2017?

A white paper researched and written for the SEC in early December explains the status of Reg. A+ activity, often called mini IPOs. Although the paper dissects the facts in detail, we have summarized some of its more pertinent findings in this article.

The paper states that Tier 2 offerings were the most common of the two Tiers, accounting for 60% of the qualified offerings in 2016. Under the Tier 2 option, companies can offer securities up to $50 million in any 12-month period. The majority (around 80%) of offerings did not involve testing-the-waters, however.  But with that said, Tier 2 offerings accounted for the most testing-the-waters solicitations.

Tier 2 offerings were also more likely than Tier 1 offerings to be associated with sales by existing affiliated and non-affiliated security holders, with 16% of Tier 2 offerings seeking to qualify sales by existing security holders and 13% seeking to qualify sales by affiliate security holders. Approximately 10% of all offerings involved sales by existing (affiliated or unaffiliated) security holders.

The paper goes on to say that between June 19, 2015, and October 31, 2016, issuers in 147 offerings sought up to $2.6 billion in financing, including up to $1.5 billion across 81 qualified offerings. Approximately $190 million has been raised during that period, and the average issuer was seeking approximately $18 million. 

In addition, the paper states that Regulation A+ securities offerings have surpassed the past rate of Regulation A activity, but hasn’t surpassed Regulation D. The paper’s authors describe a few theories for this, one being familiarity with Regulation D over Regulation A+. Nevertheless, the amount of time it takes the Commission to qualify new Regulation A offerings seems to have decreased as a result of Regulation A+. A few possible reasons could be faster Commission staff reviews of publicly filed offering statements and the adoption of electronic filings in place of paper submissions, all according to the paper.

As for the subject of electronic filing, electronic filing has been an SEC mandate since the late 90s and some filing companies have come and gone since that trend began. Edgar Agents, however, has been consistently converting all SEC mandated paper forms into the required EDGAR and XBRL systems then filing them with the SEC since the rule was initially set in place. We have always offered services that comply with the latest filing requirements and now file all the necessary forms for Regulation A+ mini IPOs for public companies as well. We also offer other value added services such as financial printing and newswire capabilities.

In conclusion, the white paper reiterates what we’ve been noticing all along. Regulation A+ filings will continue to grow as companies become more familiar with the concept. And, we are constantly adding new products and services to assist you with your Reg A+ filings as a result. To find out how Edgar Agents can help with your mini IPO, call our offices today at 732-780-5036 or visit our site and www.edgaragents.com. Be sure to also follow us on LinkedIn, Twitter and Google+.

Who is Your Reg. A+ Filing Agent?

Planning to IPO under Regulation A+? Your first step will be to assemble a team of professionals to successfully execute the process. And most likely, this team will consist of an attorney, accountant, marketing agency, transfer agent and crowdfunding platform, to name a few. These will all be very crucial components to your strategy, but one piece you might not have considered is your filing agent. We recommend that you research the industry for a filing agent who possess a working knowledge of Reg. A+.

The agents you interview should have a good grasp of the Reg. A+ basics such as Tier I and Tier II standards. Partnering with experienced SEC filing agents in any aspect of your IPO will not only facilitate the process, but will most importantly keep you compliant in terms of meeting necessary deadlines. And, although its popularity is quickly spreading, Regulation A+ is still a fairly new concept. It is very easy to misinterpret some filing requirements and there are still kinks for the SEC to iron out, but in the meantime an experienced professional will know exactly what the SEC expects because of the previous filings it has handled.

Since the SEC approved Reg. A+ in 2015, Edgar Agents has handled several Reg. A+ filings for companies crowdfunding under this rule. We have written blog posts about Reg. A+ to help customers better understand the process, SEC requirements and equity crowdfunding in general. Assisting several attorneys with their filings has positioned Edgar Agents as a highly trusted and sought-after filing agency among law firms and accounting firms, but we also work directly with companies IPOing under Regulation A+. Our special packaging for Reg. A+ filings is designed to help clients cut costs during their Reg. A+, mini-IPO process as well.

Whether you are looking for a filing agent or another type of professional to guide you through your IPO, research and experience is key. We suggest you not leave it to chance. To learn more about our Reg. A+ special pricing, call one of our agents at 732-780-5036. To learn more about our products and services, visit our site at www.edgaragents.com or follow us on Twitter, LinkedIn and Google+.