Regulation A+ Q&A

Regulation A+
Regulation A+ expands existingRegulation A. Existing
Regulation A providesan existing exemption from registration
for smaller issuers of securities. Regulation A+ offerings can
be used in combination withdirect public offeringsand
initial public offeringsas part of a Going Public Transaction.
Regulation A+ simplifies the process of obtaining the
seed stockholdersrequired
by
the
Financial
Industry
Regulatory
Authority
while
allowing
the
issuer
to
raise initial capital.

When Is Regulation A+ Effective?

Regulation A+ is effective on June
19, 2015.

Can All Companies Use

Regulation A+?
No. Regulation A+offeringscan only be conducted by
companies that are domiciled in and have their principal place
of business in the United States or Canada. As such, foreign
issuers may not conductRegulation A+offerings and must
locate an alternative exemption for their unregisteredoffering.

What Securities Can Be

Registered On Form 1-A Under
Regulation A+?
Regulation A+ is limited to warrants and convertible equity
securities.

How Much Can I Raise With Regulation

A+?
Tier 1, is available for offerings of securities of up to $20 million in a
12-month period, with no more than $6 million in offers by selling
security-holders that are affiliates of the issuer. Tier 2 is available, for
offerings of securities of up to $50 million in a 12-month period, with
no more than $15 million in offers by selling security-holders that are
affiliates of the issuer.

Can The Companys Existing

Shareholders Register Shares In A
A+ Offering?
Yes. For aRegulation
Tier 1 offering, secondary
sales are limited to $6
million in a 12-month period. For Tier 2 offerings, secondary
sales are limited to $15 million in a 12-month period.
Additionally, secondary sales at the time of an issuer's first
Regulation A offering and within 12 months thereafter cannot
exceed 30 percent of the aggregate offering price of that
particular offering and for affiliates only, the $6 million and $15
million annual limitations on secondary sales continue
indefinitely.

Who Can Invest In A Regulation

A+ Offering?
Both accredited and non-accredited investors can participate in
Regulation A+ offerings. In a Tier 2 Offering, if the issuer does
not become listed on a national exchange, non-accredited
investors may invest the greater of 10% of their income or net
worth (exclusive of principal residence), whichever is greater.
If a company lists on a national exchange immediately upon
commencement of its offering, there are no limitations on how
much may be invested by non-accredited investors in the
offering.
There is no cap on the amounts an accredited investor may
invest in either Tier 1 or Tier 2.

Are Regulation A+ Shares

Restricted Securities?
Shares sold in a Regulation A+ offering are not
restricted securities. As such, resales by non-affiliates are not
subject to transfer restrictions.
Resales by affiliates (other than registered resales or
secondary sales under Regulation A+) are subject to the
limitations of Rule 144, other than the holding period
requirement.

Do I Have To File Reports With The

SEC After My Regulation A+
Offering Is Approved?
Yes. You must file reports specifically designed for Regulation
A+. Issuers conductingRegulation A, Tier 1 offerings must
file a Form 1-Z within 30 days after theofferingis completed
or terminated. Form 1-A requires information about the
amount of securities qualified and sold, as well as the price,
fees, and net proceeds.
Issuers conductingRegulation A, Tier 2 offering must report
the same information on Form 1-Z or, depending on when
theofferingis terminated, in their annual report on Form 1-K.
Issuers inRegulation A, Tier 2 offerings become subject to
ongoing SEC reporting obligations.

What Disclosures Are Required In A Form 1-A Offering

Statement?
The Regulation A+ Form 1-A offering statement has three parts:
Part I, which requiresbasic issuer informationsuch asthe details
about the security being offered, the jurisdictions where the
securities will be offered, and recent sales of unregistered
securities. Part II, requires the business, management, financial
statement, and other substantive disclosures. Part III, contains
exhibits and related documents.

Are Regulation A+ Filings

Submitted On EDGAR?
Yes. All Regulation A+ filings must be made through the SECs
electronic filings system, known as EDGAR.

What SEC
Periodic Reporting Obligations
Imposed Apply To Tier 2 Issuers?
Tier 2 issuers becomes subject to Regulation A reporting obligations if
certain conditions are met.
These include: (i) that the securities of each class covered by the Form
1-Aoffering statement be held of record by less than 300 persons
(1,200 persons for banks and bank holding companies), (ii) offers and
sales under the Form 1-Aofferingstatement are not ongoing, and (iii)
the issuer has complied with its ongoing reporting obligations.

What Are The Ongoing Reporting

Obligations For Tier 2 Issuers?
Regulation A+ ongoing requirements for Tier 2 issuers include:
(i) annual reports on new Form 1-K, which will include the same
information required in a Form 1-A, and Regulation A offering
circular other than the offering-specific information; (ii)
semiannual reports on new Form 1-SA which includes financial
statements and an MD&A; (iii) current information reports on
the new Form 1-U which reports fundamental changes, and
other specific events including bankruptcy or receivership, nonreliance on previously issued financial statements, audit report
or interim review, changes in control, departure of certain
executive officers and unregistered sales of 10% or more of
outstanding equity securities; and (iv) depending on the
financial statements included in the Form 1-A and the timing
until the next annual or semiannual report, financial reports on
new Forms 1-K and 1-SA are required for periods where there

Do My Financial Statements
Have To Be Audited?
For Tier 1 Regulation A+ offerings, no audit is required. For
Tier 2 offerings, Audited Annual Financial Statements must be
provided by the Companys independent auditor. Note the
auditor does not have to registered with the Public Company
Accounting Oversight Board.

What Periods Are Required To Be

Audited?
Financial statements must be dated not more than nine months
before the date of Regulation A+ filing or qualification, with the
most recent annual or interim balance sheet not older than nine
months. If interim financial statements are required, they must
cover a period of at least six months.

Can A Tier 2 Issuer Become A

Reporting Company Under The
Exchange Act By Filing A Registration
Statement On Form 8-A Instead Of
Form 10?
Yes, a Tier 2 issuer can use Form 8-A to register a class of
securities under the Exchange Act concurrently with the
qualification of a Tier 2 offering?

Can A Company Suspend Its

Regulation A+ Reporting
Requirements?
Yes. A company can suspend its ongoing reporting obligations
after the fiscal year in which its Form 1-A offering statement is
qualified if it has filed an annual report for that fiscal year using
Form 1-Z.

Are Issuers In Tier 2 Offerings

Exempt From Section 12(g)
Reporting?
Securities issued in a Tier 2 offering are exempt from the
Exchange Act registration requirements of Section 12(g) if and
for so long as the issuer remains subject to, and is current in (as
of its fiscal year end) its Regulation A periodic reporting
obligations, provided the following additional conditions are also
met:
the issuer has engaged a transfer agent that is appropriately
registered with the SEC; and
the issuer has a public float of less than $75 million (or, in the
absence of a public float, annual revenues of less than $50
million) (similar to the "smaller reporting company"
qualifications).

Do I Have To Register My
Regulation A+ Offering With
State Regulators?
Regulation A+also provides for the preemption of state securities
law registration statement requirements and qualification
requirements for securities offered or sold to qualified
purchasers in Tier 2 offerings.Tier 1 offerings will be subject to
federal and state registration and qualification requirements, and
issuers may take advantage of the coordinated review program of
the North American Securities Administrators Association
(NASAA). Companies should remember that states retain authority
to:
require the filing of any documents filed with the SEC for notice
purposes and payment of fees;
enforce filing and fee requirements by suspending offerings
within a given state; and
investigate and bring enforcement actions with respect to
fraudulent securities offerings.

Does The Integration Rule Apply

To Regulation A+ Offerings?
Regulation A+ offerings will not be integrated with prior offers or
sales of securities. Subsequent offers or sale will not be
integrated with securities offerings that are:
registered pursuant to Securities Act, unless the abandoned
Regulation A offering provisions are applicable
conducted pursuant to Rule 701;
conducted pursuant to employee benefit plans;
conducted pursuant to Regulation S;
conducted pursuant to Regulation Crowdfunding; or
conducted more than six months after the completion of the
Regulation A offering.

Are Bad Actors Banned From

Regulation A+ Offerings?
Yes.
Regulation
A+
includesbad actordisqualification
provisions as adopted underRule 506(d)ofRegulation D.
Regulation A+ added two additional disqualification triggers.
These areSecurities & Exchange Commissioncease-and-desist
orders for violations of scienter-based anti-fraud provisions of
the federal securities laws or the registration provisions of
Section 5 of the Securities Act and the final orders and bars of
certain state and other federal regulators.

What Are The Advantages Of

Regulation A+?
Regulation A+ Offers Numerous Benefits. Among Them Are:

Because securities sold in

Regulation A+ offerings
are unrestricted, investors
and shareholders have an
exist strategy.
Issuers
can voluntarily
become
a
full
SEC reporting company by
using Form 8-A and list on
a
national
securities
exchange upon closing of
the offering.
Regulation A+ allows both
accredited
and
nonaccredited investors to

State Blue Sky Laws are

pre-empted
in
Tier
2
offerings.
Regulation A+ offers two
tiers of offerings providing
flexibility to investors.
Tier 1 offerings do not
require audited financial
statements.
Disclosure
requirements
are scaled down from those
required
in
an
SEC
registration statement.

For further information about thissecurities law Q & A, please

contactBrenda Hamilton,Securities Attorney at 101 Plaza
Real South, Suite 202 North, Boca Raton Florida,
(561) 416-8956, or info@securitieslawyer101.com. This
securities law blogpostis provided as a general informational
service to clients and friends ofHamilton & Associates Law
Group, P.A.and should not be construed as, and does not
constitute legal 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.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Going Public Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com