On March 25, 2015, the Securities and Exchange Commission (the “SEC”) adopted amendments to Regulation A pursuant to the mandate of Section 401(a) of the JOBS Act. The amended rules known as Amended A+ were adopted to facilitate capital-raising by smaller companies. Regulation A+ offerings can be structured in a going public transaction using a direct public offering and initial public offering as part of a going public transaction. The exemption simplifies the process of obtaining the seed stockholders required by the Financial Industry Regulatory Authority (“FINRA”) while allowing the company to raise initial capital.

1. How To Use Regulation A+ To Go Public
On March 25, 2015, the Securities and Exchange Commission (the “SEC”) adopted
amendments to Regulation A pursuant to the mandate of Section 401(a) of the JOBS
Act. The amended rules known as Amended A+ were adopted to facilitate capital-
raising by smaller companies. Regulation A+ offerings can be structured in a going
public transaction using a direct public offering and initial public offering as part of a
going public transaction. The exemption simplifies the process of obtaining the seed
stockholders required by the Financial Industry Regulatory Authority (“FINRA”) while
allowing the company to raise initial capital.
Both public and private companies can use Regulation A+ but the exemption cannot be
used by companies that are subject to the SEC’s reporting requirements. Regulation A+
may prove to be a popular exemption for private companies in going public transactions
where the company seeks to ease into the public company reporting process. Issuers
should also remember that Regulation A+ imposes a ban against certain “bad actors”
and expanded Regulation D’s disqualification criteria.
Regulation A+ provides a middle ground between private and public company status by
allowing companies to transition between being private and going public. Regulation A+
created two distinct securities offering exemptions, Tier 1 and Tier 2.
Tier 1 offerings allow issuers to raise up to $20 million in a rolling 12-month period, of
which no more than $6 million may be sold by affiliated shareholders.
Tier 2 offerings allow issuers to raise up to $50 million in a rolling 12-month period, of
which no more than $15 million may be sold by affiliated shareholders.
One of the most significant benefits of Regulation A+ in going public transactions is
that issuers can use Regulation A+’s short form registration statement to register shares
on behalf of selling shareholders. This allows the company to more easily locate
a sponsoring market maker to file its Form 211 and meet FINRA’s shareholder
requirements for a ticker symbol assignment. Regulation A+ may become a popular way
of conducting a direct public offering.
In Regulation A+ offerings, selling stockholders can register up to 30% of the particular
offering. After this 12-month period, secondary sales by non-affiliates are not limited
except by the relevant Tier’s offering cap.
The company in a Regulation A+ Tier 2 offering may also take advantage of reduced
thresholds for the registration statement requirements of Section 12(g) of the Securities
Exchange Act, if it engages a SEC registered transfer agent, remains subject to and
current in its Tier 2 periodic reporting requirements with the SEC, and has a public float
of less than $75 million as of its most recent semiannual period. For a company without

2. a public float, the thresholds are reduced to annual revenues of less than $50 million as
of its most recent fiscal year.
Issuers that exceed Regulation A+’s public float or revenue thresholds and Section
12(g)’s 500 holders threshold are allowed a two-year transition period before they
are required to register a class of securities under Section 12(g). These increased
thresholds provide more flexibility for some issuers in going public transactions
allowing them to register a class of securities on Form 8-A after their transaction is
complete.
Issuers using Regulation A+ for a Tier 2 securities offering may become fully reporting
with the SEC by filing the short Form 8-A registration statement simultaneously with
the clearance of its Regulation A securities offering statement so long as it includes
disclosures comparable to Part 1 ofForm S-1 and includes selected financial information
requirements statements that are audited in accordance with an accounting firm that is
registered with, the PCAOB. Thereafter, the company will be subject to the
SEC’s Exchange Act reporting obligations.
Companies not opting to become SEC reporting companies will be subject to the SEC’s
ongoing disclosure requirements, including filing annual, semiannual and current
reports with the SEC through the EDGAR system. Regulation A+’s ongoing reporting
requirements are not as comprehensive as those imposed on SEC reporting
companies. One primary benefit of Tier 2 offerings is that they are preempted from
state Blue Sky requirements.
Although Tier 1 of Regulation A+ significantly increased the securities offering cap from
$5 million to $20 million, the exemption has significant limitations. The most
significant being that state “Blue Sky” laws are not preempted for Tier 1 offerings. As
such, Tier 1 offerings will be subject to both federal and state securities registration and
qualification requirements. While companies conducting Tier 1 offerings save costs by
not being required to provide audited financial statements, Tier 1 issuers will incur the
cost of state Blue Sky compliance.
This securities law blog 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. For more information about direct
public offerings and going public with Regulation A+, please contact Hamilton and
Associates at (561) 416-8956 or info@securitieslawyer101.com. 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

3. Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com