October 20, 2015

Regulation A/A+: Webcast Transcript Plus Interesting Factoids on Developing Practices

We have posted the transcript for our recent webcast: “Regulation A/A+: Developing Market Practices.” There are many out there doing webcasts – but as far as I can tell, no one takes the time to produce the nicely cleaned-up transcripts like we do. Here’s an excerpt from this webcast’s transcript – with some factoids from Jean Harris of Greenberg Traurig:

The revised Reg. A, Reg. A+, became effective June 19, 2015. Looking at filings since that date, as of last week, there have been 28 filings and 13 private draft filings according to Sebastian Gomez Abero, Chief of Corp Fin’s Office of Small Business Policy. The filings are equally split between Tier 1 and Tier 2. Three have been qualified, one of which had filed before the June effective date of the amended rule.

Sampling the 11 that were filed in September, three filed for around $50 million, three for around $20 million, two for $5 million, one $10 million, one for $1 million and one not yet disclosed.

The $1 million filing is a Tier 2 offering that proposes to allow online shoppers to “earn” shares based on how much they shop. So it is intended to have many investors at very small amounts, just the type of registration that would be difficult if not limited to one or two states. One Tier 2 for $50 million is an unlisted REIT acquiring single tenant buildings, again an offering that would require registration in the states but for the preemption for Tier 2. A bio medical company is using W.R. Hambrecht in a best efforts offering. This is a good example of a company using Tier 2 where it is not sure it can get listed, although it is applying, and will be OTC if not. Were it to file as an emerging growth company, it would have to file with the states.

According to Sebastian, they are seeing a wide variety now that the dollar amount is increased. Reg. A used to be used primarily by local banks or S&Ls usually selling within one state. He indicated every review group has touched a Reg. A offering. They are seeing more real estate related than any other industry group. He also indicated more are being filed with legal counsel. Looking at a sampling of filings, one is a local bank opening a branch in a county in Indiana and intends to offer to residents of that county and the surrounding area. One is for secured notes backed by a pool of short-term real estate loans made to borrowers who are rehabbing houses and selling them. One is building cottages for adults with disabilities around a common club house. One is for cultivating medical marijuana; another is planning on providing facilities for the cultivation of marijuana. They will build and then lease the facilities to licensed marijuana growers and dispensary owners. Another is a soccer club.

Meanwhile, as noted in this MoFo blog, the OTC Markets Group has released updated guides outlining the application process to join their OTCQX Best Market and OTCQB Venture Market trading platforms for companies conducting offerings under Tier 2 of Regulation A+.

IPOs: First “Public Benefit Corporation” Takes the Plunge

As noted in this blog, a few companies have gone public as “Certified B Corporations” (see this blog about Etsy’s filing) – and we now have the first company to file for its IPO as an actual Delaware “public benefit corporation” (PBC). Earlier this month, Laureate Education, a global network of degree-granting higher education institutions, filed a Form S-1 for an IPO led by first tier underwriters…

Risk Factors: The Invalidated EU Data Security Safe Harbor

Pretty interesting dialogue went on recently in the “Q&A Forum” (#8569) about whether companies should be considering a new Risk Factor to cover the EU court’s invalidation of US-EU data privacy safe harbor. I’ll let you peruse the responses to see what you think. And don’t forget our “Risk Factors Disclosure Handbook“…

Broc Romanek