Invest In CBD offers Marketing Services to Public and Private Companies.  The team at Invest in CBD bring an expansive knowledge of Investor Relations landscape and have helped Private and Public companies since 2008. We showcase early stage emerging growth CBD and Cannabis companies raising capital through Reg A+ and Reg D

Regulation A+ (or “Reg A+”) is a new way to raise capital created by the Securities Exchange Commission (SEC). Effective March 25, 2015, SEC rules allow companies to test the attractiveness of their company offering to the investor market.

Since June 25, 2015, companies have been allowed to apply to make a Regulation A+ offering with the SEC and, when ready, raise capital in our marketplace and others. We are the first Regulation A+ marketplace. Reg A investors webiste willonly showcase those companies who have been approved to list their offering on the “Company Offerings” Page.

Under the new Regulation, companies can raise up to $50 million* per year from individual “Main Street” investors. This means that start-ups and growing businesses don’t need an angel investor worth millions or billions of dollars to help take their company to the next level. Regulation A+ dramatically improves the funding prospects for companies that are too small to make a regular IPO on the NASDAQ, for example, or which do not have access to a Private Placement or to Venture Capital. It completely changes the prospect of raising capital, giving start-up, mid-stage, and late-stage companies the opportunity to raise capital from many smaller, individual investors, who become owners of shares in the company. While of course, Angel investors and professional investors are encouraged to invest too.

Regulation A+ was extended on May 29. 2018 by federal legislation that now allows public reporting companies to make a Reg A+ capital raise. This will be most useful for OTCQB and OTCQX reporting companies because they can use Reg A+ to uplist or simply raise capital cost-effectively.

*For businesses that lend themselves to segmenting their market by geographic regions, it is possible to make multiple offerings for one parent entity by establishing one subsidiary for each region. For example, let’s say a company is planning to lend its capital across the USA. A company can establish say six regional subsidiaries that are responsible for a clearly defined geography of the US and raise capital for each region’s entity using a dedicated Reg A+ for each. In this example, the maximum per year would be 6×50 = $300 million per year.

Costs Guide for a Reg A+ Offering 

This article is intended to summarize the costs for guidance and information purposes. Most fees below are paid directly to the relevant service provider. The team at Reg A+ Investors delivers experience and competitively priced service providers as needed, and assists you with the project management of the process and the integration of all the parts required.

Total cash costs: A good guide is to expect cash costs of approximately 12%* of the capital raised (this only holds true on raises that are above about $8 mill, because fixed costs for things like the securities attorney and audits become a larger factor for smaller raises).

Costs incurred prior to going live to investors: The primary expenses before going live are for Marketing, Form 1-A legal filing, Audit, Broker-Dealer up-front fee (when a broker is involved), plus marketing payments to Reg A+ Investors. See below for more detail. It is generally recommend that you have at least $300k available before you begin your Reg A+ so that you can pay all the costs involved (the largest is the marketing content creation and the advertising media spend) before the capital raising process becomes efficient enough to easily cover the ongoing costs of the capital raising process.

The SEC permits capital proceeds to be used to pay the expenses of the offering in most well-prepared Reg A+ offerings. It’s certainly possible to start your Reg A+ with less money on hand, and this can work. But having extra money available is a smart move to give you extra runway if the early stages of the offering are tougher than expected. Starting with enough cash to proceed is essential for successful raise.

General Costs:

SEC Form 1A filing. $50k or more, payable to the legal service provider to do the work of gaining SEC qualification for a Tier 2 offering. (More for a Tier 1, amount and time depends on which States you select).

The cost of a two-year US GAAP audit by your choice of provider. Ranges from $2k for a new startup to far higher amounts for established, complex businesses. Reg A Investors can introduce you to our experienced partners and cost-effective auditors. If your company was started 6 months ago then you are required to provide the audit for the 6 months.

Marketing costs will depend on the specific situation. Expect early set up and content creation costs of $50k to $100k and sometimes more prior to going live to investors. Expect media/advertising costs of 2%* to 6%* of the raised amount after efficiency has been achieved. The early marketing efficiency will generally be lower until the advertising tuning has been optimized and an audience has been built. These fees go direct to the media firms like Google and Facebook. Marketing agency (like Invest In CBD fees are paid direct to the agency. If your company has a large fan base or customer list then the cost of marketing can be far lower. Our marketing experts can assist you in managing the agency and their work – but what they do is all your choice, your decision. The agencies and media money spent on digital advertising via Google Adwords and Facebook are paid in cash according to the budget that you select, and can be adjusted easily as needed).

Transfer Agent, Escrow fees will be approximately 0.5%* of capital raised.

Reg A Investor Marketing Fees: To see our detailed fee description, please click here.

For Broker Dealer involvement in order to allow access to investors in the US States that are not cooperating with the SEC, we recommend a broker-dealer to our client companies that charges a 1% fee.

For an IPO it is usual to engage one or more Broker-Dealers as Underwriters. When broker-dealer syndicates are involved, they will charge approx. 7.5% of the capital they bring in and may levy a 2 to 3% fee on the capital raised through the Manhattan Street Capital site. They also charge an upfront cash fee, the amount varies; approximately $20k on a small deal and much more on larger deals. The team at Manhattan Street Capital will help you prepare your pitch to the underwriters, and approach them on your behalf as needed, and assist you in your negotiations with them.

Ongoing Expenses after the Reg A+ is completed:

SEC required annual audit at US GAAP standard – depends on your provider – this applies if you list on the OTCQB or QX also.

PCAOB quarterly audit required after you use Reg A+ to list on the NASDAQ or NYSE – but the PCAOB level is only needed after listing on the major exchanges.

Each six months report management financials to SEC on company profits and revenues un-audited – moderate direct cost. (Far more stringent requirements for companies that have completed their Reg A+ IPO and have listed on the NASDAQ or NYSE – then quarterly PCAOB level Audits are required).
Transfer agent fee per investor, nominal, only applies while the shares are held at transfer agent.

Optional Fees:

If you choose to list the company on the OTCQB marketplace, the cost of registration and ticker is $2,500 paid to OTC Markets. Higher price for OTCQX – $20k. Staying listed on the OTC costs $10,000 per year for the QB – paid to OTC Markets. Higher price for OTCQX. In most Reg A+ IPOs, marketing costs can be reduced because more of the work is done by the underwriter syndicate.

You can also list your company on the NASDAQ or the NYSE. The annual fee on the NASDAQ is around $40,000, and $60,000 and above on the NYSE.
DTCC Filing fee to make your stock easier to transfer to investor brokerage accounts, $12k-18k.

For the RegA+ Test the Market  Reg A+ Investor charges a standard price of $10k/mth including marketing for a minimum of two months. 

FAQ.
See our clickable video on how to make your Reg A+ work
*(NOT charged as a percentage – we use % here as a guide only).

You might be interested in our FAQ that explains the Regulation A+ offering process in details. We have broken up the process into steps and illustrated it with a summary view flowchart.

An Accredited Investor as defined by the SEC.
Generally, natural persons must have a net worth of over $1 million (exclusive of residence) or income in excess of $200,000 individually or $300,000 jointly with a spouse. The securities are offered in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended, and are not required to comply with specific disclosure requirements that apply to registration under the Securities Act.

Currently Invest in CBD does not directly deal with the Investment flow. We are an intermediary company that brings companies and investors together. We do not give investment advice. We feature select companies on our platform as a extra solution and marketing of their raise and build exposure

Invest In CBD gives preference to our clients, we offer a showcase for companies on our site as a bonus to other marketing plans. All investors who are interested in your offer will be sent directly to your email box. We do not contact accredited investors for you.

The SEC is considering innovative approaches that appropriately balance the needs of smaller companies for efficient secondary markets and the interests of investors in smaller companies. Venture exchanges potentially could achieve such a balance by providing the investors a transparent and well-regulated environment for trading the stocks of smaller companies that offers both enhanced liquidity and strong investor protections. As such, they could strengthen capital formation and secondary market liquidity for smaller companies and expand the ability of all investors to participate through well-regulated platforms in the potential growth opportunities offered by such companies.

Venture exchange listings could include both smaller companies that do not qualify under the listing standards of the large securities exchanges and smaller companies that do qualify under such standards.