The case of the vanishing Form 1-A filings

Those of us keeping an eye on filings under revised Regulation A (“Regulation A+”) have noted that, as of today’s date, there have been six public filings and five of those have apparently been withdrawn. [Correction: they weren’t withdrawn, they were required to be amended prior to review.]  I don’t think the chances of the most recent one surviving are high, either.

What happened? Well, only the SEC Staff and the companies who made the filings know the truth, and several of the filings had more than one obvious issue, but here’s a thing they all had in common: No financial statements.

As all securities lawyers practicing before the SEC know, you do not file (even confidentially) with the SEC until your filing is substantially complete. That means that you can leave out the price and the underwriting information, but not anything else. No missing data. No spaces, blobs or brackets to be filled in later. And certainly not “Financial statements to be filed by amendment.”

Here’s Section 1210 from the Division of Corporation Finance’s Financial Reporting Manual (emphasis added):

The staff may not make a review decision or commence a review of a filing unless the registrant’s financial statements comply with the rules for age of financial statements and audit at the date of filing.

So one of the first things that happens before the Staff even starts to review is to make sure that financial statements are properly audited (where required) and are not “stale.” They are not going to review filings that don’t even have financials and you are only going to delay the process if you file an incomplete Offering Statement. Because the most likely reaction from the Staff in those circumstances is a politer version of “You filed an unfinished document. Please withdraw it and file again when it is complete.”

[Update: as of later in the day, there is finally a filing that has financials. And two amended filings that still don’t. Sigh.]

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