Entoro Reg A+ Monthly Newsletter August 2

August 2, 2023


Selecting the appropriate transfer agent is a critical decision in the business world that should not be taken lightly. In fact, choosing the wrong transfer agent can lead to a series of problems that could result in a significant headache. Let's take a closer look at what happens when you choose the wrong transfer agent.

Errors: It is the responsibility of your transfer agent to keep track of who owns your securities, and if they make an error, things can quickly become chaotic. Imagine sending your yearly report to your shareholders, and half of the addresses are incorrect, or the shareholders listed are no longer shareholders. Mistakes like this can cause costly damages and tarnish the trust your shareholders have in your offering.

Carelessness: If your transfer agent is unskilled or careless in their work, you might find yourself facing hefty fines or even lengthy legal issues with regulatory bodies like the SEC. No one wants to have the IRS breathing down their neck.

Customer Service: Your transfer agent should be responsive and provide excellent customer service to both you and your shareholders. If your transfer agent is unresponsive or does not offer adequate support, your shareholders might become frustrated and start looking for other investment opportunities.

High Fees: Some transfer agents charge exorbitant fees for services you may not need, and if you select the wrong one, you might end up paying more than you should. You do not want a transfer agent who charges excessive fees for their services and does not offer exceptional customer service or accuracy in their work.

In conclusion, selecting the wrong transfer agent can cause all sorts of difficulties and headaches. You could end up with inaccurate shareholder records, compliance and regulatory problems, poor customer service and support, and higher costs and fees.

Disclosures - Entoro


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Capturiant’s business model leverages DLT and warranty coverage to greatly enhance the trust, transparency, quality, tracking, distribution, retirement, and risk management of environmental assets and ESG instruments. Our process and compliance expertise provides exactly the level of trust and transparency issuers, investors, buyers, and sellers need throughout the entire ESG sector and asset class.

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What is the difference between Tier 1 and Tier 2 Reg A+ offerings?

Regulation A+ allows for two kinds of offerings, Tier 1 and Tier 2.

Tier 2 allows companies to raise $75 million per year from individual "Main Street" investors, accredited investors, and institutions worldwide. Most companies choose Tier 2 because the Tier 1 requirement to obtain State by State Blue Sky exemption is very slow and very expensive. Companies using Tier 2 do not need to satisfy state Blue Sky requirements to raise capital (with some exceptions).

How Tier 2 is more challenging than Tier 1:

The required upfront audit - (US-GAAP level) goes back up to two years, and the audit is for the period since the company was started for new startups. The many Tier States require 1 offering company to provide audited financials, so this one is often moot. The reporting requirements after the offering put some CEOs off. Management financial statements are required 6-monthly and an annual US-GAAP audit. Tier 1 permits capital raises of up to $20 million per year from individual "Main Street" investors, and of course, from accredited investors and institutions worldwide.

With Tier 1, the SEC does not require an audit before filing. However, this advantage often falls by the wayside because the many US States require audited financials for Tier 1 to satisfy their process. Another potential advantage for Tier 1 is that your company is not required by the SEC to provide an annual audit after you complete your raise.

It is more involved to make a Tier 1 offering because you must satisfy the Blue Sky investing regulations of each US State that you accept investors from. As a result, Tier 1 is generally used by Banks because they often have available State exemptions and a local customer base that they can appeal too easily.

What is the best situation to use Tier 1 in Reg A+ offerings?

These are the ideal situations where Tier 1 is best:
1) All your investors are local and in one State, and the State is easy to get your Blue Sky filing qualified. See the detailed list of States and how they work.
2) Your company is a bank that is exempt from State Blue Sky filing requirements.
3) All your investors will be from OUTSIDE the USA. Then you have no need to file for Blue Sky exemption with any US States.  This is close to ideal.
4) A maximum raise of $20 mill is sufficient. (Tier 2 starts at zero and goes up to $75 mill*).

The acceptance of cryptocurrency payments presents the potential for companies to raise capital from investors worldwide which may allow them to successfully raise capital from non-US investors. This opens up the possibility for companies to use Tier 1 for its simplicity, and only accept investors from some US States that have simple/efficient Blue Sky filing programs. Tier 1 doesn't require an audit prior to the Reg A+ SEC filing, the post-offering reporting requirements are significantly reduced (no audit and no 6 monthly profit and revenue reporting) and the investors are not limited as to how much they can invest.

*For businesses that can segment their market by geographic regions, it is possible to make multiple simultaneous offerings for one entity.


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Entoro Capital is a FINRA-registered Broker-Dealer in all 50 states, Puerto Rico, and the District of Columbia. The top choice for a Reg A+ broker-dealer and will answer all your questions.  We support Issuers through the entire Reg A+ process from pre-filing preparation, to SEC review, marketing selection, and completion of the offering. Call Entoro today and let our team show you how to Reg A+ the right way.

Morgan Sills                                                                  

Director – Investment Banking                                      
Entoro Capital, LLC                                                      
D: +1 832.987.4051                                                      
E: msills@entoro.com        

Christopher Luce, CAP

Managing Director – Reg A+ Sales

Entoro Capital, LLC

D: +1 832.987.3984

E: cluce@entoro.com

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