Elio Motors tested Tier 2 Regulation A at $25 million

The record

Elio Motors, Inc., an Arizona corporation incorporated in 2009, filed a Form 1-A offering circular on 28 August 2015, one of the earliest Tier 2 offerings after the SEC's expanded Regulation A took effect. The filing's own structured data designates it a Tier 2 offering of 2,090,000 shares of common stock at $12.00 per share, a maximum offering of $25,080,000, with estimated net proceeds of approximately $22,740,000 after offering expenses. The company amended the circular several times before a final version filed 20 November 2015 confirmed the same share count and price.

What the documents establish

The SEC's own 2015 adopting release for amended Regulation A, Release No. 33-9741, states the final rules "establish two tiers of offerings: Tier 1… of up to $20 million; and Tier 2… of up to $50 million," effective 19 June 2015, roughly ten weeks before Elio's filing. Elio's $25,080,000 raise sat comfortably under that Tier 2 ceiling. The release also states Tier 2 issuers must include financial statements "audited in accordance with either" AICPA or PCAOB standards, and must "file electronically with the Commission on EDGAR annual and semiannual reports, as well as current event reports" — the ongoing obligations that come with choosing Tier 2 over Tier 1. The release also states this preemption of state securities-law registration and qualification requirements applies "for Tier 2 offerings" specifically; Tier 1 issuers remain subject to state blue-sky review.

The operating read

A Tier 2 Regulation A+ offering is a distinct regulatory product from a registered IPO, not a lighter-weight substitute for one: it comes with its own audited-financial-statement standard, its own periodic reporting forms, and its own investment limits for non-accredited purchasers, and qualification by SEC staff is not equivalent to the underwriting due diligence and continuous Exchange Act reporting that follow a Form S-1 registration. This is an editorial point beyond what either filing states directly: a company choosing Tier 2 specifically to reach non-accredited retail investors, as Elio did, is accepting the ongoing Form 1-K/1-SA/1-U reporting burden in exchange for that broader investor pool and the state-law preemption Tier 2 carries.

What to check before you decide

Before treating a Tier 2 Regulation A+ offering as equivalent to a public listing, check:

• Does the offering circular's own filing data confirm Tier 2 status, and does the maximum offering amount fall within that tier's limit at the time of filing?
• What ongoing reports has the issuer actually filed since qualification, and are they current?
• Are the financial statements audited to the standard the rule requires for Tier 2, and how recent are they relative to the offering?

This entry describes what Elio Motors' own filings and the Commission's adopting release state; it does not assess the offering's investment merits or outcome.