This is my least favorite bit of the SEC's Regulation CF: the fact that the exemption from Section 12(g) is conditional.
What does this mean? Section 12(g) of the Securities Exchange Act of 1934 says that if you acquire a certain number of shareholders of any class of equity securities, you have to register that class with the SEC and become subject to the SEC's ongoing reporting requirements.
The shareholder number for non-accredited investors is 500. Lots of crowdfunding companies will want to have at least 500 investors in their crowd. Regulation CF exempts crowdfunding companies from full SEC registration, BUT this exemption is conditioned on the companies being up-to-date with their annual Form C reporting requirements (and also not having assets more than $25 million).
It's very easy for small companies to forget to make regulatory filings. At CrowdCheck, we see it all the time, especially in the spring, when Delaware franchise fees are due.
But a company that fails to make its annual filings and has a crowd of investors is going to find itself either subject to the (significant) burdens of full 34 Act reporting or in trouble with the SEC for failing to register.
CrowdCheck can help with strategies for avoiding full registration, but the easiest way to avoid trouble is never to forget to file well before May 1 (or May 2) of each year.