All companies that accept investments under Reg CF need to provide an annual update to their investors, to be filed on the SEC’s EDGAR system on Form C-AR and posted on the company's own website. It’s really important that as an investor, you know what the company has done with your money in any given year.
We searched for all companies that completed a successful fundraising (filed a Form C-U), from the date Regulation CF launched in 2016 to April 30, 2017, and found 29.3% of them did not file a Form C-AR or post an annual report on their website, meaning approximately one in three investors did not receive any updates from the company they invested in. In addition, 3.5% of those companies no longer have websites in existence, and have forfeited their right to transact business in their state of incorporation or are no longer in good standing. Investors should check that the company they invested in still exists, and are entitled to receive an update if the company pivoted business plan, changed web address, or went bankrupt.
Investors be aware – you are entitled to receive an update from the company once a year as to how they are doing. If you haven’t yet received an annual report, and it’s been120 days from the end of the company’s fiscal year, ask the company for one!
The next deadline for companies with a year-end fiscal year is April 30, we will be doing another investor alert then to see how many companies missed their deadline for providing investor with an annual report. Stay tuned!