Client Profile - Nuvanna, LLC

Client profile with Alvaro Vaselli from Nuvanna, LLC, discussing Reg CF and the future of the Company. Nuvanna LLC is an online startup that helps consumers live a more balanced life, beginning with a supremely comfortable mattress for a good night’s rest — a key ingredient of a healthy lifestyle.

Initial Coin Offerings - A New Accounting Frontier

Initial Coin Offerings - A New Accounting Frontier

Down-line accounting issues for companies raising money through Initial Coin Offerings are going to be far more complex than raising money through a regulated ICO. 

Accounting for SAFE's - The Official Unofficial Guide

The official, unofficial guide to accounting for SAFE's.

Form C-AR Coming Due for Regulation Crowdfunding Issuers

Successful Regulation Crowdfunding (Reg CF) issuers now being required to file their From C-AR Annual report.

DBBM to Speak at SBDC Sponsored Event April 25, 2017

On April 25, 2017, the SBDC of San Mateo is sponsoring an event titled "SOURCES OF EQUITY CAPITAL & HOW TO PREP YOUR CLIENTS."  DBBM's own David Gosselin will be there to speak on behalf of the equity crowdfunding industry based on his industry leading experience in the space. 

Unlike more traditional forms of equity financing (VC financing, angel financing, private equity) equity crowdfunding through Regulation Crowdfunding (Reg CF) an Regulation A+ (Reg A+) allows entrepreneurs the ability to dictate terms, utilize affinity groups, and market to the public.  These are drastic differences compared to traditional equity financing.

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

The Small Company IPO Delusion and Reg A+ Solution

Doing some holiday reading, I picked up the Orange County Business Journal, and to my surprise, I saw two stories about two companies preparing for an IPO in 2017.  I thought to myself, “wow, it looks like some really great companies are coming out of Orange Country.” But reading through the articles and reviewing some public information about the companies in question, I quickly thought “these are likely not IPO ready companies.”  One of the companies was on their way and appeared to be growing rapidly with strong investment dollars behind them.  The other seemed to be a very small (sub $5M revenue) and they were only now starting to test their new product in the market.

Unfortunately, in the times we currently live in, the small-Cap IPO’s are non-existent.  The high regulatory burden in both man hours and dollars is a huge hurdle to overcome for a small company, even if it is doing well.  What’s more, business owners tend to think that everyone knows their business or will want to know their business because of the growth potential that can be unlocked.  Unfortunately, I can tell you more often than not business owners have trouble finding qualified investors without a previous history successful.  Companies struggle to separate their uniqueness to investors.  In any case, both the companies I read about would be well served NOT going through a traditional IPO process in my opinion.

With all that doom and gloom, here is the pot of gold at the end of the rainbow…Regulation A offerings.   My guess was that neither of these companies were advised on a Regulation A (“Reg A+”) offering that lets companies raise up to $50M annually through accredited and unaccredited investors in a Mini-IPO style process.   What’s so great about the Reg A+ process is that unlike the traditional quite period of a traditional IPO where everything is very hush-hush, Reg A+ contains what I like to call a loud period. This is a period where the company markets the offering and the company itself.  It’s reaching out to retail investors to invite them on a journey.  In that sense, you are actually spending money to market your company to potential customers while also soliciting investor dollars.  It’s a win-win when done correctly.  Reg A+ can also reduce the regulatory burden compared to a traditional IPO or you can use it to reach a national exchanged just like an IPO.  Therefore, you have more options under Reg A+ than a traditional IPO.

Bottom line is if your company does under $100M in revenue and you are thinking about an IPO, strongly consider Reg A+ as a better alternative. 

 

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

Choosing a CPA Firm for Reg A+ and Title III Regulation Crowdfunding

In these early days of Regulation A + (Reg A+, raises up to $50 Million) and Title III Regulation Crowdfunding (Reg CF, raises up to $1 Million), one of the hardest things to do as a potential issuer utilizing equity crowdfunding is to vet the service providers you want to work with.

Choosing the people your company works with, the people that give you advice, the people you trust is one of the most important things to do as a business.  Bad advice can set you back years, while good advice can accelerate you forward.

Often we get the questions:

How do we (the issuer) choose a CPA firm for equity crowdfunding?

…and

Why should I choose you over another firm?

Both great questions!  Let’s cover both types of equity crowdfunding as they will dictate different responses.

Regulation Crowdfunding (Raises up to $1M) have less regulation.  The financial statement reviews required can be performed by almost any CPA firm so long as they are registered to sign attestation reports in the state where you as the business owner are located.  Many firms only provide tax services and are specifically precluded from doing this work. However, for Reg CF, firms don’t have to be PCAOB registered, but they still must be registered with state(s).  One of the common issues that has come up, is CPA firms are issuing reports for issuers that are not in their home state.  If the CPA firm is not registered in the issuers’ home state or have practice privilege there, (every state is different) then the opinion can be deemed invalid and your campaign could flop before it starts.

For Reg A+, you should use a PCAOB registered firm (although not required in certain circumstances) in the chance you want to, or someday may want to be listed on a public stock exchange. All the same rules apply as Reg CF, make sure you use a CPA firm that can work in your home state.

So what sets CPA firms apart? You can see from the initial 100 filings for Reg CF companies and from review of many of the Reg A+ filings, some financial statements are better than others.  Whereas financial statements are ultimately the responsibility of issuer management, CPA firms should be making sure they go out nice, neat and clean with all required information (a requirement of the opinion they issue).  It is apparent (very obviously to people who know) that some firms are swimming in waters that are too deep for them.  They just don’t know the requirements and maybe shouldn’t be doing the work in the first place.  That is a significant issuer for an issuer as the issuer is ultimately responsible for everything.  

However, the real difference maker is if the CPA firm makes Reg A+ and Reg CF an emphasis in their practice.  CPA’s should be well connected to marketing firms, portals, SEC attorneys’, all of whom are in the equity crowdfunding space.  If they aren’t connected, THAT is the difference. 

dbbmckennon is Proud to Sponsor the Crowd Invest Summit

As equity crowdfunding through Regulation A+ and Title III Regulation crowdfunding start to become more popular, it has been our pleasure to be one of the nations leading CPA firms when it comes to equity crowdfunding. 

We are proud to announce our sponsorship of the Crowd Invest Summit on December 7-8, 2016, a conference and expo meant to educate and bring together investors of all types with startups, issuers, and real estate investment opportunities.  

David Gosselin of dbbmckennon will be a featured panelist to discuss the accounting and audit requirements of equity crowdfunding under Reg A+ and Reg CF.  David has become the top CPAs in the nation for equity crowdfunding.  We look forward to seeing everyone at the event. 

Title III Regulation Crowdfunding – The First Few Months

After years of anticipation for those who follow equity crowdfunding, the first few months of Title III Regulation Crowdfunding (raises up to $1 Million) have now come and gone.  While we can certainly provide the statistics of what has happened, that may not necessarily be what’s most important.  What is important is what will work for you, the potential Reg CF user of the future.   What is most important are the intangible things that make one campaign more successful than another that are difficult to quantify.

At dbbmckennon, we have been a part of more companies going through Title III Reg CF than any other CPA firm in the country to this point.  While we don’t see the marketing efforts, or much of the legal and compliance work that goes into a campaign, we do get to work with company management, portals, and stakeholders in the industry.

At a very base level, what is the most important thing to know?  Your audience is out there; it just might not be able to find you.  Let’s face it, the internet is vast, and the attention span of an internet user is seconds.  As of today, potential investors are not scrolling through deals to find yours on a daily basis.  This may happen someday when equity crowdfunding is the norm, but that’s not today. Therefore, your crowd will not find you, you have to find your crowd. 

That means marketing and outreach (abiding by the laws of course), that means using your connections to spread the word, it means being involved and being realistic.  Not every person you reach will be passionate about your project or understand it.  So you have to simplify, inspire, and provide a vision in the precious moments you get with a potential investor.

The other thing that is most important, is to have a committed, enthusiastic, and take no prisoners management team/founder.  Equity crowdfunding is not for the lazy, it’s not for the delusional, it’s not for the person who is unwilling to go an extra mile.   So be prepared, go BIG, don’t hold back, leave no stone unturned, don’t take no for an answer…and you just may succeed at equity crowdfunding.

 

 

Happy Regulation Crowdfunding Day (May 16, 2016)

Regulation Crowdfunding went live at 6am EST on May 16, 2016 and there were roughly 10 companies that were listed on funding portals within the first few hours.  Of those, not all were raising over $100K and needed a CPA involved for the financial statement review.  We were proud to be involved with four of the companies (about 50% of all companies raising over $100k) that went live on day one.   This was a national roll-out for Reg CF.  This proves again why DBBM is the leading CPA firm for companies undertaking equity crowdfunding raises through Regulation Crowdfunding and Reg A+.  Happy crowdfunding day everyone, and good luck to all those involved!

To check out some of the companies raising money with regulation crowdfunding early on go to : www.startengine.com,  www.nextseed.co or www.wefunder.com.  Please remember that investing in these types of companies comes with substantial risk of loss and nothing in this post should be considered advice or encouragement to invest.  Contact your professional financial advisory for investment advice.

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

 

 

Regulation Crowdfunding (Title III) - Power of the Crowd

Regulation Crowdfunding, Title III of the JOBS Act, or SEC equity crowdfunding goes by many names, and allows startups to raise up to $1M.  The adoption of Regulation Crowdfunding ("Reg CF") is truly a once in a lifetime event, given the fact that it changed 80 years of securities law. However, it's still not perfect.  Many will argue that the funding limit ($1M) is too low, or that the costs of legal, accounting, compliance, and/or portal fees, are too high.  We say, you can either complain or use it to your advantage. 

As an expert CPA in Regulation Crowdfunding and Reg A+, my favorite thing lately is to attend pitch competitions where various startups vie for the attention of VC and angel investors.  At these events, there are usually 100+ people; 5 VC/Angel investors listening to pitches who couldn't be more dis-interested and 100+ people there looking on.  The question I pose to each startup presenting is all the same:

"When you present are you better served facing the 5 people who likely won't like your ideas since it is not the next "unicorn" or would it be more beneficial to turn around and present to the 100+ people behind you who may be customers, stakeholders, and evangelicals for your Company?"

The so-called smart money, will tell you why Regulation Crowdfunding won't work, why it will never be successful, why it will never be as good as the connections smart money can provide. I call that market protection by the rich and powerful.  To be honest, an enthusiastic customer base is more powerful than smart money will ever be.  Enthusiastic follows is every startups trump card which makes equity crowdfunding under Tilte III of the JOBS Act such an advantage to early stage companies. 

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

Countdown to Regulation Crowdfunding

Everyone involved with equity crowdfunding and specifically Title III, Regulation Crowdfunding (“Reg CF”) has May 16, 2016 marked in their calendars.  Now we are just a few weeks away from that magical date and there are still many unknowns.  One of the biggest unknowns is if the funding portals will be approved by FINRA to start Reg CF.  While that variable might not be known until very close to May 16, there are steps that issuers can take to prepare for Reg CF filings.   Start by organizing your information for the Form C filing (see page 603 of 685 of the link).  One of the lengthiest steps to preparing for a Reg CF raise is getting your financial statements reviewed by a CPA, which is where we (dbbmckennon) come in.

One of the biggest misconceptions about the financial statement review process is how long it takes and what is involved.  The financial statements being presented in the Form C are virtually no different than what any US public company files with the SEC.  The financials and notes, which can be lengthy, are held to similar disclosure standards.  For very early stage companies, reviews can be done in about a week.  For business that have been around for one, two, or many years, the review process can take 2-3 weeks or longer depending on how organized the Company is.

So what does that mean.  If you plan to do a Reg CF capital raise at the very start of when it becomes available (May 16), you should contact us today to get your Reg CF financial statement review started.  With only a few weeks left, time is running out to make sure everything is complete for filing.

dbbmckennon is a full service CPA firm with offices in Orange County, San Diego and Santa Monica, focused on providing quality accounting and consulting services at reasonable rates.  We specialize in companies filing with the SEC and utilizing equity crowdfunding through Reg A+ and Regulation Crowdfunding. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

dbbmckennon Talking Regulation A and Equity Crowdfunding at SV Crowdfund Conference

dbbmckennon Talking Regulation A and Equity Crowdfunding at SV Crowdfund Conference

In March 2016, dbbmckennon's David Gosselin, one of the nations leading CPA's for equity crowdfunding, spoke about  regulation A (Reg A+ or mini-IPO's), Regulation Crowdfunding, the audit requirement for these new regulations, and other topics at the SV Crowdfund Conference.  dbbmckennon was pleased to speak and sponsor the event as we pave the way for this new era of finance. 

Should you be Using Social Media with your Investing?

Public companies are becoming much more integrated with social media, and so should you. Last July, Netflix CEO Reed Hastings announced on his personal Facebook page information relevant to the company that had not previously been reported. The SEC has since reported that companies may release information on social media, so long as investors are made aware the announcement is coming. So what does this mean to investors? Social media is allowing companies to connect with customers in whole new fashion. One of the ways in which they are using social media is through the use of push notifications. When a company you follow on Twitter or Facebook makes an announcement, push notifications can be enabled to allow a pop up on your phone notifying you of what has happened. This allows the user to no longer have to seek out information, but instead have information sent directly to their phone. With the constant clutter and filler bombarding users on the web, the ability to receive information direct from the company without external influence can be invaluable.

However, a reliance on social media still has its downfalls. As has been seen in recent months, social media accounts are still susceptible to hackers, who may post false information. Despite the risk, with over 1 billion users worldwide, the influence of a company’s like Facebook and Twitter are a resource that should not be ignored.

dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.

Navigating Auditing Standards, Without the Headache

If you thought the process of navigating auditing standards was a painful process, you are not alone. The PCAOB has started taking steps towards re-organizing auditing standards, aiming to make navigating standards a less painful process and more in line with the workings of an audit. So what does this mean for auditors and their clients? Currently the list of standards and related interpretations is nearly as large as a menu from the Cheesecake Factory, exceeding 2,000 pages when printed. That’s a lot of information to take in and consider. The current proposed changes would re-organize the standards into a four-digit numbering system designed to follow the workings of an audit. Under the proposal, standards would be grouped by the following categories: General auditing standards, audit procedures, auditor reporting’s, matters related to secures laws, and other. The difference lies in removal of interpretations from the system. Interpretations will not be removed all together, but simply contain a link to the relocated interpretation in an effort to “trim the fat” off the current standards.

The proposed changes, if implemented, would result in a much more efficient and painless experience for both auditor and potentially the client as well. I think we can all raise a glass to those improvements.

dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.