MICRO-FARMING CAPITAL STRUCTURING
Creating jobs, restoring whanau wealth and rebuilding rural communities for "Whanau on the Whenua"
IF IN DOUBT
Disclose.... Disclose..... Disclose
NOTE 1 - THE TEMPLATE PROCESS
Undoubtedly, the preferred disclosure route as it leaves no room for doubt as to the requirements of the law. For this reason Club-EzyXchange is entirely template driven.
North American Securities Administrators Association
THE EZYXCHANGE PROCESS
Focuses on the entire disclosure process. This is effected through the "Club EzyXchange" pathway that has been developed to provide a verifiable audit trail from the beginning of the ECF campaign. A trail that has definitive trigger points that enable the process to move to the next step, knowing that the Disclosure Document that eventually goes out to the market is indeed "true and fair" and can withstand scrutiny by both investors and Regulators alike. The Club EzyXchange process encapsulates key elements of the SCOR (Small Corporate Offerings Registration), process accepted by the 11 members states of the SCOR-WEST region. This process integrity, will help to assure investors that the ECF Applicant Issuer's CF-2 disclosure document is substantiated with a corroborative assembly process. One that includes the fact that all historical trading figures disclosed have been provided by a practicing CPA in the state of CO.
DISCLOSURE TEMPLATE (Note 1)
In common with many States across the US that have now paassed intrastate ECF laws, CO has also mandated a standard Disclosure Document that must be (1) provided to any prospective investor and (2) a copy must be filed with the Regulator. Called CF-2, this CO mandated document is a shortened version of the NASAA Form U7 disclosure document used by the SCOR programs in 43 states. Hopefully the SEC will adopt a Form U7 as it has found favor with both the SEC and 43 states as a basis of registering small corporate offerings.
As can be seen in the wheel above there is a process that is generally followed when bringing a financial product to market. From the initial awareness creation, through to the action being taken. In this case, an investor taking up an investment stake in a privately held, ECF funded company. In the absence of audited accounts, it is essential that the ECF Applicant Issuer company owner understand each step along the disclosure development process and pathway through to release of the Disclosure Document, the final written word that an investor will rely on when investing.
DISCLOSURE STANDARDS Traditionally, investors look to audited accounts to get the assurance they need that the investment being offered is "true and fair" as per the standard doctrine of the audit (assurance) process. This assurance does not apply to ECF offerings of up to $1M in some states. (e,g, CO). The absence of audited numbers will be a major concern for Regulators and NGO's that oversee the securities markets for some time to come. Certainly, until the players in the market can prove their bone-fides.
RISK - HOW TO PROTECT THE "HOLY GRAIL"
It all comes down to the degree of risk that the new genre of non sophisticated investors on Main St are expected to be subjected to. This needs to be balanced against the real need of genuine small businesses to have access to early stage capital in a rapidly changing economy. Be warned, if 70% of all deals done by the pros fail, then we all need to be very sure of just how early stage ECF capital is pitched to the "crowd" on Main St. .
TITLE III - THE HIGHLY ANTICIPATED $2T+ "HOLY GRAIL* OF THE JOBS ACT
What a let down it turned out to be. The Rules were really just "so-so" with early indications being that there will be no rush to register as an intermediary. At least now, the disclosure rules that are to apply are now finalized. Simply put, what information must be disclosed by an Issuer of Securities in order to provide (1) an acceptable level of investor protection and (2) mitigate the incidence of fraud on investors is now complete .
When raising capital, always observe the "3D" principle. Disclose.....Disclose....Disclose....