Registration Statements

Overview: The process of going public requires the preparation and filing of a registration statement that contains significant financial information. Most companies are unaware that prior to the filing, the company has a one-time opportunity to review and change its accounting policies and procedures (in all cases to preferable methods, of course). Once filed in the public domain, however, accounting principles are generally not expected to be changed. In addition, many companies are unaware that these filings require enhanced disclosures to give effect to anticipated differences in reporting by the post-report entity. For example, some companies were flow-though companies that were not taxed. Another example is reorganizations, such as the conversion of preferred instruments to common stock upon an IPO. The existence of these types of items requires pro forma disclosures to give the reader a basis to evaluate how the company would have reported had it been a tax payer or had its equity been as reflected in the post-report financial statements for all previously presented periods. These two issues are among many that companies face when preparing to file their previously private company financial statements in the public domain.

Services: Our team of advisers has extensive experience in helping companies through the IPO process. We explicitly map the Registration Statement requirements for financial statements against the private company financial statements and tell management exactly what each requirement is and where it originates. Generally, we work closely with Securities Counsel who also has extensive experience in these processes and advises us to make sure all of the differing items are identified. Overall, we fill a gap between the Company and Securities Counsel to target all differences and assure a comprehensive initial filing.

Case Study: We recently provided these services to a private company that was organized as a Limited Liability Company and planned to merge with a public shell company. As an LLC, the entity was disregarded for income tax purposes and accordingly had never prepared income tax accruals under the guidance of Statements of Accounting Standards No. 109 Accounting for Income Taxes. We provided management with the requirement and, in this instance, several examples. We further prepared the tax accrual, working closely with the company’s controller who had extensive income tax experience.