By Trent Dykes, Ossie Ravid and Jennifer Tornow

Just a reminder to those who have Delaware corporations: your annual report and franchise tax payment are both due by March 1. At this point, you have likely already received from Delaware your notification of annual report and franchise tax due, which is sent to a corporation’s registered agent in December or January of each year. Delaware requires these reports to be filed electronically.

There are two methods that you can use to calculate the amount of Delaware franchise tax due
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Yesterday, the SEC issued an enforcement order regarding Munchee’s token offering and SEC Chairman Jay Clayton released a general public statement on cryptocurrencies and ICOs.  For those who previously read our post about the SEC’s report in the DAO, much of this might not be a surprise – although the SEC staff did answer the call of discussing so-called “utility tokens.”
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Article prepared by and republished courtesy of our colleagues Luke Gannon, Scott Thiel and Hayden Lau; originally published here:
https://www.dlapiper.com/insights/publications/2017/09/the-sfc-comments-on-icos/

The Securities and Futures Commission of Hong Kong (the SFC) has debunked the myths that no securities laws apply to ICOs. In its first direct statement on the subject, the SFC fired a warning shot at issuers and intermediaries of ICOs and token offerings, reminding them that they may be conducting regulated activities and therefore, may be required to be licensed by or registered with the SFC, irrespective of where they are located.
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One of the more interesting phenomena in early-stage investing is the recent emergence of initial coin offerings (“ICOs”), token generation events (“TGEs”), or similar distributed ledger or blockchain-enabled means for raising capital. Much has been written, including by many skilled lawyers in the technology sector, about whether the tokens issued in these structures involve “securities” – and, frankly, some of it is unhelpful. Hungry for something that seems like crowdfunding, but that actually works to raise meaningful capital for promising technology initiatives, many in the technology space really want these
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Much has been written recently on blockchain, Bitcoin, Ethereum, cryptocurrencies and initial coin offerings (ICO). Unfortunately, for non-computer scientists (like me), trying to understand these concepts and their potential implications can be a bit overwhelming. To help all of those non-technologists trying to get their heads around blockchain, Bitcoin, Ethereum, cryptocurrencies and ICOs, I pulled together the following list of resources that I have found useful. As an attorney who represents startup and emerging growth companies, it seems likely that these technologies will prove to be disruptive to how we do business, build new technology, fund startups and even think about employment – much like the initial proliferation of the Internet. Let’s start with a brief overview of these technologies and how they relate to each other.
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Our private company clients often ask what kind of revenue or EBITDA multiple ranges they can expect upon a sale or when determining their enterprise value in connection with a financing. This is always a tricky question as value is driven by ever-changing supply and demand and then-current market conditions. Moreover, with yet-to-be-profitable startups, substantial value often lies with their IP, team and/or future prospects.  Accordingly, for a startup, the answer to this question is subjective at best. With that said, one of the better resources I have found for
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From our colleagues Carla Small, Jim Halpert and Anne Kierig

Governor Andrew Cuomo has announced final cybersecurity rules for New York’s financial services sector.

The Cybersecurity Requirements for Financial Services Companies (the Final Rule), promulgated by the New York Department of Financial Services, is the most specific cybersecurity regulation in the country to apply to companies that are not critical infrastructure operators.

They apply to all New York-licensed financial services companies including banking, insurance and money transmission business lines, with very limited exceptions.

Read more here.

 
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Below are three charts compliments of J.Thelander Consulting and PitchBook that illustrate the dilutive impact over time of venture funding on founder ownership levels. These charts are the result of J.Thelander Consulting’s venture-backed private company ownership survey – and divided by industry (biotechnology, medical device and technology). Read the full article here.

While these charts are directionally helpful, each company will of course have its own set of facts. In my experience, the main drivers of founder dilution are often:

  • the size of the founder team;
  • how long the


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Yesterday the SEC adopted rules intended to facilitate intrastate and regional securities offerings.  The SEC made general updates and modernized old Rule 147, the safe harbor exemption for intrastate securities offerings under Section 3(a)(11) of the Securities Act. The SEC also adopted a new exemption in Rule 147A, which differs from Rule 147 primarily in that it expressly permits general solicitation and does not require the issuer to be formed in the same state as its principal place of business and investors.  This should allow Rule 147A to work more effectively with state-level crowdfunding exemptions.  (We have previously blogged about the challenges of crowdfunding under Rule 147.)

The SEC also revised Rule 504 to increase the aggregate offering amount limitation from $1m to $5m and to add “bad actor” disqualifications (aligning it with recent updates to Rule 506). In addition, the SEC repealed the little used and now largely redundant to Rule 505.

These rules have various effective dates tied to publication of the rules in the Federal Register, which will likely occur next week:

  • Revised Rule 147 – 150 days after publication in the Federal Register
  • New Rule 147A – 150 days after publication in the Federal Register
  • Revised Rule 504 – 60 days after publication in the Federal Register
  • Repeal of Rule 505 – 180 days after publication in the Federal Register


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By Tyler Hollenbeck and Cisco Palao-Ricketts

Although there a number of web resources regarding the distinctions between “incentive stock options” (ISOs), which can only be granted to employees, and “non-statutory options” (NSOs)[1], which can be granted to employees, directors and consultants, these resources are often heavy with tax jargon that is difficult to understand.  To help entrepreneurs focus on what should be most important to them, we have put together the below quick reference guide[2].

I.  TAX CONSEQUENCES – TO THE INDIVIDUAL

A.  NSOs

  • At date


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