Subject: File No. S7-09-13
From: Randy A Shipley
Affiliation: CrowdFundConnect Incorporated

December 14, 2013

I am pleased that proposed rules are finally out, and have a comment on the need to provide audited financials to raise over $500,000

In regards to providing financial audits to raise over $500,000 I would like to see this waived or exclusions allowed if the issuer is an established business that has filed a minimum of "x" years (to be determined, but I think 3 is good) tax returns with minimum annual revenues of $500,000

A company that has properly filed their taxes using a CPA, has an existing customer base of this size, and operating for 3 years presents a much smaller risk to investors for loss and fraud.

The cost of an audit goes up exponentially depending on the length of time in business and transactions to be audited. So this rule actually penalizes businesses that have a history of operations yet will be a minor expense for a start-up that has no operations or financials to audit.

Creating an exclusion for companies with operating history and proper tax filings and payments will encourage small business growth. Local businesses will be able to expand to nearby communities much easier.

In the early stages of crowd funding in the U.K., a company with three restaurants successfully received funding to grow to four restaurants, raising significantly over $1.5 million in a month. Their investors knew them, knew their product and knew what they were investing in. This type of funding will create construction work to start and long term job growth.

Small local manufacturers of consumer products are on the show Shark Tank weekly. They are people that are known in their community, have built a following of customers, and are in need of money for inventory and expansion. Many can get by with less than $500,000 - but many will need more to have a solid financial footing to build from.

Excluding existing owners of franchises that have an operating history, are known in their community and have paid taxes from an audit would allow these people to raise capital to expand the number of franchises they own. This type of operation would also have less risk for the investor of fraud and loss.

So why are we making it harder for these existing operations to raise over $500,000 than a new business that files a C Corp and has no records to audit but has an "idea"? The person with the "idea" can raise $1 million with a low cost audit - the business owner that has been here for years can't bear the cost of an audit.

Thank you for the opportunity to comment.

Randy Shipley