25
Endnotes
1
The JOBS Act created a category of issuer, called an emerging growth company (EGC). EGCs benet from various accommodations
designed to make the initial public oering (IPO) process more attractive and to ease the transition from private to public company.
2
For a detailed discussion of these rules, see our companion publication “Financial Statement Requirements in US Securities Oerings:
What Non‑US Issuers Need to Know.”
A foreign private issuer is any issuer (other than a foreign government) incorporated or organized under the laws of a jurisdiction outside
the United States, unless (1) more than 50% of its outstanding voting securities are directly or indirectly owned by US residents and
(2) either (A) the majority of its executive oers or directors are US citizens or residents, (B) more than 50% of its assets are located in
the United States, or (C) its business is administered principally in the United States. See Rule 405 under the Securities Act of 1933, as
amended (the Securities Act); Rule 3b‑4 under the US Securities Exchange Act of 1934, as amended (the Exchange Act).
3
The nancial statement requirements discussed in this User’s Guide also apply to spin‑os registered on Form 10 for the distribution
of shares of a subsidiary to the existing shareholders of a public company. However, we do not cover nancial statements in mergers
and acquisitions (M&A) transactions. When securities are registered on Form S‑4 or F‑4 in connection with a stock‑for‑stock acquisition,
dierent requirements may apply.
4
Generally, Form S‑3 may be used by an issuer to sell securities (provided that the issuer has at least $75 million of common equity
outstanding held by non‑aliates) if the issuer has been subject to the Exchange Act reporting requirements and timely led all Exchange
Act reports for the 12 months prior to registration, and neither the issuer nor its subsidiaries have had any material defaults on a payment
related to a dividend, sinking fund, indebtedness, or rentals under long‑term leases.
See Form S‑3, General Instructions.
5
In particular, Form S‑1 allows an issuer to incorporate information by reference from its previously led Exchange Act reports if the issuer:
• is required to le Exchange Act reports;
• has led all required reports and other materials under the Exchange Act during the prior 12 months (or for such shorter period that the
issuer was required to le such reports and materials);
• has led an annual report for its most recently completed scal year;
• is not, and during the past three years neither the issuer nor any of its predecessors was, a blank check issuer, shell company, or
penny stock issuer; and
• makes its Exchange Act reports readily available on its website (including by way of a hyperlink to the reports).
See Form S‑1, General Instructions.
6
The requirements of Regulation S‑X (S‑X) Rule 3‑01 are imported into both Form S‑1 and Form S‑3. See Form S‑1, Item 11(e) (noting
nancial statements must be included meeting the requirements of S‑X generally); see also Form S‑3, Item 12(a) (noting the registrant’s
latest annual report on Form 10‑K must be incorporated by reference; in turn, Form 10‑K, Item 8 species that nancial statements must
be included meeting the requirements of S‑X, with certain exceptions).
7
See S‑X Rule 3‑01(a). If the ling is made on or before February 14 (i.e., within 45 days after the end of the prior scal year), and audited
nancial statements for the most recent year are not available, the balance sheet may be as of the end of the two preceding scal years.
See S‑X Rule 3‑01(b). In this case, the ling must include an additional balance sheet as of an interim date at least as current as the end
of the issuer’s third scal quarter of its most recently completed scal year. Id. Under certain circumstances, this approach may be taken
if the ling is made after 45 days but within 90 days of the end of the issuer’s scal year. See S‑X Rule 3‑01(c). In any event, interim
balance sheets need not be audited. See S‑X Rule 3‑01(f).
8
See S‑X Rule 3‑01(a). Financial information of a registrant’s predecessor is required for all periods prior to the registrant’s existence, with
no lapse in audited periods or omission of other information required about the registrant. SEC Division of Corporation Finance, Financial
Reporting Manual, Section 1170 [Financial Reporting Manual]. The term “predecessor” is dened broadly. See Securities Act Rule 405.
9
See S‑X Rule 3‑02(a) (statements of comprehensive income and cash ows); see also S‑X Rule 3‑04 (changes in stockholders’ equity).
10
See S‑X Rule 3‑06. Under this rule, the SEC will accept nancial statements for periods of not less than nine, 21, and 33 consecutive
months as substantial compliance with the requirement to provide nancial statements for one, two, and three years, respectively. In
particular, whenever audited nancial statements are required for a period of one, two, or three years, a single audited period of nine to
12 months may count as a year if:
• the issuer has changed its scal year during the period;
• the issuer has made a signicant business acquisition for which nancial statements are required under S‑X Rule 3‑05 and the
nancial statements covering the interim period pertain to the business being acquired; or
• the SEC grants permission to do so under S‑X Rule 3‑13, provided that nancial statements are led that cover the full scal year or
years for all other years in the time period.
See id. Note that historically the SEC Sta has been reluctant to grant this relief. See Financial Reporting Manual, Note to Section 1140.8
(issuer must show unusual circumstances). On June 29, 2017, the SEC Sta signaled that it might be willing to grant permission if an
issuer is able to argue that the information is not necessary for investor protection. See Sta of the Division of Corporation Finance, Draft
Registration Statement Procedures Expanded (June 29, 2017, updated Aug. 17, 2017) [2017 Procedures]:
While an issuer should take all steps to ensure that a draft registration statement is substantially complete when
submitted, we will not delay processing if an issuer reasonably believes omitted nancial information will not be
required at the time the registration statement is publicly led. In addition, we will consider an issuer’s specic facts
and circumstances in connection with any request made under Rule 3‑13 of Regulation S‑X.
See 2017 Procedures.