Chapter 2 — Identifying the Required Financial Statements for the Registration Statement

2.4 Financial Statement Periods Presented

An entity must include in its registration statement audited annual financial statements and related footnote disclosures for both the registrant and any predecessor(s). The number of periods to be included depends on the registrant’s status as an EGC or non-EGC. In addition, depending on the time that has elapsed between the most recent fiscal year-end and the filing of the registration statement, an entity may be required to include unaudited interim financial statements and related footnote disclosures. The periods to be presented for both annual and interim financial statements are summarized in the table below. See Sections 1110 and 1120 of the FRM for more information about the financial statement requirements for annual and interim reporting periods, respectively.

Financial Statement Requirement	Non-EGCs	EGCs3
Annual Financial Statements (Audited)
Balance sheet	2 years	2 years
Income statement	3 years	2 years
Comprehensive income	3 years	2 years
Cash flows	3 years	2 years
Changes in shareholders’ equity	3 years	2 years
Interim Financial Statements (Unaudited)
Balance sheet	As of the end of the most recent interim period after the latest fiscal year-end and the latest fiscal year-end	As of the end of the most recent interim period after the latest fiscal year-end and the latest fiscal year-end
Income statement	The period from the latest fiscal year-end to the interim balance sheet date and the corresponding period in the prior fiscal year	The period from the latest fiscal year-end to the interim balance sheet date and the corresponding period in the prior fiscal year
Comprehensive income	Same as income statement	Same as income statement
Cash flows	Same as income statement	Same as income statement
Changes in shareholders’ equity4	Same as income statement	Same as income statement

2.4.1 Periods Required for Predecessor Entities

As indicated in paragraph 1170.2 of the FRM, the annual and interim financial statements for the registrant and its predecessor should collectively be “as of” all dates and “for” all periods required by Regulation S-X, Articles 3 and 10, as shown in the table above. When the registrant and its predecessor have already combined as of the IPO filing, the predecessor’s financial statements are required for all periods before the succession (i.e., up to the date of the combination), with no lapse or gap in audited periods. However, if the registrant and predecessor have not yet combined as of the IPO filing, the predecessor would present all periods required as if it was the registrant.

2.4.2 Interim Financial Statements

Article 10 outlines the financial statement requirements for interim reporting. The interim financial statements and related footnotes may be presented on a condensed basis in a level of detail allowed by Article 10 but will always need to contain disclosure of any material matters that were not disclosed in the most recent annual financial statements. While the interim financial statements in an IPO registration statement may be unaudited, SEC regulations do not require that they be subject to a review under PCAOB standards by the registrant’s independent registered public accounting firm; however, a company’s underwriters will often require that such a review be performed for due diligence or comfort letter purposes. The interim-period information may be presented alongside the audited annual financial statements, with the interim information clearly marked as unaudited. Alternatively, the interim-period information may be presented as a separate set of unaudited financial statements. Because a company undergoing an IPO may not have historically prepared interim financial statements, the company should ensure that it has established proper controls and procedures for accurately preparing such information.

2.4.3 Age of Financial Statements

In accordance with Regulation S-X, Rule 3-12, the financial statements in an IPO must meet certain age requirements as of each registration-statement filing date as well as when the registration is declared effective; otherwise, the financial statements will be considered “stale.” In general, the financial statements in an IPO filing must not be more than 134 days old (i.e., the gap between the date of filing or effectiveness and the date of the latest balance sheet cannot be more than 134 days). However, third-quarter financial statements are considered timely through the 45th day after the most recent fiscal year-end, after which the audited financial statements for the most recent fiscal year are required. See Section 1220 of the FRM for additional details.

The table below provides the dates on which financial statements become “stale” for a calendar-year-end company undertaking an IPO during 2023 or 2024. That is, financial statements for the respective financial statement period can be included in an IPO registration statement up to the dates listed below. When filing an IPO registration statement after these dates, an entity must update financial statements and other financial information to comply with the SEC’s age requirements (i.e., an additional unaudited interim period or audited fiscal year would be required).

	First Quarter Ended March 31 (Unaudited)	Second Quarter Ended June 30 (Unaudited)	Third Quarter Ended September 30 (Unaudited)	Fiscal Year Ended December 31 (Audited)
Fiscal/calendar year 2023	August 14, 2023	November 13, 2023	February 14, 2024	May 13, 2024
Fiscal/calendar year 2024	August 12, 2024	November 12, 2024	February 14, 2025	May 14, 2025

2.4.4 Omission of Certain Financial Information From Draft Registration Statements

While each draft of a registration statement is generally expected to contain all information required by SEC regulations, there is an accommodation available to companies that allows them to omit financial statement periods in certain circumstances. This accommodation was initially granted to EGCs as part of the JOBS Act but was subsequently expanded by the SEC to include non-EGCs as well. Specifically, under the accommodation, a non-EGC may omit financial information from a nonpublic draft registration statement (see Section 1.4.2) for historical periods currently required if the company reasonably believes that it will not be required to include these historical periods at the time of the public filing. This provision is likely to apply when the SEC’s review process extends through a financial statement stale date. When a non-EGC files publicly for the first time, it must include all financial information required as of the public filing date.

Example 2-1

A non-EGC calendar-year-end company submits a draft registration statement in December 20X7 and reasonably expects to file publicly for the first time in April 20X8 when annual financial statements for 20X7, 20X6, and 20X5 will be required. In such a case, the company may omit its 20X4 annual financial statements from its nonpublic draft registration statement because the 20X4 annual financial statements will not be required at the time of the first public filing. However, for either a confidential submission or public filing more than 45 days after the 20X7 year-end, audited 20X7 financial statements must be included because those financial statements will be required at the time of the first public filing and the company must comply with the staleness requirements discussed in Section 2.4.3.

For non-EGCs, Question 101.05 of the SEC’s C&DIs on the Securities Act Forms clarifies that when evaluating which interim periods to include in a draft registration statement, companies may omit interim financial information if they reasonably believe that they will not be required to separately present such information at the time they publicly file their registration statement. As a result, many initial draft registration statements may not need to include interim financial statements when they are submitted nonpublicly.

Example 2-2

A non-EGC calendar-year-end company submits a draft registration statement in December 20X7 and reasonably expects to file publicly for the first time in April 20X8 when annual financial statements for 20X7, 20X6, and 20X5 will be required. In such a case, the company may omit its nine-month 20X7 and 20X6 interim financial statements from its nonpublic draft registration statement because the company will not be required to separately present those periods when it first publicly files its registration statement in April 20X8. The annual financial statements for 20X7, 20X6, and 20X5 will be required (1) when the registration statement is filed publicly for the first time in April 20X8 or (2) in any draft registration statement submitted more than 45 days after the 20X7 year-end.

Example 2-3

A non-EGC calendar-year-end company submits a draft registration statement in late August 20X7 and reasonably expects to file publicly for the first time in December 20X7 when nine-month 20X7 and 20X6 interim financial statements will be required. In such a case, the company may omit its six-month 20X7 and 20X6 interim financial statements from its nonpublic draft registration statement because the company will not be required to separately present those periods when it first publicly files its registration statement in December 20X7. The nine-month 20X7 and 20X6 interim financial statements, as well as the 20X6, 20X5, and 20X4 annual financial statements, will be required (1) when the registration statement is filed publicly for the first time in December 20X7 or (2) in any draft registration statement submitted more than 134 days after June 30, 20X7.

In addition, the Division updated Question 1 of its C&DIs on the FAST Act, and added a corresponding C&DI (Question 101.04) to the Securities Act Forms C&DIs, to clarify the interim financial information required in draft registration statements submitted by an EGC. Under the updated guidance, an EGC that submits a draft registration statement can omit interim financial information that it reasonably believes it will not be required to separately present at the time of the contemplated offering. However, the appropriate interim financial information would still be required in a registration statement that is publicly filed.

Example 2-4

A calendar-year-end EGC submits a draft registration statement in December 20X3. The company believes that its offering will commence in April 20X4, at which time its 20X3 annual financial information will be required. The company may omit its 20X1 annual financial information, as well as its 20X2 and 20X3 interim financial information, from the draft registration statement it submits in December 20X3.

If the company were to first file its registration statement publicly in April 20X4 when its 20X3 annual financial statements are required, it would not need to separately prepare or present interim financial information for 20X2 and 20X3. However, if the company were to publicly file its registration statement in January 20X4, before its 20X3 annual financial information is available, it may still omit its 20X1 annual financial information from this registration statement but would need to include its 20X2 and 20X3 interim financial information because, as indicated in Question 101.04 of the SEC’s C&DIs on Securities Act forms, that information ”relates to historical periods that will be included at the time of the public offering” (i.e., 20X3 annual financial statements).

Connecting the Dots

Non-EGC registrants would need to include all financial information required at the time the registration statement is publicly filed, and the SEC will not process a publicly filed registration statement if such financial information is omitted. This guidance differs from the relief provided by Section 71003 of the FAST Act, which allows EGCs to omit financial information (on Form S-1) that they reasonably believe they will not be required to include in the registration statement “at the time of the contemplated offering” (emphasis added). While the examples in Sections 2.1, 2.2, and 2.3 specify periods for non-EGCs, an EGC could also use similar accommodations.

A company that does not take advantage of the Division’s nonpublic review process and elects to publicly file its initial registration statement would not be allowed to omit from its initial registration statement financial information that it reasonably believes will not be required at the time of the contemplated offering. If a company believes that an accommodation would be appropriate in a registration statement that is publicly filed, reasonable requests for such an accommodation may be directed to the relevant office chief in the Division that is responsible for performing the review.

See Appendix C for a summary of benefits available to EGCs and non-EGCs.

2.4.5 Rule 3-13 Waivers and Other Requests

Regulation S-X, Rule 3-13, gives the SEC staff the authority to permit the omission or substitution of certain financial statements otherwise required under Regulation S-X when doing so is “consistent with the protection of investors.” For example, in an IPO, the registrant’s historical financial statements may exhibit significant growth. In this case, certain acquisitions may not be material to the registrant’s current operations. Therefore, when a registrant believes that the literal application of the significance test leads to the provision of financial statements for an acquired business under Rule 3-05 (or another requirement such as that for a significant equity method investment under Rule 3-09) that are not material, not relevant, or not meaningful to investors, the registrant may consider submitting — to the Division’s Office of the Chief Accountant — a Rule 3-13 waiver request to omit or substitute certain financial statements otherwise required by Regulation S-X. The staff has indicated that it is also available to discuss potential waiver fact patterns by phone before a registrant submits a waiver request. For additional guidance on Rule 3-13 waivers and other requests, see Appendix B of Deloitte’s Roadmap SEC Comment Letter Considerations, Including Industry Insights.

Footnotes

Some EGCs may also qualify as SRCs. See Section 1.5 and Regulation S-X, Article 8, for information and reporting requirements for SRCs. The two-year accommodation for EGCs is limited to an IPO of common equity. As clarified by the SEC in paragraph 10220.1 of the FRM, in an IPO of debt securities or the filing of an Exchange Act registration statement (e.g., a Form 10) to register securities, three years of audited financial statements will generally be required.

May be presented in a footnote to the financial statements. We believe that the analysis of changes in shareholders’ equity is required for each period for which an income statement is presented and, therefore, that both the year-to-date and corresponding interim period of the prior fiscal year are required.