California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 2 - Corporate Securities › Article 13 - General Provisions › Subarticle 2 - Miscellaneous Provisions › Section 260.613 - Financial Statements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
					 All financial statements required by these rules or by any official form of the
					 Department shall be prepared in accordance with generally accepted accounting
					 principles including a balance sheet as of a date within 90 days prior to the
					 date of the application and statements of income and statements of cash flows
					 for each of the three fiscal years (for each of the two fiscal years in the
					 case of a "small business issuer" as defined by subsection (i) of Section
					 260.001) preceding the date of the
					 balance sheet and for the period, if any, between the close of the last fiscal
					 year and the date of the balance sheet. Where the application is for an open
					 qualification, there shall be filed, in addition, an audited balance sheet as
					 of the end of the person's last fiscal year (unless the last fiscal year ended
					 within 90 days of the date of the application, in which case there shall be
					 filed an audited balance sheet as of the end of the person's next preceding
					 fiscal year) and statements of income and statements of cash flows which shall
					 be audited up to the date of the last audited balance sheet filed.
(b) As used herein, "audited" refers to
					 financial statements covered by an auditor's report containing an unqualified
					 opinion of an independent certified public accountant. An opinion shall not be
					 considered unqualified if an explanatory paragraph is included in the auditor's
					 report or the notes to the financial statements which discloses information
					 relating to material uncertainties (except as to litigation) or going concern
					 issues.
(c) While the foregoing is
					 established as a general guideline in the preparation of financial statements,
					 the Commissioner may in certain cases require audited statements of an
					 applicant in connection with a limited offering qualification and may in
					 certain cases waive audited statements in connection with an open
					 qualification.
(d) Financial
					 statements of a corporation shall be prepared on a consolidated basis with any
					 other corporation(s) in which it owns directly or indirectly more than 50% of
					 the outstanding voting securities.
(e) Financial statements prepared in
					 accordance with the rules and requirements of the Securities and Exchange
					 Commission in a registration statement shall satisfy the requirement of this
					 Section that the financial statements be prepared in accordance with generally
					 accepted accounting principles when the financial statements are submitted as
					 part of an application for qualification.
(f) Where the issuer is a small business
					 issuer and the aggregate proceeds of the proposed offering plus the total
					 aggregate proceeds to the issuer from the sale of any of its securities in the
					 preceding 12 months is not more than $500,000, the requirements of subsection
					 (a) may be satisfied by reviewed financial statements. For purposes of this
					 subsection, "reviewed financial statements" means financial statements prepared
					 and accompanied by a report issued by an independent certified public
					 accountant in accordance with generally accepted accounting
					 principles.
1.
						Amendment of subsection (a) filed 9-19-73; effective thirtieth day thereafter
						(Register 73, No. 38).
2. Amendment of subsection (a) filed 1-22-75;
						effective thirtieth day thereafter (Register 75, No. 4).
3.
						Amendment filed 5-3-83; effective thirtieth day thereafter (Register 83, No.
						19).
4. Amendment of subsections (a), (b) and (e) filed 7-1-93;
						operative 7-1-93 (Register 93, No. 27).
5. Change without regulatory
						effect amending subsection (a) filed 9-30-93 pursuant to title 1, section
						100, California Code of
						Regulations (Register 93, No. 40).
6. Amendment of subsections (a)
						and (b), new subsection (f) and amendment of NOTE filed 12-19-95; operative
						1-18-96 (Register 95, No. 51).
Note: Authority cited: Sections
						  25216
						  and
						  25613,
						  Corporations Code. Reference: Sections
						  25113(b)(2)
						  and
						  25140,
						  Corporations Code.