Start with the amount you may actually offer
Reg CF financial requirements do not depend only on the minimum target shown on your offering page. The Form C instructions define the aggregate amount using applicable amounts offered and sold during the preceding 12 months, plus your current maximum. They include controlled entities, entities under common control, and predecessors. That broader history also determines whether the issuer qualifies for the first-time exception.
For example, a first-time issuer with a $100,000 minimum and a $1 million maximum cannot use the smallest financial disclosure tier just because its minimum is below $124,000. Its maximum belongs in the calculation. Review the complete offering history with your portal and CPA before selecting a tier.
Issuance Express coordinates financial statement requirements with your CPA or can recommend a qualified third-party provider. Identifying the right scope early helps avoid commissioning work that does not support your intended offering.
The current certification, review, and audit thresholds
The following thresholds apply to the relevant aggregate amount. The SEC’s issuer guidance explains the tiers and exceptions.
| Relevant aggregate amount | Financial statements required |
|---|---|
| $124,000 or less | Principal executive officer certification of financial statements and specified federal tax return information, subject to the available-statements exception. |
| More than $124,000 through $618,000 | Independent accountant review, unless audited statements are already available. |
| More than $618,000 through $1,235,000, with no previous Reg CF securities sales | Independent accountant review, unless audited statements are already available. |
| More than $618,000 for an issuer that previously sold Reg CF securities | Independent accountant audit. |
| More than $1,235,000 | Independent accountant audit. |
The first-time exception ends at $1,235,000. It does not allow a first-time issuer to offer $5 million using reviewed financials.
Existing work also matters. At the smallest tier, available reviewed or audited statements replace the officer-certified package and specified tax information. When a review would otherwise suffice, available audited statements must be provided instead. Confirm what is available before assuming that the least demanding tier applies.
The financial periods your statements cover
The financial statements follow U.S. generally accepted accounting principles. They generally cover the two most recently completed fiscal years or the period since inception if shorter. The package includes balance sheets, income-related statements, cash flows, changes in equity, and notes. Rule 201(t) specifies the contents and timing rules.
A business formed recently does not invent two years of history. It reports the applicable period since inception. SEC staff Question 201.01 explains a limited inception-balance-sheet approach for recently formed issuers.
A tax return, bookkeeping dashboard, or bank statement is not a substitute for the required financial statements. Those records can support preparation, but the public package must meet the applicable rules.
The notes help readers understand matters that a total alone cannot explain, such as accounting policies, related-party balances, and important obligations. Treat them as part of the financial story.
A review and an audit involve different work
An accountant review provides a different level of assurance from an audit. A review generally relies on inquiries and analytical procedures. An audit involves more extensive work to support an audit opinion. Neither is a guarantee that the company will succeed or that an investor will receive a return.
Tell the accountant that the statements and signed report are for a public Reg CF offering. Rule 201(t) sets standards for the accountant’s independence, the review or audit, and the report. A modified review report or a qualified, adverse, or disclaimed audit opinion does not satisfy those requirements. Read the accountant and report requirements.
Useful preparation includes reconciled bank accounts, a current ledger, debt schedules, equity records, and evidence supporting major balances. Ask the CPA what else the engagement needs. A complete file reduces repeated questions and makes unusual transactions easier to explain.
Your launch date can change the required periods
The first 120 days of a fiscal year have a limited accommodation for using older fiscal-year statements, unless the more recent statements are already available. After that period, the two most recently completed fiscal years are required. Rule 201(t), Instruction 4 describes the accommodation.
This matters when a launch moves across the financial reporting date. A package prepared for an earlier schedule may need additional work before a later launch. Ask about that possibility before announcing a date to your community.
An open offering also needs attention. In Question 201.03, SEC staff explains that an offering with a rolling close that remains open more than 120 days after fiscal year end needs updated Form C financials and an annual report. An initial closing does not freeze the financial information for the rest of the round.
Prepare the financial narrative alongside the numbers
Your Form C also explains financial condition. Help readers connect reported results to the purpose of the raise. If revenue grew while cash fell, describe the reason. If the company depends on more financing after this round, make that dependence understandable.
For an illustrative inventory business, cash may be tied up in goods bought ahead of a seasonal sales period. The financial discussion should explain that pattern and how offering proceeds fit the plan. Separate the existing inventory and historical sales from management’s expectations.
Bring your available statements, fiscal year end, prior Reg CF sales, and proposed maximum to the Issuance Express discussion. Those facts determine the accounting work to coordinate and its effect on your costs and timeline.
Sources and further reading
Read the governing rules and official guidance behind this article.
General education from Issuance Express. This article is not legal, tax, or investment advice, an offer of securities, or a guarantee that an offering is eligible for the portal. Work with qualified advisers on the facts of your offering. SEC registration and FINRA membership do not imply approval of an offering or its merits.