Section 260.613 - Financial Statements(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.Cal. Code Regs. Tit. 10, § 260.613
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.
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).