Best practices when going through the IPO registration processAugust 2016

1Best practices when going through the IPO registration process August 2016 |

Understanding the processTimelines, deadlines and the SEC comment letter processCompanies contemplating an IPO should have a good understanding of the process and the time required to complete each step. That is, you should understand the deadlines for SEC filings, when your financial statements “go stale,” when the SEC staff issues comment letters and when you will finally get to price your IPO. Creating a realistic timetable can help you manage expectations, plan the process and anticipate potential problems. For example, if the offering is delayed, a company may need to amend its filing to include additional periods of financial statements that may need to be reviewed (for comfort letter purposes) or audited. A company that updates its financial statements also may need to address new comments from the SEC staff. This could cause a company to miss a window of opportunity in the IPO market.

The SEC staff review process begins when the SEC receives the first submission or filing, regardless of whether it is a public filing or a confidential filing that EGCs and certain foreign private issuers can choose to make. Companies generally can expect to receive the first round of SEC comments within one month of submitting a registration statement. The SEC staff typically responds more quickly to subsequent amendments, but companies should plan on waiting a week or more for a comment letter on pre-effective amendments. While all comments must be resolved prior to the IPO registration statement being declared effective, most companies seek to have significant comments resolved prior to launching a road show. The

staff will provide the company with a letter to confirm that its review of the filing is complete.

The review process will be most efficient if companies follow a well-organized process and include all members of the IPO working group and professional advisers (e.g., legal counsel and external auditors) when developing responses to the SEC staff comment letters. This increases the likelihood that the company will develop full and accurate responses that successfully resolve the staff’s comments or requests for revisions.

Involving advisers early on may help a company avoid multiple rounds of comments from the staff. In our experience, companies that develop well-crafted first responses that directly address the SEC staff’s questions can resolve SEC comment letters in less time than those that submit a series of hasty responses. The staff is open to discussing its comments in a conference call to avoid confusion and help guide companies on the best path to resolution; however, the staff cannot clear comments over the phone. While companies may engage the SEC staff in a dialogue at any time, we find that conference calls are most valuable when only a few matters are left to resolve.

The Appendix provides a timeline of important SEC filing deadlines for additional information that you may need.

Average number of days from initial submission to IPO date

Non-EGCs

EGCs not submitting confidentially

EGCs submitting confidentially

IPOs take an average of 110 days to 140 days to complete once you’re in the door of the SEC. Non-EGCs are typically at the lower end of the range, and EGCs take slightly longer. For companies that need IPO proceeds to fund operations or launch new strategies, timing is crucial. For this reason, companies should be well prepared to deal with potential pitfalls along the way.100

114 days

124 days

134 days

140130120110

OverviewIf your company is planning an initial public offering (IPO), you need to be aware of potential roadblocks that can prolong the registration process.

You also should be aware of the relief provided by the Jumpstart Our Business Startups Act (JOBS Act), which was enacted in 2012 to make it easier for companies that meet the definition of an emerging growth company (EGC)1 to go public. Currently, more than 80% of companies filing an IPO registration statement are EGCs, and they take advantage of various available relief provisions, but the IPO process can still be daunting.

All companies embarking on an IPO must comply with the accounting and disclosure requirements in US GAAP that apply to public companies, as well as the rules and regulations of the US Securities and Exchange Commission (SEC). In many cases, complying with these requirements will require a change in practice for private companies.

This publication highlights common areas where companies get sidetracked in the registration process and recommends ways for companies and their advisers to effectively navigate the process.

2 | Best practices when going through the IPO registration process August 2016

Engage the SEC earlyCompanies that are uncertain about the SEC staff’s view on the application of US GAAP or IFRS in a specific fact pattern should consider seeking formal preclearance of their accounting conclusions with the Office of the Chief Accountant. Issues involving revenue recognition, consolidation and classification of financial instruments as debt or equity are commonly pre-cleared with the SEC. Similarly, companies seeking relief or guidance on compliance with the SEC’s financial reporting requirements (e.g., whether to include an acquiree’s financial statements or those of an investee) should submit written requests to the Chief Accountant’s Office in the Division of Corporation Finance.

Resolving these issues may take a few weeks, but engaging with the staff early in the process is often less time consuming and requires less effort than dealing with these kinds of issues when the registration statement is in review. For example, a company may have to restate its historical financial statements or obtain an audit of the financial statements of an investee or an acquired company, which could delay the IPO process.

At the outset, companies also should inform the SEC examiners assigned to their IPO documents about any previous correspondence they have had with other staff members in the Division of Corporation Finance or the Office of the Chief Accountant. The examiners can review documents more efficiently if they know about conclusions already reached by other members of the SEC staff.

Avoiding common pitfallsSubmit a substantially complete registration statement One common pitfall is submitting an incomplete registration statement. Companies should be aware that the SEC staff expects registration statements, including those submitted confidentially, to be substantially complete. At the time of submission, the registration statement should include all disclosures, exhibits, financial statements and financial statement schedules required by the Securities Act of 1933 (the 1933 Act). That means following the rules on the form and content of financial statements required by Regulation S-X, including those of acquired businesses and those to be acquired2 and those of significant equity investees,3 and the instructions for nonfinancial disclosures required by Regulation S-K.

If a company fails to submit a complete filing, the SEC staff can refuse to review it, which is sometimes referred to as “bed bugging” a filing, or it can “restart the clock” once the deficiencies are corrected, either of which can significantly delay an IPO. Proper planning will help reduce the likelihood of either of these events occurring. Companies that want to submit incomplete filings should discuss the matter in advance with the SEC staff, unless they are using the following exception provided for under the Fixing America’s Surface Transportation Act (FAST Act).

EGCs’ use of JOBS Act relief 2015*

EGCs that file confidentially 93%

Disclosed two years of audited financial statements* 67%

Disclosed two years of selected financial data** 56%

Provided compensation information for fewer than five executive officers***

97%

*From inception of JOBS Act in April 2012 to December 2015. **Excludes smaller reporting companies and companies with a reporting history of less ***Excludes smaller reporting companies and foreign private issuers.

The FAST Act, which was enacted in December 2015, amended the JOBS Act to, among other things, allow an EGC to omit the earliest year of financial statements in a filing if it reasonably believes (1) those financial statements will not need to be included when the filing goes effective and (2) all required information is included in the effective filing and red herring prospectus. For example, an EGC that makes its first filing in the fourth quarter of 20X6 and expects the registration statement to be effective in the spring of 20X7 can omit the 20X4 financial information from its preliminary filing.

Pro forma financial informationPro forma financial information may be required in an IPO registration statement for various reasons,4 including showing the effects of significant consummated or probable acquisitions or dispositions. Pro forma adjustments are often a source of significant judgment and an SEC staff focus area. It is important for management to determine whether pro forma financial information will be needed and to allow enough time to prepare such information and make sure it complies with Article 11 of Regulation S-X.

Registrants must also consider the SEC’s pro forma guidance for initial registration statements. When IPO proceeds are used to pay dividends to the issuer’s prior owners, promoters and/or parents, Staff Accounting Bulletin (SAB) Topic 1-B.3 requires registrants to evaluate whether the IPO filing should present pro forma earnings per share (EPS) or a pro forma balance sheet on the face of the financial statements. If the dividends are not reflected in the latest balance sheet, the registrant should provide a pro forma balance sheet on the face of the historical financial statements to reflect an accrual, with an offsetting amount to retained earnings. In addition, the SAB Topic requires the presentation of pro forma EPS if dividends paid at or before the closing of an IPO exceed earnings for the most recent year.

When a company first prepares its IPO filing, it may not be able to quantify all pro forma adjustments (e.g., those affected by the offering price or number of shares issued). In these cases, the company should be sure to include placeholders so it can add the adjustments when they become available.

For further information, please see EY’s SEC Financial Reporting Series: Pro forma financial information.

than two years.

3

Predecessor entity determinationIPO structures in recent years have become more complex, and in transactions such as those involving an “Up-C” structure, a “put-together” of multiple entities or a carve-out of operations from another company, the registrant may need to determine whether any entity is a predecessor entity, as defined in Rule 405 of Regulation C, and if so, which entity or entities. In these situations, more information must be provided for the predecessor (i.e., the same information as for a registrant), including separate schedules, selected financial data, management’s discussion and analysis (MD&A) and other disclosures required under Regulation S-K.

Delays may result because the audit of a predecessor’s financial statements must be conducted under the standards of the Public Company Accounting Oversight Board (PCAOB). The audit will also need to cover any stub period up to the acquisition or succession date, and issues such as compliance with additional SEC and PCAOB auditor independence requirements could cause additional delays and add to costs.

Identifying the predecessor is a matter of judgment and is based on whether an acquired business will be the main driver of the combined entities’ business or operations.

Companies should consider the following observations when determining the predecessor company:

• Factors to consider include the order in which the entities were acquired (i.e., which entity was acquired first), the size and fair value of the entities and the ongoing management structure. None of these factors is determinative, and all facts and circumstances should be evaluated.

• It is rare not to identify a predecessor, even if a NewCo is determined to be the accounting acquirer.

• It is possible to identify more than one predecessor entity.

Due to the significant judgment required in identifying a predecessor, companies should allow plenty of time to prepare and review financial statements they plan to submit to the SEC. They should also consider seeking preclearance from the SEC staff to avoid potential delays.

Other entity financial statementsAudited financial statements of significant acquired businesses, probable business acquisitions and significant equity method investees must be included in an IPO registration statement. Because obtaining these financial statements can require considerable effort, entities should consider these requirements in the planning process. Trying to obtain financial statements for other entities during the IPO process could cause delays.Companies can make written requests to the SEC staff for waivers from the requirement to provide audited financial statements of other entities if they believe that providing these statements isn’t reasonably necessary to inform investors. However, the SEC staff grants waivers only in rare circumstances

(e.g., when obtaining the financial statements would be an undue hardship and the results of the significance tests overstate the materiality of the financial information). Companies should also determine whether relief from providing acquired business financial statements is available through the application of SAB Topic 1.J. The SEC staff recognized that if S-X Rule 3-05 were applied literally, financial statements could be required in IPO registration statements for several acquired businesses that are immaterial to investors because of substantial growth in the registrant’s assets and earnings in recent years. Therefore, applying SAB Topic 1.J may reduce a company’s filing requirements, either by eliminating the audit requirements or by reducing the number of years required for audited financial statements of acquired businesses.

Cheap stock considerationsThe SEC staff continues to challenge the valuation of share-based payment awards issued in the 12 months before an IPO when the securities’ fair value was significantly lower than the anticipated IPO price (commonly referred to as cheap stock). Companies should be aware of the AICPA’s Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, which provides a framework and describes best practices for valuing private company securities. Companies contemplating IPOs should obtain contemporaneous valuations from independent valuation specialists to support the fair value of securities issued in the period leading up to an IPO.

4 | Best practices when going through the IPO registration process August 2016

The SEC’s Financial Reporting Manual states that companies should disclose all of the following information on share-based compensation in the financial statements included in an IPO filing:

• The methods used to determine the fair value of the company’s shares and the material assumptions used in determining the fair value

• The extent to which such estimates are considered highly complex and subjective

• That such estimates will not be necessary for new awards once the shares begin trading

In many cases, the accounting for stock compensation while a private company will represent a critical accounting estimate, and the company’s MD&A should discuss the material assumptions and describe the methodology used and judgments made, highlighting the level of complexity and how subjective they are.

If the company receives a comment letter from the SEC staff, management should first determine whether the staff is seeking additional disclosure or requesting evidence of milestones and significant events to support the changes in fair value at each grant date leading up to the IPO (i.e., support for the contemporaneous valuations). To more efficiently resolve questions about the valuations, companies should contemporaneously document consideration and the reasons for changes in fair value that occur between valuation dates and the determination of a price range for the IPO, including third-party transactions and key milestones.

Segment disclosuresIn recent years, the SEC staff has renewed its focus on segment disclosures in all filings. For companies going through the IPO process, this means more scrutiny of disclosures they are making for the first time. The challenge of first-time segment reporting is compounded when there are organization changes in preparation for the IPO. The SEC staff often challenges whether a company has appropriately identified the chief operating decision maker (CODM) and its operating segments and appropriately aggregated operating segments (with a particular focus on the qualitative criteria). The SEC staff often requests that the company explain how it made those determinations. The SEC staff often focuses on the organizational structure, the financial information used by the CODM in running the business and the process used by the CODM in allocating resources and assessing performance.

Companies should carefully evaluate any conclusions they reach on operating segments that are inconsistent with their basic organizational structure and the level of disaggregation used by the CODM in making key operating decisions. In addition, companies should consider all public information (e.g., on websites, in press releases) and confirm that their segment conclusions are consistent with both their operations and their public communications.

Non-GAAP financial measuresThe SEC staff recently increased its focus on compliance with the presentation and disclosure requirements when companies disclose non-GAAP financial measures. As a reminder, all public companies are prohibited from presenting non-GAAP financial measures in ways that are misleading or given greater prominence than GAAP measures. These prohibitions apply to both the order of presentation and the degree of emphasis. The SEC staff recently updated its guidance on the use of non-GAAP measures and identified certain uses that the staff considers misleading or providing undue prominence.

To avoid staff comments about non-GAAP financial measures, companies planning IPOs should include clear and specific disclosure of why a particular non-GAAP measure is useful for investors and how it is used by management. The statements a company makes about non-GAAP measures during the IPO process may signal how it plans to communicate with investors in the future; therefore, it is important that non-GAAP disclosures in the IPO registration statement be given careful consideration.

Our Technical Line publication, Spotlight on non-GAAP financial measures, and our To the Point publication, SEC staff updates guidance on non-GAAP financial measures, discuss the SEC rules and the staff’s new guidance and heightened focus.

5

Other SEC comment areasThe SEC staff issues comments on a variety of other issues and requests additional information when it believes that a company planning an IPO may not have complied with SEC disclosure requirements or omitted information that may be material to investors. While any comment might cause a major delay, companies planning IPOs should carefully consider their disclosures in the following five most frequent SEC staff comment areas for IPOs.

Ranking* 12 months ended 1 May

Comments area 2016 2015

Risk factors 1 3

Management’s discussion and analysis

2 1

Signatures, exhibits and agreements 3 2

Related party disclosures 4 4

Use of proceeds 5 5

* Based on comment letter topic taxonomy, excluding topics related to the terms of the offering or general updating of prospectus information, according to research firm Audit Analytics for SEC comment letters issued to companies on their Form S-1 registration statements from 1 April 2015 through 1 May 2016.

Risk factors – Item 503(c) of Regulation S-K requires a registrant to disclose its significant risks and how it is affected by each of them. Risk factors should be specific to the registrant’s facts and circumstances and should be not general risks that could apply to any registrant. The SEC staff commonly questions risk-factor disclosures that could apply to any public company. It also may question the completeness of a registrant’s risk-factor disclosures based on information included elsewhere in the document or other public information.

Management’s discussion and analysis – The SEC staff often requests that registrants explain the results of their operations with greater specificity, including identifying underlying drivers for each material factor that has affected their earnings or that is reasonably likely to have a material effect on future earnings. SEC staff comments often question the significant components of expenses and provisions. The SEC staff also has increased its focus on performance metrics, including whether registrants have disclosed key metrics monitored by management and how those metrics correlate to material changes in the results of operations.

Signatures, exhibits and agreements – The SEC staff may question the completeness and adequacy of exhibits, consents, audit reports and management signatures filed by a registrant as required by various rules and regulations. In particular, we often see the SEC staff inquiring about the omission of material contracts that must be filed as exhibits to registration statements. A company may need to amend its filing to resolve these questions.

Related party disclosures – The SEC staff may request that registrants clarify or expand their disclosures about related party transactions, as required by Item 404(a) of Regulation S-K. Item 404(a) requires a registrant to describe both actual and proposed transactions exceeding $120,000 since the beginning of its last fiscal year in which any related party had or will have a direct or indirect material interest. The SEC staff expects the description of a related party transaction to summarize the nature of the transaction in quantitative and qualitative terms and to include any other material information.

Use of proceeds – Item 504 of Regulation S-K requires registrants to describe the planned uses and amounts of offering proceeds. These disclosures should give users the ability to understand the major areas for which the funds will be used, including whether any proceeds will be used to discharge debts, to complete an acquisition or for working capital. The SEC staff may request that a company provide additional details about how it will use proceeds from the offering, particularly when other disclosures in the filing imply a use omitted from the Item 504 disclosures.

Please see our SEC Comments and Trends: An analysis of current reporting issues publication for more information.

1An EGC is defined as a company with “total annual gross revenues” (i.e., total revenues presented on the income statement in accordance with US GAAP) of less than $1 billion in its most recently completed fiscal year.

2Regulation S-X 3-05, Financial statements of businesses acquired or to be acquired.3Regulation S-X 3-09, Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons.

4Pro forma information may be needed to show the effects when a significant business combination has been consummated or is probable, to show the use of proceeds for a particular transaction or to show the registrant as an autonomous entity when it previously was part of another entity. Other examples of when pro forma information might be needed include distributions of excess earnings, changes to capitalization or tax status or significant distributions otherwise not yet reflected in the historical financial statements.

Do your financial statements need updating?2016 dates to remember1

Appendix | Best practices when going through the IPO registration process August 2016

Effective registration statement should include the following:

2015 year-end financial statements for IPOs (other than SRCs), delinquent filers and loss corporations2

2015 year-end financial statements for large accelerated filers3

2015 year-end financial statements for accelerated filers3

2015 year-end financial statements for all other filers and SRCs4 filing an IPO

2016 interim year-to-date financial statements for large accelerated filers and accelerated filers3

2016 interim year-to-date for all other filers

Federal Holiday

AprilS M T W T F S

1 23 4 5 6 7 8 9

10 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 30

JuneS M T W T F S

1 2 3 45 6 7 8 9 10 11

12 13 14 15 16 17 1819 20 21 22 23 24 2526 27 28 29 30

JulyS M T W T F S

1 23 4 5 6 7 8 9

10 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 3031

OctoberS M T W T F S

12 3 4 5 6 7 89 10 11 12 13 14 15

16 17 18 19 20 21 2223 24 25 26 27 28 2930 31

DecemberS M T W T F S

1 2 34 5 6 7 8 9 10

11 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30 31

JanuaryS M T W T F S

1 23 4 5 6 7 8 9

10 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 3031

AugustS M T W T F S

1 2 3 4 5 67 8 9 10 11 12 13

14 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30 31

SeptemberS M T W T F S

1 2 34 5 6 7 8 9 10

11 12 13 14 15 16 1718 19 20 21 22 23 2425 26 27 28 29 30

MayS M T W T F S1 2 3 4 5 6 78 9 10 11 12 13 14

15 16 17 18 19 20 2122 23 24 25 26 27 2829 30 31

NovemberS M T W T F S

1 2 3 4 56 7 8 9 10 11 12

13 14 15 16 17 18 1920 21 22 23 24 25 2627 28 29 30

MarchS M T W T F S

1 2 3 4 56 7 8 9 10 11 12

13 14 15 16 17 18 1920 21 22 23 24 25 2627 28 29 30 31

FebruaryS M T W T F S

1 2 3 4 5 67 8 9 10 11 12 13

14 15 16 17 18 19 2021 22 23 24 25 26 2728 29

Appendix

Additional resources and footnotesFind additional IPO and other thought leadership such as The JOBS Act: 2015 mid-year update and Technical Line, IPO financial statement accounting and disclosure considerations, on EY AccountingLink at http://www.ey.com/US/Accountinglink.

Notes1In order for a registration to be deemed effective, the financial statements included must be kept up to date depending on the company’s filing status. The symbols in the calendar indicate what financial statements must be included in a calendar year-end company’s registration statement at different points of the year. The dates include the permitted extension to the next business day where they would otherwise fall on a weekend or holiday. (Securities Act Rule 417)

2A “Delinquent Filer” is a registrant that has not filed all required reports.

A “Loss Corporation” does not expect to report positive income after taxes but before extraordinary items and the cumulative effect of a change in accounting principle for the most recently ended fiscal year and did not do so for at least one of the two prior fiscal years.

3Assumes that the filer is not a Loss Corporation or Delinquent Filer.

“Large Accelerated Filer” – an issuer (a) with an aggregate worldwide market value of voting and non-voting equity held by non-affiliates of $700 million or more (as of the last business day of the issuer’s most recently completed second fiscal quarter); (b) has been subject to the requirements of Section 13(a) or 15(d) for at least 12 calendar months; and (c) has filed at least one annual report pursuant to Section 13(a) or 15(d).

“Accelerated Filer” – an issuer with a market value greater than $75 million, but less than $700 million that meets the (b) and (c) criteria outlined in “Large Accelerated Filers” above.

An issuer will maintain its filing status until the end of the fiscal year in which it meets the criterion for exiting its applicable status (less than $500 million and more than $50 million for Large Accelerated Filers and less than $50 million for Accelerated Filers, calculated as of the last business day of the issuer’s most recently completed second fiscal quarter). (Exchange Act Rule 12b-2)

4“Smaller Reporting Company (SRC) ” – an issuer with public float (or anticipated public float based on anticipated IPO shares and price) of less than $75 million, or, if no public float, annual revenues of less than $50 million during the most recently completed fiscal year. (Exchange Act Rule 12b-2)

Staleness dates do not always align with periodic reporting deadlines. The SEC staff typically allows for the filing or effectiveness of a registration statement during these gap periods for timely filers (i.e., those that have filed all necessary Exchange Act reports for the past 12 months). This effectively makes the staleness date the same as the periodic reporting deadline. For example, the 2016 third quarter 10-Q is due on 9 November for Large Accelerated Filers , and the SEC staff might allow a registration statement to go effective on 8 November prior to the 10-Q filing provided the issuer has been a timely filer.

Do your financial statements need updating?2017 dates to remember1

Appendix | Best practices when going through the IPO registration process August 2016

Effective registration statement should include the following:

2016 year-end financial statements for IPOs (other than SRCs), delinquent filers and loss corporations2

2016 year-end financial statements for large accelerated filers3

2016 year-end financial statements for accelerated filers3

2016 year-end financial statements for all other filers and SRCs4 filing an IPO

2017 interim year-to-date financial statements for large accelerated filers and accelerated filers3

2017 interim year-to-date for all other filers

Federal Holiday

AprilS M T W T F S

12 3 4 5 6 7 89 10 11 12 13 14 15

16 17 18 19 20 21 2223 24 25 26 27 28 2930

MarchS M T W T F S

1 2 3 45 6 7 8 9 10 11

12 13 14 15 16 17 1819 20 21 22 23 24 2526 27 28 29 30 31

FebruaryS M T W T F S

1 2 3 45 6 7 8 9 10 11

12 13 14 15 16 17 1819 20 21 22 23 24 2526 27 28

SeptemberS M T W T F S

1 23 4 5 6 7 8 9

10 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 30

JulyS M T W T F S

12 3 4 5 6 7 89 10 11 12 13 14 15

16 17 18 19 20 21 2223 24 25 26 27 28 2930 31

OctoberS M T W T F S1 2 3 4 5 6 78 9 10 11 12 13 14

15 16 17 18 19 20 2122 23 24 25 26 27 2829 30 31

JuneS M T W T F S

1 2 34 5 6 7 8 9 10

11 12 13 14 15 16 1728 19 20 21 22 23 2425 26 27 28 29 30

DecemberS M T W T F S

1 23 4 5 6 7 8 9

10 11 12 13 14 15 1617 18 19 20 21 22 2324 25 26 27 28 29 3031

JanuaryS M T W T F S1 2 3 4 5 6 78 9 10 11 12 13 14

15 16 17 18 19 20 2122 23 24 25 26 27 2829 30 31

MayS M T W T F S

1 2 3 4 5 67 8 9 10 11 12 13

14 15 16 17 18 19 2021 22 23 24 25 26 2728 29 30 31

AugustS M T W T F S

1 2 3 4 56 7 8 9 10 11 12

13 14 15 16 17 18 1920 21 22 23 24 25 2627 28 29 30 31

NovemberS M T W T F S

1 2 3 45 6 7 8 9 10 11

12 13 14 15 16 17 1819 20 21 22 23 24 2526 27 28 29 30

Appendix

Additional resources and footnotesFind additional IPO and other thought leadership such as The JOBS Act: 2015 mid-year update and Technical Line, IPO financial statement accounting and disclosure considerations, on EY AccountingLink at http://www.ey.com/US/Accountinglink.

Notes1In order for a registration to be deemed effective, the financial statements included must be kept up to date depending on the company’s filing status. The symbols in the calendar indicate what financial statements must be included in a calendar year-end company’s registration statement at different points of the year. The dates include the permitted extension to the next business day where they would otherwise fall on a weekend or holiday. (Securities Act Rule 417)

2A “Delinquent Filer” is a registrant that has not filed all required reports.

A “Loss Corporation” does not expect to report positive income after taxes but before extraordinary items and the cumulative effect of a change in accounting principle for the most recently ended fiscal year and did not do so for at least one of the two prior fiscal years.

3Assumes that the filer is not a Loss Corporation or Delinquent Filer.

“Large Accelerated Filer” – an issuer (a) with an aggregate worldwide market value of voting and non-voting equity held by non-affiliates of $700 million or more (as of the last business day of the issuer’s most recently completed second fiscal quarter); (b) has been subject to the requirements of Section 13(a) or 15(d) for at least 12 calendar months; and (c) has filed at least one annual report pursuant to Section 13(a) or 15(d).

“Accelerated Filer” – an issuer with a market value greater than $75 million, but less than $700 million that meet the (b) and (c) criteria outlined in “Large Accelerated Filers” above.

An issuer will maintain its filing status until the end of the fiscal year in which it meets the criterion for exiting its applicable status (less than $500 million and more than $50 million for Large Accelerated Filers and less than $50 million for Accelerated Filers, calculated as of the last business day of the issuer’s most recently completed second fiscal quarter). (Exchange Act Rule 12b-2)

4“Smaller Reporting Company (SRC)” – an issuer with public float (or anticipated public float based on anticipated IPO shares and price) of less than $75 million, or, if no public float, annual revenues of less than $50 million during the most recently completed fiscal year. (Exchange Act Rule 12b-2)

Staleness dates do not always align with periodic reporting deadlines. The SEC staff typically allows for the filing or effectiveness of a registration statement during these gap periods for timely filers (i.e., those that have filed all necessary Exchange Act reports for the past 12 months). This effectively makes the staleness date the same as the periodic reporting deadline. For example, the 2017 third quarter 10-Q is due 9 November for Large Accelerated Filers, and the SEC staff might allow a registration statement to go effective on 7 or 8 November prior to the 10-Q filing provided the issuer has been a timely filer. Conversely, in some cases, the due date for the interim report on Form 10-Q will fall before the staleness date, in which case the interim financial statements will be required in the registration statement of a reporting company if they have been filed. For example, the staleness date would otherwise be 16 May or 16 August for a non-accelerated filer, but Form 10-Q is due 15 May or 14 August.

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