2.02

Question 1

What are “top line” results?

Answer 1

Full top line = gross sales/revenue vs. bottom line = net income.

Not full top line = e.g., a select few metrics of post fiscal period results (cash and cash equivalents)

Question 2

Who are a few of our clients that report interim financial results / early-released results post-year end?

Answer 2

AMSC, Ribbon, Casper, TCS and Precision.

Question 3

Key advice to clients seeking to report preliminary financials via press release?

Answer 3

Jenna’s advice:

• Must furnish PR on a 2.02 8-K
• Should have qualifying language in the PR disclaimer along the lines of, “these results are preliminary and subject to completion of the audit and execution of the company’s internal control over financial reporting”
• Example: TCS 5/12/20 “Financial Disclosure Advisory”

State the following:

• expected results discussed are unaudited and preliminary
• does not present all information necessary to understand their financial condition as of X date or results of operations for the X months ended X
• closing procedures for the quarter and FYE, if applicable, are not yet complete
• actual results may differ materially due to completion of quarter/year-end accounting procedures and adjustments, including execution of ICFR, completion of audit, occurrence/identification of events prior to formal issuance of audit fin statements for fiscal X
• not indicative of financial performance that may be expected for the quarter in question or any future fiscal period

Question 4

Key advice to clients seeking to report preliminary financials via 2.02 8-K (no press release?

Answer 4

Ellen’s formulation:

• Although it has not finalized its full financial results for the quarter, Company expects to report that it had approximately X in cash and cash equivalents as of quarter-end
• Estimate is unaudited and preliminary
• Does not present all information necessary for an understanding of financial condition as of quarter-end and its results of operations for the X months ended X (3 and 6/9 months ended…)
• Guidance: management also believes that, as of date of filing, the existing cash and cash equivalents, expected operational receipts and available credit will allow them to continue operations into [guidance period]
• review of the financial statements for the period ended X by their independent registered public accounting firm is ongoing and could result in changes to the information set forth above/herein
• Add forward-looking statement safe harbor, e.g. “including, but not limited, to statements regarding Company’s expected cash balance and projected cash needs”
• Example: Precision in 10/21/2021