California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2 - Corporate Securities
Article 4 - Standards for the Exercise of the Commissioner's Authority
Subarticle 10 - Real Estate Programs
Miscellaneous Provisions
Section 260.140.118.4 - Financial Information

(a) Financial Statements of Program. The prospectus shall include audited financial statements of the program for each of the last three fiscal years (or for the life of the program, if less), provided that the only audited balance sheet that shall be required shall be as of the end of the most recent fiscal year of the program. When a program has operated less than one fiscal year, audited financial statements are not required unless requested by the Commissioner.

(b) Financial Statements of Corporate Sponsor. The prospectus shall contain audited financial statements which shall be required to consist only of an audited balance sheet of each corporate sponsor as of the end of the sponsor's most recent fiscal year. An audited statement of income for the last fiscal year shall also be submitted with the application. The inclusion of statements of income in the prospectus shall be at the discretion of the Commissioner.

(c) Other Sponsors. A balance sheet for each non-corporate sponsor (including individual partners or individual joint venturers of a sponsor) as of a date not more than one hundred thirty-five days prior to the date of filing the application shall be submitted. Such balance sheet shall be prepared in accordance with generally accepted accounting principles and reviewed and reported upon by an independent certified public accountant under the review standards set forth by the American Institute of Certified Public Accountants, and shall be signed and sworn to by such sponsor. A representation of the amount of such net worth must be included in the prospectus, or in the alternative, a representation that such sponsor meets the net worth requirements of Section 260.140.111.2 shall be so included.

(d) Affiliates of Sponsors. The submission of financial statements of affiliates of a sponsor will be required when material.

(e) Interim Financial Information. Where an audited balance sheet required by this Section is as of a date more than 90 days prior to the date of filing, an unaudited balance sheet as of a date not more than 90 days prior to the date of filing shall also be provided. Where the application is made in coordination with a Registration Statement submitted to the Securities and Exchange Commission pursuant to the Securities Act of 1933, an interim unaudited balance sheet as of a date not more than one hundred thirty-five days prior to the date of filing shall be provided only if the audited balance sheet is as of a date more than 135 days prior to the date of filing. Interim unaudited statements of income, partners' equity, and cash flows shall also be provided with the unaudited balance sheet in instances where such statements are required by this section as part of the audited financial statements.

(f) Filing of Other Statements. The Commissioner may permit the omission of one or more of the financial statements required under this Section and the filing (in substitution thereof) of appropriate statements verifying financial information having comparable relevance to an investor in determining whether to invest in the program. Such substitution will only be allowed where the Commissioner finds this would be consistent with the protection of investors.