TLDR
A realistic S-1 registration takes 4-6 months from engagement to effectiveness, not 90 days. The SEC comment letter process alone can consume 8-12 weeks with multiple rounds of response. Founders who plan for a fast S-1 invariably face delays that cost more than proper planning would have.
The Realistic Timeline
The S-1 registration process is marketed by some advisors and service providers as a 90-day path to public markets. That timeline bears little resemblance to reality. Based on my experience as a former SEC Enforcement Staff Attorney and over three decades of issuer-side securities practice, a realistic S-1 timeline for a well-prepared emerging growth company is 4-6 months from engagement of securities counsel to SEC effectiveness. For companies with complex structures, operations in regulated industries like cannabis or cryptocurrency, or incomplete financial records, the timeline extends to 6-9 months.
The gap between expectation and reality creates cascading problems. Companies that budget 90 days frequently make decisions about capital deployment, hiring, and business operations based on the assumption that public market capital will be available within that timeframe. When the process extends to 5 or 6 months, these pre-commitments create financial pressure that compounds the already stressful registration process.
Pre-Filing Preparation
The work that occurs before the S-1 is filed with the SEC is the most underestimated phase of the entire process. Pre-filing preparation should begin 3-6 months before the intended filing date and includes engagement of auditors for PCAOB-compliant audits, preparation of all required financial statements, drafting of the registration statement, engagement of a financial printer, retention of a transfer agent, and coordination with any proposed underwriter or placement agent.
The single most common delay in S-1 filings is audit readiness. Many private companies have never had a PCAOB-compliant audit, and the transition from compiled or reviewed financial statements to fully audited financials under PCAOB standards can take 3-6 months independently of the S-1 drafting process. Companies that begin the audit process simultaneously with S-1 drafting invariably discover that the audit takes longer than expected, and the S-1 cannot be filed until the audit is complete.
The SEC Review and Comment Process
When the SEC Division of Corporation Finance receives an S-1 filing, it assigns the filing to an industry-specific review team. This team includes accounting reviewers, legal reviewers, and in some cases specialized reviewers for emerging industries. The initial review typically takes 25-30 calendar days from the filing date, after which the staff issues its first comment letter.
The comment letter process is iterative. The company responds to the initial comments, the staff reviews the responses and the amended filing, and frequently issues a second round of comments. Two to four rounds of comments and responses is standard. Each round takes 2-4 weeks from response to next comment letter. The total comment letter process typically consumes 8-12 weeks for a standard filing and can extend to 16 weeks for filings in regulated industries or filings with significant disclosure issues.
Financial Statement Requirements
Financial statement staleness is one of the most expensive timing traps in the S-1 process. The SEC requires that financial statements in a registration statement be current within specified age limits. If the registration process extends beyond these limits, the company must update its financial statements, which typically requires additional audit or review work at significant additional cost.
For a company with a December 31 fiscal year end, an S-1 filed in March with audited annual financials must include interim financial statements if the filing has not become effective by a date approximately 134 days after the fiscal year end. If the process extends further, the company may need to include audited financial statements for an additional fiscal year. These staleness deadlines create pressure points in the registration timeline that must be anticipated and managed from the beginning of the process.
The True Cost Structure
The total cost of an S-1 registration for a typical emerging growth company ranges from $300,000 to $750,000. This includes securities counsel fees (typically $75,000 to $200,000 for a flat-fee arrangement), PCAOB audit fees ($50,000 to $150,000 depending on company complexity), financial printing and EDGAR filing ($15,000 to $30,000), SEC registration fees (based on offering amount), transfer agent setup ($5,000 to $15,000), state blue sky survey and filing fees ($15,000 to $25,000), and miscellaneous costs including D&O insurance premiums, stock exchange listing fees if applicable, and investor relations setup.
Cannabis, AI, and cryptocurrency companies typically fall toward the higher end of these ranges due to additional disclosure complexity, specialized audit requirements, and extended SEC review timelines. Companies that use hourly billing for securities counsel frequently exceed the upper range because the iterative nature of the comment letter process generates significant legal fees that are unpredictable under hourly arrangements.
Where Companies Lose Time
The most common delays in the S-1 process, ranked by frequency, are: incomplete or non-PCAOB-compliant financial statements, inadequate risk factor disclosure requiring multiple rounds of SEC comments, inconsistency between the business description and the financial statements, failure to engage a financial printer early enough to meet EDGAR filing requirements, and management's inability to respond promptly to SEC comment letters due to operational commitments.
Each of these delays is preventable with proper planning. The companies that complete S-1 registrations most efficiently are those that treat the registration process as a project requiring dedicated management attention, not a background task that can be managed alongside normal business operations. The CEO, CFO, and general counsel should plan to dedicate 20-30% of their time to the registration process during the active filing period.
Industry-Specific S-1 Challenges
Companies in cannabis, AI, cryptocurrency, gaming, electric vehicles, and other regulated industries face S-1 challenges that extend beyond standard registration requirements. Cannabis companies must address federal illegality throughout the filing, including in risk factors, the business description, financial statements, and legal proceedings. AI companies must balance technology marketing with securities disclosure standards that prohibit forward-looking capability claims without appropriate cautionary language. Cryptocurrency companies must address token classification, regulatory uncertainty, and custody and safeguarding obligations in granular detail.
The SEC staff assigns these filings to reviewers with industry expertise, and the comment letters reflect detailed understanding of the sector-specific disclosure issues. Companies that engage securities counsel without experience in their specific industry frequently discover that their counsel cannot anticipate the SEC staff's questions, resulting in extended comment letter exchanges that add weeks or months to the process and significantly increase costs.
10 Key Points
- 1.A realistic S-1 registration takes 4-6 months from engagement to effectiveness, not the 90 days many founders expect.
- 2.The SEC comment letter process alone can consume 8-12 weeks with two to four rounds of staff comments and company responses.
- 3.Financial statement staleness rules create hard deadlines that, if missed, require updated audits that can add months and significant cost.
- 4.The SEC Division of Corporation Finance assigns industry-specific reviewers who bring sector expertise to their review of your filing.
- 5.Cannabis, AI, and cryptocurrency companies receive heightened scrutiny that extends the comment letter process by 2-4 additional weeks on average.
- 6.Underwriter due diligence requirements run parallel to the SEC process and can independently delay effectiveness if not coordinated.
- 7.The total cost of an S-1 registration for a typical emerging growth company ranges from $300,000 to $750,000 including legal, audit, printing, and filing fees.
- 8.EDGAR filing system technical requirements cause avoidable delays for companies that do not engage a financial printer early in the process.
- 9.Pre-filing preparation should begin 3-6 months before the S-1 is filed, not when the company decides to go public.
- 10.The most expensive S-1 mistake is not planning: companies that rush to file without adequate preparation invariably spend more and take longer than companies that plan properly.
Frequently Asked Questions
What is a Form S-1 registration statement?
Form S-1 is the initial registration statement that companies file with the SEC under the Securities Act of 1933 to register securities for public sale. It contains comprehensive disclosure about the company's business, financial condition, risk factors, management, and the terms of the offering. It is the primary form used by companies going public for the first time.
How long does the S-1 process actually take?
From engagement of securities counsel to SEC effectiveness, a realistic timeline is 4-6 months for a well-prepared company. Companies with complex structures, emerging industry operations, or incomplete financial records should plan for 6-9 months. The 90-day timeline frequently cited by promoters and some advisors reflects neither SEC review timelines nor the practical preparation work required.
What is the SEC comment letter process?
After filing the S-1, the SEC Division of Corporation Finance reviews the document and issues comment letters identifying areas where additional disclosure is needed, where existing disclosure is unclear or inconsistent, and where the staff has questions about the company's business or financials. The company responds to each comment, and the process typically involves 2-4 rounds of comments and responses before the staff declares the filing effective.
How much does an S-1 registration cost?
Total costs typically range from $300,000 to $750,000 for an emerging growth company. This includes securities counsel fees, audit and review fees, financial printing and EDGAR filing costs, SEC registration fees, state blue sky fees, transfer agent costs, and miscellaneous expenses. Cannabis, AI, and cryptocurrency companies tend toward the higher end due to additional disclosure complexity.
What financial statements are required in an S-1?
An S-1 requires audited financial statements for the two most recent fiscal years, reviewed interim financial statements if the filing is made more than 134 days after the most recent fiscal year end, and pro forma financial statements if the company has completed or planned material acquisitions. Staleness rules require that the financial statements be updated if too much time passes between the audit date and the effective date.
What is the difference between an S-1 and a Form 10?
Form S-1 is a Securities Act registration that allows the company to sell securities to the public in a registered offering. Form 10 is an Exchange Act registration that makes the company a reporting company without an associated public offering. Form 10 is typically less expensive and faster but does not include a capital raise. The choice between them depends on whether the company needs to raise capital simultaneously with becoming a reporting company.
Do cannabis companies face additional S-1 scrutiny?
Yes. Cannabis companies filing S-1 registration statements receive heightened scrutiny from SEC staff regarding federal illegality risk disclosure, IRC Section 280E tax implications, banking limitations, state licensing compliance, and the adequacy of going concern analysis. Based on my experience reviewing these filings, SEC staff comments for cannabis companies are typically more detailed and require more rounds of response than standard filings.
What is financial statement staleness?
Financial statements in an S-1 must be current under SEC rules. If the registration process extends beyond specified deadlines, the company must provide updated financial statements. For example, if a company files with fiscal year-end audited financials but the registration process extends past certain dates, updated interim financial statements or even a new audit may be required, adding significant time and cost.
What role does the underwriter play in the S-1 process?
The underwriter conducts due diligence on the company, helps structure the offering terms, markets the offering to investors, and facilitates the distribution of securities. Underwriter due diligence runs parallel to the SEC review process and includes business due diligence, legal due diligence, financial due diligence, and preparation of the underwriting agreement and related documents.
What is EDGAR and why does it matter?
EDGAR is the SEC's Electronic Data Gathering, Analysis, and Retrieval system where all SEC filings are submitted and made publicly available. S-1 filings must conform to EDGAR technical specifications including specific formatting requirements. Companies that do not engage a financial printer familiar with EDGAR requirements often face technical filing delays that are entirely avoidable.
What is an emerging growth company under the JOBS Act?
An emerging growth company is a company with total annual gross revenues below $1.235 billion during its most recently completed fiscal year. EGC status provides certain accommodations in the S-1 process including reduced financial statement requirements, delayed compliance with new accounting standards, and exemption from auditor attestation of internal controls over financial reporting.
How does the SEC review S-1 filings from AI companies?
The SEC staff evaluates AI company S-1 filings with particular attention to technology capability claims, the distinction between development-stage and commercially viable technology, data governance and privacy risk disclosure, intellectual property ownership and protection, competitive landscape accuracy, and the consistency between marketing claims and securities disclosure. Issuers often misunderstand that the standard for securities disclosure is fundamentally different from marketing standards.
What is the confidential submission process?
The JOBS Act allows emerging growth companies to submit draft registration statements confidentially before public filing. This allows the company to work through the SEC comment letter process privately, without disclosing business information to competitors and the public until the company is ready to proceed with the offering. The confidential submission must be publicly filed at least 15 days before a road show.
What are the ongoing obligations after an S-1 becomes effective?
Once the S-1 becomes effective and the company completes its offering, it becomes a reporting company subject to ongoing SEC reporting requirements including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and Section 16 insider reporting obligations.
Can a company withdraw an S-1 filing?
Yes. A company can request withdrawal of an S-1 filing at any time before effectiveness. Common reasons for withdrawal include unfavorable market conditions, failure to resolve SEC comments, changes in company strategy, and inability to secure underwriting commitments. Withdrawal does not prevent the company from filing a new S-1 in the future.
What is the role of securities counsel in the S-1 process?
Securities counsel drafts the registration statement, manages the SEC comment letter process, coordinates with auditors and underwriters, prepares all ancillary documents, advises on disclosure obligations, and provides the legal opinion required for effectiveness. The quality of securities counsel directly affects the speed and cost of the registration process.
How do cryptocurrency companies handle S-1 registration?
Cryptocurrency companies face particular challenges in S-1 registration including token classification analysis, regulatory uncertainty disclosure, custody and safeguarding disclosure, blockchain technology risk disclosure, and the evolving regulatory landscape involving the SEC, CFTC, FinCEN, and state regulators. The SEC staff has demonstrated heightened attention to crypto company filings.
What happens during the SEC road show?
The road show is the marketing phase of the offering where company management presents to potential institutional investors. It typically lasts 1-2 weeks and occurs after the S-1 has been filed publicly and all SEC comments have been resolved. The pricing of the offering occurs at the end of the road show based on investor demand.
What is acceleration and when does the SEC grant it?
Acceleration is the SEC's order declaring the registration statement effective before the standard 20-day waiting period. Companies request acceleration after all SEC comments have been resolved and all filing requirements have been met. The SEC staff typically grants acceleration promptly when the filing is complete and all comments have been adequately addressed.
Should a company hire securities counsel or a general corporate attorney for an S-1?
An S-1 registration requires specialized securities counsel with experience in SEC registration, the comment letter process, and the specific industry in which the company operates. General corporate attorneys, regardless of their competence in other areas, typically lack the SEC filing experience and staff relationship knowledge necessary to navigate the registration process efficiently. The cost difference between specialized and general counsel is typically recovered many times over in reduced timeline and fewer SEC comments.
This article was written by Frederick M. Lehrer, Esq., a former SEC Division of Enforcement Staff Attorney and Special Assistant United States Attorney (Southern District of Florida) with over 30 years of securities law experience. Florida Bar No. 888400.
Comment Letter Reality
SEC comment letters are not adversarial documents. They are the staff's questions and observations about the filing, and they reflect the staff's responsibility to ensure that investors receive adequate disclosure before securities are sold to the public. However, the way a company responds to comment letters can dramatically affect the speed and outcome of the review process.
The most effective responses are direct, specific, and address each comment individually with clear explanation and, where applicable, revised disclosure language. Responses that are evasive, argumentative, or that fail to directly address the staff's concern invariably generate additional rounds of comments. When I reviewed filings as an SEC attorney, the companies that resolved their comments most efficiently were those whose counsel understood what the staff was actually asking and provided responsive, complete answers rather than legalistic deflections.