Startup investor pages talk about users, partnerships and the size of the market. Audited financial statements have to talk about something else: whether the company can pay its bills.
When there is substantial doubt that a company can meet its obligations as they come due within one year after the financial statements are issued, U.S. accounting rules require management to say so. That disclosure is the going-concern note. Auditors can add their own paragraph flagging the same doubt.
Why it matters so much
Going-concern language is not an opinion from a critic. It is the company's own accounting admitting that, without new money or a change in the business, it may not be able to keep operating. For a startup raising from the public, it often means something simple: your investment is part of how the company plans to survive.
How to find it in 60 seconds
- Open the company's latest annual report on SEC EDGAR (Form 1-K for Regulation A companies, Form 10-K for listed ones).
- Press Ctrl+F and search “going concern.”
- Read the whole note, especially the part describing management's plans. Look for phrases like “raise additional funds,” “public crowdfunding” or “external financing.”
- Check the auditor's report for an emphasis-of-matter paragraph on the same topic.
The four numbers to read next
- Cash vs. current liabilities. How many months could the company operate on what it has?
- Working capital (current assets minus current liabilities). A large negative number means bills due soon exceed what is on hand.
- Accounts payable. Money owed to suppliers for goods and services already received. A big, growing balance can mean vendors are financing the company.
- Deferred revenue. Customer money received for products not yet delivered. It is a liability, not a sale.
What it looks like in practice
Immersed Inc.'s audited 2025 statements, filed with the SEC, reported:
The statements said these factors “raise substantial doubt about the Company's ability to continue as a going concern.” Management's plan included raising additional funds through private capital and public crowdfunding. The company later reported raising at least $10 million through its Regulation A offering in 2026, so those year-end figures are not its current cash position. They do show how dependent the business was on new money. Read the full investigation.
A going-concern note is not a fraud finding
Plenty of early companies carry one and survive. It is a risk disclosure. The question is whether the pitch you are shown is honest about it.
