---
title: "Test prospective financial information against the projection guidance"
url: "https://ailawframework.com/practice/capital-markets-and-securities-ecm-dcm-and-disclosure/test-prospective-financial-information-against-the-reasonable-grounds-gu/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A4-MO20261022-3-US"
practice_area: "Capital Markets & Securities — ECM/DCM and Disclosure"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Test prospective financial information against the projection guidance

> The tool lists whether the statement is identified as forward-looking, whether it is accompanied by cautionary statements that identify important factors that could cause actual results to differ materially, which…

Canonical page: https://ailawframework.com/practice/capital-markets-and-securities-ecm-dcm-and-disclosure/test-prospective-financial-information-against-the-reasonable-grounds-gu/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Capital Markets & Securities — ECM/DCM and Disclosure](https://ailawframework.com/practice/capital-markets-and-securities-ecm-dcm-and-disclosure.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | The tool lists whether the statement is identified as forward-looking, whether it is accompanied by cautionary statements that identify important factors that could cause actual results to differ materially, which items are projected, and whether historical results are presented with the projection. It does not write the projection. |
| What the lawyer must review | Item 10(b) of Regulation S-K, 17 CFR § 229.10, and 15 U.S.C. § 78u-5. Item 10(b) states the Commission's policy on management's projections of future economic performance that have a reasonable basis and are presented in an appropriate format. Management must have a reasonable basis. A history of operations or experience in projecting may support the assessment, and the Commission does not believe a registrant must always have had that history. If management includes a report of an outside review, the filing should disclose the reviewer's qualifications, the extent of the review, the relationship between the reviewer and the registrant, and other material factors concerning the process. Management should take care that the choice of items is not susceptible of misleading inferences through selective projection of only favorable items. Revenues, net income (loss), and earnings (loss) per share usually are presented together. It generally would be misleading to present projections based on historical financial results without presenting those results with equal or greater prominence. A non-GAAP financial measure in a projection should include a clear definition, a description of the GAAP measure to which it is most directly comparable, and an explanation of why the non-GAAP measure was selected. Section 78u-5(c)(1) provides that, in a covered private action, a person referred to in subsection (a) shall not be liable for a forward-looking statement if and to the extent that the statement is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially, or the plaintiff fails to prove that the statement was made with actual knowledge that it was false or misleading. Nothing in the section imposes a duty to update a forward-looking statement. Exclusions that were read include a forward-looking statement made in connection with an offering by a blank check company, a roll-up transaction, or a going private transaction. The lawyer decides whether the safe harbor applies and writes any projection. |
| Written for | United States |
| Applies to | [Test prospective financial information against the reasonable-grounds guidance](https://ailawframework.com/practice/capital-markets-and-securities-ecm-dcm-and-disclosure/test-prospective-financial-information-against-the-reasonable-grounds-gu.md) |

## Checking plan

- What the AI does: The tool lists whether the statement is identified as forward-looking, whether it is accompanied by cautionary statements that identify important factors that could cause actual results to differ materially, which items are projected, and whether historical results are presented with the projection. It does not write the projection.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- The oral path in section 78u-5(c)(2) is a separate set of conditions. The tool does not treat a written legend as satisfying that path.
- Item 10(b) states factors the Commission believes management considers. The tool does not decide that a projection has a reasonable basis.
- The lawyer writes any projection that is released. The tool lists the features of a draft.

## Sources

- [17 CFR § 229.10, Item 10, General](https://www.law.cornell.edu/cfr/text/17/229.10) (checked 2026-10-22)
- [15 U.S.C. § 78u-5, Application of safe harbor for forward-looking statements](https://www.law.cornell.edu/uscode/text/15/78u-5) (checked 2026-10-22)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*