Does an annual review need to be done for Phase I Exemption? In the past I have done an annual review and Biennial filing for the Phase II exemptions. (I see annual review under 103.22 (d)(4), for Phase II exempt person under (d)(s)(vi)Nonlisted Business and (d)(2)(vii) payroll withdrawal. For Phase I, I have verified they still have an open account and not done much else. Is this ok? Do they need to have 8-10 reportable transactions in a year? What do you do to document you Phase One Exemption?

You really do not have to do anything more than what you are doing with a Phase I exemption other than if you had an entity referred to in the regulations as a "listed business." In that case, you would need to perform some type of review by checking to see if its common stock or analogous equity interests are listed on the New York Stock Exchange or the American Stock Exchange or whose common stock or analogous equity interests have been designated as a Nasdaq National Market Security and document that in your records.

That was my understanding, but I began to panic on the way to work that I needed to do something more. Thank you for your response!

For listed businesses, I verify that they are still on the exchange by searching their stock symbol on one of the many stock sites on the net and print out the nifty little quote that pops up. I review the banks that we deal with to make sure they haven't been merged or sold. For the government entities, such as local government, I generally don't do anything, but someone suggested putting a copy of our property taxes in the file to document that they still exist!

the SEC's EDGAR system is also an excellent resource for documenting the status of a Phase I business. Go here for the EDGAR search page.