A company's annual report is the single most important way for it to convey itself to potential investors. As such, it should be no surprise that an annual report serves to present the company in best light possible without violating any Securities and Exchange Commission (SEC) regulations. Unfortunately many investors read annual reports but fail to read them effectively. In other words, while annual report is clearly prepared without any intent to deceive or reflect dishonesty about the business and investors should always read them with a sense of skepticism. In other words learn how to read between the lines and decipher the actual condition of the company.