Smaller Reporting Company Regulatory Relief and Simplification

AGENCY:

Securities and Exchange Commission.

ACTION:

Final rule.

SUMMARY:

The Securities and Exchange Commission is adopting amendments to its disclosure and reporting requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934 to expand the number of companies that qualify for its scaled disclosure requirements for smaller reporting companies. Companies that have less than $75 million in public equity float will qualify for the scaled disclosure requirements under the amendments. Companies without a calculable public equity float will qualify if their revenues were below $50 million in the previous year. To streamline and simplify regulation, the amendments move the scaled disclosure requirements from Regulation S-B into Regulation S-K.

DATES:

Effective Date: February 4, 2008, except for amendments § 249.308b and Form 10-QSB, which are effective October 31, 2008, and amendments Part 228, § 249.310b, and Form 10-KSB, which are effective March 15, 2009.

Compliance Dates: For information on compliance, see the SUPPLEMENTARY INFORMATION section below.

FOR FURTHER INFORMATION CONTACT:

Kevin M. O'Neill, Special Counsel, or Johanna Vega Losert, Attorney-Advisor, Office of Small Business Policy, Division of Corporation Finance, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-3628, (202) 551-3460.

SUPPLEMENTARY INFORMATION:

After the effective date of the rule amendments, companies currently qualifying as “small business issuers” under Regulation S-B will have the option to file their next annual report for a fiscal year ending on or after December 15, 2007 on either Form 10-KSB, using the scaled disclosure requirements in Regulation S-B, or Form 10-K, using the new scaled disclosure requirements in Regulation S-K. After a “small business issuer” files that next annual report, it will be required to file quarterly reports on Form 10-Q and annual reports on Form 10-K, and may elect to comply with the new scaled disclosure requirements of Regulation S-K. Companies newly qualifying as “smaller reporting companies” will have the option to use the new scaled Regulation S-K requirements when filing their next periodic report due after the effective date of the amendments. These companies will determine eligibility for smaller reporting company status based on the last business day of their most recent second fiscal quarter, or based on the alternative initial registration statement calculation discussed in Section IV. If a registration statement was filed on an “SB” form before the effective date of the rule amendments, and the company seeks to amend it after the effective date of the rule amendments, the company must file the amendment on the appropriate form available to the issuer without an “SB” designation. As discussed in Section IV, to provide a transition period, these issuers will be able to continue using the disclosure format and content based on the “SB” form until six months after the effective date.

We are adopting amendments to Regulation S-K, and rules and forms under the Securities Act of 1933, Securities Exchange Act of 1934, and Trust Indenture Act of 1939. In Regulation S-K, we are adopting amendments to Items 10, 101, 102, 201, 301, 302, 303, 305, 401, 402, 404, 407, 503, 504, 512, 601, 701, and 1118. We are adopting amendments to Securities Act Rules 110, 138, 139, 158, 175, 405, 415, 428, 430B, 430C, 455, and 502. Further, we are rescinding Regulation S-B and eliminating the forms associated with it, Forms SB-1, SB-2, 10-SB, 10-QSB, and 10-KSB. We are amending Securities Act Forms 0-1, S-1, S-3, S-4, S-8, S-11, 1-A, and F-X, Exchange Act Rules 0-2, 0-12, 3b-6, 10A-1, 10A-3, 12b-2, 12b-23, 12b-25, 12h-3, 13a-10, 13a-13, 13a-14, 13a-16, 13a-20, 14a-3, 14a-5, 14a-8, 14c-3, 14d-3, 15d-10, 15d-13, 15d-14, 15d-20, and 15d-21, and Exchange Act Forms 0-1, 8-A, 8-K, 10, 10-Q, 10-K, 11-K, 20-F, and SE. We are amending Schedules 14A and 14C. In Regulation S-X, we are amending Rules 210.3-01, 210.3-05, 210.3-10, 210.3-12, 210.3-14, 210.4-01, and 210.10-01 and adding a new Article 8 containing the financial statement requirements available to smaller reporting companies. Finally, we are amending Trust Indenture Act Rules 0-11, 4d-9, and 10a-5 and Section 269.0-1 of the Trust Indenture Act Forms.

Table of Contents

I. Background and Summary

II. Description of Proposed Amendments

III. Discussion of Amendments We Are Adopting

A. Moving Scaled Disclosure Item Requirements From Regulation S-B Into Regulation S-K

B. Moving Smaller Reporting Company Financial Statement Requirements From Item 310 of Regulation S-B Into New Article 8 of Regulation S-X; Additional Regulation S-X Changes

C. Adopting Scaled Disclosure Item Requirements in Regulation S-K

1. Overview

2. Electing Scaled Disclosure Standards on “A La Carte” Basis

D. Eliminating “SB” Forms Associated with Regulation S-B

E. Qualifying Standards for Treatment as “Smaller Reporting Company”

1. Eligibility and Exclusions

2. Determination Dates

a. Reporting Companies

b. Non-Reporting Companies Filing an Initial Registration Statement

c. Alternative Revenue Test for Reporting and Non-Reporting Companies

d. Entering and Exiting Smaller Reporting Company Status

F. Miscellaneous

1. Indexing for Inflation

2. Eliminating Transitional Small Business Issuer Format

3. Checking the “Smaller Reporting Company” Box

IV. Compliance Dates

V. Paperwork Reduction Act

A. Background

B. Summary of Comment Letters and Revisions to the Proposals

VI. Cost-Benefit Analysis

A. Background

B. Summary of Rules

C. Benefits

D. Costs

VII. Consideration of Impact on the Economy, Burden on Competition and Promotion of Efficiency, Competition and Capital Formation

VIII. Final Regulatory Flexibility Act Analysis

A. Reasons for and Objectives of Amendments

1. The Advisory Committee on Smaller Public Companies Recommended Scaled Federal Securities Regulation for Smaller Companies

2. Expanding Eligibility for Smaller Company Scaled Regulation Under Amended Regulation S-K

3. Integrating Substantive Requirements of Regulation S-B Into Regulations S-K and S-X

B. Significant Issues Raised by Public Comment

C. Small Entities Subject to the Final Amendments

D. Reporting, Recordkeeping, and Other Compliance Requirements

E. Agency Action to Minimize Effect on Small Entities

IX. Statutory Basis and Text of Amendments

I. Background and Summary

At an open Commission meeting on May 23, 2007, we approved publication of eight releases designed to update and improve federal securities regulations that significantly affect smaller companies and their investors in today's capital markets. These releases reflected our efforts during the past few years to provide responsive solutions addressing the special characteristics and needs of smaller companies and their investors. One of the releases (the “Proposing Release”) proposed rule amendments intended to provide general regulatory relief and simplification for smaller companies reporting under our rules. In that release, we proposed a series of amendments to our scaled disclosure and reporting requirements for smaller reporting companies. The release had three stated objectives:

• Expanding the number of smaller companies eligible to use scaled disclosure requirements;
• Reducing unnecessary complexity in our regulations by combining the category of “small business issuers” with the category of “non-accelerated filers” to the extent feasible; and
• Simplifying disclosure requirements by moving our scaled disclosure requirements for smaller companies from Regulation S-B into Regulation S-K, the integrated disclosure system for other companies.

Several of the amendments in the Proposing Release had their genesis in the recommendations made by the Advisory Committee on Smaller Public Companies in 2006. The Commission had chartered the Advisory Committee in March 2005 to assess the current regulatory system for smaller companies under the federal securities laws and make recommendations for changes. Among the specific charges of the Committee was to consider the corporate disclosure and reporting requirements for smaller companies, including differing regulatory requirements based on market capitalization, and other measurements of size or market characteristics. In its Final Report, the Advisory Committee made several recommendations relating to scaling securities regulation for smaller companies and labeled them as priority items.

In 2006, 3,395 reporting companies elected to take advantage of our current scaled disclosure and reporting requirements for small business issuers by filing their annual reports on Form 10-KSB. We estimate that a total of 4,976 companies will be eligible to use our scaled disclosure requirements under today's amendments, a difference of 1,581 additional companies. The 1,581 companies would represent about 13% of the total 11,898 reporting companies that filed annual reports with us in 2006.

The amendments that we are adopting address the need to revisit and adjust the Commission's small company policies to reflect changes in our securities markets as well as changes to the regulatory landscape since 1992, when the Commission first adopted an integrated scaled disclosure system for small business in Regulation S-B. The Commission adopted Regulation S-B and its associated Forms SB-1 and SB-2 based upon the success of Form S-18, which was a simplified registration form for smaller companies under the Securities Act that preceded Forms SB-1 and SB-2. Regulation S-B was designed to reduce compliance costs and improve the ability of start-ups and other small businesses to obtain financing through the public capital markets.

The amendments we are adopting will result in the substantive changes highlighted below. The new provisions:

• Establish a category of “smaller reporting companies” eligible to use our scaled disclosure requirements. The primary determinant for eligibility will be that the company have less than $75 million in public float. When a company is unable to calculate public float, however, such as if it has no common equity outstanding or no market price for its outstanding common equity exists at the time of the determination, the standard will be less than $50 million in revenue in the last fiscal year;
• Move 12 non-financial scaled disclosure item requirements from Regulation S-B into Regulation S-K. These scaled requirements will be available only for smaller reporting companies. The remaining 24 item requirements of Regulation S-B are substantially the same as their corresponding Regulation S-K item requirements. We therefore are not amending them except in one minor instance explained below;

• Move the scaled financial statement requirements in Item 310 of Regulation S-B into new Article 8 of Regulation S-X, and amend these requirements to provide a scaled disclosure option for smaller reporting companies, requiring two years of balance sheet data instead of one year, and make other minor adjustments after considering comments we received;

• Permit smaller reporting companies to elect to comply with scaled financial and non-financial disclosure on an item-by-item or “a la carte” basis. As adopted, eligible companies may elect to follow scaled financial statement requirements or to provide the larger company financial statement presentation on a quarterly basis, rather than require companies to elect the full fiscal year's financial presentation in the first quarterly report of the fiscal year, as was proposed;
• Eliminate our current “SB” forms but allow a phase-out period for small business issuers transitioning to smaller reporting company status;
• Combine elements relating to the accelerated filer definition with qualifying standards for the smaller reporting company determination and transition provisions to promote uniformity and consistency with current regulations and, therefore, simplify regulation;
• Permit all foreign companies to qualify as “smaller reporting companies” if they otherwise qualify and choose to file on domestic company forms and provide financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”); and
• Eliminate the transitional small business issuer format.

II. Description of Proposed Amendments

We proposed an eligibility standard for our scaled disclosure requirements for “smaller reporting companies” to replace the “small business issuer” definition found in Item 10 of Regulation S-B. Under the proposals, the new definition of “smaller reporting company” would have established eligibility for companies with less than $75 million in public common equity float. We provided an alternative revenue test for those companies unable to calculate public common equity float, basing eligibility on whether the company had annual revenues of less than $50 million in its last fiscal year. In contrast, our previous eligibility requirements for “small business issuer” status required that companies have both less than $25 million in public common equity float and less than $25 million in annual revenues.

Under the proposals, which we are adopting in modified form, each company would determine its eligibility based on whether the company is: (1) A reporting company already filing periodic and annual reports; (2) a non-reporting company filing a registration statement under either the Securities Act or Exchange Act; or (3) a reporting or non-reporting company that had no public float, such as if it had no public common equity outstanding or no market price for its common equity existed. A reporting company determining its eligibility as a smaller reporting company would calculate its public float as of the last business day of its most recently completed second fiscal quarter. Non-reporting companies filing a registration statement would calculate their public float as of a date within 30 days of the date of the filing of the registration statement.

Under the proposals, investment companies and asset-backed issuers would be excluded from eligibility for smaller reporting company status, as was the case under the definition of “small business issuer” in Regulation S-B. As proposed, foreign companies could qualify as smaller reporting companies and provide scaled disclosure if they elected to use domestic company forms and provide financial statements prepared in accordance with U.S. GAAP. Removing the exclusion of foreign companies would make scaled treatment available to additional smaller companies.

We proposed that smaller reporting companies be required to exit the scaled disclosure system the fiscal year after their public float rose above $75 million as of the last business day of their second fiscal quarter. Smaller reporting companies attempting to establish eligibility to enter the scaled disclosure system again would be required to determine that their public float fell below $50 million as of the last business day of their second fiscal quarter, and would be able to use scaled disclosure again in the next fiscal year following the determination, starting with the first Form 10-Q of the next fiscal year.

An objective of our proposals was to simplify and improve our disclosure and reporting rules for smaller companies by moving the Regulation S-B disclosure requirements for smaller companies into Regulation S-K, as recommended by the SEC Advisory Committee on Smaller Public Companies. As a result of our rulemaking, we identified 13 item requirements in Regulation S-B that provided scaled disclosure for smaller companies. We reasoned that consolidation of the Regulation S-K and S-B disclosure requirements would provide a more unified set of rules that would be easier to use. To accomplish this, we proposed to move item requirements in Regulation S-B containing substantive scaled non-financial disclosure requirements into Regulation S-K by adding a new paragraph to the items of Regulation S-K that would contain separate disclosure standards for smaller reporting companies. We did not propose any major substantive changes to the items we were moving from Regulation S-B into Regulation S-K, but sought comment from the public on substantive changes they would recommend.

One of the item requirements in Regulation S-B providing scaled disclosure requirements did not have a similar disclosure item requirement in Regulation S-K. Consequently, our specific proposals included adding a new Item 310 in Regulation S-K for financial statements. Item 310 of Regulation S-K would have set forth the alternative requirements on form and content of financial statements for smaller companies that formerly appeared in Item 310 of Regulation S-B.

The proposals also allowed a smaller reporting company to choose, on an item-by-item basis or “a la carte” basis, to comply with either the scaled disclosure and financial reporting requirements made available in Regulation S-K for smaller reporting companies or the requirements for other companies in Regulation S-K, when the requirements for other companies were more rigorous.

The proposal, like the amendments we are adopting, would rescind all of our forms designated with the letters “SB.” Smaller reporting companies would be eligible to file on Form S-1, rather than on Form SB-1 or SB-2 as before, to offer securities to the public. This would provide a smaller reporting company the ability to incorporate by reference its previously filed Exchange Act reports if the company meets the requirements set forth under General Instruction VII of Form S-1.

Finally, the proposals, like the amendments we are adopting, would eliminate the “transitional small business issuer format” associated with Form SB-1 and annual reports on Form 10-KSB. A small business issuer using the transitional format followed disclosure based on Model A or B found in Regulation A. These two disclosure models were intended to ease transition from non-reporting to reporting status for small business issuers preparing disclosure on initial registration statements and annual reports. In our Proposing Release we noted, however, that the number of companies registering on Form SB-1 and following the disclosure format within Form 10-KSB had significantly declined over time.

We received 21 comment letters on the proposals, including six from public accounting firms. We also received comment letters from professional and trade associations, a law firm, an associate professor of finance, two small business owners, and the Small Business Administration's Office of Advocacy. In general, the comment letters strongly supported our efforts to simplify our scaled disclosure requirements for smaller reporting companies and expand eligibility for them.

III. Discussion of Amendments We Are Adopting

After considering the public comments, we are adopting the amendments substantially as we proposed them, with the modifications discussed below.

A. Moving Scaled Disclosure Item Requirements From Regulation S-B Into Regulation S-K

Many of the comment letters supported moving our scaled disclosure requirements from Regulation S-B into Regulation S-K. In general, the comments in these letters viewed moving the requirements as having a positive impact by reducing complexity and promoting more streamlined regulation. One letter noted that combining the two disclosure systems would allow smaller reporting companies to more easily evaluate the extent of the differences between the requirements for smaller reporting companies and larger companies and consider which requirement better meets the needs of their investors.

A few comment letters opposed moving the scaled disclosure requirements into Regulation S-K, indicating that having all of the smaller company rules in one place was convenient for smaller companies. These comment letters expressed concern that the migration into Regulation S-K would increase legal and accounting costs for smaller companies and make the rules more complex for smaller companies to understand. A few comment letters suggested providing the scaled smaller reporting company disclosure requirements in a separate section of Regulation S-K.

We are adopting our proposal to move our Regulation S-B scaled disclosure requirements into Regulation S-K. After considering the comments, we believe combining the two disclosure systems and setting out the smaller reporting company scaled item requirements in separate paragraphs within Regulation S-K is appropriate. We believe our amendments eliminate redundancies and provide a more streamlined disclosure system for smaller reporting companies. In response to the concern that moving the item requirements will create complexity for smaller companies, we are including an index of scaled disclosure requirements in the definition of smaller reporting company at the beginning of Regulation S-K to highlight items of the Regulation that contain the scaled disclosure requirements specific to smaller reporting companies.

Regulation S-B has 12 non-financial item requirements that provide scaled disclosure options to smaller reporting companies. Under this rulemaking, these 12 item requirements are being moved to separate paragraphs within Regulation S-K. In some cases, smaller reporting companies are not required to provide disclosures required of larger companies. For example, while larger companies are required to provide disclosure under Item 305 on quantitative and qualitative disclosures about market risk, smaller companies are not currently required to do so under the same item requirement in Regulation S-B. In cases like this, we include a paragraph in the relevant item of Regulation S-K indicating that smaller reporting companies are not required to respond to the item.

In addition to the Regulation S-B and S-K differences, the forms themselves may contain different disclosure requirements for smaller reporting companies. Currently, Forms 10-SB, 10-KSB and 10-QSB do not require risk factor disclosure from small business issuers. The amendments carry this difference in disclosure requirements over to Forms 10, 10-K and 10-Q by adding instructions indicating that smaller reporting companies are not required to provide risk factor disclosure in these Exchange Act forms.

B. Moving Smaller Reporting Company Financial Statement Requirements From Item 310 of Regulation S-B Into New Article 8 of Regulation S-X; Additional Regulation S-X Changes

Several comment letters recommended moving the rules on form and content of financial statements for smaller reporting companies now in Item 310 of Regulation S-B into Regulation S-X, rather than into a new Item 310 of Regulation S-K, as proposed. Several comment letters also agreed with the Advisory Committee recommendation to require smaller reporting companies to provide two years of comparative audited balance sheet data in annual financial statements under these rules, rather than one year, as is currently required under Regulation S-B. The comment letters are persuasive that we should adopt these recommendations as part of our rule amendments. Accordingly, we are moving the financial statement rules for smaller reporting companies into a new Article 8 of Regulation S-X and will require two years of comparative audited balance sheet data of smaller reporting companies. Comparative balance sheets will provide a much more meaningful presentation for investors without a significant additional burden on smaller reporting companies, since the earlier year data should be readily available for the purposes of preparing the other financial statements. We also are making technical and language changes to the rules on form and content of financial statements for smaller public companies to facilitate their placement in Article 8 of Regulation S-X rather than in Regulation S-B or Regulation S-K.

We also are adopting technical amendments to Rule 3-05(b)(2)(iv) of Regulation S-X that were tied conceptually to the small business issuer threshold in Regulation S-B that we are replacing with the definition of smaller reporting company in Regulation S-K. Rule 3-05 of Regulation S-X requires the inclusion of financial statements of businesses acquired or to be acquired, so-called “target companies,” in registration statements and Form 8-K reports. The number of years of audited financial statements to be included for a target company is determined using the conditions specified in the definition of significant subsidiary in Rule 1-02(w) of Regulation S-X. If the net revenues reported by the target company for the latest fiscal year are less than $25 million and three years of financial statements would otherwise be required, the earliest of the three fiscal years may be omitted pursuant to Rule 3-05(b)(2)(iv) of Regulation S-X.

Several comment letters noted that in light of the $50 million in revenues threshold proposed for determining a company's qualification as a smaller reporting company if a company is unable to calculate public float, the Commission should consider revising this rule to raise to $50 million the $25 million threshold currently used to limit to two the periods required for audited financial statements of an acquired business. The $25 million threshold was based on the $25 million in revenues standard in Regulation S-B that we are rescinding. We are amending this standard to increase the threshold to $50 million in revenues, as suggested by the commenters.

C. Adopting Scaled Disclosure Item Requirements in Regulation S-K

1. Overview

The following is a list of item requirements we are amending in Regulation S-K to include the substance of the scaled standards for smaller reporting companies now in the same item number of Regulation S-B. The adopted amendments are substantially as described in the Proposing Release, but with the changes discussed below:

Item 101 (Description of Business). We are adding a new paragraph (h) to this item to set forth the alternative disclosure standards for smaller companies that appeared in Item 101 of Regulation S-B. Generally, the different requirements for smaller reporting companies under Item 101 involve providing a less detailed description of the company's business. For example, the Regulation S-K standard for Item 101 requires financial information about segments, which the standard for smaller reporting companies does not require. In addition, smaller reporting companies will be required to provide and disclose business development activities for only three years, instead of the five-year disclosure required of larger companies by Item 101 of Regulation S-K.

We also are implementing additional minor revisions that replace the reference to Canadian issuers. Since we are making the smaller reporting company standards available to foreign issuers generally, we are requiring that these issuers provide disclosure on enforceability of civil liability against foreign persons. Previously, Item 101 of Regulation S-B had required this disclosure from Canadian issuers only because those were the only foreign issuers eligible for Regulation S-B disclosure standards. The item requirement applicable to smaller reporting companies also will no longer refer to the foreign private issuer requirement to disclose whether the report will include a reconciliation of financial information with U.S. generally accepted accounting principles, because smaller reporting companies must provide financial statements prepared in accordance with U.S. GAAP.

Item 201 (Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters). We are revising Instruction 6 to paragraph (e) of this Regulation S-K item requirement to reflect that smaller reporting companies (instead of “small business issuers”) are not required to provide a performance graph.

Item 301 (Selected Financial Data); Item 302 (Supplementary Financial Information). We are adding a new paragraph (c) to each item requirement, providing that smaller reporting companies are not required to present the information required by these item requirements.

Item 303 (Management's Discussion and Analysis of Financial Condition and Results of Operations). As provided in new paragraph (d), this item sets forth the scaled requirements. For example, under this item requirement, smaller reporting companies will:

• Provide only two years of analysis if the company is presenting only two years of financial statements, instead of the three years of analysis required of larger companies that are required to provide three years of financial statements; and
• Not be required to provide tabular disclosure of contractual obligations.

Item 305 (Quantitative and Qualitative Disclosures about Market Risk). New paragraph (e) in this item specifies that smaller reporting companies are not required to disclose Item 305 information.

Item 402 (Executive Compensation). New paragraphs (l) through (r) set forth the alternative standards for smaller reporting companies for disclosure of compensation of executives and directors that were in Item 402 of Regulation S-B. Smaller reporting companies will:

• Provide executive compensation disclosure for only three named executive officers (specifically including the principal executive officer but not the principal financial officer), rather than the five required of larger companies;
• Provide the Summary Compensation Table disclosure for only two years, rather than the three years required of larger companies;
• Not be required to provide a Compensation Discussion and Analysis;
• Provide only three of the seven tables required of larger companies;

• Provide alternative narrative disclosures; and
• Not be required to include footnote disclosure of the grant date fair value of equity awards in the Director Compensation Table.

Item 404 (Transactions with Related Persons, Promoters and Certain Control Persons). We are making changes to the introductory text of paragraph (c)(1), and adding paragraph (d) before the instructions to this item to change the calculation of total assets for smaller reporting companies from 1% of their total assets based on the average of total assets at year end for the last three completed fiscal years to the last two completed fiscal years. We believe this standard is more consistent with the two years of financial statements required of smaller reporting companies. Under new Item 404(d) of Regulation S-K, smaller reporting companies will:

• Not be required to disclose policies and procedures for reviewing related person transactions, which is required of larger companies;
• Be required to provide disclosure regarding a transaction where the amount exceeds the lesser of 1% of a smaller company's total assets or $120,000;
• Be required to provide additional specific information about underwriting discounts and commissions, and corporate parents; and
• Be required to provide disclosure regarding promoters and certain control persons.

Item 407 (Corporate Governance). New paragraph (g) to Item 407 of Regulation S-K specifies that smaller reporting companies are:

• Not required to provide Compensation Committee Interlock and Insider Participation disclosure or a Compensation Committee Report; and
• Not required to provide an Audit Committee Report until the first annual report after their initial registration statement is filed with the Commission and becomes effective.

Item 503 (Prospectus Summary, Risk Factors, and Ratio of Earnings to Fixed Charges). New paragraph (e) to this item specifies that smaller reporting companies need not provide the information required by paragraph (d) of Item 503 regarding the ratio of earnings to fixed charges when a registrant issues debt, or the ratio of combined fixed charges and preference dividends to earnings when a registrant issues preference equity securities. In addition, we have added instructions to the risk factor disclosure requirements set forth in Exchange Act Forms 10, 10-K and 10-Q to indicate that smaller reporting companies are not required to provide Item 503 risk factor disclosure in these filings.

Item 504 (Use of Proceeds). We are revising Instruction 6 to this item to clarify that new Article 8 of Regulation S-X, rather than the other articles of Regulation S-X, will govern whether financial statements of businesses proposed to be acquired must be included in the filings of smaller reporting companies.

Item 601 (Exhibits). New paragraph (c) reflects that smaller reporting companies need not provide Exhibit 12 (Statements re Computation of Ratios).

Other Regulation S-K Items. We identified 24 item requirements in Regulation S-B that were substantially similar or identical to the same numbered item requirements in Regulation S-K. In these cases, we determined it was appropriate to require that smaller reporting companies follow the same item requirements as larger companies. In the Proposing Release, we identified Item 512 (Undertakings) as a scaled item requirement for smaller reporting companies; however, we now believe no change is needed because it is clear which undertakings may apply to a smaller reporting company's filings. We are, therefore, not including a new paragraph (m) in Regulation S-K, as proposed.

In addition, as described below, we are amending Item 102 (Description of Property) of Regulation S-K to include references to the Industry Guides noted below and highlighting the requirements of Item 401 (Directors, executive officers, promoters and control persons). To further maintain consistency with references to other industry guides in the disclosure item requirements, we also are adding instructions to Item 303 directing companies' attention to:

• Industry Guide 3—Statistical disclosure by bank holding companies; and
• Industry Guide 6—Disclosure concerning unpaid claims and claim adjustment expenses of property-casualty insurance underwriters.

The Regulation S-B item requirement on the Description of Property in Item 102 included detailed instructions specific to small business issuers engaged in: (1) Significant mining operations; (2) oil and gas producing activities; and (3) real estate activities. Under Item 102 of Regulation S-B, mining companies are directed to the information called for in Industry Guide 7; oil and gas producing issuers are directed to the information called for in Industry Guide 2; and real estate companies are directed to the information called for in Industry Guide 5. Regulation S-K, however, does not include any references to these industry guides. Several commenters suggested that we revise Item 102 of Regulation S-K to include references to industry guides. We agree, and are amending Item 102 of Regulation S-K to include references to the following industry guides:

• Industry Guide 2—Disclosure of oil and gas operations;
• Industry Guide 4—Prospectus relating to interests in oil and gas programs;
• Industry Guide 5—Preparation of registration statements relating to interests in real estate limited partnerships; and
• Industry Guide 7—Description of property by issuers engaged or to be engaged in significant mining operations.

Item 401 of Regulation S-K (Directors, executive officers, promoters and control persons), differs from Regulation S-B in one respect. Under Regulation S-B, the disclosure pertaining to Federal bankruptcy laws or state insolvency laws related only to “any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.” Under Regulation S-K, disclosure must be provided pertaining to any petitions filed under the Federal bankruptcy laws or any state insolvency laws filed by or against a director or officer of the company. We believe it is appropriate to require disclosure about a personal bankruptcy petition filed by or against a director or officer of a smaller reporting company given that, in light of the generally smaller level of operations of smaller reporting companies, it may be material to an evaluation of the ability or integrity of any director or person to be nominated to become a director or executive officer of the smaller reporting company. Accordingly, smaller reporting companies now will be required to comply with the slightly different disclosure requirement of the Regulation S-K item.

2. Electing Scaled Disclosure Standards on “A La Carte” Basis

Commenters generally supported the proposal to allow smaller reporting companies to choose compliance with either the smaller reporting company scaled disclosure requirements or the larger company disclosure requirements in Regulation S-K on an item-by-item or “a la carte” basis. One comment letter expressed the view that the smaller reporting company disclosure requirements would serve as a baseline that would allow companies to provide any additional disclosure they deemed important to investors. Another set of comments noted that the “a la carte” approach is already sanctioned by disclosure rules generally. This letter explained that line-item disclosure requirements generally permit providing more disclosure than is required by the line items. Additionally, issuers are required to disclose all material facts that are necessary to make the statements included in the document not misleading, which may require disclosures in excess of line item requirements.

Some accounting firms commenting on the a la carte approach requested that we address what one commenter referred to as the “lock-in” aspect of the proposal. In the Proposing Release, we explained that a smaller reporting company would have the option to take advantage of the smaller reporting company requirements for one, some, all or none of the item requirements, at its election, in any one filing. We proposed to require, however, that a smaller reporting company provide its financial statements on the basis of the scaled financial statement requirements or the larger company financial statement requirements for a single fiscal year, and not be permitted to switch back and forth from one to another in different filings within a single fiscal year.

One accounting firm noted that it was unclear how the a la carte approach would work if issuers were required to elect in the first quarterly report whether they would follow the scaled financial statement requirements or the larger company Regulation S-X requirements in that same fiscal year's annual report on Form 10-K. According to this letter, making a determination in this manner would require a smaller reporting company that wants to preserve the option of following the smaller reporting company requirements in its annual report on Form 10-K to adhere to the smaller reporting company rules and not provide any additional information in the first quarterly report on Form 10-Q. Another accounting firm expressed the concern that a smaller reporting company might elect to provide more than the minimum disclosures only in periods when the additional disclosures tended to be favorable. These comment letters agreed that the a la carte approach would work if the Commission clarified that although the smaller reporting company disclosure and financial statement requirements would appear to establish the minimum disclosure requirements, Rule 12b-20 under the Exchange Act would require that a smaller reporting company provide any additional information beyond those minimum disclosure requirements, in order to avoid a misleading presentation. The accounting firms suggested that we encourage smaller reporting companies to provide consistent disclosures in succeeding periods in order to respond to investor expectations and allow period-to-period comparisons.

The proposals would have required companies to make the determination whether to report financial statement disclosure on a scaled basis in the first quarter due after the fiscal year covering the determination date. After reviewing the suggestions in several comment letters, however, we believe it is appropriate to permit smaller reporting companies to choose to comply with both the non-financial and financial item requirements on an item-by-item basis when these disclosures are provided consistently and when they are consistent with the legal requirements under the federal securities laws, including Securities Act Rule 408 and Exchange Act Rule 12b-20. Additionally, we stress the importance of providing disclosure that permits investors to make period-to-period comparisons, whether quarterly or annually.

We continue to expect that our staff will evaluate item-by-item compliance by smaller reporting companies with only the Regulation S-K requirements applicable to smaller reporting companies, and not with the requirements applicable to larger companies. This will be the case even if the company whose filing is being reviewed chooses to comply with the larger company requirements. Finally, as we noted in the Proposing Release, the a la carte approach will have no effect on the legal requirements and liabilities that apply to all disclosures made by issuers.

We are further clarifying that to the extent the smaller reporting company scaled item requirement is more rigorous than the same larger company item requirement, smaller reporting companies will be required to comply with the more rigorous, smaller reporting company item requirement. Also, we do not believe it is appropriate for a smaller reporting company to comply with a larger reporting company Regulation S-K item requirement if that requirement sets a higher threshold obviating the need for the smaller reporting company to provide disclosure. For example, unlike the larger company requirement under Item 404 of Regulation S-K, smaller reporting companies are required to disclose additional specific information about underwriting discounts and commissions and corporate parents. In this case, a smaller reporting company would be required to provide the additional Item 404 disclosure.

Currently, the smaller reporting company requirements under Item 404 of Regulation S-K present the only instance where the scaled requirements could be more rigorous than the larger company standard. This is because a smaller reporting company is required to provide disclosure on a related person transaction since the beginning of the company's last fiscal year if the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of the company's total assets at year end for the last two completed fiscal years. In contrast, a larger company reporting under the same Item 404 Regulation S-K requirement is required to provide disclosure on a related person transaction since the beginning of the last fiscal year if the transaction exceeds $120,000. A smaller reporting company's related person transaction may more easily exceed 1% of the average of the smaller reporting company's total assets than $120,000, as required for larger companies under the same item requirement. We believe this may be the case because 1% of a smaller company's total assets might be appreciably lower than $120,000.

D. Eliminating “SB” Forms Associated With Regulation S-B

While some comment letters appeared to support the elimination of the forms designated with the letters “SB” associated with Regulation S-B, along with moving the smaller reporting company requirements from Regulation S-B into Regulation S-K, others questioned whether this approach would reduce compliance burdens and lower costs for smaller companies. Some of the letters questioning the elimination of the SB forms recommended a two-year phase-in period to help smaller companies adjust to the transition. Some letters expressed a general perception that eliminating the SB forms would lead to increased costs for smaller reporting companies because Forms 10, 10-K, 10-Q and S-1, which would be used by smaller companies if the SB forms were eliminated, appeared to have more item disclosure requirements. One commenter stated, however, that eliminating the “SB” forms would provide both time and cost savings to smaller reporting companies that will be eligible to incorporate information from their previously filed Exchange Act periodic reports into a Form S-1 registration statement. None of the comment letters explained how using Forms 10, 10-K, 10-Q, and S-1 would increase costs for smaller reporting companies. One letter noted, however, that a smaller company probably would take longer to go through Form 10-K and Form 10-Q to figure out exactly what applied to the company and what did not apply in terms of required disclosures. In contrast, another comment letter noted that the elimination of “SB” forms would allow smaller reporting companies to incorporate information from their previously filed Exchange Act reports into a Form S-1 registration statement, which would result in time and cost savings to the smaller reporting company.

Some of the comment letters apparently misperceived that the SB forms are simpler and shorter than forms larger companies use. This is not the case. The SB forms themselves are not necessarily simpler to use than the forms that larger companies use. The scaling and increased simplicity for smaller companies generally occurs in the item requirements of Regulation S-B, rather than the associated SB forms, and we are moving the item requirements into Regulation S-K with very few changes.

Nevertheless, after considering the comments, we have decided not to eliminate the Exchange Act reporting SB forms immediately, but to phase them out to ease the transition for smaller companies. We considered commenters' concerns regarding current small business issuers moving to the Forms 10-K and 10-Q, and concluded that our transition schedule will provide an adequate period for these companies to continue to file reports on these forms, if they so desire. Further, to help current small business issuers make the transition, the Division of Corporation Finance's Office of Small Business Policy plans to provide an informational brochure to assist their transition to the new smaller reporting company form requirements.

E. Qualifying Standards for Treatment as “Smaller Reporting Company”

Many of the comment letters in favor of our proposed definition of “smaller reporting company” agreed that combining the categories of non-accelerated filers with small business issuers for purposes of the definition provided a convenient and simple approach because it tracks the accelerated filer definition and reduces regulatory complexity. In the Proposing Release, we reasoned that requiring only a public float test for most companies to qualify would provide additional simplicity, consistency and certainty. Eliminating a revenue test also would broaden the category of eligible companies. Our decision to focus on a company's non-affiliate common equity market capitalization or “public float” was also consistent with the Commission's current regulatory standards for purposes of Form 10-K, Form S-3, and the accelerated filer definition. Setting the public float ceiling at $75 million for smaller reporting companies further aligns the smaller reporting company definition with the non-accelerated filer definition.

The Advisory Committee recommended that we require companies to determine eligibility based on total equity market capitalization rather than public float. Although the Advisory Committee acknowledged that the Commission has historically and consistently used public float as a measurement in analogous regulatory contexts, it stated that equity market capitalization would better measure total financial exposure to investors. The Advisory Committee recommended extending the Commission's non-financial scaled disclosure requirements, covering disclosure and reporting, to companies in the lowest 1% of market capitalization. Some of the comment letters we received on the Proposing Release agreed with the Advisory Committee equity market capitalization preference, stating that it was simpler and more widely understood than the calculation of public float. The majority of comment letters supported our proposals to require a public float standard only, agreeing we should require a revenue test only if a company is unable to calculate public float.

Several comment letters opposed increasing the public float ceiling to a level higher than $75 million. One comment letter explained that because smaller companies typically do not have a large analyst following, financial information provided by the company takes on greater importance in communicating results to investors. Another letter noted that to balance protecting investors and promoting capital formation by small businesses, “reduced” disclosures should be limited to those public companies with relatively limited and less complex operations. Most comment letters, however, supported a higher public float ceiling than $75 million. Some of these comment letters argued that many companies with a public float greater than $75 million are still quite small. Several commenters suggested that the Commission provide scaled regulation to companies with up to $787 million in equity market capitalization, as they seemed to believe the Advisory Committee had recommended.

We are adopting, as proposed, a definition for “smaller reporting companies” that requires companies to have a public float of less than $75 million. We believe this standard is appropriately scaled in that it reduces costs to smaller companies caused by unnecessary information requirements, consistent with investor protection.

As adopted, the definition will make eligibility for smaller reporting company status contingent solely on public float for most companies. Alternatively, for companies that are unable to calculate public float, we are, as proposed, providing a revenue test. If a company has no common equity outstanding or no market price for its outstanding common equity exists at the time of its eligibility determination, the company would qualify as a smaller reporting company if it had less than $50 million in revenues in the last fiscal year. This is a departure from the dual eligibility test under the Regulation S-B system, which required separate calculations under public float and annual revenues. By eliminating the revenue test for most companies, the new definition of smaller reporting company simplifies and streamlines the definition while expanding the number of companies eligible to qualify.

As adopted, Item 10(f) of Regulation S-K will set forth the definition for “smaller reporting company.” We are further streamlining the definition and clarifying technical inconsistencies in the Proposing Release. We are also modifying the proposed introduction of Item 10, which indicated that smaller reporting companies would be permitted to choose to comply with either the requirements applicable to smaller reporting companies or the requirements applicable to other companies. Companies may make a choice on most of the scaled disclosure item requirements, unless the requirements for smaller reporting companies specify that smaller reporting companies must comply with the smaller reporting company requirements. If the item requirement does not require specific compliance, then the smaller reporting company will be permitted to choose scaled or standard disclosure requirements.

1. Eligibility and Exclusions

Currently, under Item 10 of Regulation S-B, small business issuer eligibility is limited to U.S. and Canadian issuers. This has been the case since 1992, when we adopted Regulation S-B and its associated forms and maintained eligibility for small business issuer status for Canadian companies because these companies had been able to use the Form SB-2 precursor, Form S-18. As adopted, we are expanding eligibility for smaller reporting company status to non-U.S. companies using domestic company forms. Foreign companies will qualify as smaller reporting companies if they are eligible to file on a form that permits disclosure based on the standards for smaller reporting companies, such as Forms S-1, S-3, S-4, 10-Q, and 10-K. Companies filing on forms available only to “foreign private issuers,” such as Forms F-1, F-3, F-4, and 20-F, will be ineligible for the smaller reporting company scaled disclosure requirements.

Several commenters objected to the proposal requiring that Canadian and other foreign private issuers provide financial statements prepared according to U.S. GAAP if they want to use the scaled rules available to smaller reporting companies, which they may use only if they file on a form available to U.S. domestic companies. Generally, these comment letters stated that the proposals would eliminate an accommodation already enjoyed by Canadian companies filing on Form SB-2. Currently, Canadian companies are permitted to provide Canadian GAAP financial statements that are reconciled to U.S. GAAP on domestic forms. Some of the comment letters urged that we consider allowing all foreign private issuers to provide their own country's GAAP with U.S. GAAP reconciliation.

To the extent that a foreign company qualifies as a smaller reporting company, it may make filings with us on forms available to domestic U.S. companies if it presents financial statements pursuant to U.S. GAAP. We continue to believe that because we are extending eligibility for scaled disclosure on domestic forms to all foreign issuers, it is important to require that this significantly larger group of foreign filers provide financial data in accordance with U.S. GAAP on domestic forms at this time. Other than in limited situations, foreign filers using domestic forms are required to prepare their financial statements in accordance with U.S. GAAP. Unlike our filing forms that are specifically designed for foreign private issuers that permit the use of financial statements prepared in accordance with bases of accounting other than U.S. GAAP so long as U.S. GAAP reconciling information is presented, the disclosure and other requirements under our domestic filing forms do not contemplate the use of accounting principles other than U.S. GAAP. We believe eligible foreign registrants that choose to avail themselves of the option to provide scaled disclosure should comply fully with the scaled disclosure and financial statement presentation requirements applicable to domestic issuers. Finally, the regulatory scheme for foreign private issuers on the “F” forms is specifically tailored to address their special circumstances, and we believe the scheme provides the accommodations most useful to these companies.

We will continue to exclude investment companies, including business development companies, and asset-backed issuers from eligibility for scaled treatment under our rules for smaller reporting companies. We requested comment on these exclusions and received none.

2. Determination Dates

The smaller reporting company determination dates we are adopting today are based on three categories of companies: reporting companies with a public float, non-reporting companies filing a registration statement, probably an initial registration statement, under either the Securities Act or the Exchange Act, and reporting or non-reporting companies without a public float. We are amending the definition of smaller reporting company to remove the reference to an issuer having “no significant public common equity outstanding,” based on a commenter's belief that it was confusing. Instead, the definition will indicate that in the case of an issuer whose public float as calculated under the definition was zero, most likely because the issuer had no public common equity outstanding or no market price for its common equity existed, the issuer must have had annual revenues of less than $50 million in its last fiscal year.

In the case of a reporting company, we are requiring the same public float calculation currently used to determine accelerated filer status, $75 million in public float computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity in the principal market for the common equity.

a. Reporting Companies

To determine smaller reporting company eligibility, reporting companies will follow the accelerated filer determination date in Rule 12b-2 under the Exchange Act—the last business day of a company's second fiscal quarter. We believe this approach simplifies regulation and promotes consistency and uniformity with current Commission rules. The public float of a reporting company will be calculated by using the price at which the shares of its common equity were last sold or the average of the bid and asked prices of such shares in the principal market for the shares as of the last business day of the company's second fiscal quarter, multiplied by the number of outstanding shares held by non-affiliates. We are adopting, as proposed, a rule providing that if a reporting company determines it qualifies as a larger reporting company rather than a smaller reporting company on the last day of its second fiscal quarter, it will be required to comply with the larger company disclosure standards when it files its first quarterly report in the fiscal year following the fiscal year of the determination date. We are permitting larger reporting companies, however, to opt for the scaled disclosure requirements beginning with the Form 10-Q covering the second fiscal quarter corresponding to the measurement date establishing eligibility as a smaller reporting company.

b. Non-Reporting Companies Filing an Initial Registration Statement

Companies determining eligibility in connection with the filing of their initial registration statement with the Commission will have to choose a date within 30 days of filing to determine eligibility. Under Regulation S-B, we had required companies to choose a public float calculation during a 60-day window before the filing. We believe requiring a 30-day window will lead to more accuracy and less uncertainty for filers, Commission staff, and investors.

The calculation methodology we are adopting for non-reporting companies varies slightly from the Regulation S-B standard we are rescinding. The Regulation S-K standards will require computing public float based on three components:

• Estimated offering price per share at the time of filing the registration statement;
• Number of shares of common stock outstanding that are held by non-affiliates before the offering; and
• Number of shares of common stock to be sold at the estimated offering price.

As adopted, the rule will require that non-reporting companies base the calculation on the estimated number of registered shares for offering to the public. For example, as we illustrated in the Proposing Release, a company that registers 7,000,000 shares in its initial public offering will be required to add that number to the total number of shares held by non-affiliates before the offering. If a company has 25,000,000 shares of common stock outstanding held by non-affiliates before the offering, it would add the 7,000,000 and 25,000,000 shares of common stock. The result would mean that the 32,000,000 shares of common stock outstanding would be multiplied by the estimated offering price per share in the initial public offering.

One commenter raised questions regarding the proposed method of calculation. This commenter noted that the estimated public offering price and the number of shares being offered tends to change during the time between the initial filing of the registration statement and the final prospectus. The uncertainty raised by the final estimated public offering price and number of shares being offered caused the commenter to question whether an issuer would be required to switch midway through the process from using smaller reporting company disclosure standards to using more extensive regular disclosure standards. Conversely, this commenter noted that if the price range and/or the number of shares being offered decreased, the issuer will have satisfied a more extensive disclosure standard than it turns out it was required to satisfy.

We considered these comments, and believe it is appropriate to provide initial public offering registrants the option to recalculate their public float at the time the company completes the initial public offering. Our intention in providing this flexibility is to permit (but not require) these issuers to recalculate their eligibility based on the results of the initial public offering for purposes of filing the next periodic report. For example, if an issuer files an initial public offering registration statement under the Securities Act based on the larger company Regulation S-K item requirements but then determines after the close of the initial public offering that its public float is below $75 million, then this issuer would be a smaller reporting company and would be eligible to provide scaled disclosure in the first periodic report due after the initial public offering registration statement was declared effective.

To address the commenter's concern that a smaller reporting company would be required to transition its disclosure to the larger company requirements if its public float rose above $75 million during the pre-effective stage of the filing, we are clarifying that this would not be the case if the issuer made a bona fide eligibility determination at the time it filed the initial public offering registration statement. The issuer will continue to be a smaller reporting company until its next annual determination date—the end of its second fiscal quarter.

With regard to a company's initial registration statement under the Exchange Act covering a class of securities, the company would calculate its public float as of a date within a 30-day window of the registration statement being filed. Because such an Exchange Act registration statement would not directly affect the issuer's public float, if an issuer that files such an Exchange Act registration statement does not have a public float or its public float cannot be calculated because there is no market price for the issuer's equity securities, the issuer's eligibility for the scaled disclosure would be based on its revenue, as proposed.

c. Alternative Revenue Test for Reporting and Non-Reporting Companies

As we stated in the Proposing Release, situations may arise in which a reporting company would be unable to calculate public float because it has no public common equity outstanding or no market price for its common equity exists. As adopted, the definition provides a third eligibility category to qualify for smaller reporting company status—companies unable to calculate a public float. To qualify as smaller reporting companies, this group of companies will be required to have annual revenues of less than $50 million during the last fiscal year before filing the registration statement.

d. Entering and Exiting Smaller Reporting Company Status

The rules we are adopting on entering and exiting smaller reporting company status in Item 10 of Regulation S-K are less restrictive than the Regulation S-B requirements of Item 10. Item 10 of Regulation S-B currently requires issuers to calculate eligibility based on public float and revenue levels for two consecutive fiscal years. The Regulation S-B system had a significantly longer transition period to enter or exit the smaller company disclosure system.

We are adopting transition rules for entering and exiting smaller reporting company status that track the accelerated filer definition. The Proposing Release suggested that the accelerated filer transition rules were the same as the smaller reporting company transition requirements to move back and forth from larger company disclosure standards to smaller reporting company standards. One comment letter requested clarification, pointing out that accelerated filers are required to change to their new status when determining the due date of the annual report covering the year of the status change, but, as proposed, the smaller reporting company determination would not take effect until the first fiscal quarter of the next fiscal year.

As adopted, the rules provide that a larger reporting company that determines it is a smaller reporting company as of the last business day of its most recently completed second fiscal quarter is permitted to transition to the scaled disclosure requirements in the Form 10-Q quarterly report corresponding to the determination date's second fiscal quarter rather than, as proposed, the following fiscal year's first quarterly report. A smaller reporting company required to transition to the larger reporting system after its determination date calculation will not be required to satisfy the larger reporting company disclosure requirements until the first quarter after the determination date fiscal year.

To illustrate, a larger reporting company with a fiscal year end of December 31, 2008 that qualified as a smaller reporting company on the last business day of its most recently completed second fiscal quarter in 2008 would be able to provide scaled disclosure beginning with the Form 10-Q for the same second fiscal quarter in which the company determined its eligibility, which would be due in August 2008. Conversely, a smaller reporting company with a fiscal year end of December 31, 2008 that is required to transition out of the scaled disclosure system into the larger company disclosure system will be required to do so beginning with the Form 10-Q for the first fiscal quarter of 2009, which would be due in May 2009.

As adopted, once an issuer fails to qualify for smaller company status, it will remain unqualified unless it determines that its public float, as calculated in accordance with the definition, was less than $50 million as of the last business day of its second fiscal quarter. Where an issuer does not have a public float or no public market for its common equity securities exists and it has less than $50 million in revenue, it will qualify to use the scaled disclosure item requirements until it exceeds $50 million in annual revenue. Once such an issuer fails to qualify as a smaller reporting company because its revenues exceed $50 million, that issuer will not become eligible for smaller reporting company status until it has annual revenues of less than $40 million in its last fiscal year.

F. Miscellaneous ⁹⁹

1. Indexing for Inflation

Many comment letters favored the inflation adjustments to the public float levels and revenue ceilings in the definition of smaller reporting company, but noted that the accelerated filer definition also should be indexed in order to keep these two categories aligned. We are not adopting the indexing proposal, but will consider whether these suggestions should be the subject of a future rulemaking project to collectively index several thresholds in current Commission rules.

2. Eliminating Transitional Small Business Issuer Format

We are eliminating the transitional small business issuer format, as proposed. No commenters objected to this proposal.

3. Checking the “Smaller Reporting Company” Box

A company that qualifies as a smaller reporting company based on the appropriate eligibility test under the definition will be required to check the “smaller reporting company” box on the registration statement or periodic report filed, whether or not it chooses to rely on the scaled disclosure standards of the amended Regulation S-K requirements. Several comment letters supported this proposal.

IV. Compliance Dates

Transition for Current Small Business Issuers. We are providing current small business issuers the option to file their next annual report for a fiscal year ending on or after December 15, 2007 on either Form 10-KSB or Form 10-K. A small business issuer may continue to file its periodic reports using Regulation S-B and the “SB” forms until its next annual report is filed. After a small business issuer files that next annual report, subsequent periodic reports must be filed on a form that does not have the “SB” designation. This will provide an optional transition period for companies that were small business issuers as of the effective date.

As a result of this transition period, Regulation S-B, Form 10-QSB, and Form 10-KSB need to be maintained while eligible small business issuers may continue to use them. Accordingly, while most of the amendments are effective on February 4, 2008. Form 10-QSB will not be removed until October 31, 2008 and Regulation S-B and Form 10-KSB will not be removed until March 15, 2009.

We are making numerous changes to rules and forms to implement these rule amendments, including replacing references to small business issuers with references to smaller reporting companies. During the optional transition period, small business issuers have the same reporting obligations as they had before these rule amendments, except to the extent that they voluntarily move to the new smaller reporting company system before being required to do so.

The “SB” Securities Act and Exchange Act registration statement forms, SB-1, SB-2, and 10-SB, will be rescinded on the effective date. Companies filing a registration statement after this date will be required to file on the appropriate form without an “SB” designation. If a registration statement was filed on an “SB” form before the effective date, and the company seeks to amend it after the effective date, the company must file the amendment on a correct form without an “SB” designation, but may continue to use the disclosure format and content based on the “SB” form until six months after the effective date.

General Transition Provisions. Companies that qualify as smaller reporting companies after the effective date, whether or not they currently are small business issuers, will have the option to comply with the scaled disclosure item requirements for smaller reporting companies in their registration statements and periodic reports filed after the effective date. To determine their status after the effective date, reporting companies will refer to their most recent second fiscal quarter to calculate public float. In these cases, reporting companies have already calculated public float for purposes of determining accelerated filer status and, therefore, no additional computation is necessary. Current small business issuers will be deemed to qualify as smaller reporting companies and need not make this calculation. Companies that recently became reporting companies before the effective date, but have not yet had a completed second fiscal quarter, will base eligibility on the public float calculated after the initial public offering. In all cases, companies that qualify for smaller reporting company status will continue to have this status until they make their annual determination at the end of the second fiscal quarter.

V. Paperwork Reduction Act

A. Background

The amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”). As discussed in the Proposing Release, we submitted a request for approval of the “collection of information” requirements contained in the proposed amendments to the Office of Management and Budget in accordance with the PRA. Some of the revisions that we are making to the original proposal affect these collections of information, but the revisions do not affect the burden estimates that we submitted to the OMB in connection with the Proposing Release. The titles of the collections of information are:

(1) “Regulation S-B” (OMB Control No. 3235-0417);

(2) “Regulation S-K” (OMB Control No. 3235-0071);

(3) “Regulation C” (OMB Control No. 3235-0074);

(4) “Form SB-1” (OMB Control No. 3235-0423);

(5) “Form SB-2” (OMB Control No. 3235-0418);

(6) “Form S-1” (OMB Control No. 3235-0065);

(7) “Form S-3” (OMB Control No. 3235-0073);

(8) “Form S-4” (OMB Control No. 3235-0324);

(9) “Form S-8” (OMB Control No. 3235-0066);

(10) “Form S-11” (OMB Control No. 3235-0067);

(11) “Form 1-A” (OMB Control No. 3235-0286);

(12) “Form 10” (OMB Control No. 3235-0064);

(13) “Form 10-SB” (OMB Control No. 3235-0419);

(14) “Form 10-K” (OMB Control No. 3235-0063);

(15) “Form 10-KSB” (OMB Control No. 3235-0420);

(16) “Form 8-K” (OMB Control No. 3235-0060);

(17) “Form 8-A” (OMB Control No. 3235-0056);

(18) “Form 10-Q” (OMB Control No. 3235-0070);

(19) “Form 10-QSB” (OMB Control No. 3235-0416);

(20) “Form 11-K” (OMB Control No. 3235-0082); and

(21) “Form SE” (OMB Control No. 3235-0327).

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

The hours and costs associated with preparing disclosure, filing information required by forms, and retaining records constitute reporting and cost burdens imposed by collection of information requirements. The information collections related to annual, periodic, and current reports and registration statements will be mandatory for larger reporting companies; some of the requirements, however, will be voluntary for smaller reporting companies. There is no mandatory retention period for the information disclosed, and the information disclosed will be made publicly available on the Commission's EDGAR filing system or in the Commission's public reference room in the case of a Form 1-A or Form SE filing.

For purposes of the Paperwork Reduction Act, as adopted, the burden changes are insignificant for companies that currently meet the small business issuer definition. We did not receive any comment letters providing data or other information concerning legal or accounting costs that would cause us to change our view.

We adopted existing Regulation S-B to provide an integrated disclosure system for small business issuers and Regulation S-K to provide an integrated disclosure system for larger reporting companies. Forms SB-1, SB-2, S-1, S-3, S-4, S-8, and S-11 are registration statements that are prepared by eligible issuers to provide investors with the information they need to make informed investment decisions in registered offerings. Form 1-A is the form required when a non-reporting company seeks to use the Regulation A exemption from the Securities Act. Regulation A is a conditional small issues exemption available to eligible issuers. Forms 10, 10-SB, 10-K, 10-KSB, 8-K, 8-A, 10-Q, 10-QSB, and 11-K are forms that set forth disclosure requirements for companies filing reports with the Commission pursuant to the Exchange Act. Finally, Form SE is a notice to the Commission by an EDGAR electronic filer that it is filing paper format exhibits.

Consistent with the information that we previously submitted to the OMB we estimate that the total increase in burden hours for Form 10-K, Form 10-Q, Form 10, Form S-1, and Form S-11 will be 7,857,948 and that the total increase in cost will be $1,114,044,563. These increases are offset by the total decrease in burden hours for Form 10-KSB, Form 10-QSB, Form 10-SB, Form SB-1, and Form SB-2 of 7,853,542.5 burden hours and a total decrease in cost of $1,108,787,363. The net difference between the increase and decrease is an increase of 4,405.5 burden hours and a cost of $5,257,200. The net increase of 4,405.5 burden hours and costs of $5,257,200 is outweighed by the possible decrease of 356,290 burden hours and costs of $47,479,000 for the 1,581 newly eligible smaller reporting companies.

The table below sets forth our current hourly and cost burden estimates for Forms 10-K, 10-Q, 10, S-1, and S-11 after these amendments.

B. Summary of Comment Letters and Revisions to the Proposals

We requested comment on the Paperwork Reduction Act analysis contained in the Proposing Release. One commenter stated that the substitution of the Regulation S-K disclosure framework would only be beneficial to small issuers if there were no increase in legal and accounting costs. The commenter noted that the Commission does not guarantee that moving the current Regulation S-B disclosure requirements into Regulation S-K will be more cost effective. The commenter also disagreed with the Commission's average costs estimates, stating that costs vary between New York City and smaller communities throughout the country. Several other commenters raised similar concerns that costs may increase as a result of these proposals. None of these commenters, however, provided any data or other information to show that legal and accounting costs will increase.

Our estimates of the average number of hours each entity spends completing the affected forms, allocation of burden between outside counsel and internal personnel, and the average hourly rate for outside securities counsel were obtained by contacting a number of law firms and other persons regularly involved in completing the forms and reflect regional variances.

Commenters who raise a concern about the transition from Regulation S-B and the “SB” forms to Regulation S-K and the “SK” forms wanted us to consider a phase-in period. The amendments, as adopted, will allow a former “SB” filer a choice to file its first annual report on Form 10-K or Form 10-KSB during the transition period, but thereafter it will no longer be able to use the “SB” forms. For example, after the effective date of these amendments, an eligible calendar year company will be able to choose to file its first annual report on Form 10-K or Form 10-KSB. An eligible non-calendar company may file its quarterly reports on Form 10-Q or Form 10-QSB until its next annual report due after the effective date of the amendments. That next annual report may be filed on Form 10-K or Form 10-KSB, but thereafter the company may no longer use the “SB” forms.

We also received comment letters expressing concern that legal and accounting costs will increase as a result of the proposals. We do not believe that legal or accounting costs should increase since, small business issuers generally will be providing the same disclosure as currently filed. In the case of a newly eligible smaller reporting company that previously filed under Regulation S-K using “SK” forms, the disclosure burden will decrease if the company elects to use the scaled disclosure available to smaller reporting companies. Otherwise the issuer may also file roughly the same information as it does currently. The Commission is providing an index to the scaled disclosure requirements in new Item 10(f) of Regulation S-K and plans to publish a brochure to assist smaller reporting companies in transitioning to the new scaled disclosure requirements.

In response to these comments, we decided to revise four items that were part of the original proposal.

First, we are persuaded by the letters of the public accounting firms that Item 310 should be placed in a separate section within Regulation S-X, instead of creating a new Item 310 within Regulation S-K. We agree that having all financial information requirements within one Regulation seems logical and appropriate.

Second, several commenters cite the Advisory Committee's recommendation to require two years of balance sheets to go along with audited statements of income, cash flows, and changes in stockholders' equity for each of the latest two fiscal years, as required by Regulation S-X. We have been convinced by the comment letters and the Advisory Committee's report that two years of balance sheets will provide investors with valuable comparative information with minimal additional costs.

A third revision will allow a smaller reporting company to provide its financial statements on an “a la carte” basis like the other non-financial statement disclosure items. This revision differs from the Proposing Release, where the Commission proposed to require a smaller reporting company to provide its financial statements on the basis of Item 310 of Regulation S-K or Regulation S-X for an entire fiscal year, and not be permitted to switch back and forth from one to the other in different filings within a single fiscal year. A commenter pointed out that this inflexibility within the “a la carte” system and requiring a smaller reporting company to “lock in” to one approach or the other when it files its first Form 10-Q for a year seems contrary to the proposed “a la carte” approach. As we proposed, if a smaller reporting company wanted to preserve the option of following the smaller reporting company rules in its filings, it perhaps could not provide the additional information required of larger companies in its first quarterly report or risk losing the ability to use the scaled disclosure requirements for the year. As adopted, we will allow “a la carte” disclosure for financial statements so that smaller reporting companies can provide additional information over and above the financial disclosure required by Article 8 of Regulation S-X.

The fourth revision requested by commenters is to amend Rule 3-05 of Regulation S-X. Rule 3-05 provides the requirements for Financial Statements of Businesses Acquired or to be Acquired, and paragraph (b)(2)(iv) allows issuers to omit the financial statements for the earliest of three fiscal years required if the net revenues of the business to be acquired are less than $25 million. We agree with the commenters that the $25 million ceiling was related to the small business issuer definition, and since we are creating a new definition of smaller reporting company to replace the small business issuer definition that contains a $50 million revenue ceiling, it is appropriate to raise the Rule 3-05 ceiling to $50 million.

For purposes of the Paperwork Reduction Act, as adopted, the burden changes are insignificant for companies that currently meet the small business issuer definition. We did not receive any comment letters providing data or other information concerning legal or accounting costs that would cause us to change our view.

VI. Cost-Benefit Analysis

A. Background

We have adopted amendments to eliminate our “SB” forms and move the Regulation S-B item requirements into amended Regulations S-K and S-X. The amendments will amend all relevant rules and forms under the Securities Act, the Exchange Act, and the Trust Indenture Act to replace the existing references to “small business issuer” to reference to “smaller reporting company.” The new “smaller reporting company” definition will replace the current “small business issuer” eligibility standards to allow a greater number of public companies to provide disclosure based on the scaled disclosure requirements. The new definition for smaller reporting company will include companies with a public float of less than $75 million and will therefore be a significant increase from the $25 million levels for public float and revenue under the current “small business issuer” definition. For companies without a public float, we are requiring an alternative ceiling of below $50 million in revenue in the previous year.

B. Summary of Rules

As noted above, the amendments will eliminate the separate disclosure framework of Regulation S-B by moving those requirements into Regulation S-K and the financial disclosure into Regulation S-X. The new definition for “smaller reporting company” will expand the number of filers that will qualify to provide disclosure under the scaled item requirements of the current Regulation S-B framework. Smaller reporting companies and non-accelerated filers will both be subject to Regulation S-K, but smaller reporting companies will have the option to provide disclosure on an item-by-item basis according to the scaled item requirements of amended Regulation S-K. The newly adopted amendments will allow eligible smaller reporting companies to do the following:

• Provide three years rather than five years of business development activities, and not be required to provide segment disclosure under amended Item 101 of Regulation S-K;
• Not provide disclosure required by Items 301 and 302 relating to selected financial data and supplementary financial information;
• Provide more streamlined disclosure for management's discussion and analysis of financial condition and results of operations found in Item 303 by requiring only two years of analysis if the company is presenting only two years of financial statements, instead of three years currently required of larger companies;
• Provide audited balance sheets, audited statements of income, cash flows and changes in stockholders' equity for each of the last two fiscal years in new Article 8 of Regulation S-X instead of an audited balance sheet as of the end of the last two fiscal years and audited statement of income, cash flows and changes in stockholders' equity for each of the last three fiscal years as required by other parts of Regulation S-X;
• Provide disclosure about the chief executive officer and two other highly compensated executive officers only, rather than the information for the Chief Executive Officer, Chief Financial Officer and three other executive officers required of larger registrants;
• Not provide a Compensation Discussion and Analysis required of larger reporting companies;
• Provide only three of the seven tables (Summary Compensation, Outstanding Equity Awards, and Director Compensation) required of larger reporting companies; and
• Not provide disclosure regarding the company's policies and procedures for approving related person transactions. Smaller reporting companies will be required, however, to provide disclosure regarding a transaction where the amount exceeds the lesser of 1% of a smaller company's total assets or $120,000. They also will be required to provide additional specific information about underwriting discounts and commissions and corporate parents. Additionally, smaller reporting companies will be required to provide disclosure regarding promoters and certain control persons.

C. Benefits

As discussed above, the amendments adopted today will promote regulatory simplification by eliminating all “SB” forms and consolidating the Regulation S-B disclosure item requirements into Regulation S-K. The integrated Regulation S-K regime will enable a larger category of public companies to have more flexibility in tailoring disclosure standards to fit the need of investors and the realities of their company. We believe investors will benefit from the scaled disclosure amendments to Regulation S-K because the amendments allow issuers to make disclosure based on the size, business operations, and financial condition of the smaller reporting company. Allowing smaller reporting companies to choose scaled disclosure on an item-by-item basis allows companies to tailor their disclosure to reduce costs and thereby benefit shareholders. The increased public float standards in the definition of smaller reporting company will allow more companies the flexibility to choose between scaled item requirements such as financial statement information and executive compensation disclosure. By doing so, these newly eligible companies can appropriately determine the information needs of their investors in light of the costs of providing that information. Thus, moving the scaled disclosure requirements of Regulation S-B into Regulations S-K and S-X will provide regulatory flexibility that gives companies the ability to allocate resources to increased disclosure only in instances where they believe doing so would provide a benefit to shareholders.

Eliminating the “SB” forms will mitigate any perceived notion that smaller companies are currently reporting under a completely different and inferior disclosure framework. If current Regulation S-B filers are inappropriately penalized by the market for this perceived notion, as some commenters have suggested, then integrating Regulation S-B and Regulation S-K should benefit shareholders by decreasing the company's cost of capital. To the extent that these amendments eliminate the perceived notion of an inferior disclosure framework, we believe that these amendments will increase the benefits and in some instances, reduce the costs of being a public company and will benefit the capital markets by encouraging private companies to consider offerings that are registered under the Securities Act or to enter the Exchange Act reporting system.

As amended, an integrated disclosure system for all companies filing forms using Regulation S-K will promote efficiency because practitioners and investors will refer to one disclosure framework. Filers and their practitioners will have one consolidated regulation to find all relevant disclosure item requirements, which will reduce complexity and improve regulatory efficiencies. Although some commenters were concerned that finding the scaled disclosure provisions in Regulation S-K would be inefficient, the index of scaled disclosure in new Item 10(f) should mitigate this concern. For some smaller reporting companies, legal and accounting costs may decrease.

As discussed earlier in this release, we estimate that approximately 1,581 new companies will have an opportunity to use the restructured scaled disclosure requirements for smaller reporting companies and may experience significant burden and cost savings if they use them. We assume that approximately 50% of the 1,581 companies (or 790 companies) will use the scaled disclosure requirements. For purposes of the Paperwork Reduction Act, we estimate that these 790 smaller reporting companies may save 356,290 internal burden hours and costs in the amount of $47,479,000 by using the scaled disclosure requirements.

Finally, another benefit to smaller reporting companies is that by using Registration Statement Form S-1, a company may be permitted to incorporate by reference its previously filed periodic reports. We believe that this will result in some cost savings and efficiencies in preparing registration statements for smaller reporting companies.

D. Costs

In our view, the elimination of the “SB” forms and moving the Regulation S-B disclosure standards into Regulation S-K and financial disclosure into Regulation S-X will not significantly increase the costs of complying with the Commission's rules.

The disclosure requirements will not change except in minor ways for current small business issuers that previously filed under Regulation S-B, so we do not anticipate any increase in costs due to the change in disclosure requirements.

Four commenters stated that these proposals may have unintended consequences, such as extra legal and accounting costs. One of these commenters expressed concern that moving the disclosure requirements of Regulation S-B into Regulation S-K would only benefit small issuers if the legal and accounting costs do not increase. The commenter did not provide any data or information to support its position that costs could increase. The amount of disclosure a former small business issuer will provide on the “SK” forms should not increase unless the issuer chooses to provide additional disclosure above the required disclosure. We have added a heading entitled “Smaller Reporting Companies” to Items where scaled disclosure is available for smaller reporting companies. This will alleviate the concern that small issuers need guidance in determining what disclosure requirements apply to them. Thus, we do not believe that there should be any significant additional out-of-pocket costs associated with compliance.

We recognize that some of the 1,581 companies may choose to avail themselves of the scaled disclosure requirements when they have complied with standard Regulation S-K previously. In addition, the amount of disclosure reviewed by the Commission's staff may change for these companies. The staff will now evaluate compliance with Regulation S-K on the scaled disclosure requirements available to smaller reporting companies even if the company previously chose to comply with the larger company Regulation S-K disclosure requirements. If the amount of disclosure and corresponding SEC review under the prior reporting standard was valued by investors, using scaled disclosure may increase a company's cost of capital. Because the differences in smaller and larger company disclosure standards are small, however, we believe that any such costs will be minimal.

Investors may face additional costs in determining whether a newly eligible smaller reporting company has changed the amount of disclosure it provides to investors or whether the company continues to provide the maximum required disclosure. Allowing smaller reporting companies to choose financial statement items on an “a la carte” basis in a quarterly report may create additional costs for investors to determine whether the company has changed the type of disclosure from quarter to quarter. Since smaller reporting companies will be required to check a box indicating they qualify as such, however, investors will be alerted that these issuers are eligible to use the scaled disclosure requirements.

Another possible cost is requiring Canadian issuers, who seek to use the new scaled disclosure requirements, to provide their financial statements using U.S. GAAP rather than home country GAAP reconciled to U.S. GAAP. Based upon the Form 10-KSB filings received from Canadian issuers on the Commission's EDGAR filing system we estimate that under 50 Canadian issuers will be affected by this change. This change could increase audit costs for these companies if they chose to continue to file on the domestic forms which will now require financial statements in accordance with U.S. GAAP. Other cost increases could include staff training, administrative costs, and minor transition costs.

VII. Consideration of Impact on the Economy, Burden on Competition and Promotion of Efficiency, Competition and Capital Formation

Section 23(a)(2) of the Exchange Act requires us to consider the impact that any new rule will have on competition. Section 23(a)(2) also prohibits us from adopting any rule that will impose a burden on competition not necessary or appropriate to carry out the purposes of the Exchange Act.

Furthermore, when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in the public interest, Section 2(b) of the Securities Act and Section 3(f) of the Exchange Act require the Commission to consider whether the action will promote efficiency, competition and capital formation.

We expect that the amendments adopted today will result in regulatory simplification and efficiency by removing the duplicative sections of Regulation S-B and consolidating the scaled item requirements of Regulation S-B, such as executive compensation, into amended Regulation S-K. As adopted, the financial statement requirements for small business issuers previously found in Item 310 will be in a separate section of Regulation S-X. As amended, Regulations S-K and S-X will consolidate these requirements into a simplified framework applicable to all filers that are subject to the reporting requirements of Sections 13 and 15 of the Exchange Act and companies filing registration statements under the Securities Act. To comply with disclosure item requirements, practitioners and companies will no longer need to refer to two disclosure frameworks. Practitioners and companies will benefit from the ease of reference that a single disclosure framework will provide.

It is expected that the amendments will promote capital formation for smaller reporting companies and improve their ability to compete with larger companies for capital. For example, we believe capital formation will be improved by providing flexibility to more smaller reporting companies to tailor their disclosure to their investors' needs. In addition, the costs to raise capital may be reduced to the extent compliance costs, but not benefits, are reduced as a result of the scaled disclosure requirements. If smaller reporting companies allocate the capital they raise and save as a result of our scaled disclosure requirements to business development in an effective manner, these companies will be more competitive. More companies will be able to take advantage of more scaled disclosure item requirements, such as those contained currently in Item 310 and Item 402 of Regulation S-B. Smaller reporting companies that avail themselves of the scaled disclosure requirements will provide tailored disclosure that may better meet the needs of their investors.

VIII. Final Regulatory Flexibility Act Analysis

This Final Regulatory Flexibility Analysis has been prepared in accordance with the Regulatory Flexibility Act. It relates to amendments to the rules and forms under the Securities Act and Exchange Act, which include a new definition of “smaller reporting company” under Regulation S-K. The new definition will expand the group of smaller companies that qualify to provide disclosure in accordance with the scaled requirements of the current Regulation S-B disclosure framework.

As adopted, a smaller reporting company is defined as a company that meets all of the following criteria: Is not an investment company, an asset-backed issuer, or the majority-owned subsidiary of a parent that was not a smaller reporting company; had a public float of less than $75 million as of the last business day of its most recently completed second fiscal quarter; and in the case of an issuer whose public float was zero, had annual revenues of less than $50 million during its most recently completed fiscal year for which audited financial statements are available on the date of the filing.

The amendments also will eliminate the separate disclosure regime of Regulation S-B by removing all related “SB” forms and merging the Regulation S-B item requirements into Regulation S-K, except for Item 310 (Financial statements) which move into Regulation S-X. The revisions to Regulations S-K and S-X include revising item requirements to offer smaller reporting companies optional disclosure alternatives that are designed to provide flexibility, cost efficiencies and regulatory simplification.

A. Reasons for and Objectives of Amendments

1. The Advisory Committee on Smaller Public Companies Recommended Scaled Federal Securities Regulation for Smaller Companies

In March 2005, the Commission chartered the Advisory Committee on Smaller Public Companies to assess the current regulatory system for smaller companies under the federal securities laws, including the disclosure and reporting requirements applicable to smaller companies, and to make recommendations for changes to improve regulatory conditions for smaller companies.

After receiving public input, the Advisory Committee made three recommendations in the disclosure area, which included making the scaled disclosure accommodations available to small business issuers available to all microcap companies, incorporating Regulation S-B into Regulation S-K, and incorporating Item 310 of Regulation S-B into Regulation S-K or Regulation S-X to make the scaled financial statement accommodations available to a much larger group of smaller companies.

2. Expanding Eligibility for Smaller Company Scaled Regulation Under Amended Regulation S-K

To make the scaled requirements of the Regulation S-B disclosure framework applicable to many more companies, the Advisory Committee recommended revising the definition of “small business issuer” to include a company with a higher public float threshold than the $25 million ceiling currently required in the small business issuer definition found in Item 10 of Regulation S-B.

Although the Advisory Committee did not recommend that we use a public float threshold, the $75 million public float threshold adopted is based on the reference to that number in the accelerated filer definition set forth in Rule 12b-2 of the Exchange Act. To maintain consistency with current regulation, we believe setting a public float threshold based on the current levels established for non-accelerated filers is practical and avoids regulatory complexity.

3. Integrating Substantive Requirements of Regulation S-B Into Regulations S-K and S-X

The overall goal of the rule amendments is to integrate the scaled disclosure requirements of Regulation S-B into Regulation S-K and make these scaled disclosure requirements available to more companies as smaller reporting companies. We believe the amendments will:

• Further the goals of regulatory simplification by eliminating the current Regulation S-B framework as a separate stand-alone disclosure standard for the smallest reporting companies;
• Update the public float threshold and eliminate the revenue threshold restriction in the current “small business issuer” definition to accommodate many more companies that are contemplating an offering registered under the Securities Act or entry into the Exchange Act reporting system;
• Streamline and modernize forms under the Securities Act and the Exchange Act by eliminating all of the “SB” forms; and
• Provide regulatory flexibility by permitting smaller reporting companies to provide the same financial statement information previously found in Item 310 of Regulation S-B into Regulation S-X.

B. Significant Issues Raised by Public Comment

The initial Regulatory Flexibility Act analysis appeared in the Proposing Release. We requested comment on any aspect of the Initial Regulatory Flexibility Act analysis, especially empirical data on the impact on small businesses.

In the Proposing Release we stated that the proposed elimination of Regulation S-B and the “SB” forms will not increase significantly the costs of complying with the Commission's rules. While we still believe this is the case, we received four comment letters expressing concern that the proposals could increase legal and accounting costs. One of these commenters stated that “this type of one-size-fits-all regulation may have unintended consequences such as extra legal and accounting costs.” Another commenter stated that the proposals would not increase costs and that the backwards incorporation by reference on Form S-1 would save burden hours and costs.

As stated above, in response to the commenters' concerns about the transition from Regulation S-B and the “SB” forms to Regulation S-K and the “SK” forms, we have added a transition provision for companies that are current “SB” filers. These companies will have the choice of filing their next annual report due after the effective date on either a Form 10-KSB or a Form 10-K. Similarly, they may file any quarterly reports for periods before the next annual report due on either Form 10-QSB or Form 10-Q. Reports filed after the next annual report due may no longer be on the “SB” forms.

C. Small Entities Subject to the Amendments

The amendments will affect small entities, the securities of which are registered under Section 12 of the Exchange Act or that are required to file reports under Section 15(d) of the Exchange Act. The amendments also will affect small entities that file, or have filed, a registration statement that has not yet become effective under the Securities Act and that has not been withdrawn. Securities Act Rule 157 and Exchange Act Rule 0-10(a) define an issuer to be a “small entity” for purposes of the Regulatory Flexibility Act if it had total assets of $5 million or less on the last day of its most recent fiscal year. We believe the amendments will affect some small entities. We estimate that there are approximately 1,100 issuers that may be considered small entities. Further, we estimate that virtually all of the 1,100 small entities would be below $75 million in public equity float and will qualify for the scaled disclosure requirements.

D. Reporting, Recordkeeping, and Other Compliance Requirements

As adopted, moving Regulation S-B requirements into Regulations S-K and S-X and rescinding all of the “SB” forms will shift the location of disclosure requirements and will require smaller reporting companies to adapt to new formats in preparing their disclosure for Form S-1. The amendments to Regulation S-K include a new definition for smaller reporting company, which broadens the category of filers preparing disclosure to comply with the scaled item requirements of amended Regulation S-K. Companies with public floats between $25 and $75 million will be included in the class of filers that is eligible to provide disclosure based on the scaled requirements of proposed revisions to amended Regulation S-K. As adopted today, the scope and presentation of information disclosed based on the item requirements of amended Regulations S-K and S-X will differ in a number of significant ways from the current Regulation S-K disclosure framework. Amended Regulation S-K will allow smaller reporting companies to:

• Provide three years rather than five years of business development activities, and not be required to provide segment disclosure under amended Item 101 of Regulation S-K;
• Not provide disclosure required by Items 301 and 302 relating to selected financial data and supplementary financial information;
• Provide more streamlined disclosure for management's discussion and analysis of financial condition and results of operations found in Item 303 by requiring only two years of analysis if the company is presenting only two years of financial statements, instead of the three years currently required of larger companies;
• Provide audited balance sheets, audited statements of income, cash flows and changes in stockholders' equity for each of the last two fiscal years in new Article 8 of Regulation S-X instead of an audited balance sheet as of the end of the last two fiscal years and audited statement of income, cash flows and changes in stockholders' equity for each of the last three fiscal years as required by other parts of Regulation S-X;
• Provide disclosure about the chief executive officer and two other highly compensated executive officers only, rather than the information for the Chief Executive Officer, Chief Financial Officer and three other executive officers required of larger registrants;
• Not provide a Compensation Discussion and Analysis required of larger reporting companies;
• Provide only three of the seven tables (Summary Compensation, Outstanding Equity Awards, and Director Compensation) required of larger reporting companies; and

Not provide disclosure regarding the company's policies and procedures for approving related person transactions. Smaller reporting companies will be required, however, to provide disclosure regarding a transaction where the amount exceeds the lesser of 1% of a smaller company's total assets or $120,000. They also will be required to provide additional specific information about underwriting discounts and commissions and corporate parents. Additionally, smaller reporting companies will be required to provide disclosure regarding promoters and certain control persons. The amendments to Regulation S-K will not generally increase the disclosure requirements for former small business issuers, and could decrease the disclosure required for issuers with public float levels between $25 million and $75 million.

Amended Item 404 of Regulation S-K is the only example where it is possible that the disclosure required for smaller reporting companies will be more extensive than for standard Regulation S-K filers. In addition to a longer time period for required disclosure, as discussed above, Item 404 contains a provision that requires disclosure of transactions with related persons that exceed the lesser of $120,000 or 1% of the average of the smaller reporting company's total assets at the fiscal year end for the last two completed fiscal years. This requirement may be more burdensome to a smaller reporting company if 1% of total assets are less than $120,000. We believe transactions involving related persons are important to disclose, especially for smaller reporting companies, which generally have lower materiality thresholds. We believe these differences are important for the protection of investors. This disclosure issue will only affect smaller reporting companies that have related person transactions.

E. Agency Action To Minimize Effect on Small Entities

The Regulatory Flexibility Act directs us to consider significant alternatives that will accomplish the stated objectives, while minimizing any significant adverse impact on small entities. In connection with the proposals, we considered the following alternatives:

(a) Establishing different compliance or reporting requirements which take into account the resources available to smaller entities;

(b) The clarification, consolidation or simplification of disclosure for small entities;

(c) Use of performance standards rather than design standards; and

(d) Exempting smaller entities from coverage of the disclosure requirements or any part thereof.

As adopted, our amendments are intended to maintain current disclosure standards for small entities while further expanding the scope of eligibility for companies that elect to comply with the scaled disclosure item requirements currently set forth in Regulation S-B. These changes do not exempt smaller entities from coverage of the disclosure requirements; rather, they provide a greater number of smaller reporting companies the choice to provide scaled disclosure within Regulations S-K and S-X.

As adopted, the new definition for smaller reporting company will eliminate the current $25 million revenue threshold and increase the public float threshold requirement up to $75 million from the $25 million level currently set forth in the small business issuer definition of Regulation S-B. We believe that the $75 million threshold will appropriately result in reduced costs to smaller companies caused by unnecessary information requirements, consistent with investor protection. This is also consistent with our current regulatory system.

We considered alternatives such as including a revenue cap in the new definition of smaller reporting company, but currently believe that only requiring less than $75 million in public float is preferable, given its ease of reference and consistency with current rules under the Securities Act and the Exchange Act. We also seriously considered the comment letters submitted by the public. Some of the letters urged the Commission to use market capitalization instead of public float as a metric to determine eligibility as a smaller reporting company, but again, use of a float test provides more regulatory consistency.

As adopted, we will consolidate, clarify, and simplify our disclosure requirements by moving Regulation S-B into Regulations S-K and S-X. These amendments include a new definition of smaller reporting company, which greatly expands the number of small entities that will qualify to provide disclosure based on the scaled disclosure item requirements of the current Regulation S-B framework. We considered maintaining the Regulation S-B framework and making it available to many more companies, but we were not convinced by commenters that the Commission should not eliminate Regulation S-B and the “SB” forms. We still believe a single disclosure framework will be more cost effective and more efficient. The elimination of the “SB” forms will result in regulatory simplification for smaller entities by requiring all registrants to rely on one set of forms, such as Forms S-1, S-3, 10-K and 10-Q. These forms will include scaled item requirements for smaller reporting companies under the amendments adopted today for Regulations S-K and S-X.

Finally, we considered the use of performance rather than design standards but concluded that, although we allow some tailoring, investors need a basic level of consistency, uniformity and comparability among issuers in order to make appropriate investment decisions.

IX. Statutory Basis and Text of Amendments

The rule amendments described in this release are being adopted pursuant to Sections 6, 7, 10, and 19(a) of the Securities Act, as amended, Sections 12, 13, 14(a), 15(d), and 23(a) of the Exchange Act, as amended, and Section 319(a) of the Trust Indenture Act, as amended.

List of Subjects

17 CFR Part 228

• Reporting and recordkeeping requirements
• Securities
• Small businesses

17 CFR Parts 210, 229, 230, 239, 240, 249, 260, and 269

• Reporting and recordkeeping requirements
• Securities

For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:

PART 210—FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975

1. The authority citation for part 210 continues to read as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 78c, 78j-1, 78l, 78m, 78n, 78o(d), 78q, 78u-5, 78w(a), 78ll, 78mm, 80a-8, 80a-20, 80a-29, 80a-30, 80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, unless otherwise noted.

2. Amend § 210.3-01 by revising paragraphs (b), paragraph (c) introductory text and (f) to read as follows:

3. Amend § 210.3-05 by revising paragraph (b)(2)(iv) to read as follows:

4. Amend § 210.3-10 by revising paragraphs (h)(3) and (h)(4) to read as follows:

5. Amend § 210.3-12 by revising paragraphs (a) and (d) to read as follows:

6. Amend § 210.3-14 by removing the authority citations following the section and revising paragraph (b) to read as follows:

7. Amend § 210.4-01 by revising paragraphs (a)(3)(i)(A) and (a)(3)(i)(B) to read as follows:

8. An undesignated center heading and §§ 210.8-01 through 210.8-08 are added before the undesignated heading “Bank Holding Companies” to read as follows:

Article 8 Financial Statements of Smaller Reporting Companies

9. Amend § 210.10-01 by revising paragraphs (b)(6) and the introductory text of paragraph (c) to read as follows:

PART 228 [REMOVED]

10. Part 228 is removed and reserved.

PART 229—STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND CONSERVATION ACT OF 1975—REGULATION S-K

11. The authority citation for part 229 continues to read in part as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 777iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78 l, 78m, 78n, 78o, 78u-5, 78w, 78 ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-38(a), 80a-39, 80b-11, and 7201 et seq.; 18 U.S.C. 1350, unless otherwise noted.

12. Amend § 229.10 by adding paragraph (f) to read as follows:

13. Amend § 229.101 by:

a. Revising (a)(2) introductory text, (a)(2)(i), (a)(2)(ii), and (a)(2)(iii) introductory text; and

b. Adding paragraph (h) before the Instructions to Item 101.

The revision and addition read as follows:

14. Amend § 229.102 by adding Instructions 7, 8, and 9 to read as follows:

15. Amend § 229.201 by:

a. Revising paragraph (a)(1)(ii); and

b. Revising paragraph (a)(2); and

c. Revising Instruction 6 to Item 201(e).

The revision and addition read as follows:

16. Amend § 229.301 by removing the authority citation following the section and adding paragraph (c) before the Instruction to Item 301 to read as follows:

17. Amend § 229.302 by adding paragraph (c) to read as follows:

18. Amend § 229.303 by:

a. Revising a sentence to Instruction 1 to paragraph 303(a);

b. Adding Instructions 13 and 14;

c. Revising a sentence to Instruction 1 to paragraph 303(b); and

d. Adding paragraph (d) to read as follows:

19. Amend § 229.305 by revising paragraph (e) to read as follows:

20. Amend § 229.401 by revising Instruction 3 to paragraph (b) to read as follows:

21. Amend § 229.402 by adding paragraphs (l), (m), (n), (o), (p), (q), and (r) before the Instruction to Item 402 to read as follows:

22. Amend § 229.404 by revising the introductory text of paragraph (c)(1) and adding paragraph (d) before the Instructions to Item 404 to read as follows:

23. Amend § 229.407 by revising paragraphs (a)(1)(iii), (d)(4)(i)(B) and adding paragraph (g) before the Instructions to Item 407 to read as follows:

24. Amend § 229.503 by adding paragraph (e) before the Instruction to Item 503 to read as follows:

25. Amend § 229.504 by revising Instruction 6 to Item 504 to read as follows:

26. Amend § 229.512 by revising the introductory text of paragraph (e) to read as follows:

27. Amend § 229.601 by:

a. Revising paragraph (a)(4); the Exhibit Table; and paragraphs (b)(4)(ii), (b)(4)(v), (b)(10)(iii)(C)( 6), introductory text (b)(13), (b)(13)(i), (b)(15), (b)(19), and (b)(22); and

b. Adding paragraph (c) to read as follows:

Exhibit Table

Instructions to the Exhibit Table.

1. The exhibit table indicates those documents that must be filed as exhibits to the respective forms listed.

2. The “X” designation indicates the documents which are required to be filed with each form even if filed previously with another document, Provided, However, that such previously filed documents may be incorporated by reference to satisfy the filing requirements.

3. The number used in the far left column of the table refers to the appropriate subsection in paragraph (b) where a description of the exhibit can be found. Whenever necessary, alphabetical or numerical subparts may be used.

(b) * * *

(4) * * *

(ii) Except as set forth in paragraph (b)(4)(iii) of this Item for filings on Forms S-1, S-4, S-11, N-14, and F-4 under the Securities Act (§ 239.11, 239.25, 239.18, 239.23 and 239.34 of this chapter) and Forms 10 and 10-K under the Exchange Act (§§ 249.210 and 249.310 of this chapter) all instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries and for any of its unconsolidated subsidiaries for which financial statements are required to be filed.

(v) With respect to Forms 8-K and 10-Q under the Exchange Act that are filed and that disclose, in the text of the Form 10-Q, the interim financial statements, or the footnotes thereto the creation of a new class of securities or indebtedness or the modification of existing rights of security holders, file all instruments defining the rights of holders of these securities or indebtedness. However, there need not be filed any instrument with respect to long-term debt not being registered which meets the exclusion set forth in paragraph (b)(4)(iii)(A) of this Item.

(10) * * *

(iii) * * *

(C) * * *

(6) Any compensatory plan, contract, or arrangement if the registrant is a wholly owned subsidiary of a company that has a class of securities registered pursuant to section 12 or files reports pursuant to section 15(d) of the Exchange Act and is filing a report on Form 10-K or registering debt instruments or preferred stock that are not voting securities on Form S-1.

(13) Annual report to security holders, Form 10-Q or quarterly report to security holders.

(i) The registrant's annual report to security holders for its last fiscal year, its Form 10-Q (if specifically incorporated by reference in the prospectus) or its quarterly report to security holders, if all or a portion thereof is incorporated by reference in the filing. Such report, except for those portions thereof that are expressly incorporated by reference in the filing, is to be furnished for the information of the Commission and is not to be deemed “filed” as part of the filing. If the financial statements in the report have been incorporated by reference in the filing, the accountant's certificate shall be manually signed in one copy. See Rule 411(b) (§ 230.411(b) of this chapter).

(15) Letter re unaudited interim financial information. A letter, where applicable, from the independent accountant that acknowledges awareness of the use in a registration statement of a report on unaudited interim financial information that pursuant to Rule 436(c) under the Securities Act (§ 230.436(c) of this chapter) is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of that Act. Such letter may be filed with the registration statement, an amendment thereto, or a report on Form 10-Q which is incorporated by reference into the registration statement.

(19) Report furnished to security holders. If the registrant makes available to its security holders or otherwise publishes, within the period prescribed for filing the report, a document or statement containing information meeting some or all of the requirements of Part I of Form 10-Q, the information called for may be incorporated by reference to such published document or statement, provided copies thereof are included as an exhibit to the registration statement or to Part I of the Form 10-Q report.

(22) Published report regarding matters submitted to vote of security holders. Published reports containing all of the information called for by Item 4 of Part II of Form 10-Q or Item 4 of Part I of Form 10-K that is referred to therein in lieu of providing disclosure in Form 10-Q or 10-K, that are required to be filed as exhibits by Rule 12b-23(a)(3) under the Exchange Act (§ 240.12b-23(a)(3) of this chapter).

(c) Smaller reporting companies. A smaller reporting company need not provide the disclosure required in paragraph (b)(12) of this Item, Statements re computation of ratios.

28. Amend § 229.701 by revising paragraph (e) to read as follows:

29. Amend § 229.1118 by revising paragraph (b)(2) to read as follows:

PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

30. The authority citation for part 230 continues to read in part as follows:

Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, unless otherwise noted.

31. Amend § 230.110 by revising paragraph (a) to read as follows:

32. Amend § 230.138 by revising paragraph (a)(2)(i) to read as follows:

33. Amend § 230.139 by revising paragraph (a)(1)(i)(A)(2) to read as follows:

34. Amend § 230.158 by revising paragraphs (a)(1)(i), (a)(2)(i), and (b) to read as follows:

35. Amend § 230.175 by revising paragraphs (b)(1), (b)(1)(i), and (b)(2) to read as follows:

36. Amend § 230.405 by removing the definition of “small business issuer” and adding the definition of “smaller reporting company” in alphabetical order to read as follows:

37. Amend § 230.415 by revising paragraph (a)(3) to read as follows:

38. Amend § 230.428 by revising paragraphs (b)(2)(ii), (b)(2)(iii), (b)(2)(iv), and (b)(4) to read as follows:

39. Amend § 230.430B by revising paragraphs (f)(4) introductory text, (ii), and (i) to read as follows:

40. Amend § 230.430C by revising paragraph (d) to read as follows:

41. Revise § 230.455 to read as follows:

42. Amend § 30.502 by revising paragraphs (b)(2)(i)(B)( 1), (b)(2)(i)(B)(2), (b)(2)(ii)(A), (b)(2)(ii)(B), and (b)(2)(iii) to read as follows:

PART 239—FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

43. The authority citation for part 239 continues to read in part as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78 l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78 ll, 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, and 80a-37, unless otherwise noted.

44. Amend § 239.0-1 by revising paragraph (b) to read as follows:

45. By removing and reserving §§ 239.9 and 239.10 and removing Form SB-1 and Form SB-2.

Note:

The text of Forms SB-1 and SB-2 does not appear in the Code of Federal Regulations.

46. Amend Form S-1 (referenced in § 239.11) by:

a. Adding to the cover page, above the calculation of the registration fee table, check boxes requesting the registrant to indicate whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company; and

b. Revising Items 11(e), 11A, and 12(a)(1) in Part I.

The revisions and addition read as follows:

Note:

The text of Form S-1 does not and this amendment will not appear in the Code of Federal Regulations.

FORM S-1—REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Accelerated filer

☐ Non-accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

PART I—INFORMATION REQUIRED IN PROSPECTUS

Item 11. Information With Respect to the Registrant

(e) Financial statements meeting the requirements of Regulation S-X (17 CFR part 210) (Schedules required under Regulation S-X shall be filed as “Financial Statements Schedules” pursuant to Item 15, Exhibits and Financial Statement Schedules, of this form), as well as any financial information required by Rule 3-05 and Article 11 of Regulation S-X. A smaller reporting company may provide the information in Rule 8-04 and 8-05 of Regulation S-X in lieu of the financial information required by Rule 3-05 and Article 11 of Regulation S-X;

Item 11A. Material Changes

If the registrant elects to incorporate information by reference pursuant to General Instruction VII, describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K and that have not been described in a Form 10-Q or Form 8-K filed under the Exchange Act.

Item 12. Incorporation of Certain Information by Reference

(a) * * *

(1) The registrant's latest annual report on Form 10-K filed pursuant to Section 13(a) or Section 15(d) of the Exchange Act that contains financial statements for the registrant's latest fiscal year for which a Form 10-K was required to have been filed; and

47. Amend Form S-3 (referenced in § 239.13) by adding to the cover page, above the calculation of the registration fee table, check boxes requesting the registrant to indicate whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company and revising General Instruction II C., and in Part I, Items 11(a) and 12(a)(1) to read as follows.

Note:

The text of Form S-3 does not and this amendment will not appear in the Code of Federal Regulations.

FORM S-3—REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

GENERAL INSTRUCTIONS

II. Application of General Rules and Regulations

C. A smaller reporting company, defined in Rule 405 (17 CFR 230.405), that is eligible to use Form S-3 shall use the disclosure items in Regulation S-K (17 CFR 229.10 et seq.) with specific attention to the scaled disclosure provided for smaller reporting companies, if any. Smaller reporting companies may provide the financial information called for by Article 8 of Regulation S-X in lieu of the financial information called for by Item 11 in this form.

PART I—INFORMATION REQUIRED IN PROSPECTUS

Item 11. Material Changes

(a) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which certified financial statements were included in the latest annual report to security holders and that have not been described in a report on Form 10-Q (§ 249.308a of this chapter) or Form 8-K (§ 249.308 of this chapter) filed under the Exchange Act.

Item 12. Incorporation of Certain Information by Reference

(a) * * *

(1) The registrant's latest annual report on Form 10-K (17 CFR 249.310) filed pursuant to Section 13(a) or 15(d) of the Exchange Act that contains financial statements for the registrant's latest fiscal year for which a Form 10-K was required to be filed; and

48. Amend Form S-8 (referenced in § 239.16b) by adding to the cover page, above the calculation of registration fee table, check boxes requesting the registrant to indicate whether a registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company and revising General Instructions A.1(a)(6) and B.3. to read as follows:

Note:

The text of Form S-8 does not and this amendment will not appear in the Code of Federal Regulations.

FORM S-8—REGISTRATION OF SECURITIES UNDER THE SECURITIES ACT OF 1933

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

GENERAL INSTRUCTIONS

A. Rule as to Use of Form S-8

1. * * *

(a) * * *

(6) The term “Form 10 information” means the information that is required by Form 10 or Form 20-F (§ 249.210 or § 249.220f of this chapter), as applicable to the registrant, to register under the Securities Exchange Act of 1934 each class of securities being registered using this form. A registrant may provide the Form 10 information in another Commission filing with respect to the registrant.

B. Application of General Rules and Regulations

3. A “smaller reporting company,” defined in § 230.405, shall use the disclosure items in Regulation S-K (17 CFR 229.10 et seq.) with specific attention to the scaled disclosure provided for smaller reporting companies, if any.

49. Amend Form S-11 (referenced in § 229.18) by:

a. Adding to the cover page, above the calculation of registration fee table, check boxes requesting the registrant to indicate whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company; and

b. Revising Item 27.

The revision and addition read as follows:

Note:

The text of Form S-11 does not and this amendment will not appear in the Code of Federal Regulations.

FORM S-11—FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

Item 27. Financial Statements and Information

Include in the prospectus the financial statements required by Regulation S-X, the supplementary financial information required in Item 302 of Regulation S-K (§ 229.302 of this chapter) and the information concerning changes in and disagreements with accountants on accounting and financial disclosure required by Item 304 of Regulation S-K (§ 229.304 of this chapter). Although all schedules required by Regulation S-X are to be included in the registration statement, all such schedules other than those prepared in accordance with Rules 12-12, 12-28, and 12-29 of Regulation S-X (§§ 210.12-12, 12-28, and 12-29 of this chapter) may be omitted from the prospectus. A smaller reporting company may provide the information in Article 8 of Regulation S-X (§ 210.8 of this chapter) in lieu of the financial information required by other parts of Regulation S-X, and need not provide the supplementary financial information required in Item 302 of Regulation S-K.

50. Amend Form S-4 (referenced in § 239.25) by:

a. Adding to the cover page, above the calculation of the registration fee table, check boxes requesting the registrant to indicate whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company;

b. Removing paragraph 4 of General Instruction D; and

c. Revising paragraph 1 of General Instruction I and in Part I Item 4(b), Item 5, Item 12(a) before the Instruction, the introductory text of Item 12(b), paragraph 3 of Item 12(c), Item 17(b)(8), Item 18(b), and Item 19(c).

The addition and revisions read as follows:

Note:

The text of Form S-4 does not and this amendment will not appear in the Code of Federal Regulations.

FORM S-4—REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

GENERAL INSTRUCTIONS

I. Roll-Up Transactions

1. If securities to be registered on this Form will be issued in a roll-up transaction as defined in Item 901(c) of Regulation S-K (17 CFR 229.901(c)), then the disclosure provisions of Subpart 229.900 of Regulation S-K (17 CFR 229.900) shall apply to the transaction in addition to the provisions of this Form. A smaller reporting company, defined in § 230.405, that is engaged in a roll-up transaction shall refer to the disclosure items in subpart 900 of Regulation S-K. To the extent that the disclosure requirements of Subpart 229.900 are inconsistent with the disclosure requirements of any other applicable forms or schedules, the requirements of Subpart 229.900 are controlling.

PART I—INFORMATION REQUIRED IN THE PROSPECTUS

A. Information About the Transaction

Item 4. Terms of the Transaction

(b) If a report, opinion or appraisal materially relating to the transaction has been received from an outside party, and such report, opinion or appraisal is referred to in the prospectus, furnish the same information as would be required by Item 1015(b) of Regulation M-A (§ 229.1015(b) of this chapter).

Item 5. Pro Forma Financial Information

Furnish financial information required by Article 11 of Regulation S-X (§ 210.11-01 et seq. of this chapter) with respect to this transaction. A smaller reporting company may provide the information in Rule 8-05 of Regulation S-X (§ 210.8-05 of this chapter) in lieu of the financial information required by Article 11 of Regulation S-X.

Item 12. Information With Respect to S-3 Registrants

(a) If the registrant elects to deliver this prospectus together with a copy of either its latest Form 10-K filed pursuant to Section 13(a) or 15(d) of the Exchange Act or its latest annual report to security holders, which at the time of original preparation met the requirements of either Rule 14a-3 or Rule 14c-3:

(1) Indicate that the prospectus is accompanied by either a copy of the registrant's latest Form 10-K or a copy of its latest annual report to security holders, whichever the registrant elects to deliver pursuant to paragraph (a) of this Item.

(2) Provide financial and other information with respect to the registrant in the form required by Part I of Form 10-Q as of the end of the most recent fiscal quarter which ended after the end of the latest fiscal year for which certified financial statements were included in the latest Form 10-K or the latest report to security holders (whichever the registrant elects to deliver pursuant to paragraph (a) of this Item), and more than forty-five days before the effective date of this registration statement (or as of a more recent date) by one of the following means:

(i) Including such information in the prospectus;

(ii) Providing without charge to each person to whom a prospectus is delivered a copy of the registrant's latest Form 10-Q; or

(iii) Providing without charge to each person to whom a prospectus is delivered a copy of the registrant's latest quarterly report that was delivered to security holders and included the required financial information.

(3) If not reflected in the registrant's latest Form 10-K or its latest annual report to security holders (whichever the registrant elects to deliver pursuant to paragraph (a) of this Item) provide information required by Rule 3-05 (§ 210.3-05 of this chapter) and Article 11 (§ 210.11-01 through 210.11.03 of this chapter) of Regulation S-X. Smaller reporting companies may provide the information required by Rules 8-04 and 8-05 of Regulation S-X.

(4) Describe any and all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K or latest annual report to security holders (whichever the registrant elects to deliver pursuant to paragraph (a) of this Item) and that were not described in a Form 10-Q or quarterly report delivered with the prospectus in accordance with paragraph (a)(2)(ii) or (iii) of this Item.

(b) If the registrant does not elect to deliver its latest Form 10-K or its latest annual report to security holders:

(c) * * *

(3) Such restatement of financial statements or disposition of assets was not reflected in the registrant's latest annual report to security holders and/or in its latest Form 10-K filed pursuant to Section 13(a) or 15(d) of the Exchange Act.

Item 17. Information With Respect to Companies Other Than S-3 Companies

(b) * * *

(8) The quarterly financial and other information that would have been required had the company being acquired been required to file Part I of Form 10-Q (§ 249.308a of this chapter) for the most recent quarter for which such a report would have been on file at the time the registration statement becomes effective or for a period ending as of a more recent date.

Item 18. Information if Proxies, Consents or Authorizations Are To Be Solicited

(b) If the registrant or the company being acquired meets the requirements for use of Form S-3, any information required by paragraphs (a)(5)(ii) and (7) of this Item with respect to such company may be incorporated by reference from its latest annual report on Form 10-K.

Item 19. Information if Proxies, Consents or Authorizations Are Not To Be Solicited or in an Exchange Offer

(c) If the registrant or the company being acquired meets the requirements for use of Form S-3, any information required by paragraphs (a)(5) and (7) of this Item with respect to such company may be incorporated by reference from its latest annual report on Form 10-K.

51. Revise § 239.42 to read as follows:

52. Amend Form F-X (referenced in § 239.42) by revising General Instructions I.(e) and II.F.(a) and (c) to read as follows:

Note:

The text of Form F-X does not and this amendment will not appear in the Code of Federal Regulations.

FORM F-X—APPOINTMENT OF AGENT FOR SERVICE OF PROCESS AND UNDERTAKING

GENERAL INSTRUCTIONS

I. * * *

(e) By any non-U.S. person acting as trustee with respect to securities registered on Form F-7, F-8, F-9, F-10, or F-80; and

II. * * *

F. Each person filing this Form in connection with:

(a) The use of Form F-9, F-10, or 40-F or Schedule 13E-4F, 14D-1F, or 14D-9F stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time until six years have elapsed from the date the issuer of the securities to which such Forms and Schedules relate has ceased reporting under the Exchange Act;

(c) Its status as trustee with respect to securities registered on Form F-7, F-8, F-9, F-10, or F-80 stipulates and agrees to appoint a successor agent for service of process and file an amended Form F-X if the Filer discharges the Agent or the Agent is unwilling or unable to accept service on behalf of the Filer at any time during which any of the securities subject to the indenture remain outstanding; and

53. Amend Form 1-A (referenced in § 239.90) by revising paragraph B in Part II to read as follows:

Note:

The text of Form 1-A does not and this amendment will not appear in the Code of Federal Regulations.

FORM 1-A—REGULATION A OFFERING STATEMENT UNDER THE SECURITIES ACT OF 1933

PART II—OFFERING CIRCULAR

B. For all other issuers and for any issuer that so chooses—the information required by either Part I of Form S-1, (17 CFR 239.11), except for the financial statements called for there, or Model B of this Part II of Form 1-A. Offering circulars prepared pursuant to this instruction need not follow the order of the items or other requirements of the disclosure form. Such information shall not, however, be set forth in such a fashion as to obscure any of the required information or information necessary to keep the required information from being incomplete or misleading. Information requested to be presented in a specified tabular format shall be given in substantially the tabular form specified in the item.

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

54. The authority citations for part 240 continue to read in part as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78 l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78 ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise noted.

55. Amend § 240.0-2 by revising paragraph (a) to read as follows:

56. Amend § 240.0-12 by revising the second sentence of paragraph (c) to read as follows:

57. Amend § 240.3b-6 by revising the introductory text of paragraph (b)(1), paragraphs (b)(1)(i) and (b)(2) to read as follows:

58. Amend § 240.10A-1 by revising paragraphs (a)(4)(ii) and (b)(3) to read as follows:

59. Amend § 240.10A-3 by revising paragraph (a)(5)(i)(A) to read as follows:

60. Amend § 240.12b-2 by:

a. Revising paragraphs (1)(iv) and (2)(iv) in the definition of accelerated filer and large accelerated filer;

b. Removing the definition of small business issuer; and

c. Adding the definition of smaller reporting company in alphabetical order.

The revisions and addition to read as follows:

61. Amend § 240.12b-23 by revising paragraphs (a)(3)(i) and (b) to read as follows:

62. Amend § 240.12b-25 by revising the section heading and paragraphs (a) and (b)(2)(ii) to read as follows:

63. Amend § 240.12h-3 by revising paragraph (e) to read as follows:

64. Amend § 240.13a-10 by revising paragraphs (c), (d)(2)(ii), (d)(2)(iii), the introductory text of paragraph (e), paragraphs (e)(1), (e)(2), (e)(4), the Note to paragraphs (c) and (e) and the introductory text of paragraph (j)(2) to read as follows:

65. Amend § 240.13a-13 by revising the section heading, paragraph (a), the introductory text of paragraph (c), and paragraph (d) to read as follows:

66. Amend § 240.13a-14 by revising paragraph (a) to read as follows:

67. Amend § 240.13a-16 by revising paragraph (a)(3) to read as follows:

68. Amend § 240.13a-20 by revising the introductory text of paragraph (a) to read as follows:

69. Amend § 240.14a-3 by:

a. Removing the Note to Small Business Issuers following the introductory text of paragraph (b);

b. Revising paragraph (b)(1) and Note 1;

c. Revising the heading “Note 2” to read “Note 2 to Paragraph (b)(i)”; and

d. Revising paragraphs (b)(5)(ii), (b)(10) and its Note, and (d) to read as follows:

70. Amend § 240.14a-5 by removing the authority citation following the section and revising paragraph (f) to read as follows:

71. Amend § 240.14a-8, by revising paragraph (e)(1) to read as follows:

72. Amend § 240.14a-101 by:

a. Revising Notes C. and D.1, and the introductory text of Note E.;

b. Removing Notes F. and G. to the cover page;

c. Revising paragraph (e)(1) of Item 9, and revising paragraph (a)(1) of Item 13.

The revisions to read as follows:

73. Amend § 240.14c-3 by removing the Note to Small Business Issuers following paragraph (a)(2).

74. Amend § 240.14c-101 by revising the Note that follows the cover page to read as follows:

75. Amend § 240.14d-3 by removing the authority citation following the section and revising paragraph (a)(3)(i) to read as follows:

76. Amend § 240.15d-10 by revising paragraphs (c), (d)(2)(ii), (d)(2)(iii), the introductory text of (e), paragraphs (e)(1), (e)(2), (e)(4), the Note to paragraphs (c) and (e), paragraph (f), and the introductory text of (j)(2) to read as follows:

77. Amend § 240.15d-13 by revising the section heading, paragraph (a), the introductory text of (c), and paragraphs (d) and (e) to read as follows:

78. Amend § 240.15d-14 by revising paragraph (a) to read as follows:

79. Amend § 240.15d-20 by revising the introductory text of paragraph (a) to read as follows:

80. Amend § 240.15d-21 by revising paragraph (a)(1) to read as follows:

PART 249—FORMS, SECURITIES EXCHANGE ACT OF 1934

81. The authority citations for part 249 continues to read in part as follows:

Authority: 15 U.S.C. 78a et seq., 7202, 7233, 7241, 7262, 7264, and 7265; and 18 U.S.C. 1350, unless otherwise noted.

82. Amend § 249.0-1 by revising paragraph (b) to read as follows:

83. Amend Form 8-A (referenced in § 249.208a) by revising Item 1 before the Instruction to read as follows:

Note:

The text of Form 8-A does not and this amendment will not appear in the Code of Federal Regulations.

FORM 8-A—FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES ACT OF 1934

Item 1. Description of Registrant's Securities to be Registered

Furnish the information required by Item 202 of Regulation S-K (§ 229.202 of this chapter), as applicable.

84. Amend Form 10 (referenced in § 249.210) by:

a. Adding check boxes to the cover page, above the Information Requested in Registration Statement, requesting the registrant indicate by check mark whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company;

b. Revising Item 1A; and

c. Revising Item 13.

The addition and revision read as follows:

Note:

The text of Form 10 does not and this amendment will not appear in the Code of Federal Regulations.

FORM 10—GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

Item 1A. Risk Factors

Set forth, under the caption “Risk Factors,” where appropriate, the risk factors described in Item 503(c) of Regulation S-K (§ 229.503(c) of this chapter) applicable to the registrant. Provide any discussion of risk factors in plain English in accordance with Rule 421(d) of the Securities Act of 1933 (§ 230.421(d) of this chapter). Smaller reporting companies are not required to provide the information required by this item.

Item 13. Financial Statements and Supplementary Data

Furnish all financial statements required by Regulation S-X and supplementary financial information required by Item 302 of Regulation S-K (§ 229.302 of this chapter). Smaller reporting companies may provide the financial information required by Article 8 of Regulation S-X in lieu of the information required by in other parts of Regulation S-X.

85. By removing and reserving § 249.210b and removing Form 10-SB.

Note:

The text of Form 10-SB does not appear in the Code of Federal Regulations.

86. Amend Form 20-F (referenced in § 249.220f) by adding instruction (f) to the General Instructions B to read as follows:

Note:

The text of Form 20-F does not and this amendment will not appear in the Code of Federal Regulations.

FORM 20-F

GENERAL INSTRUCTIONS

B. General Rules and Regulation That Apply to this Form

(f) A foreign private issuer that is a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), may not use the scaled disclosure requirements in Regulation S-X and Regulation S-K available to smaller reporting companies for the purposes of preparing this form.

87. Amend Form 8-K (referenced in § 249.308) by revising General Instruction B.4.; removing General Instruction C.3; revising Item 2.01 paragraph (f) before the Instructions; Instructions 2 and 4 to Item 2.02; Item 2.03 paragraph (d); Item 3.02 paragraphs (a) and (b) before the Instructions and Instruction 2; Item 4.01 paragraphs (a) and (b) before the Instructions; Item 4.02 the introductory text of paragraph (a); Item 5.01 paragraphs (a)(8) and (b); Item 5.02 paragraphs (c)(2), (d)(4), (f), and Instruction 4; in Item 5.03 paragraph (b), revise the phrase “Form 10-K, Form 10-KSB, Form 10-Q or Form 10-QSB” to read “Form 10-K or Form 10-Q”, and revise Instruction 1; Item 5.05 paragraph (a); and Item 9.01 paragraphs (a)(1), (a)(3), (b)(1) and (d) before the Instruction

The revisions read as follows:

FORM 8-K—CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

GENERAL INSTRUCTIONS

B. Events to be Reported and Time for Filing of Reports

4. Copies of agreements, amendments or other documents or instruments required to be filed pursuant to Form 8-K are not required to be filed or furnished as exhibits to the Form 8-K unless specifically required to be filed or furnished by the applicable Item. This instruction does not affect the requirement to otherwise file such agreements, amendments or other documents or instruments, including as exhibits to registration statements and periodic reports pursuant to the requirements of Item 601 of Regulation S-K.

Item 2.01 Completion of Acquisition or Disposition of Assets

(f) If the registrant was a shell company, other than a business combination related shell company, as those terms are defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately before the transaction, the information that would be required if the registrant were filing a general form for registration of securities on Form 10 under the Exchange Act reflecting all classes of the registrant's securities subject to the reporting requirements of Section 13 (15 U.S.C. 78m) or Section 15(d) (15 U.S.C. 78o(d)) of such Act upon consummation of the transaction, with such information reflecting the registrant and its securities upon consummation of the transaction. Notwithstanding General Instruction B.3 to Form 8-K, if any disclosure required by this Item 2.01(f) is previously reported, as that term is defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), the registrant may identify the filing in which that disclosure is included instead of including that disclosure in this report.

Item 2.02 Results of Operations and Financial Condition

Instructions.

2. The requirements of paragraph (e)(1)(i) of Item 10 of Regulation S-K (17 CFR 229.10(e)(1)(i)) shall apply to disclosures under this Item 2.02.

4. This Item 2.02 does not apply in the case of a disclosure that is made in a quarterly report filed with the Commission on Form 10-Q (17 CFR 249.308a) or an annual report filed with the Commission on Form 10-K (17 CFR 249.310).

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

(d) For purposes of this Item 2.03, off-balance sheet arrangement has the meaning set forth in Item 303(a)(4)(ii) of Regulation S-K (17 CFR 229.303(a)(4)(ii)).

Item 3.02 Unregistered Sales of Equity Securities

(a) If a registrant sells equity securities in a transaction that is not registered under the Securities Act, furnish the information set forth in paragraphs (a) and (c) through (e) of Item 701 of Regulation S-K (17 CFR 229.701(a) and (c) through (e)). For purposes of determining the required filing date for the Form 8-K under this Item 3.02(a), the registrant has no obligation to disclose information under this Item 3.02 until the registrant enters into an agreement enforceable against the registrant, whether or not subject to conditions, under which the equity securities are to be sold. If there is no such agreement, the registrant must provide the disclosure within four business days after the occurrence of the closing or settlement of the transaction or arrangement under which the equity securities are to be sold.

(b) No report need be filed under this Item 3.02 if the equity securities sold, in the aggregate since its last report filed under this Item 3.02 or its last periodic report, whichever is more recent, constitute less than 1% of the number of shares outstanding of the class of equity securities sold. In the case of a smaller reporting company, no report need be filed if the equity securities sold, in the aggregate since its last report filed under this Item 3.02 or its last periodic report, whichever is more recent, constitute less than 5% of the number of shares outstanding of the class of equity securities sold.

Instructions.

2. A smaller reporting company is defined in Item 10(f)(1) of Regulation S-K (17 CFR 229.10(f)(1)).

Item 4.01 Changes in Registrant's Certifying Accountant

(a) If an independent accountant who was previously engaged as the principal accountant to audit the registrant's financial statements, or an independent accountant upon whom the principal accountant expressed reliance in its report regarding a significant subsidiary, resigns (or indicates that it declines to stand for re-appointment after completion of the current audit) or is dismissed, disclose the information required by Item 304(a)(1) of Regulation S-K (§ 229.304(a)(1) of this chapter), including compliance with Item 304(a)(3) of Regulation S-K (§ 229.304(a)(3) of this chapter).

(b) If a new independent accountant has been engaged as either the principal accountant to audit the registrant's financial statements or as an independent accountant on whom the principal accountant is expected to express reliance in its report regarding a significant subsidiary, the registrant must disclose the information required by Item 304(a)(2) of Regulation S-K (17 CFR 229.302(a)(2)).

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

(a) If the registrant's board of directors, a committee of the board of directors or the officer or officers of the registrant authorized to take such action if board action is not required, concludes that any previously issued financial statements, covering one or more years or interim periods for which the registrant is required to provide financial statements under Regulation S-X (17 CFR 210) should no longer be relied upon because of an error in such financial statements as addressed in Accounting Principles Board Opinion No. 20, as may be modified, supplemented or succeeded, disclose the following information:

Item 5.01 Changes in Control of the Registrant

(a) * * *

(8) if the registrant was a shell company, other than a business combination related shell company, as those terms are defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately before the change in control, the information that would be required if the registrant were filing a general form for registration of securities on Form 10 under the Exchange Act reflecting all classes of the registrant's securities subject to the reporting requirements of Section 13 (15 U.S.C. 78m) or Section 15(d) (15 U.S.C. 78o(d)) of such Act upon consummation of the change in control, with such information reflecting the registrant and its securities upon consummation of the transaction. Notwithstanding General Instruction B.3. to Form 8-K, if any disclosure required by this Item 5.01(a)(8) is previously reported, as that term is defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), the registrant may identify the filing in which that disclosure is included instead of including that disclosure in this report.

(b) Furnish the information required by Item 403(c) of Regulation S-K (17 CFR 229.403(c)).

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(c) * * *

(2) the information required by Items 401(b), (d), (e) and Item 404(a) of Regulation S-K (17 CFR 229.401(b), (d), (e) and 229.404(a); and

(d) * * *

(4) the information required by Item 404(a) of Regulation S-K (17 CFR 229.404(a)).

(f) If the salary or bonus of a named executive officer cannot be calculated as of the most recent practicable date and is omitted from the Summary Compensation Table as specified in Instruction 1 to Item 402(c)(2)(iii) and (iv) of Regulation S-K, disclose the appropriate information under this Item 5.02(f) when there is a payment, grant, award, decision or other occurrence as a result of which such amounts become calculable in whole or in part. Disclosure under this Item 5.02(f) shall include a new total compensation figure for the named executive officer, using the new salary or bonus information to recalculate the information that was previously provided with respect to the named executive officer in the registrant's Summary Compensation Table for which the salary and bonus information was omitted in reliance on Instruction 1 to Item 402(c)(2)(iii) and (iv) of Regulation S-K (17 CFR 229.402(c)(2)(iii) and (iv)).

Instructions to Item 5.02

(4) For purposes of this Item, the term “named executive officer” shall refer to those executive officers for whom disclosure was required in the registrant's most recent filing with the Commission under the Securities Act (15 U.S.C. 77a et seq.) or Exchange Act (15 U.S.C. 78a et seq.) that required disclosure pursuant to Item 402(c) of Regulation S-K (17 CFR 229.402(c)).

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Instructions to Item 5.03

1. Refer to Item 601(b)(3) of Regulation S-K (17 CFR 229.601(b)(3)) regarding the filing of exhibits to this Item 5.03.

Item 5.05 Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

(a) Briefly describe the date and nature of any amendment to a provision of the registrant's code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K (17 CFR 229.406(b)).

Item 9.01 Financial Statements and Exhibits

(a) * * *

(1) For any business acquisition required to be described in answer to Item 2.01 of this form, financial statements of the business acquired shall be filed for the periods specified in Rule 3-05(b) of Regulation S-X (17 CFR 210.3-05(b)) or Rule 8-04(b) of Regulation S-X (17 CFR 210.8-04(b)) for smaller reporting companies.

(2) * * *

(3) With regard to the acquisition of one or more real estate properties, the financial statements and any additional information specified by Rules 3-14 (17 CFR 210.3-14) or Rule 8-06 of Regulation S-X ( 17 CFR 210.8-06) for smaller reporting companies.

(b) * * *

(1) For any transaction required to be described in answer to Item 2.01 of this form, furnish any pro forma financial information that would be required pursuant to Article 11 of Regulation S-X (§ 210.11 of this chapter) or Rule 8-05 of Regulation S-X (§ 210.8-05 of this chapter) for smaller reporting companies.

(d) Exhibits. The exhibits will be deemed to be filed or furnished, depending upon the relevant item requiring such exhibit, in accordance with the provisions of Item 601 of Regulation S-K (17 CFR 229.601) and Instruction B.2 of this form.

88. Amend Form 10-Q (referenced in § 249.308a) by:

a. Revising the cover page of Form 10-Q to add, above Part I Financial Information, check boxes requesting the registrant to indicate whether it is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company;

b. In Part I, revising the text of Item 1; and

c. In Part II, revising the text of Item 1A.

The revisions and addition read as follows:

Note:

The text of Form 10-Q does not and this amendment will not appear in the Code of Federal Regulations.

FORM 10-Q

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

Part I—Financial Information

Item 1. Financial Statements

Provide the information required by Rule 10-01 of Regulation S-X (17 CFR 210). A smaller reporting company, defined in Rule 12b-2 (§ 240.12b-2 of this chapter) may provide the information required by Article 8-03 of Regulation S-X (§ 210.8-03 of this chapter).

Part II—Other Information

Item 1A. Risk Factors

Set forth any material changes from risk factors as previously disclosed in the registrant's Form 10-K (§ 249.310) in response to Item 1A to Part 1 of Form 10-K. Smaller reporting companies are not required to provide the information required by this item.

89. By removing and reserving § 249.308b and removing Form 10-QSB.

Note:

The text of Form 10-QSB does not appear in the Code of Federal Regulations.

90. Amend Form 10-K (referenced in § 249.310) by:

a. Revising the cover page of Form 10-K to add, above the line asking the registrant to indicate whether it is a shell company, check boxes requesting the registrant to indicate whether it is a large accelerated filer, or an accelerated filer; a non-accelerated filer, or a smaller reporting company;

b. Revising Item 1A; and

c. Revising Item 5 paragraph (a), Item 8 and Item 14 paragraph (1).

The additions and revisions read as follows:

Note:

The text of Form 10-K does not and this amendment will not appear in the Code of Federal Regulations.

Form 10-K—Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Form 10-K

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐ Large accelerated filer

☐ Non-accelerated filer

☐ Accelerated filer

☐ Smaller reporting company

(Do not check if a smaller reporting company)

Item 1A. Risk Factors

Set forth, under the caption “Risk Factors,” where appropriate, the risk factors described in Item 503(c) of Regulation S-K (§ 229.503(c) of this chapter) applicable to the registrant. Provide any discussion of risk factors in plain English in accordance with Rule 421(d) of the Securities Act of 1933 (§ 230.421(d) of this chapter). Smaller reporting companies are not required to provide the information required by this item.

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Furnish the information required by Item 201 of Regulation S-K (17 CFR 229.201) and Item 701 of Regulation S-K (17 CFR 229.701) as to all equity securities of the registrant sold by the registrant during the period covered by the report that were not registered under the Securities Act. If the Item 701 information previously has been included in a Quarterly Report on Form 10-Q (17 CFR 249.308a) or in a Current Report on Form 8-K (17 CFR 249.308), it need not be furnished.

Item 8. Financial Statements and Supplementary Data

(a) Furnish financial statements meeting the requirements of Regulation S-X (§ 210 of this chapter), except § 210.3-05 and Article 11 thereof, and the supplementary financial information required by Item 302 of Regulation S-K (§ 229.302 of this chapter). Financial statements of the registrant and its subsidiaries consolidated (as required by Rule 14a-3(b)) shall be filed under this item. Other financial statements and schedules required under Regulation S-X may be filed as “Financial Statement Schedules” pursuant to Item 15, Exhibits, Financial Statement Schedules, and Reports on Form 8-K, of this Form.

(b) A smaller reporting company may provide the information required by Article 8 of Regulation S-X in lieu of any financial statements required by Item 8 of this Form.

Item 14. Principal Accounting Fees and Services

(1) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-Q (17 CFR 249.308a) or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

91. By removing and reserving § 249.310b and removing Form 10-KSB.

Note:

The text of Form 10-KSB does not appear in the Code of Federal Regulations.

92. Amend Form 11-K (referenced in § 249.311) by removing General Instruction E(b) and redesignating the text of General Instruction E(a) as General Instruction E.

93. Amend Form SE (referenced in § 249.444) by revising General Instruction 3.C to read as follows:

Form SE—Form for Submission of Paper Format Exhibits by Edgar Electronic Filers

Form SE General Instructions

3. Filing of Form SE

C. Identify the exhibit being filed. Attach to the Form SE the paper format exhibit and an exhibit index if required by Item 601 of Regulation S-K (§ 229.601 of this chapter).

PART 260—GENERAL RULE AND REGULATIONS, TRUST INDENTURE ACT OF 1939

94. The authority citation for part 260 continues to read as follows:

Authority: 15 U.S.C. 77eee, 77ggg, 77nnn, 77sss, 78ll(d), 80b-3, 80b-4, and 80b-11.

95. Amend § 260.0-11 by revising the introductory text of paragraph (b)(1), paragraphs (b)(1)(i) and (b)(2) to read as follows:

96. Amend § 260.4d-9 by revising the introductory text to read as follows:

97. Amend § 260.10a-5 by revising paragraph (a) to read as follows:

PART 269—FORMS PRESCRIBED UNDER THE TRUST INDENTURE ACT OF 1939

98. The authority citation for part 269 is revised to read as follows:

Authority: 15 U.S.C. 77ddd(c), 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77sss, and 78ll(d), unless otherwise noted.

99. Amend § 260.01 by revising paragraph (b) to read as follows: