Re: General notes on OTC:BB stocks filing Form 10s
Think of Form 10s as S-1s (the forms filed for IPOs), in that you are registering a class of securities pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934. The only difference is that with Form 10s the securities already have been traded. Small businesses (less than $25 million in the revenue and less than $25 million in public float) may instead file a Form 10SB.
There are 15 items on a Form 10 that must be addressed: Business, Financial Information, Properties, Security Ownership of Certain Beneficial Owners and Management, Directors and Executive Officers, Executive Compensation, Certain Relationships and Related Transactions, Legal Proceedings, Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters, Recent Sales of Unregistered Securities, Description of Registrant's Securities to be Registered, Indemnification of Directors and Officers, Financial Statements and Supplementary Data, Changes in and Disagreements with Accountants on Accounting and Financial Disclosure, and Financial Statements and Exhibits. These requirements are somewhat simplified for Form 10SBs.
All financial information must be audited and up-to-date as of the day the Form 10 is filed, pursuant to the usual SEC rules of quarterly reports being filed within 60 days after fiscal quarter end and year-end reports being filed within 90 days after the fiscal year is over. For example, assuming fiscal and calendar years are the same, a company that files on July 1, 1999 must be current in their Form 10 financials through Q1 of that year. They would then have to meet normal SEC filing deadlines, which would mean Q2 numbers must be released by August 28, the 60th day after then end of Q2. Similarly, any company filing a Form 10 after August 28 must include Q2 numbers as part of their Form 10.
There seems to be some confusion about the new SEC guidelines for OTC:BB stocks to keep from being delisted. As I understand it, all newly trading companies (companies trading on or after January 4) must be reporting immediately. All others are given a grace period to comply, which begins 30 days prior to the "phase-in" date assigned to them by the NASD (for example, the phase-in date for companies beginning with A-AD is July 1, 1999). During this period, any companies not yet in compliance get an "E" appended to their symbol.
According to calls I made to the OTC and the SEC, there is no extension period. If a company is not current by the phase-in date they may not be quoted on the OTC:BB, i.e. they fall to the pink sheets. Furthermore, simply filing the Form 10 or 10SB does not assure compliance. In the past, a Form 10 or 10SB automatically (by rule) became effective 60 days after it was filed. Under the new guidelines, the SEC staff must first come to a position of "no further comment". This means companies who do not have their Form 10s approved immediately must keep filing amendments and keep trading on the pink sheets until the SEC is satisfied.
Note: I am not a securities lawyer. The information above came partly from information gathered on the otcbb.com and partly from calls I made to the OTC (Liz Heese; 202-728-8191) and SEC (202-942-2950). Comments/clarifications welcome.
- Jeff
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