Form 10-Q Quarterly Reports, Filing Requirements l Going Public Lawyer
Publicly traded companies with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are subject to the SEC’s periodic and current reporting requirements of Section 13 or 15(d) of the Securities Exchange Act. The Exchange Act contains ongoing disclosure requirements that provide investors with current information on an ongoing basis. These include an obligation to file periodic reports on Form 10-K and Form 10-Q and current reports on Form 8-K with the Securities and Exchange Commission (“SEC”). Quarterly reports on Form 10-Q are required for three of the company’s quarterly periods.
The disclosures in periodic filings must comply with a variety of SEC requirements, and are available to the public through the SEC’s website.
The SEC separates public companies into four categories for purposes of Exchange Act filings. The filing dates for Form 10-Q depend upon the issuer’s category. The categories are set forth below:
• Large Accelerated Filers (market value of $700MM or more);
• Accelerated Filers (market value of more than $75 million and less than $700 million);
• Non-Accelerated Filers; and
• Smaller Reporting Companies.
Large and accelerated filers must file the Form 10-Q, 40 days after the end of the period of the report. Non-Accelerated Filers and Smaller Reporting Companies are required to file their Form 10-Q within 45 days after the period of the report. The Form 10-Q is filed for each of the three quarters following an issuer’s annual report for its fiscal year; the fourth quarter numbers are included in the annual report.
Amendment of Form 10-Q
Reports on Form 10-Q can be amended for several reasons. These include to correct or revise previously provided information or to provide information that was unknown at the time of the original filing. For example, it is proper to amend Form 10-Q to reflect restated financial statements.
Form 10-Q Disclosures
Among other things, Form 10-Q requires the following disclosures:
● Interim financial statements for each of three quarters following the end of the fiscal year;
● Management’s Discussion and Analysis of Financial Condition and Results of Operations, Procedures and Controls;
● Legal Proceedings;
● Changes in Risks Factors from earlier reports;
● Unregistered Sales of Equity Securities and Use of Proceeds;
● Defaults Upon Senior Securities;
● Mine Safety Disclosures;
● Subsequent Events;
● Any information required to be disclosed in a report on Form 8-K during the period covered by the 10-Q.
Untimely 10-Q Filings
Filing a quarterly report on Form 10-Q late can impact on an issuer’s ability to remain listed on a stock exchange such as the NYSE or the NASDAQ. Late filings prevent the issuer from using short-form registration statement on Form S-3 for 12 months. Until the late Form 10-Q is filed, the issuer will also be ineligible to use Form S-8 to register securities. Additionally, the current informational requirement of Rule 144 will not be satisfied until the Form 10-Q is filed. Filing a quarterly report on Form 10-Q late can impact on an issuer’s ability to remain listed on a stock exchange such as the NYSE or the NASDAQ.
Penalties for Untimely Reports on Form 10-Q
The failure to file its quarterly report on Form 10-Q is a violation of Section 13(a) or Section 15, as applicable, of the Exchange Act and subjects the issuer to potential liability. The SEC could institute administrative proceedings against the issuer and seek to revoke its securities registration under the Exchange Act. The issuer is also subject to liability under the anti-fraud provisions of the Exchange Act. The failure to file a Form 10-Q could be considered a failure to disclose material information or a material omission which subjects the issuer to liability under the anti-fraud provisions of Section 10(b) and Rule 10b-5 of the Exchange Act, which prohibit material misstatements and omissions in connection with the purchase or sale of securities.
If the stock in question is listed on the NYSE, in most cases the exchange will merely require the issuer to inform its shareholders of the late filing, and will add the company’s name to its Late Filers list. It will ask for an explanation of the issues delinquency, and request an estimated new time of filing. In some cases, the company may be allowed 180 days or more to make things right.
Extensions of Form 10-Q Due Dates
Issuers can extend the relevant due date for their Form 10-Q by filing a Form 12b25 (also called NT-10Q) with the SEC. A Form 12b-25 must be filed no later than the next business day after the original 10-Q filing deadline and must disclose the issuer’s inability to file the report timely and the reasons therefore in reasonable detail. The 12b-25 will extend the issuer’s 10-Q deadline for up to 5 days.
Fully Reporting OTC Companies
The rules governing late filers are different for OTC issuers. OTC companies can also avail themselves of the five day extension provided by the submission of an NT-10Q, but if they miss the due date a second time, an “E” will be attached to their stock symbol for 30 days; If the filing is made during that time, the “E” will be removed and the stock will continue to trade as before. If, however, the grace period expires without submission, the stock will be demoted to the OTC Pinks, an outcome that can affect the company’s prestige and its ability to raise money. In either scenario, the “E” disappears from the issuer’s stock symbol after 30 days.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855