Smaller Reporting Companies

If your company qualifies as a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K, it may choose to prepare the disclosure in the prospectus relying on scaled disclosure requirements for smaller reporting companies in Regulation S-K and in Article 8 of Regulation S-X.

On June 28, 2018, the Commission adopted amendments to the definition of “smaller reporting company” that were effective on September 10, 2018.  Under the new definition, generally, a company qualifies as a “smaller reporting company” if:

• it has public float of less than $250 million or
• it has less than $100 million in annual revenues and
  • no public float or
  • public float of less than $700 million

Public float is calculated by multiplying the number of the company’s common shares held by non-affiliates by the market price and, in the case of an IPO, adding to that number the product obtained by multiplying the common shares covered by the registration statement by their estimated public offering price. A company may have no public float because it has no public common shares outstanding or because there is no market price for its common shares.

The scaled disclosure requirements for smaller reporting companies permit your company:

• to include less extensive narrative disclosure than required of other reporting companies, particularly in the description of executive compensation and
• to provide audited financial statements for two fiscal years, in contrast to other reporting companies, which must provide audited financial statements for three fiscal years

In addition to the accommodations that are available to smaller reporting companies, there are also different requirements that apply to “non-accelerated filers” and “accelerated filers.”  Generally, if a smaller reporting company has: