[Federal Register Volume 72, Number 138 (Thursday, July 19, 2007)]
[Proposed Rules]
[Pages 39670-39715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-13407]



[[Page 39669]]

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Part II





Securities and Exchange Commission





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17 CFR Parts 210, 228, 229 et al.



Smaller Reporting Company Regulatory Relief and Simplification; 
Proposed Rule

  Federal Register / Vol. 72, No. 138 / Thursday, July 19, 2007 / 
Proposed Rules  

[[Page 39670]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 228, 229, 230, 239, 240, 249, 260, and 269

[Release Nos. 33-8819; 34-56013; 39-2447; File No. S7-15-07]
RIN 3235-AJ86


Smaller Reporting Company Regulatory Relief and Simplification

AGENCY: Securities and Exchange Commission.

ACTION: Proposed amendments.

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SUMMARY: The Securities and Exchange Commission is proposing rule 
amendments relating to our disclosure and reporting requirements for 
smaller companies under the Securities Act of 1933 and the Securities 
Exchange Act of 1934. We propose to extend the benefits of our current 
optional disclosure and reporting requirements for smaller companies to 
a much larger group of companies. The proposals would allow companies 
with a public float of less than $75 million to qualify for the smaller 
company requirements, up from $25 million for most companies today. The 
proposals also would combine for most purposes the ``small business 
issuer'' and ``non-accelerated filer'' categories of smaller companies 
into a single category of ``smaller reporting companies.'' In addition, 
the proposals would maintain the current disclosure requirements for 
smaller companies contained in Regulation S-B, but integrate them into 
Regulation S-K. We also are soliciting suggestions for additional ways 
in which we could better scale our disclosure and reporting 
requirements to the needs of smaller reporting companies and their 
investors.

DATES: Comments should be received on or before September 17, 2007.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml);
     Send an e-mail to [email protected]. Please include 
File Number S7-15-07 on the subject line; or
     Use the Federal Rulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-15-07. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
are also available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Gerald J. Laporte, Chief, 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: We propose amendments to Regulation S-K,\1\ 
and rules and forms under the Securities Act of 1933,\2\ Securities 
Exchange Act of 1934,\3\ and Trust Indenture Act of 1939.\4\ In 
Regulation S-K, we propose to amend Items 10, 101, 201, 301, 302, 303, 
305, 401, 402, 404, 407, 503, 504, 512, 601, 701, and 1118.\5\ We 
propose to add a new Item 310 to Regulation S-K. We propose to amend 
Securities Act Rules 110, 138, 139, 158, 175, 405, 415, 428, 430B, 
430C, 455, and 502.\6\ Further, we propose to repeal Regulation S-B \7\ 
and eliminate the forms associated with it, which include Forms SB-1, 
SB-2, 10-SB, 10-QSB, and 10-KSB.\8\ We propose to amend Securities Act 
Forms 0-1, S-1, S-3, S-4, S-8, S-11, 1-A, and F-X.\9\ We also propose 
to amend 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\10\ 
and Exchange Act Forms 0-1, 8-A, 8-K, 10, 10-Q, 10-K, 11-K, 20-F, and 
SE.\11\ We also propose to amend Schedules 14A and 14C.\12\ Under 
Regulation S-X,\13\ we propose to amend Rules 210.3-01, 210.3-10, 
210.3-12, 210.3-14, 210.4-01, and 210.10-01.\14\ Finally, we propose to 
amend Trust Indenture Act Rules 0-11, 4d-9, 10a-5,\15\ and Sec.  269.0-
1 of the Trust Indenture Act Forms.\16\
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    \1\ 17 CFR 229.10-229.1123.
    \2\ 15 U.S.C. 77a et seq.
    \3\ 15 U.S.C. 78a et seq.
    \4\ 15 U.S.C. 77aaa et seq.
    \5\ 17 CFR 229.10, 229.101, 229.201, 229.301, 229.302, 229.303, 
229.305, 229.401, 229.402, 229.404, 229.407, 229.503, 229.504, 
229.512, 229.601, 229.701, and 229.1118.
    \6\ 17 CFR 230.110, 230.138, 230.139, 230.158, 230.175, 230.405, 
230.415, 230.428, 230.430B, 230.430C, 230.455, and 230.502.
    \7\ 17 CFR 228.10-228.703.
    \8\ 17 CFR 239.9, 239.10, 249.210b, 249.308b, and 249.310b.
    \9\ 17 CFR 239.0-1, 239.11, 239.13, 239.25, 239.16b, 239.18, 
239.90, and 239.42.
    \10\ 17 CFR 240.0-2, 240.0-12, 240.3b-6, 240.10A-1, 240.10A-3, 
240.12b-2, 240.12b-23, 240.12b-25, 240.12h-3, 240.13a-10, 240.13a-
13, 240.13a-14, 240.13a-16, 240.13a-20, 240.14a-3, 240.14a-5, 
240.14a-8, 240.14c-3, 240.14d-3, 240.15d-10, 240.15d-13, 240.15d-14, 
240.15d-20, and 240.15d-21.
    \11\ 17 CFR 249.0-1, 249.208a, 249.210, 249.308, 249.308a, 
239.310, 249.311, 249.220f, and 249.444.
    \12\ 17 CFR 240.14a-101 and 240.14c-101.
    \13\ 17 CFR 210.3-01-210.12-29.
    \14\ 17 CFR 210.3-01, 210.3-10, 210.3-12, 210.3-14, 210.4-01, 
and 210.10-01.
    \15\ 17 CFR 260.0-11, 260.4d-9, and 260.10a-5.
    \16\ 17 CFR 269.0-1.
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Table of Contents

I. Background
II. Explanation of Proposals
    A. Expanding Eligibility for Smaller Company Scaled Regulation
    1. Quantitative Standards in the Proposed Definition of 
``Smaller Reporting Company''
    a. Proposed Standard
    b. Comparison of the Proposed Standard to the Advisory 
Committee's Recommendation
    2. Exclusions From the Definition of ``Smaller Reporting 
Company''
    B. Integrating Requirements of Current Regulation S-B Into 
Regulation S-K
    1. Policy Objectives of Proposal
    2. Specific Integration Proposals
    a. Financial Statements
    b. Proposed Changes to Other Regulation S-K Disclosure Items
    c. A La Carte Approach
    d. Eliminating ``SB'' Forms
    e. Transition to and From Smaller Reporting Company Status
    f. Eliminating Transitional Small Business Issuer Format
    g. Other Proposals
III. General Request for Comments
IV. Paperwork Reduction Act
V. Cost-Benefit Analysis
VI. Consideration of Impact on the Economy, Burden on Competition 
and Promotion of Efficiency, Competition and Capital Formation
VII. Initial Regulatory Flexibility Act Analysis
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Statutory Basis and Text of Proposal

[[Page 39671]]

I. Background

    Since the federal securities laws were first enacted, the 
Commission has made special efforts not to subject smaller companies 
and their investors to unduly burdensome federal securities 
regulation.\17\ This special concern for small business in part 
reflects recognition of the special role that small business 
historically has played as a driver of economic activity, innovation, 
and job creation in the United States. In March 2005, we chartered the 
Advisory Committee on Smaller Public Companies and asked that panel to 
assess the current regulatory system for smaller companies under the 
federal securities laws and to recommend changes to that system.\18\ 
The major proposals we are making in this release stem from the 
Advisory Committee's recommendations.
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    \17\ See SEC Advisory Committee on Smaller Public Companies, 
Final Report 20-21 (2006) (``Advisory Committee Final Report''), 
available at http://www.sec.gov/info/smallbus/acspc.shtml.
    \18\ See Advisory Committee Final Report 1, App. B (Advisory 
Committee Charter).
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    Our rules currently include two major categories of smaller 
companies--``small business issuers'' and ``non-accelerated filers''--
for purposes of scaling our disclosure and reporting requirements to 
the needs of smaller companies and their investors. These two 
categories of smaller companies are defined as follows:
     ``Small business issuers'' essentially are companies with 
both a public float and revenues of less than $25 million. Of the 
11,898 companies that filed annual reports under the Exchange Act in 
2006, 3,749 had a public float of less than $25 million.\19\
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    \19\ Of these 11,898 filers, 3,395 filed a Form 10-KSB, the 
annual report filed by small business issuers. We determined that 
there were an additional 354 filers with a public float of less than 
$25 million that did not file a Form 10-KSB because they opted to 
use Form 10-K, the form prescribed for most larger companies, 
instead. We have not attempted to provide information on companies 
with revenues of less than $25 million because, as discussed below, 
we propose to eliminate the revenue test for purposes of the primary 
determination of whether smaller companies qualify for scaled 
regulation under our disclosure requirements.
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     ``Non-accelerated filers'' are companies that do not 
qualify as ``large accelerated filers'' or ``accelerated filers'' under 
our rules.\20\ Non-accelerated filers essentially are companies with a 
public float of less than $75 million. Of the 11,898 companies that 
filed annual reports under the Exchange Act in 2006, 4,976 had a public 
float of less than $75 million.\21\
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    \20\ The terms ``large accelerated filer'' and ``accelerated 
filer'' are defined in Exchange Act Rule 12b-2 (17 CFR 240.12b-2).
    \21\ Statistics are based on 2006 data from the Commission's 
computerized filing system and Thomson Financial (Datastream). 
Datastream data includes all registered public firms trading on the 
New York Stock Exchange, the American Stock Exchange, the Nasdaq, 
the Over-the-Counter Bulletin Board, and the Pink Sheets and 
excludes closed end funds, exchange traded funds, American 
depository receipts, and direct foreign listings.
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    The scaled disclosure and reporting requirements available to these 
smaller companies apply to companies filing registration statements 
covering offerings of securities under the Securities Act and companies 
required to file annual and other reports under Exchange Act Sections 
13 and 15(d).\22\
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    \22\ 15 U.S.C. 78m and 15 U.S.C. 78o(d).
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    ``Small business issuers'' are eligible to make required 
disclosures based on the requirements in Regulation S-B,\23\ which sets 
forth disclosure standards for small business issuers that must file 
documents with the Commission under the Securities Act, Exchange Act, 
or Trust Indenture Act. In most cases, small business issuers may make 
disclosures based on Regulation S-B only if they use one of the forms 
we have designated with the letters ``SB''--Form 10-SB, Form 10-QSB, 
Form 10-KSB, Form SB-1, and Form SB-2. One of the most important 
provisions of Regulation S-B is Item 310, which governs the form, 
content, and preparation of financial statements for companies that 
provide disclosure pursuant to Regulation S-B. The requirements in Item 
310 of Regulation S-B are less detailed than the requirements in 
Regulation S-X, the regulation that governs the financial statements of 
most companies that do not rely on Regulation S-B. Regulation S-B also 
contains a number of disclosure requirements that are scaled to the 
characteristics of smaller companies, including requirements on 
executive compensation, related person transactions, and management's 
discussion and analysis of financial condition and results or plan of 
operation.\24\
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    \23\ The term ``small business issuer'' is defined in Item 
10(a)(1) of Regulation S-B (17 CFR 228.10(a)(1)), among other 
places. The Commission adopted Regulation S-B in 1992. See Release 
No. 33-6949 (July 30, 1992) [57 FR 36442].
    \24\ For a more complete survey of the disclosure requirements 
for small business issuers in Regulation S-B, see Section II.B.2 
below.
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    Smaller companies qualifying as ``non-accelerated filers'' may file 
their annual reports no later than 90 days after fiscal year end and 
their quarterly reports no later than 45 days after the end of each 
fiscal quarter.\25\ This contrasts with the 60-day and 75-day deadlines 
for the annual reports of large accelerated filers and accelerated 
filers, respectively, and the 40-day deadline for quarterly reports of 
those larger companies. Non-accelerated filers also are treated 
differently with regard to the compliance dates applicable to the 
internal control over financial reporting provisions in Section 404 of 
the Sarbanes-Oxley Act of 2002.\26\
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    \25\ See Release No. 33-8644 (Dec. 21, 2005) [70 FR 76626].
    \26\ Pub. L. No. 107-204, 116 Stat. 745 (July 30, 2002); see 
also Release No. 33-8760 (Dec. 15, 2006) [71 FR 76580].
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    Our proposals have three primary objectives, each of which is 
consistent with investor protection:
     Expanding eligibility for our scaled disclosure and 
reporting requirements for smaller companies by making those 
requirements available to most companies with a public float of less 
than $75 million;
     Simplifying our rules for smaller companies by combining 
the two categories of small business issuers and non-accelerated filers 
into one category called ``smaller reporting companies;'' and
     Simplifying and improving our disclosure and reporting 
rules for smaller companies by maintaining the Regulation S-B 
disclosure requirements for smaller companies but integrating them into 
the disclosure requirements in Regulation S-K.
    The Advisory Committee on Smaller Public Companies addressed these 
objectives in the following recommendations:
     Recommendation II.P.1: Establish a new system of scaled or 
proportional securities regulation for smaller public companies using 
the following six determinants to define a ``smaller public company'':
     The total market capitalization of the company;
     A measurement metric that facilitates scaling of 
regulation;
     A measurement metric that is self-calibrating;
     A standardized measurement and methodology for computing 
market capitalization;
     A date for determining total market capitalization; and
     Clear and firm transition rules, i.e., small to large and 
large to small.
    Develop specific scaled or proportional regulation for companies 
under the system if they qualify as ``microcap companies'' because 
their equity market capitalization places them in the lowest 1% of 
total U.S. equity market capitalization or as ``smallcap companies'' 
because their equity market capitalization places them in the next

[[Page 39672]]

lowest 1% to 5% of total U.S. equity market capitalization, with the 
result that all companies comprising the lowest 6% would be considered 
for scaled or proportional regulation; \27\
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    \27\ See Advisory Committee Final Report 14-22.
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     Recommendation IV.P.1: Incorporate the scaled disclosure 
accommodations currently available to small business issuers under 
Regulation S-B into Regulation S-K, make them available to all microcap 
companies, and cease prescribing separate specialized disclosure forms 
for smaller companies; \28\ and
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    \28\ See Advisory Committee Final Report 60-64.
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     Recommendation IV.P.2: Incorporate the primary scaled 
financial statement accommodations currently available to small 
business issuers under Regulation S-B into Regulation S-K or Regulation 
S-X and make them available to all microcap and smallcap companies.\29\
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    \29\ See Advisory Committee Final Report 65-68.
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    It has been maintained that regulation and disclosure standards are 
proportional when compliance requirements are flexible enough to be 
modified and scaled according to the size, resources, operations, and 
financial complexities of the reporting company without sacrificing 
investor protection.\30\ We believe that our proposals meet this 
standard. We also believe these proposals maintain investor protection 
while providing greater capital formation opportunities for smaller 
reporting companies and encouraging more robust smaller company 
participation in the United States capital markets.
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    \30\ See generally C. Steven Bradford, Does Size Matter? An 
Economic Analysis of Small Business Exemptions from Regulation, 8 J. 
Small & Emerging Bus. L. 1, 2 (1999) (providing an economic analysis 
of costs and benefits associated with small business exemptions).
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II. Explanation of Proposals

    The proposals that we publish for comment today would simplify, and 
increase significantly the number of companies eligible for our scaled 
disclosure and reporting rules for smaller reporting companies, 
consistent with investor protection. Our proposals largely would 
implement several of the recommendations of our Advisory Committee on 
Smaller Public Companies in these areas.

A. Expanding Eligibility for Smaller Company Scaled Regulation

    The proposals would expand the availability of our disclosure and 
reporting requirements for smaller companies to most companies with a 
public float of less than $75 million.\31\ We are proposing a new 
term--``smaller reporting company''--to replace the term ``small 
business issuer'' and proposing to make available to these ``smaller 
reporting companies'' \32\ the disclosure and reporting standards that 
we make available to small business issuers and most non-accelerated 
filers.\33\ Our proposals would provide further regulatory 
simplification and relief for smaller reporting companies by 
integrating into Regulation S-K the salient ``small business issuer'' 
disclosure requirements currently found in Regulation S-B. Finally, our 
proposals would eliminate all ``SB'' forms associated with Regulation 
S-B.
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    \31\ See proposed Item 10(f)(1) of Regulation S-K. We propose to 
continue to exclude investment companies and asset-backed issuers 
from eligibility for scaled reporting and disclosure regulation.
    \32\ The definition would replace the almost identical 
definitions of the term ``small business issuer'' in Securities Act 
Rule 405 and Exchange Act Rule 12b-2. We also would insert the new 
definition as a new paragraph in Item 10(f) of Regulation S-K.
    \33\ Under our proposals, we would continue to use the term 
``non-accelerated filer'' to refer to companies that are not subject 
to our accelerated filing requirements for their annual and 
quarterly reports under the Exchange Act and are currently eligible 
to use different compliance dates applicable to internal control 
over financial reporting and different periodic report deadlines.
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1. Quantitative Standards in the Proposed Definition of ``Smaller 
Reporting Company''
a. Proposed Standard
    The smaller reporting company definition would include a public 
float eligibility ceiling of $75 million for most companies. Other 
companies, for example, companies that do not have a public float as 
defined or are unable to calculate it, would be eligible for scaled 
treatment if their revenues are below $50 million annually.\34\ At 
present, 3,395 reporting companies use our current scaled disclosure 
and reporting requirements for smaller companies.\35\ If the proposals 
are adopted, a total of 4,976 companies would be eligible to use the 
scaled disclosure item requirements. The 4,976 eligible companies 
represent 42% of the 11,898 companies that filed annual reports under 
the Exchange Act in 2006.\36\
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    \34\ See proposed Item 10(f)(1) of Regulation S-K.
    \35\ See footnote 19 above.
    \36\ See footnote 21 above.
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    The term ``smaller reporting company'' would replace the term 
``small business issuer,'' which defines the companies eligible 
currently to use the Regulation S-B disclosure requirements.\37\ The 
proposed definition of smaller reporting company also would include 
most non-accelerated filers, which generally are those filers with a 
public float of less than $75 million.\38\ Non-accelerated filers are 
the companies currently eligible to use different compliance dates 
applicable to internal control over financial reporting and different 
periodic report deadlines. By using the same term to refer to both 
current groups of companies, we would effectively combine the two 
groups of scaled requirements into a single group--companies with a 
public float of less than $75 million, or revenues below $50 million if 
their public float cannot be calculated. As proposed, the $75 million 
and $50 million ceilings would be adjusted for inflation on September 
1, 2012, and every fifth year thereafter, to reflect any changes in the 
value of the Personal Consumption Expenditures Chain-Type Price Index 
(PCECTP Index) (or any successor index thereto), as published by the 
Department of Commerce, from December 31, 2006.\39\
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    \37\ See Item 10(a)(1) of Regulation S-B, Securities Act Rule 
405, and Exchange Act Rule 12b-2.
    \38\ Although the term ``non-accelerated filer'' is not defined 
in our rules, we allude to it in Exchange Act Rule 12b-2 and have 
used it throughout several releases to refer to an Exchange Act 
reporting company that does not meet the Exchange Act Rule 12b-2 
definitions of either an ``accelerated filer'' or a ``large 
accelerated filer.'' See Release No. 33-8760 n.15 (Dec. 15, 2006) 
[71 FR 76580].
    \39\ Each adjustment would be rounded to the nearest multiple of 
$5,000,000. We propose to use the PCECTP Index because it is a 
widely used and broad indicator of inflation in the U.S. economy.
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    We propose to set the initial ceiling for smaller reporting 
companies at $75 million in public float because we now have several 
rules using the $75 million public float metric to distinguish smaller 
companies. In addition to the use of this public float metric in the 
definition of accelerated filer, the $75 million public float 
requirement is used to determine expanded eligibility in Form S-3 and 
Form F-3.\40\ Further, issuers are required to provide their public 
float on the cover page of their Exchange Act annual reports.
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    \40\ 17 CFR 239.33 and 239.13.
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    Our proposed definition of ``smaller reporting company'' does not 
include a revenue test for most companies. While our current definition 
of ``small business issuer'' includes a revenue standard, the 
classification of an issuer as a large accelerated filer, an 
accelerated filer, or (by default) a non-accelerated filer does not 
involve a revenue standard. We chose not to propose a revenue standard 
to qualify for ``smaller reporting company'' status for most companies 
to provide greater simplicity, consistency, and certainty.
    While our proposed definition of ``smaller reporting company'' does 
not generally apply a revenue standard,

[[Page 39673]]

where an issuer has no common equity public float or market price, we 
propose a revenue test.\41\ If an issuer has no common equity public 
float or market price and it has reported annual revenues of less than 
$50 million in the most recently completed fiscal year for which 
audited financial statements are available, then it would qualify 
initially for scaled regulation as a smaller reporting company for the 
fiscal year in which it files a registration statement under the 
Securities Act or Exchange Act with the Commission as a smaller 
reporting company.\42\
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    \41\ An issuer may have no public float or market price because 
it has no significant public equity outstanding or no public market 
for its equity. For example, a company with only debt publicly 
outstanding would use the revenue test.
    \42\ The issuer would refer to its most recently audited 
financial statements available at the time it files with the 
Commission as a smaller reporting company.
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    As proposed, the determination date for calculating a company's 
public float to establish eligibility for smaller reporting company 
status would be the same date used to determine accelerated filer 
status today--the last business day of a company's second fiscal 
quarter.\43\ The public float of a reporting company would 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.\44\
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    \43\ See proposed Item 10(f)(1)(i) of Regulation S-K.
    \44\ Id.
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    With regard to a Securities Act registration statement for an 
initial public offering of common equity securities, however, a company 
would calculate its public float as of a date within 30 days of the 
date it files the initial registration statement. These companies would 
compute public float by multiplying the aggregate worldwide number of 
such shares held by non-affiliates before the offering plus the number 
of such shares included in the registration statement by the estimated 
public offering price of the shares.\45\ The proposed method of 
calculating public float with regard to a Securities Act registration 
statement for an initial public offering would operate consistently 
with the following example:
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    \45\ See proposed Item 10(f)(1)(ii) of Regulation S-K.
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     Company X has 50,000,000 shares of common stock 
outstanding;
     Company X has 25,000,000 shares of common stock 
outstanding that are held by non-affiliates;
     Company X files a Securities Act registration statement 
for its initial public offering--in that registration statement, 
Company X registers 7,000,000 shares of common stock to be sold at an 
estimated offering price of $10 per share; and
     For purposes of the smaller reporting company definition, 
Company X's ``public float'' would be $320,000,000 ((25,000,000 shares 
+ 7,000,000 shares) x $10 per share).
    Currently, Regulation S-B requires a company preparing an initial 
public offering of securities to calculate its public float for 
purposes of determining small business issuer status on the basis of 
the total number of equity shares outstanding before the offering and 
the estimated public offering price of the securities. Our proposed 
change to this rule is intended to more accurately reflect the 
company's public float by requiring companies to include the number of 
shares registered to be offered to the public in calculating the public 
float.
    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 and 
reporting would be based on its revenue.
b. Comparison of the Proposed Standard to the Advisory Committee's 
Recommendation
    The proposal to broaden the number of smaller companies eligible 
for our scaled disclosure and reporting requirements is consistent 
with, but not identical to, the Advisory Committee recommendation. The 
Advisory Committee recommended that we make the majority of our smaller 
company requirements available to companies whose equity market 
capitalization places them in the lowest 1% of total U.S. market 
capitalization, which it called ``microcap companies.'' The Advisory 
Committee indicated that, based on the information it relied upon, the 
ceiling for that category was $128 million in market 
capitalization.\46\ We have chosen to propose using public float rather 
than market capitalization to set the ceiling for several reasons:
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    \46\ The Advisory Committee relied on data derived from Center 
for Research in Security Prices (CRSP) for 9,428 New York and 
American Stock Exchange companies as of March 31, 2005 and from 
Nasdaq for NASDAQ Stock Market and Over-the-Counter Bulletin Board 
firms as of June 10, 2005. See Advisory Committee Final Report, at 
15 n.36.
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     The Commission has consistently used public float in this 
context,\47\ rather than market capitalization;
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    \47\ In our adopting release for public securities offering 
reform, we provided the historical background for the use of public 
float as a measure for determining Form S-3 or F-3 eligibility. See 
Release No. 33-8591, at 26 n.50 (July 19, 2005) [70 FR 148].
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     Each reporting company already is required to disclose its 
public float on the cover page of its annual report on Form 10-K or 
Form 10-KSB;
     The use of market capitalization would require us to 
establish new standards for reporting companies to calculate that 
information and a new obligation for those companies to disclose that 
information; and
     The overlap between reporting companies with $128 million 
in market capitalization and reporting companies with $75 million in 
public float is approximately 98%.\48\
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    \48\ This estimate was calculated from data obtained from 
Thomson Financial (Datastream).
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    We have not proposed a standard based on a company's ranking within 
a specified percentage of total U.S. market capitalization because we 
believe that such a standard may make the smaller reporting company 
system unduly complicated and create confusion among both smaller 
companies and their investors. Our proposal to adjust the $75 million 
public float and $50 million in revenue ceilings every five years to 
account for inflation, however, responds to the Advisory Committee's 
concern that our regulatory metrics should be adjusted in a timely 
manner to reflect changes in our economy.
    The Advisory Committee received numerous comments to the effect 
that the $25 million public float and revenue standards in Regulation 
S-B are too low and should be increased to permit a broader range of 
smaller companies to be eligible for its benefits, particularly in 
light of the increased costs associated with Exchange Act reporting 
obligations.\49\ A group responding to the Advisory Committee's request 
for comments on its proposed agenda noted that the $25 million 
standards resulted in Regulation S-B being available only

[[Page 39674]]

to the very smallest public companies.\50\ This group also expressed 
the view to the Advisory Committee that, for Regulation S-B to have any 
meaningful benefit to new and smaller public companies, the threshold 
needed to be raised to $100 million in both revenue and market 
capitalization. Another commentator has argued that the standard should 
be less concerned with market capitalization and more concerned with 
revenue, which in part indicates the ability of small companies to 
shoulder the burdens of regulation.\51\ The Advisory Committee rejected 
a revenue-based metric in determining general eligibility for scaling, 
however, stating that market capitalization should be the primary 
metric for determining eligibility for scaling regulations and that 
including revenues would introduce unnecessary additional 
complexity.\52\
---------------------------------------------------------------------------

    \49\ See Advisory Committee Final Report 64 n.132.
    \50\ See Letter from Subcommittee on Smaller Public Companies, 
Securities Law Committee, Society of Corporate Secretaries & 
Governance Professionals (June 7, 2005) (on file in Commission 
Rulemaking File No. 256-23), available at http://www.sec.gov/info/smallbus/acspc.shtml.
    \51\ Paul Rose, Balancing Public Market Benefits and Burdens for 
Smaller Companies Post Sarbanes-Oxley, 41 Willamette L. Rev. 707, 
740 (2005).
    \52\ The Advisory Committee did recommend that we adopt a 
revenue ceiling for companies to be eligible for certain scaled 
regulations under Section 404 of the Sarbanes-Oxley Act. See 
Advisory Committee Final Report 43.
---------------------------------------------------------------------------

    The Advisory Committee recommended that we extend eligibility for 
scaled disclosure to two tiers of companies--what the Advisory 
Committee called ``microcap companies'' and ``smallcap companies.'' 
More specifically, the Committee recommended that we develop scaled or 
proportional regulation for companies that qualify as ``microcap 
companies'' because their equity market capitalization places them in 
the lowest 1% of total U.S. market capitalization and ``smallcap 
companies'' because their equity market capitalization places them in 
the next lowest 1% to 5% of total U.S. equity market capitalization, 
with the result being that all companies comprising the lowest 6% would 
be eligible for scaled or proportional regulation.\53\ Based on the 
statistics relied upon by the Advisory Committee, companies with less 
than $787 million in market capitalization would have been included in 
the lowest 6% of market capitalization as of March 31, 2005.\54\ Our 
proposals do not extend the scaled disclosure regime or develop another 
scaled disclosure regime for companies between $75 million and $787 
million in market capitalization at this time. We solicit comment below 
on the appropriateness of scaled disclosure requirements for companies 
with a public float greater than $75 million.
---------------------------------------------------------------------------

    \53\ See Advisory Committee Final Report 14-19.
    \54\ Id.
---------------------------------------------------------------------------

2. Exclusions From the Definition of ``Smaller Reporting Company''
    The current definition of ``small business issuer'' excludes 
companies that are not organized in the United States or Canada, 
investment companies, and asset-backed issuers.\55\ Under the proposed 
amendments, all foreign companies that meet the criteria would be able 
to qualify as smaller reporting companies. Foreign companies could, 
therefore, take advantage of the scaled standards available to domestic 
smaller reporting companies if they otherwise qualify for that status 
and file a form that permits disclosure based on the standards for 
smaller reporting companies, such as Forms S-1, S-3, S-4, and Forms 10-
Q and 10-K. In this regard, the forms available only to ``foreign 
private issuers,'' such as Form F-1,\56\ Form F-3,\57\ Form F-4,\58\ 
and Form 20-F,\59\ would not permit disclosure based on the standards 
for smaller reporting companies.\60\ Foreign private issuers who 
qualify for smaller reporting company status could choose whether to 
use the domestic forms and be able to provide disclosure based on these 
standards or to use the ``F'' forms and comply with the disclosure 
requirements of those forms.
---------------------------------------------------------------------------

    \55\ See Item 10(a)(1)(ii) through (iii) of Regulation S-B.
    \56\ 17 CFR 239.31.
    \57\ 17 CFR 239.33.
    \58\ 17 CFR 239.34.
    \59\ 17 CFR 249.220f.
    \60\ The term ``foreign private issuer'' is defined in 
Securities Act Rule 405 and Exchange Act Rule 12b-2.
---------------------------------------------------------------------------

    We propose to continue to exclude investment companies and asset-
backed issuers from eligibility for scaled reporting and disclosure 
regulation. Investment companies are subject to separate disclosure and 
reporting requirements.\61\ Asset-backed issuers have a separate 
disclosure system that applies to them and do not use Regulation S-K 
for their disclosure requirements.\62\
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    \61\ See, e.g., Form N-1A (17 CFR 239.15A; 274.11A), N-2 (17 CFR 
239.14; 274.11a-1), and N-3 (17 CFR 239.17a; 274.11b), the 
registration forms used by management investment companies to 
register under the Investment Company Act of 1940 (15 U.S.C. 80a-1 
et seq.), and to register their securities under the Securities Act. 
Business development companies, which are a category of investment 
companies that are not required to register under the Investment 
Company Act, register their securities under the Securities Act on 
Form N-2.
    \62\ See Regulation AB (17 CFR 229.1100 through 229.1123).
---------------------------------------------------------------------------

Request for Comments
     Should the definition of smaller reporting company include 
tests based on both public float and revenue? Should the definition 
contain only a revenue test, rather than the proposed public float 
test? If the definition contained a revenue test, should the standard 
be $50 million, $75 million, $100 million, or some other amount? Please 
explain in detail and provide a reasoned basis for your views.
     Is a public float of less than $75 million the appropriate 
standard for defining a ``smaller reporting company?'' Should the 
public float standard be $50 million, $150 million, or some other 
amount? Please explain in detail and provide a reasoned basis for your 
views.
     Is it appropriate to compute public float for an initial 
public offering by a smaller reporting company by multiplying the 
aggregate worldwide number of such shares held by non-affiliates before 
the offering plus the number of shares included in the registration 
statement by the estimated public offering price of the shares? Is it 
appropriate to permit the calculation of public float on any date 
within 30 days of a filing?
     Is it appropriate to require companies to estimate the 
public offering price of the securities before filing an initial 
registration statement that would qualify them for smaller reporting 
company status, as has been required in the past under Regulation S-B 
and as we propose to continue to require? For purposes of calculating 
the estimated public offering price per share, should we require 
issuers to rely on the high, low, or mid-point of the price range for 
the securities?
     Is there an alternative standard that would more 
accurately calculate a company's public float before it files its 
initial Securities Act registration statement with the Commission to 
determine smaller reporting company eligibility? Please provide details 
and reasoned support for your position.
     Should the definition of smaller reporting company be 
based on market capitalization, as suggested by the Advisory Committee, 
rather than public float? If so, should the market capitalization 
standard be $150 million, $125 million, $100 million, or some other 
level? Please discuss the benefits and burdens of your suggested 
standard and provide reasoned support for your position.
     Should a system of scaled or proportional regulation be 
made available to companies in the lowest 1% of total U.S. market 
capitalization (less

[[Page 39675]]

than $128 million as of March 31, 2005) or the lowest 6% of total U.S. 
market capitalization ($787 million as of March 31, 2005), as suggested 
by the Advisory Committee? Please provide reasoned support for your 
position.
     Is the $50 million revenue threshold an appropriate level 
for companies without a public float or market price, or should the 
test be $75 million or $25 million in revenue or some other standard?
     Should any public float and/or revenue ceilings be indexed 
to adjust for inflation? Should any ceilings be indexed using a 
different index than the PCECTP Index, the one we propose to use? 
Please provide details and reasoned support for your position.
     Should the Commission allow asset-backed issuers and 
investment companies, including business development companies, or 
business development companies only, to qualify as smaller reporting 
companies?
     Is it appropriate to permit all non-U.S. companies to 
qualify for smaller reporting company status?
     Are there companies reporting as small business issuers 
that have only public debt outstanding and have little or no publicly-
held common equity? Are there companies with one or more classes of 
public debt outstanding but no significant amount of outstanding common 
equity held by non-affiliates that should qualify as smaller reporting 
companies? If so, should we permit such companies to qualify as smaller 
reporting companies on the basis of a revenue test? Does the proposed 
revenue test meet the needs of smaller companies?
     What benefits would flow to investors if the Commission 
adopted these proposals? For example, would the possible cost savings 
for the company provide a net benefit to shareholders? Please provide 
details and reasoned support for your position.
     If adopted, would these proposals have any negative effect 
on investors? For example, would investors in companies that have a 
public float of between $25 million and $75 million be harmed if a 
company chose to provide the disclosure required of a smaller reporting 
company rather than the disclosure currently required under Regulation 
S-K? If so, please describe the negative effect in detail, providing 
data and support where possible.

B. Integrating Requirements of Current Regulation S-B Into Regulation 
S-K

1. Policy Objectives of Proposal
    We have maintained a separate registration, reporting, and 
qualification system for small business issuers under the Securities 
Act, Exchange Act, and Trust Indenture Act since 1992.\63\ The 
centerpiece of this system, Regulation S-B, followed the model of 
Regulation S-K. When adopting Regulation S-B, we incorporated some 
concepts from Form S-18, which was a simplified registration form for 
smaller companies under the Securities Act that we replaced with Forms 
SB-1 and SB-2.\64\
---------------------------------------------------------------------------

    \63\ See Release No. 33-6949 (Jul. 30, 1992) [57 FR 36442].
    \64\ See Release No. 33-6949 (Jul. 30, 1992) [57 FR 36442] and 
Release No. 33-6924 (Mar. 20, 1992) [57 FR 9768].
---------------------------------------------------------------------------

    Regulation S-B was designed to provide small business issuers with 
a single source for their SEC disclosure requirements. Our objectives 
in adopting a disclosure system for smaller companies were to reduce 
compliance costs while maintaining adequate investor protection, to 
improve the ability of start-ups and other small businesses to obtain 
financing through the public capital markets, and to encourage those 
companies to provide their investors with the benefits of trading in 
those markets.\65\
---------------------------------------------------------------------------

    \65\ See Release No. 33-6924.
---------------------------------------------------------------------------

    We propose to integrate the substantive provisions of Regulation S-
B into Regulation S-K for a number of reasons. We believe integration 
will simplify regulation for small business and lower costs. The 
current dual system scheme is complex, and we believe this complexity 
may deter smaller companies from taking advantage of scaled regulation. 
We also are aware of anecdotal reports that securities lawyers 
recommend against using the Regulation S-B system because it results in 
increased legal costs. The Advisory Committee, in recommending that we 
integrate the scaled disclosure requirements available to small 
business issuers into Regulation S-K and make them available to 
microcap companies, heard testimony that Regulation S-B was not used 
for two principal reasons. The first reason is that lawyers assert that 
they cannot use prior examples of filings involving companies that are 
not relying on Regulation S-B. The second reason is that the lawyers 
must maintain expertise in two different disclosure systems.\66\ 
Maintaining two separate but largely similar systems also results in 
increased burdens on the Commission staff.
---------------------------------------------------------------------------

    \66\ See Advisory Committee Final Report 64.
---------------------------------------------------------------------------

Request for Comments
     Assuming we should revise Regulation S-B, should we do so 
in some way other than integrating its substantive provisions into 
Regulation S-K? Please be as specific as possible with your comments.
     Might integrating our two disclosure systems make it more 
difficult to maintain scaled securities regulation for smaller 
companies? How should we maintain scaled regulation over time? Please 
provide opposing or supporting views and clearly explain the bases for 
your views.
     Will this proposal simplify the disclosure obligations of 
smaller companies? Please provide details to support your view.
     If these proposals are adopted, would smaller companies 
experience lower costs for legal assistance and other services?
     If adopted, would these proposals have any effect on 
investors, either positive or negative? Please provide a detailed 
explanation of your views, with supporting data if possible.
2. Specific Integration Proposals
a. Financial Statements
    We propose to add a new Item 310 (Financial Statements of Smaller 
Reporting Companies) to Regulation S-K to set forth the alternative 
requirements on form and content of financial statements for smaller 
companies that now appear in Item 310 of Regulation S-B. Item 310 of 
Regulation S-B constitutes perhaps the most significant example of 
scaling for smaller companies in all of Regulation S-B, as it bases the 
requirements on form, content, and preparation of financial statements 
for smaller companies solely on generally accepted accounting 
principles (``GAAP''). It does not require smaller companies to conform 
their financial statements to the Commission's Regulation S-X.\67\ Item 
310 of Regulation S-B allows smaller companies to provide an audited 
balance sheet for the latest fiscal year only and audited statements of 
income, cash flows, and changes in stockholders' equity for each of the 
latest two fiscal years only, rather than an audited balance sheet for 
the latest two fiscal years and audited statements of income, cash 
flows, and changes in stockholders' equity for each of the latest three 
fiscal years, as required in Regulation S-X. Item 310 of Regulation S-B 
also differs from Regulation S-X in its requirements for historical and 
pro forma financial statements for significant acquired businesses, the 
maximum age of

[[Page 39676]]

financial statements, and limited partnerships.\68\
---------------------------------------------------------------------------

    \67\ See Rule 1.01 of Regulation S-X (17 CFR 210.1-01).
    \68\ The requirements of Item 310 of Regulation S-B were 
consistent with the requirements of Form S-18, which governed the 
form and content of financial statements of smaller companies 
choosing to use that form before Regulation S-B was adopted in 1992. 
See Release No. 33-6949 (Jul. 30, 1992) [57 FR 36442].
---------------------------------------------------------------------------

    We propose one substantive change in Item 310 that would 
differentiate it from the current Item 310 in Regulation S-B. 
Currently, in Note 2 preceding the Item, foreign private issuers are 
permitted to prepare and present financial statements in accordance 
with Item 17 of Form 20-F. Item 17 of Form 20-F allows an issuer to 
provide alternative financial statements prepared according to a 
comprehensive body of accounting principles other than those generally 
accepted in the United States if certain conditions are met. Regulation 
S-B currently is available only to U.S. and Canadian issuers, so 
permitting non-U.S. GAAP for Canadian foreign private issuers was a 
modest adjustment in terms of the number of companies eligible to use 
this adjustment. Because we propose to expand the definition of smaller 
reporting company to include all foreign companies, we do not feel that 
non-U.S. GAAP financial statements would be appropriate for a larger 
number of issuers. Therefore, we propose that foreign issuers who elect 
to use Item 310 disclosure for smaller reporting companies be required 
to present financial statements pursuant to U.S. GAAP. Currently, all 
financial statements in registration statements that may be used by 
domestic issuers, other than Canadian small business issuers using 
Forms SB-1 and SB-2, are required to conform to U.S. GAAP.\69\
---------------------------------------------------------------------------

    \69\ As noted previously, foreign private issuers may use the 
forms and disclosure standards available only for such issuers.
---------------------------------------------------------------------------

Request for Comments
     Should the Commission incorporate the requirements on form 
and content of financial statements of smaller companies now in Item 
310 of Regulation S-B into Regulation S-X, as proposed? Should the 
Commission modify proposed Item 310 in any way?
     Is it appropriate to require U.S. GAAP for foreign private 
issuers and other foreign issuers who take advantage of the smaller 
reporting company requirements? Or is the option of filing a 
registration statement on Form 20-F an acceptable alternative? What 
effect, if any, will this have on foreign private issuers?
     The Advisory Committee believed that a second year of 
audited balance sheet data would provide investors with a basis for 
comparison with the current period, without substantially increasing 
audit costs.\70\ Should we consider following the Advisory Committee 
recommendation to require smaller reporting companies to provide two 
years of audited balance sheet data in annual reports and registration 
statements?
---------------------------------------------------------------------------

    \70\ See Advisory Committee Final Report 65-66.
---------------------------------------------------------------------------

b. Proposed Changes to Other Regulation S-K Disclosure Items
    As a general rule, we propose to integrate the individual 
Regulation S-B disclosure items (other than Item 310 as discussed 
immediately above) into Regulation S-K. To do this, we propose to add a 
new paragraph to each item of Regulation S-K that will contain separate 
disclosure standards for smaller reporting companies, to the extent 
that a particular item permits such disclosure.\71\ To ease navigation, 
each new paragraph would have a heading reading ``Smaller reporting 
companies,'' so readers can easily find the requirements tailored for 
smaller reporting companies. At this time, we do not propose any major 
substantive changes to the items that we are moving from Regulation S-B 
into Regulation S-K. Where the disclosure standards of identically 
numbered items in Regulation S-B and Regulation S-K are substantially 
the same for smaller reporting companies and larger companies, we 
propose no change to the existing Regulation S-K disclosure items.\72\ 
We discuss our proposed treatment of specific Regulation S-K disclosure 
items below.
---------------------------------------------------------------------------

    \71\ We propose to add the new paragraphs at the end of items in 
Regulation S-K as they exist today. If we add additional paragraphs 
to items of Regulation S-K in the future, we may or may not move the 
smaller reporting company paragraph to the end of the item at that 
time.
    \72\ We propose no changes to the following items of Regulation 
S-K because the disclosure standards are currently substantially the 
same: Item 102 (Description of Property), Item 103 (Legal 
Proceedings), Item 202 (Description of Registrant's Securities), 
Item 304 (Changes In and Disagreements with Accountant on Accounting 
and Financial Disclosure), Item 307 (Disclosure Controls and 
Procedures), Item 308 (Internal Control Over Financial Reporting), 
Item 308T (Internal Control Over Financial Reporting), Item 401 
(Directors, Executive Officers, Promoters and Control Persons), Item 
403 (Security Ownership of Certain Beneficial Owners and 
Management), Item 405 (Compliance with Section 16(a) of the Exchange 
Act), Item 406 (Code of Ethics), Item 501( Forepart of Registration 
Statement and Outside From Cover Page of Prospectus), Item 502 
(Inside Front and Outside Back Cover Pages of Prospectus), Item 505 
(Determination of Offering Price), Item 506 (Dilution), Item 507 ( 
Selling Security Holders), Item 508 (Plan of Distribution), Item 509 
(Interest of Named Experts and Counsel), Item 510 (Disclosure of 
Commission Position on Indemnification for Securities Act 
Liabilities), Item 511 (Other Expenses of Issuance and 
Distribution), Item 701 (Recent Sales of Unregistered Securities; 
Use of Proceeds from Registered Securities), Item 702 
(Indemnification of Directors and Officers), and Item 703 (Purchases 
of Equity Securities by the Issuer and Affiliated Purchasers).
---------------------------------------------------------------------------

    Item 101 (Description of Business). We propose to add a new 
paragraph (h) to Item 101 of Regulation S-K to set forth the 
alternative disclosure standards for smaller companies that appear now 
in Item 101 of Regulation S-B. Under Item 101 of Regulation S-B, 
smaller companies are required to provide a description of their 
business that is less detailed than the description that larger 
companies provide and to 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.
    Item 201 (Market Price of and Dividends on Registrant's Common 
Equity and Related Stockholder Matters). We propose only a minor change 
in wording to this item because Instruction 6 to paragraph (e) of Item 
201 of Regulation S-K currently contains a provision permitting smaller 
companies to use the alternative disclosure standards of Regulation S-B 
when preparing documents under Regulation S-K. Therefore, no 
substantive change is necessary. We propose to replace the reference to 
a ``small business issuer'' with a reference to a ``smaller reporting 
company'' and add a heading to Instruction 6.
    Items 301 (Selected Financial Data) and 302 (Supplementary 
Financial Information). Regulation S-B currently does not require 
smaller companies to disclose Item 301 (Selected Financial Data) or 
Item 302 (Supplementary Financial Information) data. We therefore 
propose to add a new paragraph (c) to Items 301 and 302 in Regulation 
S-K, providing that smaller reporting companies are not required to 
present the information required by these items.
    Item 303 (Management's Discussion and Analysis of Financial 
Condition and Results of Operations). We propose to add a new paragraph 
(d) to Item 303 of Regulation S-K to reflect the alternative disclosure 
standards for smaller companies now in Item 303 of Regulation S-B. 
Regulation S-B provides more streamlined disclosure requirements for a 
smaller company's management to present its discussion and analysis of 
the company's financial condition and results of operations. It 
requires 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 as required in Regulation S-

[[Page 39677]]

X. Further, Regulation S-B does not require smaller companies to 
provide tabular disclosure of contractual obligations, as required for 
companies reporting under Item 303(a)(5) of Regulation S-K.\73\
---------------------------------------------------------------------------

    \73\ 17 CFR 229.303(a)(5).
---------------------------------------------------------------------------

    Item 305 (Quantitative and Qualitative Disclosures about Market 
Risk). Regulation S-B currently does not require smaller companies to 
disclose Item 305 (Quantitative and Qualitative Disclosures about 
Market Risk) information. We therefore propose to add a new paragraph 
(e) to Item 305 of Regulation S-K providing that smaller reporting 
companies are not required to respond to this item.
    Item 402 (Executive Compensation). We propose to add a new 
paragraph (l) to Item 402 of Regulation S-K to add the alternative 
standards for smaller reporting companies for disclosure of 
compensation of executives and directors now in Item 402 of Regulation 
S-B. Under Item 402 of Regulation S-B, a smaller company is allowed to 
provide executive compensation disclosure for only three officers, 
rather than the five required under Item 402 of Regulation S-K, and 
Summary Compensation Table disclosure for only two years, rather than 
the three years required under Regulation S-K. A smaller company does 
not need to provide a Compensation Discussion and Analysis, is required 
to provide only three of the seven tables prescribed by Item 402 of 
Regulation S-K, and is required to provide alternative narrative 
disclosures. In the Director Compensation Table, a smaller company need 
not include footnote disclosure of the grant date fair value of equity 
awards, given that no corresponding Grants of Plan-Based Award Table 
disclosure for named executive officers of smaller companies is 
required.\74\
---------------------------------------------------------------------------

    \74\ See Release No. 8732A (Aug. 8, 2006) [71 FR 53158] and 
Release No. 33-8765 (Dec. 22, 2006) [71 FR 78338].
---------------------------------------------------------------------------

    Item 404 (Transactions with Related Persons, Promoters and Certain 
Control Persons). We propose to add a new paragraph (d) to Item 404 of 
Regulation S-K to add the alternative standards for disclosure of 
related person transactions now available to smaller companies in Item 
404 of Regulation S-B. A smaller reporting company would not be 
required to disclose policies and procedures for approving related 
person transactions, which is required of other companies under 
paragraph (b). Item 404 of Regulation S-B requires disclosure regarding 
transactions where the amount exceeds the lesser of 1% of a smaller 
company's total assets or $120,000. Companies using Regulation S-K are 
required to disclose information only about transactions above $120,000 
in amount. As such, for smaller companies with an asset level such that 
1% of its assets would equal a dollar amount lower than $120,000, 
related person disclosure under Item 404 is more rigorous than for 
larger companies. Further, smaller companies are required to disclose 
additional specific information about underwriting discounts and 
commissions and corporate parents. We propose, however, to change the 
calculation of total assets for smaller reporting companies from 1% 
percent 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. This standard is more consistent with the two 
years of financial statements required of smaller reporting companies 
in the filings containing these disclosures.
    Item 407 (Corporate Governance). We propose to add a new paragraph 
(g) to Item 407 of Regulation S-K to add the corporate governance 
disclosure standards now available to smaller companies in Item 407 of 
Regulation S-B. Smaller reporting companies would not be required to 
provide Compensation Committee Interlock and Insider Participation 
disclosure or a Compensation Committee Report. In addition, smaller 
reporting companies would not be required to provide an Audit Committee 
Report until the first annual report after their initial registration 
statement is filed with the Commission.
    Item 503 (Prospectus Summary, Risk Factors, and Ratio of Earnings 
to Fixed Charges). We propose to add a new paragraph (e) to Item 503 of 
Regulation S-K to add the alternative standards for disclosure now 
available to smaller companies in Item 503 of Regulation S-B. Item 503 
of Regulation S-B does not require smaller companies to 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.
    Item 504 (Use of Proceeds). We propose no change to the primary 
text of Item 504 of Regulation S-K because the disclosure standards of 
Regulation S-K and Regulation S-B currently are substantially the same. 
We propose a minor change to the instructions to the item, however, to 
clarify that new Item 310 of Regulation S-K, rather than Regulation S-
X, will govern whether financial statements of businesses proposed to 
be acquired are to be included in the filings of smaller reporting 
companies relying on Item 310 of Regulation S-K rather than Regulation 
S-X. We recognize that the instructions to Item 504 in Regulation S-K 
are more specific than and more than twice as long as those in Item 504 
of Regulation S-B. We do not propose to substitute the shorter 
instructions of Regulation S-B for smaller reporting companies 
complying with Item 504, because we do not regard the longer 
instructions as necessarily more burdensome or not scaled to the needs 
of smaller companies.
    Item 512 (Undertakings). We propose to add a new paragraph (m) to 
Item 512 of Regulation S-K to add the alternative standards for 
disclosure now available to smaller companies in Item 512 of Regulation 
S-B. Item 512 of Regulation S-B does not require smaller companies to 
provide the information about asset-backed securities, foreign private 
issuers, and trust indenture offerings now required by Regulation S-K.
    Item 601 (Exhibits). We propose to add a new paragraph (c) to Item 
601 of Regulation S-K to incorporate the standards currently in Item 
601 of Regulation S-B. The paragraph would clarify that a smaller 
reporting company is not required to provide Exhibit 12 (Statements re 
Computation of Ratios) unless it discloses one of the ratios discussed 
in the requirement upon the registration of debt or preference equity 
securities. The paragraph also would clarify that, for purposes of 
Exhibit 7 (Correspondence from an Independent Accountant Regarding Non-
Reliance on a Previously Issued Audit Report or Completed Interim 
Review), new Item 310 of Regulation S-K, rather than Regulation S-X, 
may govern the form, content, and preparation of financial statements 
provided by a smaller reporting company. Our proposal also would revise 
Item 601 of Regulation S-K to delete references to several ``SB'' forms 
and to Regulation S-B, all of which would be deleted from our rules and 
regulations.
Request for Comments
     Would a different format in the proposed integrated 
Regulation S-K more clearly identify the provisions that are different 
for smaller reporting companies?
     Is the proposed Item 101 (Description of Business) 
requirement adequate for most smaller reporting companies? Please be as 
specific as possible and provide details to support your position.
     Should the Commission consider requiring smaller reporting 
companies

[[Page 39678]]

to provide tabular disclosure of contractual obligations required in 
paragraph (5) of Regulation S-K Item 303? Would this disclosure provide 
meaningful information for investors or would it be overly burdensome 
for smaller reporting companies?
     Should smaller reporting companies be required to fully 
comply with any other items of Regulation S-K to which we do not 
propose to subject them?
     Are there any other provisions in current Regulation S-B 
that should be carried over for smaller reporting companies into 
Regulation S-K that we have not proposed to be carried over?
     Conversely, are any of the current Regulation S-B items 
that we propose to carry over inappropriate for the larger group of 
companies we propose to define as smaller reporting companies?
c. A La Carte Approach
    We propose to allow a company that qualifies as a smaller reporting 
company to choose, on an item-by-item or ``a la carte'' basis, to 
comply with either the scaled disclosure requirements made available in 
Regulation S-K for smaller reporting companies or the disclosure 
requirements for other companies in Regulation S-K, when the 
requirements for other companies are more rigorous.\75\ 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 items, at its election, in any one filing, in such cases. We would 
require, however, that a smaller reporting company provide its 
financial statements on the basis of either 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. If this approach is adopted, we would expect that 
our staff, in reviewing filings of smaller reporting companies, would 
be instructed to evaluate item-by-item compliance only with the 
Regulation S-K requirements applicable to smaller reporting companies, 
and not with the requirements applicable to larger companies, even if 
the company whose filing is being reviewed chooses to comply with the 
larger company requirements.\76\ The staff also would continue to seek 
clarity in disclosure provided by smaller reporting companies.
---------------------------------------------------------------------------

    \75\ As proposed, Item 404 would be the only disclosure 
requirement in Regulation S-K that would be more rigorous for 
smaller reporting companies than for other companies.
    \76\ These proposals would have no effect on the legal 
requirements and liabilities that would continue to apply to all 
disclosures made by issuers.
---------------------------------------------------------------------------

    Our objective in proposing the ``a la carte'' approach is to 
provide maximum flexibility for smaller reporting companies without 
disadvantaging investors. While establishing a baseline of required 
disclosure, we want to encourage smaller reporting companies to 
determine for themselves the proper balance and mix of disclosure for 
their investors within the boundaries of the law, given the costs of 
compliance and the market demand for information.
    We propose to add a check box to the cover page of all filings in 
which smaller reporting companies may take advantage of the alternative 
disclosure requirements. The check box would require smaller reporting 
companies to indicate that they are eligible for ``Smaller Reporting 
Company'' status. Investors and others reviewing the filing would be 
able to tell from the check box that the disclosing company is eligible 
to comply with the scaled disclosure available to smaller reporting 
companies.
    In proposing to require smaller reporting to companies to check a 
box identifying themselves as such on the cover page of their filings, 
we are attempting to strike the appropriate balance among investor 
protection, transparency, and the legitimate needs of smaller 
companies. We are aware that, as discussed by the Advisory Committee, a 
major reason our current Regulation S-B system has not worked as well 
as intended is that it requires filing on ``SB'' forms that may not 
have achieved an optimal level of market acceptance.\77\ By requiring a 
company to check a box on the front of its filings, we are trying to 
address the legitimate needs of investors who may want to know if a 
company is eligible to comply with standards scaled for smaller 
companies. We are attempting, however, to avoid unduly stigmatizing 
smaller companies. We believe that, if we have scaled our disclosure 
and reporting requirements to properly reflect the characteristics of 
smaller companies, investors will be adequately protected by our rules 
and should not be unduly concerned that a company may be providing 
information under a different, scaled standard.
---------------------------------------------------------------------------

    \77\ See Advisory Committee Final Report 63-64.
---------------------------------------------------------------------------

Request for Comments
     Should the Commission adopt the a la carte approach, 
allowing smaller reporting companies to take advantage of the adjusted 
disclosure requirements available to them on an item-by-item basis?
     Have smaller companies filing on ``SB'' forms not achieved 
greater market acceptance because investors believe that the disclosure 
required by Regulation S-K is valuable? Please provide a detailed 
explanation and a reasoned basis for your view.
     Does the proposal to scale disclosure for smaller 
reporting companies strike the proper balance between imposing 
proportional costs and burdens on smaller reporting companies while 
adequately protecting investors?
     Should the Commission adopt an approach requiring smaller 
reporting companies to comply with all disclosure requirements for 
larger companies if they elect to comply with any of those 
requirements? Should we require smaller reporting companies that choose 
to no longer follow the disclosure requirements for larger companies to 
separately disclose that change?
     Is the Commission creating a situation in which newly 
eligible companies could selectively choose not to disclose information 
that may be beneficial to investors?
     Does requiring smaller reporting companies to check a box 
indicating their ``Smaller Reporting Company'' status on the cover page 
of filings unduly penalize or stigmatize smaller reporting companies? 
Is a check box necessary for investor protection? Is another 
alternative preferable to a check box?
     Should the proposal require a smaller reporting company to 
check the box only if it is choosing to comply with at least one item 
in Regulation S-K scaled for smaller reporting companies, rather than 
requiring all eligible companies to check the box even if they choose 
not to comply with any scaled items?
     What should be the impact on a smaller reporting company 
that attempts to satisfy the disclosure requirements of larger 
companies but fails to satisfy those requirements? Please provide 
details to support your views.
     Instead of a check box indicating the size of the company, 
would it be preferable to have check boxes or some other form of 
identification indicating what smaller reporting company items the 
company has relied upon in preparing its filing?
     How would the a la carte approach affect the ability of 
investors to compare disclosures of smaller reporting companies?
d. Eliminating ``SB'' Forms
    We anticipate that the elimination of forms associated with 
Regulation S-B (Forms 10-SB, 10-QSB, 10-KSB, SB-1,

[[Page 39679]]

and SB-2) will result in regulatory simplification by mainstreaming 
smaller reporting company filers into the Regulation S-K framework. We 
anticipate that legal practitioners, accountants, and other individuals 
preparing disclosure forms will appreciate the convenience of referring 
to only one set of disclosure requirements.
    The Advisory Committee noted that elimination of the ``SB'' forms 
would reduce the complexity of federal securities regulations. The 
Advisory Committee recognized that the drawbacks associated with 
Regulation S-B included a lack of acceptance of ``SB'' filers in the 
marketplace.\78\ Also, North American Securities Administrators 
Association officials representing state securities regulators have 
commented that small businesses issuing securities were especially 
vulnerable to loss of investor confidence if some issuers ``poisoned 
the well'' with material misstatements.\79\
---------------------------------------------------------------------------

    \78\ Id.
    \79\ U.S. General Accounting Office, Small Business: Efforts to 
Facilitate Equity Capital Formation 190 (2000).
---------------------------------------------------------------------------

    The elimination of the forms associated with Regulation S-B would 
result in most smaller reporting companies using Securities Act Form S-
1 to offer securities to the public. Since 2005, an issuer using Form 
S-1 that is subject to the requirement to file reports pursuant to 
Section 13 or Section 15(d) of the Exchange Act may be permitted to 
incorporate by reference its previously filed Exchange Act reports if 
it has filed an annual report for its most recently completed fiscal 
year, has filed all reports and other materials required to be filed by 
Sections 13(a), 14, or 15(d) of the Exchange Act during the preceding 
12 months (or for such shorter period that the registrant was required 
to file such reports), and makes available all incorporated materials 
on its Web site.\80\ We believe that this ability to incorporate 
previously filed reports by reference would result in some cost savings 
and efficiencies in preparing registration statements for smaller 
reporting companies.
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    \80\ See Release No. 33-8591 (Jul. 19, 2005) [70 FR 44722].
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    It is our intention that the integration of the disclosure 
standards of Regulation S-B into Regulation S-K will mitigate the 
reported lack of market acceptance associated with smaller filers. As 
one commentator has explained, it is not enough to establish that small 
business should at times be treated separately from larger business; 
the manner in which the distinction is made is equally important, ``for 
a misguided partition may be worse than no partition at all.'' \81\ We 
expect that adoption of our proposal to eliminate the forms associated 
with Regulation S-B will further our goals of eliminating unwarranted 
negative perceptions of the smaller reporting company disclosure 
regime.
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    \81\ See Larry T. Garvin, Small Business and the False 
Dichotomies of Contract Law, 40 Wake Forest L. Rev. 295, 373 (2005).
---------------------------------------------------------------------------

Request for Comments
     Is it appropriate to eliminate all ``SB'' forms associated 
with Regulation S-B?
     Should we maintain some or all of the ``SB'' forms, even 
if we integrate the provisions of Regulation S-B into Regulation S-K?
     If adopted, would elimination of the ``SB'' forms provide 
significant benefits to legal practitioners, accountants, and other 
individuals preparing disclosure for smaller companies? Would there be 
any impact on investors? Please provide details to support your views.
e. Transition To and From Smaller Reporting Company Status
    As discussed above, we propose to significantly expand eligibility 
for smaller company-scaled regulation by combining our two current 
smaller company regulatory categories, ``small business issuer'' and 
``non-accelerated filer,'' into a new category called ``smaller 
reporting company.'' These companies would have their own eligibility 
standards and rules for transitioning up to a category of larger 
companies once a company exceeds the limitations for the smaller 
reporting company designation. In addition, each category of larger 
companies has rules for transitioning down to a smaller company 
category. This ordinarily would occur if the company drops below the 
ceiling marking the boundary between the smaller and larger company 
categories.
    Currently, a small business issuer that exceeds the $25 million 
revenue and $25 million public float standards for that status at the 
end of two consecutive fiscal years must transition out of small 
business issuer status, effective immediately for filings covering 
events and completed fiscal periods in the next fiscal year. A non-
accelerated filer ceases to qualify for that status and must transition 
to accelerated filer status in the next fiscal year after its public 
float first rises above $75 million as of the last business day of its 
most recently completed second fiscal quarter.\82\ For smaller 
reporting companies, we propose to follow the transition model 
currently used to determine ``accelerated filer'' status. Under our 
proposal, smaller reporting companies would lose eligibility to claim 
that status in the first fiscal year following a fiscal year in which 
the smaller reporting company's public float rises above $75 million as 
of the last business day of the second fiscal quarter.\83\
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    \82\ Exchange Act Rule 12b-2 (paragraph (3)(i) of the definition 
of ``accelerated filer'') provides:
    The determination at the end of the issuer's fiscal year for 
whether a non-accelerated filer becomes an accelerated filer, or 
whether a non-accelerated filer or accelerated filer becomes a large 
accelerated filer, governs the deadlines for the annual report to be 
filed for that fiscal year, the quarterly and annual reports to be 
filed for the subsequent fiscal year and all annual and quarterly 
reports to be filed thereafter while the issuer remains an 
accelerated filer or large accelerated filer.
    \83\ See proposed Item 10(f) of Regulation S-K.
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    We also propose to follow the accelerated filer model in 
establishing rules for companies to transition to smaller reporting 
company status. Under our current rules, a reporting company may 
transition to small business issuer status in the next fiscal year if 
its public float and revenue fall below $25 million at the end of two 
consecutive fiscal years.\84\ An accelerated filer may transition to 
non-accelerated filer status in the next fiscal year if its public 
float falls below $50 million as of the last business day of the 
company's second fiscal quarter. We propose that a reporting company 
that does not file reports claiming smaller reporting company status be 
required to transition to that status in the next fiscal year if its 
public float falls below $50 million as of the last business day of the 
company's second fiscal quarter.\85\
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    \84\ See Item 10 of Regulation S-B.
    \85\ See proposed Item 10(f) of Regulation S-K.
---------------------------------------------------------------------------

    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, we propose to allow it to use the scaled disclosure 
item requirements until it exceeds $50 million in annual revenue. Once 
an issuer fails to qualify for smaller reporting status under the 
revenue test, it would remain unqualified unless its annual revenues 
fall below $40 million during the previous fiscal year.
    The determination as to whether a company qualifies for smaller 
reporting company treatment would be made at the beginning of a fiscal 
year on the basis of the information in a quarterly report on Form 10-Q 
or an initial registration statement under the Securities Act or 
Exchange Act, whichever is the first to be filed during that year. If 
an issuer that qualified on the basis of revenue develops a public

[[Page 39680]]

float or its public float increases during the year, the issuer would 
remain a smaller reporting company for the entire fiscal year.
    Our purpose in proposing these transition rules is to provide both 
predictability and flexibility to smaller companies, while at the same 
time assuring that investors have access to the appropriate level of 
disclosure. We do not wish to have the rules under which a smaller 
company is reporting change too frequently. It also is our intention to 
provide smaller reporting companies with the ability to take advantage 
of scaled regulation in the appropriate circumstances.
Request for Comments
     Should the transition rules to and from smaller reporting 
company status be more similar to the current transition rules for 
small business issuer status?
     Should we provide a two-year test period, rather than a 
single determination date, for transitioning from smaller reporting 
company status, as is the case for transitioning from small business 
issuer status today?
     Should the Commission consider a threshold other than $50 
million in public float to transition into smaller reporting company 
status? Should we set the public float level for transitioning into 
smaller reporting company status at $40 million, $60 million, $75 
million, or some other level?
     Is there a better way for smaller reporting companies to 
transition to or from that status? Please be as specific as possible 
and provide details with your comments.
f. Eliminating Transitional Small Business Issuer Format
    As part of the adoption of Regulation S-B, and later additional 
small business initiatives, the Commission developed a transitional 
registration statement, Form SB-1, and annual report, Form 10-KSB, 
allowing disclosure based on Model A or B found in Regulation A.\86\ 
The Commission allowed the question-and-answer format for small 
business issuers to make an easy transition from a non-reporting 
company to a reporting company under the Securities Act or Exchange 
Act. A small business issuer may use this transitional disclosure 
format until it:
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    \86\ The transitional registration statement and annual report 
on Form 10-KSB allow some small business issuers to provide 
alternative disclosure. The Commission also allowed some small 
business issuers to provide Regulation A model disclosure on Form 
SB-1 to raise up to $10 million of securities in a continuous 12-
month period. See Release No. 33-6949; see also Release No. 33-6996 
(Apr. 28, 1993) [58 FR 26509].
---------------------------------------------------------------------------

     Registers more than $10 million under the Securities Act 
in any continuous 12-month period, other than on a Form S-8;
     Elects to graduate to a non-transitional disclosure 
system; or
     Is no longer a small business issuer.
    The number of companies that registered on Form SB-1 and followed 
the transitional disclosure format within Form 10-KSB has declined over 
time. During the past five years, the Commission has received only 56 
Form SB-1 registration statements.\87\ The number of companies that 
file their Form 10-KSB using the transitional disclosure format is also 
small. For the calendar years 2000 to 2005, two small business issuers 
out of 56 filed a Form 10-KSB using the transitional disclosure format.
---------------------------------------------------------------------------

    \87\ We calculated the number of Forms SB-1 filed by adding 
those received from 2002 through 2006.
---------------------------------------------------------------------------

    Because the transitional disclosure format is not commonly 
understood and infrequently used, we propose to eliminate this 
disclosure option. Accordingly, smaller reporting companies no longer 
would have the option to use Form SB-1 and the transitional format 
version of Form 10-KSB. Instead, they would use Form S-1 and 10-K. Our 
proposal would remove all references to transitional filer status, 
including removing paragraph 4 of General Instruction D in Form S-4, 
the Note to Small Business Issuers in Rules 14a-3 and 14c-3, and 
General Instructions G in Schedule 14A. We are not proposing to alter 
the disclosure format permitted in Regulation A offerings on Form 1-A.
Request for Comments
     Should the Commission maintain the transitional disclosure 
format option? If so, please indicate the reasons why the option should 
be maintained.
g. Other Proposals
    We also are soliciting suggestions for additional ways in which we 
could better scale our disclosure and reporting requirements to the 
needs of smaller companies and their investors. All suggestions that 
ease the burdens of smaller companies without compromising investor 
protection are welcome.
    We also propose several minor and technical amendments to our rules 
and forms to conform them to the regulatory changes we propose today. 
Most of these amendments are deletions of references to Regulation S-B 
or a small business issuer rule and substitutions of references to 
Regulation S-K. In a few instances, we propose to amend rules to 
reflect the Commission's current address of 100 F Street, NE., 
Washington, DC 20549.
Request for Comments
     Are there additional ways in which we could better scale 
our disclosure and reporting requirements to the needs of smaller 
reporting companies and their investors, while continuing to take 
investor protection into account? Please be as specific as possible and 
provide detailed support for your suggestions.

III. General Request for Comments

    We request and encourage any interested person to submit comments 
on any aspect of our proposals and any of the matters that might have 
an impact on the proposed amendments. We request comment from investors 
and companies that may be affected by the proposals. We also request 
comment from service professionals, such as law and accounting firms, 
and facilitators of capital formation, such as underwriters and 
placement agents, and other regulatory bodies, such as state securities 
regulators. We are especially interested in comments from service 
professionals that regularly work with smaller reporting companies. 
With respect to any comments, we note that they are of greatest 
assistance to our rulemaking initiatives if accompanied by supporting 
data and analysis of the issues addressed and by alternatives to our 
proposals where appropriate.

IV. Paperwork Reduction Act

A. Background

    The proposed amendments contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 
1995.\88\ We are submitting a request for approval of the proposed 
amendments to the Office of Management and Budget for review in 
accordance with the Paperwork Reduction Act and its implementing 
regulations.\89\ The titles of the collections of information are: \90\
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    \88\ 44 U.S.C. 3501 et seq.
    \89\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
    \90\ The paperwork burden from Regulation S-K and S-B is imposed 
through the forms that are subject to the requirements in those 
regulations and is reflected in the analysis of those forms. To 
avoid a Paperwork Reduction Act inventory reflecting duplicative 
burdens and for administrative convenience, we assign a one-hour 
burden to Regulations S-K and S-B.
---------------------------------------------------------------------------

    (1) ``Regulation S-B'' (OMB Control No. 3235-0417);
    (2) ``Regulation S-K'' (OMB Control No. 3235-0071);

[[Page 39681]]

    (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).
    We adopted all of the existing regulations and forms pursuant to 
the Securities Act, the Exchange Act, and the Trust Indenture Act. 
These regulations and forms set forth the disclosure requirements for 
annual, periodic, and current reports and registration statements that 
are prepared by issuers to provide investors information to make 
informed investment decisions in registered offerings of securities and 
in secondary market transactions.
    Our proposed amendments to existing forms and regulations and the 
proposed elimination of Regulation S-B, Form SB-1, Form SB-2, Form 10-
SB, Form 10-KSB, and Form 10-QSB are intended to:
     Make proportional and scaled disclosure options available 
to a larger number of smaller companies;
     Promote regulatory simplification; and
     Integrate current Regulation S-B disclosure requirements 
for smaller companies into disclosure requirements of Regulation S-K.
    These proposed amendments are intended to result in regulatory 
simplification for a greater number of entities that would be eligible 
for scaled disclosure item requirements. These proposals should not 
increase the disclosure requirements for any registrant, but will 
require some registrants to file different forms than they currently 
use. These proposals do not affect any disclosure requirements for any 
company with a public float over $75 million.
    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. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information requirement unless 
it displays a currently valid control number.
    The information collections related to annual, periodic, and 
current reports and registration statements would be mandatory for 
larger reporting companies; some of the requirements, however, would be 
voluntary for smaller reporting companies.

B. Summary of Information Collections

    Our proposals would amend the forms listed above as collections of 
information but focus primarily on the forms discussed below.
    The proposals would increase existing collection of information 
total burden estimates for reports on Form 10-K and Form 10-Q as well 
as registration statements on Form 10, Form S-1, and Form S-11 for the 
following reasons:
     The elimination of Form 10-KSB would cause an increase in 
the number of companies that are required to file an annual report on 
Form 10-K; \91\
     The elimination of Form 10-QSB would cause an increase in 
the number of companies that are required to file quarterly reports on 
Form 10-Q; \92\
     The elimination of Form SB-1 would cause an increase in 
the number of registration statements filed on Form S-1; \93\
     The elimination of Form SB-2 would cause an increase in 
the number of registration statements filed on Form S-1; \94\ and
     The elimination of Form SB-2 would cause real estate 
companies that had previously used that form to use Form S-11 instead, 
thereby increasing the number of registration statements filed on Form 
S-11.\95\
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    \91\ We estimate that approximately 3,504 small business issuers 
would file their annual reports on Form 10-K, rather than Form 10-
KSB.
    \92\ We estimate that approximately 11,299 reports on Form 10-
QSB that were filed in the last fiscal year would be filed on Form 
10-Q.
    \93\ We estimate that approximately 24 registration statements 
in the last fiscal year were filed on Form SB-1 and would be 
required to be filed on Form S-1.
    \94\ We estimate that approximately 1,028 registration 
statements were filed on Form SB-2 in the last fiscal year and that 
the number of Form S-1 registration statements would increase by the 
same number.
    \95\ We estimate that approximately 15 registration statements 
were filed on Form SB-2 in the last fiscal year covering real estate 
transactions that would be required to be registered on Form S-11 if 
these proposals were adopted.
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    At the same time, the proposals would decrease existing collection 
of information total burden estimates for annual reports on Form 10-
KSB, quarterly reports on Form 10-QSB, and registration statements on 
Form 10-SB, Form SB-1, and Form SB-2 by:
     Eliminating Form SB-1, Form SB-2, Form 10-SB, Form 10-KSB, 
and Form 10-QSB and integrating the disclosure requirements of 
Regulation S-B into Regulation S-K, thereby simplifying the disclosure 
requirements by combining them into one regulation.
    In addition, the proposals may decrease existing collection of 
information total burden estimates, or not affect them at all, for some 
reports filed on Form 10-K and Form 10-Q and some registration 
statements on Form 10, Form S-1, and Form S-11, depending on the 
company's particular circumstances, by:
     Replacing the definition of small business issuer with a 
broader category of smaller reporting companies comprised of most non-
accelerated filers with a public float between $25 million and $75 
million, and providing these smaller reporting companies with the 
option of scaled disclosure;
     Allowing smaller reporting companies to provide a three-
year discussion of their business development (Item 101), rather than 
five years as required of larger companies;
     Allowing smaller reporting companies to provide more 
streamlined disclosure for management's discussion and analysis of 
financial condition and results of operations (Item 303) by requiring 
two years of analysis if the company is presenting only two years of 
financial statements rather than three years as required of larger 
companies. Further, smaller reporting companies would not have to 
provide tabular disclosure of contractual obligations as required for 
larger companies under Item 303(a)(5);
     Allowing smaller reporting companies to provide an audited 
balance sheet for the most recent fiscal year and audited statements of 
income, cash flows, and changes in stockholders' equity for each of the 
latest two fiscal years rather than an audited balance sheet for the 
latest two fiscal years and

[[Page 39682]]

audited statements of income, cash flows and changes in stockholders' 
equity for each of the latest three fiscal years as required by 
Regulation S-X for larger companies;
     Allowing smaller reporting companies to provide 
information about the chief executive officer and two other highly 
compensated executive officers (Item 402), rather than information 
about the chief executive officer, chief financial officer, and three 
other highly compensated executive officers as required for larger 
companies and to provide only a summary compensation table, an 
outstanding equity awards table, and a director compensation table, 
rather than the seven tables required for larger companies. 
Furthermore, a smaller reporting company would not be required to 
provide a Compensation Discussion and Analysis, as required of larger 
companies; and
     Allowing smaller reporting companies to disclose related 
person transactions that exceed the lower of 1% of their total assets 
or $120,000 in amount. In this instance, a smaller reporting company 
for which 1% of its assets is less than $120,000 may have a more 
rigorous disclosure burden than a larger registrant if it chose to 
provide the scaled disclosure available to smaller reporting companies. 
Smaller reporting companies also would provide the related person 
disclosure for two years rather than the three years required for 
larger companies. A smaller reporting company would not be required to 
disclose its policies and procedures for approving related person 
transactions.

C. Paperwork Reduction Act Burden Estimates

    For purposes of the Paperwork Reduction Act, we believe that if 
these proposals were adopted, the burden changes would be insignificant 
for companies that currently meet the small business issuer definition.
    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 would be 6,151,112 and that 
the total increase in cost would be $933,954,800. 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 6,149,012 burden hours and 
a total decrease in cost of $927,927,800. The net difference between 
the increase and decrease is an increase of 2,100 burden hours and a 
cost of $6,027,000. The reason for the net difference is that small 
real estate companies, which are currently eligible to use Form SB-2, 
would be required to use Form S-11 if these proposals are adopted. Form 
S-11 is a form tailored to the real estate industry that requires more 
internal burden hours and increased professional costs. The net 
increase of 2,100 burden hours and costs of $6,027,000 is outweighed by 
the possible decrease of 356,390 burden hours and costs of $47,479,000, 
as discussed in detail below.
    Our methodologies for deriving the burden hour and cost estimates 
presented below represent the average burdens for all issuers, both 
large and small. For Exchange Act annual reports and quarterly reports 
on Form 10-K and 10-Q, we estimate that 75% of the burden of 
preparation is carried by the company internally and that 25% of the 
burden is carried by outside professionals retained by the issuer at an 
average cost of $400 per hour.\96\
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    \96\ In connection with other recent rulemakings, we have had 
discussions with several private law firms to estimate an hourly 
rate of $400 as the average cost of outside professionals that 
assist issuers in preparing disclosure and conducting registered 
offerings.
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    For purposes of the Paperwork Reduction Act, we estimate that over 
a three-year period \97\ the annual increased incremental disclosure 
burden imposed by the proposed revisions would average 4,457,088 hours 
per Form 10-K, 7,387 hours per Form 10, 1,155,209 hours per Form 10-Q, 
138,765 hours per Form S-1, and 7,413.75 hours per Form S-11. The plain 
English requirements would apply to these disclosure statements and is 
factored into the incremental burden of preparing these forms.
---------------------------------------------------------------------------

    \97\ We calculated an annual average over a three-year period 
because OMB approval of Paperwork Reduction Act submissions cover a 
three year period.
---------------------------------------------------------------------------

    These estimates were based on the following assumptions:
Form 10-K
     The elimination of Form 10-KSB would cause the number of 
Form 10-Ks filed to increase. We estimate there were approximately 
3,504 Form 10-KSBs filed in the last fiscal year so there would be a 
corresponding increase of 3,504 Form 10-Ks filed.
     We estimate that an increase of 3,504 Form 10-Ks filed 
would result in an increase in the compliance burden by an estimated 
4,457,088 hours (3,504 companies x 1,272 internal hours per company) 
and an annual cost increase of $594,278,400 ($169,600 cost per response 
x 3,504 annual responses) with respect to the current Form 10-K.\98\
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    \98\ Our current PRA inventory for completing a Form 10-KSB is 
1,272 burden hours and a cost of $169,600 (424 professional hours x 
$400/hour) per report.
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Form 10-Q
     The elimination of Form 10-QSB would cause the number of 
Form 10-Qs to increase. We estimate that there were approximately 
11,299 Form 10-QSBs filed last fiscal year so there would be a 
corresponding increase of 11,299 more Form 10-Qs filed.
     We estimate that an increase of 11,299 to the number of 
Form 10-Qs filed would result in an increase in the compliance burden 
by 1,155,209 hours (11,299 responses by companies x 102.24 internal 
hours per response) and an annual cost increase of $154,027,968 (34.08 
professional hours x $400 per hour = $13,632 cost per response x 11,299 
responses annually) with respect to the current Form 10-Q.
Form 10
     The elimination of Form 10-SB would cause the number of 
Form 10s to increase. We estimate that approximately 166 Form 10-SBs 
were filed in the last fiscal year so there would be a corresponding 
increase of 166 Form 10s.
     We estimate that an increase of 166 to the number of Form 
10s filed would result in an increase in the compliance burden by 7,387 
hours (166 responses by companies x 44.5 internal hours per response) 
and an annual cost increase of $8,864,000 (133.5 professional hours x 
$400 per hour = $53,400 cost per response x 166 responses annually) 
with respect to the current Form 10.
Form S-1
     The elimination of Form SB-1 would cause the number of 
Form S-1s to increase. We estimate there were approximately 17 Form SB-
1s filed in the last fiscal year so there would be a corresponding 
increase of 17 Form S-1s filed.
     We estimate that 17 more Form S-1s would increase the 
compliance burden by 3,009 hours (17 company responses x 177 internal 
hours per response) and increase the annual cost by $3,610,800 (531 
professional hours x $400 per hour = $212,400 cost per response x 17 
responses annually).
     The elimination of Form SB-2 would cause the number of 
Form S-1s to increase. We estimate that there were approximately 870 
Form SB-2s filed in the last fiscal year so there would be a 
corresponding increase of 870 more Form S-1s filed.
     We estimate that 870 more Form S-1s would result in an 
increase in the compliance burden by 138,765 hours (870 company 
responses x 159.5 internal hours per response) and an annual cost of 
$166,518,000 (478.5

[[Page 39683]]

professional hours x $400 per hour = $191,400 cost per response x 870 
responses annually) increase to the current Form S-1.
Form S-11
     The elimination of Form SB-2 would also cause the number 
of Form S-11s to increase. We estimate there were approximately 15 Form 
SB-2s filed by real estate companies in the last fiscal year so that 
there would be a corresponding increase of 15 Form S-11s filed.
     We estimate that 15 more Form S-11s would result in an 
increase in the compliance burden by 7,414 hours (15 company responses 
x 494.25 internal hours per response) and an annual cost of $8,898,000 
(1,483 professional hours x $400 per hour = $593,200 cost per response 
x 15 responses annually) increase in the current Form S-11.
    The annual decrease in incremental disclosure burden resulting from 
the proposed revisions would average 4,457,000 hours per Form 10-KSB, 
7,387 hours per Form 10-SB, 1,540,458 hours per Form 10-QSB, 3,009 
hours per Form SB-1, and 141,158 hours per Form SB-2. The annual 
decrease in incremental cost burden resulting from the proposed 
revisions would average $594,278,000 per Form 10-KSB, $8,864,000 per 
Form 10-SB, $151,786,000 per Form 10-QSB, $3,610,800 per Form SB-1, and 
$169,389,000 per Form SB-2. The plain English requirements would apply 
to these disclosure statements and is factored into the incremental 
burden of preparing these forms.
    These estimates were based on the following assumptions:
Form 10-KSB
     We estimate that the elimination of 3,504 Form 10-KSBs 
filed would result in a decrease in the compliance burden by 4,457,088 
hours (3,504 responses by companies x 1,272 internal hours per 
response) and an annual cost decrease of $594,278,400 (424 professional 
hours x $400 per hour = $169,600 cost per response x 3,504 responses 
annually).
Form 10-QSB
     We estimate that the elimination of 11,299 Form 10-QSBs 
filed would result in a decrease in the compliance burden by 1,155,209 
hours (11,299 responses by companies x 102.24 internal hours per 
response) and an annual cost decrease of $154,027,968 (34.08 
professional hours x $400 per hour = $13,632 cost per response x 11,299 
filings annually).
Form 10-SB
     We estimate that the elimination of 166 Form 10-SBs filed 
would result in a decrease in the compliance burden by 7,387 hours (166 
responses by companies x 44.5 internal hours per response) and an 
annual cost decrease of $8,864,000 (133.5 professional hours x $400 per 
hour = $53,400 cost per response x 166 responses annually).
Form SB-1
     We estimate that the elimination of 17 Form SB-1s would 
result in a decrease in the compliance burden by 3,009 hours (17 
company responses x 177 internal hours per response) and an annual cost 
decrease of $3,610,800 (531 professional hours x $400 per hour = 
$212,400 cost per response x 17 responses annually).
Form SB-2
     We estimate the elimination of 885 Form SB-2s would result 
in a decrease in the compliance burden by 141,157.5 hours (885 company 
responses x 159.5 internal hours) and an annual cost decrease of 
$169,389,000 (478.5 professional hours x $400 per hour = $191,400 cost 
per response x 885 responses annually).
    Additionally, we estimate that approximately 1,581 companies would 
become newly eligible to use scaled disclosure for smaller reporting 
companies or have a new opportunity to assess whether they should avail 
themselves of scaled regulation under the restructured regime and could 
experience significant burden and cost savings if these proposals are 
adopted.\99\ We estimate that if these smaller reporting companies use 
all of the scaled smaller reporting company requirements, they would 
save 713,031 burden hours and an aggregate cost of $95,018,100.\100\ We 
do not expect all of the 1,581 companies, however, to use all of the 
scaled disclosure available to smaller reporting companies.
---------------------------------------------------------------------------

    \99\ We estimate that 1,227 companies would be newly eligible to 
use the scaled disclosure available to smaller reporting companies 
in addition to another 354 companies that currently are eligible for 
scaled disclosure but do not use it, resulting in a total of 1,581 
companies. Approximately 1,227 companies have a public float between 
$25 and $75 million, in addition to approximately 354 companies with 
a public float below $25 million that currently use the ``SK'' forms 
rather than the ``SB'' forms.
    \100\ A smaller reporting company generally may choose to comply 
with one, some, all, or none of the scaled disclosure requirements 
available for smaller reporting companies under our proposals. If a 
smaller reporting company used all scaled disclosure available, it 
would decrease the compliance burden by up to 713,031 hours (1,581 
responses by companies using regular Regulation S-K disclosure x 
1,723 internal hours per company = 2,724,063 hours minus 1,581 
responses by companies using scaled disclosure x 1,272 internal 
hours per company = 2,011,032 hours for smaller reporting companies) 
and decrease the annual cost by up to $95,018,100 (574.25 
professional hours x $400 per hour = $229,700 cost per response 
using the regular Regulation S-K disclosure x 1,581 annual responses 
minus 424 professional hours x $400 per hour = $169,600 cost per 
response x 1,581 annual responses).
---------------------------------------------------------------------------

    While we are unsure how many of the 1,581 smaller reporting 
companies would use the scaled disclosure requirements, for purposes of 
this analysis, we estimate that approximately 50% of these companies 
would use the proposed scaled disclosure available to smaller reporting 
companies. As a result, we estimate that these 790 smaller reporting 
companies could save 356,390 internal burden hours and costs of 
$47,479,000 as indicated in the table below showing our estimates if 
50% of the companies used the scaled disclosure in preparing their Form 
10-K.\101\
---------------------------------------------------------------------------

    \101\ This estimate of a decrease in the compliance burden by 
356,290 hours is based upon 790 responses by companies using regular 
Regulation S-K disclosure x 1,723 internal hours per company = 
1,361,170 hours minus 790 responses by companies x 1,272 internal 
hours per company = 1,004,880 hours for smaller reporting companies 
and a decrease in the annual cost by $47,479,000 (574.25 
professional hours x $400 per hour = $229,700 cost per response 
using regular Regulation S-K disclosure x 790 responses minus 424 
professional hours x $400 per hour = $169,600 cost per response 
using the scaled disclosure x 790 annual responses).
---------------------------------------------------------------------------

Totals
    The tables below illustrate the incremental annual compliance 
burden in the collection of information in hours and cost for Exchange 
Act periodic reports, Exchange Act registration statements, and 
Securities Act registration statements.

Calculation of Paperwork Reduction Act Burden Estimates for Exchange 
Act Reports, Exchange Act Registration Statements, and Securities Act 
Registration Statements

[[Page 39684]]



                                               Table 1.--Decreases
----------------------------------------------------------------------------------------------------------------
                                                                      Annual
                              Form                                   responses     Burden hours    Annual costs
----------------------------------------------------------------------------------------------------------------
10-KSB..........................................................           3,504       4,457,000    $594,278,000
10-QSB..........................................................          11,299       1,540,458     151,786,000
10-SB...........................................................             166           7,387       8,864,000
SB-1............................................................              17           3,009       3,610,800
SB-2............................................................             885         141,158     169,389,000
                                                                 -----------------------------------------------
    Total.......................................................  ..............       6,149,012     927,927,800
----------------------------------------------------------------------------------------------------------------


                                                                                       Table 2.--Increases
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Increased   Proposed     Current    Increase    Proposed       Current        Increase in        Proposed
                              Form                                 Current annual    annual      annual      burden     in burden    burden      professional     professional     professional
                                                                     responses      responses   responses     Hours       hours       hours         costs            costs            costs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
10-K............................................................            8,602       3,504      12,106  14,819,096   4,457,088  19,276,184   $1,975,879,000     $594,278,000   $2,570,157,000
10-Q............................................................           20,264      11,299      31,563   2,918,263   1,540,458   4,458,721      291,826,000      151,786,000      443,612,000
1Q..............................................................               72         166         238       4,338       7,387      11,725        5,206,000        8,864,000       14,070,000
S-1.............................................................              528         887       1,415     155,232     138,765     293,997      186,278,000      170,128,800      356,406,800
S-11............................................................               60          15          75      29,655       7,414      37,069       35,586,000        8,898,000       44,484,000
                                                                 -------------------------------------------------------------------------------------------------------------------------------
    Total.......................................................  ...............  ..........  ..........  ..........   6,151,112  ..........  ...............      933,954,800  ...............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                    Table 3.--Decreases for Newly Eligible Companies
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           Current          Proposed       Decrease in
                                                     Current burden      Proposed       Decrease in      professional     professional     professional
   Companies between $25 million and $75 million      hours under      burden hours     burden hours     costs under      costs using      costs using
                                                        standard       using scaled     using scaled       standard          scaled           scaled
                                                     regulation S-K     disclosure       disclosure     regulation S-K     disclosure       disclosure
--------------------------------------------------------------------------------------------------------------------------------------------------------
790...............................................       1,361,170        1,004,880          356,290     $181,463,000     $133,984,000      $47,479,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Request for Comment

    We request comment in order to (a) evaluate whether the collections 
of information are necessary for the proper performance of our 
functions, including whether the information will have practical 
utility; (b) evaluate the accuracy of our estimate of the burden of 
collections of information; (c) determine whether there are ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and (d) evaluate whether there are ways to minimize the 
burden of the collections of information on those who respond, 
including through the use of automated collection techniques or other 
forms of information technology.\102\
---------------------------------------------------------------------------

    \102\ Comments are requested pursuant to 44 U.S.C. 
3506(c)(2)(B).
---------------------------------------------------------------------------

    Any member of the public may direct to us any comments concerning 
the accuracy of these burden estimates and any suggestions for reducing 
these burdens. Persons submitting comments on the collection of 
information requirements should direct the comments to the Office of 
Management and Budget, Attention: Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Washington, DC 20503, and should send a copy to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090, with reference to File No. S7-15-07. 
Requests for materials submitted to OMB by the Commission with regard 
to these collections of information should be in writing, refer to File 
No. S7-15-07, and be submitted to the Securities and Exchange 
Commission, Records Management, 6432 General Green Way, Alexandria, VA 
22312. Because OMB is required to make a decision concerning the 
collection of information requirements between 30 and 60 days after 
publication of this release, your comments are best assured of having 
their full effect if OMB receives them within 30 days of publication.

V. Cost-Benefit Analysis

A. Background

    We are proposing to eliminate our ``SB'' forms and integrate 
Regulation S-B item requirements into amended Regulation S-K. We 
propose to amend all relevant rules and forms under the Securities Act, 
the Exchange Act, and the Trust Indenture Act to replace the existing 
definition of ``small business issuer'' with the new definition of a 
``smaller reporting company.'' The ``smaller reporting company'' would 
replace the current ``small business issuer'' eligibility standards to 
allow a broader range of public companies to provide disclosure based 
on the scaled disclosure requirements. The proposed new definition for 
smaller reporting company would include companies with a public float 
of less than $75 million and would therefore provide a significant 
increase from the $25 million levels for public float and revenue under 
the current ``small business issuer'' definition.

B. Summary of Proposals

    As noted above, our proposals would eliminate the separate 
disclosure framework of Regulation S-B by integrating those 
requirements into Regulation S-K. The proposed new definition for 
``smaller reporting company'' would expand the number of filers that 
would qualify to provide disclosure under the more scaled item 
requirements of the current Regulation S-B framework. As proposed, 
smaller reporting companies and non-accelerated filers would both be 
subject to Regulation S-K, but smaller reporting companies would have 
the option to provide disclosure on an item-by-item basis according to 
the scaled item requirements of amended Regulation S-K.

[[Page 39685]]

New Definition of Smaller Reporting Company in Regulation S-K
    Under the proposals, the newly defined term ``smaller reporting 
company'' would include previously excluded companies with public float 
levels of between $25 and $75 million. Additionally, companies that do 
not have a public float as defined, or are unable to calculate it, 
would be eligible for scaled disclosure if their revenues are below $50 
million annually. A smaller reporting company would have the option to 
prepare disclosure based on the scaled disclosure item requirements of 
amended Regulation S-K. The proposed amendments to Regulation S-K would 
foster regulatory flexibility because eligible filers would be able to 
choose the level of disclosure to provide on an item-by-item basis. We 
believe providing disclosure choice is consistent with a principles-
based approach, which encourages filers to provide more meaningful and 
relevant disclosure that is specific to the needs of the company and 
its investors.
Description of Business
    Under the proposal, companies with public float levels of less than 
$75 million would be able to elect to provide disclosure regarding the 
development of their business for three years rather than the current 
requirement applicable to companies between $25 million and $75 million 
in public float to disclose the general development of the business for 
the past five years.
Financial Information
    As part of our proposals to reduce costs associated with regulatory 
compliance, we are proposing to simplify financial statement disclosure 
requirements for smaller reporting companies.
    As proposed, the current financial statement requirements in Item 
310 of Regulation S-B would be available to smaller reporting 
companies. As proposed, Item 310 of Regulation S-K would permit smaller 
reporting companies to provide an audited balance sheet for the last 
fiscal year and audited statements of income, cash flows, and changes 
in stockholders' equity for each of the latest two fiscal years. In 
addition, the expanded category of smaller reporting companies 
(companies with public float levels between $25 and $75 million) would 
no longer be required to provide an audited balance sheet for the 
latest two fiscal years and audited statements of income, cash flows, 
and changes in stockholders' equity for each of the latest three fiscal 
years as required by Regulation S-X. Other simplified aspects under 
proposed Item 310 of Regulation S-K would include:
     The historical and pro forma financial statements for 
significant acquired businesses;
     The maximum age of financial statements; and
     Limited partnerships financial statement disclosure of 
general partners.
Executive Compensation
    As proposed to be amended, Item 402 of Regulation S-K would require 
smaller reporting companies to 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; and
     Only three of the seven tables (Summary Compensation, 
Outstanding Equity Awards, and Director Compensation) required of 
larger reporting companies.
Transactions With Related Persons, Promoters, and Certain Control 
Persons
    Under the proposals, smaller reporting companies would be able to 
use the scaled disclosure requirements for transactions with related 
persons currently in Item 404 of Regulation S-B. Unlike Item 404 of 
Regulation S-K, Item 404 of Regulation S-B does not require disclosure 
regarding the company's policies and procedures for approving related 
person transactions. Smaller reporting companies would be required, 
however, to report transactions occurring within the last two years, 
whereas Item 404 of Regulation S-K requires disclosure for the last 
fiscal year, unless the information is included in a Securities Act or 
Exchange Act registration statement, where information as to the last 
three fiscal years is required.

C. Benefits

    As discussed above, our proposals would 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 would enable a larger category of 
public companies to have more flexibility in tailoring disclosure 
standards to fit the realities of their company. The proposed increased 
public float standards in the definition of smaller reporting company 
would provide more companies the flexibility to choose between scaled 
item requirements such as financial statement information and executive 
compensation disclosure.
    Eliminating the ``SB'' forms would mitigate the perceived notion 
that smaller companies are currently reporting under a completely 
different disclosure framework. Integrating smaller reporting companies 
into the Regulation S-K framework and importing Regulation S-B 
disclosure standards into Regulation S-K would provide regulatory 
flexibility and reduce compliance costs for companies. We believe that 
these proposals 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 proposed, an integrated disclosure system for all companies 
filing forms using Regulation S-K would promote efficiency because 
practitioners and investors would refer to one disclosure framework. 
Filers and their practitioners would have one consolidated regulation 
to find all relevant disclosure item requirements, which would reduce 
complexity and improve regulatory efficiencies.
    The disclosure requirements will not change for current small 
business issuers that have filed under Regulation S-B. We nonetheless 
believe that the benefits of increased flexibility and efficiency and 
mitigating the perceived notion that small business issuers are 
reporting under a different framework are important to small business 
issuers.
    As discussed earlier in this release, we estimate that 
approximately 1,581 companies would have a new opportunity to use the 
restructured scaled disclosure requirements for smaller reporting 
companies and could experience significant burden and cost savings if 
these proposals are adopted.\103\ If all 1,581 smaller reporting 
companies provided scaled disclosure, they could save 713,031 burden 
hours and costs of $95,018,100, using the assumptions from our 
Paperwork Reduction Analysis.\104\ However, we do not expect all of the 
1,581 companies to use all of the scaled disclosure available to 
smaller reporting companies.
---------------------------------------------------------------------------

    \103\ See footnote 100 above.
    \104\ Id.
---------------------------------------------------------------------------

    For purposes of the Paperwork Reduction Analysis, we assumed that 
approximately 50% of the 1,581 companies (or 790 companies) would use 
the scaled disclosure requirements. We estimate that these 790 smaller 
reporting companies could save 356,390 internal burden hours and costs 
in the

[[Page 39686]]

amount of $47,479,000 by using the scaled disclosure requirements.\105\
---------------------------------------------------------------------------

    \105\ See footnote 101 above.
---------------------------------------------------------------------------

    We believe investors would benefit from the proposed scaled and 
proportional disclosure amendments to Regulation S-K because the 
proposals would 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 meet their own needs.
    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 would result in some minor cost savings and 
efficiencies in preparing registration statements for smaller reporting 
companies.

D. Costs

    In our view, the proposed elimination of the ``SB'' forms and the 
proposed consolidation of the Regulation S-B disclosure standards into 
Regulation S-K would not increase significantly the costs of complying 
with the Commission's rules. For current ``SB'' filers, we estimate the 
net difference of reporting under Regulation S-K would be an increase 
of 2,100 burden hours and a cost of $6,027,000.\106\ The reason for the 
net difference is that small real estate companies, which are currently 
eligible to use Form SB-2, would be required to use Form S-11 if these 
proposals are adopted. Form S-11 is a form tailored to the real estate 
industry and requires more internal burden hours and increased 
professional costs.
---------------------------------------------------------------------------

    \106\ See Section C. Paperwork Reduction Act Burden Estimates.
---------------------------------------------------------------------------

    As proposed, we are not creating new rules or item requirements 
that would increase burdens or impose new requirements other than 
requiring foreign private issuers that elect to file reports as smaller 
reporting companies to provide financial statements according to U.S. 
GAAP. We believe that combining disclosure standards into one 
centralized source in amended Regulation S-K would streamline and 
simplify the disclosure burdens associated with the registration 
process for many filers. Under the proposed amendments, our intention 
is to provide regulatory relief to a broader category of filers 
consistent with investor protection. We anticipate that companies would 
be able to reduce costs associated with the preparation of disclosure.
    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. These companies may 
be providing less information to the marketplace. But more information 
is not necessarily better if the cost to provide the information is 
greater than the benefit. These companies would be providing scaled 
disclosure to fit the characteristics of their company while balancing 
the burdens of providing information with their benefits.
Request for Comments
    We solicit comments, especially quantitative data, to assist in our 
assessment of the benefits and costs of scaled disclosure resulting 
from:
     Expanding the category of filers that may be eligible for 
``smaller reporting company'' status by increasing the public float 
threshold to a level of less than $75 million in public float;
     Eliminating all forms associated with Regulation S-B;
     Allowing smaller reporting companies to provide disclosure 
based on the scaled item requirements of amended Regulation S-K, which 
would include Items 101, 303, 310, 402, 404, and any others that would 
be amended based on the current scaled standards set forth in 
Regulation S-B;
     Indexing the public float threshold for ``smaller 
reporting company'' eligibility to provide for periodic adjustments 
based on inflation; and
     Making the scaled disclosure requirements in current 
Regulation S-B Items 101, 303, 310, 402, and 404 available to more 
companies eligible for ``smaller reporting company'' status.
    Additionally, we request comments on the following:
     Do members of the public have comments, especially 
quantitative data, to assist our assessment of the benefits and costs 
of scaled disclosure resulting from our proposed amendments?
     Are there costs or benefits to our proposals that we have 
not identified?
     Some companies with a public float between $25 million and 
$75 million may choose to use the scaled disclosure to provide less 
information to investors than they have in the past. Would this loss of 
information have a negative or positive effect on investors? Would it 
affect the cost of capital?
     It may be more difficult under the current proposal for a 
smaller reporting company that filed as a Regulation S-K filer in the 
past to differentiate itself from other smaller companies. Would the 
lack of differentiation affect investors and, if so, what impact will 
it have? Would it affect the cost of capital?
     Would any reporting companies that would newly qualify for 
scaled disclosure requirements incur increased costs as a result of 
adoption of our proposed amended and scaled item requirements of 
Regulation S-K?

VI. 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 would have on competition.\107\ Section 
23(a)(2) also prohibits us from adopting any rule that would impose a 
burden on competition not necessary or appropriate to carry out the 
purposes of the Exchange Act.
---------------------------------------------------------------------------

    \107\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    Securities Act Section 2(b) and Exchange Act Section 3(f) require 
us to consider or determine, when engaged in rulemaking, whether an 
action is necessary or appropriate in the public interest and whether 
the action will promote efficiency, competition, and capital formation.
    The proposed amendments to Regulation S-K are intended to 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 financial statement information 
and executive compensation, into amended Regulation S-K. As proposed, 
amended Regulation S-K would consolidate into a single framework the 
disclosure requirements 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 would no longer need to refer to two disclosure frameworks. 
Practitioners and companies would benefit from the ease of reference 
that a single disclosure framework would provide.
    It is intended that the proposed amendments would promote capital 
formation for smaller reporting companies and improve their ability to 
compete with larger companies for capital. For example, we believe 
capital formation would be improved by providing more flexibility to 
smaller reporting companies to tailor their disclosure to their 
investors' needs. In addition, the costs to raise capital could be 
reduced to the extent compliance costs would be reduced as a result of 
the

[[Page 39687]]

proposed scaled disclosure requirements. If smaller reporting companies 
allocate the capital they raise and save as a result of our proposed 
scaled disclosure requirements to business development in an effective 
manner, these companies could be more competitive.
    The proposed amendments to Regulation S-K are intended to make the 
scaled disclosure requirements of the current Regulation S-B regime 
available to a broader category of filers on an optional basis. More 
companies would 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 would provide tailored 
disclosure that may better meet the needs of their investors. The 
proposed amendments to Regulation S-K are intended to provide more 
disclosure choice without adding additional requirements.
    We request comment on whether the proposals, if adopted, would 
promote efficiency, competition and capital formation or have an impact 
or burden on competition. Commenters are requested to provide empirical 
data and other factual support for their view, if possible.

VII. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. The following analysis relates to 
proposed revisions to the rules and forms under the Securities Act and 
Exchange Act, which would include a new definition of smaller reporting 
company under Regulation S-K. The new definition would 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 proposed, a smaller reporting company would be 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 and that 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 because the issuer had no significant 
equity outstanding or no market price for its equity, 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 that establishes whether or not the issuer is a 
smaller reporting company for any fiscal year.
    The proposed revisions also would 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. The 
proposed revisions to Regulation S-K include revising item requirements 
to offer smaller reporting companies optional disclosure alternatives 
that are designed to provide flexibility, cost efficiencies and 
regulatory simplification. The revisions would result in greater 
uniformity of rules and regulations and compliance simplification for 
filers.

A. Reasons for and Objectives of the Proposed Action

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 and to make 
recommendations for changes to improve regulatory conditions for 
smaller companies. The Commission directed the Advisory Committee on 
Smaller Public Companies to consider the impact that the Sarbanes-Oxley 
Act of 2002 \108\ and several other areas, including the disclosure and 
reporting requirements applicable to smaller companies under the 
federal securities laws.
---------------------------------------------------------------------------

    \108\ Pub. L. No. 107-204, 116 Stat. 745 (2002).
---------------------------------------------------------------------------

    In 2005, the Advisory Committee received numerous comments stating 
that the $25 million eligibility thresholds in the Regulation S-B 
definition of small business issuer are too low. The comments also 
indicated that the $25 million thresholds for public float and revenue 
in the current definition for small business issuer should be increased 
to permit a much larger group of smaller public companies to qualify 
for the scaled disclosure benefits of Regulation S-B, particularly in 
light of the increased costs associated with reporting obligations 
under the Exchange Act since passage of the Sarbanes-Oxley Act.
    The Advisory Committee made three recommendations in this area, 
which included expanding the definition of smaller public company, 
incorporating Regulation S-B into Regulation S-K, and incorporating 
Item 310 of Regulation S-B into Regulation S-K 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, increased to $75 million, as we propose today, 
the proposed $75 million public float threshold 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 uniformity 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 
Regulation S-K
    The overall goal of the rule proposals is to integrate the most 
substantive provisions of Regulation S-B into Regulation S-K and make 
these scaled disclosure requirements available to more companies as 
smaller reporting companies. We believe that the proposals would:
     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 financial statement information in 
accordance with Item 310 of Regulation S-K instead of Regulation S-X.

[[Page 39688]]

B. Legal Basis

    We are proposing the amendments pursuant to Sections 6, 7, 10 and 
19(a) of the Securities Act, Sections 12, 13, 14(a), 15(d), and 23(a) 
of the Exchange Act, and Section 319(a) of the Trust Indenture Act, as 
amended.

C. Small Entities Subject to the Rule

    The proposals would 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 
proposals also would 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 
\109\ and Exchange Act Rule 0-10(a) \110\ 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 proposals would affect some small 
entities. We estimate that there are approximately 1,100 issuers that 
may be considered small entities.\111\
---------------------------------------------------------------------------

    \109\ 17 CFR 230.157.
    \110\ 17 CFR 240.0-10(a).
    \111\ The estimated number of reporting small entities is based 
on 2007 data including the Commission's internal computerized filing 
system and Thomson Financial's Worldscope database. This represents 
an update from the number of reporting small entities estimated in 
prior rulemakings.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    As proposed, integrating Regulation S-B requirements into 
Regulation S-K and rescinding all of the ``SB'' forms would shift the 
location of disclosure requirements and would require that smaller 
reporting companies adapt to new formats in preparing their disclosure 
for Form S-1. The proposed amendments to Regulation S-K would include a 
new definition for smaller reporting company, which would broaden 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 would 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. Under the proposals, 
the scope and presentation of information disclosed based on the item 
requirements of amended Regulation S-K would differ in a number of 
significant ways from the current Regulation S-K disclosure framework. 
Under amended Regulation S-K, smaller reporting companies would:
     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 be required to 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 operation 
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 an audited balance sheet as of the end of the last 
fiscal year and audited statements of income, cash flows and changes in 
stockholders' equity for each of the last two fiscal years in new Item 
310 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 Regulation S-X;
     Under Item 402, limit the named executive officers for 
whom disclosure will be required to a smaller group, consisting of the 
principal executive officer and the other two highest paid executive 
officers, require that the Summary Compensation Table disclose the two 
most recent fiscal years, require an Outstanding Equity Awards at 
Fiscal Year-End Table, and require the Director Compensation Table;
     Under Item 402, smaller reporting companies would not be 
required to provide a Compensation Discussion and Analysis or a 
Compensation Committee Report; information regarding two additional 
executive officers; the third fiscal year of Summary Compensation Table 
disclosure; or the supplementary Grants of Plan-Based Awards Table, the 
Option Exercises and Stock Vested Table, the Pension Benefits Table, 
and the Nonqualified Deferred Compensation Table and the separate 
Potential Payments Upon Termination or Change-in-Control narrative 
section; and
     Under Item 404, a smaller reporting company would be 
required to describe any transaction where the amount involved exceeds 
the lesser of $120,000 or 1% of the average of the smaller reporting 
company's total assets at the year-end for the last two completed 
fiscal years, and in which any related person had or will have a direct 
or indirect material interest. A smaller reporting company need not 
provide disclosure relating to policies and procedures for reviewing 
related person transactions.
    The proposed amendments to Regulation S-K would not increase the 
disclosure requirements for former small business issuers and could 
substantially decrease the disclosure required for issuers with public 
float levels between $25 million and $75 million.
    Proposed amended Item 404 of Regulation S-K is the only example 
where it is possible that the disclosure required for smaller reporting 
companies could be more extensive than for standard Regulation S-K 
filers. Item 404 would contain a provision that would require 
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 may generally have 
lower materiality thresholds. While larger companies are bound by the 
higher $120,000 threshold, we believe this difference is important for 
the protection of investors. This disclosure issue would only affect 
smaller reporting companies that have related person transactions.

E. Overlapping or Conflicting Federal Rules

    We do not believe any current federal rules duplicate, overlap or 
conflict with the proposed amendments.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would 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.

[[Page 39689]]

    As proposed, our amendments are intended to maintain current 
disclosure standards for small entities while further expanding the 
scope of eligibility for companies that would elect to comply with the 
scaled disclosure item requirements currently set forth in Regulation 
S-B. Our proposals do not exempt smaller entities from coverage of the 
disclosure requirements; but rather, they would provide a greater 
number of smaller reporting companies the choice to provide scaled 
disclosure as set forth in the proposed smaller reporting company 
amendments to Regulation S-K.
    As amended, a new definition for smaller reporting company would 
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 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 was preferable, 
given its ease of reference and uniformity with current rules under the 
Securities Act and the Exchange Act.
    As proposed, we would consolidate, clarify and simplify disclosure 
requirement compliance by integrating Regulation S-B into Regulation S-
K. The proposed amendments would include a new definition of smaller 
reporting company, which would greatly expand the number of small 
entities that would 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 believe a single disclosure 
framework would be more efficient. The proposed amendments also would 
eliminate all ``SB'' forms, which would result in regulatory 
simplification for smaller entities by requiring that all registrants 
rely on one set of forms, such as Forms S-1, S-3, 10-K and 10-Q, for 
example. These forms would include scaled item requirements for smaller 
reporting companies under proposed amended Regulation S-K.
    Finally, we considered the use of performance rather than design 
standards and concluded that it would be inconsistent with the purposes 
of the Securities Act and Exchange Act and investor protection to 
specify different requirements other than those set forth in the item 
requirements of Regulation S-B and Regulation S-K.
Request for Comments
     Are there any other significant alternatives we should 
consider in our final regulatory flexibility analysis?

G. Solicitation of Comments

    We encourage the submission of written comments with respect to any 
aspect of this initial regulatory flexibility analysis, especially 
empirical data on the impact on small businesses. In particular, we 
request comment on: (1) The number of small entities that would be 
affected by the proposed amendments of Form 10-K, Form 10-Q, Form 10, 
Form S-1, and Form S-11 as well as the elimination of Regulation S-B 
and Form 10-KSB, Form 10-QSB, Form 10-SB, Form SB-1, and Form SB-2; and 
(2) whether these amendments would increase the reporting, 
recordkeeping and other compliance requirements for small businesses. 
Such written comments will be considered in the preparation of the 
final regulatory flexibility analysis if the proposed amendments are 
adopted.

VIII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996 \112\ a rule is ``major'' if it has resulted, or is likely 
to result in:
---------------------------------------------------------------------------

    \112\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment or 
innovation.
    We request comment on whether our proposals would be a ``major 
rule'' for purposes of the Small Business Regulatory Enforcement 
Fairness Act. We solicit comment and empirical data on (a) the 
potential effect on the U.S. economy on an annual basis; (b) any 
potential increase in costs or prices for consumers or individual 
industries; and (c) any potential effect on competition, investment or 
innovation.

IX. Statutory Basis and Text of Proposal

    We are proposing rule amendments 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.

    In accordance with the foregoing, under the authority of 15 U.S.C. 
19(a) Title 17, Chapter II of the Code of Federal Regulations is 
proposed to be 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 Sec.  210.3-01 by revising paragraphs (b), the 
introductory text of paragraph (c) and (f) to read as follows:


Sec.  210.3-01  Consolidated balance sheets.

* * * * *
    (b) If the filing, other than a filing on Form 10-K or Form 10, is 
made within 45 days after the end of the registrant's fiscal year and 
audited financial statements for the most recent fiscal year are not 
available, the balance sheets may be as of the end of the two preceding 
fiscal years and the filing shall include an additional balance sheet 
as of an interim date at least as current as the end of the 
registrant's third fiscal quarter of the most recently completed fiscal 
year.
    (c) The instruction in paragraph (b) of this section is also 
applicable to filings, other than on Form 10-K or Form 10, made after 
45 days but within the number of days of the end of the registrant's 
fiscal year specified in paragraph (i) of this section: Provided, That 
the following conditions are met:
* * * * *
    (f) Any interim balance sheet provided in accordance with the 
requirements of this section may be unaudited and need not be presented 
in greater detail than is required by

[[Page 39690]]

Sec.  210.10-01. Notwithstanding the requirements of this section, the 
most recent interim balance sheet included in a filing shall be at 
least as current as the most recent balance sheet filed with the 
Commission on Form 10-Q.
* * * * *
    3. Amend Sec.  210.3-10 by revising paragraphs (h)(3) and (h)(4) to 
read as follows:


Sec.  210.3-10  Financial statements of guarantors and issuers of 
guaranteed securities registered or being registered.

* * * * *
    (h) * * *
    (1) * * *
    (3) Annual report refers to an annual report on Form 10-K or Form 
20-F (Sec.  249.310 or 249.220f of this chapter).
    (4) Quarterly report refers to a quarterly report on Form 10-Q 
(Sec.  249.308a of this chapter).
* * * * *
    4. Amend Sec.  210.3-12 by revising paragraphs (a) and (d) to read 
as follows:


Sec.  210.3-12  Age of financial statements at effective date of 
registration statement or at mailing date of proxy statement.

    (a) If the financial statements in a filing are as of a date the 
number of days specified in paragraph (g) of this section or more prior 
to the date the filing is expected to become effective or proposed 
mailing date in the case of a proxy statement, the financial statements 
shall be updated, except as specified in the following paragraphs, with 
a balance sheet as of an interim date within the number of days 
specified in paragraph (g) of this section and with statements of 
income and cash flows for the interim period between the end of the 
most recent fiscal year and the date of the interim balance sheet 
provided and for the corresponding period of the preceding fiscal year. 
Such interim financial statements may be unaudited and need not be 
presented in greater detail than is required by Sec.  210.10-01. 
Notwithstanding the above requirements, the most recent interim 
financial statements shall be at least as current as the most recent 
financial statements filed with the Commission on Form 10-Q.
* * * * *
    (d) The age of the registrant's most recent audited financial 
statements included in a registration statement filed under the 
Securities Act of 1933 or filed on Form 10 (17 CFR 249.210) under the 
Securities Exchange Act of 1934 shall not be more than one year and 45 
days old at the date the registration statement becomes effective if 
the registration statement relates to the security of an issuer that 
was not subject, immediately prior to the time of filing the 
registration statement, to the reporting requirements of section 13 or 
15(d) of the Securities Exchange Act of 1934.
* * * * *
    5. Amend Sec.  210.3-14 by removing the authority citations 
following the section and revising paragraph (b) to read as follows:


Sec.  210.3-14  Special instructions for real estate operations to be 
acquired.

* * * * *
    (b) Information required by this section is not required to be 
included in a filing on Form 10-K.
    6. Amend Sec.  210.4-01 by revising paragraphs (a)(3)(i)(A) and 
(a)(3)(i)(B) to read as follows:


Sec.  210.4-01  Form, order, and terminology.

    (a) * * *
    (3)(i) * * *
    (A) The first interim or annual reporting period of the 
registrant's first fiscal year beginning on or after June 15, 2005, 
provided the registrant does not file as a smaller reporting company; 
and
    (B) The first interim or annual reporting period of the 
registrant's first fiscal year beginning on or after December 15, 2005, 
provided the registrant files as a smaller reporting company.
* * * * *
    7. Amend Sec.  210.10-01 by revising paragraphs (b)(6) and the 
introductory text of paragraph (c) to read as follows:


Sec.  210.10-01  Interim financial statements.

* * * * *
    (b) * * *
    (6) In addition to meeting the reporting requirements specified by 
existing standards for accounting changes, the registrant shall state 
the date of any material accounting change and the reasons for making 
it. In addition, for filings on Form 10-Q, a letter from the 
registrant's independent accountant shall be filed as an exhibit (in 
accordance with the provisions of Item 601 of Regulation S-K, 17 CFR 
229.601) in the first Form 10-Q subsequent to the date of an accounting 
change indicating whether or not the change is to an alternative 
principle which in the accountant's judgment is preferable under the 
circumstances; except that no letter from the accountant need be filed 
when the change is made in response to a standard adopted by the 
Financial Accounting Standards Board which requires such change.
* * * * *
    (c) Periods to be covered. The periods for which interim financial 
statements are to be provided in registration statements are prescribed 
elsewhere in this Regulation (see Sec. Sec.  210.3-01 and 3-02). For 
filings on Form 10-Q, financial statements shall be provided as set 
forth in this paragraph (c):
* * * * *
    8. 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

    9. 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, 77iii, 77jjj, 
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 
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.
* * * * *
    10. Amend Sec.  229.10 by adding paragraph (f) to read as follows:


Sec.  229.10  (Item 10) General.

* * * * *
    (f) Smaller reporting companies. The requirements of this part 
apply to smaller reporting companies. Where an item of this part sets 
forth requirements for smaller reporting companies that are different 
from the requirements applicable to other companies, a smaller 
reporting company may comply with either the requirement applicable to 
smaller reporting companies or the requirement applicable to other 
companies:
    (1) Definition of smaller reporting company. As used in this part, 
the term smaller reporting company means an issuer that is not an 
investment company, an asset-backed issuer (as defined in Sec.  
229.1101), or a majority-owned subsidiary of a parent that is not a 
smaller reporting company and that:
    (i) Had a public float of less than $75 million as of the last 
business day of its most recently completed second fiscal quarter, 
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; or
    (ii) In the case of an initial registration statement under the 
Securities Act for shares of its common equity, had a public float of 
less than $75 million as of a date within 30 days of the date of

[[Page 39691]]

the filing of the registration statement, computed by multiplying the 
aggregate worldwide number of such shares held by non-affiliates before 
the registration plus the number of such shares included in the 
registration statement by the estimated public offering price of the 
shares; or
    (iii) In the case of an issuer whose public float as calculated 
under paragraph (i) or (ii) of this definition was zero because the 
issuer had no significant public common equity outstanding or no market 
price for its common equity existed, had annual revenues of less than 
$50 million during the most recently completed fiscal year for which 
audited financial statements are available on the date of the filing 
that establishes whether or not the issuer is a smaller reporting 
company for any fiscal year.
    (2) Determination: Whether or not an issuer is a smaller reporting 
company is determined for an entire fiscal year on the basis of the 
information in a quarterly report on Form 10-Q or an initial 
registration statement under the Securities Act or the Exchange Act, 
whichever is the first to be filed that year. Once an issuer fails to 
qualify for smaller reporting company status, it will remain 
unqualified unless it determines that its public float, as calculated 
in accordance with paragraph (f)(1) of this definition was less than 
$50 million as of the last business day of its second fiscal quarter 
or, if that calculation results in zero because the issuer had no 
significant public equity outstanding or no market price for its equity 
existed, if the issuer had annual revenues of less than $40 million 
during its previous fiscal year. An issuer making this determination 
becomes a smaller reporting company for the purpose of filings for the 
next fiscal year.
* * * * *
    11. Amend Sec.  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:


Sec.  229.101  (Item 101) Description of business.

* * * * *
    (a)(1) * * *
    (2) Registrants:
    (i) Filing a registration statement on Form S-1 (Sec.  239.11 of 
this chapter) under the Securities Act or on Form 10 (Sec.  249.210 of 
this chapter) under the Exchange Act:
    (ii) Not subject to the reporting requirements of section 13(a) or 
15(d) of the Exchange Act immediately prior to the filing of such 
registration statement; and
    (iii) That (including predecessors) have not received revenue from 
operations during each of the 3 fiscal years immediately prior to the 
filing of registration statement, shall provide the following 
information:
* * * * *
    (h) Smaller reporting companies. A smaller reporting company, as 
defined by Sec.  229.10(f)(1), may satisfy its obligations under this 
item by describing the development of its business during the last 
three years. If the smaller reporting company has not been in business 
for three years, give the same information for predecessor(s) of the 
smaller reporting company if there are any. This business development 
description should include:
    (1) Form and year of organization;
    (2) Any bankruptcy, receivership or similar proceeding; and
    (3) Any material reclassification, merger, consolidation, or 
purchase or sale of a significant amount of assets not in the ordinary 
course of business.
    (4) Business of the smaller reporting company. Briefly describe the 
business and include, to the extent material to an understanding of the 
smaller reporting company:
    (i) Principal products or services and their markets;
    (ii) Distribution methods of the products or services;
    (iii) Status of any publicly announced new product or service;
    (iv) Competitive business conditions and the smaller reporting 
company's competitive position in the industry and methods of 
competition;
    (v) Sources and availability of raw materials and the names of 
principal suppliers;
    (vi) Dependence on one or a few major customers;
    (vii) Patents, trademarks, licenses, franchises, concessions, 
royalty agreements or labor contracts, including duration;
    (viii) Need for any government approval of principal products or 
services. If government approval is necessary and the small reporting 
company has not yet received that approval, discuss the status of the 
approval within the government approval process;
    (ix) Effect of existing or probable governmental regulations on the 
business;
    (x) Estimate of the amount spent during each of the last two fiscal 
years on research and development activities, and if applicable, the 
extent to which the cost of such activities are borne directly by 
customers;
    (xi) Costs and effects of compliance with environmental laws 
(federal, state and local); and
    (xii) Number of total employees and number of full time employees.
    (5) Reports to security holders. Disclose the following in any 
registration statement you file under the Securities Act of 1933:
    (i) If you are not required to deliver an annual report to security 
holders, whether you will voluntarily send an annual report and whether 
the report will include audited financial statements;
    (ii) Whether you file reports with the Securities and Exchange 
Commission. If you are a reporting company, identify the reports and 
other information you file with the Commission; and
    (iii) That the public may read and copy any materials you file with 
the Commission at the SEC's Public Reference Room at 100 F Street, NE., 
Washington, DC 20549. State that the public may obtain information on 
the operation of the Public Reference Room by calling the Commission at 
1-800-SEC-0330. State that the Commission maintains an Internet site 
that contains reports, proxy and information statements, and other 
information regarding issuers that file electronically with the 
Commission and state the address of that site (http://www.sec.gov). You 
are encouraged to give your Internet address, if available.
    (6) Canadian issuers. Provide the information required by Items 
101(f)(2) and 101(g) of Regulation S-K (Sec.  229.101(f)(2) and (g)).
* * * * *
    12. Amend Sec.  229.201 by:
    a. Revising paragraph (a)(2); and
    b. Revising Instruction 6. to Item 201(e).
    The revision and addition read as follows:


Sec.  229.201  (Item 201) Market price of and dividends on the 
registrant's common equity and related stockholder matters.

    (a) * * *
    (2) If the information called for by this paragraph (a) is being 
presented in a registration statement on Form S-1 (Sec.  239.11 of this 
chapter) under the Securities Act or on Form 10 (Sec.  249.210 of this 
chapter) under the Exchange Act relating to a class of common equity 
for which at the time of filing there is no established United States 
public trading market, indicate the amount(s) of common equity:
    (i) That is subject to outstanding options or warrants to purchase, 
or securities convertible into, common equity of the registrant;

[[Page 39692]]

    (ii) That could be sold pursuant to Sec.  230.144 of this chapter 
or that the registrant has agreed to register under the Securities Act 
for sale by security holders; or
    (iii) That is being, or has been publicly proposed to be, publicly 
offered by the registrant (unless such common equity is being offered 
pursuant to an employee benefit plan or dividend reinvestment plan), 
the offering of which could have a material effect on the market price 
of the registrant's common equity.
* * * * *
    Instructions to Item 201(e):
* * * * *
    (6) Smaller reporting companies. A registrant that qualifies as a 
smaller reporting company, as defined by Sec.  229.10(f)(1), is not 
required to provide the information required by paragraph (e) of this 
Item.
* * * * *
    13. Amend Sec.  229.301 by removing the authority citation 
following the section and adding paragraph (c) before the Instruction 
to Item 301 to read as follows:


Sec.  229.301  (Item 301) Selected financial data.

* * * * *
    (c) Smaller reporting companies. A registrant that qualifies as a 
smaller reporting company, as defined by Sec.  229.10(f)(1), is not 
required to provide the information required by this Item.
* * * * *
    14. Amend Sec.  229.302 by adding paragraph (c) to read as follows:


Sec.  229.302  (Item 302) Supplementary financial information.

* * * * *
    (c) Smaller reporting companies. A registrant that qualifies as a 
smaller reporting company, as defined by Sec.  229.10(f)(1), is not 
required to provide the information required by this Item.
    15. Amend Sec.  229.303 by adding paragraph (d) to read as follows:


Sec.  229.303  (Item 303) Management's discussion and analysis of 
financial condition and results of operations.

* * * * *
    (d) Smaller reporting companies. A smaller reporting company, as 
defined by Sec.  229.10(f)(1), may provide the information required in 
paragraph (a)(3)(iv) for the last two most recent fiscal years of the 
registrant if it provides financial information on net sales and 
revenues and on income from continuing operations for only two years. A 
smaller reporting company is not required to provide the information 
required by paragraph (a)(5) of this Item.
    16. Amend Sec.  229.305 by revising paragraph (e) to read as 
follows:


Sec.  229.305  (Item 305) Quantitative and qualitative disclosures 
about market risk.

* * * * *
    (e) Smaller reporting companies. A smaller reporting company, as 
defined by Sec.  229.10(f)(1), is not required to provide the 
information required by this Item.
* * * * *
    17. Add Sec.  229.310 to read as follows:


Sec.  229.310  (Item 310) Financial statements for smaller reporting 
companies.

    Note 1 to Sec.  229.310: Financial statements of a smaller 
reporting company, as defined by Sec.  229.10(f)(1), its 
predecessors or any businesses to which the smaller reporting 
company is a successor shall be prepared in accordance with 
generally accepted accounting principles in the United States.


    Note 2 to Sec.  229.310: Regulation S-X (17 CFR 210.1-01 through 
210.12-29) Form and Content of and Requirements for Financial 
Statements shall not apply to the preparation of such financial 
statements, except that the report and qualifications of the 
independent accountant shall comply with the requirements of Article 
2 of Regulation S-X (17 CFR 210.2-01), Item 8.A of Form 20-F (17 CFR 
249.220f) and Article 210.3-20 of Regulation S-X (17 CFR 210.3-20) 
shall apply to financial statements of foreign private issuers, the 
description of accounting policies shall comply with Article 4-08(n) 
of Regulation S-X (17 CFR 210.4-08(n)), and smaller reporting 
companies engaged in oil and gas producing activities shall follow 
the financial accounting and reporting standards specified in 
Article 4-10 of Regulation S-X (17 CFR 210.4-10) with respect to 
such activities. To the extent that Article 11-01 (17 CFR 210.11-01) 
(Pro Forma Presentation Requirements) offers enhanced guidelines for 
the preparation, presentation and disclosure of pro forma financial 
information, smaller reporting companies may wish to consider these 
items.


    Note 3 to Sec.  229.310: Financial statements for a subsidiary 
of a smaller reporting company that issues securities guaranteed by 
the smaller reporting company or guarantees securities issued by the 
smaller reporting company must be presented as required by Rule 3-10 
of Regulation S-X (17 CFR 210.3-10), except that the periods 
presented are those required by paragraph (a) of this Item.


    Note 4 to Sec.  229.310: Financial statements for a smaller 
reporting company's affiliates whose securities constitute a 
substantial portion of the collateral for any class of securities 
registered or being registered must be presented as required by Rule 
3-16 of Regulation S-X (17 CFR 210.3-16), except that the periods 
presented are those required by paragraph (a) of this Item.


    Note 5 to Sec.  229.310: The Commission, where consistent with 
the protection of investors, may permit the omission of one or more 
of the financial statements or the substitution of appropriate 
statements of comparable character. The Commission by informal 
written notice may require the filing of other financial statements 
where necessary or appropriate.


    Note 6 to Sec.  229.310: Rule 4-01(a)(3) of Regulation S-X, 17 
CFR 210.4-01(a)(3), shall apply to the preparation of financial 
statements of smaller reporting companies.

    (a) Annual financial statements. Smaller reporting companies shall 
file an audited balance sheet as of the end of the most recent fiscal 
year, or as of a date within 135 days if the issuers existed for a 
period less than one fiscal year, and audited statements of income, 
cash flows and changes in stockholders' equity for each of the two 
fiscal years preceding the date of such audited balance sheet (or such 
shorter period as the registrant has been in business).
    (b) Interim financial statements. Interim financial statements may 
be unaudited; however, prior to filing, interim financial statements 
included in quarterly reports on Form 10-Q (17 CFR 229.310) must be 
reviewed by an independent public accountant using professional 
standards and procedures for conducting such reviews, as established by 
generally accepted auditing standards, as may be modified or 
supplemented by the Commission. If, in any filing, the issuer states 
that interim financial statements have been reviewed by an independent 
public accountant, a report of the accountant on the review must be 
filed with the interim financial statements. Interim financial 
statements shall include a balance sheet as of the end of the issuer's 
most recent fiscal quarter and income statements and statements of cash 
flows for the interim period up to the date of such balance sheet and 
the comparable period of the preceding fiscal year.
    (1) Condensed format. Interim financial statements may be condensed 
as follows:
    (i) Balance sheets should include separate captions for each 
balance sheet component presented in the annual financial statements 
which represents 10% or more of total assets. Cash and retained 
earnings should be presented regardless of relative significance to 
total assets. Registrants which present a classified balance sheet in 
their annual financial statements should present totals for current 
assets and current liabilities.
    (ii) Income statements should include net sales or gross revenue, 
each cost and expense category presented in the annual financial 
statements which exceeds 20% of sales or gross revenues,

[[Page 39693]]

provision for income taxes, discontinued operations, extraordinary 
items and cumulative effects of changes in accounting principles or 
practices. (Financial institutions should substitute net interest 
income for sales for purposes of determining items to be disclosed.) 
Dividends per share should be presented.
    (iii) Cash flow statements should include cash flows from 
operating, investing and financing activities as well as cash at the 
beginning and end of each period and the increase or decrease in such 
balance.
    (iv) Additional line items may be presented to facilitate the 
usefulness of the interim financial statements including their 
comparability with annual financial statements.
    (2) Disclosure required and additional instructions as to 
content.--
    (i) Footnotes. Footnote and other disclosures should be provided as 
needed for fair presentation and to ensure that the financial 
statements are not misleading.
    (ii) Material subsequent events and contingencies. Disclosure must 
be provided of material subsequent events and material contingencies 
notwithstanding disclosure in the annual financial statements.
    (iii) Significant equity investees. Sales, gross profit, net income 
(loss) from continuing operations and net income must be disclosed for 
equity investees which constitute 20% or more of a registrant's 
consolidated assets, equity or income from continuing operations.
    (iv) Significant dispositions and purchase business combinations. 
If a significant disposition or purchase business combination has 
occurred during the most recent interim period and the transaction 
required the filing of a Form 8-K (Sec.  249.308 of this chapter), pro 
forma data must be presented which reflects revenue, income from 
continuing operations, net income and income per share for the current 
interim period and the corresponding interim period of the preceding 
fiscal year as though the transaction occurred at the beginning of the 
periods.
    (v) Material accounting changes. Disclosure must be provided of the 
date and reasons for any material accounting change. The registrant's 
independent accountant must provide a letter in the first Form 10-Q 
(Sec.  249.308a of this Chapter) filed subsequent to the change 
indicating whether or not the change is to a preferable method. 
Disclosure must be provided of any retroactive change to prior period 
financial statements, including the effect of any such change on income 
and income per share.
    (vi) Development stage companies. A registrant in the development 
stage must provide cumulative financial information from inception.
    Instruction 1 to Item 310(b): Where Item 310 is applicable to a 
Form 10-Q and the interim period is more than one quarter, income 
statements must also be provided for the most recent interim quarter 
and the comparable quarter of the preceding fiscal year.
    Instruction 2 to Item 310(b): Interim financial statements must 
include all adjustments which in the opinion of management are 
necessary in order to make the financial statements not misleading. An 
affirmative statement that the financial statements have been so 
adjusted must be included with the interim financial statements.
    (c) Financial statements of businesses acquired or to be acquired. 
(1) If a business combination accounted for as a ``purchase'' has 
occurred or is probable, financial statements of the business acquired 
or to be acquired shall be furnished for the periods specified in 
paragraph (c)(3) of this Item.
    (i) The term ``purchase'' encompasses the purchase of an interest 
in a business accounted for by the equity method.
    (ii) Acquisitions of a group of related businesses that are 
probable or that have occurred subsequent to the latest fiscal year end 
for which audited financial statements of the issuer have been filed 
shall be treated as if they are a single business combination for 
purposes of this Item. The required financial statements of related 
businesses may be presented on a combined basis for any periods they 
are under common control or management. A group of businesses are 
deemed to be related if:
    (A) They are under common control or management;
    (B) The acquisition of one business is conditional on the 
acquisition of each other business; or
    (C) Each acquisition is conditioned on a single common event.
    (iii) Annual financial statements required by this paragraph (c) 
shall be audited. The form and content of the financial statements 
shall be in accordance with paragraphs (a) and (b) of this Item.
    (2) The periods for which financial statements are to be presented 
are determined by comparison of the most recent annual financial 
statements of the business acquired or to be acquired and the smaller 
reporting company's most recent annual financial statements filed at or 
prior to the date of acquisition to evaluate each of the following 
conditions:
    (i) Compare the smaller reporting company's investments in and 
advances to the acquiree to the total consolidated assets of the 
smaller reporting company as of the end of the most recently completed 
fiscal year.
    (ii) Compare the smaller reporting company's proportionate share of 
the total assets (after intercompany eliminations) of the acquiree to 
the total consolidated assets of the smaller reporting company as of 
the end of the most recently completed fiscal year.
    (iii) Compare the smaller reporting company's equity in the income 
from continuing operations before income taxes, extraordinary items and 
cumulative effect of a change in accounting principles of the acquiree 
to such consolidated income of the smaller reporting company for the 
most recently completed fiscal year.
    Computational note to paragraph (c)(2): For purposes of making the 
prescribed income test the following guidance should be applied: If 
income of the smaller reporting company and its subsidiaries 
consolidated for the most recent fiscal year is at least 10 percent 
lower than the average of the income for the last five fiscal years, 
such average income should be substituted for purposes of the 
computation. Any loss years should be omitted for purposes of computing 
average income.
    (3)(i) If none of the conditions specified in paragraph (c)(2) of 
this Item exceeds 20%, financial statements are not required. If any of 
the conditions exceed 20%, but none exceeds 40%, financial statements 
shall be furnished for the most recent fiscal year and any interim 
periods specified in paragraph (b) of this Item. If any of the 
conditions exceed 40%, financial statements shall be furnished for the 
two most recent fiscal years and any interim periods specified in 
paragraph (b) of this Item.
    (ii) The separate audited balance sheet of the acquired business is 
not required when the smaller reporting company's most recent audited 
balance sheet filed is for a date after the acquisition was 
consummated.
    (iii) If the aggregate impact of individually insignificant 
businesses acquired since the date of the most recent audited balance 
sheet filed for the registrant exceeds 50%, financial statements 
covering at least the substantial majority of the businesses acquired 
shall be furnished. Such financial statements shall be for the most 
recent fiscal year and any interim periods specified in paragraph (b) 
of this Item.
    (iv) Registration statements not subject to the provisions of Sec.  
230.419 of this chapter (Regulation C) and proxy statements need not 
include separate financial statements of the acquired or

[[Page 39694]]

to be acquired business if it does not meet or exceed any of the 
conditions specified in paragraph (c)(2) of this Item at the 50 percent 
level, and either:
    (A) The consummation of the acquisition has not yet occurred; or
    (B) The effective date of the registration statement, or mailing 
date in the case of a proxy statement, is no more than 74 days after 
consummation of the business combination, and the financial statements 
have not been filed previously by the registrant.
    (v) An issuer that omits from its initial registration statement 
financial statements of a recently consummated business combination 
pursuant to paragraph (c)(3)(iv) of this Item shall furnish those 
financial statements and any pro forma information specified by 
paragraph (d) of this Item under cover of Form 8-K (Sec.  249.308 of 
this chapter) no later than 75 days after consummation of the 
acquisition.
    (4) If the smaller reporting company made a significant business 
acquisition subsequent to the latest fiscal year end and filed a report 
on Form 8-K, which included audited financial statements of such 
acquired business for the periods required by paragraph (c)(3) of this 
Item and the pro forma financial information required by paragraph (d) 
of this Item, the determination of significance may be made by using 
pro forma amounts for the latest fiscal year in the report on Form 8-K 
rather than by using the historical amounts of the registrant. The 
tests may not be made by ``annualizing'' data.
    (d) Pro forma financial information. (1) Pro forma information 
showing the effects of the acquisition shall be furnished if financial 
statements of a business acquired or to be acquired are presented.
    (2) Pro forma statements should be condensed, in columnar form 
showing pro forma adjustments and results and should include the 
following:
    (i) If the transaction was consummated during the most recent 
fiscal year or subsequent interim period, pro forma statements of 
income reflecting the combined operations of the entities for the 
latest fiscal year and interim period, if any; or
    (ii) If consummation of the transaction has occurred or is probable 
after the date of the most recent balance sheet required by paragraph 
(a) or (b) of this Item, a pro forma balance sheet giving effect to the 
combination as of the date of the most recent balance sheet. For a 
purchase, pro forma statements of income reflecting the combined 
operations of the entities for the latest fiscal year and interim 
period, if any, are required.
    (e) Real estate operations acquired or to be acquired. If, during 
the period for which income statements are required, the smaller 
reporting company has acquired one or more properties which in the 
aggregate are significant, or since the date of the latest balance 
sheet required by paragraph (a) or (b) of this Item, has acquired or 
proposes to acquire one or more properties which in the aggregate are 
significant, the following shall be furnished with respect to such 
properties:
    (1) Audited income statements (not including earnings per unit) for 
the two most recent years, which shall exclude items not comparable to 
the proposed future operations of the property such as mortgage 
interest, leasehold rental, depreciation, corporate expenses and 
federal and state income taxes; Provided, however, that such audited 
statements need be presented for only the most recent fiscal year if:
    (i) The property is not acquired from a related party;
    (ii) Material factors considered by the smaller reporting company 
in assessing the property are described with specificity in the 
registration statement with regard to the property, including source of 
revenue (including, but not limited to, competition in the rental 
market, comparative rents, occupancy rates) and expenses (including but 
not limited to, utilities, ad valorem tax rates, maintenance expenses, 
and capital improvements anticipated); and
    (iii) The smaller reporting company indicates that, after 
reasonable inquiry, it is not aware of any material factors relating to 
the specific property other than those discussed in response to 
paragraph (e)(1)(ii) of this Item that would cause the reported 
financial information not to be necessarily indicative of future 
operating results.
    (2) If the property will be operated by the smaller reporting 
company, a statement shall be furnished showing the estimated taxable 
operating results of the smaller reporting company based on the most 
recent twelve-month period including such adjustments as can be 
factually supported. If the property will be acquired subject to a net 
lease, the estimated taxable operating results shall be based on the 
rent to be paid for the first year of the lease. In either case, the 
estimated amount of cash to be made available by operations shall be 
shown. Disclosure must be provided of the principal assumptions which 
have been made in preparing the statements of estimated taxable 
operating results and cash to be made available by operations.
    (3) If appropriate under the circumstances, a table should be 
provided which shows, for a limited number of years, the estimated cash 
distribution per unit indicating the portion reportable as taxable 
income and the portion representing a return of capital with an 
explanation of annual variations, if any. If taxable net income per 
unit will be greater than the cash available for distribution per unit, 
that fact and approximate year of occurrence shall be stated, if 
significant.
    (f) Limited partnerships. (1) Smaller reporting companies which are 
limited partnerships must provide the balance sheets of the general 
partners as described in paragraphs (f)(2) through (f)(4) of this Item.
    (2) Where a general partner is a corporation, the audited balance 
sheet of the corporation as of the end of its most recently completed 
fiscal year must be filed. Receivables, other than trade receivables, 
from affiliates of the general partner should be deducted from 
shareholders' equity of the general partner. Where an affiliate has 
committed itself to increase or maintain the general partner's capital, 
the audited balance sheet of such affiliate must also be presented.
    (3) Where a general partner is a partnership, there shall be filed 
an audited balance sheet of such partnership as of the end of its most 
recently completed fiscal year.
    (4) Where the general partner is a natural person, there shall be 
filed, as supplemental information, a balance sheet of such natural 
person as of a recent date. Such balance sheet need not be audited. The 
assets and liabilities should be carried at estimated fair market 
value, with provisions for estimated income taxes on unrealized gains. 
The net worth of such general partner(s), based on such balance 
sheet(s), singly or in the aggregate, shall be disclosed in the 
registration statement.
    (g) Age of financial statements. At the date of filing, financial 
statements included in filings other than filings on Form 10-K must be 
not less current than financial statements, which would be required in 
Forms 10-K and 10-Q if such reports were required to be filed. If 
required financial statements are as of a date 135 days or more prior 
to the date a registration statement becomes effective or proxy 
material is expected to be mailed, the financial statements shall be 
updated to include financial statements for an interim period ending 
within 135 days of the effective or expected mailing date. Interim 
financial statements should be prepared and presented in accordance 
with paragraph (b) of this Item:
    (1) When the anticipated effective or mailing date falls within 45 
days after

[[Page 39695]]

the end of the fiscal year, the filing may include financial statements 
only as current as the end of the third fiscal quarter; Provided, 
however, that if the audited financial statements for the recently 
completed fiscal year are available or become available prior to 
effectiveness or mailing, they must be included in the filing; and
    (2) If the effective date or anticipated mailing date falls after 
45 days but within 90 days of the end of the smaller reporting 
company's fiscal year, the smaller reporting company is not required to 
provide the audited financial statements for such year end provided 
that the following conditions are met:
    (i) If the smaller reporting company is a reporting company, all 
reports due must have been filed;
    (ii) For the most recent fiscal year for which audited financial 
statements are not yet available, the smaller reporting company 
reasonably and in good faith expects to report income from continuing 
operations before taxes; and
    (iii) For at least one of the two fiscal years immediately 
preceding the most recent fiscal year the smaller reporting company 
reported income from continuing operations before taxes.
    18. Amend Sec.  229.401 by revising Instruction 3 to paragraph (b) 
to read as follows:


Sec.  229.401  (Item 401) Directors, executive officers, promoters and 
control persons.

* * * * *
    (b) * * *

Instructions to Paragraph (b) of Item 401:
* * * * *
    3. The information regarding executive officers called for by this 
Item need not be furnished in proxy or information statements prepared 
in accordance with Schedule 14A under the Exchange Act (Sec.  240.14a-
101 of this Chapter) by those registrants relying on General 
Instruction G of Form 10-K under the Exchange Act (Sec.  249.310 of 
this Chapter); Provided, that such information is furnished in a 
separate item captioned ``Executive officers of the registrant'' and 
included in Part I of the registrant's annual report on Form 10-K.
* * * * *
    19. Amend Sec.  229.402 by adding paragraph (l) before the 
Instruction to Item 402 to read as follows:


Sec.  229.402   (Item 402) Executive compensation.

* * * * *
    (l) Smaller reporting companies. A registrant that qualifies as a 
``smaller reporting company,'' as defined by Sec.  229.10(f)(1), is 
required to:
    (1) Provide information only with respect to the following persons 
(the ``named executive officers'') in lieu of the persons determined 
under paragraphs (a)(3)(i)-(iii) of this Item substituting the 
Instruction to Items 402(l)(1)(i)--(iii) for Instruction 2 to Item 
402(a)(3), and substituting paragraph (l)(1)(iv) for paragraph (a)(4):
    (i) All individuals serving as the smaller reporting company's 
principal executive officer or acting in a similar capacity during the 
last completed fiscal year (``PEO''), regardless of compensation level;
    (ii) The smaller reporting company's two most highly compensated 
executive officers other than the PEO who were serving as executive 
officers at the end of the last completed fiscal year; and
    (iii) Up to two additional individuals for whom disclosure would 
have been provided pursuant to paragraph (l)(1)(ii) of this Item but 
for the fact that the individual was not serving as an executive 
officer of the smaller reporting company at the end of the last 
completed fiscal year.
    Instruction to Items 402(l)(1)(i)-(iii).
    Determination of most highly compensated executive officers. The 
determination as to which executive officers are most highly 
compensated shall be made by reference to total compensation for the 
last completed fiscal year (as required to be disclosed pursuant to 
paragraph (c)(2)(x) of this Item) reduced by the amount required to be 
disclosed pursuant to paragraph (c)(2)(viii) of this Item, provided, 
however, that no disclosure need be provided for any executive officer, 
other than the PEO, whose total compensation, as so reduced, does not 
exceed $100,000.
    (iv) If the PEO served in that capacity during any part of a fiscal 
year with respect to which information is required, information should 
be provided as to all of his or her compensation for the full fiscal 
year. If a named executive officer (other than the PEO) served as an 
executive officer of the smaller reporting company (whether or not in 
the same position) during any part of the fiscal year with respect to 
which information is required, information shall be provided as to all 
compensation of that individual for the full fiscal year.
    (2) Provide the information required by paragraph (c) of this Item 
only for each of the registrant's last two completed fiscal years, 
without providing the information required by paragraph 
(c)(2)(viii)(A), without applying Instructions 1 and 3 to paragraph 
(c)(2)(viii), and substituting:
    (i) The following for Instruction 2 to Item 402(c)(2)(iii) and 
(iv): Registrants shall include in the salary column (column (c)) or 
bonus column (column (d)) any amount of salary or bonus forgone at the 
election of a named executive officer under which stock, equity-based 
or other forms of non-cash compensation instead have been received by 
the named executive officer. However, the receipt of any such form of 
non-cash compensation instead of salary or bonus must be disclosed in a 
footnote added to the salary or bonus column and, where applicable, 
referring to the narrative disclosure to the Summary Compensation Table 
(required by paragraph (l)(3) of this Item) where the material terms of 
the stock, option or non-equity incentive plan award elected by the 
named executive officer are reported.
    (ii) The following for Item 402(c)(2)(ix)(G): The dollar value of 
any dividends or other earnings paid on stock or option awards, when 
those amounts were not factored into the grant date fair value for the 
stock or option award;
    (iii) The following for Instruction 2 to Item 402(c)(2)(ix): 
Benefits paid pursuant to defined benefit and actuarial plans are not 
reportable as All Other Compensation in column (i) unless accelerated 
pursuant to a change in control; information concerning these plans is 
reportable pursuant to paragraph (l)(5)(i) of this Item.
    (iv) The following for Instructions 3 and 4 to Item 402(c)(2)(ix): 
Reimbursements of taxes owed with respect to perquisites or other 
personal benefits must be included in the columns as tax reimbursements 
(paragraph (c)(2)(ix)(B) of this Item) even if the associated 
perquisites or other personal benefits are not required to be included 
because the aggregate amount of such compensation is less than $10,000. 
Perquisites and other personal benefits shall be valued on the basis of 
the aggregate incremental cost to the registrant.
    (3) Provide a narrative description of any material factors 
necessary to an understanding of the information disclosed in the Table 
required by paragraph (c) of this Item. Examples of such factors may 
include, in given cases, among other things:
    (i) The material terms of each named executive officer's employment 
agreement or arrangement, whether written or unwritten;
    (ii) If at any time during the last fiscal year, any outstanding 
option or other equity-based award was repriced or

[[Page 39696]]

otherwise materially modified (such as by extension of exercise 
periods, the change of vesting or forfeiture conditions, the change or 
elimination of applicable performance criteria, or the change of the 
bases upon which returns are determined), a description of each such 
repricing or other material modification;
    (iii) The waiver or modification of any specified performance 
target, goal or condition to payout with respect to any amount included 
in non-stock incentive plan compensation or payouts reported in column 
(g) to the Summary Compensation Table required by paragraph (c) of this 
Item, stating whether the waiver or modification applied to one or more 
specified named executive officers or to all compensation subject to 
the target, goal or condition;
    (iv) The material terms of each grant, including but not limited to 
the date of exercisability, any conditions to exercisability, any 
tandem feature, any reload feature, any tax-reimbursement feature, and 
any provision that could cause the exercise price to be lowered;
    (v) The material terms of any non-equity incentive plan award made 
to a named executive officer during the last completed fiscal year, 
including a general description of the formula or criteria to be 
applied in determining the amounts payable and vesting schedule;
    (vi) The method of calculating earnings on nonqualified deferred 
compensation plans including nonqualified defined contribution plans; 
and
    (vii) An identification to the extent material of any item included 
under All Other Compensation (column (i)) in the Summary Compensation 
Table. Identification of an item shall not be considered material if it 
does not exceed the greater of $25,000 or 10% of all items included in 
the specified category in question set forth in paragraph (c)(2)(ix) of 
this Item. All items of compensation are required to be included in the 
Summary Compensation Table without regard to whether such items are 
required to be identified.
    Instruction to Item 402(l)(3).
    The disclosure required by paragraph (l)(3)(ii) of this Item would 
not apply to any repricing that occurs through a pre-existing formula 
or mechanism in the plan or award that results in the periodic 
adjustment of the option or SAR exercise or base price, an antidilution 
provision in a plan or award, or a recapitalization or similar 
transaction equally affecting all holders of the class of securities 
underlying the options or SARs.
    (4) Provide this information required by paragraph (f) of this 
Item;
    (5) Provide a narrative description of the following to the extent 
material:
    (i) The material terms of each plan that provides for the payment 
of retirement benefits, or benefits that will be paid primarily 
following retirement, including but not limited to tax-qualified 
defined benefit plans, supplemental executive retirement plans, tax-
qualified defined contribution plans and nonqualified defined 
contribution plans.
    (ii) The material terms of each contract, agreement, plan or 
arrangement, whether written or unwritten, that provides for payment(s) 
to a named executive officer at, following, or in connection with the 
resignation, retirement or other termination of a named executive 
officer, or a change in control of the registrant or a change in the 
named executive officer's responsibilities following a change in 
control, with respect to each named executive officer.
    (6) Provide the information required by paragraph (k) of this Item, 
without providing the information required by paragraph (k)(2)(vi)(A), 
without applying Instructions 2 and 3 to Item 402(k)(2)(vii), and by 
substituting:
    (i) The following for Item 402(k)(2)(i): The name of each director 
unless such director is also a named executive officer under paragraph 
(a) of this Item and his or her compensation for service as a director 
is fully reflected in the Summary Compensation Table pursuant to 
paragraph (c) of this Item and otherwise as required pursuant to 
paragraphs (f), (l)(3) and (l)(5) of this Item (column (a));
    (ii) The following for the Instruction to Item 402(k)(2)(iii) and 
(iv): For each director, disclose by footnote to the appropriate 
column, the aggregate number of stock awards and the aggregate number 
of option awards outstanding at fiscal year end; and
    (iii) The following for the Instruction to Item 402(k): In addition 
to Instruction 1 to paragraph (k)(2)(vii) of this Item, the following 
apply equally to paragraph (k) of this Item: Instructions 2 and 4 to 
paragraph (c) of this Item; the Instructions to paragraphs (c)(2)(iii) 
and (iv) of this Item, modifying Instruction 2 to paragraphs 
(c)(2)(iii) and (iv) as provided by paragraph (l)(2)(i) of this Item; 
the Instruction to paragraphs (c)(2)(v) and (vi) of this Item; the 
Instructions to paragraph (c)(2)(vii) of this Item; Instruction 2 to 
paragraph (c)(2)(viii) of this Item; the Instructions to paragraph 
(c)(2)(ix) of this Item, modifying Instruction 2 to paragraph 
(c)(2)(ix) as provided by paragraph (l)(2)(iii) of this Item and 
modifying Instructions 3 and 4 to paragraph (c)(2)(ix) as provided by 
paragraph (l)(2)(iv) of this Item; and paragraph (l)(3)(vii) of this 
Item. These Instructions apply to the columns in the Director 
Compensation Table that are analogous to the columns in the Summary 
Compensation Table to which they refer and to disclosures under 
paragraph (k) of this Item that correspond to analogous disclosures 
provided for in paragraph (c) of this Item to which they refer. 
Further, each Item reported pursuant to paragraph (k)(2)(vii) of this 
Item must be identified and quantified in a footnote if it is deemed 
material in accordance with paragraph (l)(3)(vii) of this Item.
* * * * *
    20. Amend Sec.  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:


Sec.  229.404   (Item 404) Transactions with related persons, promoters 
and certain control persons.

* * * * *
    (c) Promoters and certain control persons. (1) Registrants that are 
filing a registration statement on Form S-1 under the Securities Act 
(Sec.  239.11 of this chapter) or on Form 10 under the Exchange Act 
(Sec.  249.210 of this chapter) and that had a promoter at any time 
during the past five fiscal years shall:
* * * * *
    (d) Smaller reporting companies. A registrant that qualifies as a 
``smaller reporting company,'' as defined by Sec.  229.10(f)(1), will 
be deemed to comply with this Item if it provides:
    (i) The information required by paragraph (a) of this Item for the 
period specified there and, in addition, for the fiscal year preceding 
the smaller reporting company's last fiscal year, for a transaction in 
which the amount involved exceeds the lesser of $120,000 or one percent 
of the average of the smaller reporting company's total assets at year 
end for the last two completed fiscal years; and
    (ii) A list of all parents of the smaller reporting company showing 
the basis of control and as to each parent, the percentage of voting 
securities owned or other basis of control by its immediate parent, if 
any.
    Instruction to Item 404(d).
    Include the information for any material underwriting discounts and 
commissions upon the sale of securities by the smaller reporting 
company where any of the persons specified in paragraph (a) was or is 
to be a principal underwriter or is a controlling person or

[[Page 39697]]

member of a firm that was or is to be a principal underwriter.
* * * * *
    21. Amend Sec.  229.407 by revising paragraph (d)(4)(i)(B) and 
adding paragraph (g) before the Instructions to Item 407 to read as 
follows:


Sec.  229.407  (Item 407) Corporate governance.

* * * * *
    (d) * * *
    (4)(i) * * *
    (B) The registrant is filing an annual report on Form 10-K (17 CFR 
249.310) or a proxy statement or information statement pursuant to the 
Exchange Act (15 U.S.C. 78a et seq.) if action is to be taken with 
respect to the election of directors; and
* * * * *
    (g) Smaller reporting companies. A registrant that qualifies as a 
``smaller reporting company,'' as defined by Sec.  229.10(f)(1), is not 
required to provide:
    (1) The disclosure required in paragraph (d)(5) of this Item in its 
first annual report filed pursuant to section 13(a) or 15(d) of the 
Exchange Act (15 U.S.C. 78m (a) or 78o(d)) following the effective date 
of its first registration statement filed under the Securities Act (15 
U.S.C. 77a et seq.) or Exchange Act (15 U.S.C. 78a et seq.); and
    (2) Need not provide the disclosures required by paragraphs (g)(4) 
and (g)(5) of this Item.
* * * * *
    22. Amend Sec.  229.503 by adding paragraph (e) before the 
Instruction to Item 503 to read as follows:


Sec.  229.503   (Item 503) Prospectus summary, risk factors, and ratio 
of earnings to fixed charges.

* * * * *
    (e) Smaller reporting companies. A smaller reporting company need 
not comply with paragraph (d) of this Item.
* * * * *
    23. Amend Sec.  229.504 by revising Instruction 6 to read as 
follows:


Sec.  229.504   (Item 504) Use of proceeds.

* * * * *
    Instructions to Item 504.
* * * * *
    6. Where the registrant indicates that the proceeds may, or will, 
be used to finance acquisitions of other businesses, the identity of 
such businesses, if known, or, if not known, the nature of the 
businesses to be sought, the status of any negotiations with respect to 
the acquisition, and a brief description of such business shall be 
included. Where, however, pro forma financial statements reflecting 
such acquisition are not required by Regulation S-X (17 CFR 210.01 
through 210.12-29) (or by Sec.  229.310 in the case of a smaller 
reporting company, as defined in Sec.  229.10(f)(1)), to be included, 
in the registration statement, the possible terms of any transaction, 
the identification of the parties thereto or the nature of the business 
sought need not be disclosed, to the extent that the registrant 
reasonably determines that public disclosure of such information would 
jeopardize the acquisition. Where Regulation S-X or Sec.  229.310, as 
applicable, would require financial statements of the business to be 
acquired to be included, the description of the business to be acquired 
shall be more detailed.
* * * * *
    24. Amend Sec.  229.512 by adding paragraph (m) to read as follows:


Sec.  229.512   (Item 512) Undertakings.

* * * * *
    (m) Smaller reporting companies. A smaller reporting company is not 
required to provide information under paragraphs (a)(1)(iii)(C), 
(a)(4), (e), (j), (k), and (l) of this Item.
    25. Amend Sec.  229.601 by:
    a. Revising paragraph (a)(4); the Exhibit Table; and paragraphs 
(b)(4)(ii), (b)(4)(v), (b)(7), (b)(10)(iii)(C)(6), (b)(13)(i), (b)(15), 
(b)(19), and (b)(22); and
    b. Adding paragraph (c) to read as follows:


Sec.  229.601   (Item 601) Exhibits.

    (a) * * *
    (4) If a material contract or plan of acquisition, reorganization, 
arrangement, liquidation or succession is executed or becomes effective 
during the reporting period reflected by a Form 10-Q or Form 10-K, it 
shall be filed as an exhibit to the Form 10-Q or Form 10-K filed for 
the corresponding period. Any amendment or modification to a previously 
filed exhibit to a Form 10, 10-K or 10-Q document shall be filed as an 
exhibit to a Form 10-Q and Form 10-K. Such amendment or modification 
need not be filed where such previously filed exhibit would not be 
currently required.
* * * * *
Exhibit Table
* * * * *

                                                                      Exhibit Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Securities Act forms                                   Exchange Act forms
                                             -----------------------------------------------------------------------------------------------------------
                                                S-1      S-3    S-4 \1\    S-8      S-11     F-1      F-3    F-4 \1\     10    8-K \2\    10-Q     10-K
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Underwriting agreement..................       X        X        X   .......       X        X        X        X   .......       X   .......  .......
(2) Plan of acquisition, reorganization,           X        X        X   .......       X        X        X        X        X        X        X        X
 arrangement, liquidation or succession.....
(3) (i) Articles of incorporation...........       X   .......       X   .......       X        X   .......       X        X        X        X        X
(ii) Bylaws.................................       X   .......       X   .......       X        X   .......       X        X        X        X        X
(4) Instruments defining the rights of             X        X        X        X        X        X        X        X        X        X        X        X
 security holders, including indentures.....
(5) Opinion re legality.....................       X        X        X        X        X        X        X        X   .......  .......  .......  .......
(6) [Reserved]..............................     N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A
(7) Correspondence from an independent        .......  .......  .......  .......  .......  .......  .......  .......  .......       X   .......  .......
 accountant regarding non-reliance on a
 previously issued audit report or completed
 interim review.............................
(8) Opinion re tax matters..................       X        X        X   .......       X        X        X        X   .......  .......  .......  .......
(9) Voting trust agreement..................       X   .......       X   .......       X        X   .......       X        X   .......  .......       X
(10) Material contracts.....................       X   .......       X   .......       X        X   .......       X        X   .......       X        X
(11) Statement re computation of per share         X   .......       X   .......       X        X   .......       X        X   .......       X        X
 earnings...................................
(12) Statements re computation of ratios....       X        X        X   .......       X        X   .......       X        X   .......  .......       X

[[Page 39698]]

 
(13) Annual report to security holders, Form  .......  .......       X   .......  .......  .......  .......  .......  .......  .......  .......       X
 10-Q or quarterly report to security
 holders \3\................................
(14) Code of Ethics.........................  .......  .......  .......  .......  .......  .......  .......  .......  .......       X   .......       X
(15) Letter re unaudited interim financial         X        X        X        X        X        X        X        X   .......  .......       X   .......
 information................................
(16) Letter re change in certifying                X   .......       X   .......       X   .......  .......  .......       X        X   .......       X
 accountant \4\.............................
(17) Correspondence on departure of director  .......  .......  .......  .......  .......  .......  .......  .......  .......       X   .......  .......
(18) Letter re change in accounting           .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X        X
 principles.................................
(19) Report furnished to security holders...  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X   .......
(20) Other documents or statements to         .......  .......  .......  .......  .......  .......  .......  .......  .......       X   .......  .......
 security holders...........................
(21) Subsidiaries of the registrant.........       X   .......       X   .......       X        X   .......       X        X   .......  .......       X
(22) Published report regarding matters       .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X        X
 submitted to vote of security holders......
(23) Consents of experts and counsel........       X        X        X        X        X        X        X        X   .......    X\5\     X\5\     X\5\
(24) Power of attorney......................       X        X        X        X        X        X        X        X        X        X        X        X
(25) Statement of eligibility of trustee....       X        X        X   .......  .......       X        X        X   .......  .......  .......  .......
(27) through (30) [Reserved]................  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......
(31) Rule 13a-14(a)/15d-14(a) Certifications  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X        X
(32) Section 1350 Certifications \6\........  .......  .......  .......  .......  .......  .......  .......  .......  .......  .......       X        X
(33) through (98) [Reserved]................     N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A      N/A
(99) Additional exhibits....................       X        X        X        X        X        X        X        X        X        X        X        X
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ An exhibit need not be provided about a company if: (1) With respect to such company an election has been made under Form S-4 or F-4 to provide
  information about such company at a level prescribed by Forms S-3 or F-3 and (2) the form, the level of which has been elected under Forms S-4 or F-4,
  would not require such company to provide such exhibit if it were registering a primary offering.
\2\ A Form 8-K exhibit is required only if relevant to the subject matter reported on the Form 8-K report. For example, if the Form 8-K pertains to the
  departure of a director, only the exhibit described in paragraph (b)(17) of this section need be filed. A required exhibit may be incorporated by
  reference from a previous filing.
\3\ Where incorporated by reference into the text of the prospectus and delivered to security holders along with the prospectus as permitted by the
  registration statement; or, in the case of the Form 10-K, where the annual report to security holders is incorporated by reference into the text of
  the Form 10-K.
\4\ If required pursuant to Item 304 of Regulation S-K.
\5\ Where the opinion of the expert or counsel has been incorporated by reference into a previously filed Securities Act registration statement.
\6\ Pursuant to Sec.  Sec.   240.13-13(b)(3) and 240.15d-13(b)(3) of this chapter, asset-backed issuers are not required to file reports on Form 10-Q.

* * * * *
    (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 
(Sec.  239.11, 239.25, 239.18, 239.23 and 239.34 of this chapter) and 
Forms 10 and 10-K under the Exchange Act (Sec.  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 which 
are filed and which 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.
* * * * *
    (7) Correspondence from an independent accountant regarding non-
reliance on a previously issued audit report or completed interim 
review. Any written notice from the registrant's current or previously 
engaged independent accountant that the independent accountant is 
withdrawing a previously issued audit report or that a previously 
issued audit report or completed interim review, covering one or more 
years or interim periods for which the registrant is required to 
provide financial statements under Regulation S-X (part 210 of this 
chapter), or Item 310 if the registrant is a smaller reporting company, 
should no longer be relied upon. In addition, any letter, pursuant to 
Item 4.02(c) of Form 8-K (Sec.  249.308 of this chapter), from the 
independent accountant to the Commission stating whether the 
independent accountant agrees with the statements made by the 
registrant describing the events giving rise to the notice.
* * * * *
    (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 which are 
not voting securities on Form S-2.
* * * * *
    (13) Annual report to security holders, Form 10-Q or quarterly 
report to security holders.

[[Page 39699]]

    (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 which 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) (Sec.  230.411(b) 
of this chapter).
* * * * *
    (15) Letter re unaudited interim financial information. A letter, 
where applicable, from the independent accountant which acknowledges 
awareness of the use in a registration statement of a report on 
unaudited interim financial information which pursuant to Rule 436(c) 
under the Securities Act (Sec.  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 which is referred to therein in lieu of providing disclosure 
in Form 10-Q or 10-K, which are required to be filed as exhibits by 
Rule 12b-23(a)(3) under the Exchange Act (Sec.  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. Correspondence from an independent 
accountant under paragraph (b)(7) concerning financial statements of a 
smaller reporting company shall be made using the financial disclosure 
required in Sec.  229.310.
    26. Amend Sec.  229.701 by revising paragraph (e) to read as 
follows:


Sec.  229.701   (Item 701) Recent sales of unregistered securities; use 
of proceeds from registered securities.

* * * * *
    (e) Terms of conversion or exercise. If the information called for 
by this paragraph (e) is being presented on Form 8-K, Form 10-Q, or 
Form 10-K under the Exchange Act (Sec.  249.308, Sec.  249.308(a), and 
Sec.  240.310) of this chapter, and where the securities sold by the 
registrant are convertible or exchangeable into equity securities, or 
are warrants or options representing equity securities, disclose the 
terms of conversion or exercise of the securities.
* * * * *
    27. Amend Sec.  229.1118 by revising paragraph (b)(2) to read as 
follows:


Sec.  229.1118   (Item 1118) Reports and additional information.

* * * * *
    (b) * * *
    (2) State that the public may read and copy any materials filed 
with the Commission at the Commission's Public Reference Room at 100 F 
Street, NE., Washington, DC 20549. State that the public may obtain 
information on the operation of the Public Reference Room by calling 
the Securities and Exchange Commission at 1-800-SEC-0330. State that 
the Commission maintains an Internet site that contains reports, proxy 
and information statements, and other information regarding issuers 
that file electronically with the Commission and state the address of 
that site (http://www.sec.gov).
* * * * *

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

    28. 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, 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, 
unless otherwise noted.
* * * * *
    29. Amend Sec.  230.110 by revising paragraph (a) to read as 
follows:


Sec.  230.110  Business hours of the Commission.

    (a) General. The principal office of the Commission, at 100 F 
Street, NE., Washington, DC 20549, is open each day, except Saturdays, 
Sundays, and Federal holidays, from 9 a.m. to 5:30 p.m., Eastern 
Standard Time or Eastern Daylight Saving Time, whichever is currently 
in effect, provided that hours for the filing of documents pursuant to 
the Act or the rules and regulations thereunder are as set forth in 
paragraphs (b), (c) and (d) of this section.
* * * * *
    30. Amend Sec.  230.138 by revising paragraph (a)(2)(i) to read as 
follows:


Sec.  230.138  Publications or distributions of research reports by 
brokers or dealers about securities other than those they are 
distributing.

    (a) * * *
    (2) * * *
    (i) Is required to file reports, and has filed all periodic reports 
required during the preceding 12 months (or such shorter time that the 
issuer was required to file such reports) on Forms 10-K (Sec.  249.310 
of this chapter), 10-Q (Sec.  249.308a of this chapter), and 20-F 
(Sec.  249.220f of this chapter) pursuant to Section 13 or Section 
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); 
or
* * * * *
    31. Amend Sec.  230.139 by revising paragraph (a)(1)(i)(A)(2) to 
read as follows:


Sec.  230.139  Publications or distributions of research reports by 
brokers or dealers distributing securities.

    (a) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) As of the date of reliance on this section, has filed all 
periodic reports required during the preceding 12 months on Forms 10-K 
(Sec.  249.310 of this chapter), 10-Q (Sec.  249.308a of this chapter), 
and 20-F (Sec.  249.220f of this chapter) pursuant to section 13 or 
section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 
78o(d)); or
* * * * *
    32. Amend Sec.  230.158 by revising paragraphs (a)(1)(i), 
(a)(2)(i), and (b)(2) to read as follows.


Sec.  230.158  Definitions of certain terms in the last paragraph of 
section 11(a).

    (a) * * *
    (1) * * *
    (i) In Item 8 of Form 10-K (Sec.  239.310 of this chapter), part I, 
Item 1 of Form 10-Q (Sec.  240.308a of this chapter), or

[[Page 39700]]

Rule 14a-3(b) (Sec.  240.14a-3(b) of this chapter) under the Securities 
Exchange Act of 1934;
* * * * *
    (2) * * *
    (i) On Form 10-K, Form 10-Q, Form 8-K (Sec.  249.308 of this 
chapter), or in the annual report to security holders pursuant to Rule 
14a-3 under the Securities Exchange Act of 1934 (Sec.  240.14a-3 of 
this chapter); or
* * * * *
    (b) * * *
    (2) Has filed its report or reports on Form 10-K, Form 10-Q, Form 
8-K, Form 20-F, Form 40-F, or Form 6-K, or has supplied to the 
Commission copies of the annual report sent to security holders 
pursuant to Rule 14a-3(c) under the Securities Exchange Act of 1934 
(Sec.  240.14a-3(c) of this chapter), containing such information.
* * * * *
    33. Amend Sec.  230.175 by revising paragraphs (b)(1) introductory 
text, (b)(1)(i), and (b)(2) to read as follows:


Sec.  230.175  Liability for certain statements by issuers.

* * * * *
    (b) * * *
    (1) A forward-looking statement (as defined in paragraph (c) of 
this section) made in a document filed with the Commission, in Part I 
of a quarterly report on Form 10-Q, Sec.  249.308a of this chapter, or 
in an annual report to shareholders meeting the requirements of Rule 
14a-3(b) and (c) or 14c-3(a) and (b) under the Securities Exchange Act 
of 1934 (Sec.  240.14a-3 of this chapter), a statement reaffirming such 
forward-looking statement subsequent to the date the document was filed 
or the annual report was made publicly available, or a forward-looking 
statement made prior to the date the document was filed or the date the 
annual report was publicly available if such statement is reaffirmed in 
a filed document, in Part I of a quarterly report on Form 10-Q, or in 
an annual report made publicly available within a reasonable time after 
the making of such forward-looking statement; Provided, that
    (i) At the time such statements are made or reaffirmed, either the 
issuer is subject to the reporting requirements of section 13(a) or 
15(d) of the Securities Exchange Act of 1934 and has complied with the 
requirements of Rule 13a-1 or 15d-1 (Sec.  239.13a-1 or 239.15d-1 of 
this chapter) thereunder, if applicable, to file its most recent annual 
report on Form 10-K, Form 20-F, or Form 40-F; or if the issuer is not 
subject to the reporting requirements of Section 13(a) or 15(d) of the 
Securities Exchange Act of 1934, the statements are made in a 
registration statement filed under the Act, offering statement or 
solicitation of interest written document or broadcast script under 
Regulation A or pursuant to sections 12(b) or (g) of the Securities 
Exchange Act of 1934; and
* * * * *
    (2) Information which is disclosed in a document filed with the 
Commission, in Part I of a quarterly report on Form 10-Q (Sec.  
249.308a of this chapter) or in an annual report to shareholders 
meeting the requirements of Rules 14a-3 (b) and (c) or 14c-3 (a) and 
(b) under the Securities Exchange Act of 1934 (Sec. Sec.  240.14a-3(b) 
and (c) or 240.14a-3(a) and (b) of this chapter) and which relates to:
    (i) The effects of changing prices on the business enterprise, 
presented voluntarily or pursuant to Item 303 of Regulation S-K (Sec.  
229.303 of this chapter) ``Management's Discussion and Analysis of 
Financial Condition and Results of Operations, or Item 5 of Form 20-F, 
Operating and Financial Review and Prospects, (Sec.  249.220f of this 
chapter)'' or Item 302 of Regulation S-K (Sec.  229.302 of this 
chapter), ``Supplementary financial information,'' or Rule 3-20(c) of 
Regulation S-X (Sec.  210.3-20(c) of this chapter); or
    (ii) The value of proved oil and gas reserves (such as a 
standardized measure of discounted future net cash flows relating to 
proved oil and gas reserves as set forth in paragraphs 30-34 of 
Statement of Financial Accounting Standards No. 69) presented 
voluntarily or pursuant to Item 302 of Regulation S-K (Sec.  229.302 of 
this chapter).
* * * * *
    34. Amend Sec.  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:


Sec.  230.405  Definitions of terms.

* * * * *
    Smaller reporting company: As used in this part, the term smaller 
reporting company means an issuer that is not an investment company, an 
asset-backed issuer (as defined in Sec.  229.1101 of this chapter), or 
a majority-owned subsidiary of a parent that is not a smaller reporting 
company and that:
    (1) Had a public float of less than $75 million as of the last 
business day of its most recently completed second fiscal quarter, 
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; or
    (2) In the case of an initial registration statement under the 
Securities Act for shares of its common equity, had a public float of 
less than $75 million as of a date within 30 days of the date of the 
filing of the registration statement, computed by multiplying the 
aggregate worldwide number of such shares held by non-affiliates before 
the registration plus the number of such shares included in the 
registration statement by the estimated public offering price of the 
shares; or
    (3) In the case of an issuer whose public float as calculated under 
paragraph (1) or (2) of this definition was zero because the issuer had 
no significant public common equity outstanding or no market price for 
its common equity existed, had annual revenues of less than $50 million 
during the most recently completed fiscal year for which audited 
financial statements are available on the date of the filing that 
establishes whether or not the issuer is a smaller reporting company 
for any fiscal year; or
    (4) Determination: Whether or not an issuer is a smaller reporting 
company is determined for an entire fiscal year on the basis of the 
information in a quarterly report on Form 10-Q or an initial 
registration statement under the Securities Act or Exchange Act, 
whichever is the first to be filed during that year. Once an issuer 
fails to qualify for smaller reporting company status, it will remain 
unqualified unless it determines that its public float, as calculated 
in accordance with paragraph (1) of this definition was less than $50 
million as of the last business day of its second fiscal quarter or, if 
that calculation results in zero because the issuer had no significant 
public equity outstanding or no market price for its equity existed, if 
the issuer had annual revenues of less than $40 million during its 
previous fiscal year. An issuer making this determination becomes a 
smaller reporting company for the purpose of filings for the next 
fiscal year.
* * * * *
    35. Amend Sec.  230.415 by revising paragraph (a)(3) to read as 
follows:


Sec.  230.415  Delayed or continuous offerings and sale of securities.

    (a) * * *
    (3) The registrant furnishes the undertakings required by Item 
512(a) of Regulation S-K (Sec.  229.512(a) of this chapter), except 
that a registrant that is an investment company filing on Form

[[Page 39701]]

N-2 must furnish the undertakings required by Item 34.4 of Form N-2 
(Sec.  239.14 and Sec.  274.11a-1 of this chapter).
* * * * *
    36. Amend Sec.  230.428 by revising paragraphs (b)(2)(ii), 
(b)(2)(iii), (b)(2)(iv), and (b)(4) to read as follows:


Sec.  230.428  Documents constituting a section 10(a) prospectus for 
Form S-8 registration statement; requirements relating to offerings of 
securities registered on Form S-8.

* * * * *
    (b) * * *
    (2) * * *
    (ii) The registrant's annual report on Form 10-K (Sec.  249.310 of 
this chapter), 20-F (Sec.  249.220f of this chapter) or, in the case of 
registrants described in General Instruction A.(2) of Form 40-F (Sec.  
249.240f of this chapter), for its latest fiscal year;
    (iii) The latest prospectus filed pursuant to Rule 424(b) (Sec.  
230.424(b) of this chapter) under the Act that contains audited 
financial statements for the registrant's latest fiscal year, Provided 
that the financial statements are not incorporated by reference from 
another filing, and Provided further that such prospectus contains 
substantially the information required by Rule 14a-3(b) (Sec.  240.14a-
3(b) of this chapter) or the registration statement was on Form S-1 
(Sec.  239.11 of this chapter) or F-1 (Sec.  239.31 of this chapter); 
or
    (iv) The registrant's effective Exchange Act registration statement 
on Form 10 (Sec.  249.210 of this chapter), 20-F or, in the case of 
registrants described in General Instruction A.(2) of Form 40-F, 
containing audited financial statements for the registrant's latest 
fiscal year.
* * * * *
    (4) Where interests in a plan are registered, the registrant shall 
deliver or cause to be delivered promptly, without charge, to each 
employee to whom information is required to be delivered, upon written 
or oral request, a copy of the then latest annual report of the plan 
filed pursuant to section 15(d) of the Exchange Act, whether on Form 
11-K (Sec.  249.311 of this chapter) or included as part of the 
registrant's annual report on Form 10-K.
* * * * *
    37. Amend Sec.  230.430B by revising the introductory text of 
paragraphs (f)(4), (f)(4)(ii), and (i) to read as follows:


Sec.  230.430B  Prospectus in a registration statement after effective 
date.

* * * * *
    (f) * * *
    (4) Except for an effective date resulting from the filing of a 
form of prospectus filed for purposes of including information required 
by section 10(a)(3) of the Act or pursuant to Item 512(a)(1)(ii) of 
Regulation S-K (Sec.  229.512(a)(1)(ii) of this chapter), the date a 
form of prospectus is deemed part of and included in the registration 
statement pursuant to this paragraph shall not be an effective date 
established pursuant to paragraph (f)(2) of this section as to:
* * * * *
    (ii) Any person signing any report or document incorporated by 
reference into the registration statement, except for such a report or 
document incorporated by reference for purposes of including 
information required by section 10(a)(3) of the Act or pursuant to Item 
512(a)(1)(ii) of Regulation S-K (such person except for such reports 
being deemed not to be a person who signed the registration statement 
within the meaning of section 11(a) of the Act).
* * * * *
    (i) Issuers relying on this section shall furnish the undertakings 
required by Item 512(a) of Regulation S-K.
* * * * *
    38. Amend Sec.  230.430C by revising paragraph (d) to read as 
follows:


Sec.  230.430C  Prospectus in a registration statement pertaining to an 
offering other than pursuant to Rule 430A or Rule 430B after the 
effective date.

* * * * *
    (d) Issuers subject to paragraph (a) of this section shall furnish 
the undertakings required by Item 512(a) of Regulation S-K (Sec.  
229.512(a) of this chapter) or Item 34.4 of Form N-2 (Sec. Sec.  239.14 
and 274.11a-1 of this chapter), as applicable.
* * * * *
    39. Revise Sec.  230.455 to read as follows:


Sec.  230.455  Place of filing.

    All registration statements and other papers filed with the 
Commission shall be filed at its principal office. Such material may be 
filed by delivery to the Commission through the mails or otherwise; 
provided, however, that only registration statements and post-effective 
amendments thereto filed pursuant to Rule 462(b) (Sec.  230.462(b)) and 
Rule 110(d) (Sec.  230.110(d)) may be filed by means of facsimile 
transmission.
    40. Amend Sec.  230.502 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:


Sec.  230.502  General conditions to be met.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (B) Financial statement information--(1) Offerings up to 
$2,000,000. The information required in Item 310 of Regulation S-K 
(Sec.  229.310 of this chapter), except that only the issuer's balance 
sheet, which shall be dated within 120 days of the start of the 
offering, must be audited.
    (2) Offerings up to $7,500,000. The financial statement information 
required in Form S-1 (Sec.  239.10 of this chapter) for smaller 
reporting companies. If an issuer, other than a limited partnership, 
cannot obtain audited financial statements without unreasonable effort 
or expense, then only the issuer's balance sheet, which shall be dated 
within 120 days of the start of the offering, must be audited. If the 
issuer is a limited partnership and cannot obtain the required 
financial statements without unreasonable effort or expense, it may 
furnish financial statements that have been prepared on the basis of 
Federal income tax requirements and examined and reported on in 
accordance with generally accepted auditing standards by an independent 
public or certified accountant.
* * * * *
    (ii) * * *
    (A) The issuer's annual report to shareholders for the most recent 
fiscal year, if such annual report meets the requirements of Sec.  
240.14a-3 or Sec.  240.14c-3 under the Exchange Act, the definitive 
proxy statement filed in connection with that annual report, and if 
requested by the purchaser in writing, a copy of the issuer's most 
recent Form 10-K (17 CFR 249.310) under the Exchange Act.
    (B) The information contained in an annual report on Form 10-K 
(Sec.  249.310 of this chapter) under the Exchange Act or in a 
registration statement on Form S-1 (Sec.  239.11 of this chapter) or S-
11 (Sec.  239.18 of this chapter) under the Act or on Form 10 (Sec.  
249.210 of this chapter) under the Exchange Act, whichever filing is 
the most recent required to be filed.
* * * * *
    (iii) Exhibits required to be filed with the Commission as part of 
a registration statement or report, other than an annual report to 
shareholders or parts of that report incorporated by reference in a 
Form 10-K report, need not be furnished to each purchaser that is not 
an accredited investor if the contents of material exhibits are 
identified and such exhibits are made available to a

[[Page 39702]]

purchaser, upon his written request, a reasonable time prior to his 
purchase.
* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    41. 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, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 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.
* * * * *
    42. Amend Sec.  239.0-1 by revising paragraph (b) to read as 
follows:


Sec.  239.0-1  Availability of forms.

* * * * *
    (b) Any person may obtain a copy of any form prescribed for use in 
this part by written request to the Securities and Exchange Commission, 
100 F Street, NE., Washington, DC 20549. Any persons may inspect the 
forms at this address and at the Commission's regional offices. (See 
Sec.  200.11 of this chapter for the addresses of the SEC regional 
offices.)
    43. By removing and reserving Sec. Sec.  239.9 and 239.10 and 
removing Forms 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.

    44. Amend Form S-1 (referenced in Sec.  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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(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 Item 310 of Regulation S-K 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 which have occurred since the end 
of the latest fiscal year for which audited financial statements were 
included in the latest Form 10-K and which have not been described in a 
Form 10-Q, or Form S-8 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 which 
contains financial statements for the registrant's latest fiscal year 
for which a Form 10-K was required to have been filed; and
* * * * *
    45. Amend Form S-3 (referenced in Sec.  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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


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 subparagraph describing scaled disclosure, if any. Smaller 
reporting companies may provide the financial information called for by 
Item 310 of Regulation S-K 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 which 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 which have not been described in a 
report on Form 10-Q (Sec.  249.308a of this chapter) or Form 8-K (Sec.  
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

[[Page 39703]]

pursuant to Section 13(a) or 15(d) of the Exchange Act which contains 
financial statements for the registrant's latest fiscal year for which 
a Form 10-K was required to be filed; and
* * * * *
    46. Amend Form S-8 (referenced in Sec.  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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(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 (Sec.  249.210 or Sec.  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 Sec.  230.405, shall 
refer to the disclosure items in Regulation S-K (17 CFR 229.10 et seq.) 
and may use the scaled disclosure provided for smaller reporting 
companies.
* * * * *
    47. Amend Form S-11 (referenced in Sec.  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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(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 (Sec.  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 (Sec.  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 the Regulation may be omitted from the 
prospectus. A smaller reporting company may provide the information in 
Item 310 of Regulation S-K (Sec.  229.310 of this chapter), in lieu of 
the financial information required by Regulation S-X and need not 
provide the supplementary financial information required in Item 302 of 
Regulation S-K.
* * * * *
    48. Amend Form S-4 (referenced in Sec.  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 
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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(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 Sec.  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.
* * * * *

[[Page 39704]]

Part I
Information Required in the Prospectus
* * * * *
Item 5. Pro Forma Financial Information
    Furnish financial information required by Article 11 of Regulation 
S-X (Sec.  210.11-01 et seq. of this chapter) with respect to this 
transaction. A smaller reporting company may provide the information in 
Item 310 of Regulation S-K (Sec.  229.310 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 Sections 
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 prior to 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 registrants latest quarterly report that we 
delivered to security holders and which 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 (Sec.  210.3-05 of this chapter) and 
Article 11 (Sec.  210.11-01 through 210.11.03 of this chapter) of 
Regulation S-X.
    (4) Describe any and all material changes in the registrant's 
affairs which 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 paragraphs (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 as would have 
been required had the company being acquired been required to file Part 
I of Form 10-Q (Sec.  249.308a of this chapter) for the most recent 
quarter for which such a report would have been on file at the time of 
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.
* * * * *
    49. Revise Sec.  239.42 to read as follows:


Sec.  239.42  Form F-X, for appointment of agent for service of process 
and undertaking for issuers registering securities on Form F-8, F-9, F-
10, or F-80 (Sec. Sec.  239.38, 239.39, 239.40, or 239.41), or 
registering securities or filing periodic reports on Form 40-F (Sec.  
249.240f), or by any issuer or other non-U.S. person filing tender 
offer documents on Schedule 13E-4F, 14D-1F, or 14D-9F (Sec. Sec.  
240.13e-102, 240.14d-102, or 240.14d-103 of this chapter), by any non-
U.S. person acting as trustee with respect to securities registered on 
Form F-7 (Sec.  239.37), F-8, F-9, F-10, or by a Canadian issuer 
qualifying an offering statement pursuant to Regulation A (Sec.  
230.251 et seq.) on Form 1-A (Sec.  239.90), or by any non-U.S. issuer 
providing Form CB (Sec.  249.480) of this chapter to the Commission in 
connection with a tender offer, rights offering or business 
combination.

    Form F-X shall be filed with the Commission:
    (a) By any issuer registering securities on Form F-8, F-9, F-10, or 
F-80 under the Securities Act of 1933;
    (b) By any issuer registering securities on Form 40-F under the 
Securities Exchange Act of 1934;
    (c) By any issuer filing a periodic report on Form 40-F, if it has 
not previously filed a Form F-X in connection with the class of 
securities in relation to which the obligation to file a report on Form 
40-F arises;
    (d) By any issuer or other non-U.S. person filing tender offer 
documents on Schedule 13E-4F, 14D-1F, or 14D-9F;
    (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;
    (f) By a Canadian issuer qualifying an offering statement pursuant 
to the provisions of Regulation A; and
    (g) By any non-U.S. issuer providing Form CB to the Commission in 
connection with a tender offer, rights offering or business 
combination.
    50. Amend Form F-X (referenced in Sec.  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.


[[Page 39705]]


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
* * * * *
    51. Amend Form 1-A (referenced in Sec.  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

    52. The authority citations for part 240 continues 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, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 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.
* * * * *
    53. Amend Sec.  240.0-2 by revising paragraph (a) to read as 
follows:


Sec.  240.0-2  Business hours of the Commission.

    (a) The principal office of the Commission, at 100 F Street, NE, 
Washington, DC 20549, is open each day, except Saturdays, Sundays, and 
Federal holidays, from 9 a.m. to 5:30 p.m., Eastern Standard Time or 
Eastern Daylight Saving Time, whichever currently is in effect in 
Washington, DC, provided that hours for the filing of documents 
pursuant to the Act or the rules and regulations thereunder are as set 
forth in paragraphs (b) and (c) of this section.
* * * * *
    54. Amend Sec.  240.0-12 by revising the second sentence of 
paragraph (c) to read as follows:


Sec.  240.0-12  Commission procedures for filing applications for 
orders for exemptive relief under Section 36 of the Exchange Act.

* * * * *
    (c) * * * Five copies of every paper application and every 
amendment to such an application must be submitted to the Office of the 
Secretary at 100 F Street, NE, Washington, DC 20549. * * *
* * * * *
    55. Amend Sec.  240.3b-6 by revising the introductory text of 
paragraph (b)(1), paragraphs (b)(1)(i) and (b)(2) to read as follows:


Sec.  240.3b-6  Liability for certain statements by issuers.

* * * * *
    (b) * * *
    (1) A forward-looking statement (as defined in paragraph (c) of 
this section) made in a document filed with the Commission, in Part I 
of a quarterly report on Form 10-Q, Sec.  249.308a of this chapter, or 
in an annual report to share holders meeting the requirements of Rules 
14a-3(b) and (c) or 14c-3(a) and (b) (Sec. Sec.  240.14a-3(b) and (c) 
or 240.14c-3(a) and (b)), a statement reaffirming such forward-looking 
statement subsequent to the date the document was filed or the annual 
report was made publicly available, or a forward-looking statement made 
prior to the date the document was filed or the date the annual report 
was made publicly available if such statement is reaffirmed in a filed 
document, in Part I of a quarterly report on Form 10-Q, or in an annual 
report made publicly available within a reasonable time after the 
making of such forward-looking statement; Provided, that:
    (i) At the time such statements are made or reaffirmed, either the 
issuer is subject to the reporting requirements of section 13(a) or 
15(d) of the Act and has complied with the requirements of Rule 13a-1 
or 15d-1 thereunder, if applicable, to file its most recent annual 
report on Form 10-K, Form 20-F or Form 40-F; or if the issuer is not 
subject to the reporting requirements of Sections 13(a) or 15(d) of the 
Act, the statements are made in a registration statement filed under 
the Securities Act of 1933 offering statement or solicitation of 
interest written document or broadcast script under Regulation A or 
pursuant to Section 12(b) or (g) of the Securities Exchange Act of 
1934; and
* * * * *
    (2) Information that is disclosed in a document filed with the 
Commission in Part I of a quarterly report on Form 10-Q (Sec.  249.308a 
of this chapter) or in an annual report to security holders meeting the 
requirements of Rules 14a-3(b) and (c) or 14c-3(a) and (b) under the 
Act (Sec. Sec.  240.14a-3(b) and (c) or 240.14c-3(a) and (b) of this 
chapter) and which relates to:
    (i) The effects of changing prices on the business enterprise, 
presented voluntarily or pursuant to Item 303 of Regulation S-K (Sec.  
229.303 of this chapter) ``Management's Discussion and Analysis of 
Financial Condition and Results of Operations'' or Item 5 of Form 20-F, 
``Operating and Financial Review and Prospects,'' or Item 302 of 
Regulation S-K (Sec.  229.302 of this chapter), ``Supplementary 
financial information'' or Rule 3-20(c) of Regulation S-X (Sec.  210.3-
20(c)) of this chapter); or
    (ii) The value of proved oil and gas reserves (such as a 
standardized measure of discounted future net cash flows relating to 
proved oil and gas

[[Page 39706]]

reserves as set forth in paragraphs 30-34 of Statement of Financial 
Accounting Standards No. 69) presented voluntarily or pursuant to Item 
302 of Regulation S-K (Sec.  229.302 of this chapter).
* * * * *
    56. Amend Sec.  240.10A-1 by revising paragraphs (a)(4)(ii) and 
(b)(3) to read as follows:


Sec.  240.10A-1  Notice to the Commission Pursuant to Section 10A of 
the Act.

    (a)(1) * * *
    (4) * * *
    (ii) The disclosure requirements of item 304 of Regulation S-K, 
Sec.  229.304 of this chapter.
    (b) * * *
    (3) Submission of the report (or documentation) by the independent 
accountant as described in paragraphs (b)(1) and (b)(2) of this section 
shall not replace, or otherwise satisfy the need for, the newly engaged 
and former accountants' letters under items 304(a)(2)(D) and 304(a)(3) 
of Regulation S-K, Sec. Sec.  229.304(a)(2)(D) and 229.304(a)(3) of 
this chapter, respectively, and shall not limit, reduce, or affect in 
any way the independent accountant's obligations to comply fully with 
all other legal and professional responsibilities, including, without 
limitation, those under generally accepted auditing standards and the 
rules or interpretations of the Commission that modify or supplement 
those auditing standards.
* * * * *
    57. Amend Sec.  240.10A-3 by revising paragraph (a)(5)(i)(A) to 
read as follows:


Sec.  240.10A-3  Listing standards relating to audit committees.

    (a) * * *
    (5) * * *
    (i) * * *
    (A) July 31, 2005 for foreign private issuers and smaller reporting 
companies (as defined in Sec.  240.12b-2); and
* * * * *
    58. Amend Sec.  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:


Sec.  240.12b-2  Definitions

* * * * *
    Accelerated filer and large accelerated filer
    (1) * * *
    (iv) The issuer is not eligible to use the requirements for smaller 
reporting companies in Part 229 of this chapter for its annual and 
quarterly reports.
    (2) * * *
    (iv) The issuer is not eligible to use the requirements for smaller 
reporting companies in Part 229 of this chapter for its annual and 
quarterly reports.
* * * * *
    Smaller reporting company. As used in this part, the term ``smaller 
reporting company'' means an issuer that is not an investment company, 
an asset-backed issuer (as defined in Sec.  229.1101 of this chapter), 
or a majority-owned subsidiary of a parent that is not a smaller 
reporting company and that:
    (1) Had a public float of less than $75 million as of the last 
business day of its most recently completed second fiscal quarter, 
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; or
    (2) In the case of an initial registration statement under the 
Securities Act for shares of its common equity, had a public float of 
less than $75 million as of a date within 30 days of the date of the 
filing of the registration statement, computed by multiplying the 
aggregate worldwide number of such shares held by non-affiliates before 
the registration plus the number of such shares included in the 
registration statement by the estimated public offering price of the 
shares; or
    (3) In the case of an issuer whose public float as calculated under 
paragraph (1) or (2) of this definition was zero because the issuer had 
no significant public common equity outstanding or no market price for 
its common equity existed, had annual revenues of less than $50 million 
during the most recently completed fiscal year for which audited 
financial statements are available on the date of the filing that 
establishes whether or not the issuer is a smaller reporting company 
for any fiscal year; or
    (4) Determination: Whether or not an issuer is a smaller reporting 
company is determined for an entire fiscal year on the basis of the 
information in a quarterly report on Form 10-Q or an initial 
registration statement under the Securities Act or this Act, whichever 
is first to be filed during that year. Once an issuer fails to qualify 
for smaller reporting company status, it will remain unqualified unless 
it determines that its public float, as calculated in accordance with 
paragraph (1) of this definition was less than $50 million as of the 
last business day of its second fiscal quarter or, if that calculation 
results in zero because the issuer had no significant public equity 
outstanding or no market price for its equity existed, if the issuer 
had annual revenues of less than $40 million during its previous fiscal 
year. An issuer making this determination becomes a smaller reporting 
company for the purpose of filings for the next fiscal year.
* * * * *
    59. Amend Sec.  240.12b-23 by revising paragraphs (a)(3)(i) and (b) 
to read as follows:


Sec.  240.12b-23  Incorporation by reference.

    (a) * * *
    (3) * * *
    (i) A proxy or information statement incorporated by reference in 
response to Part III of Form 10-K (17 CFR 249.310);
* * * * *
    (b) Any incorporation by reference of matter pursuant to this 
section shall be subject to the provisions of Sec.  229.10(d) of this 
chapter restricting incorporation by reference of documents which 
incorporate by reference other information. Material incorporated by 
reference shall be clearly identified in the reference by page, 
paragraph, and caption or otherwise. Where only certain pages of a 
document are incorporated by reference and filed as an exhibit, the 
document from which the material is taken shall be clearly identified 
in the reference. An express statement that the specified matter is 
incorporated by reference shall be made at the particular place in the 
statement or report where the information is required. Matter shall not 
be incorporated by reference in any case where such incorporation would 
render the statement or report incomplete, unclear or confusing.
    60. Amend Sec.  240.12b-25 by revising the section heading and 
paragraphs (a) and (b)(2)(ii) to read as follows:


Sec.  240.12b-25  Notification of inability to timely file all or any 
required portion of a Form 10-K, 20-F, 11-K, N-SAR, N-CSR, 10-Q, or 10-
D.

    (a) If all or any required portion of an annual or transition 
report on Form 10-K, 20-F or 11-K (17 CFR 249.310, 249.220f or 
249.311), a quarterly or transition report on Form 10-Q (17 CFR 
249.308a ), or a distribution report on Form 10-D (17 CFR 249.312) 
required to be filed pursuant to Section 13 or 15(d) of the Act (15 
U.S.C. 78m or 78o(d)) and rules thereunder, or if all or any required 
portion of a semi-annual, annual or transition report on Form N-CSR (17 
CFR 249.331; 17 CFR 274.128)

[[Page 39707]]

or Form N-SAR (17 CFR 249.330; 17 CFR 274.101) required to be filed 
pursuant to Sections 13 or 15(d) of the Act or section 30 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-29) and the rules 
thereunder, is not filed within the time period prescribed for such 
report, the registrant, no later than one business day after the due 
date for such report, shall file a Form 12b-25 (17 CFR 249.322) with 
the Commission which shall contain disclosure of its inability to file 
the report timely and the reasons therefor in reasonable detail.
    (b) * * *
    (2) * * *
    (ii) The subject annual report, semi-annual report or transition 
report on Form 10-K, 20-F, 11-K, N-SAR, or N-CSR, or portion thereof, 
will be filed no later than the fifteenth calendar day following the 
prescribed due date; or the subject quarterly report or transition 
report on Form 10-Q or distribution report on Form 10-D, or portion 
thereof, will be filed no later than the fifth calendar day following 
the prescribed due date; and
* * * * *
    61. Amend Sec.  240.12h-3 by revising paragraph (e) to read as 
follows:


Sec.  240.12h-3  Suspension of duty to file reports under section 
15(d).

* * * * *
    (e) If the suspension provided by this section is discontinued 
because a class of securities does not meet the eligibility criteria of 
paragraph (b) of this section on the first day of an issuer's fiscal 
year, then the issuer shall resume periodic reporting pursuant to 
section 15(d) of the Act by filing an annual report on Form 10-K for 
its preceding fiscal year, not later than 120 days after the end of 
such fiscal year.
    62. Amend Sec.  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:


Sec.  240.13a-10  Transition reports.

* * * * *
    (c) If the transition period covers a period of less than six 
months, in lieu of the report required by paragraph (b) of this 
section, a report may be filed for the transition period on Form 10-Q 
(Sec.  249.308a of this chapter) not more than the number of days 
specified in paragraph (j) of this section after either the close of 
the transition period or the date of the determination to change the 
fiscal closing date, whichever is later. The report on Form 10-Q shall 
cover the period from the close of the last fiscal year end and shall 
indicate clearly the period covered. The financial statements filed 
therewith need not be audited but, if they are not audited, the issuer 
shall file with the first annual report for the newly adopted fiscal 
year separate audited statements of income and cash flows covering the 
transition period. The notes to financial statements for the transition 
period included in such first annual report may be integrated with the 
notes to financial statements for the full fiscal period. A separate 
audited balance sheet as of the end of the transition period shall be 
filed in the annual report only if the audited balance sheet as of the 
end of the fiscal year prior to the transition period is not filed. 
Schedules need not be filed in transition reports on Form 10-Q.
    (d) * * *
    (2) * * *
    (ii) The first report required to be filed by the issuer for the 
newly adopted fiscal year after the date of the determination to change 
the fiscal year end is a quarterly report on Form 10-Q; and
    (iii) Information on the transition period is included in the 
issuer's quarterly report on Form 10-Q for the first quarterly period 
(except the fourth quarter) of the newly adopted fiscal year that ends 
after the date of the determination to change the fiscal year. The 
information covering the transition period required by Part II and Item 
2 of Part I may be combined with the information regarding the quarter. 
However, the financial statements required by Part I, which may be 
unaudited, shall be furnished separately for the transition period.
    (e) Every issuer required to file quarterly reports on Form 10-Q 
pursuant to Sec.  240.13a-13 of this chapter that changes its fiscal 
year end shall:
    (1) File a quarterly report on Form 10-Q within the time period 
specified in General Instruction A.1. to that form for any quarterly 
period (except the fourth quarter) of the old fiscal year that ends 
before the date on which the issuer determined to change its fiscal 
year end, except that the issuer need not file such quarterly report if 
the date on which the quarterly period ends also is the date on which 
the transition period ends;
    (2) File a quarterly report on Form 10-Q within the time specified 
in General Instruction A.1. to that form for each quarterly period of 
the old fiscal year within the transition period. In lieu of a 
quarterly report for any quarter of the old fiscal year within the 
transition period, the issuer may file a quarterly report on Form 10-Q 
for any period of three months within the transition period that 
coincides with a quarter of the newly adopted fiscal year if the 
quarterly report is filed within the number of days specified in 
paragraph (j) of this section after the end of such three month period, 
provided the issuer thereafter continues filing quarterly reports on 
the basis of the quarters of the newly adopted fiscal year;
* * * * *
    (4) Unless such information is or will be included in the 
transition report, or the first annual report on Form 10-K for the 
newly adopted fiscal year, include in the initial quarterly report on 
Form 10-Q for the newly adopted fiscal year information on any period 
beginning on the first day subsequent to the period covered by the 
issuer's final quarterly report on Form 10-Q or annual report on Form 
10-K for the old fiscal year. The information covering such period 
required by Part II and Item 2 of Part I may be combined with the 
information regarding the quarter. However, the financial statements 
required by Part I, which may be unaudited, shall be furnished 
separately for such period.

    Note to paragraphs (c) and (e): If it is not practicable or 
cannot be cost-justified to furnish in a transition report on Form 
10-Q or a quarterly report for the newly adopted fiscal year 
financial statements for corresponding periods of the prior year 
where required, financial statements may be furnished for the 
quarters of the preceding fiscal year that most nearly are 
comparable if the issuer furnishes an adequate discussion of 
seasonal and other factors that could affect the comparability of 
information or trends reflected, an assessment of the comparability 
of the data, and a representation as to the reason recasting has not 
been undertaken.

* * * * *
    (j) * * *
    (2) For transition reports to be filed on Form 10-Q (Sec.  249.308a 
of this chapter) the number of days shall be:
* * * * *
    63. Amend Sec.  240.13a-13 by revising the section heading, 
paragraph (a), the introductory text of paragraph (c), and paragraph 
(d) to read as follows:


Sec.  240.13a-13  Quarterly reports on Form 10-Q (Sec.  249.308a of 
this chapter).

    (a) Except as provided in paragraphs (b) and (c) of this section, 
every issuer that has securities registered pursuant to section 12 of 
the Act and is required to file annual reports pursuant to section 13 
of the Act, and has filed or intends to file such reports on Form 10-K 
(Sec.  249.310 of this chapter), shall file a quarterly report on Form 
10-Q (Sec.  249.308a of this chapter) within the period specified in 
General Instruction A.1. to that form for each of the first three 
quarters of each fiscal year of the

[[Page 39708]]

issuer, commencing with the first fiscal quarter following the most 
recent fiscal year for which full financial statements were included in 
the registration statement, or, if the registration statement included 
financial statements for an interim period subsequent to the most 
recent fiscal year end meeting the requirements of Article 10 of 
Regulation S-X, for the first fiscal quarter subsequent to the quarter 
reported upon in the registration statement. The first quarterly report 
of the issuer shall be filed either within 45 days after the effective 
date of the registration statement or on or before the date on which 
such report would have been required to be filed if the issuer has been 
required to file reports on Form 10-Q as of its last fiscal quarter, 
whichever is later.
* * * * *
    (c) Part I of the quarterly reports on Form 10-Q need not be filed 
by:
* * * * *
    (d) Notwithstanding the foregoing provisions of this section, the 
financial information required by Part I of Form 10-Q, shall not be 
deemed to be ``filed'' for the purpose of Section 18 of the Act or 
otherwise subject to the liabilities of that section of the Act but 
shall be subject to all other provisions of the Act.
    64. Amend Sec.  240.13a-14 by revising paragraph (a) to read as 
follows:


Sec.  240.13a-14  Certification of disclosure in annual and quarterly 
reports.

    (a) Each report, including transition reports, filed on Form 10-Q, 
Form 10-K, Form 20-F or Form 40-F (Sec. Sec.  249.308a, 249.310, 
249.220f or 249.240f of this chapter) under Section 13(a) of the Act 
(15 U.S.C. 78m(a)), other than a report filed by an Asset-Backed Issuer 
(as defined in Sec.  229.1101 of this chapter) or a report on Form 20-F 
filed under Sec.  240.13a-19, must include certifications in the form 
specified in the applicable exhibit filing requirements of such report 
and such certifications must be filed as an exhibit to such report. 
Each principal executive and principal financial officer of the issuer, 
or persons performing similar functions, at the time of filing of the 
report must sign a certification. The principal executive and principal 
financial officers of an issuer may omit the portion of the 
introductory language in paragraph 4 as well as language in paragraph 
4(b) of the certification that refers to the certifying officers' 
responsibility for designing, establishing and maintaining internal 
control over financial reporting for the issuer until the issuer 
becomes subject to the internal control over financial reporting 
requirements in Sec.  240.13a-15 or 240.15d-15.
* * * * *
    65. Amend Sec.  240.13a-16 by revising paragraph (a)(3) to read as 
follows:


Sec.  240.13a-16  Reports of foreign private issuers on Form 6-K (17 
CFR 249.306).

    (a) * * *
    (3) Issuers filing periodic reports on Form 10-K, Form 10-Q, and 
Form 8-K; or
* * * * *
    66. Amend Sec.  240.13a-20 by revising the introductory text of 
paragraph (a) to read as follows:


Sec.  240.13a-20  Plain English presentation of specified information.

    (a) Any information included or incorporated by reference in a 
report filed under section 13(a) of the Act (15 U.S.C. 78m(a)) that is 
required to be disclosed pursuant to Item 402, 403, 404 or 407 of 
Regulation S-K (Sec.  229.402, 229.403, 229.404 or 229.407 of this 
chapter) must be presented in a clear, concise and understandable 
manner. You must prepare the disclosure using the following standards:
* * * * *
    67. Amend Sec.  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:


Sec.  240.14a-3  Information to be furnished to security holders.

* * * * *
    (b) * * *
    (1) The report shall include, for the registrant and its 
subsidiaries, consolidated and audited balance sheets as of the end of 
the two most recent fiscal years and audited statements of income and 
cash flows for each of the three most recent fiscal years prepared in 
accordance with Regulation S-X (part 210 of this chapter), except that 
the provisions of Article 3 (other than Sec. Sec.  210.3-03(e), 2103-04 
and 210.3-20) and Article 11 shall not apply. Any financial statement 
schedules or exhibits or separate financial statements which may 
otherwise be required in filings with the Commission may be omitted. If 
the financial statements of the registrant and its subsidiaries 
consolidated in the annual report filed or to be filed with the 
Commission are not required to be audited, the financial statements 
required by this paragraph may be unaudited. A smaller reporting 
company may provide the information in Item 310 of Regulation S-K 
(Sec.  229.310 of this chapter) in lieu of the financial information 
required by Rule 14a-3(b)(1) (Sec.  240.14a-3(b)(1).

    Note 1 to Paragraph (b)(1): If the financial statements for a 
period prior to the most recently completed fiscal year have been 
examined by a predecessor accountant, the separate report of the 
predecessor accountant may be omitted in the report to security 
holders provided the registrant has obtained from the predecessor 
accountant a reissued report covering the prior period presented and 
the successor accountant clearly indicates in the scope paragraph of 
his report (a) that the financial statements of the prior period 
were examined by other accountants, (b) the date of their report, 
(c) the type of opinion expressed by the predecessor accountant and 
(d) the substantive reasons therefor, if it was other than 
unqualified. It should be noted, however, that the separate report 
of any predecessor accountant is required in filings with the 
Commission. If, for instance, the financial statements in the annual 
report to security holders are incorporated by reference in a Form 
10-K, the separate report of a predecessor accountant shall be filed 
in Part II or in Part IV as a financial statement schedule.

* * * * *
    (5) * * *
    (ii) The report shall contain management's discussion and analysis 
of financial condition and results of operations required by Item 303 
of Regulation S-K (Sec.  229.303 of this chapter).
* * * * *
    (10) The registrant's proxy statement, or the report, shall contain 
an undertaking in bold-face or otherwise reasonably prominent type to 
provide without charge to each person solicited upon the written 
request of any such person, a copy of the registrant's annual report on 
Form 10-K, including the financial statements and the financial 
statement schedules, required to be filed with the Commission pursuant 
to Rule 13a-1 under the Act for the registrant's most recent fiscal 
year, and shall indicate the name and address (including title or 
department) of the person to whom such a written request is to be 
directed. In the discretion of management, a registrant need not 
undertake to furnish without charge copies of all exhibits to its Form 
10-K provided that the copy of the annual report on Form 10-K furnished 
without charge to requesting security holders is accompanied by a list 
briefly describing all the exhibits not contained therein and 
indicating that the registrant will furnish any exhibit upon the 
payment of a specified reasonable fee which fee shall be limited to the 
registrant's

[[Page 39709]]

reasonable expenses in furnishing such exhibit. If the registrant's 
annual report to security holders complies with all of the disclosure 
requirements of Form 10-K and is filed with the Commission in 
satisfaction of its Form 10-K filing requirements, such registrant need 
not furnish a separate Form 10-K to security holders who receive a copy 
of such annual report.

    Note to Paragraph (b)(10): Pursuant to the undertaking required 
by paragraph (b)(10) of this section, a registrant shall furnish a 
copy of its annual report on Form 10-K (Sec.  249.310 of this 
chapter) to a beneficial owner of its securities upon receipt of a 
written request from such person. Each request must set forth a good 
faith representation that, as of the record date for the 
solicitation requiring the furnishing of the annual report to 
security holders pursuant to paragraph (b) of this section, the 
person making the request was a beneficial owner of securities 
entitled to vote.

* * * * *
    (d) An annual report to security holders prepared on an integrated 
basis pursuant to General Instruction H to Form 10-K (Sec.  249.310) 
may also be submitted in satisfaction of this section. When filed as 
the annual report on Form 10-K, responses to the Items of that form are 
subject to section 18 of the Act notwithstanding paragraph (c) of this 
section.
* * * * *
    68. Amend Sec.  240.14a-5 by removing the authority citation 
following the section and revising paragraph (f) to read as follows:


Sec.  240.14a-5  Presentation of information in proxy statement.

* * * * *
    (f) If the date of the next annual meeting is subsequently advanced 
or delayed by more than 30 calendar days from the date of the annual 
meeting to which the proxy statement relates, the registrant shall, in 
a timely manner, inform shareholders of such change, and the new dates 
referred to in paragraphs (e)(1) and (e)(2) of this section, by 
including a notice, under Item 5, in its earliest possible quarterly 
report on Form 10-Q (Sec.  249.308a of this chapter), or, in the case 
of investment companies, in a shareholder report under Sec.  270.30d-1 
of this chapter under the Investment Company Act of 1940, or, if 
impracticable, any means reasonably calculated to inform shareholders.
    69. Amend Sec.  240.14a-8, by revising paragraph (e)(1) to read as 
follows:


Sec.  240.14a-8  Shareholder proposals.

* * * * *
    (e) * * *
    (1) If you are submitting your proposal for the company's annual 
meeting, you can in most cases find the deadline in last year's proxy 
statement. However, if the company did not hold an annual meeting last 
year, or has changed the date of its meeting for this year more than 30 
days from last year's meeting, you can usually find the deadline in one 
of the company's quarterly reports on Form 10-Q (Sec.  249.308a of this 
chapter), or in shareholder reports of investment companies under Sec.  
270.30d-1 of this chapter of the Investment Company Act of 1940. In 
order to avoid controversy, shareholders should submit their proposals 
by means, including electronic means, that permit them to prove the 
date of delivery.
* * * * *
    70. Amend Sec.  240.14a-101 by revising Notes C. and D.1, and the 
introductory text of Note E.; and removing Notes F. and G. to the cover 
page and revising paragraph (e)(1) of Item 9, and revising paragraph 
(a)(1) of Item 13 to read as follows:


Sec.  240.14a-101  Schedule 14A. Information required in proxy 
statement.

* * * * *
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange 
Act of 1934
* * * * *

    Notes: * * *

    C. Except as otherwise specifically provided, where any item calls 
for information for a specified period with regard to directors, 
executive officers, officers or other persons holding specified 
positions or relationships, the information shall be given with regard 
to any person who held any of the specified positions or relationship 
at any time during the period. Information, other than information 
required by Item 404 of Regulation S-K (Sec.  229.404 of this chapter), 
need not be included for any portion of the period during which such 
person did not hold any such position or relationship, provided a 
statement to that effect is made.
* * * * *
    D. * * *
    1. Any incorporation by reference of information pursuant to the 
provisions of this schedule shall be subject to the provisions of Sec.  
229.10(d) of this chapter restricting incorporation by reference of 
documents which incorporate by reference other information. A 
registrant incorporating any documents, or portions of documents, shall 
include a statement on the last page(s) of the proxy statement as to 
which documents, or portions of documents, are incorporated by 
reference. Information shall not be incorporated by reference in any 
case where such incorporation would render the statement incomplete, 
unclear or confusing.
* * * * *
    E. In Item 13 of this Schedule, the reference to ``meets the 
requirement of Form S-3'' shall refer to a registrant who meets the 
following requirements:
* * * * *
    Item 9. Independent public accountants.
* * * * *
    (e) (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.
* * * * *
    Item 13. Financial and other information. (See Notes D and E at the 
beginning of this Schedule.)
    (a) * * *
    (1) Financial statements meeting the requirements of Regulation S-
X, including financial information required by Rule 3-05 and Article 11 
of Regulation S-X with respect to transactions other than pursuant to 
which action is to be taken as described in this proxy statement (A 
smaller reporting company may provide the information in Item 310 of 
Regulation S-K (Sec.  229.310 of this chapter) in lieu of the financial 
information required by Rule 3-05 and Article 11 of Regulation S-X);
* * * * *
    71. Amend Sec.  240.14c-3 by removing the Note to Small Business 
Issuers following paragraph (a)(2).
    72. Amend Sec.  240.14c-101 by revising the Note that follows the 
cover page to read as follows:


Sec.  240.14c-101  Schedule 14C. Information required in information 
statement.

Schedule 14C Information
Information Statement Pursuant to Section 14(c) of the Securities 
Exchange Act of 1934
* * * * *

    Note to Cover Page:
    Where any item, other than Item 4, calls for information with 
respect to any matter to be acted upon at the meeting or, if no 
meeting is being held, by written authorization or consent, such 
item need be answered only with respect to

[[Page 39710]]

proposals to be made by the registrant. Registrants and acquirees 
that meet the definition of ``smaller reporting company'' under Rule 
12b-2 of the Exchange Act (Sec.  240.12b-2) shall refer to the 
disclosure items in Regulation S-K (Sec. Sec.  229.10 through 
229.1123 of this chapter) and may use the scaled disclosure 
requirements provided therein for smaller reporting companies. A 
smaller reporting company may provide the information in Item 310 of 
Regulation S-K in lieu of any financial statements required by Item 
1 of Sec.  240.14c-101.

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


Sec.  240.14d-3  Filing and transmission of tender offer statement.

    (a) * * *
    (3) * * *
    (i) To each national securities exchange where such class of the 
subject company's securities is registered and listed for trading 
(which may be based upon information contained in the subject company's 
most recent Annual Report on Form 10-K (Sec.  249.310 of this chapter) 
filed with the Commission unless the bidder has reason to believe that 
such information is not current) which telephonic notice shall be made 
when practicable prior to the opening of each such exchange; and
* * * * *
    74. Amend Sec.  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:


Sec.  240.15d-10  Transition reports.

* * * * *
    (c) If the transition period covers a period of less than six 
months, in lieu of the report required by paragraph (b) of this 
section, a report may be filed for the transition period on Form 10-Q 
(Sec.  249.308 of this chapter) not more than the number of days 
specified in paragraph (j) of this section after either the close of 
the transition period or the date of the determination to change the 
fiscal closing date, whichever is later. The report on Form 10-Q shall 
cover the period from the close of the last fiscal year end and shall 
indicate clearly the period covered. The financial statements filed 
therewith need not be audited but, if they are not audited, the issuer 
shall file with the first annual report for the newly adopted fiscal 
year separate audited statements of income and cash flows covering the 
transition period. The notes to financial statements for the transition 
period included in such first annual report may be integrated with the 
notes to financial statements for the full fiscal period. A separate 
audited balance sheet as of the end of the transition period shall be 
filed in the annual report only if the audited balance sheet as of the 
end of the fiscal year prior to the transition period is not filed. 
Schedules need not be filed in transition reports on Form 10-Q.
    (d) * * *
    (2)(i) * * *
    (ii) The first report required to be filed by the issuer for the 
newly adopted fiscal year after the date of the determination to change 
the fiscal year end is a quarterly report on Form 10-Q; and
    (iii) Information on the transition period is included in the 
issuer's quarterly report on Form 10-Q for the first quarterly period 
(except the fourth quarter) of the newly adopted fiscal year that ends 
after the date of the determination to change the fiscal year. The 
information covering the transition period required by Part II and Item 
2 of Part I may be combined with the information regarding the quarter. 
However, the financial statements required by Part I, which may be 
unaudited, shall be furnished separately for the transition period.
* * * * *
    (e) Every issuer required to file quarterly reports on Form 10-Q 
pursuant to Sec.  240.15d-13 that changes its fiscal year end shall:
    (1) File a quarterly report on Form 10-Q within the time period 
specified in General Instruction A.1. to that form for any quarterly 
period (except the fourth quarter) of the old fiscal year that ends 
before the date on which the issuer determined to change its fiscal 
year end, except that the issuer need not file such quarterly report if 
the date on which the quarterly period ends also is the date on which 
the transition period ends;
    (2) File a quarterly report on Form 10-Q within the time specified 
in General Instruction A.1 to that form for each quarterly period of 
the old fiscal year within the transition period. In lieu of a 
quarterly report for any quarter of the old fiscal year within the 
transition period, the issuer may file a quarterly report on Form 10-Q 
for any period of three months within the transition period that 
coincides with a quarter of the newly adopted fiscal year if the 
quarterly report is filed within the number of days specified in 
paragraph (j) of this section after the end of such three month period, 
provided the issuer thereafter continues filing quarterly reports on 
the basis of the quarters of the newly adopted fiscal year;
* * * * *
    (4) Unless such information is or will be included in the 
transition report, or the first annual report on Form 10-K for the 
newly adopted fiscal year, include in the initial quarterly report on 
Form 10-Q for the newly adopted fiscal year information on any period 
beginning on the first day subsequent to the period covered by the 
issuer's final quarterly report on Form 10-Q or annual report on Form 
10-K for the old fiscal year. The information covering such period 
required by Part II and Item 2 of Part I may be combined with the 
information regarding the quarter. However, the financial statements 
required by Part I, which may be unaudited, shall be furnished 
separately for such period.

    Note to Paragraphs (c) and (e):
    If it is not practicable or cannot be cost-justified to furnish 
in a transition report on Form 10-Q or a quarterly report for the 
newly adopted fiscal year financial statements for corresponding 
periods of the prior year where required, financial statements may 
be furnished for the quarters of the preceding fiscal year that most 
nearly are comparable if the issuer furnishes an adequate discussion 
of seasonal and other factors that could affect the comparability of 
information or trends reflected, an assessment of the comparability 
of the data, and a representation as to the reason recasting has not 
been undertaken.

    (f) Every successor issuer that has a different fiscal year from 
that of its predecessor(s) shall file a transition report pursuant to 
this section, containing the required information about each 
predecessor, for the transition period, if any, between the close of 
the fiscal year covered by the last annual report of each predecessor 
and the date of succession. The report shall be filed for the 
transition period on the form appropriate for annual reports of the 
issuer not more than the number of days specified in paragraph (j) of 
this section after the date of the succession, with financial 
statements in conformity with the requirements set forth in paragraph 
(b) of this section. If the transition period covers a period of less 
than six months, in lieu of a transition report on the form appropriate 
for the issuer's annual reports, the report may be filed for the 
transition period on Form 10-Q not more than the number of days 
specified in paragraph (j) of this section after the date of the 
succession, with financial statements in conformity with the 
requirements set forth in paragraph (c) of this section. 
Notwithstanding the foregoing, if the transition period covers a period 
of one month or less, the successor issuer need not file a separate 
transition report if the

[[Page 39711]]

information is reported by the successor issuer in conformity with the 
requirements set forth in paragraph (d) of this section.
* * * * *
    (j) * * *
    (2) For transition reports to be filed on Form 10-Q (Sec.  249.308 
of this chapter), the number of days shall be:
* * * * *
    75. Amend Sec.  240.15d-13 by revising the section heading, 
paragraph (a), the introductory text of (c), and paragraphs (d) and (e) 
to read as follows:


Sec.  240.15d-13  Quarterly reports on Form 10-Q (Sec.  249.308 of this 
chapter).

    (a) Except as provided in paragraphs (b) and (c) of this section, 
every issuer that has securities registered pursuant to the Securities 
Act and is required to file annual reports pursuant to section 15(d) of 
the Act on Form 10-K (Sec.  249.310 of this chapter) shall file a 
quarterly report on Form 10-Q (Sec.  249.308 of this chapter) within 
the period specified in General Instruction A.1. to that form for each 
of the first three quarters of each fiscal year of the issuer, 
commencing with the first fiscal quarter following the most recent 
fiscal year for which full financial statements were included in the 
registration statement, or, if the registration statement included 
financial statements for an interim period subsequent to the most 
recent fiscal year end meeting the requirements of Article 10 of 
Regulation S-X, for the first fiscal quarter subsequent to the quarter 
reported upon in the registration statement. The first quarterly report 
of the issuer shall be filed either within 45 days after the effective 
date of the registration statement or on or before the date on which 
such report would have been required to be filed if the issuer had been 
required to file reports on Form 10-Q as of its last fiscal quarter, 
whichever is later.
* * * * *
    (c) Part I of the quarterly reports on Form 10-Q need not be filed 
by:
* * * * *
    (d) Notwithstanding the foregoing provisions of this section, the 
financial information required by Part I of Form 10-Q shall not be 
deemed to be ``filed'' for the purpose of section 18 of the Act or 
otherwise subject to the liabilities of that section of the Act but 
shall be subject to all other provisions of the Act.
    (e) Notwithstanding the foregoing provisions of this section, the 
financial information required by Part I of Form 10-Q, or financial 
information submitted in lieu thereof pursuant to paragraph (d) of this 
section, shall not be deemed to be ``filed'' for the purpose of section 
18 of the Act or otherwise subject to the liabilities of that section 
of the Act but shall be subject to all other provisions of the Act.
    76. Amend Sec.  240.15d-14 by revising paragraph (a) to read as 
follows:


Sec.  240.15d-14  Certification of disclosure in annual and quarterly 
reports.

    (a) Each report, including transition reports, filed on Form 10-Q, 
Form 10-K, Form 20-F or Form 40-F (Sec.  249.308a, 249.310, 249.220f or 
249.240f of this chapter) under section 15(d) of the Act (15 U.S.C. 
78o(d)), other than a report filed by an Asset-Backed Issuer (as 
defined in Sec.  229.1101 of this chapter) or a report on Form 20-F 
filed under Sec.  240.15d-19, must include certifications in the form 
specified in the applicable exhibit filing requirements of such report 
and such certifications must be filed as an exhibit to such report. 
Each principal executive and principal financial officer of the issuer, 
or persons performing similar functions, at the time of filing of the 
report must sign a certification. The principal executive and principal 
financial officers of an issuer may omit the portion of the 
introductory language in paragraph 4 as well as language in paragraph 
4(b) of the certification that refers to the certifying officers' 
responsibility for designing, establishing and maintaining internal 
control over financial reporting for the issuer until the issuer 
becomes subject to the internal control over financial reporting 
requirements in Sec.  240.13a-15 or 240.15d-15.
* * * * *
    77. Amend Sec.  240.15d-20 by revising the introductory text of 
paragraph (a) to read as follows:


Sec.  240.15d-20  Plain English presentation of specified information.

    (a) Any information included or incorporated by reference in a 
report filed under section 15(d) of the Act (15 U.S.C. 78o(d)) that is 
required to be disclosed pursuant to Item 402, 403, 404 or 407 of 
Regulation S-K (Sec.  229.402, 229.403, 229.404 or 229.407 of this 
chapter) must be presented in a clear, concise and understandable 
manner. You must prepare the disclosure using the following standards:
* * * * *
    78. Amend Sec.  240.15d-21 by revising paragraph (a)(1) to read as 
follows:


Sec.  240.15d-21  Reports for employee stock purchase, savings and 
similar plans.

    (a) * * *
    (1) The issuer of the stock or other securities offered to 
employees through their participation in the plan files annual reports 
on Form 10-K (Sec.  249.310 of this chapter); and
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    79. 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.
* * * * *
    80. Amend Sec.  249.0-1 by revising paragraph (b) to read as 
follows:


Sec.  249.0-1  Availability of forms.

* * * * *
    (b) Any person may obtain a copy of any form prescribed for use in 
this part by written request to the Securities and Exchange Commission, 
100 F Street, NE., Washington, DC 20549. Any person may inspect the 
forms at this address and at the Commission's regional offices. (See 
Sec.  200.11 of this chapter for the addresses of SEC regional 
offices).
    81. Amend Form 8-A (referenced in Sec.  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 
(Sec.  229.202 of this chapter), as applicable.
    82. Amend Form 10 (referenced in Sec.  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; and
    b. 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,

[[Page 39712]]

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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(Do not check if a smaller reporting company)
* * * * *
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 (Sec.  229.302 of this chapter). Smaller reporting companies may 
provide financial information required by Item 310 of Regulation S-K in 
lieu of the information required by Regulation S-X.
* * * * *
    83. By removing and reserving Sec.  249.210b and removing Form 10-
SB.

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

    84. Amend Form 20-F (referenced in Sec.  249.220f) by revising Item 
11(e) to read as follows:
Form 20-F
* * * * *
Part I
* * * * *
Item 11. Quantitative and Qualitative Disclosures About Market Risk
* * * * *
    (e) Smaller reporting companies. A smaller reporting company, as 
defined in Rule 405 (Sec.  230.405 of this chapter) and Rule 12b-2 
(Sec.  240.12b-2 of this chapter), need not provide the information 
required by this Item 11.
* * * * *
    85. Amend Form 8-K (referenced in Sec.  249.308) by revising 
General Instruction B.4.; removing paragraph 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), (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

[[Page 39713]]

number of shares outstanding of the class of equity securities sold.
    Instructions.
* * * * *
    2. A smaller reporting company is defined under 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 including compliance with 
Item 304(a)(3) of Regulation S-K (17 CFR 229.304(a)(1)).
    (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) or 
Item 310 of Regulation S-K in the case of a smaller reporting company, 
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)). A smaller reporting company may 
provide the information in Item 310(c) of Regulation S-K (17 CFR 
229.310(c)) in lieu of any financial statements required by Item 9(a) 
of this Form.
* * * * *
    (b) * * *
    (1) For any transaction required to be described in answer to Item 
2.01 of this form, furnish any pro forma financial

[[Page 39714]]

information that would be required pursuant to Article 11 of Regulation 
S-X (17 CFR 210.3-14) shall be filed. A smaller reporting company may 
provide the information in Item 310(d) of Regulation S-K (17 CFR 
229.310(d)) in lieu of any financial statements required by Item 9(b) 
of this Form.
* * * * *
    (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.
* * * * *
    86. Amend Form 10-Q (referenced in Sec.  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; and
    b. In Part I, revising the text of Item 1.
    The revision 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 [ballot]
Non-accelerated filer [ballot]
Accelerated filer [ballot]
Smaller reporting company [ballot]


(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 (Sec.  
240.12b-2 of this chapter) may provide the information required by Item 
310 of Regulation S-K (Sec.  229.310 of this chapter) in lieu of the 
information required by Regulation S-X.
* * * * *
    87. By removing and reserving Sec.  249.308b and removing Form 10-
QSB.

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

    88. Amend Form 10-K (referenced in Sec.  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; and
    b. 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 [ballot]
Accelerated filer [ballot]
Non-accelerated filer [ballot]
Smaller reporting company [ballot]

(Do not check if a smaller reporting company)
* * * * *
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 (Sec.  210 of this chapter), except Sec.  210.3-05 and 
Article 11 thereof, and the supplementary financial information 
required by Item 302 of Regulation S-K (Sec.  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 Item 310 of Regulation S-K 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.
* * * * *
    89. By removing and reserving Sec.  249.310b and removing Form 10-
KSB.

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

    90. Amend Form 11-K (referenced in Sec.  249.311) by revising 
General Instruction E(b) to read as follows:
Form 11-K
For Annual Reports of Employee Stock Purchase, Savings and Similar 
Plans Pursuant to Section 15(D) of the Securities Exchange Act of 1934
General Instructions
* * * * *
E. Electronic Filers
* * * * *
    (b) Financial Data Schedules are not required to be submitted in 
connections with annual reports on this form. See Item 601(c)(1) of 
Regulation S-K (Sec.  229.601(c)(1)).
* * * * *
    91. Amend Form SE (referenced in Sec.  249.444) by revising General 
Instruction 3.C.
* * * * *
Form SE
Form for Submission of Paper Format Exhibits by Edgar Electronic Filers
* * * * *

[[Page 39715]]

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 (Sec.  229.601 of this chapter).
* * * * *

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

    92. 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.

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


Sec.  260.0-11  Liability for certain statements by issuers.

* * * * *
    (b) * * *
    (1) A forward-looking statement (as defined in paragraph (c) of 
this section) made in a document filed with the Commission, in Part I 
of a quarterly report on Form 10-Q, Sec.  249.308a of this chapter, or 
in an annual report to share holders meeting the requirements of Rules 
14a-3(b) and (c) or 14c-3(a) and (b) under the Securities Exchange Act 
of 1934 (Sec.  240.14a-3(b) and (c) or Sec.  240.14c-3(a) and (b) of 
this chapter), a statement reaffirming such forward-looking statement 
subsequent to the date the document was filed or the annual report was 
made publicly available, or a forward-looking statement made prior to 
the date the document was filed or the date the annual report was made 
publicly available if such statement is reaffirmed in a filed document, 
in Part I of a quarterly report on Form 10-Q, or in an annual report 
made publicly available within a reasonable time after the making of 
such forward-looking statement; Provided, that:
    (i) At the time such statements are made or reaffirmed, either the 
issuer is subject to the reporting requirements of section 13(a) or 
15(d) of the Securities Exchange Act of 1934 and has complied with the 
requirements of Rule 13a-1 or 15d-1 (Sec.  240.13a-1 or Sec.  240.15d-1 
of this chapter) thereunder, if applicable, to file its most recent 
annual report on Form 10-K, Form 20-F, or Form 40-F; or if the issuer 
is not subject to the reporting requirements of section 13(a) or 15(d) 
of the Securities Exchange Act of 1934, the statements are made in a 
registration statement filed under the Securities Act of 1933 or 
pursuant to section 12(b) or (g) of the Securities Exchange Act of 
1934; and
* * * * *
    (2) Information relating to the effects of changing prices on the 
business enterprise presented voluntarily or pursuant to Item 303 of 
Regulation S-K (Sec.  229.303 of this chapter) or Item 5 of Form 20-F 
(Sec.  249.220f of this chapter), ``Operating and Financial Review and 
Prospects,'' or Item 302 of Regulation S-K (Sec.  229.302 of this 
chapter), ``Supplementary Financial Information,'' or Rule 3-20(c) of 
Regulation S-X (Sec.  210.3-20(c) of this chapter), and disclosed in a 
document filed with the Commission, in Part I of a quarterly report on 
Form 10-Q, or in an annual report to shareholders meeting the 
requirements of Rules 14a-3(b) and (c) or 14c-3(a) and (b) (Sec.  
240.14a-3(b) and (c) or Sec.  240.14c-3(a) and (b)) under the 
Securities Exchange Act of 1934.
* * * * *
    94. Amend Sec.  260.4d-9 by revising the introductory text to read 
as follows:


Sec.  260.4d-9  Exemption for Canadian Trust Indentures from Specified 
Provisions of the Act.

    Any trust indenture filed in connection with offerings on a 
registration statement on Form S-1, (Sec.  239.1 of this chapter) F-7, 
F-8, F-9, F-10 or F-80 (Sec. Sec.  239.37 through 239.41 of this 
chapter) shall be exempt from the operation of sections 310(a)(3) and 
310(a)(4), sections 310(b) through 316(a), and sections 316(c) through 
318(a) of the Act; provided that the trust indenture is subject to:
* * * * *
    95. Amend Sec.  260.10a-5 by revising paragraph (a) to read as 
follows:


Sec.  260.10a-5  Eligibility of Canadian Trustees.

    (a) Subject to paragraph (b) of this section, any trust company, 
acting as trustee under an indenture qualified or to be qualified under 
the Act and filed in connection with offerings on a registration 
statement on Form S-1 (Sec.  239.11 of this chapter) F-7, F-8, F-9, F-
10 or F-80 (Sec. Sec.  239.37 through 239.41 of this chapter) that is 
incorporated and regulated as a trust company under the laws of Canada 
or any of its political subdivisions and that is subject to supervision 
or examination pursuant to the Trust Companies Act (Canada), R.S.C. 
1985, or the Canada Deposit Insurance Corporation Act, R.S.C. 1985 
shall not be subject to the requirement of domicile in the United 
States under section 310(a) of the Act (15 U.S.C. 77jjj(a)).
* * * * *

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

    96. 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.

    97. Amend Sec.  260.01 by revising paragraph (b) to read as 
follows:


Sec.  269.0-1  Availability of forms.

* * * * *
    (b) Any person may obtain a copy of any form prescribed for use in 
this part by written request to the Securities and Exchange Commission, 
100 F Street, NE., Washington, DC 20549. Any person may inspect the 
forms at this address and at the Commission's regional offices. (See 
Sec.  200.11 of this chapter for the addresses of SEC regional 
offices.)

    By the Commission.

    Dated: July 5, 2007.
Nancy M. Morris,
Secretary.
[FR Doc. E7-13407 Filed 7-18-07; 8:45 am]
BILLING CODE 8010-01-P