SEC Form 10-SB

What Is SEC Form 10-SB?

SEC Form 10-SB was a filing with the Securities and Exchange Commission (SEC), also known as the General Form for Registration of Securities for Small Businesses. It was used to register the securities of small businesses that wished to trade on U.S. exchanges. The filing contained information such as the type of security being issued, key financial information of the issuer, and information about the company's management team.

Understanding SEC Form 10-SB

SEC Form 10-SB was one of the most basic sources of information about small businesses. It was especially valuable in helping investors and analysts understand the investment potential and risks associated with smaller companies. The SEC no longer accepts form 10-SB since Feb. 4, 2008, but previously filed forms will remain in the SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.

SEC Form 10-SB contained much of the same information SEC Form Form 10-K does. Form 10-SB is a detailed document about a company. Sections of Form 10-SB that companies were required to fill out included the description of the business, the plan of operation, the description of the property, security ownership of certain beneficial owners, list of directors and executive officers, executive compensation, and the description of securities.

Audited financial statements for Form 10-SB could be provided for just the most recent fiscal year, assuming previous years' audited financials were not available. In that case, unaudited financials for previous years could be provided in accordance with generally accepted accounting principles (GAAP).

Discontinuation of SEC Form 10-SB

Since 2008, the SEC no longer utilizes Form 10-SB. The SEC changed over its filing requirements to streamline reports for small businesses. Small business issuers fall under the Regulation S-B designation, but under the new rules these small businesses now file the same SEC reports as other companies, except the information disclosed is different.

Thus, small companies are now filing standard 10-K and other forms, with Regulation S-K laying out the disclosures for “smaller reporting companies.” To be considered a smaller reporting company, companies have to have a public float of less than $250 million or have less than $100 million in annual revenues and no public float or a public float of less than $700 million. These rules were updated in 2018.

Prior to 2018, the rule stipulated that a smaller reporting company was one with a public float of $75 million or less or had yearly revenues below $50 million if the float was incalculable or zero.

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

SEC Form 10-SB vs. SEC Form 10-K

Small reporting companies can now provide different information on key filings, but notably, they don’t have to provide risk factor disclosures on forms 10-K and 10-Q that were required on Form 10-SB. These companies can also choose whether to provide scaled or non-scaled financial items. Overall, requirements for smaller companies are fewer compared to larger companies, except for Item 404, which can require stricter reporting.

Under Regulation S-K, Item 404 reflects transactions with related persons, promoters, and certain control persons. Related persons include directors or executives and their families, and the SEC requires disclosure of transactions that might have taken place since the start of the fiscal year or if the person has a material interest.

Another difference between the filing requirements for large and small companies is that small businesses have to provide only two years of audited financial statements, which is less than the three years required by other companies. This is, however, higher than the one-year requirement under Form 10-SB.