Guide to Filing Forms 10-K and 10-Q
As a securities attorney, I often get questions from clients about their obligations to file periodic reports with the Securities and Exchange Commission (SEC), particularly the Form 10-K and Form 10-Q. These forms are essential for maintaining transparency with shareholders and complying with U.S. securities laws. In this post, I will walk you through the key steps to filing these forms and discuss whether companies traded Over-the-Counter (OTC) have the same reporting requirements.
What are Form 10-K and Form 10-Q?
Form 10-K is an annual report that provides a comprehensive overview of a company’s financial performance over the previous fiscal year. It includes audited financial statements, management’s discussion and analysis (MD&A), and details about the company’s business, risk factors, and internal controls.
Form 10-Q is a quarterly report that includes unaudited financial statements for the most recent quarter, MD&A, and information about any material changes from the previous report. Companies must file this form three times a year, for the first three fiscal quarters.
These filings are crucial because they provide investors with the information they need to make informed decisions about buying or selling a company’s securities.
Step-by-Step Guide to Filing Form 10-K and Form 10-Q
Here’s how you can ensure compliance when preparing and filing Form 10-K and Form 10-Q:
1. Understand Your Reporting Obligations
All publicly traded companies in the U.S. are required to file Form 10-K and Form 10-Q under the Securities Exchange Act of 1934. The exact due dates for these forms vary depending on the size of your company:
Large Accelerated Filers (market cap of $700 million or more):
10-K: 60 days after the fiscal year-end
10-Q: 40 days after the fiscal quarter-end
Accelerated Filers (market cap between $75 million and $700 million):
10-K: 75 days after the fiscal year-end
10-Q: 40 days after the fiscal quarter-end
Non-Accelerated Filers (market cap of less than $75 million):
10-K: 90 days after the fiscal year-end
10-Q: 45 days after the fiscal quarter-end
2. Gather and Prepare the Required Information
For Form 10-K, you will need:
Financial Statements: Audited financials including balance sheets, income statements, and cash flow statements.
MD&A: This is a narrative explanation by management of the company’s financial condition and results of operations.
Risk Factors: Identify and disclose risks that could affect the business.
Internal Controls: A section on the company’s internal control over financial reporting, including any weaknesses.
For Form 10-Q, the reporting requirements are similar but less extensive. The financials are unaudited, and there is no requirement to discuss internal controls in as much detail unless there is a material change.
3. Prepare Your Filing Using the EDGAR System
The SEC requires all filings to be submitted electronically through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Here’s how to file:
Register with EDGAR to get your access codes.
Prepare your Form 10-K or 10-Q using software that supports XBRL (eXtensible Business Reporting Language), as the SEC mandates filings to be in this format for financial data.
Complete the form and ensure all required information is included.
Submit the form electronically via EDGAR. You will receive a confirmation when your filing is successfully submitted.
4. Review and Certify the Filing
CEOs and CFOs are required to certify that the information provided in the 10-K and 10-Q is accurate and complete. This certification is mandated under Section 302 of the Sarbanes-Oxley Act of 2002.
Additionally, Section 906 requires a written statement from the CEO and CFO certifying that the report fully complies with the Exchange Act and that the information fairly presents the company’s financial condition.
Are Companies Traded Over-the-Counter (OTC) Required to File Form 10-K and 10-Q?
Not all companies traded OTC are required to file Form 10-K and Form 10-Q. It depends on the tier of OTC market and the company's registration status with the SEC.
OTC Pink (The lowest tier): Companies in the OTC Pink market are not required to register with the SEC and therefore do not need to file Form 10-K or Form 10-Q. However, many of these companies provide limited financial information, and transparency can be inconsistent.
OTCQB and OTCQX (Higher tiers): These companies generally must be SEC-reporting, meaning they are required to file 10-K and 10-Q forms, just like companies listed on major exchanges (such as NYSE or NASDAQ). OTCQB and OTCQX companies must adhere to higher disclosure standards and regular reporting obligations.
If an OTC company is registered with the SEC (i.e., it has filed a registration statement under the Securities Act of 1933 or the Exchange Act of 1934), it must comply with the same reporting requirements as companies listed on national exchanges.
Common Pitfalls to Avoid
Late Filings: Missing a filing deadline can result in penalties, loss of eligibility for certain capital-raising exemptions (like Form S-3), and damage to investor confidence.
Incomplete Disclosures: Failing to disclose material risks or significant changes in your business operations could lead to enforcement action by the SEC.
Inadequate Internal Controls: Public companies must have strong internal controls over financial reporting to ensure the accuracy of financial information. Weak controls can result in restatements and investor lawsuits.
Conclusion
Filing Form 10-K and Form 10-Q is a critical aspect of corporate governance and transparency for publicly traded companies. Staying on top of deadlines, ensuring the accuracy of financial data, and certifying compliance are essential steps to avoid legal trouble and maintain shareholder trust. For OTC-traded companies, reporting obligations vary based on their tier, so understanding where your company stands is key.
If you’re unsure about any aspect of these forms or the filing process, consulting with a securities attorney or financial expert is always a good practice to ensure compliance and avoid costly mistakes. Consulting with a knowledgeable attorney before filing a Form 10-K or Form 10-Q is critical to ensure compliance and avoid unnecessary regulatory complications. Schedule a free consult here with our attorney or call at 435 612-0422