Regulation S-B

Regulation S–B is an integrated disclosure requirement
repository for small business issuers. If an issuing company qualifies as a "small business issuer," it can choose to file its registration statement using one of the simplified small business forms. A small business issuer is a United States or Canadian issuer:

• that had less than $25 million in revenues in its last fiscal year, and
• whose outstanding publicly–held stock is worth no more than $25 million.

Form SB–1 – To Raise $10 Million or Less: Small business issuers offering up to $10 million worth of securities in any 12–month period may use Form SB1. This form allows an issuer to provide information in a question and answer format, similar to that used in Regulation A offerings, a type of exempt offering discussed on page 19. Unlike Regulation A filings, Form SB–1 requires audited financial statements.

Form SB–2 – To Raise Capital in Any Amount: If an issuing company is a "small business issuer," it may register an unlimited dollar amount of securities using Form SB–2, and may use this form again and again so long as it satisfies the "small business issuer" definition. One advantage of Form SB–2 is that all its disclosure requirements are in Regulation S–B, a set of rules written in simple, non–legalistic terminology. Form SB–2 also permits the company to:

• Provide audited financial statements, prepared according to generally accepted accounting principles, for two fiscal years. In contrast, Form S–1 requires the issuer to provide audited financial statements, prepared according to more detailed SEC regulations, for three fiscal years; and
• Include less extensive narrative disclosure than Form S–1 requires, particularly in the description of an issuer's business, and executive compensation.