SEC Filings

What is SEC Filings by Company?

 SEC Filing are formal document submitted to the Securities and Exchange Commission in the United States and contain financial information of the company or any other material information regarding activities that took place or to be taken in the near future. These filings include registration statements, formal periodic reports, and other forms.

Why are SEC Filings Important?

  • It is imperative to understand that SEC is a regulatory watchdog created for the investor’s benefit.
  • It collects all the documents which detail the financial and operational health of the companies which have stock owned and traded by the public.
  • The SEC checks the quality of the information provided and has the right to probe the companies if certain information is not clearly provided. Investors use these filings to make an assessment of the company’s performance.
  • It is the prime reason why the reported information becomes very important. In the next section, we will discuss different types of filings.

Types of Company’s SEC Filings

SEC Filings types

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For eg:
Source: SEC Filings (wallstreetmojo.com)

There are different types of filings. Some of the most important ones have been discussed here.

  1. Registration Statements
  2. 10K Form10K FormPublic firms in the United States of America file Form 10-K. It is a detailed statement of the company's annual financial performance that is filed with the Securities and Exchange Commission (SEC) within 60 days of the end of the fiscal year.read more
  3. 10Q Reports
  4. 8K Reports
  5. Schedule 13D
  6. Proxy Statements
  7. Form 3, 4 and 5

#1 – Registration Statements

These statements are primarily are of two types:

#1 – “Offering” registrations filed under the Securities Act of 1933:

This statement is used to register securities before they are offered to a larger audience like investors. It has two parts, one of which is a preliminary prospectus, and the second one contains certain information that is not required to be filed with a prospectus. The statements vary in purpose and content, depending upon the kind of organization that is issuing stock. In case a corporation initiates an “offering” statement, it is evaluated by the SEC. If SEC requires any changes in the document, the same is informed to the corporation. Post that, the document is made available to the investors so that the sale of security can be initiated.

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The front page contains the name of the company, along with Key Management like the CEO, COO, and CFO.

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Additionally, on the front page, you will find details of the IPO offering or the amount the company is looking to raise. In this case, Box wanted to raise $250 million.

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Another critical aspect of the S1 filing is that they provide details of how the proceeds will be used. It is very important for the investor. As you can see above, Box plans to use the proceeds for corporate purposes, including the working capital, operating expenseOperating ExpenseOperating expense (OPEX) is the cost incurred in the normal course of business and does not include expenses directly related to product manufacturing or service delivery. Therefore, they are readily available in the income statement and help to determine the net profit.read more, and capital expenditure.

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There is much other important information in the S1 filing, like the discussion on total dilution, management discussion, and analysis of financial conditions and results, description of shares and capital stockCapital StockThe capital stock is the total amount of share capital (including equity capital and preference capital) that has been issued by a company. It is a way of raising funds by the company to meet its various business goals.read more, and whether the shares are eligible for future sales.

In fact, I feel all sections are critical. One section you must read through multiple times the “Risk Factors” as they provide a lot of detail about the business and its uncertainties associated with the business.

If you want to learn how to analyze the registration S1 filing in detail, do have a look at these two posts –

#2 – “Trading” registrations filed under the Securities Exchange Act of 1934:

These statements are filed to allow trading among investors on a securities exchange or in the Over-the-Counter (OTC) market.

#2 – 10K Report

The 10-K report is an annual filing which a company needs to file within 90 days of the end of its fiscal year. It provides investors and stakeholders with a comprehensive analysis of the company. The disclosures in 10-K are made under 14 different reporting items in four different parts. Each of the parts and subsequent items are detailed out below.

Part I

Item 1: This is the business section of the company, where details like principal products & services offered, markets, distribution method, competitive factors, availability of raw materials, the impact of compliance, franchises, patents, licenses, etc. are provided.

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Item 2: This is the property section of the company, where details like the location of a principal manufacturing plant and other important properties are provided.

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Item 3: This is the legal proceedings section of the company; it provides a brief description of material legal proceedings that are pending.

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Item 4: This is the section that discloses what all matters went to the vote of security holders. It provides all information related to the meeting of shareholdersMeeting Of ShareholdersShareholders Meeting means a meeting of the stockholders of the corporation wherein resolution are placed before the shareholders to discuss and approve the corporate matters and other matters required by the bylaws of the company.read more.

Part II

Item 5: This section includes details about the principal market in which the securities are traded. It contains details about share prices, dividends paid.

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Item 6: This section contains information related to the five-year selected financial data. It includes details related to net salesNet SalesNet sales is the revenue earned by a company from the sale of its goods or services, and it is calculated by deducting returns, allowances, and other discounts from the company's gross sales.read more, operating revenue, income or loss, etc.

Item 7: This is the management discussion and analysis section of the company. Here the company indicates information related to liquidity, capital resources, favorable and unfavorable market trends, etc. This section helps you identifying answers to financial analysis.

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Item 8: This is the financial statement and supplementary data section of the company. In this section, the company reports two years of audited balance sheets and three years of audited income and cash flow statementsCash Flow StatementsStatement of Cash flow is a statement in financial accounting which reports the details about the cash generated and the cash outflow of the company during a particular accounting period under consideration from the different activities i.e., operating activities, investing activities and financing activities.read more.

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Item 9: This section is related to accountants and any kind of changes in the same. It also highlights the disagreements, if any.

Part III

Item 10: This section contains information related to Directors and Executive officers. It provides details like name, a term of office, and background information of Directors and Executive officers.

Item 11: This section contains information related to the remuneration of Directors and officers.

Item 12: This section contains information related to the Security Ownership of Certain Beneficial Owners and Management. It helps investors in gauging the ownership pattern of the company, which is one of the crucial criteria while making an investment decision.

Item 13: This section contains information related to Certain Relationships and Related Transactions which the company enters into.

Part IV

Item 14: This section contains information related to Exhibits, Financial Statement Schedules.

10-K is one of the most necessary filings for a company, and all stakeholders look forward to it. Some of the most critical sections which analysts follow in great detail are a business overview, management discussion & analysis, financial statementsFinancial StatementsFinancial statements are written reports prepared by a company's management to present the company's financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more, legal proceedings, etc. For an investor, it is imperative to understand that these financial statements act as an interface to know more about the company. If the business is qualified as a small business, then the company needs to file 10-KSB.

#3 – 10Q Reports

The 10-Q report is a quarterly filing which a company needs to file within 45 days of the end of their quarterly report period. One of the significant differences with the 10-K is the fact that here the financial statements are unaudited, and the information provided is less detailed. It provides an investor with a continued view of the entity. The disclosures in 10-Q are made under 8 different reporting items under two distinct parts. Each of the parts and the subsequent items are detailed out below.

Part I

Item 1: This section contains information related to Quarterly Financial Statements.

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Item 2: This is the management discussion and analysis section of the company. It includes discussion on the operational performance during the quarter vis-à-vis performance in the previous quarters.

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Part II

Item 3: This is the legal proceedings section of the company; it provides a brief description of material legal proceedings that are pending.

Item 4: This is the Changes in Securities of the company. It reports any material changes in the right of holders across different classes of a registered security.

Item 5: This section contains information related to default upon senior securities. From the credit perspective, this is one of the most important sections as it highlights all cases of material defaults.

Item 6: This is the section that discloses what all matters went to the vote of security holders. It provides all information related to the meeting of shareholdersMeeting Of ShareholdersShareholders Meeting means a meeting of the stockholders of the corporation wherein resolution are placed before the shareholders to discuss and approve the corporate matters and other matters required by the bylaws of the company.read more.

Item 7: This is the section that discloses other materially essential events. It contains all information that is materially important but is not finding any other head for reporting.

Item 8: This section contains information related to exhibits and corporate changes that happened and are reported during the quarter.

It is imperative to note that in the continuum of the business, a lot of changes can happen during the quarter. It is the reason 10-Q is one of the necessary filings which companies file with the SEC. If the business is qualified as a small business, then the company needs to file 10-QSB.

#4 – 8K Report

8-K filing is used to regularly inform investors about the happenings in the business. Most of the developments which happen in the business are generally ascribed in 10K or 10Q. However, in case some of the developments don’t make it those filings in time, then they are released by means of 8-K. It is vital to note understand that this release is unscheduled and can happen anytime during the business. Some of the events which can lead to the filing of 8-K are:

  • Bankruptcy information
  • Material impairment performed by the company
  • Completion of merger or acquisition
  • Disposition of various assets of the company
  • Departures or appointments of executives in the company
  • Change in Fiscal year
  • Changes in control or registrant of the company

Please note that the list is just indicative and not exhaustive; any information that is materially important to the investor needs to be released in the form of 8-KForm Of 8-KIn addition to filing annual and quarterly reports on Form 10-K and Form 10-Q with the Securities and Exchange Commission (SEC), publicly traded companies are required to file Form 8-K with the SEC to announce any unscheduled material events (delisting, policy changes, bankruptcy, mergers and acquisitions, and so on) that their shareholders should be aware of.read more.

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#5 – Schedule 13D

This filing is like an acquisition statement highlighting the details of the event. This filing is required to be filed by equity owners who have more than 5% equity shares within 10 days of an acquisition event. The disclosures in Schedule 13D are made under 7 different reporting items. Each of the items is detailed out below:

  • Item 1: Security and the issuer details
  • Item 2: Background and identity of the person who is filing this statement. It helps in identifying the equity owner
  • Item 3: Consideration details like source and the number of funds which is involved in the transaction
  • Item 4: This item details out the actual purpose of the transaction
  • Item 5: This item details out interest in securities of the issuer
  • Item 6: It details out contracts and agreements, if any, which is involved in the transaction
  • Item 7: This is the exhibit section, which generally includes the acquisition agreement, financing arrangements, and contract details
schedule-13d

#6 – Proxy Statement

The proxy statement is an official notification to the designated class of shareholders stating what matters will be coming to vote for the shareholders. It needs to be filed before the solicitation of the shareholder vote for any matter ranging from an election of directors to approval of different kinds of corporate actions.

colgate-proxysource:

#7 – Form 3, 4 and 5

In these forms, investors tend to look out for how ownership and purchases of shares are taking place within the executives of the company. Each of these forms has a specific function, which is discussed below.

Form 3

It is the initial filing which tells all the ownership amounts

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Form 4:

This form is used to identify changes in the ownership structure of the company. Form 4 must be filed by the 10th day of the following month of the transaction.

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Form 5:

Form 5 is an annual summary of Form 4 and includes all information that has been disclosed by the company using Form 4. It helps investors get in one snapshot a gauge of what all has been the trend in the ownership during a particular year.

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SEC Filings Video

 

Conclusion

We have discussed all significant filings which are filed by a company with the SEC. However, let us caution investors that the list is highly representative but not exhaustive.

  • Some filings are filed in special cases and are essential to a particular event. If an investor intends to understand company information, it involves taking an extra step and learning the art of reading between the lines. T
  • here are cases when some of the significant red-flags are part of footnotes in the filings.
  • The SEC filings are a regulatory mechanism to keep information symmetry between the stakeholders and the investor community.
  • These filings help investors make informed decisions when they intend to buy or sell securities. These filings provide an ample amount of information about the company.
  • It can help investors to learn about the industry in which the company is operating, strategies adopted by the company in the market, and what has been the financial achievement of the company.
  • All these set of information together intends to provide the public at large information which is highly critical while making an investment decision.

The exhaustive list of all the SEC forms can be found here. Please go ahead, do some reading, learn about the companies, and analyze the Financial Statements like a pro!

Reader Interactions

Comments

  1. Collin Edward says

    I must appreciate your work. Brilliant job!

  2. Francisco Almeda says

    My first compliment for this article must be “Wow”. I mean you have explained everything in such a brief way that I should appreciate your work. Really amazing. Sir I would also like to know if you have any case study material on Financial Statement Analysis. If you have any kind of study material then please let me know?

  3. Arinjay says

    Thanks for such an update sir. Only 20-F/40-F are missing

  4. Mveleli says

    Enjoy the outline a great deal.Maybe need to look at developing nations as well. These kind of openness must be encouraged and in nations where information is hidden and use a tool to keep the disadvantaged at bay and far from activities of the economy.

    this is of great help

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