C14-5 Registration Process

Andex Inc. has been in business for 15 years and has compiled a record of
steady but not spectacular growth. Bandex’s engineers have recently perfected a
product that has an application in the small computer market. Initial orders
have exceeded the company’s capacity, and the company has made the decision
to expand.Bandex has financed past growth from internally generated funds,
and since the initial stock offering 15 years ago, it has sold no further shares.
Bandex’s finance committee has been discussing methods of financing the
proposed expansion. Both short-term and long-term notes were ruled out
because of high interest rates. Mel Greene, the chief financial officer, said, “It
boils down to either bonds, preferred stock, or additional common stock.” Alice
Dexter, a consultant employed to help in the financing decision, stated,
“Regardless of your choice, you will have to file a registration statement with the
SEC.” B ob. Schultz, Bendix’s chief accountant for the past five years, stated,
“I’ve coordinated the filing of all the periodic reports required by the SEC—10-
Ks, 10-Qs, and 8-Ks. I see no reason I can’t prepare a registration statement
also.” Required:
a. Identify the circumstances under which a firm must file a registration
statement with the SEC.
The Securities Act of 1933 requires a filing by any firm that raises capital
in the primary capital market through the initial sale of a new security,
whether by a public offering made directly by the firm or through an
underwriter. The registration applies only to the specific quantity of the
specific security being offered.
The Securities Exchange Act of 1934 requires a filing by any firm whose
securities are being traded publicly in the secondary capital market. These
securities are registered as an entire class with no amount specified. A
secondary offering of a firm's securities also requires the filing of a
registration statement.
b. Explain the objectives of the registration process required by the Securities
Act of 1933.
An objective of the 1933 Act is to provide investors with material
information concerning the issuing firm, its management, the securities
offered for public sale, and the proposed use of the proceeds from the
sale. The SEC does not evaluate the creditworthiness of the firm or attest
to the potential of the security as an investment. The 1933 Act is an
attempt to ensure that investors are given full and fair disclosure of all
pertinent information about the issuing firm, including audited financial
statements.

c. Identify and explain the SEC publications that Bob Schultz would use to guide
him in preparing the registration statement.
Explanation     SEC Publication    .c

Instructions as to the form and content of Regulation S-X

.the required financial statements
Instructions as to the form and content of Regulation S-K
required disclosures other than the
required financial statements (i.e.,
supplementary financial information,
summary financial data, and non-financial
.information)

Constitute part of Regulation S-X in the Financial Reporting

Releases
determination of the form and content of formerly Accounting Series(
the Required financial statements )Releases

Interpretations and practices followed by Staff Accounting Bulletins

the Division of Corporation Finance and the
Office of the Chief Accountant in
administering the disclosure requirements
.of the federal securities laws

C14-7 Form 8-K [CMA Adapted]

The purpose of the Securities Act of 1933 is to regulate the initial offering of a
firm’s securities by ensuring that investors are given full and fair disclosure of
all pertinent information about the firm. The Securities Exchange Act of 1934
was passed to regulate the trading of securities on secondary markets and to
eliminate abuses in the trading of securities after their initial distribution. To
accomplish these objectives, the 1934 act created the SEC. Under its auspices,
public companies must not only register their securities but also periodically
prepare and file Forms 8-K, 10-K, and 10-Q.
Required:
a. With regard to Form 8-K, discuss
(1) The report’s purpose.
The purpose of Form 8-K, called the Current Report, is to ensure that any significant
event affecting a firm's policies or financial position is immediately reported to the SEC.
Covering the period since the filing of the latest annual or quarterly report, Form 8-K
provides a continuous stream of material information concerning specified events
between filings.

(2) The report’s timing.

Form 8-K must be filed with the SEC within 4 business days after the occurrence of a
reportable event. Violation of the 8-K filing requirement may jeopardize a registrant's
status.

(3) The report’s format.

Form 8-K is a narrative report with sufficient flexibility to permit management to
describe any significant events. The first page must contain the standard 8-K heading
identifying the reporting company, and the body of the report details the specified event
or events in accordance with the disclosure requirements outlined in the SEC’s
regulations for each event. The company may include other information, financial or
otherwise, it deems appropriate for a complete description of the event. The report must
be signed by an officer of the corporation.

(4) The role of financial statements in filing the report.

The inclusion of audited and pro forma financial statements is required when reporting
the acquisition of a business. Financial statements may be included in a Form 8-K in
order to clarify the effect of any event on the corporation. In general practice, financial
statements are included if an event is deemed to have a material financial impact.

b. Identify five circumstances under which the SEC requires the filing of
Form 8-K.
In 2004, the SEC expanded the list of reportable events to 19 in number, as
discussed and listed in the chapter. Any five of these events may be selected and
discussed, but it may be interesting to see if there is a consensus on the most
often selected by students in their lists of five. Also, the faculty member might
ask students why they chose the five they selected.