5110.1 An entity that is not an investment company, asset-backed issuer or majority-owned subsidiary of a parent that is not a smaller reporting company qualifies as a smaller reporting company based on the following criteria:
a. Public float of less than $250 million. An entity is a smaller reporting company if it has a public float (the aggregate market value of the issuer's outstanding voting and non-voting common equity held by non-affiliates) of less than $250 million; or
b. Annual revenues of less than $100 million and either no public float or a public float of less than $700 million. An entity is a smaller reporting company if it has annual revenues of less than $100 million and either (1) no public float (because it has no public equity outstanding or no public trading market for its equity exists) or (2) a public float of less than $700 million.
For additional information, see the Small Entity Compliance Guide for Issuers.
5110.2 Apply the public float test as follows:
a. Reporting company [S-K 10(f)(1)(i)]
The public float test of a reporting company is computed as of the last business day of its most recently completed second fiscal quarter by multiplying the aggregate worldwide number of shares of voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity, in the principal market for the common equity.
b. Initial Registration Statement - Securities Act and Exchange Act [S-K 10(f)(1)(ii)]
The public float of a company filing an initial registration statement for shares of its common equity shall be determined as of a date within 30 days of the date the registration statement is filed. Public float shall be computed by multiplying the (A) aggregate worldwide number of shares voting and non-voting common equity held by non-affiliates prior to the filing of the registration statement plus, in the case of a Securities Act registration statement, (B) the number of such shares included in the registration statement by the estimated public offering price of the shares.
5110.3 Annual revenue is determined as follows:
a. Reporting company
Revenue in its annual audited financial statements as originally filed with the Commission (not restated for subsequent discontinued operations) for its most recent fiscal year completed before the last business day of the second fiscal quarter (i.e., public float test date).
b. Initial Registration Statement - Securities Act and Exchange Act
Annual revenue in its most recent audited financial statements available on the initial public float calculation date (as described above in 5110.2b), which would be the most recent fiscal year for which audited financial statements are included in the initial registration statement. However, if, consideration of the pro forma effect of (1) businesses acquired during the latest fiscal year and (2) consummation of business combinations identified as probable at the time of filing the initial registration statement would result in the issuer exceeding the revenue limit, the issuer would not qualify as a smaller reporting company.
c. Banks and similar financial institutions
For purposes of the test, a bank must include all gross revenues from traditional banking activities. Banking activity revenues may include interest on loans and investments, dividends on investments, fees from loan origination, fees from trust and investment services, commissions, brokerage fees, mortgage servicing revenues, and any other fees or income from banking or related services.
5110.4 If the issuer is a majority-owned subsidiary, the parent entity also must be a smaller reporting company. An entity that is to be spun off from its parent coincident with or prior to its initial registration may register as a smaller reporting company if it will otherwise qualify as a smaller reporting company upon consummation of the spin-off.
5110.5 Foreign companies are eligible to qualify as smaller reporting companies and use the scaled disclosure if they file on domestic forms and provide financial statements in accordance with U.S. GAAP. [Instruction 2 to definition of "smaller reporting company."]
5110.6 An issuer that becomes an investment company or qualifies as an asset-backed issuer is disqualified from being considered a smaller reporting company for its next filing.