SEC Form 10-Q

SEC form 10-Q refers to an inclusive quarterly report presented to the Securities and Exchange Commission (SEC) as per the Federal Securities laws. It states the unaudited financial position of the public companies continuously by reporting the current quarter compared to that of the previous quarter.

Financial reporting is essential for investors, regulators, and other stakeholders to analyze the quarterly health of the large accelerated, accelerated, and non-accelerated filers. It is made during the first three quarters of the fiscal year, while the company files SEC form 10-K in the last quarter, which declares the company's annual financial performance.

SEC Form 10-Q is a document used by publicly traded companies to file the quarterly financial status and data with the Securities and Exchange Commission (SEC). It comprises the unaudited financial reports, other financial disclosures, and Management's Discussion and Analysis (MD&A) for the current quarter and that of the previous quarter of a fiscal year. The companies need to submit these quarterly reports in the first 3 quarters of every fiscal year, while in the last quarter, they need to file the annual financial report in form 10-K.

The primary aim of such reporting is to inform investors, analysts, and regulators about the company's financial health and position. Thus, it ensures more frequent updates on the business performance compared to the annual reporting. However, such reports are not audited and provide limited information about the company's financials compared to the Form 10-K. Nevertheless, form 10-Q filing is mandatory for public companies to maintain transparency and safeguard the interests of investors and other stakeholders. The companies should closely follow the SEC form 10-Q instructions to stay updated.

The Form 10-Q filing involves two critical elements. One includes all the relevant information on the company's financial performance during the given quarter, and the other includes crucial information about market risk and other details not covered in the previous part.

Given below is a brief overview of the SEC form 10-Q checklist:

1. Financial Information: It comprises condensed financial statements, market risk disclosures, management's discussion and analysis (MD&A), financial health analysis, and internal controls.
2. Other Information: This section covers additional disclosures, legal proceedings, defaults upon senior securities, use of unregistered sales proceeds, and equity securities' unregistered sales. It also contains information on market pricing trends, sector volatility, business lending, market liquidity, capital investment, and trading and investment decisions.

The filing deadlines of public companies are based on their public floats. Public float refers to the net worth of the outstanding stocks that are held by the public, excluding those held by owners, officers, or the government.

Let us now take a look at the categorization of companies on this basis and their respective deadlines for SEC filing:

1. Non-Accelerated Filers: Companies whose public float is below $75 million can file Form 10-Q within 45 days from the end of the respective quarter, while they can file Form 10-K up to 90 days from the closing of the last quarter.
2. Accelerated Filers: Accelerated filers are business entities whose public float ranges between $75 million and $700 million. They must submit 10-Q 40 days from the closing date of a quarter and a 10-K in 75 days, respectively.
3. Large Accelerated Filers: These are giant public companies with a more than $700 million public float. While such firms can file 10-Qs up to 40 days after the quarter ends, they must submit 10-Ks 60 days after the quarter's closing date.

Given below is a table that provides a more precise understanding of form 10-Q and 10-K filing deadlines:

The companies have to maintain a proper calendar for all their SEC filing due dates to avoid missing any of these since it can lead to severe consequences. Now, what happens if a company skips the filing deadline? Let us discuss this scenario:

1. If a company misses the 10-Q filing due date in any quarter, it must submit the form NT 10-Q, specifying the reason for the delay and requesting a 5-day grace period to file the 10-Q.
2. If the filer's reason is valid or genuine, then the SEC will allow the late filing and extend the date, but only up to the requested grace period. The SEC considers such submission as timely filing only if the form is submitted within the permitted extension period.
3. Some of the valid reasons behind the 10-Q filing delay include mergers and acquisitions, ongoing auditor reviews, corporate litigation, and aftereffects of bankruptcy.
4. Any further postponement of the 10-Q submission beyond the extended deadline can result in severe consequences, such as loss of SEC registration, legal consequences, and delisting from stock exchanges.

Let us now have a sneak-peak at some relevant examples to understand this concept better:

Example #1

Suppose XYZ Public Ltd. It is a business entity listed on the New York Stock Exchange (NYSE). It is a non-accelerated filer with a public float of $67.9 million. Hence, the company is supposed to submit its Form 10-Q within 45 days of the last date of the given quarter. However, the company missed out on this date and therefore filed from NT on the next day to avoid its delisting or cancellation of registration and other legal consequences.

Example #2

According to a report published on July 25, 2024, Logitech International filed form 10-Q with the SEC. This report includes information about the company's financial performance in the first quarter of the fiscal year 2025. Notably, Logitech is a popular digital technology company that provides software-enabled hardware interfaces. These interfaces are designed to facilitate interactions and communication between people while working, gaming, streaming, or creating content.

It is a listed Swiss public company that trades on the SIX Swiss Exchange and the NASDAQ Global Select Exchange. Since its public float is 134.89 million, it belongs to the category of Accelerated Filers when filing for the SEC.

Such financial reporting is a mandatory SEC filing for public companies for the following reasons:

• Quarterly Financial Overview: The Form 10-Q provides critical insights to investors, analysts, and regulators on the company's financial well-being each quarter. The MD&A section states management's analysis of any major financial changes to understand better.
• Facilitates Comparison: Such reports include the financial performance of the current and previous quarters, enabling internal comparison. The same can be compared externally with the 10-Q reports of the competitors to analyze the firm's market standing.
• Discloses Operational Health: The investors and the management can gauge the operational efficiency of the business by tracking its quarterly growth and potential issues.
• Shapes Investor's Decision: Such reports help investors make future expectations and predictions based on the company's quarterly performance for informed decision-making. They can analyze the firm's legal risk, inventory, changes in working capital, and share buybacks for this purpose.
• Impact of Debt and Interest: It sheds light on the company's current debt position and interest rate changes to gauge its leverage position and the effect of such a burden on business profitability.