By Cydney Posner

The SEC has just posted staff observations regarding review of Forms 8-K filed to report reverse mergers and similar transactions. Anyone working on a reverse merger should consult this guidance. In essence, the staff reminds companies in the guidance that a former shell company filing a Form 8-K under Item 2.01 and/or 5.01 to report the reverse merger must include in its Form 8-K the information that would be required if it were filing a Form 10 under the Exchange Act. In addition, Item 9.01(a) of Form 8-K requires that smaller reporting companies provide up to two years of audited financial statements of the acquired company as well as unaudited, interim financial statements for the most recently completed quarter, and that other companies provide up to three years of audited financial statements of the acquired company and unaudited, interim financial statements for the most recently completed quarter. In addition, Item 9.01(c) requires that the financial statements and pro forma financial information required by Item 9.01 must be included in the initial Form 8-K report.

Further guidance is provided regarding completion of the Form 10 information. For example, the staff frequently asks for information regarding post-transaction business, requesting that companies distinguish between current activities and planned activities, provide more detail regarding the company's plans to generate revenue, its holding company structures and control arrangements, and any significant elements of historical income or loss that will not continue in the company's post-transaction operations. Another frequent request is for enhanced disclosure about compensation awards, practices or policies, including post-transaction compensation arrangements for their executive officers and directors and the material terms of employment agreements. Companies must also provide summary compensation table information for the acquired company's most recently completed fiscal year and certain transactions for three years.

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