[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR228.303]

[Page 314]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS--Table of Contents
 
                        Subpart A--Regulation S-B
 
Sec. 228.303  (Item 303) Management's Discussion and Analysis or Plan of Operation.

    Small business issuers that have not had revenues from operations in 
each of the last two fiscal years, or the last fiscal year and any 
interim period in the current fiscal year for which financial statements 
are furnished in the disclosure document, shall provide the information 
in paragraph (a) of this Item. All other issuers shall provide the 
information in paragraph (b) of this Item.
    (a) Plan of Operation. (1) Describe the small business issuer's plan 
of operation for the next twelve months. This description should include 
such matters as:
    (i) a discussion of how long the small business issuer can satisfy 
its cash requirements and whether it will have to raise additional funds 
in the next twelve months;
    (ii) a summary of any product research and development that the 
small business issuer will perform for the term of the plan;
    (iii) any expected purchase or sale of plant and significant 
equipment; and
    (iv) any expected significant changes in the number of employees.
    (2) [Reserved]
    (b) Management's Discussion and Analysis of Financial Condition and 
Results of Operations--(1) Full fiscal years. Discuss the small business 
issuer's financial condition, changes in financial condition and results 
of operations for each of the last two fiscal years. This discussion 
should address the past and future financial condition and results of 
operation of the small business issuer, with particular emphasis on the 
prospects for the future. The discussion should also address those key 
variable and other qualitative and quantitative factors which are 
necessary to an understanding and evaluation of the small business 
issuer. If material, the small business issuer should disclose the 
following:
    (i) Any known trends, events or uncertainties that have or are 
reasonably likely to have a material impact on the small business 
issuer's short-term or long-term liquidity;
    (ii) Internal and external sources of liquidity;
    (iii) Any material commitments for capital expenditures and the 
expected sources of funds for such expenditures;
    (iv) Any known trends, events or uncertainties that have had or that 
are reasonably expected to have a material impact on the net sales or 
revenues or income from continuing operations;
    (v) Any significant elements of income or loss that do not arise 
from the small business issuer's continuing operations;
    (vi) The causes for any material changes from period to period in 
one or more line items of the small business issuer's financial 
statements; and
    (vii) Any seasonal aspects that had a material effect on the 
financial condition or results of operation.
    (2) Interim Periods. If the small business issuer must include 
interim financial statements in the registration statement or report, 
provide a comparable discussion that will enable the reader to assess 
material changes in financial condition and results of operations since 
the end of the last fiscal year and for the comparable interim period in 
the preceding year.

Instructions to Item 303: 1. The discussion and analysis shall focus 
specifically on material events and uncertainties known to management 
that would cause reported financial information not to be necessarily 
indicative of future operating results or of future financial condition.
    2. Small business issuers are encouraged, but not required, to 
supply forward looking information. This is distinguished from presently 
known data which will impact upon future operating results, such as 
known future increases in costs of labor or materials. This latter data 
may be required to be disclosed.