Legal Bulletins

Effective December 1, 2005, the SEC now requires that public companies filing Annual Reports on Form 10-K discuss their most significant risk factors in a new item of the Form 10-K and that these risk factors be updated for material changes in each subsequent Quarterly Report on Form 10-Q. Risk factors should be discussed in a new Item 1A in Part I of the Form 10-K and updates should be discussed in a new Item 1A in Part II of the Form 10-Q. Many public companies already include risk factors in their Form 10-K, either in the business sections of their Form 10-K or as an exhibit to their Form 10-K, so these disclosures will simply need to be moved to the body of the filing and then periodically reviewed and updated in satisfaction of the Form 10-Q disclosure obligations. Companies that do not currently include risk factors in their Form 10-K should begin the drafting process now so that they can comply with the new requirement by the March 2006 filing deadline.

In addition, the SEC now also requires that accelerated filers and "well-known seasoned issuers" disclose in their Form 10-K the substance of any unresolved material written comments raised by the SEC regarding their previous Exchange Act reports (10-Ks, 10-Qs, and 8-Ks), if those comments were received not less than 180 days before the end of a company's fiscal year to which the Form 10-K relates. Companies subject to this requirement should make the disclosure in a new Item IB in Item I of the Form 10-K.

For more information regarding these new requirements, please contact Andrew D. Bulgin at 410-576-4280 or your regular Gordon Feinblatt contact.