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Last week’s SPAC rules also enhance the disclosure requirements that apply to projections. In addition to new Item 1609 of Regulation S-K that applies specifically to de-SPAC disclosures, Item 10(b) of Regulation S-K has been expanded to address concerns about prominence and non-GAAP financial measures for all companies. This Latham blog summarizes the change:

Amendments to the SEC’s guidance in S-K Item 10(b) state that any projections that are not based on historical financial results or operational history must be “clearly distinguished” from projections that are based on historical financial results or operational history. Projections based on historical financial results or operational history must give equal or greater prominence to the historical measures or operational history. Presentation of projections that include a non-GAAP financial measure should include a clear definition or explanation of the measure, a description of the GAAP financial measure to which it is most closely related, and an explanation why the non-GAAP financial measure was used instead of a GAAP measure.

The amendments also clarify that the Item 10(b) guidelines also apply to projections of future economic performance of persons other than the registrant, such as the target company in a business combination transaction, that are included in the registrant’s filings.

– Liz Dunshee