A. Uniform Limited
Offering Registration ("ULOR"). An issuer may register securities by
qualification under A.R.S. §
44-1902
in an aggregate amount not exceeding $5 million in any 12-month period as
provided in this Section.
B. Form
U-7 and the Issuer's Manual. Any reference in this Section to Form U-7 means
the Small Company Offering Registration Form as adopted by the North American
Securities Administrators Association, Inc. Any reference to the Issuer's
Manual means the Small Company Offering Registration Issuer's Manual, which
contains the requirements and general instructions for use of the Form U-7, as
adopted by the North American Securities Administrators Association, Inc.
Copies of Form U-7 and the Issuer's Manual are available from the Commission
and from the North American Securities Administrators Association,
Inc.
C. Qualification. To be
eligible for registration under A.R.S. §
44-1902,
the issuer shall comply with the following conditions:
1. The offering shall not be a blind pool
offering as defined in A.R.S. §
44-1801.
2. The issuer shall not be an investment
company subject to the Investment Company Act of 1940.
3. The issuer shall not be subject to the
reporting requirements of Section 13 or Section 15(d) of the Securities
Exchange Act of 1934.
4. The issuer
and offering must meet the qualifications for use set forth in the Issuer's
Manual.
5. If the offering includes
debt securities, the application for registration shall include information
that demonstrates the ability of the issuer to service its debt.
D. Disclosure Document. The issuer
shall apply for registration of securities by qualification under A.R.S. §
44-1902
by filing with the Commission Form U-7, with exhibits and such other documents
as required by the Issuer's Manual.
E. Financial Statements. The financial
statements included in the application for registration shall be in the form
provided in the Issuer's Manual. All prospective financial information that is
included in the Form U-7 must be prepared or reviewed by an independent
accounting firm.
F. Registration
Fee. An application for registration shall be accompanied by a nonrefundable
fee as provided in A.R.S. §
44-1861.
G. Issuer-Dealer Registration. An application
for registration of securities also shall constitute an application for
registration under A.R.S. §
44-1941
of the issuer as a dealer who deals exclusively in securities of which the
dealer is the issuer ("issuer-dealer") if accompanied by a duly completed Form
BD, a brief description of the proposed method of sale, and other information
required by A.R.S. §
44-1941.
No bond shall be required for purposes of such issuer-dealer application. The
Commission or the Director may require submission of additional information as
to the issuer's previous history, record, or business experience as deemed
necessary to determine whether the issuer should be registered as a dealer, as
provided under A.R.S. §
44-1942.
Appropriate examinations may be required.
H. Other Registration Requirements. The
following applicable Sections shall apply to registration of securities by
qualification under A.R.S. §
44-1902:
1.
R14-4-103
(advertising and sales literature). The issuer shall not distribute advertising
and sales materials prior to receipt of the Division's notification that the
issuer may use the materials.
2.
R14-4-105
(promotional securities). For purposes of this Section,
R14-4-105(C)
is revised as follows:
"Securities that are issued to promoters for consideration
valued at less than the following percentages of the proposed public offering
price, in an amount that represents an ultimate right of participation in
excess of 60 percent of the securities to be outstanding at the completion of
the proposed public offering, shall be promotional securities. The value of
consideration other than cash received by the issuer for shares shall be
established to the Commission's satisfaction by appraisals, evidence of amounts
paid by others for substantially similar services or property, evidence of a
bona fide offer to purchase such services or property, evidence of significant
services rendered or contractually required to be rendered to the issuer, which
may take into account the relevant experience, special skills, and other
qualifications of the person rendering the service, or any other evidence. The
value of noncash consideration that cannot be established to the satisfaction
of the Commission shall be zero.
"1.
For all securities issued to a promoter within one year prior to and including
the date of the offering of securities to the public: 85 percent.
"2. For all securities issued to a promoter
within two years but not less than one year prior to and including the date of
the offering of securities to the public: 75 percent.
"3. For all securities issued to a promoter
within three years but not less than two years prior to and including the date
of the offering of securities to the public: 65 percent."
3.
R14-4-106
(options, warrants, and rights to purchase).
5.
R14-4-108
(sales commission and expenses). For purposes of this Section
R14-4-108(A)
is revised as follows: "No issuer shall incur a liability that must be paid by
the issuer as a selling expense in connection with the offering of greater than
20 percent of the amount of the offering actually sold to the
public."
7.
R14-4-111
(commissions to officers and directors).
10.
R14-4-118
(statements required in prospectus).
I. Delivery Requirements. The issuer must
deliver to each offeree a copy of any literature mandated by the Commission,
along with a Form U-7 that has been declared effective by the Commission and
any supplements. As long as any securities sold in the offering are
outstanding, the issuer shall deliver to investors any reports required by Form
U-7 or under the Securities Exchange Act of 1934, unless there are ten or fewer
shareholders and all of such shareholders consent in writing to the cessation
of such reporting.
J. Reporting.
After registration under A.R.S. §
44-1902,
the issuer shall cause the following reports to be delivered to the Commission.
The Commission may specify the forms necessary to fulfill the reporting
requirements stated below.
1. Within ten
business days after every 90-calendar-day period following the effective date
of the registration and on completion of the offering, a report stating the
number of purchasers and the dollar amount of securities sold.
2. Within ten business days after every
90-calendar-day period following the effective date of the registration and on
completion of the offering, a statement reflecting that the issuer has not made
any changes in or amendments to the Form U-7 or sales and advertising materials
provided to the Commission, other than any changes or amendments filed with and
declared effective or cleared by the Division.
3. Within ten business days after every
six-month period following the effective date of the registration and at such
time as the proceeds have been completely used, a report stating in reasonable
detail the issuer's use of the offering proceeds.
4. Within ten business days after delivery to
investors, copies of any other reports, brochures, letters, or such similar
documents furnished, through any medium, to investors.