Haw. Code R. § 16-38-9 - Prospectus

(a) The prospectus of any securities that are subject to registration under chapter 485, HRS, or this chapter may be printed, mimeographed, lithographed, or typewritten, or prepared by any similar process in clearly legible copies.

(b) Every subscription agreement concerning a registration of securities by qualification shall contain a statement by the purchaser that the purchaser has received a copy of the prospectus covered by the registration.

(c) Interstate offerings shall contain the information required by the application form together with the following:

(1) How the public offering price was established;

(2) Whether there has been a public market for the securities;

(3) Terms and conditions of the escrow agreement; and

(4) Business history of the officers and directors.

(d) Intrastate offerings shall contain the same information as interstate offerings, plus the following:

(1) That the offering is only to bona fide residents of the State of Hawaii;

(2) That during the public offering no securities may be transferred to a non-resident of Hawaii;

(3) That in case of a sale to a non-resident, the issuer may rescind the sale and refund the purchase price; and

(4) In an offering of interest-bearing securities, what reserves or sinking fund shall be provided to pay for the securities as they become due, or whether no reserves shall be provided.

(e) The prospectus shall be prepared in substantially the following form and shall contain the information as hereinafter specified together with any additional data as the commissioner may prescribe. (The following specimen form has been prepared for use in connection with a speculative intrastate offering and may therefore be modified to the extent the provisions are inapplicable.)

(1) Cover page:

PROSPECTUS

(Date)

(NAME OF ISSUER)

(Address)

Incorporated under the laws of the State of Hawaii (Date) Shares of Common Stock of the Par Value of $_________ Per Share.

	Offering Price	Sales Commissions	Net Proceeds To Issuer*
Per Share	$_________	$______________	$_________________
Aggregate	$_________	$______________	$_________________

*Before deducting expenses estimated not to exceed $________ to be borne by the issuer.

THESE SECURITIES ARE OFFERED AS A SPECULATION.

NEITHER THIS PROSPECTUS NOR THE SECURITIES DESCRIBED HEREIN HAVE BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF SECURITIES OF THE STATE OF HAWAII, NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.

THIS OFFERING IS ONLY TO BONA FIDE RESIDENTS OF THE STATE OF HAWAII.

To be sold by__________

(2) Business.

(A) State the history, showing capitalization, mergers, change of names, etc., general character and location of issuer's business, properties, branch offices, stores, plants, outlets, etc., and similar information concerning its predecessors, affiliates, and subsidiaries. There should also be a statement as to the length of time the issuer has been in business;

(B) Describe the physical properties, equipment, claims, patents, or patent applications, etc., and nature of title or interest therein;

(C) If the issuer leases its plant, office, or other physical properties, disclose briefly the terms of the lease and relationship of lessor to any officer, director, promoter, or stockholder of the issuer;

(D) State the nature of present or proposed products or services, the principal market therefor;

(E) Set forth the general competitive conditions in the industry or business in which the issuer is, or proposes to be, engaged, and any particular risks or hazards to which it might be subjected; and

(F) Describe the issuer's employee relations by setting forth the number of employees and whether any of them are covered by collective bargaining agreements and, if so, approximately how many are so covered, when agreements expire, and whether collective bargaining is on a company or industry wide basis. Also describe whether the issuer has experienced an y work stoppages in recent years;

(3) Use of proceeds. Outline the proposed plans, objectives, or programs of the issuer and make a reasonable itemized statement of the purposes for which the net proceeds to the issuer from the sale of securities are to be used and the amounts to be used for each purpose, indicating the order of priority;

(4) Method of offering. If the securities are to be offered through a dealer, state the name and address of the dealer, with a statement of any material relationship between the issuer and the dealer. State whether the securities are to be offered for cash only or whether the securities may be paid for in installments and, if so, the terms and conditions. If a minimum purchase is required, it should also be disclosed. State briefly the commission to be paid to the dealer, including cash, securities, contracts, options, or any other consideration. If the securities are to be sold by the issuer, it should also be stated that the offering shall be done by securities salespersons duly registered with the commissioner of securities. If the proceeds of the offering are to be placed in escrow, state the terms and conditions of the escrow, and provide other terms prescribed by the commissioner for the certification by the escrow agent to the commissioner when the amount specified in the escrow agreement has been met in the specified time and the conditions whereby the funds shall be released to the subscribers by the escrow agent. State also that during the public offering, no securities may be transferred to a non-resident and that in case of a sale to a non-resident, the issuer shall rescind the sale and refund the purchase price;

(5) Speculative features of the offering. Explain generally the speculative features of the offering and any special conditions which may affect the success or failure of the enterprise or the investor's interest therein. State how the public offering price was established and whether there has been a public market for the shares. In a speculative offering, the front cover shall contain a clear and conspicuous statement that the securities are speculative. If the officers, directors, or promoters are receiving or have received salaries, fees, or other compensation from the issuer, indicate the amounts, how paid, and services rendered (see section 16-38-11.5);

(6) Description of securities. Outline briefly as follows:

(A) In the case of shares, the par or stated value, if any; the rate of dividend, if fixed, whether cumulative or noncumulative and any restrictions on dividend payments; the preference, if any; and if convertible, the conversion rate; the restrictions, if any, on the transfer of the securities;

(B) In the case of debt securities, the rate of interest; the date of maturity or, if the issue matures serially, a brief indication of the serial maturities; if the issue is redeemable before maturity, a brief statement of the redemption date or dates and price or prices; if payment of principal or interest is contingent, an indication of the contingency; a brief indication of the priority of the issue; and if convertible, the conversion rate; and

(C) In the case of any other kind of security, appropriate information of a comparable character;

(7) Management and control. List the names and residence addresses of all officers and directors of the issuer and of any person or persons controlling the issuer and, if the issuer was organized within the last three years, the names and addresses of all promoters of the issuer. For each person listed, show the business history;

(8) Interests with management. Provide a description of all direct or indirect interests, by security holdings or otherwise, of each officer and director of the issuer and, if the issuer was organized within the last three years, of each promoter of the issuer:

(A) In the issuer or its affiliates; and

(B) In any material transactions within the past two years or in any material proposed transactions to which the issuer or any of its predecessors or affiliates was or is to be a party, stating the cost to those persons of any property or services for which payment by or for the account of the issuer has been or is to be made;

(9) Ownership. If the issuer was organized within the last three years, a statement of the percentage of outstanding securities of the issuer which shall be held by directors, officers, and promoters as a group, and the percentage thereof which shall be held by the public if all of the securities to be offered are sold, and the respective amounts of cash (including cash expended for property transferred to the issuer) paid therefor by the group and by the public;

(10) Options and warrants. A brief description of all options or warrants presently outstanding or proposed to be granted to purchase securities of the issuer, including the names of the holders thereof, the cost thereof to the holders, the terms and conditions on which they may be exercised, and the price at which the securities may be acquired pursuant thereto;

(11) Litigation. Briefly describe any material pending legal proceedings other than ordinary routine litigation incidental to the business to which the issuer or any of its subsidiaries is a party or of which any of their property is the subject;

(12) Legal opinion. State the name and address of the attorney who has advised the issuer with respect to the legality and validity of the securities and their issuance;

(13) Escrow provisions. If the officers, directors, promoters, or insiders have stock which is subject to escrow pursuant to section 485-18, HRS, or subject to escrow pursuant to any state or federal statute or regulation, make a complete disclosure of the number of shares escrowed, names of persons escrowing the stock, where escrowed, and the terms and conditions of the escrow; and

(14) Financial statements. Provide a balance sheet of the issuer at the close of the issuer's last fiscal year preceding the date of filing of the prospectus, and a profit and loss statement and analysis of surplus for the fiscal year ended at the date of the balance sheet, all certified by an independent public accountant; together with a balance sheet of the issuer as of a date within ninety days prior to the date of filing of the prospectus and a statement of profit and loss for the period from the close of the last preceding fiscal year to the date of the balance sheet, both verified by a duly authorized officer of the issuer or, if the issuer has been in existence for less than one year, a balance sheet of the issuer as of a date within ninety days prior to the date of filing and a statement of profit and loss for the period from the date of the issuer's organization to the date of the balance sheet, both certified by an independent public accountant.

If consolidated financial statements are used, there should also be a financial statement of the issuer alone. If the issuer has not yet commenced business, there should be submitted in lieu of the statement of profit and loss a statement of receipts and disbursements certified to by an independent public accountant.

Notes

Haw. Code R. § 16-38-9

[Eff 6/4/70; am and ren § 16-38-9, 7/30/81; am and comp 10/12/85; am and comp 4/14/03] (Auth: HRS § 485-2) (Imp: HRS §§ 485-9, 485-10, 485-18)