Michigan Scor Instructions For Form U-7 - Small Company Offering Registration printable pdf download

FIS 0555 (5/04) Office of Financial and Insurance Services

MICHIGAN SCOR INSTRUCTIONS (Form U-7)

I. Introduction

SCOR registration offers an optional method of registration for corporations (or other recognized legal entities) issuing securities exempt from

registration with the Securities and Exchange Commission ("SEC") under rule 504 of Federal Regulation D. SCOR registration is intended to reduce

the costs and burdens of raising capital for small business without sacrificing investor protection, and to maximize the amount of offering proceeds

available to the issuer for investment in the business. Issuers eligible for this optional registration method must use the Form U-7 (or SEC Model A)

as the disclosure document for the offering. It should be noted that neither the fact that an application for registration has been filed under Section

304a nor the fact that an issuer's security is effectively registered constitutes a finding by the administrator of the Michigan Office of Financial and

Insurance Services (the "Office") that the Form U-7 or any other document filed under Section 304a is true, complete, and not misleading. Neither

any such fact nor the fact that an order has been issued by the Office means that the Office has passed in any way upon the merits or qualifications

of, or recommended or given approval for any security. It is suggested that the Company consult with an experienced securities attorney and a

qualified accountant. Any comments that an applicant may receive are not a recommendation by the Office of the accuracy or adequacy of the

disclosure document. The burden of compliance with the Michigan Uniform Securities Act and Rules is on the Company. If a company intends on

utilizing the SCOR registration the following must be submitted:

A. Fully completed and executed Form U-7 and a Form U-1 (SCOR) Uniform Application to Register Securities.

B. All exhibits required by the rule.

C. Consent to Service of Process. The U-2 and U-2(a) are acceptable.

D. A filing fee of 1/10 of 1% of the maximum aggregate offering price at which the registered securities are to be offered in this state, with

a minimum fee of $100.00 and a maximum fee of $1,000.00.

II. Qualification for Use of Form U-7

To be eligible to use Form U-7, a Company must comply with each of the following requirements:

A. The Company must be a corporation or other recognized legal entity organized under the laws of one of the states or possessions of

the United States which engages in or proposes to engage in a business. "Blind pool" offerings and other offerings for which the

specific business or properties cannot not be described are ineligible to use Form U-7.

B. SCOR registration shall not be utilized by the following issuers and programs unless written permission is obtained from the Office

based upon a showing that adequate disclosure can be made to investors using the SCOR registration format: (i) Holding companies,

companies that have a principal purpose of owning stock in, or supervising the management of, other companies; (ii) Portfolio

companies, such as real estate investment trusts; (iii) Issuers with complex capital structures; (iv) Commodity pools; (v) Equipment

leasing programs; (vi) Real estate programs.

C. The securities may be offered and sold only on behalf of the Company, and Form U-7 may not be used by any selling security-holder

(including purchasing underwriters in a firm commitment underwriting) to register his securities for resale.

D. The offering price for common stock (and the exercise price, if the securities are options, warrants or rights for, and the conversion

price if the securities are convertible into, common stock) must be equal to or greater than $5.00 per share, unless the administrator

authorizes a lower price per share. By execution of the application and filing of the Form U-7, the Company thereby agrees with the

Office that the Company will not split its common stock, or declare a stock dividend, for two years after effectiveness of the

registration; provided, however, that in connection with a subsequent registered public offering, the Company may upon application

and consent of the Office take such action.

E. The Company may engage selling agents to sell the securities. Commissions, fees, or other remuneration for soliciting any prospective

purchaser in this state in connection with this offering may only be paid to persons who, if required to be registered, the Company

believes, and has reason to believe, are appropriately registered in this state.

F. This form shall not be available for the securities of any Company if the Company or any of its Officers, Directors, 10% stockholders,

promoters or any selling agents of the securities to be offered, or any officer, director or partner of such selling agent: (i) has filed a

registration statement which is the subject of a currently effective registration stop order entered pursuant to any federal or state

securities law within 5 years prior to the filing of the application for registration hereunder; (ii) has been convicted within five years

prior to the filing of the application for registration hereunder of any felony or misdemeanor in connection with the offer, purchase or

sale of any securities or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money

under false pretenses, larceny, or conspiracy to defraud; (iii) is currently subject to any state administrative enforcement order or

judgment entered by that state's securities administrator or the Securities and Exchange Commission within five years prior to the

filing of the application for SCOR registration hereunder or is subject to any state's administrative enforcement order or judgment in

which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was

found and the order or judgment was entered within 5 years prior to the filing of the application for registration hereunder; (iv) is

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Michigan Scor Instructions For Form U-7 - Small Company Offering Registration

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