Okla. Admin. Code § 660:11-11-54

Current through Vol. 41, No. 19, June 17, 2024

Section 660:11-11-54 - Intrastate offering exemption

(a)Terms of the Exemption. Under the authority of Section 1-202.25 of the Securities Act, transactions meeting the following conditions are exempt from Sections 1-301 and 1-504 of the Securities Act:

(1)Intrastate offers and sales. The issuer meets all of the requirements set forth in Section 1-202.25 of the Securities Act.

(2)Minimum offering amount. Investors shall receive a return of all their subscription funds if the minimum offering amount is not raised by the time stated in the disclosure document. Non-cash contributions from control persons or other insiders shall not be considered in fulfilling the minimum offering amount

(3)Initial notice filing. The issuer, at least ten (10) business days prior to the first sale of the securities, shall file a notice of the proposed offering directly with the Department. The notice must include the following:

(A) the names and addresses of the issuer, all persons who will be involved in the offer or sale of securities on behalf of the issuer, and any bank or other depository institution in which investor funds will be deposited;

(B) a copy of the disclosure document to be provided to each prospective purchaser in connection with the offering within a reasonable period of time before the date of sale containing at least the following:

(i) the name, legal status, physical address, and website address of the issuer;

(ii) the names of the directors, officers, and any other control persons with descriptions of each person's background and qualifications;

(iii) a description of the business of the issuer and the anticipated business plan of the issuer;

(iv) a description of the stated purpose and intended use of the proceeds of the offering sought by the issuer, including compensation paid to any officer, director, or control person;

(v) the target offering amount and the deadline to reach the target offering amount, and any minimum amount required to close the offering if such minimum is less than the target offering amount;

(vi) the amount of commission or other renumeration to be paid to any broker-dealer or agent involved in the offer or sale of the securities;

(vii) financial information about the issuer, certified by the issuer's chief executive officer and chief financial officer, or other individual serving in a similar capacity, to be true and complete in all material respects, including:

(I) annual financial statements, unless the issuer is newly organized and has not reached its first fiscal year end, that are dated as of the end of the issuer's most recently completed fiscal year; are prepared in accordance with generally accepted accounting principles in the United States; include a balance sheet, statement of income, statement of cash flows, statement of changes in stockholders' equity and notes to the financial statements; and comply with the applicable standard set forth in (4) of this subsection; and

(II) interim financial statements including an unaudited balance sheet and statement of income for the issuer's most recently completed fiscal quarter, but only if the issuer is newly organized and has not reached its first fiscal year end or the date of the issuer's most recently completed fiscal year end is more than one hundred twenty (120) days prior to the date of filing.

(C) a description of any litigation, legal proceedings, or pending regulatory action involving the issuer, its officers, directors, or control persons;

(D) a statement that:

(i) sales will only be made to any one person in an amount up to $5,000.00 unless the persons are accredited investors as that term is defined in Rule 501 of Regulation D of the Securities Act of 1933 (17 C.F.R. 230.501);

(ii) sales will only be made to residents of the state of Oklahoma at the time of the sale of the security;

(iii) the securities have not been registered with or approved by the state of Oklahoma and are being offered and sold pursuant to an exemption from registration and, therefore, cannot be resold unless the securities are registered or qualify for an exemption from registration under federal and state law;

(iv) for a period of six (6) months from the date of the sale by the issuer of the securities, any resale of the securities (or the underlying securities in the case of convertible securities) shall be made only to persons resident within the state of Oklahoma; and

(v) there is no ready market for the sale of the securities acquired from this offering and it may be difficult or impossible for a purchaser to sell or otherwise dispose of this investment;

(E) a copy of the escrow agreement;

(F) a consent to service of process on Form U-2 and (if applicable) Form U-2A; and

(G) the fee as set forth in Section 1-612 of the Securities Act.

(4)Annual financial statement standards. The annual financial statements required in (3)(B)(vii)(I) of this subsection must meet the following applicable standard:

(A) For offerings that have an aggregate offering amount of $500,000 or less, the issuer may provide unaudited and unreviewed financial statements. However, if the issuer has obtained financial statements that have been compiled, reviewed, or audited by an independent certified public accountant, the issuer must provide those financial statements;

(B) For offering that have an aggregate offering amount of more than $500,000 but less than $1,000,000, the financial statements must be compiled by an independent certified public accountant. However, if the issuer has obtained financial statements that have either been reviewed or audited by an independent certified public accountant, the issuer must provide those financial statements; or

(C) For offerings that have an aggregate offering amount of $1,000,000 or more, the financial statements must be reviewed by an independent certified public accountant. However, if the issuer has obtained financial statements that have been audited by an independent certified public accountant, the issuer must provide those financial statements.

(5)Continuing notice filings. For offerings that continue beyond one year from the commencement date of the offering, the issuer shall file with the Department, no later than thirty (30) days after the end of each quarter, updated interim financial statements including an unaudited balance sheet and statement of income for the issuer's most recently completed fiscal quarter, certified by the issuer's chief executive officer and chief financial officer, or other individual serving in a similar capacity, to be true and complete in all material respects.

(6)Final notice filing. The issuer shall file with the Department, no later than thirty (30) days after the termination of the offering, a final notice that the offering has been terminated. The final notice must include the following:

(A) the Oklahoma exemption file number for the offering of securities to which the final notice relates;

(B) the commencement date of the offering and the termination date of the offering;

(C) a sales report that discloses the dollar amount of securities sold in Oklahoma in connection with the offering, in the following format:

(i) Beginning offering amount;

(ii) Minus: Amount sold during the offering;

(iii) Balance unsold at the termination of the offering; and

(D) If the offering did not achieve the minimum offering amount, the issuer shall provide written confirmation to the Department that all offering proceeds that were raised in the offering were returned to each purchaser and that each purchaser did receive their investment proceeds.

(7)Fees. There are no fees required to be paid for the continuing notices or the final notice.

(8)Piecemeal filings. Any notice required under this section is not considered filed if it is incomplete. Piecemeal filings shall not be accepted.

(9)Required legend. The issuer shall, in connection with any securities sold by it under this Section, place a prominent legend on the certificate or other document evidencing the security stating that: "Offers and sales of these securities were made under an exemption from registration and have not been registered under the Securities Act of 1933 or the Oklahoma Uniform Securities Act of 2004. For a period of six months from the date of the sale by the issuer of these securities, any resale of these securities (or the underlying securities in the case of convertible securities) shall be made only to persons resident within the state of Oklahoma."

(10)Evidence from purchaser. The issuer shall obtain from each purchaser a written representation of residency within the state of Oklahoma before a sale may be made. Such representation shall include an affirmation made by the purchaser that the purchaser is at least eighteen (18) years of age and purchasing the securities for investment. The issuer shall also obtain a copy of any one of the following from the purchaser:

(A) valid Oklahoma driver's license or official identification card issued by the State of Oklahoma;

(B) current Oklahoma voter registration card; or

(C) county property tax records showing the individual owns and occupies property in Oklahoma as his or her primary residence.

(b)Application of NASAA Statements of Policy and guidelines. The Department may apply the provisions of applicable Statements of Policy or guidelines adopted by NASAA to any offering of securities made pursuant to this exemption from registration. Failure to comply with any such provision may serve as the basis for withdrawing or further conditioning the exemption as to a particular offering.

Okla. Admin. Code § 660:11-11-54

Adopted by Oklahoma Register, Volume 38, Issue 23, August 16, 2021, eff. 7/13/2021

Adopted by Oklahoma Register, Volume 39, Issue 24, September 1, 2022, eff. 9/15/2022