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Colorado formally adopted the use of the Form U-7 (or SCOR Form) on January 1, 1992 and joined the Western Regional Review process on March 1, 1995. This type of application also includes the requirements of Sections 11-51-302 and 11-51-304(1-5), of the Colorado Revised Statute (C.R.S.).
The Western Regional Review process allows the issuer to deal with a lead examiner in one state after filing in two or more of the participating states. Those participating states are: AZ, AK, WA, OR, ID, UT, CO, NV, NM, WY, MT (and CA for Regulation-A filings). The State of Washington acts as the administrator of the Western Region and should be contacted when a filing is to be made in two or more of the Western Regional states. Contact any of the participating states for more information regarding this type of filing. States in other parts of the country are also adopting regional reviews and will usually work together in performing centralized regional reviews.
The Form U-7 can be used by companies organized under the laws of any of the states and doing business other than petroleum exploration or production, or mining or other extractive industries. Blind Pool/Blank Check offerings and offerings which do not have a specific business plan or any company assets may not use this particular application process (nor Federal Rule 504).
The Form U-7 can only be used to sell the securities of the issuer. Selling security holders cannot sell their shares using this type of registration. The offering price for the shares must be equal to or greater than $1.00 per share in most states. The company may engage broker-dealers as selling agents, or the officers and/or directors of the company may sell the issue themselves. If the officers and/or directors act as the sellers they may have to register in Colorado or other states as sales representatives.
The Form U-7 application is generally used for offerings which fall under the Federal Regulation-D/Rule 504 or Regulation-A exemptions. Rule 504 has a $1 million maximum offering amount allowed while Regulation-A allows up to $5 million. When a Form U-7/Rule 504 filing is made with the State of Colorado, the federal Form-D must be included in the filing. Regulation-A offerings may claim an exemption from registration and file the appropriate fee along with one copy of whatever they file with the SEC, concurrently with their SEC filing.
Financial statements need to be either "Reviewed" or "audited". Refer to the Form U-7 instructions or contact the Division to verify your particular filing requirements.
The Division usually requires that an escrow account be established for a minimum offering amount with a depository institution and the funds may not be turned over to the company until an adequate minimum amount has been raised. That minimum amount should be sufficient to allow the company to at least attempt to accomplish its stated offering goals and remain in business for at least 12 months after the offering period. See FORMS below for an example of an Escrow/Impound Agreement.
The Division review period for this type of application is 28 days and the total review process usually takes approximately 6-8 weeks.
The Internet site of the North American Securities Administrator's Association (NASAA) contains information which will aid an issuer in preparing a small securities offering. The Form U-7 may be downloaded from that site and a complete Form U-7 Issuer's Manual and instructions can be viewed.
NOTE: The NEW revised Form U-7 (dated September 28, 1999) is now available at the NASAA web site and can also be obtained from the Colorado Division of Securities. All applications to Colorado must use the new form. The Division can supply the Form on 3.5 Diskette or as an e-mail attachment in WORD format.
The Application Requirements Are: