NAC90.490. Offering of debt securities, equity securities or securities convertible to equity securities; offering of partnership units or trust certificate.  


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  •      1. In the case of an offering by a development stage company of debt securities, equity securities or securities which are convertible to equity securities, the company must maintain equity of not less than $50,000 or 5 percent of the aggregate offering price, whichever is less. For the purposes of this subsection, equity means the sum of consideration contributed for the equity securities of the issuer plus retained earnings. Retained deficits do not reduce the equity of the issuer for the purposes of this subsection. Capital contributed in the form of services, tangible or intangible property, or evidence of indebtedness may qualify as equity for the purposes of this subsection if approved by the Administrator and:

         (a) There is objective evidence of the market value of the services or the tangible or intangible property and title to the property is held by the issuer;

         (b) The indebtedness is recourse debt against an obligor who has a verifiable net tangible asset value equal to 100 percent of the principal amount of the indebtedness; or

         (c) The indebtedness is secured by collateral with an objectively verified market value at least equal to the principal amount of the indebtedness.

    Ê In any case where noncash consideration is contributed as equity to satisfy the requirements of this subsection, the market value of all services and tangible and intangible property, plus the principal amount of all evidence of indebtedness and all cash consideration must equal at least 120 percent of the equity required by this subsection.

         2. In the case of an offering of partnership units or a trust certificate, one or more of the general partners, promoters or managers of the partnership or trust must, before the effective date of the registration statement:

         (a) Acquire an equity interest in the partnership or trust for a cash consideration of not less than $50,000 or 5 percent of the aggregate offering price, whichever is less;

         (b) Irrevocably agree to acquire an interest of the kind described in paragraph (a), for the consideration required by that paragraph, demonstrating to the satisfaction of the Administrator his, her or their ability to perform under the agreement; or

         (c) Maintain a tangible net worth, exclusive of homes, furnishings or automobiles, of not less than 10 percent of the aggregate offering price. Any tangible net worth which is used to satisfy the requirements of this paragraph in connection with an offering may not be used to satisfy these requirements in connection with another offering.

     (Added to NAC by Sec’y of State, eff. 4-22-88; A 10-16-89)