Title 13 Part 80

These regulations shall become effective November 1, 1968.

Chapter 1093 of the Laws of 1968 when referred to in all rules and regulations promulgated by the Attorney-General relating thereto, shall be referred to as the “New York Intrastate Financing Act”.

The Condominium, Theatre and Syndication Financing Bureau of the Department of Law shall be responsible for the administration of the New York Intrastate Financing Act. Whenever in these regulations there is a reference to a submission or filing with the Department of Law this shall mean the Condominium, Theatre and Syndication Financing Bureau at 28 Liberty Street, New York, NY 10005.

The offering prospectus required to be used by section 359-ff, subdivision 1, of the General Business Law shall be the only offering material used in this State and shall contain a full and fair summary of all of the material aspects of the offering. The prospectus shall be effective for a period of six months from the date of filing with the Department of Law unless material events occur sooner, in which event the prospectus shall be amended. It may be printed, mimeographed, photocopied, lithographed, typewritten or prepared by any similar process in clearly legible copies of an easily readable type size. If the offering is to be made to a group whose primary language is not English, the prospectus should be in both the primary language and in English. Photographs, drawings and color pages may be used, but may not be used in a way that would tend to be misleading. Twenty-five copies of such prospectus shall be filed as provided herein. The Attorney-General in his discretion, may permit prefiling of three copies of a draft of a proposed prospectus with underlying documents, for preliminary conference purposes. Such submission is not a filing requirement under section 359-ff or these regulations (see section 80.13, infra ).

Unless otherwise provided by these regulations, the prospectus filed with the Department of Law pursuant to the Intrastate Financing Act shall be accompanied in the original filing by two copies of form INTRASTATE-1 (Filing of Intrastate Prospectus) issued by the Attorney-General for such purposes. All documentation relating to the offering shall accompany such filing, together with the filing fee provided by law.

Unless otherwise provided by these regulations, documents filed with the Department of Law to supplement or amend a prospectus already filed pursuant to the foregoing subdivision shall be accompanied by two copies of form INTRASTATE-2 (Amendment to Prospectus) issued by the Attorney-General for such purposes. Such form together with five copies of the supplemental or amended prospectus shall be filed with the Department of Law.

Unless otherwise provided by regulation, two copies of form INTRASTATE-3 (Withdrawal of Offering) shall be filed by the promoters of every intrastate offering which is abandoned either prior to the actual solicitation of funds or after returning in full all funds obtained as a result of such offering. Such form shall be filed within 15 days of the abandonment.

Unless otherwise provided by regulation, two copies of form INTRASTATE-4 (Status Report of Intrastate Financing) shall be filed by every intrastate issuer of securities who either files a prospectus or receives an exemption from the prospectus requirements of the New York Intrastate Financing Act within 30 days after the completion or termination of the offering or six months after the date the prospectus was filed with the Department of Law or an exemption granted, whichever is sooner.

Further, said form shall be filed thereafter every six months or 30 days after completion or termination of the offering, whichever is sooner, until the offering is either completed or terminated.

The Department of Law may assign identification numbers to all offerings filed with it or exempted on application. If so assigned, said identification shall appear on all offering literature used in this State and in all authorized advertisements, unless otherwise exempted.

As used in these regulations, the following definitions shall apply, along with those which may hereinafter appear, to the extent that they are not inconsistent with the definitions of article 23-A of the General Business Law, or where the context otherwise requires:

A written or oral request to participate in an investment initiated initially by either a potential seller or buyer of a security. An authorized advertisement shall not be considered an offering.

All officers, directors, principals or controlling persons of a venture.

A group where a family or long time business or personal relationship exists between one or more of the promoters and each and every member of the group.

Includes stocks, bonds, debentures, notes, IOUs or other evidences of indebtedness, general or limited partnership interests, assignments of interest, joint venture agreements, investment contracts, membership certificates, collateral pledge agreements, warrants, rights, fractional undivided interests, trust certificates, warehouse receipts, certificates of participation and all other types of participation interests in an investment.

An offering which seeks to raise no more than $40,000, not including the personal investment of promoters.

“THE ATTORNEY-GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. N.Y. #__” (THE “N.Y.” NUMBER SHALL BE ASSIGNED BY THE ATTORNEY-GENERAL)

There shall be no other reference to filing with the Attorney-General or the Department of Law anywhere in the prospectus.

The prospectus should be prepared in clear and simple language. It should contain a table of contents and, where applicable, should contain the information set forth below:

This section should state the name and the address of the issuer, the year in which the issuer was organized, its form of organization, and a brief statement as to the type of business the issuer is engaged in or proposes to engage in.

Examples of subject matter are given below. This section should state in detail necessary for full explanation of the following types of information, where applicable, plus other applicable risk factors:

This section should indicate the direct or indirect interest of any of the promoters of the venture in transactions with the issuer or in any proposed transaction. It should disclose the approximate dollar amounts of all material profits and should indicate what restrictions, if any, there are with respect to future personal dealings with the issuer.

This section should state the principal purposes for which the proceeds of the offering are to be used, including a detailed breakdown of offering expenses, and the amount to be used for each purpose. It should indicate in what order of priority the proceeds will be used for the respective purposes. The specifics of the use should be set forth as opposed to general statements such as “working capital”. It is recommended that the section provide that the proceeds of the offering will be held in trust in a special account in a named bank until used for the purposes set forth in the prospectus. Further, it is suggested that provision be made for a minimum amount of money to be raised before any part of the proceeds can be used, and that unless such minimum amount is raised by a definite date all subscriptions will be returned in full. Such arrangements should be fully described. If any securities being sold are to be offered for consideration other than cash, these details should be provided.

This section should set forth in tabular form the various types or classes of securities of the issuer outstanding or to be outstanding as a result of the offering, the amount authorized at the date of the prospectus, and the amount as of a date within 90 days prior to the prospectus, and the amount to be outstanding if all of the securities offered by the prospectus are sold. Below this table should be a table setting forth known or anticipated fixed debt maturities or fixed interest or other obligations, including leasehold commitments, for a five-year period.

This section should briefly describe the business conducted by the issuer and its subsidiaries and the development of such business during the past five years. If the business consists of the production or distribution of different kinds of products or the rendering of different kinds of services, indicate, insofar as practical, the relative importance of each product or service or class of similar products which contributed 15 percent or more to the gross volume of business during the last fiscal year. This section should also indicate briefly, to the extent material, the general competitive conditions in the industry in which the issuer and its subsidiaries are engaged or intend to engage, and the position of the enterprise in the industry. If several products or services are involved, separate consideration should be given to the principal products or services or classes or products or services.

This section should state briefly the location and general character of the principal plants, offices, machinery and equipment and other materially important physical properties of this issuer and its subsidiaries. Where material, details on mortgages, installment contracts, leases and other obligations should be provided.

This section should contain the name and home address of each officer, director, partner, principal, trustee and other promoters of the issuer, their business background, their experience with respect to the issuer's business, and the percentage of time those in management intend to devote to the business of the issuer. It should also indicate the dollar amount of investment in the company and the compensation and fees of all officers, directors and principals.

This section should indicate the name and address of all persons who beneficially or of record own 10 percent or more of any outstanding class of the securities of the issuer, the type or class of such security, the type of ownership, the amount owned, and the percentage of class. Where the security holders are offering their securities for resale, their adjusted basis should be stated.

This section should set forth in the form of organization of the issuer outlining briefly such items as dividend rights, voting rights, liquidation rights, pre-emptive rights, conversion rights, sinking fund provisions, liability to further calls or assessments, amendment procedures, repurchase rights, outstanding options, provisions for meetings, etc. together with a summary of the various material documents, such as the certificate of incorporation, by-laws, stockholders agreements, partnership agreement, debenture, indenture, etc. It should also contain full details about the securities offered by the prospectus.

This section should indicate any material legal proceedings pending or known to be contemplated, other than ordinary routine claims and 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.

This section should indicate what persons are to solicit purchasers on behalf of the issuer, any compensation to be received by them and how the proposed issue is to be offered.

This section should indicate the obligations of the issuer to provide annual reports to investors and a statement as to the nature of the books and records to be maintained, where they will be maintained, the extent to which they will be available for inspection by investors, and the fiscal year of the issuer.

This section should indicate the name and address of all experts, such as accountants, engineers, or attorneys, who passed upon matters relating to the offering.

This section should contain the issuers profit and loss statement for its most recent three fiscal years (or such lesser number of fiscal years during which the issuer has been in existence). If the latest fiscal year ended more than four months prior to the date of the prospectus, a profit and loss statement for a period from the end of such latest fiscal year to a date within four months prior to the date of filing and comparable figures for the same period during the preceding fiscal year should also be provided. In addition, the issuers balance sheet as of the last fiscal year and as of the end of such additional period, if any, should be provided. The balance sheets and profit and loss statements shall be prepared in accordance with generally accepted accounting principles applied on a basis consistent with previous years or periods and shall include an opinion by an independent public accountant as to fairness of presentation of issuer's financial position and results of operations reflected in the financial statements, except where an exemption from said requirement has been granted.

This section should contain all other material details of the offering, if any, not heretofore covered, plus a representation that the prospectus contains a fair summary of material facts, does not knowingly omit any material fact and does not contain any untrue statement of a material fact.

Copies of all material corporate or organizational documents of the proposed issuer together with all material documents mentioned in the prospectus (including a sample form of the security to be offered) should be submitted to the Department of Law in duplicate together with a manually signed consent and authorization of every person named in the prospectus as an expert, officer, director or principal.

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing a small offering, as defined in these regulations, may submit to the Department of Law a prospectus on form INTRASTATE-5 (Short Form Prospectus) which prospectus may be accepted for filing by the Department of Law, if, on its face, the offering is fair, just and equitable and not part of a series of offerings which in total exceed $40,000. Said small offering prospectus shall consist of form INTRASTATE-5 reproduced by photocopy or otherwise plus any additional supplemental information called for by the Department of Law.

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a related group, as defined in these regulations, may submit to the Department of Law a prospectus on form INTRASTATE-5 (Short Form Prospectus) which prospectus may be accepted for filing by the Department of Law, if, on its face, the offering is fair, just and equitable. Said related group prospectus shall consist of form INTRASTATE-5 reproduced by photocopy or otherwise plus any additional supplemental information called for by the Department of Law.

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a group of persons whose net worth, financial background and experience would be such as to enable them to evaluate a prospective investment solely on the basis of original documentation, without other offering literature, may submit to the Department of Law an application for exemption from the prospectus requirements and the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a promoter group, as same is defined in these regulations, or the spouses or sons and daughters of the promoters, for front money or otherwise, may submit to the Department of Law an application for exemption from the prospectus requirements and the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

In the case of a specialized offering such as a community offering, rights offering, employees' stock purchase plan, investment club or other special type of offering, upon application by the issuer to the Department of Law for exemption from or modification of the prospectus requirements, the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

Pursuant to section 359-ff, subdivision 3, of the General Business Law of the State of New York, small offerings to a promoter group, small offerings to a related group, as defined in these regulations, offers and sales of any interest or participation in a collective trust fund maintained by a bank which interest or participation is issued in connection with a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1954, and offerings made to fewer than 10 persons are hereby exempted from the provisions of section 359-ff of the General Business Law. Offerings within the scope of this section are automatically exempted without application.

The following procedure should be followed in applying for an exemption from the prospectus or accounting provisions of the New York Intrastate Financing Act under regulations 80.6, 80.7, 80.8, 80.15(b) or 80.15(d). The issuer should submit an application verified by all of the officers, directors and promoters of the corporation, general partners, trustees, etc., as the case may be, containing the following information, where applicable:

I understand that I am purchasing this interest in without being furnished any offering literature or prospectus and that this transaction has not been scrutinized by the Attorney-General of the State of New York as a full registration because of the representation made by the issuer that the offering is only being made to a group of sophisticated investors whose business and financial background and experience is such as to not require any offering literature. I warrant that this interest is being purchased for my own account and that no portion is for the interest of any other and not for resale to others. I further warrant that my personal net worth is in excess of $__

It is understood that all documents, records and books, pertaining to this investment have been made available to my attorney, my accountant and myself.”

All filings and applications for exemption from the prospectus requirements should be accompanied by a filing fee equal to one-half of one percent of the offering (.005 times the offering). The minimum fee is $25 and the maximum fee is $1500. Checks should be made payable to the Department of Law and need not be certified. There are no filing fees for amendments (except where additional securities are added) or annual reports.

Prior to the use of any funds obtained as a result of an offering of securities covered by the Intrastate Financing Act or the removal of any funds obtained as a result of such offering from any special trust account, the issuer shall have set up a system of books and records in accordance with generally accepted accounting principles. Such records shall be maintained at the principal office of the issuer. All books and records shall be posted and maintained in an orderly legible manner, in ink, by or under the direction and control of a person familiar with generally accepted bookkeeping and accounting practices. At a minimum such books and records shall consist of a cash receipts and disbursements book showing in detail all receipts and expenditures, a general ledger and general journal, a book showing the outstanding securities of the issuer and the names, addresses and holdings of each security holder and all contracts, checks, vouchers, receipts, bills and other documents pertaining to the transactions and operations of the issuer. All promoters of the issuer shall be responsible for such records. Notwithstanding anything contained herein to the contrary, the books and records of the issuer may be maintained pursuant to a system created or approved by an independent public accountant licensed and with an office in the State of New York upon certification in writing by such accountant to the Department of Law that he has set up the issuer's accounting system in accordance with generally accepted accounting principles, that he is independent of the issuer, that he has given instruction on maintenance of the system and that he verily believes that if his instructions are followed, the accounting system will be adequate. Where such a statement is provided the Department of Law the responsibility for the adequacy of the accounting system shall be preliminarily considered to have been met.

"State of New York ) ) SS.: County of ) The undersigned, being duly sworn, deposes and says that the attached financial statements are true and correct except (indicate either ‘no exceptions’ or specifics of any reservations about the accuracy of the statements and the reasons thereof).

Nothing contained in these regulations shall exempt any issuer from compliance with section 359-e of the General Business Law with respect to the filing of Issuer Statements, State Notices and Further State Notices or with respect to any other provision of article 23-A.