3 AAC 08.135 - Disclosure of use of proceeds

(a) The administrator will, in the administrator's discretion, deny registration unless it complies with the requirements of this section.
(b) An issuer's prospectus must disclose, in a tabular form, for both the minimum and maximum amounts proposed, if applicable, the following information:
(1) the estimated cash proceeds that the issuer is to receive from the offering;
(2) the purposes for which the issuer is to use the proceeds disclosed under (1) of this subsection;
(3) the amount, expressed as a percentage and as a dollar amount, to be used for each purpose identified under (2) of this subsection;
(4) the order or priority in which the proceeds disclosed under (1) of this subsection will be used for the purposes identified in (2) of this subsection.
(c) In addition to the information required under (b) of this section, an issuer's prospectus must disclose the following:
(1) the amounts of any money to be raised from other sources to achieve the purposes identified under (b)(2) of this section, the sources of that money, whether the sources are firm or contingent, and any contingencies;
(2) if any part of the proceeds is to be used to acquire property, including goodwill, other than in the ordinary course of business, the following information:
(A) the name and address of each person selling the property;
(B) the purchase price of the property;
(C) the name of any person who has received a commission in connection with the acquisition of the property, and the amount of that commission;
(D) any other expense in connection with the acquisition of the property, including the cost of borrowing money to finance the acquisition;
(3) if any part of the proceeds is to be used to acquire property in the future, the acquisition criteria to be used by the issuer to determine whether or not to acquire that property; and
(4) the amount of any proceeds used to pay indebtedness, including unpaid salaries, to promoters, and the reasons for using those proceeds for that purpose.
(d) The issuer may not reserve more than 15 percent of the proceeds for working capital or general corporate purposes, or for any other unspecified use, unless the issuer's prospectus
(1) discloses each potential use of unspecified proceeds with qualifying language that the potential use may be subject to change; and
(2) indicates the specific circumstances leading to reallocation and the potential areas of reallocation.
(e) The issuer must demonstrate to the administrator's satisfaction that the offering proceeds, together with all other sources of financing currently available to the issuer, are sufficient to sustain the issuer's proposed activities. If the offering proceeds are insufficient to sustain the issuer's activities for at least 12 months following the offering, the issuer must provide the appropriate risk disclosure of that fact in the prospectus.
(f) If an offering is not a firmly underwritten offering, the issuer must set a minimum amount of proceeds to be raised consistent with the business plan set out in the prospectus. The proceeds of the offering must be impounded, in accordance with 3 AAC 08.190, in an interest-bearing escrow or trust account until the minimum amount is reached. The prospectus must disclose if officers, directors, or other promoters have the right to purchase shares for the purpose of meeting the impound requirements.


3 AAC 08.135
Eff. 4/19/2000, Register 154

Authority:AS 45.55.120

AS 45.55.950

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