Cal. Code Regs. Tit. 10, § 260.113 - Application for Qualification by Permit

Current through Register 2022 Notice Reg. No. 16, April 25, 2022

An application for the qualification of the offer and sale of securities by permit pursuant to Section 25113 of the Code shall, in addition to the facing page required by Section 260.110 of these rules and items 8 through 10 and 12 through 18 specified in Section 260.112 of these rules, continue in the following form:

(Note: The applicant's response to Item 21(j) of the application for qualification by permit pursuant to Corporations Code Section 25113 incorporates the information requested by Item 11 of Section 260.112 of these rules. Consequently, applicant's response to Item 11 should beThe applicant's response to Item 21(j) of the application for qualification by permit pursuant to Corporations Code Section 25113 incorporates the information requested by Item 11 of Section 260.112 of these rules. Consequently, applicant's response to Item 11 should be "see response to Item 21(j)." In addition, the small company applicant's response to items of Section 260.112 and Section 260.113 of these rules may incorporate the information contained in the Form U-7 by referring to the appropriate page and question number of the Form U-7.)

ITEM 19. PRIOR ISSUANCES PURSUANT TO CODE SECTIONS25102(f), (h), (n) AND (o). If the applicant has issued securities pursuant to the exemptions from qualification provided for in Sections 25102(f), (h), (n) and (o) of the Code, briefly state the details of the transaction(s).


(i) Interest or participation in oil, gas or mining titles or leases: The following, if appropriate:
(a) A description of the properties involved and copies of all conveyances, assignments, leases, subleases or other instruments or agreements relating to said properties together with an opinion of counsel or title policy indicating that applicant has title to such properties.
(b) A statement of the area of interest to the applicant, a description of the plan of exploration including, where available, anticipated drilling depth, the horizon or horizons in which hydrocarbon substances are expected and the nature of such hydrocarbons, the estimated costs of drilling and completing the well or wells proposed to be drilled, and the availability of a market or markets for hydrocarbons discovered.
(c) In the case of programs other than wildcat drilling, a geological report and appraisal which indicate the proposed method of development and production, a statement of the method used in preparing such report, together with supporting geological and engineering data, a table setting forth the estimated future production and the present value thereof, together with a statement of the factor or factors used in making such estimate, and an estimate of the expenses to be incurred in connection with development and production of minerals as proposed in such geological report.
(d) If the securities proposed to be issued involve minerals other than oil, gas or other hydrocarbons, the applicant shall include a mineral report which indicates the area of interest to the applicant, the geological information available to such applicant with respect to such area, the results of other mineral operations in the area, if known, a description of the plan of operation including, where available, the extent of ore deposits, the cost of development and production thereof, the market or markets for minerals produced and the cost of marketing such minerals.
(e) Copies of all instruments or agreements which will convey an interest in minerals to the proposed purchasers and a statement of the ownership of other interests in the same minerals. In the event that there is a relationship or an arrangement between one or more holders of such an interest in minerals and the applicant, the nature thereof shall be described.
(ii) Real Estate Syndicates: The following if appropriate: (a) A copy of an appraisal of the property of recent date should be attached hereto as an additional exhibit. In lieu of an appraisal, in cases where the property is being acquired from other than a promoter of the applicant and where no real estate commission in connection with the acquisition is being paid to anyone related to the applicant, a valuation of the property may be submitted together with a detailed description of the method of valuation. (b) Such other information as may be necessary to demonstrate compliance with Sections through of Title 10 of the California Code of Regulations.
(iii) Mutual Water Companies: An application for a permit to offer and sell securities of a mutual water company must demonstrate compliance with Sections 260.140.71 through of Title 10 of the California Code of Regulations.
(iv) Church debt securities: An application for permit to offer and sell church debt securities must demonstrate compliance with Subarticle 7.2, Article 4, Subchapter 2 of these rules.

ITEM 21. EXHIBITS. Attach and incorporate by reference the following exhibits:

Note: Any exhibit which is inapplicable should be listed by letter on the form followed simply by the word "inapplicable."

A.A copy (which may be in the form of a restated or composite copy) of applicant's charter documents as described in Section260.001 of Title 10 of the California Code of Regulations.
B.Specimen certificate evidencing the security to be issued. (Instruction: Certificates for common stock which are to be in a standard printer's form without any additional substantive provisions should not be submitted.)
C.A copy of any contract made or to be made by the issuer affecting any of the rights, preferences, privileges or transferability of the securities.
D.Subject to the following instruction, a copy of any agreement made or to be made by or among shareholders of the issuer which materially affects, or will materially affect, any of the rights, preferences, privileges, or restrictions of or on securities of the issuer or the management of the issuer (including any voting agreement, irrevocable proxy or shareholders' agreement). Instruction: If a copy of an agreement is not available to the issuer, so state and furnish a brief description of the agreement including therein such information regarding the parties and terms as is known to the issuer. Nothing contained herein shall be construed as requiring the issuer to disclose information concerning agreements of which it has no knowledge.
E.Financial statements of the issuer and any other business involved in this transaction as required by Section 260.613 of Title 10 of the California Code of Regulations.
F.A copy of any advertisement, prospectus, or Small Corporate Offerings Registration Form (Form U-7 disclosure document as described in Section 260.113.1 of these rules) to be used in connection with the offer or sale of the securities. Also include the consent of any attorney, accountant or other expert named in any such advertisement, prospectus, or Form U-7, if required pursuant to Section 260.504.2.2 of Title 10, California Code of Regulations, in the form required by that section.
G.A description of the consideration to be received by applicant in exchange for the securities if other than cash. Instructions: If the applicant proposes to issue securities in exchange for consideration other than cash, state in tabular form the total number of shares proposed to be issued for each type of consideration, the per share selling price based on the consideration proposed to be paid and the names of the purchasers for each category. Submit an appraisal or detailed description of the valuation thereof, or if for a patent or invention for which an application for patent is pending, a copy of the patent or application together with an opinion of a patent attorney covering subjects of ownership and validity thereof and of infringement of patents of others by products as disclosed therein, and a description of all contracts, licenses and assignments of rights or interests therein.
H.A list of the names of the proposed purchasers or an identification of the class of the proposed offerees, if the application is for a limited offering qualification. Instructions: A list of the complete names, post office addresses and occupations of the proposed issuees and a statement as to the relationship, if any, of the proposed issuees to the promoters, officers or directors of applicant. Further information as to the financial responsibility and investment experience of the proposed purchasers, while not required as part of the original application except in connection with oil and gas or mining interests and real estate syndicates, if furnished may serve to facilitate processing by the Department. (UPON REQUEST, AND IN ACCORDANCE WITH RULE 250.10, SUCH INFORMATION WILL BE TREATED AS CONFIDENTIAL BY THE COMMISSIONER.) If the applicant proposes to limit the offering to a class of purchasers, information concerning the financial and other qualifications which will be used to determine the class, together with the methods to be used by the applicant in qualifying purchasers within that class, should be submitted.
(1) The Consent to Service of Process if required by Section 25165 of the California Corporations Code.
(2) A Customer Authorization of Disclosure of Financial Records Form (Form No. QR 500.259).
(1) A list containing the complete names of the directors, officers, trustees, and/or general partners, as the case may be, and the general managers, principal executives and/or other persons who will be charged with the business activities and operations of the applicant and with respect to each of the foregoing persons, the current post office address, age, and current occupation and principal occupation during the last five years.
(2) A statement of any order, judgment or decree of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is an officer or director, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any misdemeanor involving a security or any aspect of the securities business, or of theft, or of any felony.
K.In the event applicant has not commenced business and has no assets or liabilities, in lieu of financial statements a statement should be submitted, in the form of a budget, setting forth (i) the use proposed to be made of the proceeds from the sale of the securities, including all expenditures to be made or incurred; (ii) the total projected financing requirements of the applicant for six months or, if the proposed plan of operation requires initial financing for a period longer than six months, for such longer period; and (iii) a statement setting forth the sources of all of the required funds other than from the sale of securities, including any proposed loans or contributions to capital.

ITEM 22. REPORTS OF FINANCIAL CONDITION. Pursuant to Section 25146 of the California Corporations Code and Section 260.146 of Title 10 of the California Code of Regulations, applicant hereby undertakes, as long as required under the foregoing sections and subject to the exception therein contained, to file with the Commissioner:

(a) within 120 days after the end of each fiscal year a report of financial condition and a related statement of income and expenses covering such fiscal year; and
(b) within 90 days after the first six months of each fiscal year, a like report and statement covering such six months period.

ITEM 23. SMALL COMPANY UNDERTAKING. For an application filed under Section 25113(b)(2) of the California Corporations Code, the applicant hereby undertakes that there will be no stock splits, stock dividends, spinoffs, or mergers for a period of two years from the close of the offering.

(Note: The application must be signed and verified in the following manner.)The application must be signed and verified in the following manner.)

The applicant has duly caused this application to be signed on its behalf by the undersigned, thereunto duly authorized.






I certify (or declare) under penalty of perjury under the laws of the State of California that I have read this application and the exhibits thereto and know the contents thereof, and that the statements therein are true and correct.

Executed at ________________________, on ________, 20 ___.

(Place) (Date)




Cal. Code Regs. Tit. 10, § 260.113

Note: Authority cited: Sections 25113(b), 25610 and 25612, Corporations Code. Reference: Sections 25102, 25110,25113, and 25160, Corporations Code.

1. Amendment of Item 20.(iii) filed 4-14-83; effective thirtieth day thereafter (Register 83, No. 16). For prior history, see Register 79, No. 2.
2. Amendment filed 10-26-84; effective thirtieth day thereafter (Register 84, No. 43).
3. Editorial correction (Register 85, No. 17).
4. Amendment of Item 20 filed 2-8-89; operative 3-10-89 (Register 89, No. 8).
5. Amendment and new Item 23 filed 7-1-93; operative 7-1-93 (Register 93, No. 27).
6. Change without regulatory effect amending Item 20 (iii) filed 9-30-93 pursuant to title 1, section 100, California Code of Regulations (Register 93, No. 40).
7. Change without regulatory effect amending Item 20 (iv) and Item 23 filed 9-25-2002 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 39).
8. Amendment of Item 19 and Note filed 9-23-2009; operative 10-23-2009 (Register 2009, No. 39).

The following state regulations pages link to this page.

State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.