Current through Register Vol. 41, No. 25, June 23, 2022
offer, but not a sale, of a security made by or on behalf of an issuer for the
sole purpose of soliciting an indication of interest in receiving a prospectus
for the security shall be exempt from the requirements of K.S.A. 17-12a301 through 17-12a306 and K.S.A. 17-12a504 and amendments thereto, if all of the
following requirements are met:
issuer shall be a business entity organized under the laws of the state of
Kansas having, both before and upon completion of the offering, its principal
office and a majority of its full-time employees located in this state.
(2) At least 80 percent of the net
proceeds from the offering shall be used in connection with the operations of
the issuer in this state.
issuer shall not be engaged in or propose to engage in petroleum exploration or
production, mining, or other extractive industries and shall not be a
development stage company that either has no specific business plan or purpose
or has indicated that its business plan is to engage in merger or acquisition
with an unidentified company or companies or other entity or person.
The offeror shall intend to register the
security in this state and conduct its offering pursuant to one of the
following federal laws or regulations, as adopted by reference in K.A.R.
(A) Section 3(a)(11) of the
securities act of 1933;
regulation A, 17 C.F.R. 230.251
et seq.; or
(C) rule 504 of SEC regulation D, 17 C.F.R.
(5) Ten business
days before the initial solicitation of interest under this regulation, the
offeror shall file with the administrator a solicitation of interest form
KSC-15 along with any other materials to be used to conduct solicitations of
interest, including the script of any broadcast to be made and a copy of any
notice to be published.
business days before usage, the offeror shall file with the administrator any
amendments to the foregoing materials or additional materials to be used to
conduct solicitations of interest, except for materials provided to a
particular offeree pursuant to a request by that offeree.
(7) No solicitation of interest form, script,
advertisement, or other material shall be used to solicit indications of
interest if the administrator has instructed the offeror not to distribute the
(8) Except for scripted
broadcasts and published notices, the offeror shall not communicate with any
offeree about the contemplated offering, unless the offeree is provided with
the most current solicitation of interest form at or before the time of the
communication or within five days after the communication.
(9) During the solicitation of interest
period, the offeror shall not solicit or accept money or a commitment to
(10) No sale
shall be made until seven days after the delivery of a prospectus to the
offeror shall comply with each of the following requirements:
Each published notice or script for
broadcast shall contain at least the identity of the chief executive officer of
the issuer, a brief and general description of its business and products, and
the following legends:
(A) "NO MONEY OR OTHER
CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED."
(B) "NO SALES OF THE SECURITIES WILL BE MADE
OR COMMITMENT TO PURCHASE ACCEPTEDUNTIL DELIVERY OF AN OFFERING CIRCULAR THAT
INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING."
(C) "AN INDICATION OF INTEREST MADE BY A
PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND."
(D) "THIS OFFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE
SECURITIES LAWS. NO SALE MAY BE MADE UNTIL THE OFFERING STATEMENT IS REGISTERED
IN THIS STATE."
communications with prospective investors made in reliance on this regulation
shall cease after a registration statement is filed in Kansas, and no sale may
be made until at least 20 calendar days after the last communication made in
reliance on this regulation.
preliminary prospectus or its equivalent may be used only in connection with an
offering for which indications of interest have been solicited under this
regulation if the offering is conducted by a registered broker-dealer.
The exemption specified in subsection (a) shall not be available to an offeror
who knows, or in the exercise of reasonable care should know, that the issuer
or any one of its officers, directors, 10 percent shareholders, or promoters
meets any of the following conditions:
Has filed a registration statement that is subject to a currently effective
registration stop order entered pursuant to any federal or state securities law
within five years before the filing of the solicitation of interest form;
(2) has been convicted, within
five years before the filing of the solicitation of interest form, of any
felony or misdemeanor in connection with the offer, purchase, or sale of any
security, or any felony involving fraud or deceit, including forgery,
embezzlement, obtaining money under false pretenses, larceny, and conspiracy to
(3) is subject to any
current federal or state administrative enforcement order or judgment entered
by any state securities administrator or the securities and exchange commission
within five years before the filing of the solicitation of interest form;
(4) is subject to any federal or
state administrative enforcement order or judgment entered within five years
before the filing of the solicitation of interest in which fraud or deceit was
(5) is subject to any
federal or state administrative enforcement order or judgment that prohibits,
denies, or revokes the use of any exemption from registration in connection
with the offer, purchase, or sale of securities; or
(6) is subject to any current order,
judgment, or decree of any court of competent jurisdiction that temporarily,
preliminarily, or permanently restrains or enjoins the party from engaging in
or continuing any conduct or practice in connection with the purchase or sale
of any security, or involves the making of any false filing with the state,
entered within five years before the filing of the solicitation of interest
Failure to comply with any
condition of subsection (a) shall constitute grounds for denying or revoking
the exemption for a specific security or transaction and shall be grounds for
other relief and sanctions under K.S.A. 17-12a603 and 17-12a604, and amendments
thereto. However, upon application by the offeror, the failure to comply shall
not result in the loss of the exemption for any offer to a particular
individual or entity if the administrator determines that all of the following
conditions are met:
(A) The failure to comply
did not pertain to a condition directly intended to protect that particular
individual or entity.
failure to comply was insignificant with respect to the offering as a whole.
(C) A good faith and reasonable
attempt was made to comply with all applicable conditions of subsection (a).
(2) Failure to comply
with any requirement in subsection (b) shall constitute grounds for denying or
revoking the exemption for a specific security or transaction and shall be
grounds for other relief and sanctions under K.S.A. 17-12a603 and 17-12a604,
and amendments thereto, but shall not result in the loss of the exemption for
the entire offering.
(1) Upon application by the offeror and the
showing of good cause, any condition of this exemption may be waived in writing
by the administrator.
application by the offeror and the showing of good cause, the disqualification
specified in subsection (c) may be waived in writing by the administrator under
any of the following circumstances:
person subject to the disqualification is currently licensed or registered to
conduct securities-related business in the state in which the administrative
order or judgment was entered against the person.
(B) The broker-dealer employing the person is
registered in Kansas, and the form BD filed in Kansas discloses the order,
conviction, judgment, or decree relating to the person.
(C) The agency that created the basis for
disqualification determines upon a showing of good cause that it is not
necessary under the circumstances that the exemption be denied, and the
administrator concurs with that determination.
(3) The absence of any objection or order by
the administrator with respect to any offer of securities undertaken pursuant
to this regulation shall not be deemed to be a waiver of any condition of the
regulation and shall not be deemed to be a confirmation by the administrator of
compliance with this regulation.
(f) Integration. An offer made in reliance on
this regulation shall not result in a violation of the registration
requirements by virtue of being integrated with subsequent offers or sales of
securities, unless the subsequent offers and sales would be integrated under
federal securities laws.
Effect on other exemptions. Issuers on whose behalf indications of interest are
solicited under this regulation shall not make offers or sales in reliance on
K.S.A. 17-12a202(1) or 17-12a202(14) and amendments thereto, or K.A.R. 81-5-6
until six months after the last communication with a prospective investor made
pursuant to this regulation.