Section 260.140.05 - Securities of Speculative Business(a) An application for an open qualification normally will not be approved if the business in which the issuer is engaged is not reasonably anticipated to produce profits within a reasonable period of time. A period of time not exceeding twenty-four months after the date of the approval of the application is presumptively reasonable; however a longer period of time may be authorized in light of the nature and circumstances of the proposed business, including the operational norms for the industry in which the business will operate.(b) Any prospective financial information that an applicant submits to demonstrate a reasonable anticipation of profits shall be prepared by the issuer and based upon appropriate and reasonable assumptions. The Department may require a specified level of service to be performed by an independent certified public accountant in accordance with standards established by the American Institute of Certified Public Accountants ("AICPA") and that any such prospective financial information submitted by an applicant be examined by an independent certified public accountant. The specified level of service to be performed by an independent certified public accountant may include: (1) examination of prospective financial statements, either forecasted or projected;(2) compilation of prospective financial statements, either forecasted or projected;(3) performing feasibility studies;(4) providing assistance in developing forecasting systems; and(5) identifying factors to be considered in developing prospective financial statements, forecasts and projections.(c) Each small business issuer shall deliver to each prospective purchaser of a security to be issued by such issuer, at least five business days before a prospective purchaser's offer to purchase securities is accepted by such issuer, a copy of "A Consumer's Guide to Small Business Investments" prepared by the North American Securities Administration Association (see, CCH NASAA Reports, Para. 3676). A copy of this guide may be obtained from any office of the Department.Cal. Code Regs. Tit. 10, § 260.140.05
1. New section filed 5-10-73; effective thirtieth day thereafter (Register 73, No. 19).
2. Amendment of newly designated subsection (a) and new subsections (b)-(c) filed 12-19-95; operative 1-18-96 (Register 95, No. 51). Note: Authority cited: Sections 25241 and 25610, Corporations Code. Reference: Sections 25140- 25142, 25241 and 25534, Corporations Code.
1. New section filed 5-10-73; effective thirtieth day thereafter (Register 73, No. 19).
2. Amendment of newly designated subsection (a) and new subsections (b)-(c) filed 12-19-95; operative 1-18-96 (Register 95, No. 51).