Form U-7

	Sign In Sign-Up

Form U-7

http://www.nasaa.org/helpsmallbusiness

Above is the main link for obtaining an RTF copy of theU-7 form from the North American Securities Administrators Association web site, and the page also includes an introduction sheet and an Issuer's manual that aren't included in the next link. (After downloading this info, be sure to visit the subsequent two links for other Forms that are included in the U-7 process.) The greatest charm of the U-7 is probably that I have not found a filing fee for it federally or in California at this time. (There is also no federal fee for Regulation A.) The California fee has been temporarily withdrawn and there deliberately was not a federal fee in order to encourage small businesses.

I have encountered some disparaging comments about the U-7, especially from two web sites: one which took issue with U-7's auditing requirement. I had not paid this great attention, but it might pose a distinct problem for some issuers. Regulation A does not require auditing. The other web site pointed out that in many states a 10% minimum capitalization target is required, or all funds have to be returned. To my knowledge, it is possible to file the U-7 document but not to either audit or reach capitalization targets or pay the $200 minimum filing fee unless more than 35 investors purchase it, but this too could be wrong.

In California, there are two further complications because the recommended advertizing format is strongly discouraged, and a $600 fee is required; and the "finder's fee" commission format which would hopefully offset the NASD(AQ) monopoly on public stock offerings, is for all intensive purposes eliminated by a $10,000 surety bond. Again, from what I gather, Regulation A may offer an advantage over the U-7/SCOR/ULOR, if one chooses the obtuse path of issuing public stock.

I strongly recommend reading the Garage Shares and Funding Garage Inventions sections for some clarity in this matter. From the number of obstacles positioned around this uniform equity-for-small-companies vehicle, one gathers that it is not much used. In those sections I touch on some of the higher truths about equity and fundraising, such as that one can issue stock to whomever one pleases with few if any forms when one is providing value and not risk.

The actual Form for reading or downloading to disk in RTF format and other information: http://www.nasaa.org/helpsmallbusiness/scor/formu7/default.htm .

Some forms that are required for the U-7 to be filled out completely are found at this page: file://www.nasaa.org/bluesky/uniform/default.htm . If it fails to connect, go to the main page, http://www.nasaa.org and navigate to the "blue sky" and then "uniform" (commercial code) pages.

And lastly, the Securities and Exchange Commission Form D is required to be filed. It is found at: http://www.sec.gov/smbus/forms/formssb.htm . Or you can get the Form D directly at http://www.sec.gov/smbus/forms/formd.htm .

8 Garage Capital 1999