ARIZONA SECURITIES DIVISION
1300 W. WASHINGTON
THIRD FLOOR
PHOENIX, AZ. 85007

ARIZONA JOINS 36 OTHER STATES TO SIMPLIFY
STOCK SALES BY MID-SIZED COMPANIES

A new multistate program designed to cut costs and red-tape for mid-sized companies that want to raise money through stock offerings successfully completed its first filing yesterday, the Arizona Corporation Commission today announced. The first company is California-based REAL GOODS TRADING COMPANY.

Eighteen months in the planning, the new national COORDINATED EQUITY REVIEW (CER) program makes it easier for emerging companies to register stock offerings in the states in which they hope to sell shares. Of the 43 state securities agencies that register this type of offering, 37 have agreed to participate with the number expected to grow. The new program will target stock offerings on the NASDAQ Small Cap, over-the-counter, and other small exchanges. The size of these offerings range from $5 million to $20 million dollars. "We've worked hard to create a simple, uniform program that responds to the needs of emerging companies without sacrificing investor protection, " states Michael G. Burton, Sr., Director of Securities. "Since smaller companies are the engine of America's economic growth, everyone will benefit by our making it more cost effective for them to raise money."

For decades, a small business that wanted to raise money through the sale of stock has been required to register its offering in all of the states where it would be initially offered -- a process known as obtaining "blue-sky" approval. Mid-size companies have found that approval process to be time-consuming and expensive.

To solve this problem, the CER program shifts much of the burden to the regulator. To register its stock, the issuer sends a completed U-1 form ("Uniform Application to Register Securities"), along with a simplified, two-page application for coordinated state review, to the securities departments of the states in which it intends to offer stock. The issuer also sends its application documents to the Arizona Securities Division which has volunteered to act as project administrator.

But then things get much simpler. Within three days, an Arizona official designates two "lead" states. The "non-lead" states have ten business days to comment on the issuer's application. Once the lead states collect and consolidate all the comments, they promptly produce one coordinated review letter that is sent to the company. The lead states then resolve outstanding comments with the issuer's legal counsel. Once the lead states clear the application, all participating states agree to clear it, as well.

"Coordinated Equity Review means businesses can now predict when they may be cleared to offer share ownership to their customers and others in many states," states Drew Field, a securities attorney and author of Direct Public Offerings. "This new cooperation among the states could pave the way for reducing federal review of offerings of $10 million dollars and less."

According to Mike Liles, Jr., co-chair of the Subcommittee on Limited Offerings of the Committee on State Regulation of Securities of the Business Law Section of the American Bar Association, "The efficiency in regulatory processing of stock offerings from this coordination among the states should expedite the capital raising efforts of emerging companies. Previously, companies and their counsel had to undertake this coordination on their own. Now the states have embodied it in their own regulatory system and removed the burden from the private sector."

"The national Coordinated Equity Review program should encourage smaller companies that have shied away from doing large, multistate offerings in the past to take a second look," adds Washington State Securities Division Administrator Deborah R. Bortner, who served as chair of the North American Securities Administrators Association committee overseeing the program's development. "We already have in place a similar regional review system for Small Corporate Offering Registration (SCOR) and Regulation A filings that is working quite well. It is designed for companies offering stock valued at under $5 million."

Other states participating in the national Coordinated Equity Review program include Alaska, Alabama, Arkansas, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.

Because the states of Colorado, Florida, Georgia, Hawaii, Louisiana, New York, and Wyoming do not require state-level review of this type of filing, they are not included in the program.

For information on options for small businesses that want to offer securities in Arizona, call the Securities Division at (602) 542-4242, fax (602) 594-7470, or e-mail at accsec@ccsd.cc.state.az.us.