1.1                          A bill for an act 
  1.2             relating to securities regulation; making changes 
  1.3             applicable to securities registered under the small 
  1.4             company offering registration; amending Minnesota 
  1.5             Statutes 1998, sections 80A.115, subdivisions 4 and 9. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 80A.115, 
  1.8   subdivision 4, is amended to read: 
  1.9      Subd. 4.  [CONDITIONS.] In order to register under this 
  1.10  section, all of the following conditions must be satisfied: 
  1.11     (1) the offering price for common stock and the exercise 
  1.12  price, if the securities offered are options, warrants, or 
  1.13  rights for common stock, and the conversion price if the 
  1.14  securities are convertible into common stock must be equal to or 
  1.15  greater than $5 $1 per share; and 
  1.16     (2) the aggregate offering price of the securities offered, 
  1.17  within or outside this state, may not exceed $1,000,000 less the 
  1.18  aggregate offering price of all securities sold within the 12 
  1.19  months before the start of and during the offering of the 
  1.20  securities under securities and exchange commission Rule 504 in 
  1.21  reliance on an exemption under section 3(b) of the Securities 
  1.22  Act of 1933.  The issuer may not split its common stock, or 
  1.23  declare a stock dividend for two years after effectiveness of 
  1.24  the registration, except that in connection with a subsequent 
  1.25  public offering, the issuer may upon application and consent of 
  2.1   the commissioner take this action.; 
  2.2      (3) unless an issuer or its predecessors have demonstrated 
  2.3   profitable operations for two of the three fiscal years prior to 
  2.4   registration, determined in accordance with generally accepted 
  2.5   accounting principles, after taxes and excluding extraordinary 
  2.6   items, the fair value of the equity investment, as defined by 
  2.7   the commissioner by rule, of such issuer shall be at least five 
  2.8   percent of the equity investment, as defined by the commissioner 
  2.9   by rule, that would result from the sale of all the securities 
  2.10  proposed to be offered; and 
  2.11     (4) the maximum quantity of cheap stock, as defined by the 
  2.12  commissioner by rule, allowable, expressed as a percentage of 
  2.13  the total number of shares to be outstanding after the proposed 
  2.14  offering, shall be determined by calculating the fair value of 
  2.15  equity investment as a percentage of equity investment in 
  2.16  accordance with the following formulations.  If the percentage 
  2.17  is 20 percent or less, the maximum quantity of cheap stock 
  2.18  allowable shall be 50 percent.  If the percentage is greater 
  2.19  than 20 percent, the maximum quantity of cheap stock allowable 
  2.20  shall be two times the percentage plus ten percent.  The maximum 
  2.21  quantity of cheap stock allowable shall not exceed 90 percent of 
  2.22  the total number of shares to be outstanding after the proposed 
  2.23  offering. 
  2.24     Sec. 2.  Minnesota Statutes 1998, section 80A.115, 
  2.25  subdivision 9, is amended to read: 
  2.26     Subd. 9.  [EFFECTIVE DATE.] A registration statement under 
  2.27  this section becomes effective when the commissioner so orders. 
  2.28  If no stop order is in effect and no proceeding is pending under 
  2.29  section 80A.13, a registration statement under this section 
  2.30  becomes effective automatically at 5:00 p.m. on the 20th full 
  2.31  business day after the filing of the registration statement or 
  2.32  the last amendment of it, or at such earlier time as the 
  2.33  commissioner by order determines. 
  2.34     Sec. 3.  [EFFECTIVE DATE.] 
  2.35     Sections 1 and 2 apply to securities offered or sold on or 
  2.36  after the date of enactment.