Blue Sky Manual Exemptions

This information was last updated on December 14, 2004. Always check with your legal counsel as to the current laws and requirements in the jurisdictions you are concerned. These provisions are subject to change and should not be relied on in substitution of legal advice. Please also note, this exemption is a non-issuer exemption.

45.55.900(b)(17) a nonissuer transaction by a registered agent of a registered broker-dealer, and a resale transaction by a sponsor of a unit investment trust registered under 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), in a security of a class that has been outstanding in the hands of the public for at least 90 days if, at the time of the transaction,
	(A)	the issuer of the security is actually engaged in business and not in the organization stage or in bankruptcy or receivership and is not a blank check, blind pool, or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;
	(B)	the security is sold at a price reasonably related to the current market price of the security;
	(C)	the security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	(D)	a nationally recognized securities manual, which may be designated by rule or order of the administrator, or a document filed with the United States Securities and Exchange Commission that is publicly available through the United States Securities and Exchange Commission's electronic data gathering and retrieval system, contains:
		(i)	a description of the business and operations of the issuer;
		(ii)	the names of the issuer's officers and directors, if any, or, in the case of an issuer not domiciled in the United States, the corporate equivalents of such persons in the issuer's country of domicile;
		(iii)	an audited balance sheet of the issuer as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had that audited balance sheet, a pro forma balance sheet; and
		(iv)	an audited income statement for each of the issuer's immediately preceding two fiscal years or for the period of existence of the issuer if the issuer has been in existence for less than two years or, in the case of a reorganization or merger where the parties to the reorganization or merger had that audited income statement, a pro forma income statement; and
	(E)	the issuer of the security has a class of equity securities listed on a national securities exchange registered under 15 U.S.C. 78a - 78lll (Securities Exchange Act of 1934) or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless the issuer of the security:
		(i)	is a unit investment trust registered under 15 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940);
		(ii)	including predecessors, has been engaged in continuous business for a least three years; or
		(iii)	has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had that balance sheet, a pro forma balance sheet;
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44-1844(A)11. A nonissuer transaction in an outstanding security, including the sale by a dealer, including an underwriter no longer acting as an underwriter in respect to the securities involved, of securities sold and distributed to the public, but not including securities constituting an unsold allotment to or subscription by the dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter, if the class of security has been outstanding in the hands of the public for not less than ninety days preceding the date of the transaction and a recognized manual of securities designated by the commission by rule or order at the time of sale contains the names of the issuer's officers and directors, a statement of financial condition of the issuer as of a date within eighteen months of the date of the sale and a statement of income or operations for each of the two fiscal years next before the date of the statement of financial condition or for the period from the commencement of the issuer's existence to the date of the statement of financial condition if the period is less than two years.

R14-4-138(A)(1). A non-issuer transaction in an outstanding security (including an American Depository Receipt representing such a security), of an issuer domiciled in a foreign country with which the United States is at the time of the transaction maintaining diplomatic relations (including the sale by a dealer, including an underwriter no longer acting as an underwriter in respect to the securities involved, but not including securities constituting an unsold allotment to or subscription by the dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter), if the class of security has been outstanding in the hands of the public for not less than 90 days preceding the date of the transaction and if, at the time of the transaction, the conditions of subsections (a) and (b) hereof are met:
	a.	The exemption of subsection (A)(1) is not available unless one of the following requirements is met:
		i.	The most recent edition of Moody's International Manual or Standard & Poor's Corporation Records, or the periodic supplements to such publications (hereinafter referred to as the "Manual"), contains a description of the issuer's business or operations, the names of the issuer's officers and directors (or their corporate equivalents in the issuer's country of domicile), an audited balance sheet of the issuer as of a date within 18 months of the date of the transaction and audited profit and loss statements for each of the issuer's two fiscal years immediately preceding the date of such balance sheet (such statements to be prepared in accordance with U.S. or Foreign GAAP); or
		ii.	The issuer of the security has a class of securities subject to the reporting requirements of Section 13 of the Securities Exchange Act, 15 U.S.C.A. 78m (West 1981 & Supp. 1992) ("Section 13") or Section 15(d) of the Securities Exchange Act, 15 U.S.C.A. 78o(d) (West 1981) ("Section 15(d)") and is not delinquent in such reporting. Section 13 and Section 15(d) are incorporated herein by reference and on file with the Secretary of State; or
		iii.	The security is exempted from the provisions of Section 12(g) of the Securities Exchange Act of 1934, 15 U.S.C.A. 78l(g) (West 1981) by Section 12(g)(3) of that Act, 15 U.S.C.A. 78l(g)(3) (West 1981) and the issuer is in compliance with all of the conditions of Section 12g3-2(b)(1), 17 CFR 240.12g3-2(b)(1) (1992) which sections and rule are incorporated herein by reference and on file with the Secretary of State.
	b.	The exemption of subsection (A)(1) is not available unless all of the following requirements are met:
		i.	The issuer, including any predecessors, has been in continuous operation for at least the preceding five years, is a going concern actually engaged in business and is not in an organizational or developmental stage, and is not in bankruptcy or receivership; and
		ii.	The issuer has net tangible assets of at least U.S. $25,000,000 as of the date of its most recent audited financial statement prepared in accordance with U.S. or Foreign GAAP. Such statement shall be dated as of a date within 18 months of the date of the transaction; and
		iii.	The issuer had an average net income after taxes of at least U.S. $1,000,000 over its most recent two consecutive years of operation according to audited profit and loss statements of the issuer prepared in accordance with U.S. or Foreign GAAP for the issuer's two fiscal years immediately preceding the date of the financial statement referred to in subsection (A)(1)(b)(ii) hereof; and
		iv.	The issuer has a class of securities listed or traded on a stock exchange or automated quotation system organized under the laws of its country of domicile; and
		v.	For the issuer's securities in the United States, there are at least two market makers, who are registered broker-dealers under the Securities Exchange Act of 1934, or at least one market maker who is a registered broker-dealer under the Securities Exchange Act of 1934 and who has a net capital of at least $25,000,000.

23-42-504(a)(2) Any nonissuer transaction by a registered agent of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety (90) days provided, at the time of the transaction:
	(A)	The issuer of the security is actually engaged in business and not in the organization stage or in bankruptcy or receivership and is not a blank check, blind pool or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;
	(B)	The security is sold at a price reasonably related to the current price of the security;
	(C)	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	(D)	A nationally recognized securities manual designated by rule or order of the commissioner or a document filed with the Securities and Exchange Commission that is publicly available through the Securities and Exchange Commission�s Electronic Data Gathering and Retrieval System (EDGAR) and contains:
		(i)	A description of the business and operations of the issuer;
		(ii)	The names of the issuer�s officers and directors, if any, or, in the case of an issuer not domiciled in the United States, the corporate equivalents of such persons in the issuer�s country of domicile;
		(iii)	An audited balance sheet of the issuer as of a date within eighteen (18) months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheets, a pro forma balance sheet; and
		(ix)	An audited income statement for each of the issuer�s immediately preceding two (2) fiscal years, or for the period of existence of the issuer, if in existence for less than two (2) years, or, in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statements, a pro forma income statement; and
	(E)	The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless:
		(i)	The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940, or
		(ii)	The issuer of the security has been engaged in continuous business (including predecessors) for at least three (3) years, or
		(iii)	The issuer of the security has total assets of at least two million dollars ($2,000,000) based on an audited balance sheet as of a date within eighteen (18) months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheets, a pro forma balance sheet.

Rule 504.01(A)(2) Manual Exemption.
	(a)	The following will be considered recognized manuals:
		(1)	Standard & Poor's Standard Corporation Records;
		(2)	Moody's Industrial Manual;
		(3)	Moody's Bank and Finance Manual;
		(4)	Moody's Municipal and Government Manual;
		(5)	Moody's Transportation Manual;
		(6)	Moody's Public Utility Manual;
		(7)	Moody's OTC Industrial Manual;
		(8)	Moody's International Manual.
	(b)	Supplements to the above recognized manuals are recognized, provided that the necessary information required by the Act is disclosed and the supplements are subsequently incorporated and published in the respective annual manual.
	(c)	The distribution of large blocks of securities by controlling persons in firmly underwritten offerings will ordinarily be presumed to be for the direct or indirect benefit of the issuer, and not within the provisions of the manual exemption.
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Sec. 36b-21(b)(2) any nonissuer transaction by a registered agent of a registered broker-dealer in a security of a class that has been outstanding in the hands of the public for at least ninety days provided, at the time of the transaction:
	(A)	The security is sold at a price reasonably related to the current market price of the security;
	(B)	the security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	(C)	a nationally recognized securities manual contains:
		(i)	a description of the business and operations of the issuer;
		(ii)	the names of the issuer�s officers and directors or, in the case of a non-United-States issuer, the corporate equivalents of such persons in the issuer�s country of domicile;
		(iii)	an audited balance sheet of the issuer as of a date within eighteen months, or in the case of a reorganization or merger where the parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet; and
		(iv)	an audited income statement for each of the issuer�s immediately preceding two fiscal years, or for the period of existence of the issuer, if in existence for less than two years, or in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statement, a pro forma income statement; and
	(D)	the issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless the issuer, including any predecessors of the issuer
		(i)	has been engaged in continuous business for at least three years, or
		(ii)	has total assets of at least two million dollars based on an audited balance sheet of the issuer as of a date within eighteen months, or in the case of a reorganization or merger where the parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet.
The exemption in this subdivision shall not be available for any distribution of securities issued by a blank check company, shell company, dormant company or any issuer that has been merged or consolidated with or has bought out a blank check company, shell company or dormant company unless the issuer or any predecessor has continuously operated its business for at least the preceding five years and has had gross operating revenue in each of the preceding five years, including gross operating revenue of at least five hundred thousand dollars per year in three of the preceding five years;

Sec. 36b-31-21b-2. Manual exemption

In implementing section 36b-21(b)(2)(A) of the general statutes, �recognized securities manual� shall include only Standard & Poors Standard Corporation Descriptions, Standard & Poors Corporation Records, Moody�s Industrial Manual, Moody�s Bank and Finance Manual, Moody�s Transportation Manual, Moody�s OTC Industrial Manual, Moody�s Public Utility Manual and Moody�s International Manual. Supplements to such manuals are recognized if the information required by section 36b 21(b)(2)(A) of the general statutes is disclosed in the supplement and the supplement is subsequently incorporated and published in the respective annual manual. If the manual contains the information required by section 36b 21(b)(2)(A) of the general statutes only in abbreviated form, the securities transaction is not exempt under section 36b 21(b)(2)(A) of the general statutes.

(Effective July 3, 1995)

7309(b)(2) Any nonissuer transaction by a registered agent of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least 90 days, provided, at the time of the transaction:
	a.	The issuer of the security is actually engaged in business and not in the organization stage or in bankruptcy or receivership and is not a blank check, blind pool or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person or persons;
	b.	The security is sold at a price reasonably related to the current market price of the security;
	c.	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	d.	A nationally recognized securities manual designated by rule or order of the Commissioner or a document filed with the Securities and Exchange Commission that is publicly available through the SEC�s Electronic Data Gathering and Retrieval System (EDGAR) and contains:
		1.	A description of the business and operations of the issuer;
		2.	The names of the issuer�s officers and directors, if any, or, in the case of an issuer not domiciled in the United States, the corporate equivalents of such persons in the issuer�s country of domicile;
		3.	An audited balance sheet of the issuer as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet; and
		4.	An audited income statement for each of the issuer�s immediately preceding 2 fiscal years, or for the period of existence of the issuer, if in existence for less than 2 years or, in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statement, a pro forma income statement; and
	e.	The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System (NASDAQ), unless:
		1.	The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;
		2.	The issuer of the security has been engaged in continuous business (including predecessors) for at least 3 years; or
		3.	The issuer of the security has total assets of at least $2,000,000 based on an audited balance sheet as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet.

� 31-5604.02(2) A nonissuer transaction by a licensed agent of a licensed broker-dealer, and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding and publicly held for at least 90 days; provided, that at the time of the transaction:
	(A)	The issuer of the security is actually engaged in business and not in the organizational stage or in bankruptcy or receivership and is not a blank check, blind pool, or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;
	(B)	The security is sold at a price reasonably related to the current market price of the security;
	(C)	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	(D)	A nationally recognized securities manual designated by rule or order of the Commissioner or a document filed with the Securities and Exchange Commission which is publicly available through the Securities and Exchange Commission's Electronic Data Gathering and Retrieval System contains:
		(i)	A description of the business and operations of the issuer;
		(ii)	The names of the issuer's officers and directors, if any, or, in the case of a non-United States issuer, the corporate equivalents of such persons in the issuer's country of domicile;
		(iii)	An audited balance sheet of the issuer as of a date within 18 months, or in the case of a reorganization or merger where parties to the reorganization or merger had an audited balance sheet, a pro forma balance sheet as of a date within 18 months;
		(iv)	An audited income statement for each of the issuer's immediately preceding 2 fiscal years or for the period of existence of the issuer, if in existence for less than 2 years or, in the case of a reorganization or merger where the parties to the reorganization or merger had an audited income statement, a pro forma income statement; and
	(E)	The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System or any other electronic trading system which the Commissioner designates by rule to have substantially the same standards for listing or trading, unless:
		(i)	The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;
		(ii)	The issuer of the security has been engaged in continuous business (including predecessors) for at least 3 years; or
		(iii)	The issuer of the security has total assets of at least $2 million based on an audited balance sheet as of a date within 18 months or, in the case of a reorganization or merger where parties to the reorganization or merger had an audited balance sheet, a pro forma balance sheet;

1900.11 Pursuant to the power granted in Section 307 of the District of Columbia Securities Act of 2000 (the �Act�), the Commissioner of the District of Columbia Department of Insurance and Securities Regulation hereby recognizes each of the securities manuals listed in � 1900.12 to be a �nationally recognized securities manual� under Title IV, Section 402(2)(D) of the Act and the conditions attached therein. The term �manual� for purposes of this order shall include all commonly recognized formats of publications, including CD-ROM and electronic dissemination over the Internet.

1900.12 The Department recognizes the following securities manuals:
	(a)	Mergent�s Industrial Manual;
	(b)	Mergent�s Transportation Manual;
	(c)	Mergent�s Public Utility Manual;
	(d)	Mergent�s Bank and Finance Manual;
	(e)	Mergent's International Manual;
	(f)	Standard & Poor�s Standard Corporation Descriptions;
	(g)	Fitch�s Individual Stock Bulletin; and
	(h)	Mergent�s OTC Industrial Manual.

517.061 (20) Any nonissuer transaction by a registered associated person of a registered dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least 90 days; provided, at the time of the transaction:
	(a)	The issuer of the security is actually engaged in business and is not in the organization stage or in bankruptcy or receivership and is not a blank check, blind pool, or shell company whose primary plan of business is to engage in a merger or combination of the business with, or an acquisition of, any unidentified person;
	(b)	The security is sold at a price reasonably related to the current market price of the security;
	(c)	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security;
	(d)	A nationally recognized securities manual designated by rule of the commission or order of the office or a document filed with the Securities and Exchange Commission that is publicly available through the commission's electronic data gathering and retrieval system contains:
		1.	A description of the business and operations of the issuer;
		2.	The names of the issuer's officers and directors, if any, or, in the case of an issuer not domiciled in the United States, the corporate equivalents of such persons in the issuer's country of domicile;
		3.	An audited balance sheet of the issuer as of a date within 18 months before such transaction or, in the case of a reorganization or merger in which parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet; and
		4.	An audited income statement for each of the issuer's immediately preceding 2 fiscal years, or for the period of existence of the issuer, if in existence for less than 2 years or, in the case of a reorganization or merger in which the parties to the reorganization or merger had such audited income statement, a pro forma income statement; and
	(e)	The issuer of the security has a class of equity securities listed on a national securities exchange registered under the Securities Exchange Act of 1934 or designated for trading on the National Association of Securities Dealers Automated Quotation System, unless:
		1.	The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;
		2.	The issuer of the security has been engaged in continuous business, including predecessors, for at least 3 years; or
		3.	The issuer of the security has total assets of at least $2 million based on an audited balance sheet as of a date within 18 months before such transaction or, in the case of a reorganization or merger in which parties to the reorganization or merger had such audited balance sheet, a pro forma balance sheet.

30-14-202(2) A nonissuer transaction by or through a broker-dealer registered, or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under the investment company act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety (90) days, if, at the date of the transaction:
	(a)	The issuer of the security is engaged in business, the issuer is not in the organizational stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell company that has no specific business plan or purpose or has indicated that its primary business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person;
	(b)	The security is sold at a price reasonably related to its current market price;
	(c)	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution;
	(d)	A nationally recognized securities manual or its electronic equivalent designated by any rule adopted or an order issued under this chapter or a record filed with the securities and exchange commission that is publicly available contains:
		(i)	A description of the business and operations of the issuer;
		(ii)	The names of the issuer's executive officers and the names of the issuer's directors, if any;
		(iii)	An audited balance sheet of the issuer as of a date within eighteen (18) months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had an audited balance sheet, a pro forma balance sheet for the combined organization; and
		(iv)	An audited income statement for each of the issuer's two (2) immediately previous fiscal years or for the period of existence of the issuer, whichever is shorter, or, in the case of a reorganization or merger when each party to the reorganization or merger had audited income statements, a pro forma income statement; and
	(e)	any one (1) of the following requirements is met:
		(i)	The issuer of the security has a class of equity securities listed on a national securities exchange registered under section 6 of the securities exchange act of 1934 or designated for trading on the national association of securities dealers automated quotation system;
		(ii)	The issuer of the security is a unit investment trust registered under the investment company act of 1940;
		(iii)	The issuer of the security, including its predecessors, has been engaged in continuous business for at least three (3) years; or
		(iv)	The issuer of the security has total assets of at least two million dollars ($2,000,000) based on an audited balance sheet as of a date within eighteen (18) months before the date of the transaction or, in the case of a reorganization or merger when the parties to the reorganization or merger each had such an audited balance sheet, a pro forma balance sheet for the combined organization;

23-2-1-(b)(3) A nonissuer offer or sale by a registered broker-dealer, acting either as principal or agent, of issued and outstanding securities if the following conditions are satisfied:
	(A)	The securities are sold at prices reasonably related to the current market price at the time of sale, and if the registered broker-dealer is acting as agent, the commission collected by the registered broker-dealer on account of the sale is not in excess of usual and customary commissions collected with respect to securities and transactions having comparable characteristics.
	(B)	The securities do not constitute an unsold allotment to or subscription by the broker-dealer as a participant in the distribution of the securities by the issuer or by or through an underwriter.
	(C)	Either:
		(i)	information consisting of the names of the issuer's officers and directors, a balance sheet of the issuer as of a date not more than eighteen (18) months prior to the date of the sale, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations is published in a securities manual approved by the commissioner;
		(ii)	the issuer is required to file reports with the Securities and Exchange Commission pursuant to sections 13 and 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78m and 78o) and is not delinquent in the filing of the reports on the date of the sale; or
		(iii)	information consisting of the names of the issuer's officers and directors, a balance sheet of the issuer as of a date not more than sixteen (16) months prior to the date of the sale, and a profit and loss statement for either the fiscal year preceding that date or the most recent year of operations is on file with the commissioner. The information required by this item to be on file with the commissioner must be on a form and made in a manner as the commissioner prescribes. The fee for the initial filing of the form shall be twenty-five dollars ($25). The fee for the annual renewal filing shall be fifteen dollars ($15). When a filing is withdrawn or is not completed by the issuer, the commissioner must retain the filing fee.
	(D)	There has been compliance with section 6(l) of this chapter.
	(E)	Unless the issuer is registered under the Investment Company Act of 1940, all the following must be true at the time of the transaction:
		(i)	The security belongs to a class that has been in the hands of the public for at least ninety (90) days.
		(ii)	The issuer of the security is a going concern, is actually engaged in business, and is not in bankruptcy or receivership.
		(iii)	Except as permitted by order of the commissioner, the issuer and any predecessors have been in continuous operation for at least five (5) years. An issuer or predecessor is in continuous operation only if the issuer or predecessor has gross operating revenue in each of the five (5) years immediately preceding the issuer's or predecessor's claim of exemption and has had total gross operating revenue of at least two million five hundred thousand dollars ($2,500,000) for those five (5) years or has had gross operating revenue of at least five hundred thousand dollars ($500,000) in not less than three (3) of those five (5) years.

	The commissioner may revoke the exemption afforded by this subdivision with respect to any securities by issuing an order:
		(i)	if the commissioner finds that the further sale of the securities in this state would work or tend to work a fraud on purchasers of the securities;
		(ii)	if the commissioner finds that the financial condition of the issuer is such that it is in the public interest and is necessary for the protection of investors to revoke or restrict the exemption afforded by this subsection; or
		(iii)	if the commissioner finds that, due to the limited number of shares in the hands of the public or due to the limited number of broker-dealers making a market in the securities, there is not a sufficient market for the securities so that there is not a current market price for the securities.

In the matter of: the manual exemption (IC 23-2-1-2(b)(3)(C)(i)). Pursuant to the power granted in IC 23-2-1-2(b)(3)(C)(i) (the "Manual Exemption"), and subject to the conditions stated below, the Commissioner hereby approves all securities manuals published by Moody's, Standard & Poor's, and Best's Insurance Reports. Approval of these manuals is made on the condition that the Manual Exemption will not be available for any security, other than a security issued by an investment company registered under the Investment Company Act of 1940, unless at the time of the transaction:
	1.	The security is of a class which has been outstanding in the hands of the public for at least 90 days;
	2	The issuer of the security is a going concern actually engaged in business and not in the organizational stage or in bankruptcy or receivership; and
	3.	The issuer and any predecessors have been in continuous operation for at least 5 years. An issuer or predecessor is in continuous operation only if it has gross operating revenue in each of the 5 years immediately preceding its claim of exemption, and has had total gross operating revenue of $2,500,000 for those 5 years or has had gross operating revenue of at least $500,000 in not less than 3 of those 5 years.

17-1262(b) Any nonissuer distribution by or through a registered broker-dealer of outstanding securities at a price reasonably related to the current market price of such securities, if any recognized securities manual approved by the commissioner, pursuant to rules and regulations or orders contains:
	(1)	The names of the issuer's officers and directors; and
	(2)	audited financial statements, including a balance sheet of the issuer as of a date within 18 months and an income or loss statement for either the full fiscal year preceding that date or the most recent full year of operations.
If the commissioner finds that the sale of certain securities in this state under this exemption would work or tend to work a fraud on purchasers thereof, the commissioner may revoke the exemption provided by this subsection with respect to such securities by issuing an order to that effect and providing notice of such order to all registered broker-dealers.

(Relevant portions only)
	(a)	Except as provided in paragraphs (c) through (e) below, the following securities manuals are approved for the exemption from registration of securities under K.S.A. 17-1262(b) and amendments thereto:
		(1)	Standard & Poors manual of standard corporation descriptions; and
		(2)	Mergent's manuals, formerly known as Moody's manuals.
	(b)	The recognized manuals may be distributed in a published paper format or an electronic format that is widely available to the public.
	(c)	The approval of any manual is limited to the listing within the manual which contain all of the information required by K.S.A.17-1262(b) and amendments thereto. Transactions are not exempt from registration if a listing does not contain all the required information about an issuer.
	(d)	The approval of any manual does not extend to any listing within the manual which would give rise to an exemption for the following transactions, do the transactions are not exempt under K.S.A.17-1262(b) and amendments thereto:
		(1)	Transactions in securities of a company that is in the development stage as defined by generally accepted accounting principles, a company in bankruptcy proceedings, or a shell company with no plan of business other than to pursue a merger or acquisition of an unidentified company; or
		(2)	distribution of an unsold allotment of securities by or from the underwriter of an initial public offering of securities.
		(3)	The Commissioner may issue an order to revoke this exemption for the securities of an issuer if the Commissioner finds that the sale of the securities would work or tend to work a fraud on purchasers of the securities.

10502(2)(C) Any nonissuer transaction in a security that has been outstanding in the hands of the public for at least 90 days if at the time of the transaction:
	(1)	The issuer of the security is:
		(a)	Actually engaged in business;
		(b)	Not in the organizational stage;
		(c)	Not a development stage company, a blank check, blind pool or shell company, the primary plan of business of which is to engage in a merger or combination with, or an acquisition of, an unidentified person or persons; and
		(d)	Not in bankruptcy or receivership;
	(2)	A licensed agent of a licensed broker-dealer effects the transaction;
	(3)	The security is sold at a price reasonably related to the current market price of the security;
	(4)	The security does not constitute the whole or part of an unsold allotment to, or a subscription or participation by, a broker-dealer as an underwriter of the security;
	(5)	A nationally recognized securities manual designated by order of the administrator or a document filed with the United States Securities and Exchange Commission that is publicly available through the United States Securities and Exchange Commission's Electronic Data Gathering and Retrieval system contains:
		(a)	A description of the issuer's business and operations;
		(b)	The names of the issuer's officers and directors or, in the case of a non-United States issuer, the corporate equivalents of such persons in the issuer's country of domicile;
		(c)	An audited balance sheet of the issuer as of a date within the last 18 months or, in the case of a reorganization or merger where the parties had audited balance sheets, a pro forma balance sheet; and
		(d)	An audited income statement for each of the issuer's immediately preceding 2 fiscal years or for the issuer's period of existence if less than 2 years or, in the case of a reorganization or