44-2087

44-2087. Application of safe harbor for
forward-looking statements; definitions

A. This section only applies to a forward-looking statement made by:

1. At the time that the statement is made, an issuer that is subject to the
reporting requirements of section 13(a) or section 15(d) of the securities exchange act
of 1934 (15 United States Code section 78m(a) or section 78o(d)).

2. A person acting on behalf of an issuer described in paragraph 1 of this
subsection.

3. An outside reviewer who is retained by an issuer described in paragraph 1 of
this subsection and who is making a statement on behalf of that issuer.

4. An underwriter of an issuer described in paragraph 1 of this subsection who uses
information provided by the issuer or information derived from information provided by
the issuer.

B. Except if specifically provided by rule or order of the commission, this section
does not apply to a forward-looking statement if the statement is:

1. Made in connection with the issuer's business or operations and if any of the
following applies to the issuer:

(a) At any time during the three consecutive years before the date on which the
statement was first made, the issuer was convicted of a felony or misdemeanor pursuant to
section 44-1961, subsection A, paragraph 8, or clauses (i) through (iv) of section
15(b)(4)(B) of the securities exchange act of 1934 (15 United States Code section
78o(b)(4)(B)), has been found to have violated or been made subject to an order, judgment
or decree under section 44-1961, subsection A, paragraph 9, 10 or 11, or has been made
the subject of a judicial or administrative decree or order arising out of a governmental
action that prohibits future violations of the antifraud provisions of the federal,
Arizona or other jurisdictions' securities laws, requires that the issuer cease and
desist from violating the antifraud provisions of the federal, Arizona or other
jurisdictions' securities laws or determines that the issuer violated the antifraud
provisions of the federal, Arizona or other jurisdictions' securities laws.

(b) The issuer makes the forward-looking statement in connection with an offering
of securities by a blank check company.

(d) The issuer makes the forward-looking statement in connection with a roll up
transaction.

(e) The issuer makes the forward-looking statement in connection with a going
private transaction.

2. Included in a financial statement prepared in accordance with generally accepted
accounting principles.

3. Contained in a registration statement of or issued by an investment company.

4. Made in connection with a tender offer.

5. Made in connection with an initial public offering.

6. Made in connection with an offering by or relating to the operations of a
partnership, a limited liability company or a direct participation investment program.

7. Made in a disclosure of beneficial ownership in a report required to be filed
with the SEC pursuant to section 13(d) of the securities exchange act of 1934 (15 United
States Code section 78m(d)).

C. Except as provided in subsection B of this section, in any private action that
arises under this chapter and that is based on an untrue statement of a material fact or
an omission of a material fact necessary to make the statement not misleading, pursuant
to subsection A of this section, a person, issuer, outside reviewer or underwriter is not
liable for any written or oral forward-looking statement if and to the extent that either
of the following exists:

1. The forward-looking statement is identified as a forward-looking statement and
is accompanied by meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those in the forward-looking
statement or the statement is immaterial.

2. The plaintiff fails to prove that the forward-looking statement if made by a
natural person was made with actual knowledge by that person that the statement was false
or misleading, or if made by a business entity, was made by or with the approval of an
executive officer of that entity and was made or approved by that officer with actual
knowledge by that officer that the statement was false or misleading.

D. In the case of an oral forward-looking statement made by an insurer that is
subject to the reporting requirements of section 13(a) or section 15(d) of the securities
exchange act of 1934, (15 United States Code section 78m(a) or section 78o(d)) or by a
person acting on behalf of the issuer, the requirement set forth in subsection C,
paragraph 1 of this section is satisfied if both of the following are true:

1. The oral forward-looking statement is accompanied by a cautionary statement that
the oral statement is a forward-looking statement and that the actual results could
differ materially from those projected in the forward-looking statement.

2. If the oral forward-looking statement is accompanied by an oral statement that
additional information concerning factors that could cause actual results to differ
materially from those in the forward-looking statement is contained in a readily
available written document, the oral statement shall identify the document or the portion
of the document that contains the additional information about those factors relating to
the forward-looking statements and the written document shall contain a cautionary
statement that satisfies the standard established in subsection C, paragraph 1 of this
section.

E. Any document that is filed with the commission or the SEC or that is generally
disseminated is readily available for purposes of subsection D of this section.

F. The exemption provided for in subsection C of this section is in addition to any
exemption that the commission may establish by rule under subsection J of this section.

G. Nothing in this section imposes on any person a duty to update a forward-looking
statement.

H. On any motion to dismiss based on subsection C of this section, the court shall
consider any statement cited in the complaint and any cautionary statement that is not
subject to material dispute and that is cited by the defendant accompanying the
forward-looking statement.

I. In any private action arising under this chapter, the court shall stay
discovery, other than discovery that is specifically directed to the applicability of the
exemption provided by this section, during the pendency of any motion by a defendant for
summary judgment that is based on the grounds that the statement or omission on which the
complaint is based is a forward-looking statement within the meaning of this section and
the exemption provided by this section precludes a claim for relief.

J. In addition to the exemptions provided by this section, the commission by rule
may provide exemptions from or under any provision of this chapter, including liability
that is based on a statement, projections or other forward-looking information, if the
exemption is consistent with the public interest and the protection of investors, as
determined by the commission.

K. Nothing in this section limits, either expressly or by implication, the
authority of the commission to exercise similar authority or to adopt similar rules for
forward-looking statements under any other statute under which the commission exercises
rule making authority.

L. For the purposes of this section, unless the context otherwise requires:

1. "Forward-looking statement" means any of the following:

(a) A statement containing a projection of revenues, income, income loss, earnings,
earnings per share, loss per share, capital expenditures, dividends, capital structure or
other financial items.

(b) A statement of the plans and objectives of management for future operations,
including plans or objectives relating to the products or services of the issuer.

(c) A statement of future economic performance, including any statement contained
in a discussion and analysis of financial condition by the management or in the results
of operations included pursuant to the rules of the commission or the rules and
regulations of the SEC.

(d) Any statement of the assumptions underlying or relating to any statement
described in subdivision (a), (b) or (c) of this paragraph.

(e) Any report issued by an outside reviewer retained by an issuer, to the extent
that the report assesses a forward-looking statement made by the issuer.

(f) A statement containing a projection or estimate of other items specified by
commission rule.

2. "Going private transaction" has the same meaning prescribed in the rules and
regulations of the SEC issued pursuant to section 13(e) of the securities exchange act of
1934 (15 United States Code section 78m(e)).

3. "Investment company" has the same meaning prescribed in section 3(a) of the
investment company act of 1940 (15 United States Code section 80a-3(a)).

4. "Person acting on behalf of an issuer" means any officer, director or employee
of the issuer.

5. "Tender offer" has the same meaning prescribed in section 14(d) of the
securities exchange act of 1934 (15 United States Code section 78n(d)).

6. The following terms have the same meaning prescribed in the rules of the
commission:

(a) "Direct participation investment program".

(b) "Executive officer of an entity".

(d) "Limited liability company".

(e) "Partnership".

(f) "Penny stock".

(g) "Roll up transaction".