House committee substitute makes the following changes to the 2nd editiion.

Amends new GS 78A-17.1, which provides for an exemption from GS 78A-24 and GS 78A-49(d) for an issuer'soffer or sale of a security that meets specified requirements, includingnot exceeding the capon the amount to be received on all sales of securities in reliance on the exemption, to provide that the cap is $1 million if the issuer has not made documentation resulting from a financial audit for its most recent fiscal year available to each prospective investor and the Administrator. Provides that the cap is $2 million if the issuer has made the documentation available resulting from a financial audit for its most recently completed fiscal year to each prospective investor and the Administrator. Makes clarifying changes to the provisions of subdivision (5) of GS 78A-17.1(a), providing specifications regarding notice of an offering of securities in reliance on this exemption, details required pertaining to the description of the company, and and additional details and data regarding the company and its structure. Also clarifies that the issuer must makecertain disclosures to prospective purchasers or investors.

Provides that the issuer of the securities must require each purchaser to certify in writing that the purchaser acknowledges and understands the parameters of the transaction.

Requires the web site operator to register with the Administrator by filing a statement that it is a businessentity organized under North Carolina law authorized to do business in this state and being utilized to offer and sell securities under this exemption. Prohibits offers or sales of a security via an Internet web site unless this registration requirement is met. Requires all payments for purchases of securities to be directed to and held by the bank or depository institution subject to the provisions of sub-subdivision (a)(5)c. of GS 78A-17.1 (requires that the notice filed with the Administrator contain an escrow agreement with a bank or other depository institution locatedwithin the state in which the investor funds will be deposited). Requires the issuer to provide a copy of the disclosure document provided to the Administrator to each prospective investor at the time that the offer of securities is made to the potential investor. Prescribes additional information tobe include in the disclosure document. Provides that the caps set in subdivision (a)(3) ofthis section must be cumulatively adjusted every fifth year by the Administrator to reflect the change in the Consumer Price Index for all Urban Consumers published by the Bureau of Labor Statistics. Requires that an issuer must file each quarterly report with the Administrator.

Clarifies that except as otherwise indicated, this act is effective when it becomes law and expires on July 1, 2017.