Honolulu, Hawaii
                                                  , 1999

                                RE:  S.B. No. 1071

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


   Your Committee on Economic Development, to which was
referred S.B. No. 1071 entitled: 


begs leave to report as follows:

   The purpose of this measure is to authorize the use of Form
U-7, a uniform question and answer document developed by the
North American Securities Administrators Association, for the
prospectus currently required under section 485-10(b)(3), Hawaii
Revised Statutes, which will enable small companies to raise up
to $1,000,000 in start-up capital by selling stock directly to
the public after registering the shares under a Small Corporate
Offerings Registration (SCOR).

   Your Committee received testimony in support of this measure
from the Department of Business, Economic Development, and
Tourism, the Department of Commerce and Consumer Affairs, and The
Hawaii Congress of Small Business.

   Your Committee finds that lack of available capital is one
of the most frequent reasons for small business failures in
Hawaii.  Small businesses need infusions of capital at various
stages of their development, and the current process of applying
for conventional loans or venture capital is both difficult and
time consuming.

   Your Committee further finds that forty-eight states have
successfully adopted the SCOR procedure to make it possible for

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small businesses to obtain capital in a more efficient and less
costly manner.  Additionally, with the approval of SCOR the Small
Business Administration will allow use of SCOR documents to
establish the Angel Capital Electronic Network (ACE-Net) in
Hawaii, a nationwide directory of high net worth individuals who
are seeking investments in high growth companies.

   Your Committee understands that establishment of a SCOR
program is one of the ten top priorities of Hawaii's small
business owners and operators, and believes this program will
attract vital investment opportunities that will benefit both
these businesses and the economy as a whole.

   As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 1071 and recommends that it pass Second Reading and
be referred to the Committee on Ways and Means.

                                Respectfully submitted on
                                behalf of the members of the
                                Committee on Economic

                                LORRAINE R. INOUYE, Chair

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