In a remedial practice session, the fact pattern is framed this way. Prioritize the registration trigger and ignore irrelevant noise. A startup company wants to raise capital by selling shares exclusively within its home state. It has never issued securities before and has no federal registration. Which registration method must the issuer use at the state level?

Why D — Registration by qualification because no federal registration statement is being filed

Under USA Section 304, registration by qualification is required when an issuer is not filing a federal registration statement with the SEC. Since coordination requires a simultaneous SEC filing and notification/filing is reserved for established issuers with a track record, qualification is the appropriate method for a startup conducting a state-only offering. State-law analysis leads to the same conclusion despite the alternate scenario.