In a remedial practice session, the fact pattern is framed this way. Treat the facts as a straight Series 63 application question. 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. The governing USA principle is unchanged even though the framing is different.