Sonic Petroleum, Inc. (Sonic) was incorporated in Utah in October 1980. It set up and maintained its offices and records in Utah. In October and November, Sonic publicly offered stock to Utah residents. Sonic had not conducted business anywhere prior to this offering. Sonic registered its public offering with the State of Utah, but not with the Securities and Exchange Commission. Only Utah residents purchased this stock. On May 25, 1981, Sonic agreed to merge with an Illinois company. The merged entity deposited the majority of the proceeds from the Sonic offering in Illinois. Paul and Linda Busch (plaintiffs) purchased Sonic stock on June 26, 1981. The Busches brought suit against Sonic officers and directors Craig Carpenter, George Jensen, and Ronald Burnett (defendants) (collectively, Sonic). Sonic claimed that it was exempt from federal registration under the intrastate exemption. The trial court granted Sonic’s motion for summary judgment. The Busches appealed.