Regulation D Rule 506

Regulation D Rule 506 and issuer may issue an on unlimited amount of securities with no dollar limit to 35 non-accredited investors and any number of accredited investors. However, there are required disclosures.

Advertising and general investor solicitations are prohibited.

The securities are restricted securities and may not be readily sold to the public.

The major advantage of Regulation D Rule 506 is that it supersedes and preempts the securities laws of all the states so by complying with Rule 506 it greatly simplifies your need to figure out what your state’s requirement are. This is especially true and save a great deal of lawyer time, effort and expense if the issuer is obtaining money from investors in multiple states. Whether you decide to use a Regulation D Rule 505 or Regulation D Rule 506 exception will actually depend upon the state or states you will be selling your securities. Since in today environment, you never know who will be interested and wish to invest in your idea I recommend that if Rule 504 is not available to use than you use Rule 506.

Note: If a sale is made to a non-accredited investor this can dramatically increase your compliance requirements and likely the additional compliance will be very expensive. The reason, it can greatly increase the lawyers involvement to make sure that you have met the additional compliance requirements. Just not worth it. Do not take any non-accredited investors money. Not $1. See Rule 501

It is OK to take in money after the distribution of the Private Placement Offering.

There is no limit to the number of Accredited Investors. Non-Accredited Investors are limited to a total of 35.

You cannot use “money finders”. Only registered Broker Dealers or your company officers can solicit investors.

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