In these monetarily depressing times businesses are looking outside the box for a localized injection of economic stimulus. Banks are hording their bags of government bailout money while the small business owner is forced to fend for themselves. Nothing but doom and gloom seem to infest all aspects of present and near future financial forecasts.

There is, however, a fiscal niche being carved out as we speak by wealthy, aggressive and eager angel investors. Angel investors, private investors, micro ticket investment partnerships and other alternative financing groups are spearheading a global rally to buy into promising mid-size companies from all industry genres. The elements of a viable company prime for investment are solid and realistic growth potential, talented ‘who’s who’ executive staff with the right educational and professional pedigrees, minimal debt, a solid business plan laying out every minute intricacy that could affect growth, financial return and the exit strategy.

Another important element that is often overlooked but is a mandatory prerequisite for the SEC regulated exchange of cash for equity is a Private Placement Memorandum. A Private Placement Memorandum takes advantage of three powerful Regulation D Rule exemptions (Rule 504, Rule 505 and Rule 506) these are technical documents that spill the beans to the potential investor. In a PPM all the financial and industry risks are put on the table as well as stock prices, a breakdown of fund raising benchmarks and what the money will be used for etc.

A Private Placement Memorandum can be costly if you hire a law firm to custom author the package for you but there are consulting firms that will do this for as little as $4500.

If you are serious about raising capital for your company you need to add a Private Placement Memorandum to your list of necessary documents to hand off to the investors in order to get the cash you need in an expedient manner.

Want to find out more about Private Placement Memorandums, then visit Princeton Corporate Solutions site on how to choose the best Offering Memorandum for your needs.

Regulation D, Under Sections 4(2) and 3(b) of the Securities Act of 1933, the SEC adopted Regulation D to coordinate the various limited offering exemptions and to streamline the existing requirements applicable to private offers and sales of securities. The Regulation establishes three exemptions from registration in Rules 504, 505, and 506.

Rule 504, which provides an exemption for non-reporting companies unless they are “blank check” issuers or certain “shells”, stipulates that: The sale of up to $1,000,000 of securities in a 12-month period is permitted provided that there is no general solicitation, the securities sold are restricted securities and cannot be resold except pursuant to a registration statement or exemption, and a notice must be filed with the SEC within 15 days after the first sale. Rule 504 does not provide an exemption under any state laws. In certain limited circumstances where an offering is conducted under state accredited investor exemptions, securities offered under Rule 504 may be freely transferrable. Unlike Rules 505 and 506, Rule 504 does not mandate that specified disclosure be provided to purchasers. Nonetheless, the business person should take care that sufficient information is provided to meet the full disclosure obligations which exist under the antifraud provisions of the securities laws.

Rule 505 was adopted by the SEC to provide small businesses more flexibility in raising capital than under Rule 504 – but without the uncertainty of determining the quality of the purchasers that generally is involved in using Rule 506. Rule 505 provides issuers a limited offering exemption for sales of securities totaling up to $5 million in any 12-month period.

Rule 505 contains certain restrictions regarding “accredited investors” and non-accredited persons. The-term “accredited investor” includes:

Banks, insurance companies, registered investment companies, business development companies, or small business investment companies; Certain employee benefit plans for which investment decisions are made by a bank, insurance company, or registered investment adviser; Any employee benefit plan (Within the meaning of Title I of the Employee Retirement Income Security Act) with total assets in excess of $5 million; Charitable organizations, corporations or partnerships with assets in excess of $5 million; Directors, executive officers, and general partners of the issuer; Any entity in which all the equity owners are accredited investors; Natural persons with a net worth of at least $1 million; Any natural person with an income in excess of $200,000 in each of the two most recent years or joint income with a spouse in excess of $300,000 for those years and a reasonable expectation of the same income level in the current year; and Trusts with assets of at least $5 million, not formed to acquire the securities offered, and whose purchases are directed by a sophisticated person.

If the issuer sells any securities to non-accredited investors, it must furnish to all investors the same type of information as required by Regulation A. It must also furnish audited financial statements.

If an issuer other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the issuer’s balance sheet (to be dated within 120 days of the start of the offering) must be audited.

Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish financial statements prepared on the basis of federal income tax requirements and examined and reported on by an independent public or certified accountant in accordance with generally accepted auditing standards; and The issuer must also be available to answer questions by prospective purchasers about the issuer or the offering.

Further restrictions under Rule 505 include:

The total offering price of each issue of securities may not exceed $5 million. The offering may not be made by means of general solicitation or general advertising. The issuer may sell the securities to an unlimited number of “accredited investors” and to 35 non-accredited persons. There are no requirements of “sophistication” or “wealth” for persons to whom the securities are sold. A company must take any necessary steps to ensure that the purchasers are acquiring securities for investment only, not for resale. The securities are thus “restricted” and investors must be informed that they may not be able to sell except pursuant to a registration statement or exemption from registration. The issuer is not required to file any offering materials with the Commission. Fifteen days after the first sale in the offering, the issuer must file a notice of sales on Form D. The notice also contains an undertaking under this Rule for the issuer to furnish the Commission, upon its staff s request, any information given to non-accredited purchasers in connection with the offering. Rule 505 does not provide an exemption from state securities laws.

SEC Rule 506 offers and sales of securities by an issuer that satisfy the conditions stated below are deemed transactions not involving any public offering within the meaning of Section 4(2) of the Securities Act. For an offering to be considered exempt from the registration requirements, Rule 506 stipulates: There is no ceiling on the amount of money which may be raised. No general solicitation or general advertising is permitted. The issuer may sell its securities to an unlimited number of accredited investors and 35 non accredited purchasers. Unlike Rule 505, all non-accredited purchasers (either alone or with a purchaser representative) must be sophisticated – that is, have sufficient knowledge and experience in financial and business matters to render them capable of evaluating the merits and risks of the prospective investment. The term “accredited investor” is defined under Rule 505.

If the issuer sells any securities to non-accredited investors, it must furnish to all investors the same type of information as required by Regulation A. It must also furnish the same financial information as would be required by registration on Form S-1.

If the issuer cannot obtain audited financial statements without unreasonable effort or expense, then financial statements may be provided in accordance with the special treatment described under Rule 505.

The securities sold are “restricted” under the same stipulations in Rule 505.

A company is required to file a notice of the offering on Form D at SEC headquarters within 15 days after the first sale in the offering. All states except New York provide an exemption from state securities laws for offerings under Rule 506 but the company must file a copy of the Form D and pay a filing fee in each state. New York has a distinctive law which makes a Rule 506 offering within that state impractical.

Accredited Investor Exemption

The Small Business Investment Incentive Act of 1980 created a new statutory exemption from registration under the Securities Act for transactions involving offers and sales of securities by any issuer solely to one or more “accredited investors.” Under Section 4(6):

The total offering price of each issue of securities under the exemption may not exceed the limit on small offerings set by Section 3(b) the Securities Act, which currently is $5 million per issue. The offering may not be made by means of any form of advertising or public solicitation.

The term “accredited investor” is defined to include the same individuals and entities as included for purposes of Rules 505 and 506. The issuer is required to file a notice of sales on Form D with the Commission 15 days after the initial sale is made in reliance on the exemption.

Want To Go Public With Your Company, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

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Take Your Company Public: A Must Read Before You Do Anything! As a consultant in the business of structuring companies, setting up strategic alliances for clients, writing business plans and PPM’s and taking companies public on the OTCBB, I must admit I’ve seen my share of scams and swindling of uninformed clients. One sad issue that permeates the industry is clients who believe that their only option is to give up substantial equity while paying hefty fees to consultants who take your company public.

Here is the reality. When you are investigating the industry to find a consulting firm to work with to facilitate your ‘go public’ process, the first thing you need to do is make sure you are hiring a ‘turn-key’ solutions consulting group; meaning they need to offer everything soup to nuts in house because the second your consultant outsources anything, accountability is lost.

Next, on the issue of paying fees and also giving up equity, it should be either or, not both. If a company tells you that they want you to pay them in both upfront fees and in equity, you should laugh and walk away. In actuality the best deals for the client are those that are simply fee based, not equity based.

It’s better to pay 100k in a few easy installments than to pay millions in stock that will only be liquidated after the IPO which will completely obliterate your stock price and almost certainly ruin your company’s chances of success. It baffles me to see the scenarios that uninformed company owners accept. Currently there is a company that is promoting all over Google Adwords that they will take your company public for $25k and after a month of talking to the company, when you finally agree to use them they break the bad news that they are not going to charge you $25k or anything even close to that, they are, in fact, going to charge you $125k upfront, plus $10k to $20k for your initial SEC audit and on top of all of that they are going to take 30% of your company! It’s shocking but this group of consultants, because of their extensive advertising, has no problem bringing in clients and turning the tables on them at the last minute and sadly, because the client is uninformed, they accept the contract and pay the fees.

If you are going to give up any amount of equity in exchange for the process of going public, it should be with a licensed broker dealer and there should be zero out of pocket expenses from you. Your broker dealer should pay for the SEC audit, S-1 filing, SEC approval, FINRA approval, Symbol achievement and ongoing investor relations to keep your stock price solid. Unless your broker dealer is doing all of this, you need to find a new, full service broker.

Keep in mind, each consulting firm you talk to will give you a million reasons as to why their fee structure and process is the best but here are some comparable facts so that you can make the right decision on how to proceed. First of all, if you get an emotional consultant that acts like he is excited about your project and ‘can’t wait to get started’ this is bogus and you should walk away. The best consultants keep clients at arm’s length and never get emotional because it clouds the process and makes them ineffective. Besides, if they are acting so excited about your company it’s probably because they are trying to convince you of their legitimacy that won’t stand on its own merit.

Next you want to make sure that you are getting a quote on your specific company type which includes at a minimum: corporate structuring, strategic alliance facilitation, board of directors evaluation, business plan authoring built for IPO, investor finder service, SEC audit (the should be able to give you a general idea of the cost of the audit and have a company that you can use as most consultants don’t employ an auditor on staff), S-1 filing, SEC approval, FINRA approval, symbol achievement, market maker or broker dealer relationship/contract setup and investor relations for long term success.

For Corporate Consulting or Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

If you are going to start raising capital for your start-up or established business you’ve most likely been advised to have a Private Placement Memorandum written for your company so you don’t get in trouble with the SEC for selling securities without the proper structure.

The Offering Circular section of your document is crucial. Most likely you won’t be authoring this document on your own as it is wise to outsource this necessity to a trained consultant or attorney who specializes in PPM docs but you should be familiar with the basic anatomy of an Offering Circular so you can understand the PPM as a whole.

Here is a general breakdown of the sections of your Offering Circular, they are as follows (there are a few technical sections left out to streamline and simplify this explanation):

Amount of company equity you want to make available, escrow agent info, address and phone number, business locations presently and in the future and why have you decided on these locations, pertinent information about the company (date of incorporation , purpose of creating this company etc), risk factors in your industry, history of operations, time lapse from start-up to operational stage of the company, talk about the ins and outs of your competition, dependence on management, detailed description of the company, government regulations in your industry, who is retaining control of the company, dividend details, how did you arrive at the arbitrary offering price., details about officer’s salary, use of proceeds to repay loans due to officers and director, additional use of proceeds, in depth break down of business (summary, management, strategic partnerships etc), company balance sheet demonstrating assets, liabilities, shareholder equity etc.

This has been a general breakdown of the offering circular basics. Please consult your consultant or attorney for a more in-depth description. A Private Placement Memorandum can help you raise capital quickly and easily and is often the pivoting mechanism for a public offering. Take advantage of this valuable instrument as you pursue capital for your business.

Need Information about your Offering Circular, call 267-233-0183 Take Your Company Public contact Princeton Corporate Solutions.

When raising funding, most likely investors will want their equity distribution in an SEC recognized format like a Private Placement Memorandum, also known as a PPM. This structure makes use of one of the three Regulation D exemptions stemming from the Securities Act of’33.

The three common exemption rules are Regulation D (Reg D) Rule 504, Rule 505 and Rule 506. These rules carry multiple criteria that assist businesses in raising equity or debt funding without all the stringent legalities of an IPO. These rules are defined like this: Rule 506 provides an exemption for limited offers and sales without regard to the dollar amount of the offering.

This exemption doesn’t limit the number of accredited investors, but the number of non-accredited investors may not exceed 35 investors. (An accredited investor is any one investor with a certain net worth and or experience in the purchase of stocks.) All non-accredited purchasers, either alone or together with a designated representative must be sophisticated enough (meaning, have the knowledge and experience necessary) to evaluate the merits and risks of the investment. (An offering company will usually determines the sophistication of its investors with a questionnaire subscription agreement.)

Rule 506 requires very detailed disclosure of all relevant information to potential investors; the extent of disclosure depends on the dollar size of the offering. Rule 505 offerings may not exceed $5 million, less the total dollar amount of securities sold during the preceding 12 month period under Rule 504, Rule 505 or Section 3 of the act. This exemption limits the number of non-accredited investors to 35 but has no investor sophistication standards. Rule 505 requires disclosure similar to that required for Rule 506 offerings, under $7.5 million.

Regulation D Rule 504 offerings allow a company to raise a maximum of $1 million in funding, less the total dollar amount of securities sold during the preceding 12 month period, under Rule 504, Rule 505 or Section 3 of the act. However, a business can raise only $500,000 by the sale of securities to persons residing in the states of Montana and Alaska, which have no disclosure laws applicable to the offering. For states that do have disclosure laws, which are 48 out of the 50 states, a business can raise up to $1,000,000. Rule 504 has no prescribed disclosure requirements, no limit on the number of purchasers, and no investor sophistication standards. So if you’re trying to raise capital using a Private Placement Memorandum, use the above criteria as a cliff-note and as long as you stay within SEC guidelines, fund raising for your company will be simple.

Call 267-233-0183, Private Placement Memorandum Services, visit Princeton Corporate Solutions to get more info about Private Placement Memorandums and passing Due Diligence

If you’re on the venture capital trail there’s no doubt you’ve heard the term that usually shuts most fund raising efforts down before they can actually begin, that term being ‘due diligence’. When an investor of venture capital firm expresses interest in funding your project, the next thing that happens after intent contracts are submitted is the dreaded due diligence process.

A cloud of confusion usually hangs over the minds of those about to go through this procedure but if you are informed and prepared this process can go from being a migraine inducing nightmare to a confidence booster no brainier that starts a bidding war between investors. The reality of investor due diligence in the new millennium begins with a solid online investigation using the most popular search engine, Google.

The game plan for the entrepreneur is to assemble a robust and authoritative online presents with all the bells and whistles an investor is seeking in a well pedigreed executive staff that is asking for millions of dollars in investment capital. Your plan must be well diversified through various online media genres such as video marketing, how to videos, article submission and press releases with content focused on the cutting edge and leadership role your company plays in your industry niche.

In addition to filling your own blogs with new, viable content on a daily basis, you should make it a habit to blog on other industry specific blogs as you lead the investors back to your site with your blog signature. Don’t forget about the power of audio and video Pod-casting. Let the investors hear your voice, then them feel the powerful conviction and intonation in the keywords as you hypnotize them and place them under your spell.

There are products on the market that cater to plastering the internet with your message with a strong focus on company branding and mass media marketing and publicity. If you pay attention to the branding aspects of your company with a strong and authoritative position on the internet, due diligence will be as easy as taking a nap!

Learn more about Publicity Marketing, Princeton Corporate Solutions has lots of helpful information at their website on how to get Publicity publicity quickly