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SEC Guidelines

Accredited Verification Requirements

Regulation D Rule 506(c) Investor Verification Standards
and Protocols
In purchasing securities through a 506(c) Offering, the Company is obligated
to verify any participating investor’s status as an accredited investor in
accordance with Rule 501 of Regulation D. There are three primary methods
the Company may employ to comply with the verification standards. Note –
most issuers use third party verification (broker-dealer letter, attorney letter,
CPA letter, or a third party speciality services like verifyinvestor.com) to
obtain proper and suitable verification. It is possible for the investor to
provide bank statements and/or IRS tax forms – however most clients do not
want the responsibility of reviewing those types of records and forms.
Investors in the offering will need to provide the Company with verification
that meets the standards and form using one or multiple methods as listed
below:
Income: The Company may verify an individual’s status as an accredited
investor on the basis of income by reviewing copies of any IRS form that
reports net income, such as Forms W-2 or 1099 (which are typically filed by
an employer or other third party payor), or Forms 1040 filed by the
prospective purchaser (with non-relevant information permitted to be
redacted). Under this method, the Company must review IRS forms for the
two most recent years and obtain a written representation from the
prospective purchaser that he or she has a reasonable expectation of
attaining the necessary income level for the current year. Where accredited
investor status is based on joint income with the person’s spouse, the IRS
forms and representation must be provided with respect to both the
purchaser and the spouse.
Net Worth: Under this method, the Company will need to review bank or
brokerage statements or third-party appraisal reports to verify the
purchaser’s assets and a credit report to verify liabilities, in each case dated
within the prior three months, and will need to obtain a written
representation from the prospective purchaser that all liabilities have been
disclosed. Where accredited investor status is based on joint net worth with
the person’s spouse, the asset and liability documentation and representation
must be provided with respect to both the purchaser and the spouse.
Reliance on Determination by Specified Third Parties to Provide
Verification: The Company may satisfy the verification requirement if it
obtains a written confirmation from a registered broker-dealer (who the
investor has had an account with longer than 6 months), an SEC-registered
investment adviser, a licensed attorney, or a certified public accountant that
within the prior three months such person or entity has taken reasonable

steps to verify that the purchaser is an accredited investor and has
determined that the purchaser is an accredited investor. Third party services,
such as verifyinvestor.com (managed by an attorney) are also qualified third
party providers of verifications.
Proper verification must be submitted with the subscription for securities in
order for the Company to verify the investor’s suitability for investment and
accept the subscription.
Accredited Investor Qualifications:
Any natural person whose individual net worth, or joint net worth with that
person's spouse, exceeds $1,000,000.
 (i) Except as provided in paragraph (a)(5)(ii) of this section, for purposes of calculating
net worth under this paragraph (a)(5):
o (A) The person's primary residence shall not be included as an asset;
o (B) Indebtedness that is secured by the person's primary residence, up to the
estimated fair market value of the primary residence at the time of the sale of
securities, shall not be included as a liability (except that if the amount of such
indebtedness outstanding at the time of sale of securities exceeds the amount
outstanding 60 days before such time, other than as a result of the acquisition
of the primary residence, the amount of such excess shall be included as a
liability); and
o (C) Indebtedness that is secured by the person's primary residence in excess of
the estimated fair market value of the primary residence at the time of the sale
of securities shall be included as a liability;

 (ii) Any natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the same
income level in the current year;

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