Private Placement Memorandum:

Also known as a Reg. D offering or an Offering Memorandum. A document that outlines the terms of securities to be offered in a private placement. Resembles a business plan in content and structure. Private Placement Offering Packages are designed with the small business securities issuer in mind. It allows small companies to raise equity or debt capital privately without having to file a registration statement with the Federal Securities and Exchange Commission or any state securities agency. A Private Placement Offering is developed in reliance upon both federal and state exemptions from securities registration. In some instances, audited financial statements are not required. The Company is not required to make any state or federal filings until after the Company receives investment through the private placement offering. After initial private placement moneys are received, the Company is required to comply with federal notice filings pursuant to the Securities Act of 1933, as amended (the “Securities Act”) and to file notice filings in each state where the private placement offering was made from and into. Apollo Capital specializes in effectively preparing and placing PPM’s with the appropriate institutional and accredited individual investors for funding.

Rule 504, 505 and 506 Placements:

Rule 504, 505, and 506 placements deal with the specifics of raising money under SEC Reg D. Rule 504 generally pertains to securities sales up to $1 million. Rule 505 applies to offerings from $1 million to $5 million. Rule 506 is for securities offerings exceeding $5 million.

[a] Rule 504:

Rule 504 is considered by many as the perfect answer for the company just starting out OR one that needs to raise less than $1 million. Rule 504 offers such companies an exemption to raise up to $1 million, no disclosure criteria, few general solicitation and resale restrictions and no limit as to the number or type of investors.

[b] Rule 505:

Rule 505 is used for offerings of $5 million or less in any 12 month period and is restricted to 35 purchasers other than “accredited investors.” There are a number of required disclosures if the sale of securities includes investors who are not accredited investors: advertising and a general solicitation are prohibited, one must inform purchasers that they receive “restricted” securities (meaning that the securities cannot be sold for a time period without registering them), you must not violate the antifraud prohibitions of the Federal Security Laws.

[c] Rule 506

An issuer may issue an unlimited amount of securities, with no dollar limit, to 35 unsophisticated investors plus any number of “accredited investors.” There are required disclosures, if a sale of securities includes purchasers who are not accredited investors. All non accredited investors must be sophisticated and must sign an Investor Questionnaire acknowledging same. Advertising and a general solicitation are prohibited. The securities are “restricted securities” which may not be readily resold. There is a major advantage to 506, in that it supersedes and preempts the securities laws of all the states. This saves a lot of time, effort, and expense if the issuer is obtaining money from investors in multiple states. Form D must be filed with the SEC within 15 days after the first sale of securities and also with the Secretary of State of each state in which a purchaser is a resident.

PIPE or Private Investment in Public Equity:

This financing package consists of private investors buying common stock of a company at a discount to the current market value per share. PIPE financing requires legal fees, securing a placement agent, investment banker, investors and a time consuming registration process. Apollo Capital acts as a finder in these transactions, introducing the client company to the appropriate institutional investors to complete the PIPE funding.