b'6. Choose Your Securities Exemptionbe found under Regulation D (17 CFR230.501 et seq.), but a summary is provided below: Rule 506(b)Advertising ProhibitedIn general, under the original Rule 506now known as Rule 506(b) and still in effectan issuer of securities has a safe harbor exemption from registration. This means that it doesnt have to obtain SEC pre-approval of the of-fering or need a securities license to sell its own securities, as long as the issuer follows the rules for the exemption.Rule 506(b) allows an issuer of its own securities to raise an unlimited amount of money. There is no limit on the number of accredited inves-tors but there is a limit of up to 35 non-accredited investors. In this ex-emption, all investors must be sophisticated (described above). However, the issuer cannot make any offers or sales of the securities by any means of general advertising or solicitation. For issuers relying on Rule 506(b), the investors may self-certify that they are accredited or non-accredited by checking boxes on a pre-qualification form and subscription agree-ment provided by the issuer. All investors must state how they believe they are sophisticated. This is a subjective determination you should not take lightly. To prove that you didnt solicit investors for a Rule 506(b) offering, you must be able to demonstrate you had a pre-existing relationship with your investors that pre-dates any offer to sell securities or that you sold them through a licensed securities broker-dealer. The pre-existing rela-tionship is complex, in that it requires that you understand the inves-tors financial qualifications before making an offer, and there must be an undefined passage of time between when you first met the prospective investor and when you made the offer. I liken this to a dating relationship: You meet someone and get his or her contact information (the introduc-tion); you go out on a date to determine suitability and whether your goals are compatible (the first date), and then you further the relationship with additional contact over time before making an offer (the proposal), and eventually solidifying the relationship with a formal contract/subscrip-tion (the marriage). A description of the rules for the Rule 506(b) exemption follows: You can raise an unlimited amount of money55'