Replies to post #36773 on Aquagold International Inc (AQUI)

[Bull Trader]

This rule is considered by many as the perfect answer for the company just starting out that needs to raise less than $1 million but can't afford to go through the whole SEC registration process. Until they grow to a point where they can afford it, Rule 504 offers such companies an out:

An exemption to raise up to $1 million
No disclosure criteria
Few general solicitation and resale restrictions
No limit as to the number or type of investors

Actually, Congress's original intent in 1982 for Rule 504 was to "set aside a clear and workable exemption for small issuers to be regulated by state blue sky requirements, but by the same token, to be subjected to federal anti-fraud provisions and civil liability provisions." Rule 504 exemption is provided for almost any type of organization, including corporations, partnerships, trusts, or other entities. However, it is not applicable to companies already reporting to the SEC (subject to the '34 Act) or investment companies.

You Cannot Exceed $1 Million
The total offering amount under Rule 504 can be up to $1 million in a 12-month period, less the aggregate offering of all securities sold within 12 months before the start of a 504 offering. So, if a company has raised $100,000 in private money in the previous 12 months, it can still raise up to $900,000 without being accused of breaking the rules, or integration.

Generally speaking, there are no specific disclosure requirements under Rule 504 (disclosing what the company is about, what it intends to do, or who is connected with it). This means that, theoretically, an issuer can have a purchaser sign a subscription agreement and purchase stock without any information about the company being disclosed. However, the rule is dependent on the blue-sky laws of each state in which the securities are offered. This means that if a state's blue-sky rules require disclosure, it must be provided regardless of Rule 504.

Rule 504 also provides that at least $500,000 of securities must be sold pursuant to a registration under a state's securities law. Consequently, an offer must comply with the blue-sky laws of each individual state in which it is offered. In many states, this negates the effective simplicity of Rule 504 and the federal government's intent, because many states' blue-sky laws are more restrictive than Reg D.

A word of caution to the entrepreneur--regardless of the amount of disclosure the issuer is willing to provide, Rule 504 does not dismiss the issuer from the federal requirements, nor is there an exemption from the fraud provisions, including the areas of material omissions or misstatements. The penalties for noncompliance are severe, including monetary fines and mandatory jail sentences.
http://www.regd504.com/

[Bull Trader]

THIS IS FROM THE LAST 10Q FILED BY THE OLD ONMC THAT YOU WERE STUCK IN:

Shareholders' equity: (Note 6)
Preferred stock par value $0.0001, 10,000,000 shares
Authorized, none issued and outstanding at November 30, 2001
Common stock par value $0.0001 100,000,000 shares
authorized; 48,554,712 issued and outstanding at
November 30, 2001

So as you can see the outstanding shares were 48,554,712.
The float was around 16,000,000. So the stock you were trading around (or as you say: "were held by investors like me") before the 504 was part of the original share structure of the OLD company. The shell guys increased the A/S with the NV SOS and then filed the REG D 504 to increase the float effectively adding liquidity to the share structure and allowing them to sell stock to you, me, and whoever they wanted to in order to raise the money needed to consummate the merger with Aquagold.