They claim to be relying on Rule 504 as an exemption for issuing shares. They should have filed a FORM D, with the SEC, for using that exemption...
While companies using an exemption under Regulation D do not have to register their securities and usually do not have to file reports with the SEC, they must file what’s known as a "Form D" after they first sell their securities...
If the company has not filed a Form D, this should alert you that the company might not be in compliance with the federal securities laws.