STEM CELL AUTHORITY, LTD.
ACCREDITED INVESTOR CHECKLIST
Rule 501 of Regulation D, promulgated under the Securities Act of 1933, defines an “accredited investor” as follows:
“Accredited investor” shall mean any person who comes within any of the following categories, or whom the issuer reasonably believes comes within any of the following categories at the time of the sale of the securities to that person:
1. Any bank as defined in section 3 (a) (2) of the Securities Act of 1933 (the “Act”), or any savings and loan association or other institution as defined in section 3 (a) (5) (A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2 (13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2 (a) (48) of that act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301 (c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3 (21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
2. Any private business development company as defined in section 202 (a) (22) of the Investment Advisers Act of 1940;
3. Any organization described insection 501 (c) (3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
4. Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
5. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeds $1,000,000;
6. 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;
7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506 (b) (2) (ii) of Regulation D; and
8. Any entity in which all of the equity owners are accredited investors.
One of the following must apply to the potential investor:
1. Purchaser (individually or with spouse) has a net worth of $1,000,000 or more.
The purchaser’s net worth or the joint net worth of purchaser and spouse is to be measured as of the date of purchase and should be determined in accordance with generally accepted accounting principles. Net worth may include the purchaser’s home and automobiles.
2. Individual purchaser who had “income” in excess of $200,000 in each of the two most recent years and reasonably expects to reach the same “income" level in the current year.
The rule does not define the term “income.” It is suggested that one possible method of computing income is as follows: individual adjusted gross income (assuming that gross income has been reported on a federal income tax return) decreased by any deduction for long term capital gains, any deduction for depletion, any exclusion for interest, and any losses of a partnership.
3. Individual, whose joint “income” with spouse, is in excess of $300,000 in each of the two most recent years and has a reasonable expectation of reaching the same “income” level in the current year.
Comment made under qualification number 2, above, is also applicable here.
4. Purchaser is a director, executive officer, or general partner of the issuer or a director, executive officer, or general partner of a general partner of that issuer.
The rule does not include a manager of a limited liability company issuer, but it is suggested that a person that holds the position of a manager of the issuer before purchasing will be considered an accredited investor.
5. Bank, whether acting for itself or as a fiduciary.
As defined in section 3 (a) (2) of the Securities Act of 1933 (the “Act”).
6. “Insurance Company.”
As defined in section 2 (13) of the Act.
7. Investment Company or Mutual Fund.
Must be registered under Investment Company Act of 1940 “(1940 Act”).
8. “Business Development Company.”
As defined in section 2 (a) (48) of 1940 Act.
9. Small Business Investment Company.
Must be licensed by U.S. Small Business Administration under section 301 (c) or (d) of the Small Business Investment Act of 1958.
10. “Private Business Development Company.”
As defined in section (a)(2) of the Investment Adviser Act.
11. “An entity where all owners are accredited investors.”
As defined in Rule 501 (a) of Regulation D.
12. Trust with total assets exceeding $5,000,000.
Not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in section 203.506 (b) (2) (ii).
13. “Employee Benefit Plan” under ERISA which also meets requirements under “Explanation."
Must be an “employee benefit plan” within the meaning of savings and loan association Employee Retirement Income Security Act of 1974 (“ERISA”) and either: (i) the investment decision to purchase the securities will be made by a bank, savings and loan association, insurance company or investment advisor registered under the Investment Adviser Act of 1940 (the “Investment Adviser Act”), or (ii) the plan has total assets in excess of $5,000,000.
