DISCLAIMER

Sprowtt produces proprietary capital classes for owners of small business and security law firms seeking to advance their training in the compliance area of security law. This education is supplemental and never a substitution for advice from retained Security Law Experts.

The Sprowtt education is general in nature and final authority from licensed security law experts always supersedes the Sprowtt general education, which education is not security law advice where such advice may only be provided with client attorney privileged relationships between a company and their retained legal representation. Sprowtt lesson plans teach business owners that their licensed security attorney is the final authority for security law legal compliance that is specific to their company details, whereas a retained licensed security council is providing specific advice regulated by state and federal authorities. Any advice from your attorney that may conflict with general education provided in this lesson plan supersedes the education product and must be followed by the business owner who is seeking to protect full legal compliance with state and federal laws.

Sprowtt presents copyright lesson plans and terms as an assistant guide to new enrolled members to the Sprowtt Capital Education Class.

ACCREDITED INVESTORS

A SEC standard of net worth and or income the SEC defines and modifies from time to time to assure the investor is qualified and suitable to make the investment. Investors can invest 10% of their net worth or 10% of their annual income in a high-risk venture in a year maximum. Issuers must obtain third party verification the investor is accredited in all offerings that are not CROWD FUNDING and follow a passage of time rule that such investors have time to complete due diligence which investors must document. SPROWTT does these compliance requirements using automation. Non-accredited investors have lower net worth. In most larger security offerings, greater than one million crowd funding offering exemptions 100% of investors must be accredited to acquire the security. Failure to comply may breach our exemption and all investors can sue for their funds returned due to a single breach of compliance in this area.

BLUE SKY LAW

State Security departments in all fifty states that regulated the placement of securities to investors residing in their state with their own box top rules on security laws and form filing fee’s that the issuer must never breach when offering securities to investors in their home state. This is known as BLUE SKY LAW. The blue sky your investor resides under.

CAPITAL INTENSIVE

The exclusive and only issuer current law compliance education with practice skill transfer trainings, to assure the skill of raising capital with real investors inside a compliance bubble, is advanced by the business owner. As with Golf Tennis or any new skill regular practice attending three to five trainings substantially advances issuer skill in layered learning over time.

CLOSING

The closing of an offering in securities occurs when the issuer closes the forward offering of stock or the subscription face value of the offering is fully acquired by investors and additional securities may no longer be offered when the offering is fully sold or subscribed or electively issuer closed. Legal counsel assures all documents for all shareholders are complete without deficiencies and issues a closing letter as an over compliance step. SPRWOTT automates this process and assures no unauthorized securities are sold at all or to non-suitable qualified investors Sprowtt issues the LLC certificates or stock certificates to the investor and keeps stock ledgers on line for compliance protection forever. Sprowtt automation manages legal compliance transparency for the issuer and the investor in real time and their legal counsel and state and federal agencies at a click never before possible.

COMPLIANCE BREACH

Failing to follow and document compliance to the box top rules of the SEC and States in offering securities to investors. A breach of legal compliance upon issue of an investor complaint can result in state or federal investigations fines and penalties to bring the issue back into compliance, cease and desist orders and potentials for civil and even criminal penalties depending on the severity of the compliance breach. Assuring offerings are in compliance and never breach is the responsibility of the issuer. The Sprowtt intensive seeks to assure issuers have the education and best practices to over comply with the law such that a forward breach of the law is more unlikely.

CROWD FUNDING

Private Placement of Stock exemption - As set forth under this section at sec.gov. A set of rule regulations and guidance for offering stock to the public within box top rules the SEC publishes to the "issuers” of the stock which are the most relaxed regulations for first capital formation providing all box top rules are adhered to than rules for a public offering. Private placements of securities are known as exempt offerings because they are exempt from the higher time disclosure money costs and ongoing compliance and reporting costs of public offerings.

DEBENTURE OR BOND

Debt security agreements. Securities are just agreements between two parties. If the agreement is debt, it may be a debenture which may allow conversion at some term options to convert into equity or a bond debt which is a fixed debt agreement. Sprowtt encourages equity offerings until a venture has two quarters of income stable enough to support debt being considered and to fund early-stage costs. Never put a debt saddle on a startup horse.

EXEMPT OFFERINGS OF SECURITIES

Stock or debt agreements may be sold in companies as equity or debt securities without the cost or burden of a public offering filing with regulatory agencies. Box Top rules for various models of Exempt Offerings typically 506 C for offerings of over one million dollars, Crowd Funding offerings for first rounds under one million dollars, and Regulation A rounds for larger fundings within a short form public offering model. Other exempt offerings such as 504 505 and less used models are explained on the sec.gov web site with booklets for venture owner’s Sprowtt encourages our community to print and read. Sprowtt venture owners are primarily Crowd Funding or Regulation D section 506 C exemption offering formats. Exemption compliance is not hard it is just new for my first-time capital raisers.

EXPERT SECURITY COUNSEL

A licensed legal firm expert in security law whose primary practice is security law compliance work. Space engages low-cost fast performance venture specialized security law experts to instruct and mentor one on one issuers seeking to raise capital. Issuers may explore in private sessions following live capital compliance classes hosted by Security Attorneys some of which have long staff experienced at the SEC before entering private security law practice. Roel Campos on Faculty serving larger offerings upward of 20 million and much higher is a former SEC Commissioner serving two terms under the George Bush Administration.

FACE VALUE

The amount being raised in total in the documents presented to investors as the TOTAL being raised in each offering by the issuer (you).

FILINGS TO COMPLY

Crowd funding box top rules require the filing by a security law expert representing the issuer a SEC FORM C 20 before the security is offered in all fifty states via an approved regulated FINRA Portal to the investors. A REG D form is required for exempt offerings over one million dollars, with filing fee paid to the SEC and a REG D FORM filing in the state of the issuer and the states the investor resides in with filings fees paid in those states. Failure to file the REG D FORM can result in a breach of exemption and a litigation where investors ask for all their funds returned due to the technical breach of full compliance required by law.

ISSUER

You - the corporation issuing the security to investors is the issuer. Only officers and directors of the issuer may offer private placements of a security and or licensed security agents with a FINRA Brokerage firm may offer the security. Stock was initially issued to the new company at or fraction of a penny by the state. The issuer then put their IP ideas and business plans and protected ip into the business which raised stock price and for going income business with well raised the stock price. The issuer than sets a price they declare with their expert advisers, and structure a security offering at the declared price to the market of private investors. Private Equity and Hedge Fund institutional investors typically invest in second or third around funding when proof of concept is more developed. Angel investors fund early-stage ventures. Professional investors fund later growth with pitch deck developed by larger law firms like Hugh’s and Hubbard - see Roel Campos Sprowtt faculty for this level of security - requires larger legal fees. 3

LITIGATION PREVENTION FORM (LPF)

A Sprowtt optional form that is not required for legal compliance and is an issuer over compliance election. The LPF produces an added layer of litigation insulation when selling securities if chosen as an option. The MS2 conference is being optimized and automated as an election on SPROWTT as a future service option under a license arrangement with Sprowtt for 1.00 for use of this IP by SPROWTT exclusively. The LPF is an over compliance creating of Sprowtt to protect issuers and investors from unwanted later litigation distraction or cost in a highly litigious business environment. A Sprowtt invention for issuer uses and over compliance work. 3

MASTER SEQUENCE

The Master Sequence is learning earn and return. First learn and structure you’re offering. Second retain legal counsel and speed your compliance documents while you develop our pitch deck for Sprowtt. Third develop investor interest and then begin focused effort to sell out and close your offering before you spend on budgets. After offering close following board approved budgets make every investor dollar work like five seeking to bring in results under budget with profits exceeding expectations. Launch your second round before you begin this budget spending to replace lake of money going down in startup costs before income rain can replace that lake of capital. Use Sprowtt and Sprowtt to accelerate your journey.

MILESTONE GRAPH

A Sprowtt suggested model of presenting the legal business model to investors, with shareholder growth and time milestones that define the value of the offer to the investor where investors put in the growth hypotheticals, and the issuer defines risk and disclaims any hypothetical while the investor examines legally qualified disclosure of the summary value propositions suggested by all the documentation. A tool to legally qualify value to investors without making statements that deviate from the full legal disclosure information reviewed and approved by license security law experts including the milestone graph presentation model. A Sprowtt invention for issuer use and compliance.

OFFERING COSTS

The cost to gain permission to offer your security to investors under over compliance guidance policies taught by SPROWTT includes the cost to get work done by your attorney as a flat rate filing cost including Blue Sky work to the offering chosen and any state BLUE SKY FILING Fee’s for security offerings greater than one million dollars that may apply. Sprowtt cost and pitch deck costs are added cost to the security offering. The other cost are flights hotels and work to visit investors and form relationships deep enough to get investors into the venture space.

PITCH DECK

The documents typically presented by SPROWTT upon attorney review that include the company’s filing compliance documents, their private placement documents to the investors, their business plan, any financials, video’s audio’s animations or power points. The items an investor will see without omission related to the pitch to investors. All of which must be attorney reviewed and approved before investors receive a pitch deck. 4

PRIVATE PLACEMENT MEMORANDUM

PPMs are disclosure documents used by small businesses raising money through private securities transactions. It’s a document that has been used for 70 years, and defines the legal disclosure of required full disclosure to investors buying a security that is not public through an exempt private placement of stock. A booklet that contains full investor disclosure in an approved legal format lay out of where the company plan appears, its management section appears, its marketing section appears, its risk factors appear and so forth. Must be prepared by expert licensed security attorney’s to assure legal compliance is met before you offer to investors. All filings must be current before you offering to investors. 4

RESCISSION

In the event of a breach investors may have a right to their money back known as an offering rescission

REG D - 506 C

Private Placement of Stock Exemption - As set forth under this section at sec.gov. A set of rule regulations and guidance for offering stock to qualified investors with compliance box top rules at a reduced standard of cost time and burden of ongoing reporting from a public offering if all exemption rules are adhered to by the issuer of the stock (you). Clear print content of these rules to issue stock to investors is presented with guidance PDF file booklets at their web site. See below.

SEC

Security and Exchange commission of the United States regulating federal laws for security offerings in all fifty states.

SECURITIES

Any form of agreement in any model where investors make an investment and receive profit or potential gains from the work of others versus their own work. All such agreements and including purchase of stock in venture space are in fact “SECURITIES” under the law (or agreement between two parties) which the selling and buying is regulated by state and federal law to protect the public. Legal opinions that such agreements are not securities have been historically cut down ' by the courts for 70 years. Always act as if any such agreement. The cost of legal compliance is a small cost of doing larger business. Over comply with the law versus weakly comply.

SOURCE OR PLATFORM FUNDING

A process of selling a service including charitable services or products before they are available in the market. Well known platforms like kickstarter and indiegogo offer such presale promotions. Not to be confused with equity crowd funding as under the law crowd funding is a set of box top rules for selling stock privately outside a public offering, exempt from a public filing burden providing all exemption rules are adhered to. Source funding is not crowd funding though the terms are often entwined.

SPROWTTCF.COM

A legal FINRA portal for crowd funding. Sprowt.com An over compliance automation (in Sprowtt’ opinion) for all other private placement formats of issuer private placement of security to the market. SPROWTT is an endorsed automation to document all interaction between investors and issuers and to retain legal compliance records forever. Sprowtt provides automation features in security issue that have not previously been present nor are present from any alternative provider that Sprowtt is aware of. SPROWTT carries our highest endorsement for over compliance using automation to preclude unwanted breach liability in the marketplace today. .com for information or htpp://www.sprowttcf.com for crowdfunding information. SROWTTCF IS A LEGALLY AUTHORIZED FINRA CROWD FUNDING PORTAL of which there are less than 50 in the market. Many Sprowtt features where suggested by Sprowtt advanced education in over compliance with state and federal security laws for issuers in the market place.

SUBSCRIPTION AGREEMENTS

This is typically the last document in a Private Placement Memorandum or PPM as it is often called a PPM. The stock subscription agreement is the legal agreement between the corporation (seller of the stock) and the buyer (investor acquiring the stock) as to the terms of the transaction. Filling these documents out carefully and completely is a legal compliance item every issuer will wish to carefully rehearse with their security legal counsel to complete properly for each transaction. If used on http://www.sprowtt.com the process is automated to an over compliance standard in our expert opinion. No regulatory authority allows Sprowtt or any regulated platform to claim they provide legal compliance as only your security attorney and you as issuer are responsible ultimately for legal compliance which may never be transferred to a third party.

SUPPLEMENT

A set of financial and information updates to a 12-month-old security offering bringing the original disclosure documents current if the issuer is seeking to extend the offering for a final 180 days.

TERM

The date in time a security offering disclosure is deemed to become stale and out of date for investor consumption. The term is typically 12 months from date of first security sale. The offering documentation may include optimal language where the issuer (you) may supplement the private placement in 12 months with updated more current information and financials and continue offering the securities for an extension period of 180 days from the 12-month stated maximum offering term in time