For the past three years, Wayne has been the sole owner and CEO of a corp that manufactures and distributes a relatively expensive high-tech baby monitoring device known as "Hear All." The business has grown steadily, and Wayne is convinced that it's time to "shoot for the stars." To make this happen, Wayne needs 1.5m of equity capital and an expanded bank line of credit that will be "doable without personal guarantees" based on the past record of the business and the new equity. Wayne is willing to give up 40% of the equity to secure the needed capital.

Wayne's brother-in-law Sam, a CPA and big fan of Wayne's product, claims to have "lined up the dough." Seven individuals will each contribute 200k, and Sam will contribute 100k. All Wayne knows is that the investors reside in three states, four of the sven are "doctor clients of Sam," two are mothers who "married right and love the product," and the last one is a "23-year-old kid who wants to be a musician and just inherited a bundle."

What additional facts do you need to advise Wayne relative to any registration exemptions under the federal securities laws? On the basis of the facts you have, which exemption likely will work best for Wayne?