Molten Salt Reactors
www.MoltenSaltReactors.com

What are Molten Salt Reactors?

Molten Salt Reactors or "MSRs" are liquid-fueled reactors that can be used for production of electricity, actinide burning, production of hydrogen, and the production of "fissile fuels."

Electricity production and waste "burn-down" are expected to be the primary missions for the Molten Salt Reactor. 

Fissile, fertile, and fission isotopes are dissolved in a high-temperature molten fluoride salt with a very high boiling point (1,400 C) that is both the reactor fuel and the coolant. The near-atmospheric-pressure molten fuel salt flows through the reactor core.

Traditional Molten Salt Reactor designs have a graphite core that results in a thermal to epithermal neutron spectrum.

In the core of the Molten Salt Reactor is where fission occurs - within the flowing molten salt which is the "fuel" and is heated to approximately 700° C., after which it flows into a primary heat exchanger where the heat is transferred to a secondary molten salt coolant.  The fuel salt then flows back to the reactor core. The clean salt in the secondary heat transport system transfers the heat from the primary heat exchanger to a high-temperature Brayton cycle which converts the heat energy into electricity. The Brayton cycle may use either nitrogen or helium as a working gas.

The picture above from the Department of Energy (www.DOE.gov)

Yes Nukes!
www.YesNukes.com
(as long as they are MSR or LFTR!)

Energy Cheaper and Cleaner than Coal Through Liquid Fluoride Thorium Reactors

Imagine, energy that is both cheaper than coal and cleaner than coal - and can solve more problems than just global warming.

The Liquid Fluoride Thorium Reactor (LFTR) is an alternative energy source that is not well known to the public. The LFTR uses inexpensive thorium as a fuel, which is transformed to uranium-233 and through nuclear fission, generates heat and power at a cost far less than coal fired power plants.

Environmental Concerns

The rising cost of energy and threat of climate change is a concern to many. The US annually imports over $400 billion of oil from foreign suppliers - many from countries whose governments that are not friendly to the U.S.

Global warming and climate change has been linked to melting glaciers which provides fresh water to millions of people.

Global warming and climate change has been linked to the ice melt in both the Arctic and Antarctic - where much of the ocean's algae is produced and provides the foundation of the ocean's food chain.

Global warming and climate change is linked to deforestation and desertification - causing further losses of fresh water supplies.

Global warming and climate change has been linked to declining food/crop production.

Fisheries are collapsing - some fish such as tuna, cod, swordfish facing extinction.

24,000 people in the US die annually from particulate emissions from coal fired power plants.

Global Population

The global population contributes to demand on finite resources. The world's population of almost 7 billion people is growing and leading to competition for dwindling food, water, and energy resources that may lead to famine, plague and eventually wars and world war.

The US and other industrialized nations' birth rates are stable and even declining - and less than the population replacement rates. Countries that are prosperous are more sustainable.

Global prosperity depends on energy. Carbon Free Energy and Pollution Free Power from Clean Power Generation plants and renewable energy technologies are far superior than any fossil fuel as well as nuclear (fue) better for all living things and a healthy planet. And global prosperity will thrive when Carbon Free Energy is generated from technologies that are "cheaper than coal."

Electrical energy provides power for clean water supplies, sanitation, lighting, refrigeration, cooking, communications, healthcare/hospitals and schools/education. It has been shown that when a country has at least 2,000 kwh per year/per capita, that there is prosperity for the people in that country and the population stabilizes. The U.S. generates approximately
12,000 kWh per year, per household.

Economists study the relationship between the economic damage from carbon taxes (Cap and Trade) against the economic damage done from greenhouse gas emissions and anthropogenic climate change. Raising the carbon tax too fast will damage the economy. Europe’s $50 billion Cap and Trade has not yet reversed emissions growth of greenhouse gas emissions. And, developing nations will not accept carbon taxes that limit their economic growth.

Even global warming contrarians can support the economic benefits of energy that is cheaper than coal.

The Liquid Fluoride Thorium Reactor solves many of the problems highlighted above by:

• Generating Carbon Free Energy and Pollution Free Power at costs that are "cheaper than coal."

• Generating power with zero greenhouse gas emissions.

• Enabling populations of developing nations to afford the energy they need for sustainable growth and smaller, sustainable populations.

The History of the Liquid Fluoride Thorium Reactors

The Liquid Fluoride Thorium Reactor uses inexpensive and abundant thorium as its fuel. Thorium is transformed into uranium-233 which generates heat and power via nuclear fission.

The thorium and uranium are dissolved in molten salt which simplifies fueling and waste removal when compared to today's nuclear power plants.

Environmental LFTR Advantages

1. Liquid Fluoride Thorium Reactors generate Carbon Free Energy and Pollution Free Power at costs that are cheaper than coal.

This would cause the closings of coal fired power plants and the end of their dumping of millions of tons of greenhouse gas emissions into our atmosphere every year..... not to mention their hundreds of thousands of tons of mercury emissions they are dumping into our environment that is poisoning our planet and all living things.

2. Liquid Fluoride Thorium Reactors produce less hazardous waste than coal or other forms of nuclear energy and the radioactive waste from Liquid Fluoride Thorium Reactors lasts 1/100th the time of nuclear waste from today's nuclear power plants.

3. Ending the pollution from coal fired power plants and associated coal particulates would save 24,000 lives annually in the US and thousands of people in China and the rest of the world.

4. The fuel used in Liquid Fluoride Thorium Reactors is inexhaustible and inexpensive. 

One ton of thorium costs $100,000 and is enough to generate 1 GW electricity per year - which would be all the power a city the size of San Francisco needs.


Technical Advantages of Liquid Fluoride Thorium Reactors:

1. Liquid Fluoride Thorium Reactors have no refueling outages, with continuous automated refueling and continuous automated waste fission product removal.

2. Liquid Fluoride Thorium Reactors can change power output to satisfy electric demand, for both baseload coal fired power plants and nuclear power plants and replace entirely expensive natural gas "peaker" plants.

3. Liquid Fluoride Thorium Reactors operate at high temperature for 50% thermal/electrical conversion efficiency, thus needing only half of the cooling required by today's coal fired power plants and nuclear power plants cooling towers.

4. Liquid Fluoride Thorium Reactors are air cooled, critical for the West and Southwest U.S. as well as many developing countries where water is scarce.

5. Liquid Fluoride Thorium Reactors have low capital costs because they do not need massive pressure vessels or containment domes. 

Because Liquid Fluoride Thorium Reactors have compact heat exchangers and utilize Brayton Cycle turbines, their cooling requirements are halved and safety is increased, when compared with today's nuclear power plants.

6. A new Liquid Fluoride Thorium Reactor will cost $200 million for a 100 MW power plant which means they are affordable.

7. Liquid Fluoride Thorium Reactors can also make hydrogen fuel for helping develop the hydrogen economy.

8. Liquid Fluoride Thorium Reactors are intrinsically safe because overheating expands the fuel salt past criticality. 

Because Liquid Fluoride Thorium Reactor fuel is not pressurized and because total loss of power or control will allow a freeze-plug to melt, gravitationally draining all fuel salt into a dump tray, where it cools convectively.

9. 100% of Liquid Fluoride Thorium Reactor thorium fuel is burned, compared to 0.7% of uranium burned in today's nuclear reactors.

10. Liquid Fluoride Thorium Reactors are proliferation resistant, because their U-233 fuel also contains U-232 decay products that emit strong gamma radiation, hazardous to any bomb builders who might somehow seize control of the power plant for the many months necessary needed to extract uranium.

11. Liquid Fluoride Thorium Reactors plutonium and other actinides remain in the salt until it is fissioned - unlike today's solid fuel reactors, which must refuel long before these long-lived radiotoxic elements are consumed, because of radiation and thermal stress damage to the zirconium-encased solid fuel rods.

12. No plutonium or other fissionable material is ever isolated or transported to or from the Liquid Fluoride Thorium Reactors (except for importing spent nuclear fuel waste used to start the Liquid Fluoride Thorium Reactor).


Liquid Fluoride Thorium Reactor Challenges

There is almost no political awareness of the thorium/uranium fuel cycle.

James Hansen, the well-known climate scientist from NASA and Columbia professor, recommends and supports the deployment of Liquid Fluoride Thorium Reactor technology for generating "carbon free energy."

At present, there is no R&D support or funding for Liquid Fluoride Thorium Reactors.

R&D is needed now for supporting Liquid Fluoride Thorium Reactor technology.

The Nuclear Regulatory Commission would need to learn Liquid Fluoride Thorium Reactor technology in order to license and regulate it.

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In affiliation with an energy investment banking firm and Fortune 250 engineering company, we are forming a new Energy Service Company (ESCO) to provide ESCO solutions, including; demand side management, energy efficiency measures and clean power generation solutions for commercial, industrial and utility clients.  Our company will reduce our client's energy expenses, while increasing their power reliability and reducing or eliminating their environmental risks and liabilities. Our company's clean power generation systems and ESCO solutions will upgrade practically any company's facilities into a "net zero energy" solution providing the business with the ability to operate without connection to the electric grid.

For qualified clients, we will provide the optimum solutions and services, with little to no expense, with an Energy Services Agreement or Power Purchase Agreement that includes emissions engineering services and "greenhouse gas reporting" services, now required for many of our clients.

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The Business Model of "Central Power Plants" is a failed model due to the following failures of Central Power Plants and the electric utilities and other companies that own or operate them.

Central Power Plants are:

• Highly inefficient

• Highly polluting - generating hazardous air pollutants, mercury and greenhouse gas emissions, all of which are now regulated, and are now, or will be heavily taxed.

• Consume inordinate amounts of fuel.

• Waste inordinate amounts of useful heat energy.

• Require as many as 5-10 years to begin construction of new central power plants.

• Typically owned by highly inefficient, heavily regulated electric utility companies that are massive bureaucracies requiring significant amounts of capital that are passed on to customers

• Located as far as 50 miles, to 150 miles from the load center, or market

The alternative to Central Power Plants are "Dispersed Generation" power and energy systems.  

Dispersed Generation power and energy systems are;

• At approximately 90% system efficiency, Dispersed Generation power and energy systems are about 250% more efficient than Central Power Plants.

• Highly efficient

• Generate 50% to 100% fewer emissions

• Consume 50% to 90% less fuel 

• Located at the load center, i.e. customer's location, where the "waste heat" energy can be recovered and used by the client.

• Can be permitted and built in less than 12-18 months

NOTE:  The above can be affected by a number of variables can affect the above.  We can provide the turnkey solution and installation for clients in the 500 kW to 10 MW range.  Our front-end engineering design and economic analysis determines the optimum solution for our clients, that takes into account the client's location, operation/business and how the client uses power and energy and their existing electric and natural gas rates. All of which play an important role regarding the client's return on investment.

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What is "Dispersed Generation"?

Dispersed Generation is similar to Decentralized Energy - which is the opposite of "centralized energy."  Dispersed Generation is defined as the efficient deployment of clean, efficient and renewable power, which are located near a "load center" and are in the 10 MW to 150 MW to as much as 300 MW range. 

Our new company is  focused in solving power problems in the 1 MW to 30 MW range as well as providing solutions for the "demand side management" market opportunities.

 
The Problems and Opportunities with USA's Present Electrical Grid, Power Supply, Power Generation, "Central Power Plants" and "Centralized Energy."

• Central power plants are extremely inefficient, costly and generate significant amounts of pollution, including mercury, hazardous air pollutants, nitrogen oxides and greenhouse gas emissions. 
  

• Siting of new central power plants require as many as 10 years to receive approvals and permits.  Our company's Founder and Chairman has developed or consulted in new power generation assets, wherein our/their highly-efficient "Dispersed Generation" assets received permits in well under 12 months.
  

• Building new central power plants are expensive - as much as $4500/kW.
  

• Central power plants are not as "integrated" or connected to the electric grid of a load center, as a Dispersed Generation power plant is.  In addition, due to their size, high power output and "profile," central power plants are more likely to be a target of criminal activity than Dispersed Generation plants.
  

• The "electric utility" business model based on generating power - and then re-selling it - from highly inefficient central power plants - is a failed business model. Highly efficient, integrated and locally-sited Dispersed Generation plants are the future of power generation.
  

• Even new, "highly-efficient" central power plants - with efficiencies of 60% - are still "highly inefficient" when compared with our 90% to 92% efficient Dispersed Generation plants.
  

• According to the EIA (Department of Energy), America's power and energy sector contributes about 1/2 trillion dollars every year to the U.S. gross domestic product (GDP).
  

• Demand for new electric electric generation is expected be more than > 40% by 2025.

Dispersed Generation power plant's multiple advantages over Central Power Plants:

• Operating at approximately 90%, Dispersed Generation plants are about 200% to almost 300% more efficient than central power plants. This results in significant economic and environmental savings, as well as reduction or elimination of pollution, including mercury, hazardous air pollutants, nitrogen oxides and greenhouse gas emissions. 
  

• Dispersed Generation plants located at or near the load center.  Even more opportunities develop when a customer or host is available for utilizing the "waste heat" of the Dispersed Generation plant.
  

• Blackouts are practically eliminated when load centers have Dispersed Generation power plants.
  

• Problems relating to electric grid's "transmission congestion" are reduced or eliminated.
  

• Problems relating to high prices of power transmission at/in major load centers (cities) are reduced or eliminated.
  

• Dispersed Generation power plants cost - on a $/MW - is less than 1/2 of the cost for new central power plants.

Our Dispersed Generation power plants provide clean, renewable power for cities and other load centers that eases the congestion of the grid and prevents blackouts and brownouts. Our company plans to develop Dispersed Generation assets located near load centers - where we design, build, own, operate and maintain natural gas fueled CHP systems.

We provide generator sales and service, energy and power engineering services and energy master planning services. This includes custom-packaging of engines and generators (Engine Generator Sets) such as the one below, to optimize the return on investment for our customers.

We can design and custom-package an onsite power generation system that is tailored to your facility's specific power and energy previous 12-36 months historical energy use. With our client's input, we also provide projections into future energy use and then custom-package a power and energy solution that:

• increases power reliability

• reduces energy expenses

• increases energy efficiency

• reduces/eliminates emissions

• reduces or eliminates the power supply / blackout problems

• may pay for itself in less than 36 months!

Call/email us if you are seeking an Energy Master Plan or a customized onsite power generation solution for your facility's power and energy requirements - or to tour of one of the facility's where we can design and build a customized Engine Generator Set or CHP system for your business.

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Running on "green fuel" such as Biomethane, B100 Biodiesel, Synthesis Gas or natural gas, our CHP Systems are the greenest "clean power generation" systems available.

Our clean power generation systems are a superior "micro-grid" and demand side management solution for data centers, hospitals, universities, municipal utility districts and new real estate developments/subdivisions seeking "net zero energy" solutions. 

With Natural Gas prices now running well below $3.00/mmbtu, and more recently in March 2012, below $2.40/mmbtu, our Clean Power Generation plants generate  power for a fuel cost at about $0.03/kWh.  With operations & maintenance added in - we generate power for less than a nickel or $0.05/kWh - or, anywhere from 50% to 75% less than your present electric rates.

We also provide energy independence from the "dirty" power grid with its high unreliability, black-outs and sky-rocketing electric power prices.  

Our "Integrated" CHP Systems (Cogeneration and Trigeneration) Plants 
Have Very  High Efficiencies, Low Fuel Costs & Low Emissions

The Effective Heat Rate is Approximately 
4100 btu/kW & System Efficiency is 92% Plant.

The CHP System below is Rated at 900 kW and Features:
(2) Natural Gas Engines @ 450 kW each on one Skid with Optional 
Selective Catalytic Reduction system that removes Nitrogen Oxides to "non-detect."

Our CHP Systems may be the best solution for your company's economic and environmental sustainability as we "upgrade" natural gas to clean power with our clean power generation solutions.

Our Emissions Abatement solutions reduce Nitrogen Oxides to "non-detect" which means our Trigeneration energy systems can be installed and operated in most EPA non-attainment regions!

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How we make and distribute electricity is changing!

The electric power generation, transmission and distribution system (the electric "grid") is changing and evolving from the electric grid of the 19th and 20th centuries, which was inefficient, highly-polluting, very expensive and “dumb.”

The "old" way of generating and distributing energy resembles this slide:

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Hubbert's Peak Oil Predictions Now Proving True?

Marion King Hubbert was a geologist and scientist who worked at Shell Oil company's research lab in Houston, Texas. Hubbert made several important contributions to geology, geophysics and petroleum geology. Hubbert is most recognized for the "Hubbert Curve" and " Hubbert Peak Theory" which is now referred to as " Peak Oil.

Hubbert's life work determined that the world has a finite amount of petroleum that can be produced. (Similarly, there is a finite amount of coal.) Many scientists and engineers believe we have reached Hubbert's "peak oil" limit. Hubbert's espouses that when 50% of domestic crude oil production has been reached, that there will be such significant upward demand on prices of the limited supplies of oil production, that the U.S. economy will experience severe economic, social, and political turmoil.

Hubbert's Peak Oil predictions have proven to be true and this is validated as the U.S. in the early 1970's produced about 60% of its' oil demand and imported 40%. That equation has flipped since then, because our domestic oil production has been on the decline since 1970, so now, due to our declining domestic oil production, we have to import 60% of our oil supplies, to meet our country's oil/energy demands.

The Next Oil Shock Could be the "mother" of All Oil Shocks

How severe our economic calamity and next "oil shock" will depend upon a number of factors, including when this occurs, as well as the following:

1. the dependence of the individual country upon its own crude oil production to meet its energy needs and to subsidize consumer imports;

2. the rate of relative decline in crude oil production;

3. the degree of difficulty encountered in replacing missing energy inputs;

4. the degree to which our country had prepared in advance for this inevitable geological and economic calamity.

Examples of past "oil shocks" and the economic and political calamities that followed:

United States: Our peak crude oil production of domestic oil occurred in 1970; the first "oil shock" and oil crisis followed in 1973 with the Arab/OPEC Oil Embargo.

Iran: Their peak crude oil production occurred in 1974; They had their islamic revolution 1979 that overturned government and replaced it with radical islam.

Soviet Union: Their peak crude oil production was in 1989; what happened next?
Their country disintegrated and the collapse of the Soviet Union followed in 1991.

Indonesia: Their peak crude oil production was in 1991; their financial and government crisis followed in 1997.

Iraq: Iraq's crude oil production was in 1989; they then invaded Kuwait (for their oil) in 1991.

Using Mr. Hubbert's predictions, that beginning around 2000 we would see peak (global) oil production, then, if the country's not weaning themselves off of their oil addiction, and had not begun making the switch to renewable energy, that the negative economic and political calamities would soon follow, including ever-increasing prices of energy that is from fossil fuels.

Now is the time to begin weaning ourselves off of fossil fuels and making the transition to and increasing the use of renewable energy. If you don't believe in climate change, or global warming, GREAT! Join us in the switch to renewable energy and a fossil-free economy!

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America's Clear and Present Danger

America Has INCREASED its' Dependence on Foreign
Sources of Energy by 50% Since 1973.

America is even more "addicted" to foreign oil today, than we were in 1973 - 1974 when OPEC, Saudi Arabia and other suppliers from the Middle-East stopped selling us their fossil fuels, and created a significant blow to our economy.

According to Monty Goodell, Founder and Chairman of the Renewable Energy Institute, "our increased dependence and reliance on foreign energy supplies represents a Clear and Present Danger to our national security, our economy, and the lives and livelihood of every American. Energy - including the energy we use from imported fossil fuels, is the very "lifeblood" of the American economy as it is for every industrialized country. An economy dies without it's lifeblood of energy. This Clear and Present Danger we face is far more serious than the problems related to greenhouse gas emissions. And while greenhouse gas emissions are very serious issue, in the long-term, pales in comparison to America's vital national security interests and America's economic stability in the short term. For this reason alone, America needs to transition away from its addiction to foreign energy supplies. And America's abundant renewable energy resources such as the energy we receive from the sun, and renewable energy technologies such as concentrated solar power (CSP) plants - can supply 100% of America's power requirements with a concentrating solar power plant measuring 75 miles by 75 miles, located in the Southwest U.S. By generating America's power from concentrating solar power plants, America resolves its' short-term Clear and Present Danger as it relates to importing its energy from foreign countries, and the long-term problems relating to greenhouse gas emissions."

Continuing, Mr. Goodell states that "too many Americans have forgotten what happened to us in 1973, when the Arabs and OPEC brought the United States economy to a screeching halt during the OPEC Oil Embargo. This happened because they (mainly the country of Saudi Arabia) disagreed with our foreign policy and is the reason why they "turned off the tap" of our need for their oil supplies. When Saudi Arabia and OPEC stopped the vital flow of oil to our country in 1973, they caused an "oil shock" that severely and negatively impacted our economy.

Mr. Goodell's question for us to ponder is, "do these countries who sell us 60% of our daily energy requirements, like us and our foreign policy, or might they leverage our addiction to their fossil fuels, and turn off the tap to make us adjust or revise our foreign policy?? Like any addict, America's foreign policy may be held hostage to its addiction, and in this case, our addiction to foreign oil, may over-ride our national interests."

Have American's forgotten the gas shortages and long lines at
their gas stations to get gas during the Arab Oil Embargo of 1973?

"Apparently so." Mr. Goodell states that "in 1973, America was 'addicted' and 'over the barrel' of foreign oil to the amount of 40%. Forty percent of our energy 'needs' in 1973 came from countries - many of which didn't like us then, and I'm afraid, many of them still don't. The difference between 1973 and today - is that today we receive 50% MORE foreign oil now than we did in 1973. And now we know about the problems relating to greenhouse gas emissions that we didn't know then. America needs to change course, and change course now, in terms of its' energy supplies and how we keep America's economy strong, without the threat of being held hostage to a middle-east tyrant or regime, that could once again, turn on us, and turn off our supply of foreign oil."

Remember ????

"Sadly, most Americans have forgotten the long lines of people waiting in their cars - lined up and waiting for gasoline at their nearby gas station, with lines that were many blocks long. And, after waiting 4-5 hours, many even waiting overnight in many places, to finally take their turn to fill up their car with gasoline, only to find that the gas station had run out of gas."

"Let me Repeat.... That was 1973 when we imported 40% of our daily energy requirements in the form of crude oil from overseas, and from foreign countries - and many of these from countries that don't like us.

Today, over 35 years later, America has yet to learn the lesson. We cannot continue our reliance on energy from foreign countries that supply us with 60% of the crude oil that our refineries use as a feedstock for producing gasoline and diesel fuel for our cars and trucks comes from overseas.

America is "over the barrel" and it's not our barrel, but the barrels of oil that we are addicted by and owned by other countries. Why have we not learned the lessons we needed to learn in 1973 when we were cut-off from the vital energy supplies we need?

Countries like China, are growing rapidly, and have an insatiable need for crude oil. China, with their booming economy, is increasingly growing in its clout and control over international supplies of crude oil - whether they do this through their ability to buy as much oil as they need on a daily basis, or whether they simply but American drilling rigs, technology, and explore and produce oil and gas from their own fields. China, is buying large amounts of oil for their country, and causing upward pricing on declining supplies. What happens if Russia, with all of their oil and natural gas, along with China and Venezuela, with or without the help of OPEC, decided to NOT sell oil to us????

To be sure, greenhouse gas emissions are a problem, and to some, greenhouse gas emissions are also a Clear and Present Danger, but not to the extent that it presents an imminent Clear and Present Danger.

America's reliance for 60% of our energy "needs" coming from foreign suppliers is un-acceptable.

The "driver" to get America to begin reducing and eliminating fossil fuel use should be our nation's national security and the welfare and safety of its citizens. And this can all begin with developing and investing in our own renewable energy resources and renewable energy technologies, let's start by putting solar on every rooftop that has a clear and unobstructed view of the Southern sky. See www.RooftopPV.com or www.DistributedPV.com for more information. Let's create incentives begin with adopting a national "Feed In Tariff" as Germany did in 1990.

America, we simply do NOT have the luxury of time on our hands. We need to end our dependence and reliance on foreign fossil fuels, especially from countries that don't like us! We need to rapidly begin expanding renewable energy resources and renewable energy technologies from our vast and abundant renewable energy resources, such as; solar, solar energy systems, solar cogeneration, solar trigeneration, "solar on every roof," waste to energy, waste to fuel, biomass gasification, B100 Biodiesel, Biomethane, Synthesis Gas, geothermal, E100 Ethanol (from sugar cane and NOT from corn), and wind, where it makes economic sense."

For more information, call/email:

What is a "Durable Competitive Advantage?"

A durable competitive advantage is also referred to as a "strategic competitive advantage," however similar, they are different. The two differ in that a company with a durable competitive advantage can go on indefinitely. Companies that have a durable competitive advantage include Coca-Cola and Hershey's. The term "durable competitive advantage" has been popularized by "the Oracle of Omaha," Warren Buffet the Founder and Chairman of Berkshire Hathaway as the single-most important asset a company must before his company will make the investment or acquisition.

What is a Private Placement Memorandum?

Private Placement Memorandums (PPM) are confidential sales documents that is provided to a potential sophisticated investor for a private placement of bonds. The PPM contains relevant information about the financial, economic and demographic characteristics of the borrower and its service area.

More specifically, Private Placement Memorandums provide the investor, in the format of a structured document, the information and data the investor needs to know to make an informed investment decision, including:

* The Private Placement Memorandum's offering format and structure
* The company information and structure of the company
* SEC required disclosures about the securities being purchased
* Information related to the company's business and operations
* Risks involved with the investment
* Senior Management and Company Financials
* Use of proceeds

Private Placement Memorandums also includes the subscription agreement which is the actual "sales contract" for purchasing the securities. The PPM is the document that the investor will sign and send in with his/her investment funds


What is a Regulation D Offering?

Regulation D, also known as "Reg D," became effective April 15, 1982. It's one the key SEC exemptions for small businesses that want to raise money by selling its stock. It's also considered a route to taking a company public without the burden and expense of a full registration with the SEC.

Regulation D consists of six basic rules. The first three are concerned with definitions, conditions, and notification. Rule 501 covers the definitions of the various terms used in the rules. Rule 502 sets forth the conditions, limitations, and information requirements for the exemptions in rules 504, 505, and 506. Rule 503 contains the SEC notification requirements. The last three rules deal with the specifics of raising money. Rule 504 generally pertains to securities sales up to $1 million. Rule 505 applies to offerings up to $5 million (including those offerings less than $1,000,000). Rule 506 is for securities offerings with no limit or any dollar amount (including those offerings less than $5,000,000 million).

Regulation D Offerings Continued

Under the Securities Act of 1933, any offer to sell securities must either be registered with the SEC or meet an exemption. Regulation D (or Reg D) provides three exemptions from the registration requirements, allowing some smaller companies to offer and sell their securities without having to register the securities with the SEC. For more information about these exemptions, read our publications on Rules 504, 505, and 506 of Regulation D.

While companies using a Reg D exemption 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. Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.

Rule 504 of Regulation D

Rule 504 of Regulation D provides an exemption from the registration requirements of the federal securities laws for some companies when they offer and sell up to $1,000,000 of their securities in any 12-month period.

A company can use this exemption so long as it is not a blank check company and does not have to file reports under the Securities Exchange Act of 1934. Also, the exemption generally does not allow companies to solicit or advertise their securities to the public, and purchasers receive "restricted" securities, meaning that they may not sell the securities without registration or an applicable exemption.

Rule 504 does allow companies to make a public offering of freely tradable securities but only if one of the following circumstances is met:

The company registers the offering exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;

A company registers and sells the offering in a state that requires registration and disclosure delivery and also sells in a state without those requirements, so long as the company delivers the disclosure documents required by the state where the company registered the offering to all purchasers (including those in the state that has no such requirements); or

The company sells exclusively according to state law exemptions that permit general solicitation and advertising, so long as the company sells only to "accredited investors."
Even if a company makes a private sale where there are no specific disclosure delivery requirements, a company should take care to provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information a company provides to investors must be free from false or misleading statements. Similarly, a company should not exclude any information if the omission makes what is provided to investors false or misleading.

While companies using the Rule 504 exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what is known as a "Form D" after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.


Rule 505 of Regulation D

Rule 505 of Regulation D allows some companies offering their securities to have those securities exempted from the registration requirements of the federal securities laws. To qualify for this exemption, a company:

Can only offer and sell up to $5 million of its securities in any 12-month period;

May sell to an unlimited number of "accredited investors" and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions;

Must inform purchasers that they receive "restricted" securities, meaning that the securities cannot be sold for at least a year without registering them; and

Cannot use general solicitation or advertising to sell the securities.

Rule 505 allows companies to decide what information to give to accredited investors, so long as it does not violate the antifraud prohibitions of the federal securities laws. But companies must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If a company provides information to accredited investors, it must make this information available to non-accredited investors as well. The company must also be available to answer questions by prospective purchasers.

Here are some specifics about the financial statement requirements applicable to this type of offering:

Financial statements need to be certified by an independent public accountant;

If a company other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the company's balance sheet (to be dated within 120 days of the start of the offering) must be audited; and

Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish audited financial statements prepared under the federal income tax laws.
While companies using the Rule 505 exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what is known as a "Form D" after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.

Rule 506 of Regulation D

Rule 506 of Regulation D is considered a "safe harbor" for the private offering exemption of Section 4(2) of the Securities Act. Companies using the Rule 506 exemption can raise an unlimited amount of money. A company can be assured it is within the Section 4(2) exemption by satisfying the following standards:

The company cannot use general solicitation or advertising to market the securities;

The company may sell its securities to an unlimited number of "accredited investors" and up to 35 other purchases. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated—that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;

Companies must decide what information to give to accredited investors, so long as it does not violate the antifraud prohibitions of the federal securities laws. But companies must give non-accredited investors disclosure documents that are generally the same as those used in registered offerings. If a company provides information to accredited investors, it must make this information available to non-accredited investors as well;

The company must be available to answer questions by prospective purchasers;

Financial statement requirements are the same as for Rule 505; and

Purchasers receive "restricted" securities, meaning that the securities cannot be sold for at least a year without registering them. While companies using the Rule 506 exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what is known as a "Form D" after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.

What is an Initial Public Offering?

An "Initial Public Offering" or "IPO" is the first sale of stock by a company to the public.

The purpose of an Initial Public Offering is to generate capital for a business that decides to take the route of equity financing.

What is Equity Financing?

Companies seek "equity financing" when a company uses its assets or ownership in the company to get cash they need for expansion or continued growth.

When a company sells its stock through an Initial Public Offering it is, in essence, selling partial ownership in the company.

One downside to this type of financing is that the company loses some of its control when shares are sold to the public.

In order to complete a successful Initial Public Offering, an "underwriter" is used to facilitate the process as well as to promote the company's stock to investors and eventually to the public. Another term for an underwriter is an investment bank.

What is a Strategic Competitive Advantage?

A company with a strategic competitive advantage consistently outperforms their competition through its strategic competitive advantage(s) which is that company's unique value proposition wherein it produces better products or services than anyone else.

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