THE O’NEAL LAW FIRM, P.C.
17100 E. Shea Boulevard
Suite 400-D
Fountain Hills, Arizona 85268
(480) 812-5058
(480) 816-9241
oneallaw@qwest.net
July 25, 2005
First American Stock Transfer
706 E. Bell Road
Suite #201
Phoenix, AZ 85022
Re: Application of SEC Rule 504 to certain Sales of the Stock of AmerElite Solutions, Inc.
Dear Mr. Young:
We have been requested by our client, AmerElite Solutions, Inc. (the “Company”) that we provide you with a legal opinion as corporate securities counsel with respect to the Company’s proposed sale and issuance of 2,500,000 shares of its common stock (the “Shares”) to North American Funding, Inc., a Texas corporation (the “Purchaser”) in an offering exempt from registration under the Securities Act of 1933 ( the “Securities Act”) pursuant to Rule 504 of Regulation D promulgated thereunder, Section 5.I of the Texas Securities Act, and Rule 109.3.C.1 of the Texas Administrative Code and the Regulations promulgated thereunder.
In connection with this opinion, I have reviewed applicable federal and state laws, rules and regulations and have made such investigations and examined such documents and material related to the Company and the purchasers as I have deemed necessary and appropriate under the circumstances, including, but not limited to, the following:
1. SEC Regulation D, especially Rules 501, 502, 503 and 504 thereunder.
2. Section 5.1 and 7 of the Texas Securities Act (the “Texas Act”) and Rule 109.3.C.1 of the Texas Administrative Code promulgated under Section 5.I.
3. Articles of Incorporation of the Company as filed with the Nevada Secretary of State and Bylaws adopted by the Company.
4. Various corporate books and records, including minutes of directors meetings and resolutions of the Company’s Board of Directors related to the authorization and issuances of the Shares;
5. A certificate of the Company’s president stating that the Company:
a. is not a reporting company under the 1934 Securities Exchange Act;
b. is an operating company with a specific business plan; and
c. has not sold securities pursuant to exemption under Rule 504 within the past twelve (12) calendar months in an aggregate dollar amount that would preclude the contemplated sales of Shares under that rule.
6. The form of the Subscription Agreement to be executed by the Company and the respective Purchasers, including various representations of the parties therein.
The Law
Rule 504 Exemption: Section 5 of the Securities Act requires with certain exceptions, that all securities involved in an original distribution by the issuer must be registered. Regulation D promulgated under Section 3(b) of the Securities Act provides several means by which an issuer which is not subject to the reporting requirements of Section 13 and 15(d) of the Securities Exchange Act and is neither an investment company nor a blank check company may make an offer and sale of securities without registration upon satisfaction of certain requirements. Specifically, Rule 504 of Regulation D provides an exemption from registration for eligible issuers who make a limited offer and sale of securities not exceeding an aggregate amount to $1,000,000 in any twelve (12) month period. Rule 504 was amended effective April 7, 1997, to provide that in a Rule 504 offering made in compliance with one or more exemptions from registration in states that permit general solicitation and advertising where sales are made only to “accredited investors” as defined in Rule 501(a) of Regulation D, there will be no restriction on the resale of the securities sold in the offering.
Texas Law. In accordance with Rule 109.3.C.1 of the Texas Administrative Code which was promulgated under Section 5.I of the Texas Securities Act, the Texas State Securities Board has specifically exempted from the registration requirement of Section 7, the offer and sale of any securities made to an “accredited investor” as long as the seller reasonably believes all buyers, other than financial institutions, institutional investors or broker-dealers, are purchasing for investment and no commission or other remunerations is paid or given directly or indirectly for soliciting investors except to a licensed broker-dealer or sales representative.
Legal Opinion
The Company is incorporated in the State of Nevada, is not a reporting company under the 1934 Securities Exchange Act, and intends to make an offering to a limited number of “accredited investors” as defined in Regulation D, Rule 501(a), who reside or are domiciled in Texas and who purchase for investment securities in accounts which, if aggregated with all securities purchased in the offering and with any securities sold under Section 3(b) of the Securities Act and/or in violation of Section 5(a) of the Securities Act during the preceding 12 months, will not exceed $1,000,000.
Based on the foregoing, it is my opinion that there will be no restriction on resale of the securities sold in the offering as proposed if the purchasers do, in fact, qualify as “accredited investors.” I have made no independent attempt to verify facts provided me and set forth herein and this opinion is limited to and conditioned upon, the facts as stated herein.
This opinion is solely for the use of the Company and may not be published or provided to any person or entity other than the Company’s transfer agent, without written permission from the undersigned. Do not hesitate to call me if you have any questions.
Very truly yours
THE O’NEAL LAW FIRM, P.C.
GB+ND
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