These proceedings concern disclosure violations by AmericaFirst Capital Management, LLC ("AFCM") and its two principals, Rick Gonsalves and Robert Clark, while selling promissory notes to individual retail investors, including the firm's advisory clients. From December 2012 through February 2015 ("the relevant time period"), AFCM was a registered investment adviser that was experiencing cash flow issues and turned to borrowing cash from investors in order to cover its business expenses. While soliciting investors to purchase or renew $2.7 million in AFCM's promissory notes, Clark - who was directed by AFCM's CEO Gonsalves - gave the impression to investors that AFCM was a profitable business and failed to disclose that there was a risk of default associated with the promissory notes. In reality, the firm for several years had experienced increasingly negative net worth and decreasing net income, and had been sustaining its business operations through cash raised from the promissory notes sold to investors. As a result of their failure to exercise reasonable care in providing investors with complete and accurate disclosures regarding AFCM's financial health, AFCM, Gonsalves, and Clark violated Section 17(a)(2) of the Securities Act; and AFCM and Gonsalves violated, and Clark caused AFCM's violations of, Section 206(2) of the Advisers Act.