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Confidential Private Placement Memorandum
CONFIDENTIAL
PRIVATE PLACEMENT MEMORANDUM
<COMPANY CONTACT INFORMATION>
[Date of PPM]
| Partnership Unit Offered | Offering Price | Underwriting Discount and Commissions | Net Proceeds to the Company* |
|---|---|---|---|
| Minimum Offering [][Class_] Units | $[],000 per Unit [Class_] Unit | None | $[],000 |
| Maximum Offering [][Class_] Units | $[],000 per Unit [Class_] Unit | None | $[??],000 |
*The expenses of the Offering are expected to be less than $[],000 and paid from operating revenues
OFFER TO SELL SECURITIES
[ ] Class [ ] Limited Partnership Units
Beginning on the date hereof, [Name of Issuer], LP, a [State of Domicile] limited partnership (the “Company” or the “Partnership”), is offering to sell [Class _ ] Limited Partnership Units to investors for [$??],000 for _____ (_) ownership unit (the “[Class _ ] Units,” the “Units” or the “Securities”). Each ownership Unit represents one-half of one percent of the equity of the Company. The maximum offering is ________ Units for an aggregate offering of [$??],000,000 (the “Maximum Offering”) or twenty ([??]%0) percent of the equity of the Company. The minimum offering is [_] Units for an aggregate offering of $[??],000 (the “Minimum Offering”) or __ (_%) percent of the equity of the Company. The minimum investment amount is [$??],000, provided however the General Partner may, in its discretion, accept a subscription in a lesser amount. The investor subscribing for a [Class _ ] Unit will be provided a quarterly preferred return (non-cumulative and non-guaranteed) for __________________ of the investment period in an amount up to but not exceeding __ (??%) percent per annum calculated on the amount of their capital account as of the date of the quarterly payment. The return shall be calculated as of the date the original investment, based on the beginning balance of the Limited Partner’s capital account and shall be adjusted in the event that the Limited Partner’s capital account is reduced as a result of a return of equity. The General Partner and the Class [ ] Limited Partners will be allocated the balance of the earnings in proportion their respective ownership interests. Additionally, in the event of a sale of all of the assets, the ______________ preferred annual return for __________________will be prorated on a calendar year basis calculated on the balance of the Limited Partner’s capital account as of the date of the closing of the sale. A [Class _ ] Limited Partnership Interest owner shall also have _____________ as to other Partners for repayment of the balance due of his, her or its Capital Account in the event of liquidation.
THE SECURITIES OFFERED HEREIN ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE DILUTION, AND SHOULD BE PURCHASED ONLY BY
[NAME OF ISSUER], LP – PRIVATE PLACEMENT MEMORANDUM (DATE) PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT (SEE “INVESTOR SUITABILITY STANDARDS”). SEE “RISK FACTORS” FOR SPECIAL RISKS CONCERNING THE COMPANY.
THE SECURITIES OFFERED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY ARE BEING OFFERED AND SOLD IN RELIANCE UPON THE EXEMPTIONS FROM FEDERAL REGISTRATION REQUIREMENTS PROVIDED FOR UNDER SECTION 4(2) OF THE ACT, AND REGULATION D THEREUNDER RELATING TO CERTAIN LIMITED OR PRIVATE OFFERINGS, AND COMPARABLE STATE LAW PROVISIONS. THESE SECURITIES CANNOT BE RESOLD WITHOUT REGISTRATION UNDER THE ACT OR PURSUANT TO AN EXEMPTION THEREFROM.
THERE WILL BE NO ESCROW OF FUNDS, AND UPON SECURING SUBCRIPTIONS FOR THE MINIMUM OFFERING ALL SUBSCRIPTION MONEYS WILL BE IMMEDIATELY AVAILABLE TO THE COMPANY FOR ITS OPERATING EXPENSES. ALL SECURITIES ARE OFFERED ON A “BEST EFFORTS, ANY OR ALL” BASIS. THIS OFFERING WILL TERMINATE ON JUNE 30, 2012, BUT MAY BE EXTENDED LONGER OR TERMINATED EARLIER WITHOUT NOTICE TO INVESTORS. THE COMPANY RESERVES THE RIGHT TO UPDATE THIS MEMORANDUM AT ANY TIME. SEE “TERMS OF THE OFFERING”, “USE OF PROCEEDS” AND “PLAN OF DISTRIBUTION.”
- * The General Partner anticipates selling all of the Units involved herein, and no commissions will be due on any sale thereof. The Company does not believe that there will be any situation in which the Company could legally pay incentive compensation (a true “finder’s fee”) to a financial consultant, and that there will not be any licensed Broker/Dealer that would underwrite or otherwise agree to sell the Company’s Units.
- The proceeds to the Company are calculated after deducting direct offering expenses estimated at [$??]0,000 payable by the Company, including selling costs, legal and accounting expenses, printing, state filing fees, transportation, and other related expense which will be paid from operating revenues.
[NAME OF ISSUER], LP – PRIVATE PLACEMENT MEMORANDUM (DATE)
You should rely only on the information contained in this Memorandum. We have not authorized anyone to provide you with additional or different information. We are offering to sell, and seeking offers to buy, Units of our [Class _ ] Preferred Units only in jurisdictions where offers and sales are permitted. The information in this Memorandum is accurate only as of its date, regardless of its time of delivery or of any sale of Units of our Preferred Stock. Our business, financial condition, results of operations and prospects may have changed since that date.
– GENERAL INFORMATION AND SECURITIES LAW NOTICES –
INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE “RISK FACTORS” BELOW THAT MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS OFFERING.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE PRIVATE PLACEMENT, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH, OR APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE. NO SUCH COMMISSION OR AUTHORITY HAS PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM, NOR IS IT INTENDED THAT THEY WILL AND ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PRIVATE PLACEMENT OF SECURITIES (THE “OFFERING”) IS BEING MADE IN THE UNITED STATES OF AMERICA IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
[NAME OF ISSUER], LP – PRIVATE PLACEMENT MEMORANDUM (DATE) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ANALOGOUS PROVISIONS UNDER STATE SECURITIES LAWS FOR AN OFFER AND SALE OF SECURITIES THAT DOES NOT INVOLVE A PUBLIC OFFERING. THERE IS NO PUBLIC MARKET FOR THE UNITS AND NO MARKET IS LIKELY TO DEVELOP. THE COMPANY HAS NO OBLIGATION TO REGISTER THE UNITS IN ORDER TO FACILITATE TRADING. THESE SECURITIES ARE “RESTRICTED SECURITIES” UNDER AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
SALES OF THE UNITS WILL BE MADE ONLY TO INVESTORS WHO QUALIFY AS “ACCREDITED INVESTORS” UNDER RULE 501(A) UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT, AND TO INVESTORS WHO ARE RESIDENTS OF CAILFORNIA ACCORDING TO RULE 1001 AND CAIFORNIA CODE SECTION 25102. THE COMPANY RESERVES THE RIGHT TO DETERMINE IN ITS SOLE DISCRETION WHETHER AN INVESTOR MEETS THE SOPHISTICATION REQUIREMENTS.
THE DISTRIBUTION OF THIS MEMORANDUM AND THE OFFER AND SALE OF THE UNITS MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THIS MEMORANDUM OR ANY OF THE UNITS COME MUST INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. THE COMPANY IS NOT MAKING ANY REPRESENTATION TO THE POTENTIAL INVESTOR OR PURCHASER OF THE UNITS REGARDING THE LEGALITY OF ANY INVESTMENT THEREIN BY THE POTENTIAL INVESTOR OR PURCHASER UNDER APPLICABLE LEGAL INVESTMENT OR SIMILAR LAWS.
THIS MEMORANDUM CONSTITUTES AN OFFER ONLY TO THE INVESTOR WHOSE NAME APPEARS IN THE APPROPRIATE SPACE ON THE COVER PAGE HEREOF AND TO WHOM THIS MEMORANDUM IS INITIALLY DISTRIBUTED AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANYONE IN ANY STATE OR IN ANY OTHER JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER, TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THIS OFFERING AND/OR TO ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE UNITS OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF UNITS SUCH INVESTOR DESIRES TO PURCHASE; THE COMPANY SHALL HAVE NO LIABILITY WHATSOEVER TO ANY INVESTOR AND/OR PURCHASER IN THE EVENT THAT ANY OF THE FOREGOING SHALL OCCUR. THE COMPANY, IN ITS SOLE DISCRETION, MAY WAIVE THE MINIMUM INVESTMENT REQUIREMENT.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION WITH RESPECT TO THE OFFER OR SALE OF THE UNITS IN THIS OFFERING, WHICH IS NOT CONTAINED IN THIS OFFERING MEMORANDUM, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON. ANY PREDICTIONS, REPRESENTATIONS, AND/OR ANY INFORMATION, WRITTEN OR ORAL, WHICH DO NOT CONFORM TO THOSE CONTAINED IN THE OFFERING MEMORANDUM ARE NOT PERMITTED AND MUST NOT BE RELIED UPON BY ANY PROSPECTIVE INVESTOR.
THIS MEMORANDUM DOES NOT PURPORT TO BE ALL-INCLUSIVE OR CONTAIN ALL INFORMATION THAT A PROSPECTIVE INVESTOR MAY DESIRE IN INVESTIGATING THE COMPANY. EACH INVESTOR MUST RELY ON HIS OR HER OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS MEMORANDUM, INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT DECISION WITH RESPECT TO THE SECURITIES. PRIOR TO MAKING AN INVESTMENT DECISION REGARDING THE SECURITIES, A PROSPECTIVE INVESTOR SHOULD CONSULT HIS OR HER OWN COUNSEL, ACCOUNTANTS, INVESTMENT AND TAX CONSULTANTS, AND OTHER ADVISORS, AS TO ALL MATTERS CONCERNING THIS INVESTMENT, AND TO CAREFULLY REVIEW AND CONSIDER THIS ENTIRE MEMORANDUM.
THIS MEMORANDUM HAS BEEN PREPARED FOR INFORMATIONAL PURPOSES IN ORDER TO ASSIST PROSPECTIVE INVESTORS IN UNDERSTANDING THE COMPANY AND SPEAKS AS OF THE DATE HEREOF. BY ACCEPTING DELIVERY OF ANY PRIVATE PLACEMENT MATERIAL, THE PROSPECTIVE INVESTOR AGREES: (1) TO KEEP THE CONTENTS CONFIDENTIAL AND NOT TO DISCLOSE THE SAME TO ANY THIRD PARTY OR OTHERWISE USE THE SAME FOR ANY PURPOSE OTHER THAN EVALUATION BY SUCH INVESTOR OF A POTENTIAL PRIVATE INVESTMENT IN THE COMPANY AND (2) AGREES TO RETURN THE SAME TO THE COMPANY, IF (A) THE INVESTOR DOES NOT AGREE TO PURCHASE ANY UNITS, (B) THE INVESTOR’S PURCHASE AGREEMENT IS NOT ACCEPTED BY THE COMPANY, OR (C) THE OFFERING IS TERMINATED OR WITHDRAWN BY THE COMPANY.
NASAA Information.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED. NO FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS RECOMMENDED THESE SECURITIES. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES MAY BE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE UNDER APPLICABLE UNITED STATES LAWS AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER FEDERAL AND STATE SECURITIES LAWS.
INVESTORS SHOULD BE AWARE THAT THEY MIGHT BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Retirement Plan Information.
THE FIDUCIARY OF THE ERISA PLAN REPRESENTS THAT HE/SHE/IT HAS BEEN INFORMED OF AND UNDERSTANDS THE COMPANY’S INVESTMENT OBJECTIVES, POLICIES AND STRATEGIES, AND THAT THE DECISION TO INVEST PLAN ASSETS (AS SUCH TERM IS DEFINED IN ERISA) IN THE COMPANY IS CONSISTENT WITH THE PROVISIONS OF ERISA THAT REQUIRE DIVERSIFICATION OF PLAN ASSETS AND IMPOSE OTHER FIDUCIARY RESPONSIBILITIES. THE PURCHASER FIDUCIARY OR PLAN (A) IS RESPONSIBLE FOR THE DECISION TO INVEST IN THE COMPANY, (B) IS INDEPENDENT OF THE COMPANY MANAGER OR ANY OF ITS AFFILIATES, (C) IS QUALIFIED TO MAKE SUCH INVESTMENT DECISION, AND (D) IN MAKING SUCH DECISION, THE PURCHASER FIDUCIARY OR PLAN HAS NOT RELIED PRIMARILY ON THE ADVICE OR RECOMMENDATION OF THE COMPANY OR ANY OF ITS AFFILIATES.
State Information.
This Memorandum will not be distributed to, nor will an offer, solicitation or sale be made to, any person unless the Company has reasonable grounds to believe, and does believe, immediately prior to making the offer, solicitation or sale, that such person is either an Accredited Investor, or a Non-Accredited Investor able to understand this Memorandum and bear the entire economic risk of this investment. The [Class _ ] Preferred Units (the “Units”) offered hereby may not be resold or otherwise transferred by the purchaser in the absence of qualification under any applicable state securities laws, or an opinion of counsel, which opinion of counsel must be acceptable to the Company, to the effect that such qualification is not required.
Except as otherwise provided by certain state laws, once a subscriber has tendered his/her subscription amount, he/she will have no right to the return of such funds.
Other Information.
Offerees are entitled and encouraged to ask questions of the Company or its representatives concerning the business and financial condition of the Company and the terms and conditions of this Offering, and to request such data as may be necessary to enable them to make an informed investment decision. Therefore, the Company will make available, prior to consummation of any sale, to each prospective investor and/or such investor’s representatives and advisors, if any, the opportunity to ask questions and receive answers concerning the terms and conditions of this private placement and to obtain any additional information which the Company may possess or can obtain without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished to each prospective investor. Any such questions should be directed to the Managers of the General Partner, ________________________, who can be contacted at the address on the cover page of this Memorandum.
Neither the delivery of this Memorandum nor any sale made in connection with this Memorandum shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this Memorandum. You should not assume that the information appearing in this Memorandum is accurate as of any date other than the date on the front cover of this Memorandum, regardless of the time of delivery of this Memorandum or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
SUITABILITY REQUIREMENTS
Investor Representations. The potential investor represents that, he/she or it:
- 1. Are acquiring the Securities for investment purposes only and not with a view to resale or distribution;
- 2. Are able to bear the economic risk of losing the entire amount of their investment in the Securities;
- 3. Have an overall commitment to investments that are not readily marketable and which are not disproportionate to their net worth, and the investment in the Securities will not cause such overall commitment to become excessive;
- 4. Have adequate means of providing for current needs and personal contingencies and have no need for liquidity in the investment in the Securities;
- 5. Have substantial experience in making investment decisions of this type or are relying on their own professional representative in making this investment decision; and
- 6. Their own investment goals are compatible with the objectives of an investment in the Securities.
The suitability standards referred to above and below represent minimum suitability requirements for prospective investors, and the satisfaction of such standards by a prospective investor does not necessarily mean that the Securities are a suitable investment for a prospective investor. The Company reserves the right to reject the subscription of any prospective investor the Company believes, in its sole discretion, does not meet the standards for investment in the Securities. In addition, the Company reserves the right to waive the suitability standards in certain cases. In the Subscription Agreement provided in conjunction herewith, (the “Subscription Agreement”), potential investors must represent that they satisfy the suitability standards provide for herein.
Investor Suitability Standards.
The Company makes this offer for investment in the Units (the “Offering”) only to those individuals who meet certain investor suitability standards regarding both their financial ability to absorb loss of their investment and their investment sophistication. Rule 504 of Regulation D provides that the Company may offer the securities solely for investment purposes to investors who meet certain suitability standards established either by the Company or, in certain circumstances, by the laws of the investors’ domicile. Rule 1001 allows an additional exemption in [State of Domicile] according to Section 25102 (n)(2)(E). Therefore, unless the requirements of a particular state demand a higher amount, the suitability standards established by the Company for non-[State of Domicile] residents will be those of an “Accredited Investors” according to Rule 501.
The most common ways to meet the definition of an Accredited Investor are as follows:
- 1. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeds [$??],000,000;
- 2. Any natural person who had an individual income in excess of $__,000 in each of the two most recent years or joint income with that person’s spouse in excess of $____,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
- 3. Any trust, with total assets in excess of $_______,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment; or
- 4. An entity in which all of the equity owners are Accredited Investors.
For [State of Domicile] residents the prospective investor must, during the year in which the investment is being made, have an estimated annual gross income of at least One Hundred Thousand U.S. Dollars ([$??]00,000) and a net worth, exclusive of personal residence, furnishings and automobiles, of at least ______________ U.S. Dollars ([$??]0,000) or, in the alternative, have a net worth of at least ____________________U.S. Dollars ($??],000).
The Company is offering the securities pursuant to available exemptions from registration under federal and state securities laws. The securities will be restricted securities and must be held indefinitely according to their terms. They may not be transferred unless pursuant to an effective registration statement or an available exemption from registration with an opinion from legal counsel to that effect, satisfactory to the company. The company is under no obligation, and has no intention, to register the securities and is under no obligation to attempt to secure an exemption for any subsequent sale.
FORWARD-LOOKING STATEMENTS
Some of the statements under “Executive Summary,” “Risk Factors,” “Use of Proceeds,” “Financial Information,” and elsewhere in this Private Placement Memorandum constitute forward-looking statements. These statements involve risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, potential investors can identify forward-looking statements by terms, such as “may,” “intends,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “continue,” or the negative of these terms.
Since these Securities are not subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, we currently are ineligible to rely on the safe harbor for forward-looking statements provided in Section 27A of the Securities Act of 1933, as amended.
Although forward-looking statements in this Memorandum reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Memorandum. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Memorandum, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us herein, especially in the section titled Risk Factors, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation, and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.
Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:
- Internet sales depend on a commitment to internet marketing which is expensive and sales do not always correlate to the volume of marketing performed.
- Competitor’s response in the market.
- Due to the absence of any operating history, the Company may have overlooked other trends and conditions that could affect its business.
- Ability to control costs in general.
- The ability to market unique nutritional supplements according to the Company’s business strategy.
- General economic conditions in the United States and other parts of the world.
- Lower levels of consumer confidence, consumer spending and purchases of discretionary items, including nutritional supplements.
- Continued restrictions in the credit and capital markets, which would impair our ability to access additional sources of liquidity, if needed.
- Changes in the availability and cost of raw materials which could impact prices of our products.
- Our ability to anticipate and respond to constantly changing consumer demands.
- Our ability to attract and retain talented, highly qualified executives and employees.
- Our ability to adequately establish, defend and protect our proprietary rights.
- Our ability to successfully develop or acquire new product lines or enter new markets or product categories, and risks related to such new lines, markets or categories.
- The ability of our principal unit-holders to exercise significant influence over the Company.
The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable law. Because of these risks, uncertainties and assumptions, the forward-looking events discussed in this Private Placement Memorandum might not occur. To the extent that the Company uses market data and industry standards in this Private Placement Memorandum, such information shall have been obtained from internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information they have provided has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed.
We caution you that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above and in the Risk Factors section of this Memorandum. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for us to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. You should not place undue reliance on forward-looking statements. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events
RISK FACTORS
INVESTING IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THE RISK FACTORS AND ALL OTHER INFORMATION DISCLOSED IN THIS MEMORANDUM MUST BE CAREFULLY CONSIDERED BEFORE MAKING AN INVESTMENT DECISION REGARDING THE SECURITIES. ONE OR MORE OF THESE RISK FACTORS COULD CAUSE A LOSS OF PART OR ALL FUNDS INVESTED IN THE SECURITIES.
The purchase of the Units offered hereby involves a high degree of risk and is suitable only for persons with the financial capability of making and holding long-term investments not readily reducible to cash. Prospective investors must, therefore, have adequate means of providing for their current needs and personal contingencies. Only those investors who can bear the risk of loss of their entire investment should participate in this Offering. In addition to the general risks described in this Memorandum and the related Exhibits, prospective investors should consider the risks set forth below. Investors should recognize that the risk factors set forth below are those that, at the date of this Memorandum, seem to the Company the most likely to be significant. Prospective purchasers must realize, however, that factors other than those set forth below may ultimately affect the investment offered pursuant to this Memorandum in a manner and to a degree that cannot be foreseen at this time. The order in which the following risks are presented is not intended to represent the magnitude of the risks described.
Financial Risks
New entity; no prior operations; no cash flow from operations.
[Copy]
Projections may not be relied upon by Investors.
[Copy]
The Offering proceeds provide limited operating capital which could adversely affect the Company’s ability to achieve its business plan; leverage with borrowed funds.
[Copy]
Business Risks
Costs of Products and materials.
[Copy]
Competition.
[Copy]
Inability to gain market acceptance for products or establish a market presence.
[Copy]
Inability to implement business strategy; impact on earnings.
[Copy]
Limited control and dependence upon individuals as management.
[Copy]
Retaining a qualified and competent management team.
[Copy]
Defending proprietary rights.
[Copy]
Regulatory issues.
[Copy]
General economic conditions in the United States.
[Copy]
Offering Risks
Illiquidity and restrictions on Limited Partnership Units.
[Copy]
The pricing, terms and conditions of the Securities were arbitrarily determined by the Company.
[Copy]
The Company may not raise sufficient funds to close the Minimum Offering and the investor may miss other investment opportunities while his, her or its funds are held by the Company.
[Copy]
The offering without an underwriter; all Units may not be sold.
[Copy]
Dilution in the book value of investment.
[Copy]
Financial projections.
[Copy]
Management has the discretion to use the proceeds from the offering.
[Copy]
No established exit strategy.
[Copy]
THE COMPANY IS OFFERING THE SECURITIES PURSUANT TO AVAILABLE EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS. THE SECURITIES WILL BE RESTRICTED SECURITIES AND GENERALY MUST BE HELD INDEFINATELY. THEY MAY NOT BE TRANSFERRED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN AVAILABLE EXEMPTION FROM REGISTRATION WITH AN OPINION FROM LEGAL COUNSEL TO THAT EFFECT SATISFACTORY TO THE COMPANY. THE COMPANY IS UNDER NO OBLIGATION AND HAS NO INTENTION, TO REGISTER THE SECURITIES AND IS UNDER NO OBLIGATION TO ATTEMPT TO SECURE AN EXEMPTION FOR ANY SUBSEQUENT SALE.’
Additional disclosures may have been required if this Agreement had been reviewed by federal or state securities regulators.
[Copy]
No independent review.
[Copy]
No separate legal representation.
[Copy]
ERISA
[Copy]
Investment in the Securities involves complex tax consequences; no tax opinion has been secured.
[Copy]
INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OR TO SECURE THEIR OWN TAX OPINIONS.
Conclusion.
GENERALLY, IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS INVESTMENT, POTENTIAL INVESTORS SHOULD KEEP IN MIND OTHER POSSIBLE RISKS THAT COULD BE IMPORTANT.
EXECUTIVE SUMMARY
Beginning on the date hereof, [Name of Issuer], LP, a [State of Domicile] limited partnership (the “Company” or the “Partnership”), is offering to sell [Class _ ] Limited Partnership Units to investors for [$??],000 for _____ (_) ownership unit (the “[Class _ ] Units,” the “Units” or the “Securities”). Each ownership Unit represents one-half of one percent of the equity of the Company. The maximum offering is ________ Units for an aggregate offering of [$??],000,000 (the “Maximum Offering”) or twenty ([??]%0) percent of the equity of the Company. The minimum offering is [_] Units for an aggregate offering of $[??],000 (the “Minimum Offering”) or __ (_%) percent of the equity of the Company. The minimum investment amount is [$??],000, provided however the General Partner may, in its discretion, accept a subscription in a lesser amount. The investor subscribing for a [Class _ ] Unit will be provided a quarterly preferred return (non-cumulative and non-guaranteed) for _______________of the investment period in an amount up to but not exceeding __ (??%) percent per annum calculated on the amount of their capital account as of the date of the quarterly payment. The return shall be calculated as of the date the original investment, based on the beginning balance of the Limited Partner’s capital account and shall be adjusted in the event that the Limited Partner’s capital account is reduced as a result of a return of equity. The General Partner and the Class [ ] Limited Partners will be allocated the balance of the earnings in proportion their respective ownership interests. Additionally, in the event of a sale of all of the assets, the ______________ preferred annual return for __________________will be prorated on a calendar year basis calculated on the balance of the Limited Partner’s capital account as of the date of the closing of the sale. A [Class _ ] Limited Partnership Interest owner shall also have _____________ as to other Partners for repayment of the balance due of his, her or its Capital Account in the event of liquidation.
BUSINESS DESCRIPTION
Background and Industry.
[Copy]
The [Company] Business and Products.
[Copy]
MARKET ANALYSIS
[Copy]
MARKETING STRATEGY
[Copy]
OPERATIONS
[Copy]
MANAGEMENT SUMMARY
[Copy]
FINANCIAL INFORMATION
Note: the information provided herewith includes Management’s estimates and projections; they are not calculated according to generally accepted accounting principles.
[Copy]
DESCRIPTION OF THE OFFERING
Beginning on the date hereof, [Name of Issuer], LP, a [State of Domicile] limited partnership (the “Company” or the “Partnership”), is offering to sell [Class _ ] Limited Partnership Units to investors for [$??],000 for _____ (_) ownership unit (the “[Class _ ] Units,” the “Units” or the “Securities”). Each ownership Unit represents one-half of one percent of the equity of the Company. The maximum offering is ________ Units for an aggregate offering of [$??],000,000 (the “Maximum Offering”) or twenty ([??]%0) percent of the equity of the Company. The minimum offering is [_] Units for an aggregate offering of $[??],000 (the “Minimum Offering”) or __ (_%) percent of the equity of the Company. The minimum investment amount is [$??],000, provided however the General Partner may, in its discretion, accept a subscription in a lesser amount. The investor subscribing for a [Class _ ] Unit will be provided a quarterly preferred return (non-cumulative and non-guaranteed) for ______________of the investment period in an amount up to but not exceeding __ (??%) percent per annum calculated on the amount of their capital account as of the date of the quarterly payment. The return shall be calculated as of the date the original investment, based on the beginning balance of the Limited Partner’s capital account and shall be adjusted in the event that the Limited Partner’s capital account is reduced as a result of a return of equity. The General Partner and the Class [ ] Limited Partners will be allocated the balance of the earnings in proportion their respective ownership interests. Additionally, in the event of a sale of all of the assets, the ______________ preferred annual return for __________________will be prorated on a calendar year basis calculated on the balance of the Limited Partner’s capital account as of the date of the closing of the sale. A [Class _ ] Limited Partnership Interest owner shall also have _____________ as to other Partners for repayment of the balance due of his, her or its Capital Account in the event of liquidation.
All proceeds raised from the Offering will be held by the Company in a segregated bank account but not with an independent escrow agent until the “minimum offering” has been subscribe to at which time the Company may draw out the investment funds to use according to the uses described herein. Investors must complete and forward to the Company a Subscription Agreement and signature page to the Limited Partnership Agreement, as well as wire transfer the subscription price for the [Class _ ] Units to the Company in accordance with the instructions set forth in the Subscription Agreement. The Company has the right in its sole and absolute discretion to reject or accept subscriptions. Any questions regarding the Offering should be directed to ___________________.
USE OF PROCEEDS
THE AMOUNTS SET FORTH BELOW ARE ESTIMATES. THERE MAY BE DIFFERENCES BETWEEN THE ESTIMATED USES AND THE ACTUAL USES OF THE PROCEEDS. THE COMPANY DOES NOT EXPECT THE DIFFERENCES TO BE OF A MATERIAL NATURE.
The Company estimates using the proceeds from the Offering as follows:
| Partnership Unit Offered | Offering Price | Underwriting Discount and Commissions | Net Proceeds to the Company |
|---|---|---|---|
| Minimum Offering | [$??],000 per Unit [Class_] Units | None [Class_] Units | $[??],000 |
| Maximum Offering 40 Class B Units | [$??],000 per Unit [Class_] Units | None | $[??],000 |
Use of Funds
Funding according to Business Plan (see also Schedule below) $[??],000
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Assuming that all [Class _ ] Preferred Units offered by the Company are sold, of which there is no assurance, the net proceeds to the Company will be approximately $______________, after deduction for expenses of approximately [$??]0,000 for this Offering. The Company, for this purpose, is assuming that all sales of the Units will be made by the Company’s General Partner, who will receive no commission or fee from such sales, and that no placement fees will be paid.
The investment proceeds will be used for the creation and acquisition of product inventory sold by the Company, operating expenses, and marketing costs for a period of one year from the date of closing of the offering. See Use of Funds schedule below. If the Minimum Offering is fully subscribed, management does not anticipate that additional equity or other sources of financing will be required to operate the Company. If the lesser amount of subscription is received from the offering, then the marketing strategy and execution will be impaired in proportion to the amount of money raised. Any costs or expenses in creating the Offering including legal and registration fees will be paid by the Company from operating revenues. The Company is not currently in breach or default of any note, loan, lease or other indebtedness. The Company has no judgments, liens or settlement obligations.
After reviewing the use of funds allocation a potential investor should consider whether the remaining portion of his/her/its investment is adequate to fund the future development of the business and operations of the Company. The following represents management’s current best estimate of the manner in which net proceeds from the Offering would be utilized:
| Description of Use of Funds | Amount | Estimated Date |
|---|---|---|
| [Copy] |
Note: The uses, amounts and dates of use above are speculative and estimates only. Management reserves the right to change any use, amount and date of use in is sole and unfettered discretion.
CAPITALIZATION
The following chart sets forth the capitalization of the Company as of ___________ and the capitalization of the Company assuming it receives the full Offering Amount.
| Capitalization | ||
|---|---|---|
| Upon Funding of the Offering | ||
| Total Debt | $0 | $0 |
| Equity | [$?],000 | [$?],000 |
| Retained Earnings | $0 | $0 |
| Total Capitalization | [$?],000 | [$?],000 |
DESCRIPTION OF THE SECURITIES
Operating Distributions.
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[Class _ ] Preferred Distributions.
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Dilution.
As a result of the arbitrary decision by the Company to sell the [Class _ ] Units at an effective price of _______________ in in the Company, the value of the investors’ [Class _ ] Units are in effect diluted on a price per percentage ownership, in relation to the book value of Company. The __________ Units outstanding prior to this Offering were acquired at a substantially lower price than the offering price. The book value of the Company will increase after the offering, and the value of the [Class _ ] Unit-holder percentage will be diluted while the value of the ________________. Under Generally Accepted Accounting Principles (“GAAP”), the current assets of the company, except for inventory, equipment, cash and receivables, are, not considered to be tangible assets. They are intangible assets such as intellectual property rights, good will, and the time and effort put into developing business. For accounting purposes therefore, the book value of the Company is effectively zero prior to the Offering.
Restrictions on Transfer.
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ADDITIONAL INFORMATION
Subscription Process.
In order to subscribe to this Offering please follow the process below:
- 1. Carefully review and complete the Information and Document Package.
- 2. Sign the Receipt for this Memorandum.
- 3. Complete and sign the Investor Suitability Questionnaire.
- 4. Sign the Non-Solicitation Declaration.
- 5. Sign the signature page of the Subscription Agreement.
- 6. Sign the signature page of the Limited Partnership Agreement.
- 7. Wire funds or provide a check or money order for the subscription amount of your investment.
The Company reserves the right to accept or reject any subscription for Units for any reason whatsoever. If a subscription is rejected by the Company all funds tendered for the investment will be returned to the subscriber, without interest or deduction.
Documents and Questions.
Copies of all documentation which is material to the Company and this offering are available for inspection by qualified investors at the offices of the Company upon request. In addition, the Company will make available to qualified investors any other information concerning the Company that an investor requests to evaluate the investment. Representatives of the Company are available to answer any questions or inquiries from qualified investors concerning the Company and the investment.
Inquiries may be directed to:
A list of available Partnership documents include:
- 1. Articles of Limited Partnership.
- 2. Form of Limited Partnership Agreement.
- 3. Form of Subscription Agreement.
- 4. Investor Suitability Questionnaire.
- 5. Declaration of Non-Solicitation.
This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com
