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InfoTouch Corporation

Point-of-Sale Software & Retail Management System Provider

Min. of $1,000,000 and up to $3,000,000

Minimum Investment - $10,000

11.0% Senior Secured Promissory Notes

due no later than 06/30/2025*

  • InfoTouch Corporation (“InfoTouch” or the “Company”) develops and supports a proprietary and customizable point of sales software/hardware solution for brick-and-mortar retailers.

  • Founded in 1986, 2020 revenues were $1.9MM and generated from reliable and growing payment-processing fees charged on a per transaction basis.

  • InfoTouch merchant customers are highly diversified and loyal. Over 900 merchant customers have relied on InfoTouch point-of-sale software solutions for 5 years+ on average

  • The Promissory Notes (the “Notes”), offered herein, are secured by InfoTouch’s transaction-based revenue stream (the “Residual Revenues”) and by a corporate guarantee from InfoTouch.

  • The Note monthly principal and interest payments will be made via automatic cash sweeps from a segregated bank account receiving all InfoTouch payment processing revenues.

InfoTouch Corporation, (“InfoTouch”, “The Company”, “ITC” or “Borrower”) is issuing a minimum of $1,000,000 and up to $3,000,000 in promissory notes (the “Notes” or “Securities”) to support Marketing, R&D, a stock re-purchase and loan refinancing.

*The Maturity Date shall be the last day of the 45th month following the closing of the First Tranche (as defined in the Security Terms). The initial closing must happen or before September 15, 2021.

By registering with Carofin, Members have access to more extensive due diligence materials, additional private investment opportunities, and can proceed with making an investment.

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BUSINESS OPPORTUNITY / ITC SOLUTION

Business Opportunity

Disparate Industries, with Varied Payment Processing Needs

  • Highly regulated industries (Alcohol, Tobacco, Firearms etc.) often use third-party accounting services alongside payment processing software to conduct and record their transactions internally.

  • The non-customizable and static nature of these services can cause difficulty meeting reporting requirements and are operationally burdensome.

  • Many small retailers cannot afford to customize their payment processing systems to the needs of their governing regulatory agency.

  • Furthermore, major systems are sunsetting their cloud-based systems, causing retailers to seek new payment processors.

InfoTouch Solution

ERP-Integrated, Customizable, Scalable Modular Software Solutions

  • Initially developed for large, complex enterprises, then adapted through the years as a robust operating system scaled to smaller retailers, InfoTouch software has the unique balance of end-user flexibility and highly efficient code.

  • InfoTouch software is sculpted into a custom fit solution, with purpose-specific configurations created without main line code modification, avoiding the overhead required by other sophisticated systems. With a library of thousands of prior configurations, field and expert manageable building blocks are combined to satisfy virtually limitless specialized needs.

  • InfoTouch is well positioned to grow its market share of both small-medium sized business and enterprise customers, because of its added efficiency to the retailer:

SMBs – Utilizing InfoTouch software saves operators time and provides structured data analytics allowing retailers focus more on growing sales & profits.

Enterprises – InfoTouch provides reliable powerful solutions to facilitate accelerated growth, integrating business-critical functions, with centralized command in a configurable system, delivered, updated, and maintained at a fraction of the cost of less malleable software.

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INVESTMENT OVERVIEW

1) Purpose of the financing

  • Financing proceeds are being used by InfoTouch to develop an additional high-margin revenue stream and to recapitalize the Company. Use of Proceeds include: (1) financing marketing and research & development activities, (2) the buyout of an existing shareholder, (3) refinancing of existing debt, (4) funding the Note’s Interest Reserve and (5) paying the Note’s issuance expenses.

2) Borrower - InfoTouch Corporation

  • Provider of hybrid point-of-sale and inventory management systems for brick & mortar retailers.

  • 30-year operating history and a highly diversified customer base across multiple low-volatility industries including alcohol, tobacco, and firearms.

  • Senior management and shareholders have 10+ years with the company and have a proven operational track record.

3) Security Description - Senior Secured Note

  • 11.0% annual interest rate, payable monthly; interest only payments until 90 days after the initial closing of $1,000,000 (the “First Tranche”).

  • Fully amortizing thereafter until final maturity of the last day of the 45th month following the First Tranche.

  • Loan Interest Reserve to be maintained in a segregated bank account with the reserve amount stipulated to be the lesser of $100,000 and 3.5% of outstanding principal.

  • The Notes are secured by the Residual Revenues and a corporate guarantee from InfoTouch

4) Repayment

  • Interest and principal are paid from the Residual Revenues using a segregated revenue collection bank account and an automatic cash sweep sufficient to pay monthly principal and interest. This account is administered by Bank of America.

  • Both maintenance of the Loan Interest Reserve and payments of principal and interest are guaranteed by InfoTouch.

5) Investment Risks

  • Variable Monthly Cash Flows: Residual Revenue is based on customer transactions and is not a fixed or guaranteed income stream.

  • Merchant Industry Decline or Contraction: Residual Revenues may decrease if an industry with many merchant clients using InfoTouch software, experiences a sharp decline in demand.

Financing Structure

FinancingStructure

Note Principal & Interest Coverage

NotePICoverage

Repayment Structure

Repayment

AN INVESTMENT IN THE SECURITIES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT. RETURNS CANNOT BE GUARANTEED.

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INVESTMENT CONSIDERATIONS

30+ Year History & Mature Software Platform

  • An early pioneer in the payment processing space, InfoTouch has mature software and long-standing books of business from which it earns Residual Revenues.

  • InfoTouch’s software is highly customizable and includes inventory management, components crucial to its merchant base.

Embedded Software & Resilient Industry Focus

  • InfoTouch software requires merchant investment in its workflow and data management – a large natural deterrent to switching payment processors.

  • More than 80% of merchants using InfoTouch software are in the alcohol, tobacco, firearms, fuel, and thrift industry verticals – business lines that are resilient under current market conditions.

  • No single industry vertical represents more than 15% of annual Residual Revenue opportunity.

Note Secured by Consistent Cash Flow Stream

  • The Note is secured by a cash sweep on Residual Revenues – a revenue stream with a historical average of $1.2MM/year from 2016-2019 and $1.33+ MM in 2020.

  • The Residual Revenues are earned from books of business including over 900 merchants, with an average relationship of 5+ years.

First Position Lien & Corporate Guarantee

  • 11.0% Annual Interest Rate – interest only for first three months.

  • The Note is secured by a first position lien on the Residual Revenues and a corporate guarantee from InfoTouch.

  • Principal and interest payments are made directly via a cash sweep from a segregated bank account receiving the Residual Revenues.

AN INVESTMENT IN THE SECURITIES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT.

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COMPANY INFORMATION

Background

InfoTouch, Inc.

Headquartered in San Antonio, Texas, InfoTouch Corporation (“InfoTouch” or the “Company”) was founded in 1986. The Company was purchased by its current CEO, Harry Nass, as well as John Welch, in 2006. InfoTouch has focused on developing comprehensive point-of-sale technology for specialty retailers, and service industry businesses.

The Company’s entirely configurable point-of-sale platform provides end-to-end integration, enabling small and medium-sized businesses access to seamless back office and inventory management.

InfoTouch is both a pioneer and leading innovator in touchscreen hybrid point-of-sale and retail management systems for retailers with anywhere between 1 and 1,000 locations. Its RetailOS software runs thousands of stores, combining sophisticated POS, ERP, CRM, SCM from a platform that is entirely configurable to the merchant's needs.

CompanyInformation

InfoTouch is the author of Point-of-Sale software, which it licenses to 3rd party merchants to account for their retail business transactions utilizing a computer running the InfoTouch software system.

The system allows for ‘integrated payment processing’ which routes the request for charge authorization to the merchant’s payment processor while, crucially, also allowing for an internal accounting for the merchant of amount due for deposit, general ledger entries, etc.

Revenues

Residual Revenues

InfoTouch earns Residual Revenues when a customer presents a credit payment to a merchant using InfoTouch software. InfoTouch functions as either an Independent Sales Organization (ISO), or a Direct Agent for the merchant and earns residual revenues (a percentage of the transaction between customer and merchant) accordingly.

InfoTouch maintains a portfolio of merchants comprising more than 900 individual retailers with an average relationship ranging between 4 to 5 years. These retailers are largely in the alcohol, firearms and tobacco industries and include meat markets and gardening centers, limiting volatility in volume and amount of customer transactions.

Payment Processing Partners

InfoTouch holds contracts with two large payment processors, FiServ and FIS, which direct the flow of merchant fees from customer transactions at brick-and-mortar retailers to InfoTouch and other service providers.

PaymentProcessingPartners

Payment Amount by Processor Type

InfoTouch Corporation receives an agreed upon percentage of residual payments through existing contracts based on service type. Residual income is linearly dependent on customer transactions.

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Mechanics of Credit Transaction - ISO Case

ISO

Mechanics of Credit Transaction - Direct Agent Case

DirectAgent

Merchants

Residual Revenue Historical Trends

InfoTouch’s residual revenues have increased over 75% in the last five and a half years, and for the last three years, monthly revenues have averaged more than $100,000 a month. Since the start of COVID-19, InfoTouch has seen an increase in monthly residual income, primarily due to the nature and types of merchants responsible for generating the cash flows - namely, the alcohol, firearms, and tobacco industries, gardening centers and meat markets. In addition to the stable product mix of the underlying merchant base, there are over 900 merchants using InfoTouch products, diversifying the risk to InfoTouch of any single merchant not performing.

Residual Revenues RR by Processor

InfoTouch Corporation Sales Pipeline

InfoTouch continually updates, maintains, and replenishes its sales pipeline. Please note that the following opportunities correspond to new revenue opportunities from software and hardware sales. Lenders will have 1st lien on any corresponding increase in Residual Revenues.

SalesPipeline

Market

Point-of-Sale (POS) Software Developers

About the point-of-sale Software Industry

This industry develops point-of-sale software which tracks, organizes, and facilitates sales at physical locations (brick & mortar retailers) where goods are sold. Software services allow increased ease of access in managing sales, tracking, and organizing within retail, e-commerce, and wholesale trade industries.

Major Players:

The largest player within the point-of-sale software industry is NCR Corporation. There is a common comparison drawn between players in the industry and hardware firms like Square and VeriFone, but these companies are much more significant in the POS payment processing hardware industry, not the POS software industry.

Primary Activities, Products, and Services:

Within this industry, the main activities are the development of POS software for retail, hospitality, food service, healthcare, and educational uses. The major product in the industry is developed software, which is sold to retail, e-commerce, and the wholesale trade spaces.

Supply Chain:

The supply chain for POS software begins with the creation of the software itself. It is then licensed by end-users and implemented via existing (or new) hardware within the retail, e-commerce, and wholesale trade spaces.

Drivers

Industry Size and Growth Projections:

Over the last five (5) years (2015-2020), the industry has seen annualized growth of 12.2%, reaching $2.8 billion in total revenues. Annualized growth for the next five (5) years (2020-2025), is projected to be 5.2% resulting in $3.6 billion in total industry revenues.

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Implications for InfoTouch

With this financing, InfoTouch Corporation will pay off existing debt allowing them to relieve an expensive capital constraint. Additionally, InfoTouch will be able to execute on a marketing plan targeting new enterprise and SMB customers, which management projects will increase their revenue 200% within the year.

Innovation and focus on developing cutting-edge technology are key drivers of success in the industry. InfoTouch has proven itself historically nimble and prescient in this regard and is committed to continuing necessary research and development in a demanding environment.

InfoTouch Corporation is poised to take advantage of the industry foothold it currently has, making it ripe for growth and expansion. The POS software industry is highly segmented with retail POS accounting for 36% and food service POS 16% of the segment; InfoTouch has both types of these customers, giving them access to over half of the market. The market is highly competitive, but InfoTouch has been established for over 30 years and has very low churn. Additionally, InfoTouch has a strong position in an industry that has experienced large growth in recent years.

InfoTouch Corporation’s growth has a direct relationship with the growth of existing Residual Revenues.

Consumer Spending Trends – COVID-19 Pandemic

The United States Bureau of Economic Analysis tracks consumer purchasing patterns in the US across different purchasing categories. At the onset of the COVID-19 pandemic, consumers increased their monthly food and beverage expenditure by $220 Billion. The first quarter of 2020 had an 8.0% increase in consumer spending on take-home food and beverage compared to the previous quarter, a margin of $80 Billion. Expenditures continued to increase into Q2 of 2020, with an increase of $24 Billion, and further into Q3 with an additional $10 Billion. Personal expenditure levels maintained through Q4 2020.

USBEA Data

This unprecedented growth is attributed to the COVID-19 pandemic where consumers were mandated to cook and drink in-home rather than at restaurants and bars. Interestingly, more than 48.0% of the residual revenues that InfoTouch generated in the last 12 months were from the food and beverage industry. These purchasing pattern changes extend beyond food and beverage to local shops. The US is experiencing a period of heightened personal spending across numerous industries. According to an Accenture research report, consumers expect that these shopping patterns have changed permanently. The general increased desire to shop local, increase in food and beverage spending, and ubiquitous increase in consumer spending has a positive impact on this financing. InfoTouch Capital derives revenues from purchases made on InfoTouch systems which exclusively target local businesses.

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COMPANY FINANCIAL INFORMATION

Historical Financials

SummaryIS SummaryBS

Pro-Forma Financials

Income Statement

ProFormaIS

Balance Sheet

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Model Assumptions:

  • Assumes capital is invested in March 2021.
  • Growth in channel revenue is based on the successful implementation of a marketing plan targeting enterprise customers.

Associated Risks:

  • InfoTouch is unable to convert marketing plan expenditures into new clients.
  • External supply shocks such as legislation in the firearms market or a prolonged recession will affect customer spending habits, a large component of InfoTouch’s revenue.

The preceding financial projections reflect the Company’s best estimated forecasts and are not guaranteed to be accurate. The timing of performance is estimated post-funding. These figures are forward-looking statements and reflect the Company’s views about various future events or expectations. These figures take into account known and unknown risks, uncertainties and other factors and assumptions which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by this forward-looking financial projection. Please see the note regarding forward-looking statements. A full version of this pro-forma financial model is available through carofin.com

Use of Proceeds

UoP

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MANAGEMENT TEAM

Harry A. Nass - Chief Executive Officer

Harry Nass is a technical and financial business operator with over 40 years’ experience bringing technology, business process and finance together in production. He has been involved in projects requiring hardware, software, design and financial systems to coalesce new products in the constantly evolving technology-based information and financial transaction environment.
In 2006, Mr. Nass, with another investor, acquired Atlanta based InfoTouch Corporation (founded in 1986) and he has served as its President and CEO since 2011. Mr. Nass and his partner relocated InfoTouch to San Antonio in 2012 where it remains today with a network of nationwide distributors and end-user merchants in the point-of-sale computer and payment processing industry.


Tony Diamond - Brand & Marketing Strategist

Tony Diamond is a Brand and Marketing Strategist who develops companies by shifting focus to the purpose, power, and profitability within their brand. As CMO for InfoTouch, he and the entire staff has added an entrepreneurial, innovative, future-forward mindset to this stable, mature company. Top tier solutions are available through both direct and indirect channels to Large Enterprise and SMB markets with a commitment to 100% referenceable customers. The InfoTouch Operating Systems are supporting growth for thousands of retailers across the nation and expanding to become a leader in not only POS but also ERP, Supply Chain and CRM. With a deep experience in creative, branding and management consulting, Tony brings leadership to InfoTouch that benefits customers, partners, and employees alike. He holds degrees in Advertising and Business Administration from the University of Texas at Austin, advises the University of Texas at San Antonio’s College of Engineering, serves on multiple non-profit boards and mentors start-ups. 


Maria Vazeos - VP of Channel Development

Maria Vazeos is the Vice President of Channel Development who works with InfoTouch’s VAR and ISO relations to build programs that will enhance our VAR’s end-user experience. Maria believes in excellent customer service. Her moto is “End Users and VAR’s come first.” Maria started her career in the POS Industry in 2000 specializing in Hospitality. She walked into the Retail POS Industry in 2003 as a VAR for InfoTouch. Maria holds a degree in Merchandising and Marketing


Jeff Ballard - General Manager

Jeff Ballard is a general manager who has worked with many teams to help companies grow to their full potential. Jeff believes that through teamwork, good training, and proper guidance all goals can be achieved. Jeff is an integral leader at InfoTouch, facilitating efforts by leadership, staff, partners, suppliers, and others to make the company what it can be. This 30-year-old company is undergoing an entrepreneurial phase, accelerating innovation, and creating a product line that leverages pioneering architecture with today’s technologies for a hybrid solution made for the future. Jeff’s background and education make him well suited for this chapter in the POS industry. A decorated veteran, he understands how to organize and motivate all teams. His engineering degree and aerospace experience prepared him to solve problems, taking him to some of the nation’s largest retail chains and positioning him to devise and lead training programs through numerous expansions and renovations.

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COMPANY DISCLOSURES

On April 27, 2018, InfoTouch Corporation was named as a defendant in a complaint filed by Chetu, Inc., in the Florida Circuit Court in and for Broward County, alleging that InfoTouch entered into a written contract with Chetu for computer software development services and failed to pay Chetu $50,487.66 for services rendered. In its answer, InfoTouch has denied the allegations and a $150,000 counterclaim for fraud, breach of good faith and fair dealing is outstanding. Chetu has been unresponsive to discovery requests and InfoTouch has filed motions to compel discovery.

On February 13, 2019, Bridgehead Networks, Inc., a company for which Harry Nass acts as President, filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Western District of Texas to gain standing to sue the Comptroller of Public Accounts of the State of Texas. Upon the resolution of issues between Bridgehead Networks and the Texas Comptroller, the company’s largest creditor, the courts approved exit from the bankruptcy case on June 06, 2019 with no plan of reorganization and therefore no compromise to any creditor.

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DEBT STRUCTURE AND CREDIT ANALYSIS

Financial Covenant One:

A reserve account will be retained by the Lender’s Administrative Agent equaling at least 3.5% of outstanding Note principal ($35,000 with the breaking of Escrow, see below) which account will be capped at $100,000.

Covenant1

Financial Covenant Two:

Funds received from the Residual Revenues for each monthly rolling 6-month period (when available) must exceed 110.0% of the Note payments due during that period.

Covenant2

Key Takeaways & Model Analysis

Analysis

  • Residual Revenue stream is highly consistent and projected to grow at a conservative $6,000/year, in line with historical growth.

  • Residual Revenue stream has not fallen below the ~$86,000/month of principal and interest required to service the Note since 2017 and does not in the pro forma projections through 2024.

  • The Residual Revenue stream is earned from a diverse set of merchants across many industry verticals, limiting exposure to any one merchant or any one industry.

  • Growth in revenue is driven largely by software (and associated hardware) sales to new clientele, executing on a robust marketing plan.

  • This can be plainly seen by the percentage contribution of residual revenues steadily decreasing from 2020 to 2024.

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DUE DILIGENCE

From the Carofin Knowledge Base:

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SECURITY TERMS

InfoTouch Corporation

MIN. OF $1,000,000 AND UP TO $3,000,000

11.0% SENIOR SECURED NOTES

DUE NO LATER THAN 06/30/2025

This Summary of Terms represents only the current thinking of the parties with respect to certain of the major issues relating to the proposed private offering and does not constitute a legally binding agreement. The final Summary of Terms appearing in the Company’s Private Placement Memorandum shall take precedence.

Terms of the Notes

Summary and Purpose

A minimum of $1,000,000 and up to $3,000,000 of senior secured notes (the “Offering”, “Notes”) is being issued by InfoTouch Corporation (“InfoTouch”, the “Borrower” or the “Company”) to (1) finance InfoTouch marketing, research and development activities, 2) refinancing of existing indebtedness, 3) repurchase of shareholder stock 4) fund the Note’s Interest Reserve 5) pay Note issuance expenses. InfoTouch based in San Antonio, Texas, is developer of a configurable point of sale solution, for small to medium sized retailers.

Borrower

InfoTouch Corporation of San Antonio, Texas (the “Borrower”).

Lenders

Individuals and institutional investors who qualify as accredited investors as defined by Rule 501 of Regulation D of the US securities laws.

Note Description

Senior Secured Notes of the Borrower (the “Offering” or “Notes”), which represent the senior indebtedness of the Borrower.

Note Amount

A minimum of $1,000,000 up to $3,000,000 of senior secured notes (the “Notes”) are being issued to finance working capital expenses of the Borrower.

Use of Proceeds

The proceeds for any Note issuance will be used as follows to (1) finance InfoTouch marketing, research and development activities, 2) refinancing of existing indebtedness, 3) repurchase of shareholder stock 4) fund the Note’s Interest Reserve 5) pay Note issuance expenses. Funds will be advanced to the Borrower in two tranches: The “First Tranche” is comprised of those funds advanced to the Borrower following the Escrow Requirements, with a “Second Tranche” comprised of those funds advanced directly to the Borrower for up to 90 days thereafter.

Minimum Investment Amount

The minimum investment amount for an investment in the Notes will be $10,000, subject to exception by the Issuer.

Interest Rate

Notes issued will pay Lenders an annual rate of 11.0% non-compounded, payable monthly on the first of each month on an actual/365 day basis.

Final Maturity

The Notes will mature on the last day of the 42nd month following the beginning or amortization (the “Maturity Date”), upon which time all outstanding Note principal and interest is due and payable. Provided that the offering shall end or before September 15, 2021, the Maturity date shall not be later than June 30th, 2025.

Amortization

Notes will pay interest-only until the later of 1) the cessation of fund-raising by the Issuer or July 15, 2021. Thereafter the Notes will fully amortize until December 31, 2024.

Optional Prepayment

The Notes are pre-payable on or after 24 months from the closing date of the First Tranche, with no penalty

Offering Period

An initial closing is targeted to occur by March 15, 2021 with additional investment to be accepted at the discretion of the Issuer through July 15, 2021. The Offering Period may be extended up to 60 days at the election of the Company.

Credit Support

Seniority

The Notes will represent the senior indebtedness of the Borrower, now or in the future, that will have a perfected security interest in all assets of the business to include all software products, intellectual property, cash, and accounts receivable. The Borrower currently has approximately $720,000 of debt with Liens on the Collateral, which debt shall be retired upon closing of the First Tranche.

Revenue Sweep

As the Borrower receives cash from the Company’s residual payment processing income revenues (the “Residual Revenues”) from FIS under a business development agreement with InfoTouch, and under its ISO agreement with Fiserv, InfoTouch Corporation generates the residual payment processing revenues as a part of a contractual relationship with the payment processors (the “POS Software”). The initial funds received each month will be automatically directed by the commercial bank providing account support into a bank account established for the benefit of the Lenders, the Lenders will apply funds necessary to pay the Notes principal and interest due at that time, and absent an Event of Default the balance will be remitted to the Borrower. The Administrative Agent will at first have a Deposit Account Control Agreement “DACA” for the account receiving Residuals from FIServ, and if/when the Note Payment Coverage Ratio drops below 1.25x, the Administrative Agent shall be granted a DACA to the account receiving residuals from FiS.

Interest Reserve Account

Upon initial funding and through the life of the Notes, a reserve account will be retained by the Lender’s Administrative Agent equaling at least 3.5% of outstanding Note principal ($35,000 with the breaking of Escrow, see below) which account will be capped at $100,000. The interest reserve will be filled in the first month of funding. The Administrative Agent may use its DACA rights to increase the amount of funds in the reserve account upon additional funding.

Collateral Interests

The Notes will have a perfected security interest in all of the assets of the borrower to include all software products, intellectual property, cash, and accounts receivable. A UCC will be filed with the state of incorporation of the Borrower to perfect these security interests. The Borrower has currently pledged the Collateral to other lenders who advanced approximately $720,000 to the Borrower; liens of such lenders shall be retired upon closing of the First Tranche. Collateral rights in deposit accounts shall first be limited to the deposit account receiving Residual Revenues from FIServ, and expanded to the deposit account receiving Residual Revenues from FIS if/when the Note Payment Coverage Ratio falls below 1.25x.

Representations & Conditions to the Notes

Reps and Warranties

Usual for Offering of this type for the Borrower, including but not limited to: accuracy of financial statements; no material adverse change; absence of litigation; no violation of agreements; compliance with laws; payment of taxes; solvency; compliance with environmental matters; accuracy of information; and validity, and priority and perfection of security interest in the collateral.

Conditions Precedent to Initial Funding

Including but not limited to satisfaction of all legal and financial due diligence relating to the Borrower.

Financial Covenants

Restricted Shareholder Distributions - If it is not in compliance with any other covenants associated with this or any other financing by Lenders, the Borrower shall not, without the prior written consent of a majority of the Lenders, make any distributions on a quarterly basis to its shareholders, other than tax distributions necessary to defer incremental income tax suffered by such shareholders, which can be made at any time.

Limitation on Additional Indebtedness – The Company will not create, incur, assume or permit to be outstanding any additional Indebtedness excluding purchase money security interests on equipment or equipment leases, that exceeds $100,000 and such additional Indebtedness, if any, will not be allowed to place secondary lien or other secured by a lien on the Collateral. Provided, however, that any indebtedness incurred pursuant to the amendments to the Small Business Act by the CARES Act (or similar) shall not be included in this debt limitation, so long as such indebtedness is not secured by a lien on the Collateral. Note Payment Coverage Ratio – Funds received from the Residual Revenues for each monthly rolling 6-month period (when available) must exceed 110.0% of the Note payments due during that period.

Affirmative Covenants

As is usual for Offerings of this type, including but not limited to performance of obligations; delivery of agreed financial information and compliance certificates; notices of default and litigation; maintenance of satisfactory insurance; compliance with laws; and payment of taxes. Prior to closing management, officer, director and shareholder compensation will be agreed and not changed without Lender consent. All other financial obligations of Borrower to its officers, directors or shareholders shall be subordinated to Borrower’s obligations to Lenders.

Negative Covenants

As is usual for Offerings of this type, including but not limited to transfer of assets, incurrence of additional debt above the allowable amount, mergers changes in primary business, etc.

Note Governance

Events of Default

An “Event of Default” under these Notes shall include: (a) Borrower shall fail to pay when due any required interest or principal; (b) any warranty, representation, statement, report or certificate made or delivered to the Administrative Agent or the Lenders by Borrowers or any of Borrowers’ officers, directors, employees or agents, now or in the future, shall be untrue or misleading in any material respect; or (c) Borrowers shall fail or neglect to perform or shall violate any Financial Covenant, Affirmative Covenant or Negative Covenant as specified in the Note and Security Agreement supporting the Notes, subject to a 5 business day grace period, provided, however, than an Event of Default caused by a failure of credit card processors to pay Residuals to the Company shall be accompanied by at least a 75 day grace period.

Default Interest Rate

If the Notes and any interest due to the Lender is not paid when due or the Borrower is otherwise in default, the Borrower will begin incurring an incremental 5% (annualized) default rate interest per month for so long as such default is in effect. The default rate interest shall be based upon the aggregate principal balances of all outstanding Notes, unpaid interest and any accrued default rate interest. Once the default has been remedied, the interest rate will return to that applicable for Notes at that time.

Escrow

The Administrative Agent will establish an escrow account at an FDIC-insured banking institution (the “Custodian”). Under escrow instructions with this Bank, all subscription amounts will be deposited into the escrow account until the Company has received, and is prepared to accept, subscriptions for at least $1,500,000 of Notes offered hereby through a combination of cash or other consideration (each an “Alternative Financing”). When this subscription amount has been reached, with our without the addition of Alternative Financings, the amounts previously deposited in escrow will be released to the Company (the “Closing”). If the Company does not receive subscriptions equal to at least $1,500,000 prior to the termination date of this Offering, then at the termination date all funds on deposit in the escrow account will be returned to the corresponding subscribers, without interest. At its discretion, the Company may not establish an escrow account if the minimum amount is met by a single investor.

Governing Law

North Carolina

Other Matters

Insurance

Insurance will be maintained by the Company including: 1) a property and casualty insurance coverage for $1,000,000 per incident and $2,000,000 in aggregate limits and 2) general liability insurance for its operations in its facilities.

Information Rights

The Administrative Agent will be provided monthly unaudited financial statements within 45 days of the end of each preceding month as well as an annual unaudited statement for each calendar year within 90 days of the end of each year.

Placement Agent:

Carolina Financial Securities, LLC (“CFS”). CFS, a FINRA-registered broker dealer, is the exclusive Placement Agent for the Offering and will receive a 5.0% placement fee for acting as Placement Agent. CFS is 75% owned by Carolina Financial Group, LLC (“CFG”). CFS may share up to 50% of its fees with Carofin, LLC, an affiliated Broker-Dealer, for its assistance in the placement of the Offering.

Administrative Agent:

CFG Financial Services, LLC (the “Administrative Agent”), which is 100% owned by CFG. The role of the Administrative Agent includes: administration of the Interest Reserve Account, ongoing representation of the Lenders to the Borrower, oversight of Borrower compliance with all the Notes covenants, processing of interest and principal payments from the Borrower to Lenders, preparation and payment of all Regulation D filings (to be reimbursed by the Borrower) and other actions required in the administration of the Notes on behalf of the Lenders.

Fees and Expenses

A cash fee equaling five percent (5.0%) will be paid by the Borrower as a placement fee to CFS for acting as exclusive Placement Agent for the Offering. Provided that at least $1,000,000 is raised in the Offering.

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SECURITY VISUALIZATION

InfoTouch Senior Secured Note

Interest & Amortization Illustration

PI Payments (returns cannot be guaranteed)

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Visualization

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FREQUENTLY ASKED QUESTIONS

What is Carofin?

Carofin is a FINRA broker dealer, an investment bank headquartered in Brevard, North Carolina, that specializes in financing smaller businesses. Carofin’s parent company Carolina Financial Group, LLC, was established in 1995 and its affiliates have privately placed over $1 billion of debt and equity securities.

Is this security registered with the Securities Exchange Commission (S.E.C.)?

No. It is being privately placed under Rule 506c of Regulation D of the S.E.C.

Must Investors in the Note be Accredited Investors?

Yes. They must have household income of $300,000 (for married couples) OR a net worth of $1,000,000, excluding the value of their primary residence, OR qualify for an institutional category of investor.

What Happens if the Issuer Defaults on a Payment or Violates a Covenant?

In the event of a default CFG Financial Services, an affiliate of Carofin and administrative agent during the life of the Notes, will notify the Issuer of such default or violation, interface with the Issuer to understand the underlying causes of such default and expected curing timeline, and work with Investors on any required forbearance or recovery of collateral.

Will Investors Continue to Receive Information About the Note After Issuance?

Given its role as the administrative agent, CFG Financial Services is able to keep Investors informed about any unexpected changes in the Issuer's business, covenant compliance, or any potential prepayments or defaults.

What if I have questions in the future about the Note’s performance?

Carofin will distribute updates to investors at least quarterly, including account statements. You should feel free to also email Carofin at [email protected] or telephone us at 828.393.0088

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RISK FACTORS

AN INVESTMENT IN THE NOTES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT. AN INVESTMENT IN THE SECURITIES OFFERED HEREIN SHOULD NOT BE A MAJOR PART OF YOUR INVESTMENT PORTFOLIO. YOU SHOULD REVIEW THE RISKS OF THIS INVESTMENT WITH YOUR LEGAL OR FINANCIAL ADVISORS. THIS OFFERING INVOLVES SUBSTANTIAL RISKS. THESE RISKS INCLUDE, BY WAY OF ILLUSTRATION AND NOT LIMITATION, THE FOLLOWING: RISKS ASSOCIATED WITH THE FACT THAT THE MEMBERS WILL NOT HAVE THE RIGHT TO VOTE ON OR APPROVE MOST DECISIONS REGARDING THE BUSINESS AND, AS SUCH, WILL NOT BE IN CONTROL OF THEIR INVESTMENTS IN NOTES OF THE COMPANY AND THE BUSINESS; AND THE OPERATION OF THE COMPANY INVOLVES TRANSACTIONS BETWEEN THE COMPANY, THE MANAGER, AND THE OWNER WHICH MAY INVOLVE CONFLICTS OF INTEREST.
THE NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND WITH THE PRIOR CONSENT OF THE MANAGER, WHICH CONSENT MAY BE WITHHELD IN THE MANAGER’S SOLE DISCRETION. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. SOME OF THE INFORMATION IN THIS PRESENTATION MAY CONTAIN “FORWARD-LOOKING” STATEMENTS. YOU CAN IDENTIFY SUCH STATEMENTS BY THE USE OF FORWARD-LOOKING WORDS SUCH AS “MAY,” “ANTICIPATE,” “ESTIMATE,” “COULD,” “SHOULD,” “WOULD,” “EXPECT,” “BELIEVE,” “WILL,” “PLAN,” “INTEND,” “PROJECT,” “PREDICT,” “POTENTIAL” OR OTHER SIMILAR WORDS. THESE TYPES OF STATEMENTS DISCUSS FUTURE EXPECTATIONS OR CONTAIN PROJECTIONS OR ESTIMATES WHICH MAY OR MAY NOT HAPPEN AS PROJECTED HEREIN. WHEN CONSIDERING SUCH FORWARD-LOOKING STATEMENTS, YOU SHOULD KEEP IN MIND THE RISK FACTORS LISTED BELOW, WHICH COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN CONJUNCTION WITH THE OTHER INFORMATION ABOUT THE NOTES BEFORE PARTICIPATING IN THIS OFFERING. THE RISKS DISCUSSED IN THIS PRESENTATION CAN ADVERSELY AFFECT THE COMPANY’S OPERATION, OPERATING RESULTS, FINANCIAL CONDITION AND PROSPECTS FOR SUCCESS. THIS COULD CAUSE THE VALUE OF THE SECURITIES OFFERED HEREIN TO DECLINE AND COULD CAUSE YOU TO LOSE PART OR ALL OF YOU INVESTMENT. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THE COMPANY FACES BUT DO REPRESENT THOSE RISKS AND UNCERTAINTIES KNOWN TO THE COMPANY AND THAT THE COMPANY BELIEVES ARE MATERIAL TO THE COMPANY’S FUTURE OPERATING PERFORMANCE.

A. Investment Related Risks

Speculative Investment

The Loan being offered should be considered a speculative investment. The ability of the Borrower to achieve its objectives may be determined by factors beyond its control that cannot be predicted at this time. Consequently, there can be no assurance that the Borrower’s efforts to continue its business operations will prove to be sufficient to enable the Borrower to generate the funds required to repay the Loan. Anyone investing in the Loan should do so only if they are financially able to sustain the loss of their entire investment and should recognize that such a possibility exists.

Credit Risk

A fundamental risk, relating to all Loans, is a chance that the Borrower will fail to make a principal and interest payment when due. Borrowers with higher credit risks typically offer higher yields for this added risk, such as the Borrower. Changes in financial conditions of the Borrower, changes in economic and political conditions in general, changes in economic or political conditions specific to the Borrower are factors that may have an adverse impact on the Borrower’s credit quality and security values.

Reliance on Credit of the Borrower and on the Value of the Collateral

This offering is predicated upon the Loan and Security Agreement between the Borrower and the Lenders for the repayment of its borrowings from Lenders, and, if necessary, on the corporate guarantee from ITC, which secures the Loan. If the Agreement becomes unenforceable or is not honored by the Borrower for any reason it will have a severe adverse effect on the sale of the collateral.

No Secondary Market for the Borrower’s Loans

As this Loan is a private transaction, there is currently no public market for the Borrower’s Loans being offered herein. This Loan is not a publicly registered security and will have no secondary sale liquidity.

Refinancing of the Loan

This Loan is scheduled for repayment on 12/31/2024. It may be necessary for the Borrower to meet the projected principal redemption through the issuance of additional debt or equity securities. If the Borrower is unable to successfully raise additional capital, this may have an adverse impact on the timely redemption of the Loan.

B. Industry-Related Risks

Dependence on the Consumer Purchasing

The Borrower’s business is initially dependent on the consumer purchasing behavior. If consumer purchases were greatly diminished, it could affect the Borrower’s ability to sell product to its current customers and it would have to seek new markets for its product.

Regulatory Oversight

The Borrower’s activities are subject to federal, and state laws. The Borrower’s activities are expected to have a variety of regulatory oversight as development proceeds. Development of any of the Borrower’s operations will be dependent on the Borrower satisfying regulatory guidelines. The Borrower intends to conduct their business activities in a compliant manner and in accordance with all applicable laws but may still be subject to accidents or other unforeseen events which may compromise its performance, and which may have adverse financial implications.

Changes in Laws, Regulations and Policies

Changes in the laws, regulations and policies including the interpretation or enforcement thereof, that are germane to ITC and the SPC’s industry, can affect its business including changes in accounting standards, tax laws, data privacy as well as anti-corruption laws.

Competition

ITC competes with other companies in the industry. Competitors include companies that may have greater financial and other resources than the ITC. Additionally, these competitors may use pricing or other strategies to prevent ITC from achieving its business development objectives. This may have a material adverse impact on the financial position and prospects of the SPC.

Cybersecurity

Security incidents or other technological risks involving systems and data, or those of ITC clients or vendors, could expose ITC to liability or damage our reputation. ITC operations depend on receiving, storing, processing, and transmitting sensitive information pertaining to its business, associates, clients and their customers. Any unauthorized access, intrusion, infiltration, network disruption, denial of service or similar incident could disrupt the integrity, continuity, security and trust of ITC’s systems or data, or the systems or data of its clients or vendors. These events could create costly litigation, significant financial liability, increased regulatory scrutiny,

C. Offering-Related Risks

Acceptance of Investors on a First-Come, First-Serve Basis

The Borrower reserves the right to accept or reject any proposed investment in its sole discretion. Subject to this discretion, it intends to accept investments on a “first-come, first-served” basis, with the consequence that Lenders will be allocated a portion of the total Offering, based upon the amounts they have committed, in the order in which such commitments have been accepted. The Borrower is not required to accept all commitments tendered to it. There is no assurance, therefore, that your commitment will necessarily be accepted in whole or in part by it should it raise more or less funds than are needed to make its investments.

Possibility of Material Differences Between Projected and Actual Results

The financial projections contained in this Offering Summary and any supplements represent the SPC’s estimated results of operations. The financial projections have been prepared upon the basis of assumptions and estimates which may differ from actual events and/or circumstances.

D. Federal Income Tax Risks

Lack of Rulings and Opinions; Possibility of IRS Challenge of the Borrower’s Tax Position

The SPC has not requested and will not request any tax ruling from the IRS regarding the tax consequences of the SPC’s activities. Accordingly, there is no certainty as to the tax consequences of participating in the Loan. The SPC has not sought or obtained a legal opinion with respect to the tax treatment of the offering proceeds or issuance of the Loan. Accordingly, Lenders are urged to consult their own tax advisor with respect to the federal and state tax consequences arising from participation in this Offering.

Risk of Audit to Investors

There is a possibility that the IRS will audit the SPC’s income tax returns. If the SPC’s income tax returns are audited, your return might also be audited.

Future Federal Income Tax Legislation and Regulations

No assurance can be given that the current Congress or any future Congress will not enact federal income tax legislation that could adversely affect the tax consequences of participating in the Loan.

F. Other Risks

Reliance on Certain Aspects of the Offering

Potential investors should not rely exclusively on one aspect of the security structure, such as the debt service capacity of the Company when making an investment decision on whether or not to participate in this Offering.

Unforeseen Risks

In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by management. Prospective investors reviewing this Offering Summary should keep in mind other possible risks that could be important to the success of their investment in the Notes.

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BEST INTEREST & OTHER DISCLOSURES

Important Disclosures

These securities have not been registered with the Securities and Exchange Commission (the “SEC” or the “Commission”), or with any state securities commission or any other regulatory authority. The securities are being offered in reliance upon an exemption from the registration requirement of federal and state securities laws and cannot be resold unless the securities are subsequently registered under such laws or unless an exemption from registration is available. Neither the SEC nor any other agency has passed on, recommended or endorsed the merits of this offering (this “Offering”) or the accuracy or adequacy of these confidential offering documents (the “Offering Package”). Any representation to the contrary is unlawful.

These securities are offered through Carofin, LLC, Member of FINRA/SIPC. Carolina Financial Securities is an affiliate of Carofin and both Broker-Dealers are affiliates of Carolina Financial Group, LLC. Documents have been prepared by Carolina Financial Securities and have been reviewed and approved by the management of the Company. The information contained herein has not been independently verified and is dependent on information provided by the Company to Carolina Financial Securities, LLC.

The information contained herein is for informational purposes only and is not intended for further distribution. The information does not constitute a complete description of any investment or investment performance. This document is in no way a solicitation nor is it an offer to sell securities nor is it advice or recommendation regarding any investment. The information is not directed to any person who is not believed to qualify under the definition of an Accredited Investor under the rules of Regulation D of the 1933 Securities and Exchange Act. No security listed in this document or otherwise offered through Carolina Financial Securities, LLC or Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offer to sell.

Due diligence materials related to this Borrower and the Offering are available to you through Carolina Financial Securities’ affiliated marketplace, Carofin. If you have not received your login information to access Carofin.com, please contact your company representative to have access granted..

The Company will not offer, sell or issue any Securities in any jurisdiction where it is unlawful to do so or where laws, rules, regulations or orders would require the Company, in its sole discretion, to incur costs, obligations or time delays disproportionate to the net proceeds the Company will realize from such offers, sales or issuances. Neither this Offering Package nor any subscription agreement shall constitute an offer to sell or a solicitation of an offer to purchase any Securities in any jurisdiction in which such transactions would be unlawful.

Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing in this document should be interpreted to state or imply that past results indicate future performance, nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided in this document. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be imped if it is sold. Please see the Private Placement Memorandum (PPM), and the complete list of contents of this Offering Package for a more detailed explanation of the securities Summary of Terms, Investor Suitability Standards, Confidentiality, Securities Matters and Risk Factors.

Caution Regarding Forward-Looking Statements

Certain statements in this Summary Offering Material may be “Forward-looking” in that they do not discuss historical facts but instead note future expectations, projections, intentions, or other items relating to the future. We caution you to be aware of the speculative nature of forward-looking statements as these statements are not guarantees of performance or results.

Forward-looking statements, which are generally prefaced by the words “may,” “anticipate,” “estimate,” “could,” “should,” “would,” “expect,” “believe,” “will,” “plan,” “project,” “intend,” and similar terms, are subject to known and unknown risks, uncertainties and other facts that may cause our actual results or performance to differ materially from those contemplated by the forward-looking statements.

Although these forward-looking statements reflect our good faith belief based on current expectations, estimates and projections about, among other things, the industry and the markets in which we operate, they are not guarantees of future performance. Whether actual results will conform to our expectations and predictions is subject to several known and unknown risks and uncertainties, including risks and uncertainties discussed in this Summary Offering Material.

Consequently, all the forward-looking statements made in this Summary Offering Material are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Risks, uncertainties, and factors that could cause actual results to differ materially from those projected are discussed in the “Risk Factors” section of this Summary Offering Material. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Considering these risks, uncertainties, and assumptions, the forward-looking events discussed in the Summary Offering Material might not occur.

SECURITIES MATTERS

State Securities Matters

The Company will not offer, sell or issue any securities in any jurisdiction where it is unlawful to do so or where laws, rules, regulations or orders would require the Company, in its sole discretion, to incur costs, obligations or time delays disproportionate to the net proceeds the Company will realize from such offers, sales or issuances. Neither this Offering Package nor any subscription agreement shall constitute an offer to sell or a solicitation of an offer to purchase any securities in any jurisdiction in which such transactions would be unlawful.