Integra Logo

Integra Foods, LLC.

Up to $1,500,000

$1,000,000+ funded to date

Min. Investment - $5,000

12.5% Secured Promissory Notes

due 4/30/2023

4% Common Equity Warrants

Watch Integra's Intro Video (2 min watchtime)
  • North Carolina food processing business specializing in smoked turkey legs for Asian export

  • Meridien is providing demand to Integra through their 8-year relationship with Tokyo Disneyland, Universal Studios (Osaka) & Everland (Seoul)

  • Actively diversifying into multiple products and expanding US and Asian customer base

Integra Foods, LLC, (the “Issuer”, “Integra”, “Company”, or “Borrower”) is issuing a maximum of $1,500,000 of senior promissory notes (the “Notes” or “Securities”) for product diversification and working capital.

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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Investment Overview

1) Purpose of the Financing

  • Purchase equipment needed to produce additional product lines

  • Fund new customer acquisition initiatives

  • Provide working capital to support growth and continuing operations

2) Issuer – Integra Foods, LLC (Integra)

  • Integra Foods, LLC produces smoked meats for Asian export and domestic distribution

  • The facilities are located in Bladenboro, North Carolina, where Integra began production in January 2020

  • Integra was founded by Meridien Export and Packing, Inc. who, for the last 8 years, has been shipping smoked turkey drumsticks and mini corn dogs to Japan and Korea for distribution in amusement parks

3) Security Description – Senior Secured Notes

  • Interest - 12.5% interest, payable monthly

  • Equity Warrants – Common equity warrants equal to 4% of the company

  • Maturity – April 30, 2023, with 50% amortizing and the remaining principal due at maturity

  • Seniority – The loan will represent senior indebtedness of the borrower, except for a SBA loan and certain purchase money security interests totaling $477,650. A UCC1 has been filed with the state of North Carolina to perfect these security interests.

  • Collateral – All assets of the company, i.e., cash, inventory, and equipment

4) Repayment

  • Interest and principal will be paid from operating cash flow

  • Warrants may provide incremental return in the event of an acquisition

5) Investment Risks

  • While additional product lines and customers have been established, there is still customer concentration risk

  • COVID-19 poses the risk of supply chain disruptions and the potential to dampen demand

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Why We Like This Investment

Problem = High Food Standards in the Asian Market

  • Asian consumers desire turkey legs meeting their unique tastes – specifically, smaller hen leg sizes which are cooked and smoked to highly demanding specifications.

  • The U.S. raises about 50% of world’s annual production. Turkeys are not produced in large commercial scale in Asia due to climate conditions and land restrictions.

  • Asian importers pay premium prices for a specially prepared product.

  • These unique and highly exacting customer specifications require tightly managed processing operations.

  • Additional demand exists from Asian corporate customers for this product with an opportunity to replace other producers in Chile and the European Union.

Investment Opportunity = Diversify Production

  • Meridien Export and Packing, Inc. (“Meridien”) has an 8-year relationship selling smoked turkey drumsticks to amusement parks in Japan and Korea (e.g., Tokyo Disney, Universal Studios in Osaka and Samsung Everland in Seoul).

  • Meridien has historically sourced all its finished goods product through costly third-party co-packers, but product delivery has been inconsistent.

  • Integra Foods was founded by Meridien, providing access to the niche Asian foods market and dedicated production to meet its sales goals

  • Meridien has leased (w/ a purchase option) an existing production facility in eastern North Carolina (Bladenboro). Eastern North Carolina has extensive infrastructure to support food processing

  • Integra is able to cook, package, and ship multiple meat products to domestic and international retailers. Integra is actively pursuing these additional products and has multiple customers in their pipeline.

Product Mix

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Company Information

Background

For the past 8 years, Meridien Export and Packing, Inc. has been shipping smoked turkey drumsticks and mini corn dogs to Japan and Korea for distribution in amusement parks – Tokyo Disney, Universal Studios Japan in Osaka, and Samsung Everland Park in Seoul, Korea. The company owns proprietary marinade formulas developed internally for each of the Parks using a production know-how. Meridien also owns the registered trademark “Piedmont Country Club” used for shipment of all its products to Japan and Korea. Until recently, Meridien’s business model called for placing all orders with third-party co-packing facilities in the South East Region while providing these facilities with raw materials, which Meridien purchased from local turkey producers. The company would then monitor the quality of goods and pick up finished packed goods to arrange export certification and transportation to final destinations, being the shipper-on-record. The owners of Meridien have determined the time is right to consolidate its commercial activity with production of finished products under similar ownership. Such consolidation will allow the company to increase its profit margin and provide control over quality and volumes. The owners of Meridien have founded Integra Foods, LLC, using an existing facility in Bladenboro, North Carolina with which Integra can start operating immediately on a lease-to-buy basis. Production began January 2020.

Why Now?

Meridien owners have been considering this strategy for several years, and recent events related to their suppliers made this the ideal time to begin. Previously, as demand grew, Meridien concentrated on getting more co-packers to fulfill demand for their product. In 2018 and early 2019, there was a sequence of events which triggered a decision:

  • Hurricane Florence caused Meridien’s co-packer, Villari Food Group, to cease operations for 2 weeks. When they resumed operations, they were forced to focus on their own backlog, rather than fulfill Meridien’s orders. As a result, Meridien was unable to supply product between September 2018 and February 2019.

  • Late 2018, Meridien agreed to co-pack with Zachy Farms in California. After months of preparation and an initial shipment of hen drumsticks, Zachy went out of business and was unable to fulfill orders.

  • Early 2019, Meridien agreed to co-pack smoked legs with Stahlmeyer in Florida. After several months of preparations, Stahlmeyer packed ½ of a container before determining that the project was not efficient for them, ultimately discontinuing service.

These events have spurred the owners of Meridien to pursue vertical integration through the founding of Integra. This will allow Meridien and Integra to maintain stability required to meet customer demand without interruption.

Business Relationship Chart

Below is a chart depicting the realtionships between each of the related parties.

Business Relationship Chart

Product

The companies provide a unique mix of products with the experience to appeal to a variety of clients:

Map

  • Individually sized and calibrated female turkey drumsticks: The Company is not aware of anyone else in the United States that provides this product. Additionally, the flavor formula has been designed by Meridien to meet customer specifications and is a trade secret known only to Meridien and its co-packers.

  • Smoked Pork Loin: The Company has received a co-packing agreement to begin injecting and cooking pork loins two days a week for Villari Foods in late August 2020.

  • Rotisserie Turkey Breast and Thigh (testing phase): The Company has begun sending Rotisserie Turkey in three different flavors - traditional rotisserie, barbeque, and New Orleans – to Costco for taste testing.

  • Ground Turkey (research phase): This product is being researched by management as a way to generate revenue from broken, mis-sized, or mis-cooked turkey that does not meet quality standards.

The Bladenboro Plant (Integra Foods, LLC.)

Integra Processing’s facility is in the heart of NC poultry industry. The location allows regular fresh turkey legs deliveries from a choice of reputable long-established North Carolinian and nearby poultry factories. The plant began operations at the end of January.

This plant was chosen for a variety of reasons including but not limited to:

  • Close Proximity to shipping and exporting locations:

    • US Cold Storage (3 miles)

    • Secondary Cold Storage (68 miles)

    • Export Gate 1 – Port of Wilmington, NC (68 miles)

    • Export Gate 2 – Port of Norfolk, VA (210 miles)

    • Export Gate 3 – Port of Savannah, GA (320 miles)

  • Adequate wastewater and power capacity of town of Bladenboro

  • Economic incentives offered by the Government of Bladen County, NC Department of Commerce and USDA Existing Refrigeration

Plant Production

Production is planned for 1.5 shifts 5 days a week. For reasons of conservatism, production is kept at a constant rate over 5-year period. Expanding production into 6-day week and 2 full shifts provides almost double growth figures.

Based on the production schedule, the company plans to produce the following volumes:

Average Production & Sales Volumes (per month)

Average Production

Plant Process Flow

Integra Foods is a manufacturer with in-house sales and logistics. Management has invested significant R&D into its marinade formula and production know-how. General production flow is presented below: Production Flow

Plant Process Flow Continued

Decision Tree

Quality Specs

Approved vs. Not Acceptable

Ruler Turkey Leg

Quarter on the Turkey Leg

Production Plant Diagram

Production Plant Diagram

Customers

Meridien’s primary customer for many years has been Tohzai Sangyo Boeki Inc. (“Tohzai”), a Japanese importer which imports the product to be distributed to Tokyo Disney, the end-use customer. Integra will initially produce up to 4 containers (of the required 6) for sales to Tohzai.

Tohzai Sangyo Boeki Inc.

Tohzai Logo Tohzai Sangyo Boeki, Inc. is a Japanese company that offers importing and distribution of turkey products and livestock, as well as supplying poultry farming equipment and meat processing equipment. Founded in 1953, Tohzai has grown its poultry livestock and equipment operations through import services from the US and EU and has contributed to the development of the Japanese poultry industry’s modernization and to the increase in demand for animal protein in Japan.

Tokyo Disney

Tokyo Disney Logo The Tokyo Disney Resort, comprised of Tokyo Disneyland and Tokyo DisneySea, is an amusement park located near Tokyo, Japan and owned by The Oriental Land Company, Ltd. (“OLC Group”, TYO: 4661). Tokyo Disneyland was the first Disney park built outside the US in 1983 and was built in the same style as the parks in Florida and California. Tokyo Disneyland and DisneySea are also the only Disney parks of which Disney has no ownership. Tokyo Disneyland attendance in 2018 was 17.9MM, up from 16.6MM in 2017 and 14.8MM in 2012.

OLC Group licenses characters and likenesses from Disney for its theme park business segment. It also has a hotel and other business segments. OLC Group is 22% owned by Keisei Electric Railway (TYO: 9009), which currently has a market cap of $741 billion and generated revenues of $2.5 billion for the 12 months ending September 2019.

Villari Foods

Villari Foods Logo

Additionally, Integra will begin co-packing smoked pork loin for Villari Foods in late August. This source of revenue is expected to continue until year end of 2020, but the Company believes this to be a seasonal source of income in years to come.

Other Potential Sources of Revenue

Additional sources of revenue can be found in a) growing the customer base for Integra’s products, both domestically and internationally, b) entering into co-packing agreements with larger US brands, and c) looking into producing additional turkey-based protein products, such as turkey sausage.

Co-Packing Revenue – in a co-packing arrangement, Integra would receive product from another company and process it, charging a fixed processor’s fee per lb. This is a very common and stable revenue generator for many other similar companies in the industry. Potential co-packing partners include, but not limited to: House of Raeford Farms, Butterball, Cargill, and Jennie-O. Integra’s injection line and smokehouse is capable of processing a wide variety of products, ranging from chicken wings to injecting whole turkeys. Integra’s equipment allows us to produce naturally smoked and roasted product.

Growing existing customer base – Meridien’s sales team will pursue other international amusement parks and convenience chains, adding additional customers to the flagship product line. Immediate opportunities for growth exist in Singapore, People’s Republic of China, Hong Kong and the Middle East. Being able to source Halal certified turkey drumsticks allows the Company to target buyers in Singapore, Hong Kong and UAE. It was impossible for the owners of Integra to approach these markets before.

Costco logo

Domestically, Integra has begun producing rotisserie turkey products for Costco to taste test in an effort to diversify sales avenues in their business. Should this partnership become fruitful this will increase sales without the need for additional machinery or packaging material as the Company is able to capitalize on this opportunity without additional resources invested.

Market

The following are management projections of demand for Meridien’s product. For 2019, Meridien was unable to meet this demand due to lack of co-packing capacity. The 2019 bar for Japan represents approximately 4 containers per month sold to Tohzai, which is the amount of capacity that Integra projects to achieve on a single shift each day. Additional capacity could be met through additional shifts at Integra or through Villari Foods co-packing.

Industry Overview

Over the last five years the chicken and turkey meat production industry has seen positive trends in demand-side variables and a near constant demand. Over the next five years, to 2024, the industry expects to have conditions remain relatively consistent. Trends point to more consumers turning towards the white meat of poultry as an alternative to red meat such as beef or pork due to an increase in the health consciousness among consumers. Despite pricing for these poultry products dipping over the last five years, prices are projected to rise slightly as 2024 approaches.

Management Projection of Demand

Projected Demand Graph

Pricing

Historical pricing for whole turkeys (which drives pricing of individual components) hit a peak in 2016, before dropping in 2017 and 2018. Prices were back up slightly in 2019. Pricing between Meridien and Integra, and subsequently between Tohzai and Meridien, are determined by a pricing matrix based off the raw materials input cost, which provides protection to both Integra and Meridien if input prices continue to grow. Wholesale prices Graph

Integra Sale Price

Market for Chicken

In the event that Integra receives a bad order of turkey legs or hits an unforeseen lull in turkey sales, Integra will be purchasing chicken products from Mountaire Farms to be cooked and sold mostly to domestic buyers. Integra’s Japanese clients, such as Tohzai Sangyo Boeki Inc., have also expressed interest in their chicken products. % of Total Meat Consumption Per Capita Consumption Graph

It is clear to see that for the last 6 decades, the increase in the demand for chicken has been extremely significant. Chicken went from roughly 15% to 48% of the share of meat consumption. Chicken consumption is forecasted to continue this growth and take over a majority share of the meat consumption market. Wholesale Prices for Chicken

Along with an increasing demand for chicken, the price per pound of chicken has been rising on average since 1960. These prices are expected to continue this increasing growth.

Integra will use their chicken products as a secondary or back-up source of income. This is expected to be profitable given the circumstances of the market laid out above. Integra will be using the same equipment and process for the chicken as they do with the turkey. There are no additional expenses to including chicken products, other than the cost of purchasing the chicken from Mountaire Farms.

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Management Team

Vladimir Stepanian
Founder, Chairman, & CEO
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Eugene Korniychuk
Founder & Vice President
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John "Tim" Nance
Plant Manager
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Pepperish Tedder
Quality Assurance Manager
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Vincent Palmisano
Head of Maintenance
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Company Disclosures

On or about December 13, 2017, Meridien Export and Packaging, Inc., the guarantor of the Loan, entered into a written agreement with Zacky & Sons Poultry, LLC (“Zacky Farms”) whereby Zacky Farms sold and delivered to Meridien merchandise in the approximate value of $102,524.00 for which Meridien agreed to pay. On November 13, 2018, Zacky Farms filed a voluntary Chapter 11 Bankruptcy Petition in the United States Bankruptcy Court, with the balance of the agreement between Zacky Farms and Meridien still unpaid.

GemCap Lending I, LLC was appointed by the bankruptcy court to operate Zacky Farms’ business and brought an action against Meridien, Vladimir Stepanian, and Eugene Korniychuk in the Superior Court of the State of California alleging breach of contract and breach of guaranties by Vladimir Stepanian and Eugene Korniychuk, among other claims.

On or around May 3, 2019, the Plaintiffs attorney filed with the court a notice of settlement indicating that the case had been settled and called for monthly payments totaling $102,524.00 by December 31, 2019 – with the defendants being granted an extension until the end of January to make the last remaining payment under the settlement agreement. GemCap requested dismissal of the case on January 23, 2020.

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Financial Statements

Financial Summary

Model Assumptions:

  • Production capacity ramps up to approximately 4.5 containers per month by September 2020.

  • Tohzai demand modeled at 3 containers per month and increases to 4 in September 2020.

  • Price/Kg is $4.62. One container is approximately 22,000 Kg.

  • Gross margin is approximately 40%, which is largely from variable costs in materials, storage, and labor.

  • Operating expenses are approximately $70,000 per month.

  • DSO is 7 days, though it may be less due to Meridien’s PO financing. DIO is 45 days for raw materials and 7 days for finished goods. DPO for materials and operating expenses is 30.

  • No maintenance capex assumed other than monthly maintenance which is expensed at $3,000/month.

  • Integra has the option to, and is assumed to, purchase its facility in October 2022, for approximately $1.2MM.

  • No additional equity financings assumed. The Notes are refinanced through new debt in 2023.

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 on page 2 regarding forward-looking statements. A full version of this pro-forma financial model is available through carofin.com.

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Debt Structure - Credit Analysis

Covenants

  1. "Gross Cash Flow" means the Borrower’s pre-tax income plus interest, principal amortization, and any non-cash expenses.

  2. "Fixed Charge Coverage" means a ratio calculated wherein the numerator equals the Borrower’s Gross Cash Flow and the denominator equals the Borrower’s required principal and interest payments.

  3. "Leverage Ratio" means a ratio calculated wherein the numerator equals Borrower’s Funded Debt and the denominator equals the Borrower’s Gross Cash Flow.

Model Assumptions:

  • Production capacity ramps up to approximately 4.5 containers per month by September 2020.

  • Tohzai demand modeled at 3 containers per month and increases to 4 in September 2020.

  • Price/Kg is $4.62. One container is approximately 22,000 Kg.

  • Gross margin is approximately 40%, which is largely from variable costs in materials, storage, and labor.

  • Operating expenses are approximately $70,000 per month.

  • DSO is 7 days, though it may be less due to Meridien’s PO financing. DIO is 45 days for raw materials and 7 days for finished goods. DPO for materials and operating expenses is 30.

  • No maintenance capex assumed other than minor monthly maintenance which is expensed at $3,000/month.

  • No additional equity financings assumed.

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Due Diligence Room

From the Carofin Knowledge Base:

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Security Terms

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. In order to move forward, Borrower and Carofin will execute an Engagement Agreement, which will detail capital raise terms. This capital raise will be on a “best efforts” basis.

Terms of the Loan

Summary and Purpose

Up to $1,500,000 of secured promissory notes (the “Offering”, “Loan” or “Notes”) are being issued by Integra Foods, LLC (“Integra”) to finance the final construction of a smoked turkey drumstick and mini corndog processing plant in Bladenboro, North Carolina.

For the past 8 years, Meridien Export and Packing, Inc. (“Meridien”) of Raleigh, North Carolina has been shipping smoked turkey drumsticks and mini corn dogs to Japan and Korea for distribution in amusement parks – Tokyo Disney, Universal Studios Japan in Osaka, and Samsung Everland Park in Seoul, Korea. The company owns proprietary marinade formulas developed internally for each of the Parks and a production know-how. Owners of Meridien have capitalized Integra and are consolidating the commercial activity with the production of finished products, initially a smoked turkey drumstick. Integra has leased an existing facility in Bladenboro, North Carolina on a lease-to-buy basis (the “Bladenboro Facility”). Renovation of the Bladenboro Facility is complete, and the plant commenced operations in January 2020. This financing will fund the construction, as well as a refinance, of several outstanding bridge financings supporting the project.

Borrower

Integra Foods, LLC. of Raleigh, North Carolina (“Integra” or the “Borrower”).

Investors

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

Loan Description

Secured Notes of the Borrower (the “Offering”, “Loan” or “Notes”), which represent the senior indebtedness of Integra except for existing SBA-guaranteed indebtedness of Integra and equipment financing for the Bladenboro Facility.

Loan Amount

Up to $1,500,000 of secured notes (the “Notes” or “Loans”) are being issued to finance the final construction of the Bladenboro Facility.

Use of Proceeds

The proceeds for any Note issuance will be used as follows: 1) purchase equipment needed to produce additional product lines, 2) fund new customer acquisition initiatives, 3) fund the Interest Reserve Account (see below), 4) for working capital to support growth and continuing operations and 5) provide for Note issuance expenses.

Minimum Investment Amount

The minimum investment amount for an investment in the Notes will be $5,000.

Interest

The Notes will pay Investors an annual interest rate equaling the higher of 12.5% or the U.S. Prime Rate as published in the Wall Street Journal plus 5.0%, calculated on an 30/360-day basis, provided that the annual interest rate shall not exceed 15.0%. If necessary, the applicable rate shall be reset July 1 and January 1 of each year for each subsequent monthly payment the Notes are outstanding. Each payment will be due on the first day of each month or, if occurring on a weekend or holiday, on the next business day.

Maturity

April 30, 2023 (the “Maturity Date”), with all outstanding l Note principal and interest due and payable.

Amortization

Loan will pay interest only through November 1, 2020. Thereafter it will 50% amortize on a mortgage style basis calculated through April 30, 2023, with all outstanding principal due on April 30, 2023.

Equity Warrants

Investors will receive common equity warrants in Integra having a 10-year life and priced at a $1,000,000 valuation. If $1,500,000 of the Loan is raised from investors these warrants will equal 4% of the fully diluted equity of Integra, with those warrants being distributed to Investors based on their pro-rata participation in the Notes. If a smaller amount of the Loan is funded, the amount of warrants issued to Lenders will be proportionately smaller.

Optional Prepayment

The Notes may be prepaid at any time but only if investors have been paid, through a combination of previous interest payments and, if necessary an additional amount at the time of the prepayment, totaling at least one full year of 12.5% interest, based upon their original principal investment.

Offering Period

Additional investment to be accepted at the discretion of the Company through November 30, 2020. The Offering Period may be extended at the election of the Company.

Credit Support

Seniority

The Loan will represent the senior indebtedness of the Borrower except for the GBC International Bank’s SBA loan ($340,000) and other equipment financing totaling approximately $137,650.

Loan Guarantor

The Loan will be supported by a corporate guaranty from Meridien Export and Packing, Inc.

Interest Reserve Account

The company will maintain a 3-month Interest Reserve Account (the “Interest Reserve Account”), held and administered by the Administrative Agent, through January 31, 2021. Thereafter, if there has been no Event of Default (see below), amounts held within this Interest Reserve Account may be applied to monthly principal and interest payments as they become due. In the event of an imminent Event of Default due to non-payment, the Administrative Agent will disburse funds from the Interest Reserve Account as payments,

Collateral Interests

The Loan will have a secondary security position to GBC International Bank’s SBA loan ($340,000), which has a first lien on all assets of the Company, and the Blue bridge Bank Equipment Loan ($137,650), which is secured by certain equipment assets. A UCC1 has been filed with the state of North Carolina to perfect these security interests.

Representations & Conditions of the Loan

Reps and Warranties

Usual for Loans 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

Fixed Charge Coverage Ratio (“FCCR”) - Starting December 31, 2020, the Borrower shall generate gross cash flow sufficient to maintain a 1.15x Fixed Charge Coverage Ratio, on a trailing six-month basis with December 31, 2020 as the first effective date for calculation purposes. The FCCR will be tested on a monthly basis.

Funded Debt/Gross Cash Flow Ratio (“Leverage Ratio”) - The Borrower shall maintain its Leverage Ratio sufficient to remain below 3.00 times its total Funded Debt. Gross Cash Flow will be calculated on a on a trailing six-month annualized basis with December 31, 2020 as the first effective date for calculation purposes. The Leverage Ratio will be tested on a monthly basis.

“Funded Debt” means all interest-bearing debt of any kind whatsoever by Borrower.

“Funded Debt Ratio” means a ratio calculated wherein the numerator equals Borrower’s Funded Debt and the denominator equals the Borrower’s EBITDA.

“Gross Cash Flow” means the Borrower’s pre-tax income plus interest, principal amortization and any non-cash expenses.

Restricted Member Distributions - If it is not in compliance with any other covenants associated with this or any other financing by the Company, the Borrower shall not, without the prior written consent of a majority of the Lenders, make any distributions on a quarterly basis to its members/shareholders.

Limitation on Additional Indebtedness - The Company will not create, incur, assume or permit to be outstanding any Indebtedness that exceeds $50,000, excluding currently outstanding debt. Such Indebtedness, if any, will not be allowed to place secondary lien or other lien on the Collateral.

Affirmative Covenants

As is usual for Loans 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.

Negative Covenants

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

Loan Governance

Events of Default

An “Event of Default” under this Loan shall include: (a) Borrower shall fail to pay when due any required interest or principal; or (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 Loan and Security Agreement supporting the Loan, subject to a 5 business day grace period.

Default Interest Rate

If the Loan 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) Penalty Fee per month for so long as such default is in effect. The Penalty Fee shall be based upon the aggregate principal balances of all outstanding Notes, unpaid interest and any accrued Penalty Fees, subject to a five working day grace period and the occurrence of a force majeure event. Once the default has been remedied, the interest rate will return to that applicable for Loan at that time.

Other Matters

Insurance

Insurance will be maintained by the Company including: 1) a property and casualty insurance coverage for an amount equaling at least the outstanding principal of the Note and 2) general liability insurance for its operations in its facilities.

Information Rights

The Administrative Agent will be provided monthly unaudited financial statements through January 31, 2022 within 30 days of the end of each preceding month as well as an annual unaudited statement for each calendar year within 60 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 6.0% placement fee for acting as Placement Agent. CFS is 75% owned by Carolina Financial Group, LLC (“CFG”). CFS will enter a Selling Agent relationship with Carofin, LLC, also a FINRA-registered broker dealer. CFS owns 52% of Carofin, LLC.

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 Investors to the Borrower, oversight of Borrower compliance with all Loan covenants, processing of interest and principal payments from the Borrower to Investors, preparation and payment of all Regulation D filings (to be reimbursed by the Borrower) and other actions required in the administration of the Loan on behalf of the Investors.

Fees and Expenses

A cash fee equaling 6.0% will be paid by the Borrower as a placement fee to CFS for acting as exclusive Placement Agent for the Offering. CFS shall also be granted the right to purchase common equity warrants in the amount equaling one percent (1.0%), on a fully diluted, as converted basis of the ownership interest of Integra for every one million dollars ($1,000,000) raised in a Financing Transaction.

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Security Visualization

Integra Foods Secured Promissory Notes

Interest & Amortization Illustration

Integra Payback Profile

Liquidation Preference Illustration

Liquidation Preference

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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 Presidio Shares 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.

How is the Note's Interest Paid?

Interest is paid in cash to investors on a monthly basis by CFG Financial Services, an affiliate of Carofin and administrative agent of the Note. If any interest payable date falls on a weekend or holiday the distribution will be made on the subsequent business day.

Can the Issuer Prepay the Note Before the Maturity Date?

The Notes may be prepaid at any time but only if investors have been paid, through a combination of previous interest payments and, if necessary an additional amount at the time of the prepayment, totaling at least one full year of 12.5% interest, based upon their original principal investment.

Who are Integra's Clients?

Integra current is supplying product to Tohzai, Tokyo Disney, and Vallari. The company has a new customer pipeline it continues to build to diversify revenue and minimize customer concentration risk.

Are Meridien's sales contracted?

No. Meridien formed Integra to provide the sales and demand from their existing and future clients, but no contract ahs been signed. As Integra is a subsidiary Meridien, they are financially aligned to continue to provide sales to the company while also receiving specialized production of a high-quality product with uninterrupted delivery, all challenges when utilizing 3rd party suppliers.

What Protections do I have as an Investor?

Covenants have been built into the note as safety measure for debt investors and notification mechanisms for Carofin if a company’s financial position changes. Some of the Note’s covenants are:

  • Fixed Charge Coverage Ratio (“FCCR”) - Starting December 31, 2020, the Borrower shall generate gross cash flow sufficient to maintain a 1.15x Fixed Charge Coverage Ratio, on a trailing six-month basis with December 31, 2020 as the first effective date for calculation purposes. The FCCR will be tested on a monthly basis.

  • Funded Debt/Gross Cash Flow Ratio (“Leverage Ratio”) - The Borrower shall maintain its Leverage Ratio sufficient to remain below 3.00 times its total Funded Debt. Gross Cash Flow will be calculated on a on a trailing six-month annualized basis with December 31, 2020 as the first effective date for calculation purposes. The Leverage Ratio will be tested on a monthly basis.

  • “Funded Debt” means all interest-bearing debt of any kind whatsoever by Borrower.

  • “Funded Debt Ratio” means a ratio calculated wherein the numerator equals Borrower’s Funded Debt and the denominator equals the Borrower’s EBITDA.

  • “Gross Cash Flow” means the Borrower’s pre-tax income plus interest, principal amortization and any non-cash expenses.

  • Restricted Member Distributions - If it is not in compliance with any other covenants associated with this or any other financing by the Company, the Borrower shall not, without the prior written consent of a majority of the Lenders, make any distributions on a quarterly basis to its members/shareholders.

  • Limitation on Additional Indebtedness - The Company will not create, incur, assume or permit to be outstanding any Indebtedness that exceeds $50,000, excluding currently outstanding debt. Such Indebtedness, if any, will not be allowed to place secondary lien or other lien on the Collateral.

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 enforcement of collateral.

Will Investors Continue to Receive Information About the Security 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 and general operational updates.

What if I have questions in the future about the Business’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 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. 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 SECURITIES 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 SECURITIES 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 SECURITIES 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 third-party sale of the Collateral, 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.

Initial Interest Reserve Account Depleted

For interest payments between April and July 1st, an event of default was imminent for non-payment, so the Administrative Agent made those interest payments out of the Company’s interest reserve account. The interest reserve account currently holds less than one month of interest payments at the current funding rate. Funds from the Offering will re-establish a 3-month Interest Reserve Account.

Dependence on the Amusement Park Industry

The Borrower’s business is initially dependent on the amusement park industry’s demand for turkey drumsticks, especially in Asian amusement parks. If the amusement park industry’s demand for turkey drumsticks 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.

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 April 30, 2023. Additionally, the Company will be required to purchase the facility that it is operating in Q4, 2022, requiring a large capital expenditure. 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.

Existing Short-Term Debt

The Company has obtained short- and long-term bridge financing from multiple officers, directors, and shareholders, which will be repaid with the proceeds of this offering.

Personal Guarantees

Investors subscribing for $250,000 or more of the Notes may be granted personal guarantees by managers of the Issuer.

Liquidation of Collateral

The Notes in this Offering will have a secondary lien position to the Company’s currently outstanding debt. If the need should arise for the Company’s creditors to liquidate the collateral for any reason, there may not be sufficient collateral to repay any or all of the principal of these Notes.

Customer Concentration

Currently, the Borrower only has a single end-customer to which its product will be sold. If that customer chooses to use another supplier for its smoked turkey drumstick product, the Borrower would have to find new customers for Meridien to sell product to, which could cause the Borrower’s operations to temporarily shut down, which in turn could cause material adverse effects on the Borrower’s ability to repay the Loan.

Lack of Customer Contracts

The company’s management has a preexisting 8-year relationship with its end customer. The product produced by Integra is not bound by contracts and is instead based on verbal agreements. The end customer is not legally bound to purchase its turkey legs from the Company. This ultimately, may have an adverse effect on financial performance given the end customer purchases from another supplier or ceases purchases.

B. Industry Related Risks

Demand for Smoked Turkey drumsticks related

Any substantial decline in the demand for products sold by the Borrower, but not limited to, the introduction of substitute products, may cause a decline in the market value of Borrower’s product and negatively impact the Borrower’s financial performance.

Fluctuations in commodity prices and in the availability of raw materials

Pricing for poultry products vary significantly depending on market conditions. This may negatively impact the Borrower’s financial performance.

Outbreaks of diseases, specifically avian flu

Outbreaks of disease and other events, which may be beyond the company’s control, producers who sell raw materials to Integra, could significantly affect demand for its products, consumer perceptions of products, the availability of turkey for purchase by Integra and its ability to conduct its operations.

Quality & Safety of the Products

Success for the Borrower’s business depends, in part, on the quality and safety of the Borrower’s products. If the products are found to be defective or unsafe, or if they otherwise fail to meet customer standards, relationships with customers could suffer. Further, the Borrower’s reputation could be diminished, and the Borrower could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on the business.

Regulatory Oversight

The Borrower’s activities are subject to international, federal, and state laws, as well as agencies including, but not limited to, the Food and Drug Administration. As with all food service-related industries, 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 and, where required, being approved by governmental authorities. 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 the Borrower’s industry, can affect its business including changes in accounting standards, tax laws, data privacy as well as anti-corruption laws. Additionally, as the Borrower continues to sell and expand its international business, it may be subject to laws relating to selective distribution, environmental or climate change laws, trade accords and customs regulations could adversely affect the Borrower’s distribution endeavors.

Competition

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

C. Management-Related Risks

Reliance on Key Personnel

Due to the size of the organization, the Borrower has a significant reliance on certain key employees, particularly Vladimir Stepanian and Eugene Korniychuk. If the Borrower is unable to retain key employees it could jeopardize the Borrower’s ability to implement its business plan, its relationships with its customers, and its financial stability.

Ability to Manage Growth

The Borrower’s expects to continue to grow its overall operations and this may strain the Borrower’s resources. Any inability to manage growth effectively would have a material adverse effect on the Borrower’s business.

D. 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 Borrower’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.

Reliance on 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 Borrower or the collateral value of its inventory, when making an investment decision in order to participate in this Offering.

E. Federal Income Tax Risks

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

The Borrower has not requested and will not request any tax ruling from the IRS regarding the tax consequences of the Borrower’s activities. Accordingly, there is no certainty as to the tax consequences of participating in the Loan. The Borrower 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 your 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 Borrower’s income tax returns. If the Borrower’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

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 You may learn more about the services we offer and the details surrounding such services through our Customer Relationship Summary. 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.

Our firms seek to present vital capital with meaningful investment opportunities through the fundamental analysis of the businesses we seek to finance. Such analysis is usually conducted through a First Principles approach.

When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations, we provide you. Here are some examples to help you understand what this means:

Proprietary Products: Our firms will often present investments that are only available though them, which may result in a higher placement fee.

Conflicting Positions as Administrative Agent: CFG Financial Services, an affiliate of Carofin and Carolina Financial Securities will act as administrative agent for both the Royalty Notes and the Series B Preferred. Unless all Royalty Notes are converted into Series B Preferred, CFG Financial Services may be presented with conflicts of interest.

Our firms offer brokerage services to accredited investors, exclusively through the sale of private placements. the offerings we bring to market are carefully selected, and any recommendation you may receive from us will be limited to these offerings. Therefore, we may be unable to adequately compare the risks and benefits of the offerings we bring to offerings presented by other financial professionals. While our firms will often present new investments and discuss such investment’s risks and benefits with you, the ultimate authority to make such investment rests solely with you.

Our firms do not hold any investor cash or securities, and securities offered by us often have no easily assessable market value, so our firms will not monitor the market value of your investment on an ongoing basis. The investments we present often require a minimum investment of $5,000 for equity offerings and $10,000 for debt offerings.

Fees and costs may reduce any amount of money you make on your investments over time. Our firms are mostly compensated through placement fees, which are payable by the issuer, meaning that the firms will be compensated by receiving a percentage of the funds raised in an offering, regardless of the investment performing as expected. Such placement fee is usually between 3% and 7% (please find the specific Placement Fee for this offering in the “Placement Agent Fees” section of the “Security Terms”. Given that different investments have different placement fees, we may often have a conflict of interest when presenting these investments to you.

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 Issuer and the Offering are available to you through 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.

State Securities Laws

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.