SnippetSentry, Inc. (“Snippet” or “the Company”) provides advanced mobile communication monitoring, seamlessly capturing messages across platforms while ensuring compliance with regulatory standards. Its unmatched reliability, scalability, and ability to integrate with major archives make it the only truly viable solution in a market where alternatives fall short.
Recently, the SEC has fined major Wall Street firms over $2.3 billion for text-related recordkeeping non-compliance. Other agencies, such as the DOJ, FDIC, and the Financial Conduct Authority enforce similar standards. Companies across industries are increasingly adopting mobile communication monitoring to mitigate regulatory risk.
Snippet recently began Beta testing a new product which allows seamless text data integration into popular CRMs such as Salesforce, Hubspot, and Microsoft Dynamics, leading to a significantly increased Total Addressable Market (TAM).
The Company has seen significant traction within its direct sales channel with large financial firms and is poised to continue this growth through additional direct sales and via its partnership growth strategy.
The proceeds of this offering will be used to refinance existing debt and to provide additional working capital to the Company.
By solving complex technical requirements and focusing their efforts on industries where their services are most needed, Snippet has been able to achieve substantial growth in ARR, total Seats Under Contract, and Active Seats.
This growth is forecasted to continue as the Company converts clients already in its sales pipeline and continues its commercialization of the partner channel.
Financial services companies are promoting mobile messaging apps to improve communication, but U.S. regulations require all electronic communications to be archived, and some providers, like Apple’s iMessage, do not support third-party archival solutions.
This lack of compliance has led to record fines from the SEC against Wall Street firms, driving financial and other companies to urgently seek effective technological solutions.
SnippetSentry’s SaaS technology securely captures and transmits text messages from leading messaging apps (iMessage, WhatsApp, SMS/MMS) to corporate archives, with future support for WeChat/WeCom. It captures all mobile data types, including attachments, emojis, GIFs, and voice messages.
SnippetSentry’s SaaS platform requires no proprietary apps, secondary phone numbers, and minimal IT involvement, which together drive rapid adoption across client organizations.
This simplicity allows clients to seamlessly go from non-compliant to full compliance, avoiding regulatory sanctions and negative publicity.
SnippetSentry’s proprietary service functions across four stages once a mobile device is connected:
| Current customers | 91 |
| ARR | $1.77 million |
| Active seats at breakeven | 16,200 |
| Current contracted seats | 10,966 |
| Active users | 7,501 |
| Seats in implementation | 3,465 |
| $ in short-term sales pipeline | $5.5 million |
| Sales cycle | 90 days |
| Implementation | 30 days |
| Amount | $2,500,000 |
| Use of proceeds | (I) Recapitalizing senior lender (II) Providing working capital to the Company (III) Pay offering expenses |
| Annual interest rate | 14.00% |
| Structure | Tranche 1: Up to $1,250,000, 1.0% warrants of fully diluted capitalization Tranche 2: Up to $1,250,000 |
| Interest-only period | Until payments due on November 1st, 2025 |
| Amortization | Full amortization |
| Maturity | April 1st, 2027 |
| Collateral | Senior lien against all assets of the company |
Character
Capacity
Capital
Collateral
Conditions
The preceding financial projections along with the performance estimates described on the following page 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. And the “Risk Factors – Summary” for more information about the risks related to these projections. Additional details are available in the data room for further review.
An investment in the securities described in this Summary involves certain risks. You should carefully consider all of the following risk factors, in addition to all of the information contained in this Summary and the PPM prior to investing in the Notes. The risk factors described below are not the only ones facing the Company. Additional risk factors not presently known or that are currently deemed immaterial may also impair the Company’s business operations. The Company’s business, financial condition, results of operations or prospects could be materially and adversely affected by any of these risks. If any of the following risks occur, the Company’s business, financial condition or results of operations could be seriously harmed. In such case, an investor could lose all or part of its investment.
Risks related to SnippetSentry's business
Risks related to SnippetSentry’s industry
Risks related to this offering
The list of Risk Factors above is non-exhaustive and any potential investor should review the “Risk Factors” section of the PPM for additional risks and a discussion of all risks identified therein.
SnippetSentry, Inc. (“Snippet” , the “Company”, or the “Issuer”) is seeking to:
refinance existing loans and obligations up to $750,000.00 that have been made by prior employees to the Company
secure additional working capital as the Company grows, brings in new clients, and enters new markets. Snippet is issuing a secured promissory note that is secured by all assets of the Company. Snippet is issuing a secured promissory note in two tranches as follows:
Tranche 1: Up to $1,250,000. This tranche will be contingent on a borrowing base equal to 60% of the Company’s Annual Recurring Revenue (ARR) and will include warrant coverage equal to 1.00% of the Company’s fully diluted equity as of the Closing Date (as further described under “Warrants” below).
Tranche 2: Up to $1,250,000. This tranche will be contingent on a borrowing base equal to 50% of ARR and will not include any warrant coverage.
Each Tranche may close independently and on different dates, subject to the terms herein and in the Definitive Agreements.
SnippetSentry, Inc.
Up to $2,500,000
The "Maturity Date" shall be April 1st, 2027
On one or more dates acceptable to the Company. (each a “Closing Date”)
The Notes will pay Investors an annual interest rate equaling 14.00% (as applicable, the “Interest Rate”) based upon 30/360 basis
Investors participating in Tranche 1 shall receive warrants to purchase equity representing 1.00% of the Company’s fully diluted capitalization as of the Closing Date. The warrants shall have the following terms:
Exercise Price: Equal to the price per share of the most recent equity financing, or otherwise fair market value as determined by the Board of Directors in good faith.
Term: 10 years from the date of issuance.
Equity Class: Common Stock.
Payments shall be made on the following dates and amounts:
Interest only for the first 6 months (the “Interest-Only Period”), until the payment due on November 1st, 2025,
The remaining payments shall be amortized over the remainder of the Note’s term.
All payments shall be first applied towards accrued but unpaid interest and then towards principal.
The Note is prepayable at any time, but in the event of prepayment, investors will be entitled to a full year’s interest on their investment, inclusive of any interest paid up until the date of the repayment.
Prior to the Closing Date, the Borrower shall have entered into Lock-Box Agreements with all of the Lock-Box Banks and delivered counterparts of each to the Administrative Agent. Upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may (with the consent of the Majority Lenders) or shall (upon the direction of the Majority Lenders) at any time thereafter give notice to each Lock-Box Bank that the Administrative Agent is exercising its rights under the Lock-Box Agreements to do any or all of the following: (a) to have the exclusive control of the Lock-Box Accounts transferred to the Administrative Agent (for the benefit of the Lenders) and to exercise exclusive dominion and control over the funds deposited therein and (b) to take any or all other actions permitted under the applicable Lock-Box Agreement.
The Note shall be secured by all assets of Snippet (the "Collateral"). The secured interest granted pursuant to the Note shall be shared amongst Investors pro-rata to their outstanding principal amount and regardless of their investment date. A financing statement perfecting this secured interest shall name CFG Financial Services, LLC, acting as Administrative Agent on behalf of Investors, as the secured party.
Lenders shall have a first priority perfected security interest in the Collateral.
Standard for this type of financing, which may include (i) delivery of reporting requirements, including unaudited monthly and annual financial statements, (ii) Collateral requirements, (iii) notices, (iv) financial records, (v) existence/nature of business, (vi) insurance, (viii) payment of expenses, (viii) payment of taxes, (ix) Maintenance of properties, (x) field examinations, (xi) appraisals, (xii) material contracts, and (xiii) compliance with laws, (xiv) Licenses, Permits and protection of Collateral, (xv) control of accounts, and (xvi) use of proceeds.
The “Borrowing Base” shall mean the maximum principal amount available to Borrower under the Loan, determined based on Borrower’s Annual Recurring Revenue (“ARR”) as follows:
For aggregate loan commitments or advances up to and including $1,250,000 the Borrowing Base shall be equal to sixty percent (60%) of ARR;
For aggregate loan commitments or advances greater than $1,250,000 and up to a maximum of $2,500,000, the Borrowing Base shall be equal to fifty percent (50%) of ARR;
provided, however, that in no event shall the Borrowing Base exceed $2,500,000.
Snippet shall provide the Administrative Agent (as further defined herein) with a borrowing base certificate evidencing such calculating and certifying its compliance with such requirement.
Annual Recurring Revenue (ARR) shall mean, as of the most recently completed fiscal month, the annualized value of the Borrower’s recurring subscription revenue derived from bona fide, arm’s-length customer contracts for the sale of the Borrower’s products or services that are (i) in effect and fully executed, (ii) non-cancellable or cancellable only upon payment of early termination fees, (iii) with creditworthy customers, and (iv) generating recognized revenue in accordance with U.S. Generally Accepted Accounting Principles (GAAP), consistently applied. ARR shall exclude, without limitation, any non-recurring revenues, professional services fees, implementation or set-up fees, pass-through or reimbursable amounts, one-time payments, and revenue derived from customers in material default, past due accounts over 90 days, or contracts that are subject to material contingencies or conditions precedent.
ARR shall be calculated by taking the Monthly Recurring Revenue (MRR) for such month and multiplying such amount by twelve (12).
Standard for this type of financing, which may include (i) Loans and investments, (ii) liens, (iii) limitation on indebtedness, (iv) articles of organization or operating agreement, (v) transactions among affiliates, (vi) prepayments of indebtedness, (vi) distributions, (vii) change in accounting principles or fiscal year, (viii) sale and leaseback, (ix) maintenance of corporate existence and nature of business, (x) special covenants as to Collateral, (xi) disposal of assets, and (xii) anti-corruption laws.
If the Investor does not receive any payment by the end of the date on which it is due or an Event of Default is outstanding, Snippet will pay the Investor a “Default Charge” calculated as if it were additional interest on the outstanding principal balance at the rate of 5% per annum until such payment is received by the Investor or an Event of Default no longer exists.
The following events shall constitute an “Event of Default” under the Notes:
(i) Failure by Snippet to pay any amounts when due, subject to a 5-business day cure period, and accompanied by the Default Charge;
(ii) Failure to comply with any provision of the Definitive Agreements, including affirmative and negative covenants;
(iii) The filing by the company for relief under any bankruptcy or similar protection scheme; or
(iv) The filing of an involuntary petition against the company pursuant to any bankruptcy statute.
The Note may be amended by written consent of the Investors holding a Majority (i.e., 50.00%) of the principal outstanding at any time such amendment is sought.
Notwithstanding the foregoing, the written consent of Investors holding a Super Majority (i.e., 66.67%) of the then outstanding principal is required to (i) change the Maturity Date, change the Interest Rate, Default Charge, or any other fees payable, (ii) release or subordinate any Collateral, or (iii) waive or release in writing any claim against or obligation of the Company.
CFG Financial Services, LLC (“CFG FS”), an affiliate of CFS and Carofin, shall be appointed as Administrative Agent by Snippet and the Investors regarding the ARR Note.
Carolina Financial Securities, LLC (“CFS”). CFS, a FINRA-registered broker dealer, is the exclusive Placement Agent for the Offering and will receive a 5.00% placement fee for acting as Placement Agent. 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.
Due to the relationship between certain registered representatives of Carofin and the Company, certain conflicts of interest may be present in the Offering and during the life of the Note:
Board Position: Bruce V. Roberts, the President of Carolina Financial Securities, LLC is the Series A Director of the Company and may have a conflict of interest in selecting CFS and its affiliated entities as the Placement Agent for the Offering. Mr. Roberts is not expected to receive direct sales compensation for CFS’ participation in the Offering.
Warrant Position: CFS and some of its associated persons are holders of warrants and other equity instruments in the company and may have a different investment objective or timeline than investors in the Note.
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 this Summary. 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.
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Reuters. (2021, December 17). JPMorgan Securities to pay $125 million to settle SEC charges over record-keeping lapses. Reuters. https://www.reuters.com/business/jpmorgan-securities-pay-125-mln-settle-sec-charges-record-keeping-lapses-2021-12-17/
Reuters. (2022, September 27). U.S. fines 16 major Wall Street firms $1.1 billion over record-keeping failures. Reuters. https://www.reuters.com/business/finance/us-fines-16-major-wall-street-firms-11-billion-over-recordkeeping-failures-2022-09-27/
Investment Executive. (2022, August 8). BMO, Wall Street firms sanctioned for app violations. Investment Executive. https://www.investmentexecutive.com/news/from-the-regulators/bmo-wall-street-firms-sanctioned-for-app-violations/
Reuters. (2024, September 24). U.S. fines a dozen Wall St firms more than $100 mln over record-keeping violations. Reuters. https://www.reuters.com/markets/us/sec-fines-11-companies-more-than-88-mln-over-record-keeping-violations-2024-09-24/
