Regulatory compliance within many industries requires full access for forensic analysis of all business-related written and electronic communications. (FRCP 37.8a)
Current solutions foster data leaks, non-compliance, and monitoring challenges related to user adoption, inadvertent deletions, and high cost.
Recent fines for violation of MiFID II, FINRA, and SEC regulations regarding compliant communication include $200MM for JP Morgan and substantial fines for each of Royal Bank of Scotland, Citi, and HSBC.
Txtsmarter’s MetaSnippetTM Technology securely captures, encrypts, archives, and analyzes all Snippet-based communications, carrier/cloud independently, such as Apple iMessages, Android's SMS/MMS texts, as well as other forms of social mobile communications data, including voice and video, in real-time, user-permission based, adhering to all global privacy laws and regulations.
Txtsmarter's MetaSnippetTM Technology solution requires no proprietary apps, IT involvement, or changes in user behavior, driving adoption and implementation across a client organization.
This simplicity allows clients to go from non-compliant to fully compliant seamlessly, avoiding regulatory sanctions and negative publicity. It also supports full forensic analysis and tracking of any mobile data (externally and internally) as it passes through the company’s networks enhancing the company’s mobile security profiles.
Txtsmarter is the first company to develop a holistic solution to the growing need for archival of all business-related electronic communications, including Apple iMessage.
Txtsmarter, Inc., the predecessor company, was founded in 2013 as a Corporation and all of its assets were purchased by the Txtsmarter, LLC in August 2022 following a reorganization of its leadership.
Since then, Txtsmarter has achieved significant milestones, technology development, scalability testing, intellectual property portfolio development relating to routing, analysis, and storage and further customer acquisition, both at the current pilot-stage and for near-term start dates using the upcoming Version 2 release.
Preferred Return: 6.0% cumulative preferred return (accrues until paid or converted).
Amount: Up to $3,000,000 of Class A-3 Units will be offered, with an effective pre-money valuation of $15,000,000.
Seniority: The Class A-3 Units are pari-passu with Class A-2 and Class A-1 unitholders (the Class A-1, A-2, and A-3 Units are referred to herein collectively as the “Class A Units”) with regards to liquidation preference and senior to Common units of the Company in such regard.
Liquidation Preference: Upon a liquidity event, proceeds shall be distributed in the following order (i) first, Members holding Class A Units, to the extent of any accrued but unpaid preferred return, on a pari passu and pro rata basis; (ii) second, Members holding Preferred Units, until each Member's Unreturned Capital is reduced to zero, on a pari passu and pro-rata basis; (iii) thereafter, to Members holding Common Units to the extent of their respective membership percentage. Members holding Class A Units shall receive the higher of (i) the aggregate of their accrued but unpaid preferred return and unreturned capital, or (ii) that amount such Member would receive had such Class A Units been converted to Common Units immediately prior to such liquidation.
Optional Conversion: At the election of the Class A-3 Members.
Accruing Preferred Return: Class A-3 Units shall accrue preferred returns at a rate of 6.0% per annum and shall be cumulative but not compounding (the “Accruing Preferred Return”). The Accruing Preferred Return shall only be payable when, as, and if declared by the Board of Managers or in connection with a liquidation event. No preferred returns shall be paid on other class or series of units until the accrued but unpaid Accruing Dividends of the Class A Units are reduced to zero.
Convertible Preferred Exit: Upon a liquidity event, Members holding Class A Preferred Units shall receive the higher of (i) the aggregate of their accrued but unpaid Accruing Preferred Return and unreturned capital, or (ii) that amount such Member would receive had such Class A Units been converted to Common Units immediately prior to such liquidity event.
Capital Gains: Management will actively seek to maximize member enterprise value through a sale, merger, or IPO when it is strategically beneficial.
Development: Txtsmarter may not fully meet all the functional goals of Its product
Customer Adoption: Txtsmarter’s MetaSnippetTM technology is newly developed and is only now being introduced to customers.
Scalability: Introducing new products in a highly regulated environment is difficult, with long sales cycles and substantial oversight, which may slow growth.
Need for Additional Capital: Early-stage companies often underestimate the cost of scaling operations, and Txtsmarter may need more capital to execute its business plans. If unable to do so, the company may be forced into bankruptcy.
AN INVESTMENT IN THESE PREFERRED INTERESTS 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.
Textsmarter, Inc. was founded in 2013 to develop a framework for archival private texting platforms and other social media messaging channels without cumbersome secondary phone numbers or customized applications hindering adoption.
The Company developed and patented a proprietary methodology for this secure data collection and distribution. Txtsmarter is the only solution that addresses Apple's iMessage, Android’s SMS/MMS and Meta’s Whatsapp on the root level.
With recent fines from the SEC and FINRA levied against JP Morgan, UBS, and HBSC, large financial institutions are seeking a solution to the well-known problem of text messaging archival.
Several prominent companies, including OakTree, Iconiq Capital, and Carlyle Group, have entered the paid pilot stage. Many others notable firms have a confirmed upcoming pilot start date.
The Issuer for this Offering is Txtsmarter, LLC, an entity which purchased substantially all the assets of Textsmarter, Inc., in August of 2022. The Company is currently filing fictitious name reservations for “SnippetSentry” in an effort to become the category king as it shapes the mobile enterprise communication security industry.
Txtsmarter's proprietary solution works in three steps after being implemented on a target endpoint:
Collection Layer: Data is captured via a Unique Personal Identifier (mobile number, email, or username) on the root level, in real-time.
MetaSnippetTM Technology Core: Captured data is transferred through the micro-services core system in Transport Layer Security (TLS) 1.2 encrypted format at all times, and data is never at rest therefor inaccessible to anybody other than the customer upon reaching the designated archive.
In the process the captured snippets get tagged with essential data transforming them into MetaSnippetsTM. MetaSnippetsTM contain both the original snippet data AND essential data such as origination, time/date, location information, parties involved, etc. required for forensic record keeping to be able to incorporate them seamlessly into the corporate record flow.
Client Designated Archive: Data gets distributed to a designated client archive with visibility only to the client.
Txtsmarter’s MetaSnippetTM Technology securely captures, encrypts, archivs, and analyses all Snippet-based mobile communications, carrier-independent, such as Apple iMessages, Android's SMS/MMS text as well as other forms of social mobile communications data, including voice and video in real-time, mitigating compliance and communication data leaks in highly regulated industries. The financial services industry and other highly regulated industries are experiencing growing pressure to adopt a comprehensive electronic communications compliance platform due to increasing scrutiny from regulatory agencies, levied fines, and sanctions due to compliance gaps and data loss.
Failures in compliance have led to substantial fines and negative press events for some of the largest financial institutions in the world. Outside of financial institutions, government agencies (NATO, UN, US Government, etc.) have similar regulations, and discussions are ongoing for implementing Txtsmarter’s services.
Currently, Txtsmarter offers the only solution for organizations in these highly regulated industries and as such is uniquely positioned to capitalize on this growing demand.
While Txtsmarter is currently pursuing customers in all highly regulated industries, the short-term focus of the company is on the financial sections i.e., banking, venture capital, financial services, and insurance (“BFSI”).
The BFSI industry currently has some of the most highly regulated communications standards and Txtsmarter is uniquely positioned to service the industry with a fully comprehensive product.
Within the BFSI industry, Txtsmarter already has contacts at some of the largest financial institutions in the world (shown in the chart below) and has visibility to ~50,000 endpoints and ~$23MM in Annual Recurring Revenue.
Only Txtsmarter captures Apple’s iMessage and Android SMS/MMS natively at the root level, making it unique in the market. In addition, Txtsmarter also captures Meta’s WhatsApp and other private messaging communication channels for previously inaccessible data and makes it readily available for compliance requirements in highly regulated industries.
Given the uniqueness of its MetaSnippetTM technology and solution approach, Txtsmarter does not consider anyone to be a direct competitor. There are companies such as Smarsh, Global Relay, Proofpoint, and Behavox, etc. which offer solutions that appear similar in nature, but involve a very different (and in management’s view, sub-optimal) approach. These companies typically use third-party number protocols or wrappers, are containerized, or require the end-user to install and communicate via a proprietary app. These approaches force changes to user behavior, resulting in low adoption rates, essentially defeating the solution's entire purpose to ensure complete data compliance.
Currently, the majority of Enterprise Information Archiving ("EIA") spending goes into email compliance and retention, but there are now enforced regulations mandating the archiving of all electronic communications. EIA solutions include data reduction across information types, retention management, content indexing, eDiscovery, and categorization technologies. Improvements in advanced computing and communication networks have led to cloud computing data centers which allow for scalable archiving at a reasonable cost.
The worldwide digital transition has been accelerated through COVID-19 because of increased virtual meetings and conversations. This shift has also marked a rise in the number of large complex files that firms are looking to archive. The main factor that restrains growth in the industry is ignorance regarding EIA solutions among the majority of businesses that require them.
The components of EIA solutions break down into two categories: services, which is where much of the recent growth in the industry has come from, and content, which further breaks down into Email & Web, Database, Social Media, Instant Messaging, File, Enterprise file synchronization & sharing, etc. Vertically, the industry is broken down into BFSI, Government & Defense, Manufacturing, Telecom & IT, Retail & Consumer Goods, Healthcare & Life Sciences, Education & Research, and Others. In 2021, the BFSI sector acquired the largest revenue share in most part due to the amount of regulatory oversight from FINRA, the SEC, the FDIC, the FFIEC, and the Dodd Frank Act. Based on deployment type, the industry's solutions are separated into on-premises and cloud, with cloud dominating the revenue share in 2021. Cloud EIA solutions serve as storage as a service solution for long-term data archiving, lower costs, and faster execution. In 2021, EIA solutions were most commonly adopted by large organizations with large purchasing power, most commonly in North America and countries with rapidly rising GDPs (China, Japan, Singapore, and India).
The current market size of the EIA market is ~$6.3B, with a projected CAGR of 14.7% through 2027. A recent explosion in the demand for EIA products and services was driven by widespread migration to virtual communication among organizations due to the COVID-19 pandemic. Further growth is expe cted to be fueled by the combination of an increase in the awareness of large organizations with respect to EIA solutions and rising levels of fines and sanctions in highly regulated industries. By 2027, the EIA market is expected to eclipse $12.5B
Due diligence materials related to this Issuer and the Offering are available to you through an electronic data room. Please contact your registered representative to setup access to the electronic data room.
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Carofin, LLC ("Carofin") is offering up to $3,000,000 of Class A-3 Convertible Preferred Units (the "Offering", "Securities", or "Class A-3 Units") in Txtsmarter, LLC ("Txtsmarter", the "Company" or the "Issuer").
Proceeds from this Offering will be used to (i) reduce acquired liabilities, (ii) support the migration of assets, (iii) implement financial controls and systems, (iv) provide working capital and (v) pay any fees and expenses associated with this Offering.
The information below is summary and nature and each prospective investor shall review the Company’s First Amended and Restated Operating Agreement (the “Operating Agreement”) prior to purchasing the Securities, as the Operating Agreement shall govern the rights and preferences associated with the Securities. Terms capitalized but not defined herein shall have the meaning assigned to them in the Operating Agreement
Txtsmarter, LLC (the "Company"), a North Carolina limited liability company.
Class A-3 Preferred Units (the "Securities" or “Class A-3 Units”) of Txtsmarter, LLC (the "Company"), a North Carolina limited liability company (together with currently outstanding Class A-1 Preferred Units and Class A-2 Preferred Units the “Class A Units”).
Up to $3,000,000 of Class A-3 Units will be issued on a continuous basis.
The pre-money valuation for this Offering is $15,000,000 ($1.5889 per unit). The implied post-money valuation is $18,000,000.
Proceeds from this investment will be used to (i) reduce acquired liabilities, (ii) support the migration of assets, (iii) implement financial controls and systems, (iv) provide working capital and (v) pay any fees and expenses associated with this Offering.
Individuals and institutional investors who qualify as accredited investors as defined by Rule 501 of Regulation D of the US securities laws (the "Class A-3 Members")
To generate capital gains for Members.
This Offering will expire on July 31, 2023. The Offering Period may be extended at the sole discretion of the Company.
Class A-3 Units, along with other Class A Units, shall accrue a preferred return at the rate of 6.0% per annum, which shall be cumulative but not compounding (the “Accruing Preferred Return”).
In the event of a Liquidation or Deemed Liquidation Event, the proceeds shall be distributed to the Members of the Company in the following order, with each category being satisfied before payments are made in the subsequent category:
First, to the Members holding Class A Units, to the extent of any accrued but unpaid Accruing Preferred Return, on a pari passu and pro rata basis;
Second, to the Members holding Class A Units, until each Member's Unreturned Capital is reduced to zero, on a pari passu and pro rata basis;
Thereafter, to the Members holding Common Units, on a pari passu and pro-rata basis.
In connection with the payments described above as they relate to a Liquidation or Deemed Liquidation Event, each Member holding Class A Units shall receive payments equal to the higher of (i) the accrued but unpaid Accruing Preferred Return plus any Unreturned Capital, or (ii) the amount such Member holding Class A Units would receive had they converted their Unreturned Capital to Common Units immediately prior to such Liquidation or Deemed Liquidation Event.
The Class A-3 Units initially convert at a 1:1 ratio to Common Units at any time at the option of the Class A-3 Members, subject to adjustments for dividends, splits, combinations , and similar events and as described below under "Anti-Dilution Provisions."
Broad based weighted average anti-dilution protection against additional equity being issued or options granted at a value lower than that implied at the closing of this Offering. Options or Warrants approved by the Board of Directors for issuance to management, consultants, and/or key employees shall not trigger anti-dilution adjustment. This anti-dilution protection does not apply to anticipated subsequent rounds of financing needed to grow the Company that are sold at a higher valuation than that implied at the closing of this Offering.
The Company’s Board of Managers shall be comprised of three individuals, which shall be selected as follows: (1) the chief executive officer of the Company, which shall initially be Eddie Green (the “CEO Manager”), (2) one individual selected by a majority of the Class A-2 Units, which shall initially be Jamie Stiles (the “Class A-2 Manager”), and (3) one individual selected by a majority of the Class A Units, which shall initially be Bruce V. Roberts (the “Class A Manager”).
The Company will provide financial reporting, including quarterly, year-to-date, and annual income, balance sheet, and cash flow statements as compared to the current budget and compared to results for the comparable period for the prior year to Members holding Class A Units and the Administrative Agent. An annual review will be performed within 120 days of year-end by a third-party auditor as designated by the Company. The coming year's annual budget will be provided to each Unitholder within 30 days of each fiscal year-end for as long as they continue to be a shareholder of the Company.
All Members holding Class A Units shall have preemptive rights to purchase additional Units, up to the amount of their ownership percentage of the Company on an as-converted basis, in bona fide offerings for capital raising purposes until such time as the Class A Units convert to Common Units, and/or a sale or merger of the Company occurs, subject to customary exclusions, including without limitation: (i) issuances of management/employee/director/consultant incentive equity, (ii) equity issued at any time pursuant to any currently outstanding debt instruments, options or warrant agreements (ii) equity securities issuable upon exercise of any options or other equity security equivalents, (iv) equity securities issued in connection with bona fide third party financing transactions and (v) equity securities issued in connection with acquisitions and other strategic transactions.
Should any Member holding Class A Units or unitholder of any class owning five percent (5%) or more of the Company's total equity make a private sale of its units (to someone other than another employee, officer or Director or then current Member of the Company, or a transfer pursuant to estate planning), then the Members holding Class A Units would be entitled to participate, pro rata, in the sale (i.e., a Tag-Along Right).
If Members holding Class A Units, or a common unitholder, or a group of unitholders owning more than sixty six and two thirds percent (66 2/3%) of the total units of all classes ("Selling Unitholders") decide to (i) sell their units to an unrelated third party, (ii) sell or license all or substantially all of the Company's assets to an unrelated third party or (iii) consummate a similar "sale of the company" transaction, and such transaction is unanimously approved by the Company's Board, then they shall have the right (i.e., a Drag-Along Right) to require the remaining members of all classes to sell their Units at the same price and on the same terms as offered by the third party for the Selling Members' Units; subject to standard exceptions and requirements.
The Class A Units are subject to resale restrictions under applicable securities laws and are not registered for sale with the Securities and Exchange Commission.
Members holding Class A Units, together as one class, will be granted the following registration rights after the Company's IPO: (i) one demand registration for underwritten offerings, (ii) unlimited piggyback rights (including participation in the Company's IPO, subject to underwriter approval) and (iii) rights to register Units in unlimited S-3 "shelf" offerings provided that the aggregate amount of the proceeds of any such S-3 offering is at least $50,000,000. All of the related expenses (except underwriters' discounts and commissions) incurred by the members shall be paid by the Company. The registration rights shall be subject to standard black out rights.
Approximately 15% of the Company’s post-money, fully diluted capitalization shall be reserved for an employee option pool which is currently unallocated and uncommitted.
Standard representations and warranties as to due organization, existence in good standing and power to conduct its business will be provided by the Company in the purchase agreement. Standard representations and warranties typical of a private offering of equity units will be provided by each Investor, including as to status as an "accredited investor", receipt of Private Placement Memorandum, Company's operating agreement, and other offering documents and other materials as requested, and acknowledgement that the Offering is being made under exemption from registration requirements (Details to be found in the purchase agreement). In order to comply with the requirements of Rule 506(c), Each Investor shall be obligated to provide the Company with either: (i) third party confirmation of such Investor's status as an "accredited investor", or (ii) such information as reasonably requested by the Company to confirm such Investor's status as an "accredited investor.
Carolina Financial Securities, LLC ("CFS") shall receive a cash placement fee equal to 6% of the gross proceeds received by the Company in this Offering, with such fee being payable by the Company simultaneously with the closing of any investment. Additionally, CFS shall receive a warrant to purchase common units of the Company in an amount equaling up to 1.0% of the Company's fully diluted, as-converted capitalization. Up to 50% of such placement fee and warrant allocation may be shared with Carofin, LLC, an affiliated Broker-Dealer, for its assistance in the placement of the Offering.
CFG Financial Services, LLC ("CFG FS"), an affiliate of Carofin and Carolina Financial Securities will act as administrative agent for the Class A-3 Members, often coordinating reporting and other obligations between the Company and the Class A-3 Members. The Company will reimburse CFG FS for its reasonable out of pocket expenses.
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 LENDERS 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 YOUR 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.
The Securities being offered should be considered a speculative investment. The ability of the Company 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 Company's efforts to continue its business operations will prove to be sufficient to enable the Company to generate the funds required to make distributions. Anyone investing in the Securities 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.
As this security is a private transaction, there is currently no public market for the securities being offered herein. These Securities are not a publicly registered securities and will have no secondary sale liquidity.
The Company has a limited history of operations upon which an evaluation of the Company's business and prospects can be based. No assurances can be given that the Company will ever be profitable or generate revenues sufficient to make distributions. This makes evaluating the Company's business operations and validating its financial projections difficult. In assessing the Company's prospects, a potential investor must consider the risks and difficulties frequently encountered by early-stage companies. These risks include the Company's ability to: raise sufficient capital to fund operations, and other general corporate purposes; manage changing and expanding operations; establish and increase awareness of the Company's brand and strengthen loyalty among prospective customers; implement and successfully execute the Company's business and marketing strategies; respond effectively to competitive pressures and developments; continue to enhance the Company's products and services; and attract, retain and motivate qualified personnel. The Company's failure in any of these areas could adversely affect the Company's financial condition and results of operation.
The Company’s Operating Agreement contains certain aspects which may affect the class as a whole upon the consent of a certain number of the outstanding Class A-3 Units or Class A Units and without the affirmative consent of Investors, which may include affiliates and employees of the Company as well as other parties with conflict of interest. As such, purchasers of the Securities shall carefully weigh how such governance mechanics may adversely affect them as it pertains to their membership in the Company.
The Company’s success depends on continued innovation that make their products useful for existing and prospective customers, but there is no guarantee that the Company’s investments in its technologies and the development thereof will provide it with the benefits it expects. The Company’s technologies must integrate with a variety of network, hardware, mobile, and software platforms and technologies, and the Company may need to often modify and enhance its services to adapt to changes and innovation in these technologies. Any failure of the Company to operate effectively with future infrastructure platforms and technologies could reduce the demand for its services.
Txtsmarter’s MetaSnippetTM technology is newly developed and is only now being introduced to customers. The Company’s customer care and customer experience, as well as the quality and value of the technology itself are critical to the Company’s ability to attract and retain customers.
The Company’s ability to increase its revenue and grow its business is partially dependent on the widespread acceptance of their products and solutions by large businesses and other commercial organizations. The Company may need to spend significant time and resources to better educate and familiarize these potential customers with the value proposition of its products and solutions. The length of the Company’s sales cycle for these customers from initial evaluation to payment for the Company’s offerings will vary substantially from customer to customer and from offering to offering. Customers will often require considerable time to evaluate, test, and qualify the Company’s offerings prior to adopting the Company’s offerings. The timing of the Company’s sales with its enterprise customers and related revenue recognition will be difficult to predict because of the length and unpredictability of the sales cycle for these customers. During the sales cycle, the Company will expend significant time and money on sales and marketing and contract negotiation activities, which may not result in a sale. Additional factors that may influence the length and variability of the Company’s sales cycle include: the effectiveness of its sale force; the discretionary nature of purchasing and budget cycles and decisions; the obstacles placed by customers’ procurement process; economic conditions and other factors impacting customer budgets; the customer’s integration complexity; the customer’s familiarity with communications surveillance and compliance processes, and evolving customer demands.
Any substantial decline in the demand for products sold by the Issuer may cause a decline in the market value of Issuer's product and negatively impact the Issuer's financial performance.
Pricing for the Txtsmarter platform may vary significantly depending on market conditions. This may negatively impact its financial performance.
The Issuer's activities are subject to international, federal, and state laws. The Issuer's activities are expected to have a variety of regulatory oversight as development proceeds. Development of any of the Issuer's operations will be dependent on the Issuer satisfying regulatory guidelines and, where required, being approved by governmental authorities. The Issuer 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.
The Company competes with others in the industry. Competitors include companies that may have greater financial and other resources than the Company. Additionally, these competitors could use strategies to prevent the Company from achieving its objectives and may gain market share. This may have a material adverse impact on the financial position of the Company.
Any negative changes in economic conditions could have a material adverse effect on the Company's business.
Due to the size of the organization, the Issuer has a significant reliance on certain key employees, particularly Edward Green, Sabine Zimmerhansl, Sanjay Malhotra, and Hugh Cumberland. If the Issuer is unable to retain key employees it could jeopardize the Issuer's ability to implement its business plan, its relationships with its customers, and its financial stability.
The Issuer expects to continue to grow its overall operations and this may strain the Issuer's resources. Any inability to manage growth effectively would have a material adverse effect on the Issuer's business.
The Issuer 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 Investors 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.
The financial projections contained in this Offering Summary and any supplements represent the Issuer'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.
The Company has not requested and will not request any tax ruling from the IRS regarding the tax consequences of the Company's activities. Accordingly, there is no certainty as to the tax consequences of participating in the Security. The Company has not sought or obtained a legal opinion with respect to the tax treatment of the offering proceeds or issuance of the Security. Accordingly, Investors are urged to consult your own tax advisor with respect to the federal and state tax consequences arising from participation in this Offering.
There is a possibility that the IRS will audit the Company's income tax returns. If the Company's income tax returns are audited, your return might also be audited.
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 Offering.
Potential investors should not rely exclusively on one aspect of the security structure when making an investment decision on whether or not to participate in this Offering.
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 Securities.
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.
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 through them, which may result in a higher placement fee. The Firms will receive the placement fee regardless of your investment performing as expected.
Administrative Agent Services: CFG Financial Services, LLC, an affiliate of our firms, will act as Administrative agent for the securities while they are outstanding. Given that our firms have an interest in providing recurring services to the Issuer, while the administrative agent looks after the interests of investors, there may be a conflict of interest between the firms and its affiliates.
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 Firms’ bankers are often compensated by receiving a percentage of the placement fee, and may have their own conflict of interest when presenting you with offerings they structure.
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.
THIS OFFERING PACKAGE MAY CONTAIN MARKET AND INDUSTRY DATA THAT HAS BEEN OBTAINED FROM INDEPENDENT INDUSTRY SOURCES AND PUBLICATIONS, AS WELL AS FROM RESEARCH AND THIRD-PARTY AND GOVERNMENTAL REPORTS AND PUBLICATIONS PREPARED FOR OTHER PURPOSES. ALTHOUGH IT IS BELIEVED THAT THESE SOURCES ARE RELIABLE, THE DATA OBTAINED FROM THESE SOURCES HAS NOT BEEN INDEPENDENTLY VERIFIED AND THE ACCURACY OR COMPLETENESS OF THE DATA CANNOT BE ASSURED. FORECASTS OR FORWARD-LOOKING DATA OBTAINED FROM THESE SOURCES ARE SUBJECT TO THE SAME QUALIFICATIONS AND ADDITIONAL UNCERTAINTIES REGARDING THE OTHER FORWARD-LOOKING STATEMENTS IN THIS OFFERING PACKAGE.
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.
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