Some providers of messaging apps, in particular Apple with iMessaging, have not enabled third-party communication technology providers to create archival solutions that meet regulatory compliance.
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.
SnippetSentry was founded in August 2022 when it purchased assets from Txtsmarter, Inc., which provided the technical foundation to build a scalable SaaS platform. Additionally, it acquired employees with the technical depth needed to develop the service. Since its inception, the company has focused on creating a robust, scalable core. This focus has enabled the company to contract with many leading financial institutions.
SnippetSentry's proprietary service functions across four stages once a mobile device is connected:
SnippetSentry has streamlined its sales process to focus on ideal-fit prospects, increasing sales velocity in the pipeline. By eliminating “pilots” and “trials” and negotiating Master Service Agreements (MSAs) with seat deployment commitments and limited exit options, they have also eliminated the risk that customers linger in extended trial periods. Additionally, rolling out a Product-Led Growth (PLG) strategy has enhanced lead generation and deal activity, particularly in the mid-market segment.
Since April 2024, the Company has more than doubled the forecasted seats in its sales pipeline thanks to a targeted effort to engage channels. This strategy has successfully added over 30,000 seats into the pipeline for the next 12 months, whose contract value represents more than $2.1 million.
As product development advances and channels become more engaged, seat growth is expected to accelerate accordingly.
SnippetSentry has established a relationship with Archive 360, a key enterprise channel partner, facilitating the introduction to McKinsey & Co. This gives the Company visibility into more than 5,000 seats. The collaboration is progressing from a sandbox to a pilot phase and eventually to full deployment, with plans for expansion in Q3 2024.
Another significant enterprise channel partner, Symphony, with a portfolio of 600,000 seats, is turning to SnippetSentry to fill their iMessage and WhatsApp gaps. The initial scope of the partnership will likely include key prospects such as JPMorgan Chase or Wells Fargo.
Currently, the team manages two pipelines, one for direct sales and a second for partners/channels.
Across the direct sales pipeline, there has been a significant increase in the number of seats forecast since the arrival of the new CRO, Jeremiah Smith. Roughly 7,500 seats are forecast across this pipeline. As of May 1st, 2024, the seat forecast has more than doubled versus the forecast in mid-March 2024. The newly instituted sales process has also increased the velocity of deals through the pipeline. The sales team started May with a projection of 9 closed deals representing 1020 seats: 3 of the 9 deals have already closed, while the remaining 6 have verbally committed closing dates with MSAs going through redlines. This quarter, the direct sales pipeline will forecast adding another 2,500 seats above the current active seat count of 739. By the end of June, the team is forecasting +3,000 active seats on the platform. That would represent more than 400% growth quarter over quarter.
Below is a screenshot of the current customer pipeline taken from the SnippetSentry CRM.
Additionally, the channel pipeline represents an exponential growth opportunity. Currently, the team has secured or is negotiating partnerships with 5 prominent partners, where SnippetSentry has demonstrated a quantifiable value-add to their product mix. The channel pipeline has grown to include more than 30,000 seats in the forecast. Opportunities include a mix of enterprise and mid-market prospects. Some of these partnerships require further integration before these opportunities can be realized. Management is confident it will meet the integration schedules, meeting the revenue growth expectation for 2H2024.
Below is a screenshot of the current channel pipeline taken from the SnippetSentry CRM.
The financial market is rapidly adopting mobile messaging capture technology, making the market a land grab. There are a few players in the mobile message capture market, but management believes it has a significant technological advantage. The following is a discussion of those players and their positions relative to SnippetSentry.
LeapXpert has been a direct competitor in the market for 2 years. The company offers a service similar to SnippetSentry. Management believes that the limitation of their solution is the difficulty of onboarding users. The process is very cumbersome and requires considerable time and IT support. Over time, management believes they will introduce a smoother, faster onboarding process similar to that of SnippetSentry. SnippetSentry management believes that SnippetSentry has more than a 6-month technological lead.
GlobalRelay is the dominant email archiving solution in the marketplace. They announced their intention to offer a mobile messaging service integral to their product. The initial announcement was made over a year ago; they have not yet shipped a solution. SnippetSentry archives to their system and has several customers who use the Global Relay archive endpoint. Management is unaware of when the product will be in the market and what form the service will take.
FrimScribe is a small company founded in 2007 to monitor text messages for parents with children. Recently, they announced a capture solution at FINRE in Washington, DC. Management believes they lack the scalability and features set to be competitive in the marketplace. Their cost structure is well above the customer-indicated threshold, which management believes will limit their market presence.
Carofin, LLC ("Carofin") is offering up to $5,000,000 of Class A-3 Convertible Preferred Units (the "Offering", "Securities", or "Class A-3 Units") in SnippetSentry, LLC ("SnippetSentry", 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
SnippetSentry, LLC (the "Company"), a North Carolina limited liability company.
Class A-3 Preferred Units (the "Securities" or “Class A-3 Units”) of SnippetSentry, 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 $5,000,000 of Class A-3 Units will be issued on a continuous basis.
The pre-money valuation for this Offering is $15,000,000 ($1.6018 per unit). The implied post-money valuation is $23,961,351, including approximately 18.66% of the Company’s capitalization reserved for the creation of an employee incentive plan (the “Plan”).
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 upon full funding of the Offering or upon a decision by the Company to terminate the Offering.
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 Securities will be "restricted securities," as defined in Rule 144 under the Securities Act, and will not be transferrable unless subsequently registered under the Securities Act or an exemption from such registration is available. Subject to compliance with law, limited exceptions may be made for transfers (1) not involving a change in beneficial ownership or (2) by an entity without consideration to (x) a parent, subsidiary or other affiliate of the holder that is an entity or (y) any of its partners, members or other equity owners, or to the estate of any of its partners, members or other equity owners, or (3) transfers in compliance with Rule 144 under the Securities Act, as long as the Company is furnished with reasonably satisfactory evidence of compliance with such rule. The Company may refuse any transfer, including a permitted transfer, if the Company reasonably determines that, as a result of such transfer, the Company would become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.
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 18.66% of the Company’s post-money, fully diluted capitalization shall be reserved for an employee incentive plan (the “Plan”) 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 up to 382,876 common units of the Company, assuming the full funding of the Offering. 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.
North Carolina
An investment in the Securities involves certain risks. You should carefully consider all of the following risk factors, in addition to all of the information contained in this Offering Package prior to investing in the Securities. The risk factors described below are not the only ones facing the Company. Additional risk factors not presently known to the Company or that the Company currently deem immaterial may also impair their 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. The investment in the securities offered hereby is highly speculative, involves a high degree of risk, and should not be made by persons who cannot afford to lose their entire investment.
The Company was formed in 2022 and has, since then, been developing its products and creating its technology through extensive research and development. However, it has limited operational history and cannot fully evaluate its business and prospects. Investors in the Securities must consider the risks and uncertainties frequently encountered by early stage companies like this. If the Company is unsuccessful in addressing these risks and uncertainties, its business will be seriously harmed or may fail.
The Company is in the process of implementing its business model. It is still in the early stages of developing its business strategy, sales and implementation practices, technological capabilities, customer relationships and marketing focus. The Company faces a number of challenges, including a lack of meaningful historical financial data upon which to plan future budgets, competition from a wide range of sources, the need to develop customer relationships and other risks. The Company may not be able to successfully implement its business model.
Since its inception, the Company has generated limited operational revenues and has incurred only losses, principally from costs relating to research and development, legal expenses, and salaries and consulting fees. The Company expects to continue to incur net operating losses for the foreseeable future. Its business model and strategies may not be successful and there is no assurance that the Company will ever become profitable in any future period.
The Company plans to continue to expend substantial capital in connection with the development of its products or sales process. If it fails to obtain the funding necessary to fund such development and to satisfy its working capital needs, the Company may have to delay its plans and miss its market opportunities. The Company’s current operating plan could change as a result of many known and unknown factors and may require additional funding. In addition, the Company may choose to raise additional capital due to favorable market conditions or strategic considerations even if it has sufficient funds for its current operating plan. To the extent available capital resources are insufficient to meet future capital requirements, the Company will have to seek additional funds to continue with its expansion plan. There can be no assurance that such funds will be available on favorable terms, or at all. If adequate funds are not available, the Company may be required to curtail operations significantly or even altogether. The Company’s inability to raise capital on favorable terms could have a material adverse effect on its business, financial condition and results of operations.
Under most conditions, the Company’s officers and directors may not be held liable for errors in judgment or other acts or omissions made by them as representatives of the Company because of provisions in its operating agreement holding them harmless and providing them with indemnification against liabilities or losses that arise from such acts or omissions. To the extent that such indemnification provisions are invoked, then Company’s assets could be reduced and its business could be impaired.
The Company’s inability to manage its growth effectively could affect its ability to pursue business opportunities and expand its business. As the Company increases the commercialization of its products and its operations grow, it will need to hire a significant number of additional employees. This growth may place strain on its management and operations. The Company’s ability to manage growth will depend on the ability of its officers and key employees to implement and improve the Company’s operational, management information, sales and marketing and financial control systems and to expand, train and manage its work force. The Company believes that competition for qualified technical, sales, marketing and managerial personnel will be intense. The Company’s ability to implement its business plan could be adversely affected if it is unable to hire and retain qualified personnel as needed.
The Company is highly dependent on the efforts and abilities of its CEO, Edward Green. The loss of its CEO or any of its other officers or key employees could have a material adverse effect on its financial condition, existing business, or anticipated growth.
The Company increasingly relies on information technology systems to process, transmit and store electronic information. The future success and growth of its business depends on streamlined processes made available through information systems, global communications, internet activity and other network processes.
The Company’s information technology systems, and those of its third-party service providers, may be vulnerable to information security breaches, acts of vandalism, computer viruses and interruption or loss of valuable business data. Stored data might be improperly accessed due to a variety of events beyond the Company’s control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. The Company has technology security initiatives and disaster recovery plans in place to mitigate its risk to these vulnerabilities, but these measures may not be adequate or implemented properly to ensure that its operations are not disrupted or that data security breaches do not occur.
Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Any breach of the Company’s network may result in damage to its reputation, the loss of valuable business data, misappropriation of its consumers' or employees' personal information, product fulfillment delays, key personnel being unable to perform duties or communicate throughout the organization, loss of sales, significant costs for data restoration and other adverse impacts on its business. Despite the Company’s existing security procedures and controls, if its network was compromised, it could give rise to unwanted media attention, materially damage its customer relationships, harm its business, reputation, results of operations, cash flows and financial condition, result in fines or lawsuits, and may increase the costs it incurs to protect against such information security breaches, such as increased investment in technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud.
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.
SnippetSentry’s 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.
The Company will have to compete on the basis of price and performance with product offerings from service providers that are already well-established in the marketplace. The domestic market for the Company’s products is intensely competitive and is also characterized by frequent introductions of new or enhanced products, price competition, continued emergence of new industry standards and regulatory developments. Some of the Company’s potential competitors have longer operating histories, substantially greater financial, technical, sales, marketing and other resources, established name recognition and an existing customer base. Competitors with an established customer base will have a significant competitive advantage over the Company by virtue of their existing sales channels and ability to create repeat business.
The Company relies on a combination of patent, copyright, trademark and trade secret laws, and confidentiality procedures to establish and protect its proprietary rights. Policing unauthorized use of its technologies will be difficult and the Company cannot be certain that the steps it has taken will prevent the misappropriation or unauthorized use of its technologies, particularly in foreign countries where the laws may not protect its proprietary rights as fully as United States law. The Company’s competitors may independently develop or may have already developed similar technology, duplicate the Company’s products or design around its other intellectual property rights.
The Company will also rely on trade secrets and new technologies developed by its employees and consultants to maintain its competitive position. Although the Company has confidentiality and intellectual property protections inherent in employee relationships, it cannot be certain that these protections will be effective in preventing them and others from misappropriating its trade secrets.
The Company’s success will, in part, depend on its ability to operate without infringing on the proprietary rights of others. It may not be able to do this successfully. Although the Company has conducted searches and are not aware of any patents and trademarks which its products or their use might infringe, it cannot be certain that infringement has not or will not occur. The Company would incur substantial costs in defending infringement lawsuits or in asserting rights in a lawsuit against another party.
The Securities offered through this Offering will not be registered or qualified under federal and state securities laws or the securities laws of any foreign jurisdiction. The Company anticipates that no regulatory authority or other disinterred entity will review or pass upon the fairness of the disclosure of risks and tax consequences inherent in the investment in the Securities or the other terms of this Offering. Prospective investors should be aware that they do not have all of the protection afforded by applicable federal and state securities laws to investors in registered or qualified offerings. Accordingly, all investors must evaluate for themselves, or with the assistance of their advisors, attorneys, and accountants, the adequacy of the disclosures and the fairness of the other terms of this Offering without the benefit of prior review by any regulatory authority or other disinterested entity.
Management will have broad discretion to spend or invest the proceeds from this offering in ways with which new investors may not agree.
While certain rights in the Company’s operating agreement afford the Investors herein certain protections against future dilution, it is likely that the Company will require additional funding, and existing investors will likely have to make an additional capital contribution to benefit from such protections.
The Company is not obligated to make distributions of cash or other property on any of the Securities and it has no present intention of making any such distributions. The Company intends to retain any earnings in the foreseeable future to finance the growth and development of the business.
An investment in the Company is a long-term, speculative commitment. No public market for the Securities exists and no assurance can be made that any such public market will develop in the future. Consequently, investors may not be able to resell any of the Securities sold in this offering. Each purchaser of the Securities will be required to represent that it is an accredited investor and that it is purchasing the Securities for its own account for investment purposes and not with a view to resale or distribution. The Securities have not been nor will be registered under the Securities Act or under any state securities laws, and the Company is under no obligation to register any of the Securities. No transfer of the Securities may be made unless an exemption to such registration applies to any such transfer. See "Transfer Restrictions" under "Security Terms" for more information. Accordingly, investors must be ready to hold the Securities for an indefinite period of time and must be able to bear a risk of total loss of their entire investment.
The offering price of the Securities is not necessarily indicative of their value, and it is not anticipated that there will be any market for resale of the Securities. As a result, you may be unable to sell or otherwise dispose of your Securities should you desire to liquidate your investment in the event of an emergency or other financial need.
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.
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.
The foregoing risks, as well as other risks described in this Offering Package are not an all-inclusive listing of the business and other risks facing the Company. As with any business entity, the Company cannot predict with certainty all the possible challenges which may confront the Company’s business in future years. It is possible that events or conditions not foreseeable at present and which may not be subject to control by the Company may occur in the future and have an adverse impact on the ability of the Company to carry out its business objectives in a profitable manner.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THE SECURITIES OFFERED HEREUNDER INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THE SUBSTANTIAL RISKS SET FORTH IN THIS OFFERING PACKAGE. THESE SECURITIES SHOULD ONLY BE PURCHASED BY PERSONS WHO CAN AFFORD TO ABSORB A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY.
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.
Warrant Position: Carolina financial Securities and Carofin will be issued a warrant to purchase certain ownership interests in the Company upon closing of the Offering. The financial interests associated with the conversion of such warrants may result in a conflict of interest regarding the timing of exit opportunities, as the exercise of such warrants is often predicated upon the realization of a business combination or other exit transaction.
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 Company 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.
SECURITIES MATTERS
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.
A Carofin representative will be in touch soon.
Carolina Financial Securities, LLC and Carofin, LLC (“CFS” and “Carofin”, respectively) are affiliated broker-dealers registered with the Securities and Exchange Commission and members of FINRA and SIPC. The fees and services broker-dealers offer differ across the industry and it is important for you to understand such differences.
Free and simple tools to research firms and financial professionals are available at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.
You will find certain pertinent questions you may ask us when first establishing a relationship listed as “conversation starters” below. We invite you to visit our Knowledge Base for educational materials on private investments.
Our firms offer brokerage services to accredited investors, exclusively through the sale of private placements. A private placement is an offering of securities that is exempt from registration with the Securities and Exchange Commission and carries significant risks, which may result in the loss of some or all of your investment. Such risks include, but are not limited to, the inability to sell your investment for cash, the lack of publicly available information on the company issuing the security, and no guarantees of returns or periodic payments.
Our firms carefully select the offerings they bring to market, 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. An affiliate of CFS and Carofin, CFG Financial Services, does, however, act as administrative agent for many offerings we bring to market. In this role, CFG Financial Services will monitor an issuer’s compliance with its obligations, make distributions of periodic payments, and, when necessary, intervene in the event that things are not going to plan. When this happens, CFG Financial Services is often compensated by part of the proceeds recovered in settlement or bankruptcy proceedings, which may reduce the return on your investment.
The investments we present often require a minimum investment of $5,000 for equity offerings and $10,000 for debt offerings.
Conversation Starters:You will pay fees and costs whether you make or lose money on your investments. Fees and costs may reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.
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%. Given that different investments have different placement fees, we may often have a conflict of interest when presenting these investments to you.
Given that our placement fees are payable by the issuer, the full amount of your investment will be used to purchase debt or equity securities, even though a certain amount of the proceeds may be immediately redirected by the issuer to CFS and Carofin as placement fees.
Conversation Starters: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.
Management Fees: Our firms will often present investments in which Carolina Financial Group, LLC an affiliate of CFS and Carofin, acts a manager of the company. CFG will often be compensated for such services.
Warrant Position: Our firms will often receive a warrant (an option to purchase an equity security in the future, for a defined price) for certain securities. Given that our firms, or other equity holders in the company, may have an investment time horizon that differs from yours, this may create a conflict of interest.
Equity Trust Company Relationship: Carofin and Equity Trust Company (“ETC”) have entered into an agreement by which Carofin exclusively promotes ETC’s services as IRA custodian, in exchange for the sharing of certain Carofin content by ETC. You can learn more about the services ETC offers, along with the fees associated with such services, at trustetc.com.
Conversation Starters:Our firms have different compensation structures.
CFS financial professionals, which are often the individuals working with the company to structure an appropriate security, receive a percentage of the placement fee received by CFS in the investments they structure. Therefore, these professionals have an interest in presenting you with the investments they have structured.
Carofin financial professionals, on the other hand, are the individuals responsible for understanding and presenting these investments to you. While Carofin professionals are compensated through discretionary bonuses, they may have an interest in presenting you with investments which may result in a higher placement fee to the firm overall.
Yes. You have access to a free and simple tool to research our firms and financial professionals at Investor.gov/CRS.
Conversation Starters:You may learn more about our brokerage services and request a copy of this relationship summary at Carofin.com. You may also contact us directly at 828.393.0088 or compliance@carofin.com to request up-to-date information and a copy of this relationship summary. We also encourage you to visit our Knowledge Base for additional educational information on private investments.
Conversation Starters:Form CRS – October 12th, 2020, Ver. 2.0
PRIVATE PLACEMENTS ARE HIGH RISK AND ILLIQUID INVESTMENTS. AS WITH OTHER INVESTMENTS, YOU CAN LOSE SOME OR ALL OF YOUR INVESTMENT.
Securities offered through Carofin, LLC. Carofin, LLC and Carolina Financial Securities, LLC are affiliated Broker-Dealers, Members of FINRA/SIPC, and subsidiaries of Carolina Financial Group, LLC. For more information on the services we offer and details associated with such services, please see our Customer Relationship Summary.
This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Craig Gilmore at 828.393.0088 x 520 and/or cgilmore@carofin.com
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 webpage 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 on this webpage or otherwise offered through Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offers of sale.
Carolina Financial Securities and Carofin only offer one type of alternative investment, those sold as private placements. Nothing on this website should be interpreted to state or imply that past results are an indication of 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 on this website. 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 impaired if it is sold.
© Copyright 2024 Carofin. All Rights Reserved
