THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED IN THIS SAFE AND UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
FILMIO STUDIOS INC.
SAFE
(Simple Agreement for Future Equity)
THIS CERTIFIES THAT in exchange for the payment by _____________________ (the “Investor”) of $ ______________ (the “Purchase Amount”) on or about _________________ _____, 2025, Filmio Studios Inc., a Delaware corporation (the “Company”), issues to the Investor the right to certain shares of the Company’s Capital Stock, subject to the terms described below.
The “Discount Rate” is 80%.
See Section 2 for certain additional defined terms.
1. Events
(a) Equity Financing. If there is an Equity Financing before the termination of this Safe, on the initial closing of such Equity Financing, this Safe will automatically convert into the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Discount Price.
In connection with the automatic conversion of this Safe into shares of Safe Preferred Stock, the
Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; provided, that such documents (i) are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and indemnification obligations for the Investor.
(b) Liquidity Event. If there is a Liquidity Event before the termination of this Safe, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If any of the Company’s securityholders are given a choice as to the form and amount of Proceeds to be received in a Liquidity Event, the Investor will be given the same choice, provided that the Investor may not choose to receive a form of consideration that the Investor would be ineligible to receive as a result of the Investor’s failure to satisfy any requirement or limitation generally applicable to the Company’s securityholders, or under any applicable laws.
Notwithstanding the foregoing, in connection with a Change of Control intended to qualify as a
tax-free reorganization, the Company may reduce the cash portion of Proceeds payable to the Investor by the amount determined by its board of directors in good faith for such Change of Control to qualify as a tax-free reorganization for U.S. federal income tax purposes, provided that such reduction (A) does not reduce the total Proceeds payable to such Investor and (B) is applied in the same manner and on a pro rata basis to all securityholders who have equal priority to the Investor under Section 1(d).
(c) Dissolution Event. If there is a Dissolution Event before the termination of this Safe, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds equal to the Cash-Out Amount, due and payable to the Investor immediately prior to the consummation of the Dissolution Event.
(d) Liquidation Priority. In a Liquidity Event or Dissolution Event, this Safe is intended to operate like standard non-participating Preferred Stock. The Investor’s right to receive its Cash-Out Amount is:
(i) Junior to payment of outstanding indebtedness and creditor claims, including contractual claims for payment and convertible promissory notes (to the extent such convertible promissory notes are not actually or notionally converted into Capital Stock);
(ii) On par with payments for other Safes and/or Preferred Stock, and if the applicable Proceeds are insufficient to permit full payments to the Investor and such other Safes and/or Preferred Stock, the applicable Proceeds will be distributed pro rata to the Investor and such other Safes and/or Preferred Stock in proportion to the full payments that would otherwise be due; and
(iii) Senior to payments for Common Stock.
The Investor’s right to receive its Conversion Amount is (A) on par with payments for Common Stock and other Safes and/or Preferred Stock who are also receiving Conversion Amounts or Proceeds on a similar as-converted to Common Stock basis, and (B) junior to payments described in clauses (i) and (ii) above (in the latter case, to the extent such payments are Cash-Out Amounts or similar liquidation preferences).
(e) Termination. This Safe will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this Safe) immediately following the earliest to occur of: (i) the issuance of Capital Stock to the Investor pursuant to the automatic conversion of this Safe under Section 1(a); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 1(b) or Section 1(c).
2. Definitions
“Capital Stock” means the capital stock of the Company, including, without limitation, the “Common Stock” and the “Preferred Stock.”
“Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of1934, as amended), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company’s board of directors, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.
“Direct Listing” means the Company’s initial listing of its Common Stock (other than shares of Common Stock not eligible for resale under Rule 144 under the Securities Act) on a national securities exchange by means of an effective registration statement on Form S-1 filed by the Company with the SEC that registers shares of existing capital stock of the Company for resale, as approved by the Company’s board of directors. For the avoidance of doubt, a Direct Listing will not be deemed to be an underwritten offering and will not involve any underwriting services.
“Discount Price” means the lowest price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate.
“Dissolution Event” means (i) a voluntary termination of operations, (ii) a general assignment for
the benefit of the Company’s creditors or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary.
“Dividend Amount” means, with respect to any date on which the Company pays a dividend on its outstanding Common Stock, the amount of such dividend that is paid per share of Common Stock multiplied by (x) the Purchase Amount divided by (y) the Liquidity Price (treating the dividend date as a Liquidity Event solely for purposes of calculating such Liquidity Price).
“Equity Financing” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed valuation, including but not limited to, a pre-money or post-money valuation.
“Initial Public Offering” means the closing of the Company’s first firm commitment underwritten initial public offering of Common Stock pursuant to a registration statement filed under the Securities Act.
“Liquidity Event” means a Change of Control, a Direct Listing or an Initial Public Offering.
“Liquidity Price” means the price per share equal to the fair market value of the Common Stock at the time of the Liquidity Event, as determined by reference to the purchase price payable in connection with such Liquidity Event, multiplied by the Discount Rate.
“Proceeds” means cash and other assets (including without limitation stock consideration) that are proceeds from the Liquidity Event or the Dissolution Event, as applicable, and legally available for distribution.
“Safe” means an instrument containing a future right to shares of Capital Stock, similar in form and content to this instrument, purchased by investors for the purpose of funding the Company’s business operations. References to “this Safe” mean this specific instrument.
“Safe Preferred Stock” means the shares of the series of Preferred Stock issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences, seniority, liquidation multiple and restrictions as the shares of Standard Preferred Stock, except that any price-based preferences (such as the per share liquidation amount, initial conversion price and per share dividend amount) will be based on the Discount Price.
“Standard Preferred Stock” means the shares of a series of Preferred Stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing.
3. Company Representations
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.
(b) The execution, delivery and performance by the Company of this Safe is within the power of the Company and has been duly authorized by all necessary actions on the part of the Company (subject to section 3(d)). This Safe constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To its knowledge, the Company is not in violation of (i) its current certificate of incorporation or bylaws, (ii) any material statute, rule or regulation applicable to the Company or (iii) any material debt or contract to which the Company is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.
(c) The performance and consummation of the transactions contemplated by this Safe do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material debt or contract to which the Company is a party or by which it is bound; or
(iii) result in the creation or imposition of any lien on any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.
(d) No consents or approvals are required in connection with the performance of this Safe, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities laws; and (iii) necessary corporate approvals for the authorization of Capital Stock issuable pursuant to Section 1.
(e) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business asnow conducted and as currently proposed to be conducted, without any conflict with, or infringement of the rights of, others.
4. Investor Representations
(a) The Investor has full legal capacity, power and authority to execute and deliver this Safe and to perform its obligations hereunder. This Safe constitutes a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.
(b) The Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act, and acknowledges and agrees that if not an accredited investor at the time of an Equity Financing, the Company may void this Safe and return the Purchase Amount. The Investor has been advised that this Safe and the underlying securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Investor is purchasing this Safe and the securities to be acquired by the Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time.
5. Miscellaneous
(a) Any provision of this Safe may be amended, waived or modified by written consent of the Company and either (i) the Investor or (ii) the majority-in-interest of all then-outstanding Safes with the same “Discount Rate” as this Safe (and Safes lacking one or both of such terms will be considered to be the same with respect to such term(s)), provided that with respect to clause (ii): (A) the Purchase Amount may not be amended, waived or modified in this manner, (B) the consent of the Investor and each holder of such Safes must be solicited (even if not obtained), and (C) such amendment, waiver or modification treats all such holders in the same manner. “Majority-in interest” refers to the holders of the applicable group of Safes whose Safes have a total Purchase Amount greater than 50% of the total Purchase Amount of all of such applicable group of Safes.
(b) Any notice required or permitted by this Safe will be deemed sufficient when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address listed on the signature page, as subsequently modified by written notice.
(c) The Investor is not entitled, as a holder of this Safe, to vote or be deemed a holder of Capital Stock for any purpose other than tax purposes, nor will anything in this Safe be construed to confer on theInvestor, as such, any rights of a Company stockholder or rights to vote for the election of directors or on any matter submitted to Company stockholders, or to give or withhold consent to any corporate action or to receive notice of meetings, until shares have been issued on the terms described in Section 1. However, if the Company pays a dividend on outstanding shares of Common Stock (that is not payable in shares of Common Stock) while this Safe is outstanding, the Company will pay the Dividend Amount to the Investor at the same time.
(d) Neither this Safe nor the rights in this Safe are transferable or assignable, by operation of law or otherwise, by either party without the prior written consent of the other; provided, however, that this Safe and/or its rights may be assigned without the Company’s consent by the Investor (i) to the Investor’s estate, heirs, executors, administrators, guardians and/or successors in the event of Investor’s death or disability, or (ii) to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor.
(e) In the event any one or more of the provisions of this Safe is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Safe operate or would prospectively operate to invalidate this Safe, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this Safe and the remaining provisions of this Safe will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby.
(f) All rights and obligations hereunder will be governed by the laws of the State of Delaware, without regard to the conflicts of law provisions of such jurisdiction.
(g) The parties acknowledge and agree that for United States federal and state income tax purposes this Safe is, and at all times has been, intended to be characterized as stock, and more particularly as common stock for purposes of Sections 304, 305, 306, 354, 368, 1036 and 1202 of the Internal Revenue Code of 1986, as amended. Accordingly, the parties agree to treat this Safe consistent with the foregoing intent for all United States federal and state income tax purposes (including, without limitation, on their respective tax returns or other informational statements).
IN WITNESS WHEREOF, the undersigned have caused this Safe to be duly executed and delivered.
FILMIO STUDIOS INC.
By:
______________________________________
Ian LeWinter
President
INVESTOR:
__________________________________________
By:
______________________________________
Name:
____________________________________
Title:
_____________________________________
Address:
__________________________________
__________________________________________
Email:
_____________________________________
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM FOR ACCREDITED INVESTORS
Filmio Studios Inc.
A Delaware Corporation
Email: invest@filmio.studio
(310) 321-9999
Simple Agreement For Future Equity
Maximum Offering - $5,000,000
Discount - 20%
February 2025
The information contained herein is confidential and private. It is for the exclusive use of persons selected by Filmio Studios Inc. Unless the context requires otherwise, in this Memorandum the terms “Filmio Studios,” the “Company,” “we,” “us” and “our” refer to Filmio Studios Inc., and all dollar ($) amounts set forth herein refer to United States dollars.
This Confidential Private Placement Memorandum (this “Memorandum”) has been prepared by Filmio Studios Inc. (the “Company” or “Filmio Studios”) for use by accredited investors (each, an “Investor” and/or “Buyer”) to whom the Company is offering in this Simple Agreement for Future Equity (individually, as “SAFE, and collectively as “SAFEs”) Offering (the “Offering”) the opportunity to sell in one or more closings up to $5,000,000 aggregate principal amount. There is no minimum number of SAFEs that must be sold. There is no minimum number of SAFEs that must be sold for the Offering to close and for subscription funds to be released to the Company.
The SAFEs may be convertible into shares of Company’s capital stock atthe Conversion Price. “Conversion Price” means the price per share of the Company’s capital stock sold in the equity financing multiplied by the discount rate of 80%. The Offering is being made by the officers of the Company, only to persons who are “accredited investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”). No commissions will be paid on any sales made by the Company’s officers.
The Company may elect to engage one or more FINRA member firms (the “Placement Agents”), as placement agents for this Offering, in which event the Placement Agents will also conduct the Offering on a “best efforts” basis, and the Company would expect in such case to pay estimated total commissions based on a percentage of the purchase price of securities acquired by Investors.
The Company will attempt to sell the SAFEs during an offering period commencing on the date of this Memorandum and expiring on the earlier to occur of (1) the date on which the Maximum Offering amount has been subscribed for and accepted by the Company and (ii) April 15, 2025 unless extended by the Company, in its sole discretion (such period being hereinafter referred to as the “Offering Period”).
This Memorandum has been prepared in connection with a private offering to accredited investors of the SAFEs. Each investor will be required to execute a Simple Agreement for Future Equity to effect its investment in the Company. This Memorandum contains a summary of the SAFEs and certain other documents referred to herein. However, the summaries in this Memorandum do not purport to be complete and are subject to and qualified in their entirety by reference to the actual text of the relevant document, copies of which are attached here or will be provided to each prospective Investor upon request. Each prospective Investor should review this Memorandum and such other documents for complete information concerning the rights, privileges and obligations of investors in the SAFEs. If any of the terms, conditions or other provisions of the other documents are inconsistent with or contrary to the descriptions or terms in this Memorandum, such other documents shall control. The Company reserves the right to modify the terms of the Offering and the SAFEs described in this Memorandum, and any subscription is subject to the Company’s ability to reject any commitment in whole or in part.
The SAFEs have not been and will not be registered under the Securities Act, or any United States state securities laws or the laws of any foreign jurisdiction. This Offering in the United States is strictly limited to accredited investors. The Company is claiming exemption from registration under Section 506(c) of Regulation D of the Securities Act.
The Company will not be registered as an investment company under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”). Consequently, Investors will not be afforded the protections of the Investment Company Act.
The SAFEs as described in this Memorandum are subject to restrictions on transferability and resale and may not be transferred or resold except as described herein. Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time. An investment in the SAFEs involves a high degree of risk, volatility and illiquidity. A prospective Investor should thoroughly review the confidential information contained herein and the terms of the SAFEs, and carefully consider whether an investment in the SAFEs is suitable to the Investor’s financial situation and goals. No person has been authorized to make any statement concerning the Company or the sale of the SAFEs discussed herein other than as set forth in this Memorandum, and any such statements, if made, must not be relied upon.
Investors should make their own investigations and evaluations of the SAFEs, including the merits and risks involved in an investment therein. Prior to any investment, the Company will give Investors the opportunity to ask questions of and receive answers and additional information from it concerning the terms and conditions of this Offering and other relevant matters to the extent the Company possesses the same or can acquire it without unreasonable effort or expense. Investors should inform themselves as to the legal requirements applicable to them in respect of the acquisition, holding and disposition of the SAFEs, and as to the income and other tax consequences to them of such acquisition, holding and disposition.
This Memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, an interest in any jurisdiction in which it is unlawful to make such an offer or solicitation. Neither the United States Securities and Exchange Commission nor any other federal, state or foreign regulatory authority has approved an investment in the SAFEs. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Memorandum, nor is it intended that the foregoing authorities will do so.
Investments in the SAFEs are denominated in United States dollars ($) and Investors may tender United States dollars in exchange for the SAFEs. Such currencies are subject to any fluctuation in the rate of exchange and, in the case of digital assets, the exchange valuations. Such fluctuations may have an adverse effect on the value, price or income of an Investor’s investment. Each recipient hereof acknowledges and agrees that (i) the contents of this Memorandum constitute proprietary and confidential information, (ii) the Company and its affiliates derive independent economic value from such confidential information not being generally known, and (iii) such confidential information is the subject of reasonable efforts to maintain its secrecy. The recipient further agrees that the contents of this Memorandum are a trade secret, the disclosure of which is likely to cause substantial and irreparable competitive harm to the Company. Any reproduction or distribution of this Memorandum, in whole or in part, or the disclosure of its contents, without the prior written consent of the Company, is prohibited. Each person who has received this Memorandum is deemed to agree to return this Memorandum to the Company upon request. The existence and nature of all conversations regarding the Company and this offering must be kept confidential. This Memorandum may not be reproduced or circulated to any persons other than those selected by the Company and its sales agents, with the exception that such recipients may show it to their professional advisors.
AN INVESTMENT IN THE SAFES INVOLVES A HIGH DEGREE OF RISK. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF US AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. YOU SHOULD ONLY INVEST IN OUR SAFES IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. YOU SHOULD READ THE COMPLETE DISCUSSION OF THE RISK FACTORS BEGINNING OF THIS MEMORANDUM.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SEE “CERTAIN NOTICES UNDER STATE SECURITIES LAWS.” THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. NO INVESTMENT IN THE SECURITIES SHOULD BE MADE BY ANY INVESTOR NOT FINANCIALLY ABLE TO LOSE THE ENTIRE AMOUNT OF ITS INVESTMENT.
RISK DISCLOSURE STATEMENT THE ATTORNEYS THAT PREPARED THESE OFFERING DOCUMENTS (THE “ATTORNEYS”) HEREBY DISCLAIM ANY OPINION OR ASSURANCE OF ANY NATURE WHATSOEVER REGARDING THE ACCURACY, COMPLETENESS, REASONABLENESS, TIMELINESS OR VERACITY OF ANY OF THE ASSERTIONS, REPRESENTATIONS OR OTHER INFORMATION CONTAINED HEREIN, WHETHER QUALITATIVE OR QUANTITATIVE, OR REGARDING THE INVESTMENT-WORTHINESS OF THE SECURITIES DISCUSSED HEREIN (THE “SECURITIES”). ANY ASSERTION OR REPRESENTATION MADE HEREIN, AND ALL OTHER INFORMATION DISCLOSED HEREIN, WHETHER QUALITATIVE OR QUANTITATIVE, HAS BEEN MADE OR PROVIDED BY THE COMPANY. IN CONNECTION WITH THE PREPARATION OF THESE CONFIDENTIAL OFFERING DOCUMENTS, THE ATTORNEYS HA VE NOT BEEN ENGAGED TO ATTEST HERETO, OR TO OPINE IN RESPECT HEREOF. ACCORDINGLY, THE ATTORNEYS HA VE NOT PERFORMED ANY ANALYTICAL, CONFIRMATION, V ALIDATION, VERIFICATION OR OTHER PROCEDURES IN RESPECT OF THE ASSERTIONS
AND REPRESENTATIONS CONTAINED HEREIN, NOR IN RESPECT OF ANY OF THE OTHER INFORMATION DISCLOSED HEREIN, INCLUDING ANY SIMILAR TO THOSE PROCEDURES UNDERTAKEN BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT IN CONNECTION WITH AN AUDIT OF THE FINANCIAL STATEMENTS OF AN ISSUER OF SECURITIES FOR PURPOSES OF RENDERING AN OPINION THEREON. CONSEQUENTLY, POTENTIAL INVESTORS, IN DECIDING WHETHER OR NOT TO INVEST IN THE SECURITIES, ARE CAUTIONED NOT TO ASCRIBE ANY SPECIAL RELIANCE WHATSOEVER ON THESE OFFERING DOCUMENTS BY REASON THAT ATTORNEYS HA VE PREPARED THESE OFFERING DOCUMENTS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EV ALUATE YOUR PARTICIPATION IN THIS COMPANY. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN AN INVESTMENT IN THIS COMPANY, YOU SHOULD CAREFULLY STUDY THESE OFFERING DOCUMENTS, INCLUDING A DISCUSSION OF THE CERTAIN RISK FACTORS OF THIS INVESTMENT.
TABLE OF CONTENTS
RISK DISCLOSURE STATEMENT_______________________________________________ 4
JURISDICTIONAL NOTICES __________________________________________________ 10
FOR RESIDENTS OF ALL STATES:_____________________________________________ 10
INVESTOR NOTICES GENERALLY ____________________________________________ 25
NOTICES, CONFIDENTIALITY AND RELATED MATTERS________________________ 27
NOTICE REGARDING FORWARD-LOOKING STATEMENTS_____________________27
ADDITIONAL INFORMATION_________________________________________________28
SUMMARY OF THE OFFERING________________________________________________28
Tax Considerations___________________________________________________________32
THE COMPANY OVERVIEW__________________________________________________ 33
MANAGEMENT______________________________________________________________ 39
CERTIFICATE OF INCORPORATION & BYLAWS________________________________ 41
TERMS OF THE OFFERING___________________________________________________42
PLAN OF DISTRIBUTION_____________________________________________________48
RISK FACTORS______________________________________________________________49
STATEMENT AS TO INDEMNIFICATION_______________________________________ 68
FEDERAL INCOME TAX CONSEQUENCES_____________________________________69
LEGAL MATTERS___________________________________________________________ 72
CERTAIN NOTICES REGARDING THESE OFFERING DOCUMENTS AND UNDER
STATE SECURITIES LAWS
FOR RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HA VE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE, AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SET FORTH IN SECTION 4(A)(2) THEREOF
AND RULE 506(C) OF REGULATION D PROMULGATED THEREUNDER TO
ACCREDITED INVESTORS. RULE 506 OF REGULATION D SETS FORTH CERTAIN
RESTRICTIONS AS TO THE NUMBER AND NATURE OF PURCHASERS OF
SECURITIES OFFERED PURSUANT THERETO. WE HA VE ELECTED TO SELL
SECURITIES IN THE UNITED STATES ONLY TO ACCREDITED INVESTORS AS SUCH
TERM IS DEFINED IN RULE 501(A) OF REGULATION D. EACH PROSPECTIVE
INVESTOR WILL BE REQUIRED TO MAKE REPRESENTATIONS AS TO THE BASIS
UPON WHICH IT QUALIFIES AS AN ACCREDITED INVESTOR. PURSUANT TO RULE
506(C), INDEPENDENT VERIFICATION WILL BE REQUIRED.
THE SECURITIES OFFERED HEREBY WILL BE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. ONLY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT
IN THE SECURITIES SHOULD PURCHASE THE SECURITIES.
THE SECURITIES OFFERED HEREBY HA VE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION (“SEC”), NOR HAS THE SEC OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THESE OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE INFORMATION PRESENTED HEREIN WAS PRESENTED AND SUPPLIED SOLELY
BY FILMIO STUDIOS INC. AND IS BEING FURNISHED SOLELY FOR USE BY
PROSPECTIVE INVESTORS IN CONNECTION WITH THE OFFERING. FILMIO
STUDIOS INC. MAKES NO REPRESENTATIONS AS TO THE FUTURE PERFORMANCE
OF FILMIO STUDIOS INC. THESE OFFERING DOCUMENTS WERE PREPARED BY
FILMIO STUDIOS INC.
THIS OFFERING IS SUBJECT TO WITHDRAWAL, CANCELLATION OR MODIFICATION
BY FILMIO STUDIOS INC. AT ANY TIME AND WITHOUT NOTICE. WE RESERVE THE
RIGHT IN OUR SOLE DISCRETION TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN
PART NOTWITHSTANDING TENDER OF PAYMENT OR TO ALLOT TO ANY
PROSPECTIVE INVESTOR LESS THAN THE NUMBER OF SECURITIES SUBSCRIBED
FOR BY SUCH INVESTOR.
THESE OFFERING DOCUMENTS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE
SECURITIES OFFERED HEREBY , NOR DOES IT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY SUCH SECURITIES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THESE OFFERING DOCUMENTS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS
SINCE THE DATE HEREOF. THESE OFFERING DOCUMENTS CONTAIN SUMMARIES
OF CERTAIN PERTINENT DOCUMENTS, APPLICABLE LAWS AND REGULATIONS.
SUCH SUMMARIES ARE NOT COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY
BY REFERENCE TO THE COMPLETE TEXTS THEREOF.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THESE
OFFERING DOCUMENTS AS LEGAL OR TAX ADVICE. EACH PROSPECTIVE
INVESTOR SHOULD CONSULT HIS OR HER OWN COUNSEL, ACCOUNTANT AND
OTHER ADVISORS AS TO LEGAL, TAX AND RELATED MATTERS PRIOR TO
PURCHASING ANY SECURITIES.
FILMIO STUDIOS INC. DOES NOT MAKE ANY EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS OF
THE INFORMATION CONTAINED IN THESE OFFERING DOCUMENTS OR IN ANY
ADDITIONAL EV ALUATION MATERIAL, WHETHER WRITTEN OR ORAL, MADE
A V AILABLE IN CONNECTION WITH ANY FURTHER INVESTIGATION OF FILMIO
STUDIOS INC. FILMIO STUDIOS INC. EXPRESSLY DISCLAIMS ANY AND ALL
LIABILITY THAT MAY BE BASED UPON SUCH INFORMATION, ERRORS THEREIN OR
OMISSIONS THEREFROM. ONLY THOSE PARTICULAR REPRESENTATIONS AND
WARRANTIES, IF ANY , WHICH MAY BE MADE TO A PARTY IN A DEFINITIVE
WRITTEN AGREEMENT REGARDING A TRANSACTION INVOLVING FILMIO
STUDIOS INC., WHEN, AS AND IF EXECUTED, AND SUBJECT TO SUCH LIMITATIONS
AND RESTRICTIONS AS MAY BE SPECIFIED THEREIN, WILL HA VE ANY LEGAL EFFECT. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED TO THE CONTRARY IN
WRITING, THESE OFFERING DOCUMENTS SPEAK AS OF THE DATE HEREOF.
NEITHER THE DELIVERY OF THESE OFFERING DOCUMENTS NOR ANY SALE OF
SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
FILMIO STUDIOS INC. AFTER THE DATE HEREOF.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THESE OFFERING
DOCUMENTS IN CONNECTION WITH THE OFFERING OF SECURITIES BEING MADE
PURSUANT HERETO, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HA VING BEEN AUTHORIZED
BY FILMIO STUDIOS INC.
THERE IS NO MARKET FOR OUR SECURITIES AND THERE IS NO ASSURANCES A
PUBLIC MARKET WILL EVER BE ESTABLISHED. PURCHASERS OF THE SECURITIES
ARE NOT BEING GRANTED ANY REGISTRATION RIGHTS. A PURCHASE OF THE
SECURITIES SHOULD BE CONSIDERED AN ILLIQUID INVESTMENT.
BY ACCEPTING DELIVERY OF THESE OFFERING DOCUMENTS, EACH
PROSPECTIVE INVESTOR HEREBY EXPRESSLY AGREES WITH FILMIO STUDIOS
INC. TO KEEP CONFIDENTIAL ALL OF THE CONTENTS HEREOF, INCLUDING, BUT
NOT LIMITED TO, THE OFFERING AND ALL INFORMATION RELATED TO FILMIO
STUDIOS INC., AND NOT TO DISCLOSE THE SAME TO ANY THIRD PARTY AND/OR
OTHERWISE USE THE SAME FOR ANY PURPOSE OTHER THAN AN EV ALUATION BY
SUCH OFFEREE OF A POTENTIAL INVESTMENT IN FILMIO STUDIOS INC. OF THE
SECURITIES OFFERED PURSUANT HERETO. WE HA VE CAUSED THESE OFFERING
DOCUMENTS TO BE DELIVERED TO YOU IN RELIANCE UPON SUCH AGREEMENT
BY YOU.
EACH PROSPECTIVE SUBSCRIBER BY RECEIVING THESE OFFERING DOCUMENTS
AGREES TO RETURN THE SAME TO US IF (A) THE OFFEREE DOES NOT SUBSCRIBE
TO PURCHASE ANY SECURITIES OFFERED HEREBY; (B) THE OFFEREE’S
SUBSCRIPTION IS NOT ACCEPTED, AND/OR (C) THE OFFERING IS TERMINATED OR
WITHDRAWN.
THESE OFFERING DOCUMENTS ARE SUBJECT TO AMENDMENT AND
SUPPLEMENTATION AS APPROPRIATE. WE DO NOT INTEND TO UPDATE THE
INFORMATION CONTAINED IN THE OFFERING DOCUMENTS FOR ANY INVESTOR
WHO HAS ALREADY MADE AN INVESTMENT. WE MAY UPDATE THE
INFORMATION CONTAINED HEREIN FROM TIME TO TIME AND PROVIDE SUCH
UPDATED DOCUMENT TO POTENTIAL INVESTORS BUT UNDERTAKE NO
OBLIGATION TO PROVIDE SUCH UPDATED DOCUMENTS TO AN INVESTOR WHO
HAS ALREADY MADE HIS INVESTMENT.
JURISDICTIONAL NOTICES
FOR RESIDENTS OF ALL STATES:
THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT
A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE
CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR
STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES
MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED
TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THESE
OFFERING DOCUMENTS HA VE NOT BEEN REGISTERED UNDER ANY STATE
SECURITIES LAWS (COMMONLY CALLED “BLUE SKY” LAWS). THESE
SECURITIES MUST BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OF SUCH SECURITIES UNDER SUCH LAWS, OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS
ONLY THAT A LEGEND MAY BE REQUIRED BY THE STATE AND SHOULD NOT
BE CONSTRUED TO MEAN AN OFFER OF SALE MAY BE MADE IN ANY
PARTICULAR STATE.
IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR
OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES
AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. NO FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY HAS RECOMMENDED THESE SECURITIES.
FURTHERMORE, THE FOREGOING AUTHORITIES HA VE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THESE OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
THESE SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS AS SET
FORTH IN THE SUBSCRIPTION AGREEMENT AND/OR THE CERTIFICATE
INCORPORATION AND BYLAWS OF THE COMPANY.
1. NOTICE TO ALABAMA RESIDENTS ONLY: THESE SECURITIES ARE OFFERED
PURSUANT TO A CLAIM OF EXEMPTION UNDER THE ALABAMA SECURITIES ACT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN
FILED WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES
NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES
IT PASS UPON THE ACCURACY OR COMPLETENESS OF THESE CONFIDENTIAL
OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
2. NOTICE TO ALASKA RESIDENTS ONLY: THE SECURITIES OFFERED HA VE NOT
BEEN REGISTERED WITH THE ADMINISTRATOR OF SECURITIES OF THE STATE OF
ALASKA UNDER PROVISIONS OF 3 AAC 08.500 - 3 AAC 08.504. THE INVESTOR IS
ADVISED THAT THE ADMINISTRATOR HAS MADE ONLY A CURSORY REVIEW OF
THE REGISTRATION STATEMENT AND HAS NOT REVIEWED THESE OFFERING
DOCUMENTS SINCE THE OFFERING DOCUMENTS ARE NOT REQUIRED TO BE
FILED WITH THE ADMINISTRATOR. THE FACT OF REGISTRATION DOES NOT MEAN
THAT THE ADMINISTRATOR HAS PASSED IN ANY WAY UPON THE MERITS,
RECOMMENDED, OR APPROVED THE SECURITIES. ANY REPRESENTATION TO THE
CONTRARY IS A VIOLATION OF 45.55.170. THE INVESTOR MUST RELY ON THE
INVESTOR’S OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE
SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND
RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES.
3. NOTICE TO ARIZONA RESIDENTS ONLY: THESE SECURITIES HA VE NOT BEEN
REGISTERED UNDER THE ARIZONA SECURITIES ACT IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION PURSUANT TO A.R.S. SECTION 44-1844 (1) AND
THEREFORE CANNOT BE RESOLD UNLESS THEY ARE ALSO REGISTERED OR
UNLESS AN EXEMPTION FROM REGISTRATION IS A V AILABLE.
4. NOTICE TO ARKANSAS RESIDENTS ONLY: THESE SECURITIES ARE OFFERED IN
RELIANCE UPON CLAIMS OF EXEMPTION UNDER THE ARKANSAS SECURITIES
ACT AND SECTION 4(2) OF THE SECURITIES ACT OF 1933. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE
ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND EXCHANGE
COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED
UPON THE V ALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO
THEIR PURCHASE, APPROVED OR DISAPPROVED THIS OFFERING OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THESE CONFIDENTIAL OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
5. NOTICE TO CALIFORNIA RESIDENTS: THESE SECURITIES HA VE NOT BEEN
QUALIFIED OR OTHERWISE APPROVED OR DISAPPROVED BY THE CALIFORNIA
DEPARTMENT OF CORPORATIONS UNDER THE CALIFORNIA CORPORATIONS
CODE. THESE SECURITIES ARE OFFERED IN CALIFORNIA IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTIONS 25100, 25102 or 25105
OF THE CALIFORNIA CORPORATIONS CODE. ACCORDINGLY , DISTRIBUTION OF
THIS MEMORANDUM AND OFFERS AND SALES OF THE SECURITIES REFERRED TO
HEREIN ARE STRICTLY LIMITED TO PERSONS WHO THE COMPANY DETERMINES
TO HA VE MET CERTAIN FINANCIAL AND OTHER REQUIREMENTS. THIS
MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY WITH RESPECT TO ANY OTHER PERSON. IN
ORDER TO RELY ON THE FOREGOING EXEMPTIONS, THE COMPANY WILL RELY IN
TURN ON CERTAIN REPRESENTATIONS AND WARRANTIES MADE TO THE
COMPANY BY THE INVESTORS IN THIS OFFERING. THOSE REPRESENTATIONS AND
WARRANTIES ARE CONTAINED IN THE SUBSCRIPTION AGREEMENT, ATTACHED
HERETO AS EXHIBIT A.
6. FOR COLORADO RESIDENTS ONLY: THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS OFFERING HAS NOT BEEN QUALIFIED WITH
COMMISSIONER OF CORPORATIONS OF THE STATE OF COLORADO AND THE
ISSUANCE OF SUCH SECURITIES OR PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATIONS IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPTED FROM QUALIFICATION BY
SECTION 25100, 25102, OR 25104 OF THE COLORADO CORPORATIONS CODE. THE
RIGHTS OF ALL PARTIES TO THIS OFFERING ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATIONS BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. THE
SECURITIES HA VE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE COLORADO SECURITIES ACT OF 1991 BY REASON OF
SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED A V AILABILITY
OF THE OFFERING. THESE SECURITIES CANNOT BE RESOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
COLORADO SECURITIES ACT OF 1991, IF SUCH REGISTRATION IS REQUIRED.
7. NOTICE TO CONNECTICUT RESIDENTS ONLY: SECURITIES ACQUIRED BY
CONNECTICUT RESIDENTS ARE BEING SOLD AS A TRANSACTION EXEMPT UNDER
SECTION 36b-31-21b-9b OF THE CONNECTICUT, UNIFORM SECURITIES ACT. THE
SECURITIES HA VE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF
CONNECTICUT. ALL INVESTORS SHOULD BE AWARE THAT THERE ARE CERTAIN
RESTRICTIONS AS TO THE TRANSFERABILITY OF THE SECURITIES.
8. NOTICE TO DELAWARE RESIDENTS ONLY: IF YOU ARE A DELAWARE RESIDENT,
YOU ARE HEREBY ADVISED THAT THESE SECURITIES ARE BEING OFFERED IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
DELAWARE SECURITIES ACT. THE SECURITIES CANNOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
IN A TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT.
9. NOTICE TO DISTRICT OF COLUMBIA RESIDENTS ONLY: THESE SECURITIES
HA VE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES BUREAU OF
THE DISTRICT OF COLUMBIA NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THESE OFFERING DOCUMENTS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
10. NOTICE TO FLORIDA RESIDENTS ONLY: THE SECURITIES DESCRIBED HEREIN
HA VE NOT BEEN REGISTERED WITH THE FLORIDA DIVISION OF SECURITIES AND
INVESTOR PROTECTION UNDER THE FLORIDA SECURITIES ACT. THE SECURITIES
REFERRED TO HEREIN WILL BE SOLD TO AND ACQUIRED BY THE HOLDER IN A
TRANSACTION EXEMPT UNDER SECTION 517.061 OF SAID ACT. THE SECURITIES
HA VE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN
ADDITION, ALL OFFEREES WHO ARE FLORIDA RESIDENTS SHOULD BE AWARE
THAT SECTION 517.061(11)(a)(5) OF THE ACT PROVIDES, IN RELEV ANT PART, AS
FOLLOWS: “WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN [FLORIDA],
ANY SALE IN [FLORIDA] MADE PURSUANT TO [THIS SECTION] IS VOIDABLE BY
THE PURCHASER IN SUCH SALE EITHER WITHIN 3 DAYS AFTER THE FIRST
TENDER OF CONSIDERATION IS MADE BY THE PURCHASER TO THE ISSUER, AN
AGENT OF THE ISSUER OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE
A V AILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICHEVER OCCURS LATER.” THE A V AILABILITY OF THE PRIVILEGE TO VOID
SALES PURSUANT TO SECTION 517.061(11) IS HEREBY COMMUNICATED TO EACH
FLORIDA OFFEREE. EACH PERSON ENTITLED TO EXERCISE THE PRIVILEGE TO
A VOID SALES GRANTED BY SECTION 517.061 (11) (A)(5) AND WHO WISHES TO
EXERCISE SUCH RIGHT, MUST, WITHIN 3 DAYS AFTER THE TENDER OF ANY
AMOUNT TO THE COMPANY OR TO ANY AGENT OF THE COMPANY (INCLUDING
THE SELLING AGENT OR ANY OTHER DEALER ACTING ON BEHALF OF THE
PARTNERSHIP OR ANY SALESMAN OF SUCH DEALER) OR AN ESCROW AGENT
CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT TO THE COMPANY AT THE
ADDRESS PROVIDED IN THIS CONFIDENTIAL EXECUTIVE SUMMARY . SUCH
LETTER OR TELEGRAM MUST BE SENT AND, IF POSTMARKED, POSTMARKED ON
OR PRIOR TO THE END OF THE AFOREMENTIONED THIRD DAY . IF A PERSON IS
SENDING A LETTER, IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO
EVIDENCE THE TIME IT WAS MAILED. SHOULD A PERSON MAKE THIS REQUEST
ORALLY , HE MUST ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS
BEEN RECEIVED.
11. NOTICE TO GEORGIA RESIDENTS ONLY: THESE SECURITIES ARE OFFERED IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
GEORGIA SECURITIES ACT PURSUANT TO REGULATION 590-4-5-04 AND -01. THE
SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER THE ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH IS
OTHERWISE IN COMPLIANCE WITH THE ACT.
12. NOTICE TO HAWAII RESIDENTS ONLY: NEITHER THESE CONFIDENTIAL
OFFERING DOCUMENTS NOR THE SECURITIES DESCRIBED HEREIN BEEN
APPROVED OR DISAPPROVED BY THE COMMISSIONER OF SECURITIES OF THE
STATE OF HAWAII NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY
OR ADEQUACY OF THESE CONFIDENTIAL OFFERING DOCUMENTS.
13. NOTICE TO IDAHO RESIDENTS ONLY: THESE SECURITIES EVIDENCED HEREBY
HA VE NOT BEEN REGISTERED UNDER THE IDAHO SECURITIES ACT IN RELIANCE
UPON EXEMPTION FROM REGISTRATION PURSUANT TO SECTION 30-14-203 OR
302(c) THEREOF AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SAID
ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SAID ACT.
14. NOTICE TO ILLINOIS RESIDENTS: THESE SECURITIES HA VE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECRETARY OF THE STATE OF ILLINOIS
NOR HAS THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY
OF THE CONFIDENTIAL OFFERING DOCUMENTS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
15. NOTICE TO INDIANA RESIDENTS ONLY: THESE SECURITIES ARE OFFERED
PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION 23-2-1-2 OF THE
INDIANA SECURITIES LAW AND HA VE NOT BEEN REGISTERED UNDER SECTION
23-2-1-3. THEY CANNOT THEREFORE BE RESOLD UNLESS THEY ARE REGISTERED
UNDER SAID LAW OR UNLESS AN EXEMPTION FORM REGISTRATION IS
A V AILABLE. A CLAIM OF EXEMPTION UNDER SAID LAW HAS BEEN FILED, AND IF
SUCH EXEMPTION IS NOT DISALLOWED SALES OF THESE SECURITIES MAY BE
MADE. HOWEVER, UNTIL SUCH EXEMPTION IS GRANTED, ANY OFFER MADE
PURSUANT HERETO IS PRELIMINARY AND SUBJECT TO MATERIAL CHANGE.
16. NOTICE TO IOWA RESIDENTS ONLY: IN MAKING AN INVESTMENT DECISION
INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR
ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HA VE NOT
BEEN RECOMMENDED; THE FOREGOING AUTHORITIES HA VE NOT CONFIRMED
THE ACCURACY OR DETERMINED THE ADEQUACY OF THESE OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
17. NOTICE TO KANSAS RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER TO
PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 81-5-15 OF THE
KANSAS SECURITIES ACT AND MAY NOT BE RE-OFFERED FOR SALE,
TRANSFERRED, OR RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND
APPLICABLE RULES PROMULGATED THEREUNDER.
18. NOTICE TO KENTUCKY RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER
TO PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER TITLE 808 KAR 10:210 OF
THE KENTUCKY SECURITIES ACT AND MAY NOT BE RE-OFFERED FOR SALE,
TRANSFERRED, OR RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND
APPLICABLE RULES PROMULGATED THEREUNDER.
19. NOTICE TO LOUISIANA RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER
TO PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER RULE 1 OF THE LOUISIANA
SECURITIES LAW AND MAY NOT BE RE-OFFERED FOR SALE, TRANSFERRED, OR
RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND APPLICABLE RULES
PROMULGATED THEREUNDER.
20. NOTICE TO MAINE RESIDENTS ONLY: THE ISSUER IS REQUIRED TO MAKE A
REASONABLE FINDING THAT THE SECURITIES OFFERED ARE A SUITABLE
INVESTMENT FOR THE PURCHASER AND THAT THE PURCHASER IS FINANCIALLY
ABLE TO BEAR THE RISK OF LOSING THE ENTIRE AMOUNT INVESTED. THESE
SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION UNDER §16202(15) OF
THE MAINE UNIFORM SECURITIES ACT AND ARE NOT REGISTERED WITH THE
SECURITIES ADMINISTRATOR OF THE STATE OF MAINE. THE SECURITIES
OFFERED FOR SALE MAY BE RESTRICTED SECURITIES AND THE HOLDER MAY
NOT BE ABLE TO RESELL THE SECURITIES UNLESS: (1) THE SECURITIES ARE
REGISTERED UNDER STATE AND FEDERAL SECURITIES LAWS, OR (2) AN
EXEMPTION IS A V AILABLE UNDER THOSE LAWS.
21. NOTICE TO MARYLAND RESIDENTS ONLY: IF YOU ARE A MARYLAND RESIDENT
AND YOU ACCEPT AN OFFER TO PURCHASE THESE SECURITIES PURSUANT TO
THESE CONFIDENTIAL OFFERING DOCUMENTS, YOU ARE HEREBY ADVISED THAT
THESE SECURITIES ARE BEING SOLD AS A TRANSACTION EXEMPT UNDER
SECTION 11-602(9) OF THE MARYLAND SECURITIES ACT. THE SECURITIES HA VE
NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF MARYLAND. ALL
INVESTORS SHOULD BE AWARE THAT THERE ARE CERTAIN RESTRICTIONS AS TO
THE TRANSFERABILITY OF THE SECURITIES.
22. NOTICE TO MASSACHUSETTS RESIDENTS ONLY: THESE SECURITIES HA VE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
MASSACHUSETTS UNIFORM SECURITIES ACT, BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED A V AILABILITY OF THIS
OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY
REGISTERED OR AN EXEMPTION FROM REGISTRATION IS A V AILABLE.
23. NOTICE TO MICHIGAN RESIDENTS ONLY: THESE SECURITIES ARE BEING
OFFERED IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE MICHIGAN SECURITIES ACT. THE SECURITIES CANNOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE ACT
OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
IN A TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT.
24. NOTICE TO MINNESOTA RESIDENTS ONLY: THESE SECURITIES BEING OFFERED
HEREBY HA VE NOT BEEN REGISTERED UNDER CHAPTER 80A OF THE MINNESOTA
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO REGISTRATION, OR AN EXEMPTION
THEREFROM.
25. NOTICE TO MISSISSIPPI RESIDENTS ONLY: THE SECURITIES ARE OFFERED
PURSUANT TO A CLAIM OF EXEMPTION UNDER THE MISSISSIPPI SECURITIES ACT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN
FILED WITH THE MISSISSIPPI SECRETARY OF STATE OR WITH THE SECURITIES
AND EXCHANGE COMMISSION. NEITHER THE SECRETARY OF STATE NOR THE
COMMISSION HAS PASSED UPON THE V ALUE OF THESE SECURITIES OR
APPROVED OR DISAPPROVED THIS OFFERING. THE SECRETARY OF STATE DOES
NOT RECOMMEND THE PURCHASE OF THESE OR ANY OTHER SECURITIES. EACH
PURCHASER OF THE SECURITIES MUST MEET CERTAIN SUITABILITY STANDARDS
AND MUST BE ABLE TO BEAR AN ENTIRE LOSS OF THIS INVESTMENT. THE
SECURITIES MAY NOT BE TRANSFERRED FOR A PERIOD OF ONE (1) YEAR EXCEPT
IN A TRANSACTION WHICH IS EXEMPT UNDER THE MISSISSIPPI SECURITIES ACT
OR IN A TRANSACTION IN COMPLIANCE WITH THE MISSISSIPPI SECURITIES ACT.
26. FOR MISSOURI RESIDENTS ONLY: THE SECURITIES OFFERED HEREIN WILL BE
SOLD TO, AND ACQUIRED BY , THE PURCHASER IN A TRANSACTION EXEMPT
UNDER SECTION 4.G OF THE MISSOURI SECURITIES LAW OF 1953, AS AMENDED.
THESE SECURITIES HA VE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE
OF MISSOURI. UNLESS THE SECURITIES ARE SO REGISTERED, THEY MAY NOT BE
OFFERED FOR SALE OR RESOLD IN THE STATE OF MISSOURI, EXCEPT AS A
SECURITY , OR IN A TRANSACTION EXEMPT UNDER SAID ACT.
27. NOTICE TO MONTANA RESIDENTS ONLY: IN ADDITION TO THE INVESTOR
SUITABILITY STANDARDS THAT ARE OTHERWISE APPLICABLE, ANY INVESTOR
WHO IS A MONTANA RESIDENT MUST HA VE A NET WORTH (EXCLUSIVE OF HOME,
FURNISHINGS AND AUTOMOBILES) IN EXCESS OF FIVE (5) TIMES THE
AGGREGATE AMOUNT INVESTED BY SUCH INVESTOR IN THE SECURITIES.
28. NOTICE TO NEBRASKA RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER
TO PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER CHAPTER 15 OF THE
NEBRASKA SECURITIES LAW AND MAY NOT BE RE-OFFERED FOR SALE,
TRANSFERRED, OR RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND
APPLICABLE RULES PROMULGATED THEREUNDER.
29. NOTICE TO NEV ADA RESIDENTS ONLY: IF ANY INVESTOR ACCEPTS ANY OFFER
TO PURCHASE THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION NRS 90.530 OF THE
NEV ADA SECURITIES LAW. THE INVESTOR IS HEREBY ADVISED THAT THE
ATTORNEY GENERAL OF THE STATE OF NEV ADA HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING AND THE FILING OF THE OFFERING
WITH THE BUREAU OF SECURITIES DOES NOT CONSTITUTE APPROV AL OF THE
ISSUE, OR SALE THEREOF, BY THE BUREAU OF SECURITIES OR THE DEPARTMENT
OF LAW AND PUBLIC SAFETY OF THE STATE OF NEV ADA. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL. NEV ADA ALLOWS THE SALE OF SECURITIES
TO 25 OR FEWER PURCHASERS IN THE STATE WITHOUT REGISTRATION.
HOWEVER, CERTAIN CONDITIONS APPLY , I.E., THERE CAN BE NO GENERAL
ADVERTISING OR SOLICITATION AND COMMISSIONS ARE LIMITED TO LICENSED
BROKER-DEALERS. THIS EXEMPTION IS GENERALLY USED WHERE THE
PROSPECTIVE INVESTOR IS ALREADY KNOWN AND HAS A PRE-EXISTING
RELATIONSHIP WITH THE COMPANY . (SEE NRS 90.530.11.)
30. NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY: NEITHER THE FACT THAT A
REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE UNDER THIS
CHAPTER HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT
THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN
THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF
STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND
NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS A V AILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROV AL TO,
ANY PERSON, SECURITY , OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT
ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
31. NOTICE TO NEW JERSEY RESIDENTS ONLY: IF YOU ARE A NEW JERSEY
RESIDENT AND YOU ACCEPT AN OFFER TO PURCHASE THESE SECURITIES
PURSUANT TO THESE CONFIDENTIAL OFFERING DOCUMENTS, YOU ARE HEREBY
ADVISED THAT THESE CONFIDENTIAL OFFERING DOCUMENTS HA VE NOT BEEN
FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW
JERSEY PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE
STATE OF NEW JERSEY HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
32. NOTICE TO NEW MEXICO RESIDENTS ONLY: THESE SECURITIES HA VE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES DIVISION OF THE NEW
MEXICO DEPARTMENT OF BANKING NOR HAS THE SECURITIES DIVISION PASSED
UPON THE ACCURACY OR ADEQUACY OF THESE CONFIDENTIAL OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
33. NOTICE TO NEW YORK RESIDENTS ONLY: THESE OFFERING DOCUMENTS HA VE
NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK
PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF
NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE COMPANY HAS
TAKEN NO STEPS TO CREATE AN AFTER MARKET FOR THE SECURITIES OFFERED
HEREIN AND HAS MADE NO ARRANGEMENTS WITH BROKERS OF OTHERS TO
TRADE OR MAKE A MARKET IN THE SECURITIES. AT SOME TIME IN THE FUTURE,
THE COMPANY MAY ATTEMPT TO ARRANGE FOR INTERESTED BROKERS TO
TRADE OR MAKE A MARKET IN THE SECURITIES AND TO QUOTE THE SAME IN A
PUBLISHED QUOTATION MEDIUM, HOWEVER, NO SUCH ARRANGEMENTS HA VE
BEEN MADE AND THERE IS NO ASSURANCE THAT ANY BROKERS WILL EVER
HA VE SUCH AN INTEREST IN THE SECURITIES OF THE COMPANY OR THAT THERE
WILL EVER BE A MARKET THEREFORE.
34. NOTICE TO NORTH CAROLINA RESIDENTS ONLY: IN MAKING AN INVESTMENT
DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING MERITS AND RISKS INVOLVED. THESE SECURITIES HA VE
NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY . FURTHERMORE, THE FORGOING
AUTHORITIES HA VE NOT CONFIRMED ACCURACY OR DETERMINED ADEQUACY
OF THESE OFFERING DOCUMENTS. REPRESENTATION TO THE CONTRARY IS
UNLAWFUL. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
35. NOTICE TO NORTH DAKOTA RESIDENTS ONLY: THESE SECURITIES HA VE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES COMMISSIONER OF THE
STATE OF NORTH DAKOTA NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THESE CONFIDENTIAL OFFERING DOCUMENTS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
36. NOTICE TO OHIO RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER TO
PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 1707.03(X) OF THE
OHIO SECURITIES LAW AND MAY NOT BE RE-OFFERED FOR SALE, TRANSFERRED,
OR RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND APPLICABLE RULES
PROMULGATED THEREUNDER.
37. NOTICE TO OKLAHOMA RESIDENTS ONLY: THESE SECURITIES ARE OFFERED
FOR SALE IN THE STATE OF OKLAHOMA IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION FOR PRIV ATE OFFERINGS. ALTHOUGH A PRIOR FILING OF
THESE CONFIDENTIAL OFFERING DOCUMENTS AND THE INFORMATION HAS
BEEN MADE WITH THE OKLAHOMA SECURITIES COMMISSION, SUCH FILING IS
PERMISSIVE ONLY AND DOES NOT CONSTITUTE AN APPROV AL,
RECOMMENDATION OR ENDORSEMENT, AND IN NO SENSE IS TO BE
REPRESENTED AS AN INDICATION OF THE INVESTMENT MERIT OF SUCH
SECURITIES. ANY SUCH REPRESENTATION IS UNLAWFUL.
38. NOTICE TO OREGON RESIDENTS ONLY: THE SECURITIES OFFERED HA VE BEEN
REGISTERED WITH THE CORPORATION COMMISSION OF THE STATE OF OREGON
UNDER PROVISIONS OF ORS 59.049. THE INVESTOR IS ADVISED THAT THE
COMMISSIONER HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION
STATEMENT AND HAS NOT REVIEWED THESE OFFERING DOCUMENTS SINCE
THESE OFFERING DOCUMENTS ARE NOT REQUIRED TO BE FILED WITH THE
COMMISSIONER. THE INVESTOR MUST RELY ON THE INVESTOR’S OWN
EXAMINATION OF THE COMPANY CREATING THE SECURITIES, AND THE TERMS
OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN
INVESTMENT DECISION ON THESE SECURITIES.
39. NOTICE TO PENNSYLV ANIA RESIDENTS ONLY: EACH PERSON WHO ACCEPTS AN
OFFER TO PURCHASE SECURITIES EXEMPTED FROM REGISTRATION BY SECTION
203(d), DIRECTLY FROM THE ISSUER OR AFFILIATE OF THIS ISSUER, SHALL HA VE
THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY
LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON
WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF
HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A
TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF PURCHASE,
WITHIN TWO (2) BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR
THE SECURITIES BEING OFFERED. IF YOU HA VE ACCEPTED AN OFFER TO
PURCHASE THESE SECURITIES MADE PURSUANT TO A PROSPECTUS WHICH
CONTAINS A NOTICE EXPLAINING YOUR RIGHT TO WITHDRAW YOUR
ACCEPTANCE PURSUANT TO SECTION 207(m) OF THE PENNSYLV ANIA SECURITIES
ACT OF 1972 (70 PS § 1-207(m), YOU MAY ELECT, WITHIN TWO (2) BUSINESS DAYS
AFTER THE FIRST TIME YOU HA VE RECEIVED THIS NOTICE AND A PROSPECTUS
TO WITHDRAW FROM YOUR PURCHASE AGREEMENT AND RECEIVE A FULL
REFUND OF ALL MONEYS PAID BY YOU. YOUR WITHDRAWAL WILL BE WITHOUT
ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL,
YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE ISSUER (OR
UNDERWRITER IF ONE IS LISTED ON THE FRONT PAGE OF THE CONFIDENTIAL
OFFERING DOCUMENTS) INDICATING YOUR INTENTION TO WITHDRAW. SUCH
LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END
OF THE AFOREMENTIONED SECOND BUSINESS DAY . IF YOU ARE SENDING A
LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO EVIDENCE THE TIME
WHEN IT WAS MAILED. SHOULD YOU MAKE THIS REQUEST ORALLY , YOU
SHOULD ASK WRITTEN CONFIRMATION THAT YOUR REQUEST HAS BEEN
RECEIVED. NO SALE OF THE SECURITIES WILL BE MADE TO RESIDENTS OF THE
STATE OF PENNSYLV ANIA WHO ARE NON-ACCREDITED INVESTORS. EACH
PENNSYLV ANIA RESIDENT MUST AGREE NOT TO SELL THESE SECURITIES FOR A
PERIOD OF TWELVE (12) MONTHS AFTER THE DATE OF PURCHASE, EXCEPT IN
ACCORDANCE WITH WAIVERS ESTABLISHED BY RULE OR ORDER OF THE
COMMISSION. THE SECURITIES HA VE BEEN ISSUED PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE PENNSYLV ANIA
SECURITIES ACT OF 1972. NO SUBSEQUENT RESALE OR OTHER DISPOSITION OF
THE SECURITIES MAY BE MADE WITHIN 12 MONTHS FOLLOWING THEIR INITIAL
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION, EXCEPT IN
ACCORDANCE WITH WAIVERS ESTABLISHED BY RULE OR ORDER OF THE
COMMISSION, AND THEREAFTER ONLY PURSUANT TO AN EFFECTIVE
REGISTRATION OR EXEMPTION.
40. NOTICE TO RHODE ISLAND RESIDENTS ONLY: THESE SECURITIES HA VE NOT
BEEN APPROVED OR DISAPPROVED BY THE DEPARTMENT OF BUSINESS
REGULATION OF THE STATE OF RHODE ISLAND NOR HAS THE DIRECTOR PASSED
UPON THE ACCURACY OR ADEQUACY OF THESE OFFERING DOCUMENTS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
41. NOTICE TO SOUTH CAROLINA RESIDENTS ONLY: THESE SECURITIES ARE
BEING OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE SOUTH
CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT RELATING
TO THESE SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA
SECURITIES COMMISSIONER. THE COMMISSIONER DOES NOT RECOMMEND OR
ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE
ACCURACY OR COMPLETENESS OF THESE CONFIDENTIAL OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
42. NOTICE TO SOUTH DAKOTA RESIDENTS ONLY: THESE SECURITIES ARE BEING
OFFERED FOR SALE IN THE STATE OF SOUTH DAKOTA PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SOUTH DAKOTA BLUE SKY LAW,
CHAPTER 47-31, WITH THE DIRECTOR OF THE DIVISION OF SECURITIES OF THE
DEPARTMENT OF COMMERCE AND REGULATION OF THE STATE OF SOUTH
DAKOTA. THE EXEMPTION DOES NOT CONSTITUTE A FINDING THAT THESE
CONFIDENTIAL OFFERING DOCUMENTS ARE TRUE, COMPLETE, AND NOT
MISLEADING, NOR HAS THE DIRECTOR OF THE DIVISION OF SECURITIES PASSED
IN ANY WAY UPON THE MERITS OF, RECOMMENDED, OR GIVEN APPROV AL TO
THESE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
43. NOTICE TO TENNESSEE RESIDENT ONLY: IN MAKING AN INVESTMENT
DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER
AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HA VE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY .
FURTHERMORE, THE FOREGOING AUTHORITIES HA VE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THESE OFFERING DOCUMENTS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD. EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISK OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
44. NOTICE TO TEXAS RESIDENTS ONLY: THE SECURITIES OFFERED HEREUNDER
HA VE NOT BEEN REGISTERED UNDER APPLICABLE TEXAS SECURITIES LAWS
AND, THEREFORE, ANY PURCHASER THEREOF MUST BEAR THE ECONOMIC RISK
OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE
SECURITIES CANNOT BE RESOLD UNLESS THEY ARE SUBSEQUENTLY
REGISTERED UNDER SUCH SECURITIES LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION IS A V AILABLE. FURTHER, PURSUANT TO §109.13 UNDER THE
TEXAS SECURITIES ACT, THE COMPANY IS REQUIRED TO APPRISE PROSPECTIVE
INVESTORS OF THE FOLLOWING: A LEGEND SHALL BE PLACED, UPON ISSUANCE,
ON CERTIFICATES REPRESENTING SECURITIES PURCHASED HEREUNDER, AND
ANY PURCHASER HEREUNDER SHALL BE REQUIRED TO SIGN A WRITTEN
AGREEMENT THAT HE WILL NOT SELL THE SUBJECT SECURITIES WITHOUT
REGISTRATION UNDER APPLICABLE SECURITIES LAWS, OR EXEMPTIONS
THEREFROM.
45. NOTICE TO UTAH RESIDENTS ONLY: THESE SECURITIES ARE BEING OFFERED IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
UTAH SECURITIES ACT. THE SECURITIES CANNOT BE TRANSFERRED OR SOLD
EXCEPT IN TRANSACTIONS WHICH ARE EXEMPT UNDER THE ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A
TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT.
46. NOTICE TO VERMONT RESIDENTS ONLY: THESE SECURITIES HA VE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES DIVISION OF THE STATE OF
VERMONT NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR
ADEQUACY OF THESE OFFERING DOCUMENTS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
47. NOTICE TO VIRGINIA RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN OFFER
TO PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE
SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION UNDER SECTION 13.1-514 OF THE VIRGINIA SECURITIES ACT AND
MAY NOT BE RE-OFFERED FOR SALE, TRANSFERRED, OR RESOLD EXCEPT IN
COMPLIANCE WITH SUCH ACT AND APPLICABLE RULES PROMULGATED
THEREUNDER.
48. NOTICE TO WASHINGTON RESIDENTS ONLY: THE ADMINISTRATOR OF
SECURITIES HAS NOT REVIEWED THE OFFERING OR CONFIDENTIAL PRIV ATE
PLACEMENT MEMORANDUM AND THE SECURITIES HA VE NOT BEEN REGISTERED
IN RELIANCE UPON THE SECURITIES ACT OF WASHINGTON, CHAPTER 21.20 RCW,
AND THEREFORE, CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER
THE SECURITIES ACT OF WASHINGTON, CHAPTER 21.20 RCW, OR UNLESS AN
EXEMPTION FROM REGISTRATION IS MADE A V AILABLE.
49. NOTICE TO WEST VIRGINIA RESIDENTS ONLY: IF AN INVESTOR ACCEPTS AN
OFFER TO PURCHASE ANY OF THE SECURITIES, THE INVESTOR IS HEREBY
ADVISED THE SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 15.06(b)(9) OF THE
WEST VIRGINIA SECURITIES LAW AND MAY NOT BE REOFFERED FOR SALE,
TRANSFERRED, OR RESOLD EXCEPT IN COMPLIANCE WITH SUCH ACT AND
APPLICABLE RULES PROMULGATED THEREUNDER.
50. NOTICE TO WISCONSIN RESIDENTS ONLY: IN ADDITION TO THE INVESTOR
SUITABILITY STANDARDS THAT ARE OTHERWISE APPLICABLE, ANY INVESTOR
WHO IS A WISCONSIN RESIDENT MUST HA VE A NET WORTH (EXCLUSIVE OF
HOME, FURNISHINGS AND AUTOMOBILES) IN EXCESS OF THREE AND ONE-THIRD
(3 1/3) TIMES THE AGGREGATE AMOUNT INVESTED BY SUCH INVESTOR IN THE
SECURITIES OFFERED HEREIN.
51. FOR WYOMING RESIDENTS ONLY: ALL WYOMING RESIDENTS WHO SUBSCRIBE
TO PURCHASE SECURITIES OFFERED BY THE COMPANY MUST SATISFY THE
FOLLOWING MINIMUM FINANCIAL SUITABILITY REQUIREMENTS IN ORDER TO
PURCHASE SECURITIES: (1) A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS
AND AUTOMOBILES) OF TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000);
AND (2) THE PURCHASE PRICE OF SECURITIES SUBSCRIBED FOR MAY NOT
EXCEED TWENTY PERCENT (20%) OF THE NET WORTH OF THE SUBSCRIBER; AND
(3) “TAXABLE INCOME” AS DEFINED IN SECTION 63 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, DURING THE LAST TAX YEAR AND ESTIMATED
“TAXABLE INCOME” DURING THE CURRENT TAX YEAR SUBJECT TO A FEDERAL
INCOME TAX RATE OF NOT LESS THAN THIRTY-THREE PERCENT (33%). IN ORDER
TO VERIFY THE FOREGOING, ALL SUBSCRIBERS WHO ARE WYOMING RESIDENTS
WILL BE REQUIRED TO REPRESENT IN THE SUBSCRIPTION AGREEMENT THAT
THEY MEET THESE WYOMING SPECIAL INVESTOR SUITABILITY REQUIREMENTS.
INVESTOR NOTICES GENERALLY
THIS CONFIDENTIAL OFFERING MEMORANDUM (THE “MEMORANDUM”) IS BEING
PROVIDED TO SELECTED RECIPIENTS IN CONNECTION WITH A PROPOSED
OFFERING OF SAFES BY FILMIO STUDIOS INC. (THE “COMPANY”). AN
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK, INCLUDING
THE POSSIBILITY OF A TOTAL LOSS OF INVESTMENT, AND INVESTORS (EACH, AN
“INVESTOR,” AND COLLECTIVELY “INVESTORS”) SHOULD NOT INVEST ANY
PROCEEDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. THERE IS NO MARKET FOR THE OFFERED SAFES AND NONE IS
EXPECTED TO DEVELOP IN THE FORSEEABLE FUTURE.
PROSPECTIVE INVESTORS SHOULD NOT ACQUIRE THE OFFERED SAFES IF THE
INVESTOR ANTICIPATES THAT IT WILL HA VE A NEED FOR THE PROCEEDS
CONTRIBUTED. THE OFFERED SAFES WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER ANY STATE
SECURITIES LAW. THE TRANSFER OF SAFES ACQUIRED HEREUNDER WILL BE
RESTRICTED. SEE “RISK FACTORS” BELOW FOR A NON-EXCLUSIVE LIST OF
ISSUES THAT THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES PRESENT
THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS OFFERING.
THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE
OFFERED SAFES DESCRIBED HEREIN IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SALE.
THE OFFERED SAFES MAY BE SOLD ONLY TO “ACCREDITED INVESTORS,” WHICH
FOR NATURAL PERSONS ARE INVESTORS WHO MEET CERTAIN MINIMUM
ANNUAL INCOME OR NET WORTH THRESHOLDS.
THE SUITABILITY STANDARDS DISCUSSED IN THE INVESTOR SUITABILITY
QUESTIONNAIRE REPRESENT MINIMUM SUITABILITY STANDARDS FOR
PROSPECTIVE INVESTORS. EACH PROSPECTIVE INVESTOR SHOULD DETERMINE
FOR HIMSELF, HERSELF, OR ITSELF WHETHER AN INVESTMENT IN THE OFFERED
SAFES IS APPROPRIATE.
OFFEREES OF SAFES ARE NOT TO CONSTRUE THE CONTENTS OF THESE
DOCUMENTS AS LEGAL OPINIONS OR TAX ADVICE. EACH INVESTOR MUST RELY
UPON THEIR OWN REPRESENTATIVES, INCLUDING THEIR OWN LEGAL COUNSEL
AND ACCOUNTANT, AS TO LEGAL, TAX, AND RELATED MATTERS CONCERNING
THE COMPANY AND AN INVESTMENT THEREIN.
THE OFFERED SAFES ARE BEING OFFERED IN RELIANCE ON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ARE
NOT REQUIRED TO COMPLY WITH SPECIFIC DISCLOSURE REQUIREMENTS THAT
APPLY TO REGISTRATION UNDER THE SECURITIES ACT.
THE OFFERED SAFES HA VE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY , NOR HA VE ANY OF THE
FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING OR THE ACCURACY OR ADEQUACY OF THESE DOCUMENTS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SINCE THERE ARE SUBSTANTIAL RESTRICTIONS ON THE TRANSFERABILITY OF
THE OFFERED SAFES OFFERED HEREBY , EACH OFFEREE SHOULD PROCEED ON
THE ASSUMPTION THAT THE OFFEREE MUST BEAR THE ECONOMIC RISK OF THE
INVESTMENT FOR AN EXTENDED PERIOD. THE OFFERED SAFES MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE COMPANY’S CERTIFICATE OF
INCORPORATION AND BYLAWS. IN ADDITION, THE OFFERED SAFES ARE NOT
REGISTERED FOR SALE TO THE PUBLIC UNDER THE SECURITIES ACT OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID
SECURITIES ACT AND SUCH LAWS. THE OFFERED SAFES MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY AN INVESTOR ONLY IF, AMONG
OTHER THINGS, REGISTRATION IS ACCOMPLISHED, UNLESS EXEMPTIONS FROM
REGISTRATION AND QUALIFICATION ARE A V AILABLE, AS DETERMINED BY THE
BOARD, IN ITS SOLE AND ABSOLUTE DISCRETION.
ALL DOCUMENTS RELATING TO THIS OFFERING (INCLUDING ANY ADDITIONAL
INFORMATION THAT MAY BE PROVIDED BY THE COMPANY) WILL BE MADE
A V AILABLE TO THE OFFEREE NAMED ABOVE AND ITS REPRESENTATIVES, IF ANY ,
UPON REQUEST, AND REPRESENTATIVES OF THE COMPANY WILL BE A V AILABLE
TO OFFEREES AND THEIR REPRESENTATIVES TO PROVIDE ANSWERS TO
QUESTIONS CONCERNING THIS OFFERING, PROVIDED THAT THE COMPANY
SHALL HA VE NO OBLIGATION TO DISCLOSE ANY PROPRIETARY INFORMATION OR
TO MAKE ANY REPRESENTATIONS (WHETHER ORAL OR WRITTEN) OTHER
THAN THOSE SET FORTH IN THESE DOCUMENTS. ANY INFORMATION (WHETHER
ORAL OR WRITTEN) OTHER THAN THAT CONTAINED IN DOCUMENTS FURNISHED
BY THE COMPANY MUST NOT BE RELIED UPON.
NOTICES, CONFIDENTIALITY AND RELATED MATTERS
Each recipient hereof agrees by accepting this Memorandum that the information contained
herein is of a confidential nature and that such recipient will treat such information in a strictly
confidential manner and that such recipient will not, directly or indirectly, disclose or permit its
affiliates or representatives to disclose, any information to any other person or entity, or
reproduce information such, in whole or in part, without the prior written consent of the
Company. Each recipient of this Memorandum further agrees to use the information solely for
the purpose of analyzing the desirability of an investment in the Company to such recipient and
for no other purpose whatsoever.
ANY REPRODUCTION OR DISTRIBUTION OF THESE OFFERING DOCUMENTS AND
EXHIBITS, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF ITS CONTENTS
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY IS PROHIBITED. NO
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION NOT CONTAINED IN THESE OFFERING DOCUMENTS OR AN
AUTHORIZED SUMMARY HEREOF, OR IN ANY AGREEMENT CONTEMPLATED
HEREBY , AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN
OR IN SUCH AUTHORIZED SUMMARY OR AGREEMENT MUST NOT BE RELIED
UPON.
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Memorandum that are not historical facts are forward-looking
statements that represent management’s beliefs and assumptions based on currently available
information. Forward-looking statements include all statements that are not historical facts and
can be identified by the use of forward-looking terminology such as the words “believes,”
“intends,” “may,” “will,” “should,” “anticipates,” “expects,” “projects,” “could,” “plans,” or
comparable terminology or by discussions of strategy or trends. Although management believes
that the expectations reflected in such forward-looking statements are reasonable, we cannot give
any assurances that these expectations will prove to be correct. Such statements by their nature
involve risks and uncertainties that could significantly affect expected results, and actual future
results could differ materially from those described in such forward-looking statements.
Among the factors that could cause actual future results to differ materially are the risks and
uncertainties discussed in this Memorandum. While it is not possible to identify all factors,
management continues to face many risks and uncertainties including, but not limited to, our
ability to meet the requirements to complete any potential project, the results of operations and
our profitability, the acceptance in the market in general as discussed more thoroughly in the risk
factors section of this Memorandum. Should one or more of these risks materialize, or should the
underlying assumptions prove incorrect, actual results could differ materially from those
expected. We disclaim any intention or obligation to update publicly or revise such statements
whether as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION
The Company has agreed to make available to each prospective Investor, prior to the sale of the
SAFEs, the opportunity to ask questions of, and receive answers from, the officers of the
Company and/or key personnel concerning the terms and conditions of the offering and to obtain
any additional information, to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense, which may be necessary to verify the accuracy of the
information set forth herein. You may call, or mail or email questions, inquiries, and requests for
information to:
Filmio Studios Inc.
Attn: Ian LeWinter
Email: invest@filmio.studio
You may be required to sign a confidentiality agreement as determined by the Company. You,
and your representatives, if any, will be asked to acknowledge in the SAFE agreement that you
were given the opportunity to obtain additional information.
This Memorandum contains limited information on the Company. While we believe the
information contained in this Memorandum is accurate, such documents are not meant to contain
an exhaustive discussion regarding the Company. We cannot guarantee a prospective Investor
that the abbreviated nature of this Memorandum will not omit to state a material fact, which a
prospective Investor may believe to be an important factor in determining if an investment in the
SAFEs offered hereby is appropriate for such Investor. As a result, prospective Investors are
required to undertake their own due diligence of the Company, our current and proposed
business and operations, our management and our financial condition to verify the accuracy and
completeness of the information we are providing in this Memorandum. An investment in the
SAFEs is suitable only for investors who have the knowledge and experience to
independently evaluate the SAFEs, the Company and our business and prospects.
SUMMARY OF THE OFFERING
This summary of the Offering is intended to highlight certain information contained in the body
of this Memorandum. More detailed information is found in the remainder of this Memorandum,
and this summary is qualified in its entirety by information appearing elsewhere in this
Memorandum and its appendices and exhibits. Before you invest in our SAFEs, you should read
this entire Memorandum, including the section entitled “Risk Factors”.
The Company
Filmio Studios Inc. is a Delaware Corporation organized under the laws of Delaware, formed on
November 22, 2024.
See “The Business”.
Business
Filmio Studios is an innovative film production company that aims to revolutionize the $465B
entertainment industry by leveraging powerful technologies, including the Film.io platform,
blockchain and AI technologies..
See “The Company Overview”.
The Offering
In this Offering, the Company is offering SAFEs for an aggregate principal amount of
$5,000,000. There is no minimum number of SAFEs that must be sold for the Offering to close
and for subscription funds to be released to the Company.
Each Investor must be an accredited investor as defined in Regulation D under the Securities
Act. Payment for SAFEs may be made in U.S. dollars. The Offering is being made by the
officers of the Company on a “best efforts” basis. No commissions will be paid on any sales
made by the Company’s officers. The Company may elect to engage one or more Placement
Agents in connection with this Offering, in which event the Placement Agents will also conduct
the Offering on a “best efforts” basis, and the Company would expect in such case to pay
commissions based on the SAFEs entered into by Investors.
The Company will attempt to sell the SAFEs during an offering period commencing on the date
of this Memorandum and expiring on the earlier to occur of (1) the date on which the Maximum
Amount has been subscribed for and accepted by the Company or (ii) June 15, 2025, unless
extended by the Company, in its sole discretion (such period being hereinafter referred to as the
“Offering Period”). We reserve the right to reject any subscription, in whole or in part, or to allot
to any prospective Investor SAFEs for less than the amount subscribed for by such prospective
Investor. This private offering is subject to withdrawal, cancellation or modification without
prior notice.
Initial and subsequent closings shall occur at the discretion of the Company.
To subscribe for the SAFEs offered hereby, prospective Investors are to deliver to the Company:
(i) one completed and duly executed SAFE agreement (the forms of which accompanies this
Memorandum as Exhibit A; and (ii) a check or wire in the amount subscribed for. The proceeds
of this Offering will not be deposited with an escrow agent and shall be available for use by the
Company immediately upon its acceptance of a subscription. We have the right, in our sole
discretion, to accept or reject any subscription and subscriptions may not be withdrawn once
made.
See “Terms of the Offering”.
Terms of the SAFEs
The SAFEs may be entitled to certain rights.
See “Terms of the Offering”.
Management and Administration
The Company is managed by our directors and officers of the Company, who will administer the
business and affairs of the Company and will provide certain services to the Company.
See “Management”.
Use of Proceeds
The purpose of this Offering is to provide initial financing for the Company and to provide
general working capital for the Company’s operations (see “Use of Proceeds”). All funds shall be
immediately deposited into the Company's operating account for operational development as
described herein. Subscription funds are intended to be used for general working capital
purposes, including without limitation to further fund the development of the Company, and
cover operational costs. In addition, all fees and costs associated with this Offering will be borne
by the Company and paid from the proceeds of the Offering. As a secondary benefit, this
Offering will serve to increase the Company’s presence in the industry, and it will be the focus of
the Company’s initial marketing campaigns.
See “Use of Proceeds”.
Summary of Risk Factors
Before you invest, you should consider the complete discussion of the risks associated with an
investment in our SAFEs and SAFEs in the section entitled “Risk Factors”.
The following are some of the significant risks concerning your investment:
● There is no public trading market for the SAFEs, and we do not expect one to ever
develop. Further, the transfer and redemption of our SAFEs is restricted as set forth
herein.
● We rely entirely on our officers for the day-to-day management of our business.
● Our officers and directors have the ability to revise our policies and strategies without the
prior approval of Investors.
Investing in assets such as the SAFEs involves risks attributable to both general economic
conditions and dynamics within the industry. See “Risk Factors”.
Reports
The Company does not expect to provide periodic reports to Investors in this Offering.
Who May Invest
We are offering the SAFEs in the United States only to persons who are “accredited investors” as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Pursuant to the
provisions of Rule 506(c), independent third-party verification of the accredited investor status
of each prospective Investor in the United States will be required prior to the acceptance of any
subscriptions by us. Each Investor must represent and warrant in the SAFE agreement that it, he
or she is able to assume the risks inherent in an investment in the Company.
See “Who May Invest” and “Plan of Distribution”.
How to Invest
In order to invest in the Company, a subscriber must complete and execute a SAFE agreement
and the attached documents and deliver or mail such documents to the Company as set forth
therein and must deliver payment for their subscription at such time.
See “Subscription Procedures”.
Certificate of Incorporation and Bylaws
Your relationship with the Company and the partners of the Company will be governed by our
Certificate of Incorporation (the “Certificate”) and Bylaws (the “Bylaws”), copies of which are
attached hereto as Exhibit B and Exhibit C, respectively. Some of the significant features of our
Certificate and Bylaws are as follows:
● The holders of SAFEs shall not have any right to select the Board of Directors (the
“Board”) or officers of the Company and do not have any other voting rights in the
Company.
●The Certificate and Bylaws provide that the Board and the Company’s officers shall
control the business and affairs of the Company.
Our Certificate and Bylaws are discussed in more detail in the section entitled “Certificate of
Incorporation & Bylaws”. If any statements in this Memorandum differ from our Certificate or
Bylaws, you should rely on our Certificate and Bylaws as attached hereto.
TAX CONSIDERATIONS
The Company has been formed in Delaware as a Delaware Corporation and we expect that it will
be taxed as such. The Memorandum does not address the tax consequences to Investors who
subscribe for or purchase SAFEs. You should consult your own tax advisor regarding personal
tax consequences that might be associated with your investment in our SAFEs.
Tax Treatment of the Fund investors’ Distributions
If the Company establishes a Fund (as defined below), and if distributions are made, an Investor
who receives an interest may be eligible to income tax benefits..
In such case, Investors would receive an IRS Form K-1 annually, detailing their proportionate
share of any distributions and losses in the Fund. The tax treatment of these amounts would be
subject to IRS rules and may include classification as passive income, capital gains, or other
applicable tax categories. Additionally, if applicable, Investors may also receive pass-through
losses. Depending on the advice of the Investor’s tax professional, such losses may potentially be
used to offset passive income. Furthermore, if the tax code regulations for active participation are
met, and if deemed appropriate by the Investor’s tax professional, e, such losses may also be
considered for offsetting active income.
Investors should consult with their tax professionals to assess the specific tax implications of
their participation. The Company reserves full discretion regarding the legal structure and
formation of the Fund or any similar or related entity, and there is no guarantee that any tax
benefits will be available.
THE COMPANY OVERVIEW
Filmio Studios is an innovative film production company that aims to revolutionize the estimated
$465B entertainment industry by leveraging powerful technologies, including the Film.io
platform, blockchain and AI technologies. The company works closely with Film.io, film
studios, film labs and film festivals, sourcing, validating, producing and financing films. Filmio
Studios fan-first model leverages the power of community to bring creators, fans, and investors
together to democratize the filmmaking industry. Leveraging strong fan engagement is a natural
conduit to creating the anticipated Filmio Now streaming network, which is planned to feature
films produced by Filmio Studios.
Core Components
Filmio Studios is involved in the filmmaking process from initial project selection through to
distribution. As such, Filmio Studios produces and co-produces pre-validated films with
communities of fans and earns producer services fees, as well as rights and royalties by helping
to raise project funding.
Deal Flow And Film Funding:
●
Scalable Deal Flow Engine: By utilizing deal flow from partnerships with established
industry partners, including Film Labs, Film Festivals, Film Studios and the Film.io
platform, Filmio Studios is poised to fill a substantial gap in the filmmaking industry.
o Film Labs: Film Labs are essentially film incubators. One example is our
partnership with Asociación Madrileña del Audiovisual, working with the city of
Madrid, called Ventana Madrid which has projected to bring 100 films to the
Film.io platform. The first slate of films will go through the film.io ecosystem
where they can build a community, be rated by the Go Score algorithm, and the
winners become potential production and financing prospects for Filmio Studios.
o Film Festivals: Filmio Studios is partnering with film festivals that utilize the
Film.io platform for validation and community development, in order to help
source high quality projects for production and financing. The first partnership is
with a festival called WeMakeMovies, which has projected to bring 500 films to
the Film.io platform, from which the winners of a multi month contest become
prospects for Filmio Studios to produce.
o Film.io: A blockchain-based platform that serves as the initial project greenlight
portion of the deal flow pipeline for Filmio Studios' operations. It allows projects
to accumulate and rank according to "Go Scores" based on community
engagement and support.
Scalable Film Funding:
o Film Funds
Filmio Studios intends to establish a film fund (the “Fund”), a private investment
vehicle focused on financing select opportunities in the entertainment industry,
including film, TV , gaming, virtual reality (VR), and related technologies. Filmio
Studios intends to serve as the General Partner (GP) of the Fund, with a
“promote” on fund profits.
Should the Fund be established, Filmio Studios intends to allocate twenty percent
(20%) of its promote to investors who participate in this offering. The Investors
would receive a non-managing GP interest, meaning their participation is
anticipated to be limited to financial distributions and would not include any
managerial rights over the Fund or Filmio Studios, subject to the terms and
conditions of the governing corporate documents of the Fund, which shall be
separately prepared and issued for execution to each participating Investor at that
time.
Filmio Studios retains full discretion over the final naming, structure, and legal
formation of the Fund, or any other investment vehicles that may be established.
There is no guarantee that these entities will be created in the form described
herein, or at all. Furthermore, Filmio Studios may establish additional entities in
the future, and the SAFE purchasers in this Offering will not directly participate
or have an economic interest in such entities..
o Funding Syndicates:
Funding Syndicates offer a new approach to film financing, blending angel
investing with the film industry's needs. Accredited investors pool resources
under the guidance of industry experts, in this case Filmio Studios and its expert
film industry executives as well as partners, to fund promising projects. This
model offers benefits like broader investor access, risk distribution, and expert
guidance. Filmio Studios plans to explore implementing this process as a way of
expanding funding options for film and TV projects. This model enables investors
to purchase securities in specific films, potentially sharing in the profits and
participating in the film's success, while diversifying their investment portfolios,
with a promote (a portion of what the film’s investors invest) going to Filmio
Studios. While offering potential benefits, Funding Syndicates also require careful
consideration of risks in the volatile entertainment market. The success of this
model depends on delivering value to both investors and filmmakers.
o Reg A+ Series Issuer - Fractionalized Film Investment:
As part of its scalable film funding strategies, Filmio Studios intends to become a
Reg A+ Series issuer. This innovative approach allows the company to
fractionalize ownership of film projects, offering shares to a wider pool of
investors, including non-accredited individuals. By leveraging Reg A+, Filmio
Studios can raise up to $75 million per year, providing a significant boost to its
film financing capabilities.
This strategy allows for a broader audience to participate in the film industry,
aligning with Filmio's mission to democratize access to film investment. As a
Series issuer, Filmio can issue multiple offerings under the same Reg A+
qualification, streamlining the process of raising capital for various film projects
with a carried interest (a portion of what the film’s investors invest) going to
Filmio Studios, targeted at 20% to 25%. This fractional ownership model enables
investors to purchase shares in specific films, potentially sharing in the profits and
participating in the film's success, while diversifying their investment portfolios .
o Reg CF Crowdfunding Portal:
Film.io intends to launch a Regulation CF portal in collaboration with licensed
broker-dealers. This will allow filmmakers to leverage the Film.io platform to
engage their community, including non accredited investors, and raise funds for
their projects. By combining the power of community engagement and
crowdfunding, Filmio Studios can further democratize the film financing process
and provide opportunities for a wider audience to participate in film production
OPERATIONAL WORKFLOW
Project Selection and Evaluation
Filmio Studios has developed what we believe is a unique and robust process for project
selection and evaluation, working in synergy with the Film.io decentralized pre-validation
platform. This collaborative approach aims to ensure that projects with the highest potential for
success are identified and moved forward, while maintaining a strong connection with audience
interests and market trends. The multi-step evaluation system combines traditional industry
expertise from Filmio Studios executives and film industry experts, partner Film Labs, Film
Festivals and Studios, with innovative AI and blockchain-based metrics and community input
from the Film.io platform, creating a comprehensive assessment framework.
Filmio Studios partners with film labs, film festivals and select studios to source projects that can
utilize the Film.io platform to help predict their commercial viability. Film festivals provide the
largest collective selection of projects and creators seeking industry advancement and by
partnering with festivals, Filmio Studios gains access to this important audience. Film labs are
collaborative forums or events designed to nurture emerging film projects through mentorship,
networking, and industry exposure. These typically include workshops, pitch sessions, and
opportunities for filmmakers to connect with potential collaborators, funders, and distributors.
Here's how the process unfolds:
●
Projects originate from Studios, Production Companies, Directors, Creators Film Labs
and Festivals (like Sundance and SXSW), as well as directly on the Film.io platform,
building communities, generating metrics and being ranked according to Film.io’s Go
Score algorithm.
●
Projects with the greatest potential, based on factors including the Film.io Go Score, AI
analysis, community size, other studios already invested, involvement of notable talent,
evaluation of film industry experts, the stage of the project in its development, are
selected to enter Filmio Studios' deal flow funnel.
● Initial Project Review assesses factors including the above criteria, as well as project
materials, market potential, budget feasibility, and community engagement.
● Detailed Evaluation involves deeper analysis of market potential, budget, creative
elements, and alignment with Filmio criteria by Filmio Studios experts as well as outside
resources, including AI.
● A Greenlight Committee, informed by the above criteria, makes final approval decisions
on greenlighting projects, which are then prepared for a lead investment by Filmio
Studios, usually consisting of a small percentage of the budget (targeted at 1% to 2%),
and then opened up to the Filmio Studios Funding Syndicate members.
● Once greenlit, a film’s materials are placed in a due diligence “room” and shared with the
Funding Syndicate members, who make their own decisions as to their level of
participation in the funding.
● Filmio Studios, as the lead investor, receives a “carried interest” targeted at 20% to 25%
of the invested capital from the Syndicate investors, providing cash flow which can be
shared under certain circumstances, directly or indirectly, with Filmio Studios
shareholders.
Project Funding
When Filmio Studios identifies a promising film project for production and decides to take a lead
investment position, it utilizes a Funding Syndicate model, Reg A+ fractionalized ownership,
and other strategies, to raise the remaining capital. Filmio Studios, acting as the lead investor,
leverages its industry expertise and network to attract accredited investors to participate in the
syndicate and other funding strategies. These investors pool their resources alongside Filmio
Studios' investment, forming a Special Purpose Vehicle (SPV) specifically for funding the
chosen film project. This collaborative approach not only distributes the financial risk but also
allows Filmio Studios to retain a significant stake in the project's success, aligning the interests
of all stakeholders.
Production Process
Filmio Studios intends on co-producing and financing advanced development stage films and TV
shows alongside reputable studios and producers, leveraging the deal flow from its partnerships
with Film Labs, Film Festivals, and the film.io ecosystem. This strategy prioritizes projects with
high potential for success, ensuring quality and minimizing risk.
Distribution & Marketing
Filmio Studios employs a hybrid distribution and marketing model, combining traditional film
industry methods with the unique advantages of the Film.io platform. This includes partnering
with film labs, festivals, and select studios to secure distribution deals, while also leveraging the
Film.io community for marketing and promotion. Filmio Studios will also work with leading
film industry distributors to bring films to a wider audience.
Finished Film Release
The Finished Film Release stage represents the culmination of Filmio Studio’s innovative
filmmaking process, where the completed project is brought to audiences through various
channels. This phase exemplifies the studio's commitment to leveraging both traditional
distribution methods and a powerful streaming strategy with the anticipated launch of Filmio
Now, Filmio Studio’s own streaming network. Filmio Studio’s approach to film release is
designed to maximize reach and engagement while also rewarding the community that supported
the project throughout its development, and to maximize profit.
Filmio Studios leverages relationships with film labs, festivals, and other studios to source and
co-produce high-quality films, utilizing the Film.io platform for community engagement and
funding. The company employs a hybrid distribution model, partnering with both traditional
distributors and the Film.io community to maximize reach and audience engagement.
Additionally, Filmio Studios plans to launch its own streaming network, Filmio Now, featuring
films produced in-house and sourced through the Film.io platform, further solidifying its position
in the film industry.
Unique Features
● Strategic Partnerships: Filmio Studios forms strategic partnerships with film labs, film
festivals, and select studios to source high-quality projects and secure distribution deals.
● Hybrid Distribution Model: The company utilizes a hybrid distribution model,
combining traditional film industry methods with the unique advantages of the Film.io
platform to maximize reach and audience engagement.
● Streaming Network: Filmio Studios plans to launch its own streaming network, Filmio
Now, featuring films produced in-house and sourced through the Film.io platform.
● Focus on Advanced Projects: Filmio Studios concentrates on co-producing advanced
development stage films and TV shows alongside reputable studios and producers,
ensuring quality and minimizing risk.
● Scalable Funding Strategy: The company has a scalable funding strategy, acting as the
lead investor in "de-risked" film projects and benefiting from a carried interest in the
larger funding from the Syndicate.
● Experienced Team: Filmio Studios is led by a team of entertainment and technology
veterans with a proven track record.
Team and Backing
●Led by a team of entertainment and technology veterans with over 150 years of combined
expertise from companies like HBO, Disney, and Universal.
● Backed by notable figures including Kevin Harrington from Shark Tank.
In summary, Filmio Studios represents a bold attempt to disrupt the traditional film industry by
combining decentralized technology, community engagement, and traditional filmmaking
expertise. Its integrated approach aims to democratize the filmmaking process while potentially
offering new avenues for investment and participation in the entertainment industry.
MANAGEMENT
Bryan Hertz, Chairman and Chief Executive Officer
Bryan, is a seasoned entrepreneur with over 30 years in business and tech innovation, having
founded leading technology companies, sat on boards and helped raise over $100 Million
throughout his career. He co-executive produced the Star Wars related film '5-25-77', Crypto
starring Kurt Russel, and televised concerts for Alicia Keys and Brad Paisley.
Orlando Pedragosa, Director
Orlando Pedregosa boasts a rich portfolio as a production executive, with credits ranging from
independent films like "Cold Skin" and "The Paramedic" to major studio productions like
"Exodus: Gods and Kings" and "The Promise."
Glenn Kennedy, Director
Mr. Kennedy serves as Director for Filmio International Limited, and his focus is on corporate
governance and legal and compliance matters, bringing over 20 years' experience with fund
formation, operations, regulatory and business law to efforts. Mr Kennedy previously served as
General Counsel of a listed European fund management group, during which time he
implemented an innovative, first-of-its-kind restructuring of a group of distressed Cayman
Islands hedge funds, pioneering a restructuring model which was later adopted by many
distressed funds during the 2008-09 financial crisis. He subsequently served as a special advisor
to an investor's committee on value recovery related matters.
Previously, Mr Kennedy was an associate attorney with the Cayman Islands office of a
multi-jurisdictional offshore law firm as part of the firm's investment funds team, and was prior
to that an equity partner with a Toronto, Canada based business law firm, where he practiced in
the areas of corporate law and investment funds.
Mr. Kennedy holds Bachelor of Laws and Bachelor of Arts degrees from the University of
Manitoba, Canada. Glenn is a Professional Director registered pursuant to the Directors
Registration and Licensing Act, 2014. He holds Canadian, United Kingdom and British Overseas
Territories citizenship, and is a permanent resident of the Cayman Islands.
Corey Hertz, Chief Product Officer
Corey brings over a decade of experience in technology product management leadership. Corey
has led the product management and development efforts of numerous successful product lines,
including industry leading high volume call and SMS billing, rating and routing platforms,
turning around and reinventing stagnant business units, innovating and increasing revenue by
millions of dollars in record time.
Ian LeWinter, President
With over thirty years experience in the creative industry, Ian has managed communications and
business strategy in the technology and entertainment verticals. Ian’s strategies have been used to
brand and promote industry heavyweights such as Toshiba, Intuit, Tenet Healthcare and Kyocera.
His TV and film Executive Producer credits include Alicia Keys and Brad Paisley televised
concerts, and his most recent feature film, a tribute to “Star Wars” fandom, ‘5-25-77.’ Ian is also
a co-creator of the world’s first superhero (Blank) created in real-time on Twitter in 2007.
Bob Giargiari, Chief Financial Officer
A graduate of Harvard and the UCLA Anderson School of Management, Bob has built, financed,
operated and achieved exits for a variety of innovative start-ups. A long-time senior executive
for both private and public organizations, he has led or facilitated financing and M&A
transactions totaling nearly $1 Billion.
Chris Davis, Chief Technology Officer
A full stack developer with experience building blockchain based projects, best-selling author,
speaker, artist, actor and start-up veteran, Chris has 20+ years experience in design and
engineering. A pioneer in the early days of WordPress, Chris developed the first plugins and
tutorials that showed the true power of WordPress, and authored best-selling books that helped to
bring it to the attention of millions of people. Chris developed the first admin dashboard and
theme system, helped to create the 'theme framework' category for WordPress, introduced several
new concepts like a theme settings page, a unique dynamic archive navigation system, a Humane
Notification system inspired by Jef Raskin and a complete widget-field-builder. Chris is a
member of the Infrastructure team for the Apache Software Foundation, and a speaker at the
Foundations Yearly Conferences in the US and Europe. He has remained active with the open
source community, working with the ASF, the jQuery Foundation and the original Google Code,
as well as helping to discover, refine and execute the vision of dozens of startups from luminaries
like tech giant billionaire Janus Friis, Co-founder of Skype, KaZaA & Rdio.
CERTIFICATE OF INCORPORATION & BYLAWS
Investors will not have control over our management, which is vested solely in the Board and the
officers of the Company, to the extent required by the laws of the Delaware General Corporation
Law (the “DGCL”).
Our Certificate provides that, to the fullest extent permitted by applicable law, a director and/or
officer of the Company will not be personally liable to the Company or its shareholders for
monetary damages for any breach of fiduciary duty as a director, and that, to the fullest extent
permitted by applicable law, the Company may indemnify any person made or threatened to be
made a party to any action or proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that such person, or a person for whom such person is the legal
representative, is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent of any other
enterprise. Our Certificate also provides that the Board may amend or repeal the Bylaws without
any action by the shareholders.
Our Bylaws provide that, subject to any limitations in the Certificate, the actual number of
directors will be determined by the Board.
Your relationship with the Company will be governed by our Certificate and Bylaws, copies of
which are attached hereto as Exhibit B and Exhibit C, respectively. Some of the significant
features of our Certificate and Bylaws are as follows:
● The holders of SAFEs shall not have any right to select the officers or directors of
the Company and do not have any other voting rights in the Company;
● The Certificate and Bylaws provide that the Board shall control the business and
affairs of the Company.
If any statements in this Memorandum differ from our Certificate or Bylaws, you should rely on
our Certificate and Bylaws as attached hereto.
The summary above does not set forth all of the provisions of the Certificate and the Bylaws of
the Company and is qualified in its entirety to our full Certificate and the Bylaws, which are
attached hereto as Exhibit B and Exhibit C, respectively.
TERMS OF THE OFFERING
The SAFEs are being offered privately by the Company and its officers on a best-efforts basis.
This offering is made to a limited number of investors who are qualified to purchase our SAFEs.
The Company is complying with the securities laws of the United States in offering and selling
the SAFEs. The Company will use the funds from this Offering to develop the Company
described herein.
Maximum Offering
There is no minimum amount required to be raised in this Offering for the Company to access
the funds, and the Maximum Amount is $5,000,000 in aggregate principal amount. Investors’
funds will not be held in escrow and will be immediately available to the Company upon
acceptance of the applicable subscription. Investors may, at any time, and from time to time,
subscribe for additional SAFEs so long as this Offering is open.
Offering Period
The Company will attempt to sell the SAFEs during an offering period commencing on the date
of this Memorandum and expiring on the earlier to occur of (1) the date on which the Maximum
Amount has been subscribed for and accepted by the Company or (ii) April 15, 2025, unless
extended by the Company, in its sole discretion. The Company reserves the right to reject any
subscription, in whole or in part. This private Offering is subject to withdrawal, cancellation or
modification without prior notice.
Use of Proceeds
The Company’s management will have broad discretion in the application of the net proceeds of
this Offering and Investors will have to rely upon their judgment. At present, the net proceeds of
the Offering are expected to be used for (i) paying for the costs of this Offering, (ii) the future
development of the Company, including acquiring rights in entertainment IP, investing in
technology, and establishing a fund to invest in film, TV and other entertainment related projects,
(iii) the development of functional applications for the Company, if any, (iv) general business
purposes, which may include capital expenditures, acquisitions, debt repayments, infrastructure
and personnel, development of products and services, and short term investments, among other
things, (v) legal, accounting and marketing expenses. The failure by the Company’s management
to apply these funds effectively could have a material adverse effect on the Company and the
value of the SAFEs. Since the commencement of the Offering through the date of this document,
the Company has utilized its own capital to manage its operations and doesn’t owe any future
debt as reported in the financial statements in this document.
In addition, Filmio Studios intends to allocate 20% of the proceeds of the Offering(targeting
$1M) toward its GP commitment in the Fund, if such Fund is established. This allocation is
intended to align Filmio Studios with future limited partners of the Fund (the “Limited Partners”)
by providing capital commitment consistent with industry standards.
The remaining 80% of the proceeds of the Offering will be used for operational growth, business
development, and investment in Filmio Studios’ proprietary entertainment initiatives.
Who May Invest
The offer, offer for sale, and sale of our SAFEs is intended to be exempt from the registration
requirements of the Securities Act pursuant to Rule 506(c) of Regulation D promulgated
thereunder as to “accredited investors” under the Securities Act, and is intended to be exempt
from the registration requirements of applicable state securities laws as a federally covered
security.
A subscriber must meet one (or more) of the investor suitability standards (be an “accredited
investor” below) to purchase SAFEs. Fiduciaries must also meet one of these conditions. If the
investment is a gift to a minor, the custodian or the donor must meet these conditions. For
purposes of the net worth calculations below, net worth is the amount by which assets exceed
liabilities, but excluding your house, home furnishings or automobile(s) among your assets. In
addition, in the subscription agreement, a subscriber will have to confirm satisfaction of these
minimum standards:
●Each Investor must have the ability to bear the economic risks of investing in the
SAFEs;
●Each Investor must have sufficient knowledge and experience in financial, business or
investment matters to evaluate the merits and risks of the investment;
●Each Investor must represent and warrant that the SAFEs to be purchased are being
acquired for investment and not with a view to distribution;
●Each Investor will make other representations to us in connection with purchase of the
SAFEs, including representations concerning the Investor’s degree of sophistication,
access to information concerning the Company, and ability to bear the economic risk
of the investment.
Suitability Requirements
Accredited Investors
Rule 501(a) of Regulation D defines an “accredited investor” as any person who comes within
any of the following categories, or whom the issuer reasonably believes comes within any of the
following categories, at the time of the sale of the securities to that person:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section
15 of the Exchange Act; any insurance company as defined in section 2(a)(13) of the Securities
Act; any investment company registered under the Investment Company Act of 1940 or
a business development company as defined in section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration undersection 301(c) or
(d) of the Small Business Investment Act of 1958; any plan established and maintained by
a state, its political subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in excess of
$5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section
3(21) of such act, which is either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are
accredited investors;
(2) Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of the securities
being offered or sold, or any director, executive officer, or general partner of a general partner of
that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person‘s spouse, exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person’s spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the same income level in the
current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a
sophisticated person as described in § 230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited investors.
For purposes of calculating net worth:
(A) The person’s primary residence shall not be included as an asset;
(B) Indebtedness that is secured by the person’s primary residence, up to the
estimated fair market value of the primary residence at the time of the sale of securities, shall not
be included as a liability (except that if the amount of such indebtedness outstanding at the time
of sale of securities exceeds the amount outstanding 60 days before such time, other than as a
result of the acquisition of the primary residence, the amount of such excess shall be included as
a liability); and
(C) Indebtedness that is secured by the person’s primary residence in excess of the
estimated fair market value of the primary residence at the time of the sale of securities shall be
included as a liability.
In determining income, a subscriber should add to the subscriber’s adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited partner in any
limited partnership, deduction claimed for depletion, contribution to an IRA or Keogh plan,
alimony payments, and any amount by which income for long-term capital gains has been
reduced in arriving at adjusted gross income.
Additional Provisions and Requirements
In addition to the foregoing suitability standards, we cannot accept subscriptions from anyone if
the representations required are either not provided or are provided but are inconsistent with our
determination that the investment is suitable for the subscriber. In addition to the financial
information we require, the representations we require of you state that you:
●Have received this Memorandum, together with the Exhibits attached hereto;
●Understand that no federal or state agency has made any finding or determination as
to the fairness for investment in, nor made any recommendation or endorsement of,
the SAFEs; and
●Understand that an investment in the Company will not, in itself, create a qualified
retirement plan as described in the Internal Revenue Code and that you must comply
with all applicable provisions of the Internal Revenue Code in order to create a
qualified retirement plan. You will also represent that you are familiar with the risk
factors we describe and that this investment matches your investment objectives.
Specifically, you will represent to us that you:
●Understand that there will be no public market for the SAFEs or any capital stock
upon conversion of the SAFEs, that there are substantial restrictions on
repurchase, sale, assignment or transfer of the SAFEs and converted securities
offered therein, and that it may not be possible to readily liquidate an investment
in the SAFEs; and
●Have investment objectives that correspond to those described elsewhere in this
Memorandum. You will also represent to us that you have the capacity to invest in
our SAFEs by confirming that:
●You are legally able to enter into a contractual relationship with us, and, if you are
an individual, have attained the age of majority in the state in which you live; and
●If you are a manager, that you are the manager for the Company on behalf of
which you are purchasing the SAFEs and have due authority to purchase SAFEs
on behalf of the Company.
If you are purchasing as a fiduciary, you will also represent that the above representations and
warranties are accurate for the person(s) for whom you are purchasing SAFEs. By executing the
SAFE agreement, you will not be waiving any rights under the Securities Act or the Exchange
Act.
We have the right to refuse a subscription for SAFEs if in our sole discretion if we believe that
the prospective Investor does not meet the suitability requirements. It is anticipated that
comparable suitability standards (including state law standards applicable in particular
circumstances) may be imposed by us in various jurisdictions in connection with any resale of
the SAFEs.
Subscription Procedures
Each Investor herein will be required to do the following:
1. Complete, sign and deliver to us a SAFE agreement (subject to the guidance below);
2. Deliver payment by check or wire, or USD, pursuant to the instructions herein, if any.
Investors within the United States, or who are U.S. persons, and who are subscribing on the
basis of being an accredited investor should complete and return the form of SAFE
attached hereto as Exhibit A.
The execution of the SAFE agreement by a subscriber constitutes a binding offer to purchase the
SAFEs subscribed for. Once a subscriber subscribes for SAFEs, that subscriber will not be able
to withdraw such subscription. If a subscription is not accepted, subscription funds will be
promptly returned to the subscriber, without interest or deduction (except for the wire transfer
fee). By submitting the completed and signed SAFE agreement with payment for the purchase of
the SAFE(s), you represent and warrant that you meet the relevant suitability standards and are
eligible to purchase SAFEs.
We do not permit sales to discretionary accounts without prior specific written approval of the
owner of the account. By executing a SAFE agreement and delivering payment you will not
become a shareholder of the Company. You will become a shareholder upon conversion of the
purchased SAFE(s).
Upon executing a SAFE agreement, you are not yet the counterparty to the Company or an
owner of the SAFEs or our capital stock. The SAFEs will be countersigned and issued if and
when your SAFE agreement is accepted by the Company. The agreements are non-cancelable
and irrevocable and subscription funds are non-refundable for any reason, except with the
consent of the Company.
We will be reviewing subscription applications as they are received and will accept or reject
subscription applications within fifteen (15) days after receipt of the subscription. We will
indicate our acceptance of your SAFE agreement by countersigning it and returning to the
prospective Investor. The Company reserves the right to reject any subscription submitted for
any reason. The minimum offering amount is $50,000 and the Company will hold subscription
funds during the period that the Company is determining whether to accept a particular
subscription. If your subscription is rejected, subscription funds will be promptly returned,
without interest.
Transfer Restrictions
The issuance and sale of the SAFEs and capital stock upon conversion therein, have not been
registered under the Securities Act or any other applicable securities laws, and we do not expect
that the SAFEs and capital stock upon conversion therein, will be registered once created. Unless
so registered, the SAFEs and capital stock upon conversion therein, may not be offered, sold,
pledged or otherwise transferred within the United States or to or for the account of any U.S.
Person, except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and any other applicable securities laws. Investors will
generally be required to maintain and hold their SAFEs and capital stock upon conversion
therein, for a period of one year from the issuance of Company’s capital stock. The SAFEs are
not redeemable at the option of the holder, and shareholders will not have the right to withdraw
their capital. It is not contemplated that the SAFEs and capital stock upon conversion therein will
ever be registered. No public market for the SAFEs and/or capital stock may ever develop.
In addition, if an Investor wishes to transfer SAFEs and/or Company’s capital stock, to another
investor, they must submit a request to the Company, provide all legal documents needed for the
transfer as well cover all the fees associated with the transfer.
Each purchaser of SAFEs and any capital stock upon conversion therein, will be required to
make the representations set forth in “Who May Invest”.
PLAN OF DISTRIBUTION
We intend to offer the SAFEs for sale directly to Investors privately pursuant to Regulation D as
promulgated by the SEC under the Securities Act. Investors shall execute documents provided
with this Memorandum in which they represent that the purchase of the SAFEs and the
underlying securities is being made for investment purposes with no intent to resell.
The SAFEs will be offered on a “best efforts” basis to qualified Investors by the Company
through the Company’s officers. All sales will be made privately to interested parties. The
SAFEs are being offered for sale to a select group of investors who meet the suitability standards
set forth under “Who May Invest.” The Company’s officers, employees and advisors may
participate in the Offering and no fees will be due to them for sale of SAFEs by such persons.
We reserve the right to accept or reject your subscription in whole or in part. Our acceptance of
your SAFE agreement is effective when we countersign it and issue the SAFE. If we accept your
SAFE agreement, we will provide you with a confirmation of your purchase. If we do not accept
your subscription, your purchase payment will be returned to you, without interest, within thirty
(30) days of our non-acceptance.
RISK FACTORS
In addition to the other information in this Memorandum, you should carefully consider the
following risk factors below before making an investment decision to purchase SAFEs offered
hereby. The purchase of SAFEs is only suitable for persons or entities that can afford the risk of
loss of their entire investment. If any of the following risks actually occur, our business, financial
condition, or results of operations could be materially and adversely affected. The risks and
uncertainties described below are not the only ones we face.
SAFES MAY HA VE NO V ALUE. BUYER MAY LOSE ALL AMOUNTS PAID. Buyer has
carefully reviewed, acknowledges, understands and assumes the following risks, as well as
all other risks associated with the SAFEs (including those not discussed herein), all of
which could render the SAFEs worthless or of little value:
Risks Related to the Company
This Memorandum contains forward-looking statements.
Certain information contained in this Memorandum constitutes “forward-looking statements,”
which can be identified by the use of forward-looking terminology such as “may,” “will,”
“should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the
negatives thereof or other variations thereon or similar terminology. Due to various risks and
uncertainties, actual events or the actual performance of the Company may differ materially from
those reflected or contemplated by such forward-looking statements. Investors are cautioned not
to place undue reliance on such statements.
The Company has limited operating history, which makes it hard to evaluate its ability to
generate revenue through operations.
The Company has only limited operations, assets and revenues. As a consequence, while the
Company is beginning to develop its application, it does not have sufficient revenues or financial
results or history upon which prospective investors may base an assessment of its business and
prospects. The Company’s operations are subject to all of the risks inherent in the establishment
of a developing business in a highly competitive market.
The Company’s limited operating history may make it difficult to evaluate its current business
and future prospects. The Company will continue to encounter risks and difficulties frequently
experienced by growing companies in rapidly developing and changing industries, including
challenges in forecasting accuracy, determining appropriate investments of its limited resources,
gaining market acceptance, managing a complex regulatory landscape and developing new
projects.
The likelihood of its success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with developing and expanding
businesses and the competitive environment in which it operates. If the Company fails to
successfully address these risks, its business, financial condition and results of operations would
be materially harmed. Any investment in the Company should be considered a high-risk
investment because the investor will be placing funds at risk in an unseasoned early stage
company with unforeseen costs, expenses, competition and other problems to which such
companies are often subject.
The Company’s current operating model may require changes in order for it to scale its
operations efficiently. Purchasers should consider the Company’s business and prospects in light
of the risks and difficulties it faces as an early-stage company. The Company is focused on
developing its business and exploring opportunities.
The Company does not have any material cash reserves or operations at this time. No assurances
can be given that we will generate sufficient revenue or obtain necessary financing to continue as
a going concern.
Payments made pursuant to the terms of the SAFEs may detract from the capital the Company
could otherwise deploy to improve its business.
Any capital used to make payments related to the SAFEs detracts from the capital available for
the Company to deploy in developing its business. Diverting the funds from the Company’s
operations may put the Company at a significant disadvantage in comparison to its competitors
who do not make similar payments. This disadvantage may have an adverse impact on the
operations and financial conditions of the Company.
The Company may be forced to cease operations.
It is possible that, due to any number of reasons, including, but not limited to the inability by the
Company to establish the SAFEs’ utility, the failure of commercial relationships, or intellectual
property ownership challenges, the Company may no longer be viable to operate, and the
Company may dissolve.
The Company may not successfully develop platforms and technologies.
The Company does not own Film.io, and its business plan is partially reliant on its commercial
partnership with, and the functionality and success of Film.io. Film.io and Filmio Studios are
separate entities. The Company views the development of the Film.io platform as a key
commercial milestone.
In addition, the development of the Filmio Now streaming platform and other technologies and
features will require significant capital funding, expertise of the Company’s management and
time and effort in order to be successful. The Company may have to make changes to the
specifications of these technological plans for any number of reasons, or the Company may be
unable to develop themin a way that realizes those specifications. It is possible that these
technologies may not ever occur. These technologies, if successfully developed, may not meet
investor expectations at the time of purchase of SAFEs.
Furthermore, despite good faith efforts to develop the technologies and subsequently to maintain
them, it is still possible that theywill fail to be adequately developed or maintained, which may
negatively impact the Company or the SAFEs.
The Company may, but is not obligated to, use the proceeds of this Offering to make significant
investments to develop and construct a viable platform and technologies (or to acquire or invest
in them in exchange for rights) upon which shareholders and can realize utility and value. The
Company may not have or may not be able to obtain the technical skills and expertise needed to
successfully develop these technologies. While the Company is seeking to competitively recruit
experts, there may, from time to time, be a general scarcity of management, technical, scientific,
research, marketing and personnel with appropriate training to develop and maintain the
technologies.
Alternative platforms may be established that compete with the platform in this case.
It is possible that alternative platforms could be established that utilize the same or a similar
protocol or regulations that will underlie the platform(s) and technologies used by Filmio Studios
or that will facilitate services that are materially similar to ours. The Company may compete with
these alternative platforms, which could negatively impact the Company.
Some market participants in the industry may oppose development of platforms and
technologies.
The market participants who may oppose may include market participants with significantly
greater resources, including financial resources and political influence, than the Company has.
The ability of the Company to operate and achieve its commercial goals could be adversely
affected by any actions of any such market participants that result in the need to have a material
adverse effect on the Company’s operations and financial conditions.
We need additional capital to develop our business. If we fail to obtain additional capital, we
may not be able to implement our business plan.
The continuation of our operations will require the commitment of substantial additional
resources. Currently, we have no established bank-financing arrangements. Our expenses are at a
minimum, and therefore, most of the capital raised will be utilized as described herein.
There can be no assurance that any additional financing will be available to us, or if available,
will be on terms favorable to us. The sale of additional equity securities will result in dilution to
our shareholders. The occurrence of indebtedness would result in increased debt service
obligations and could require us to agree to operating and financing covenants that would restrict
our operations. If adequate additional financing is not available on acceptable terms, we may not
be able to continue our business operations.
Our Certificate and the Bylaws provide for indemnification of the officers and shareholders.
Our Certificate and Bylaws provides for the indemnification of our officers and shareholders at
our expense and limit their liability to the Company. This may result in a major cost to us
because company resources may be expended for the benefit of the shareholders and present or
former officers.
We are dependent on key personnel.
The Company’s operations and business strategy are dependent upon the knowledge and
business connections of the shareholders and the Board. Even if we are able to find additional
personnel, it is uncertain whether we could find someone who could develop our business along
the lines described in this Memorandum. We could fail without the services of the shareholders
and the Board.
The success of the Company will be highly dependent on the expertise and performance of its
management team. There can be no assurance that the shareholders and the Board or any
additional members of the management team will continue to be associated with the Company or
any of their affiliates throughout the life of the Company. The loss of the services of one or more
of these individuals could have a material adverse effect on the performance of the Company.
General economic conditions and recent events may affect the Company and its operations.
Various sectors of the global financial markets have been experiencing an extended period of
adverse conditions. These conditions have resulted in reduced liquidity, greater volatility, general
widening of credit spreads and a lack of price transparency. The short and long-term impact of
these events is uncertain but could have a material effect on general economic conditions,
consumer and business confidence and market liquidity. Investments made by the Company are
expected to be sensitive to the performance of the overall economy. A negative impact on
economic fundamentals and consumer and business confidence would likely increase market
volatility and reduce liquidity, both of which could have a material adverse effect on the ability
of the Company to dispose of or realize its assets or investments at favorable multiples and on
the performance of the Company generally, and these or similar events may affect the ability of
the Company to execute its investment strategies.
The Company does not expect to make any distributions to holders of the SAFEs and there
can be no assurance of repurchases of SAFEs.
The Company does not expect to make any distributions to the holders of the SAFEs other than
as set forth herein. However, there can be no assurance that holders of the SAFEs will not owe
taxes with respect to their ownership of SAFEs, and thus such taxes will have to be paid from the
holders’ own funds.
There will exist recourse to the Company’s assets.
The Company’s assets are available to satisfy all liabilities and other obligations of the Company.
If the Company becomes subject to a liability, parties seeking to have the liability satisfied may
have recourse to the Company’s assets generally and not be limited to any particular asset, such
as the asset representing the investment giving rise to the liability or to any particular operating
subsidiary of the Company.
The Company is undertaking this Offering pursuant to a private offering exemption.
The Company intends to offer the SAFEs without registration under any securities laws in
reliance on an exemption for private offerings to accredited investors. While the Company
believes reliance on such exemption is justified, there can be no assurance that factors such as
the manner in which offers and sales are made, the scope of disclosure provided, failures to make
notices, filings, or changes in applicable laws, regulations or interpretations will not cause the
Company to fail to qualify for such exemptions under U.S. federal or one or more states’
securities laws. Failure to so qualify could result in the rescission of sales of SAFEs at prices
higher than the current value of those SAFEs, potentially materially and adversely affecting the
Company’s performance and business. Further, even non-meritorious claims that offers and sales
of SAFEs were not made in compliance with applicable securities laws could materially and
adversely affect the ability of the shareholders and the officers they name to conduct the
Company’s business.
Regulatory, legal and tax changes may adversely affect the Company.
Legal, tax and regulatory changes, as well as judicial decisions, could adversely affect the
Company. In response to the recent global financial crisis, there have been unprecedented
legislative and regulatory actions taken by numerous governmental authorities and their
agencies. Many of these actions have been directed at the securities industry in general and
specific segments of the industry. Additional legislative and regulatory action is likely. Changes
to the securities laws and regulations could occur during the term of the Company and may
adversely affect the Company and its ability to operate. Such risks are often difficult or
impossible to predict, avoid or mitigate. The effect on the Company of any such regulatory or
legal changes could be substantial and adverse.
Our financial condition and results of operation will depend on our ability to manage future
growth effectively.
Our ability to achieve our investment objective will depend on our ability to grow, which will
depend, in turn, on the ability of the Board and the officers it names to execute on our business
plan. The management team of Company will have substantial responsibilities under the
Certificate and Bylaws. In addition, the employees of the Company may also be called upon to
provide managerial assistance. Any failure to manage our future growth effectively could have a
material adverse effect on our business, financial condition, and results of operations.
The Company may experience fluctuations in its quarterly results.
The Company could experience fluctuations in its quarterly operating results due to a number of
factors, including the level of its expenses; variations in, the timing of, and the recognition of
realized and unrealized gains or losses; the degree to which we encounter competition in our
markets; and general economic conditions. As a result of these factors, results for any period
should not be relied upon as being indicative of performance in future periods.
Misconduct by employees of the Company or third-party service providers could cause
significant losses to the Company.
Misconduct by employees of the Company or third-party service providers could cause
significant losses to the Company. Losses could also result from actions by third-party service
providers, including, without limitation, failing to recognize trades and misappropriating assets.
In addition, employees and third-party service providers may improperly use or disclose
confidential information, which could result in litigation or serious financial harm, including
limiting the Company’s business prospects or future marketing activities. No assurances can be
given that the due diligence performed by the Company or the shareholders will identify or
prevent any such misconduct.
There is always doubt concerning the Company’s ability to continue as a going concern.
The Company’s ability to continue as a going concern is subject to its ability to generate a profit
and/or obtain necessary funding from outside sources, including obtaining additional funding
from the sale of the SAFEs offered hereby upon consummation of an acquisition, increasing
sales or obtaining loans and grants from various financial institutions where possible. Company’s
continued net operating losses increase the difficulty in meeting such goals and there can be no
assurances that such methods will prove successful. If Company is unable to continue as a going
concern, the investors may lose their entire investment.
If the Company’s operations do not achieve and maintain market acceptance, its business will
not be successful.
The Company’s success is dependent upon the commercial viability of the operations it markets.
In order for its business to be successful, however, it must convince potential customers of both
the effectiveness and economic benefits of our operations as compared to currently existing or
future developments. There can be no assurances that the Company will be able to do so. If its
technologies do not achieve and maintain market acceptance, its business will not be successful.
Company is dependent upon its growth operations, which is subject to licenses with others.
If any of these agreements are terminated, the Company’s results of operations will be adversely
affected.
If the Company does not develop sales and marketing capabilities or marketing arrangements
successfully, it will not be able to market its operations successfully.
At the present time, the Company’s principal executive officers devote substantial time to sales
efforts, and the Company’s sales efforts are significantly reliant upon the contacts and experience
of its executive officers and members of its board of directors. The Company intends to develop
its sales and marketing capabilities through the appointment of sales representatives and
independent distributors. If the Company is unable to do so, it will have difficulty selling its
products, which would materially adversely affect its business, prospects, financial condition and
results of operations.
If the Company is unable to secure adequate third-party suppliers, the Company’s competitive
position and profit margins could be materially affected.
The Company is dependent on third parties to supply various parts and components. While the
Company believes there are numerous suppliers available to satisfy its anticipated requirements,
failure or refusal of an existing supplier to fulfill an order could result in the Company’s inability
to deliver its operations on a timely and competitive basis. Further, the inability to obtain
favorable pricing terms from third parties could affect the Company’s competitive position and
the Company’s profit margins.
The Company is dependent upon its management team and the loss of any of these individuals
would harm its business.
The Company is dependent on the efforts of its key management personnel. While the Company
has employment agreements with other persons, each may resign at any time. The loss of key
personnel and other officers of the Company, or the Company’s inability to recruit and train
additional key personnel in a timely manner, could materially and adversely affect its business
and its future prospects. The Company does not have life insurance on any of its key
management personnel.
If the Company is unable to effectively manage its growth, its ability to implement its business
strategy and its operating results will likely be materially adversely affected.
In the event the Company is successful in generating business, such success will likely place a
significant strain on its management, administrative, operating and financial infrastructures. To
manage its business and planned growth effectively, the Company must successfully develop,
implement, maintain and enhance its financial and accounting systems and controls, integrate
new personnel and businesses, and manage expanded operations. If the Company is unable to
manage its growth, its operating results may be adversely affected.
If the Company fails to develop operations that is competitive, satisfies certification standards
and meets customer needs, its business, revenues, financial condition and operating results
will be materially adversely affected.
The market for the Company’s operations is characterized by rapidly changing and evolving
governmental and industry standards, including developments in required regulatory
certifications. The emergence of new governmental and industry standards can render
Company’s existing goals obsolete and unmarketable and can exert price pressure on Company
sales. It is critical to the Company’s success that it anticipate changes in governmental and
industry standards and successfully acquire and introduce new, enhanced and competitive
techniques on a timely basis. The Company cannot assure you that it will have adequate
resources available to develop the platform, that it will be able to successfully introduce new
ideas, that the platform will achieve market acceptance or that the introduction of it or plan or
technological developments by others will not render it obsolete. If the Company fails to develop
the platform that is competitive, satisfies certification standards and meets customer needs, its
financial condition and operating results will be materially adversely affected.
The Company must comply with complex laws and regulations, which make it costlier and
more difficult for it to successfully conduct its business.
The Company must comply with complex laws and regulations, which can make it more difficult
for it to retain its rights under such contracts. These laws and regulations affect how the
Company and its customers can do business and, in some instances, impose added costs on the
Company’s business. Any changes in applicable laws and regulations could restrict its ability to
maintain its existing business model, which could limit its ability to conduct its business and
materially and adversely affect its revenues and results of operations.
If the Company fails to comply with laws and regulations, it may be subject to costly civil and
criminal penalties and administrative sanctions.
The Company’s business is highly regulated by United States federal, state and other agencies,
including the Securities and Exchange Commission, and is subject to laws and regulations that
affect its business model. If a government review or investigation were to uncover improper or
illegal activities on the Company’s part in connection with the business, the Company may be
subject to civil and criminal penalties and administrative sanctions, including termination of
contracts, forfeiture of profits, price reductions, suspension of business activities, determination
of non-responsibility, fines and suspension or debarment from doing business with government
agencies. The imposition of civil or criminal penalties or administrative sanctions could
materially adversely affect our business, financial condition and results of operations. In
addition, the United States may adopt new laws, or a government, domestic or foreign, may
reform its procurement practices or adopt new rules and regulations that could be costly to
satisfy or that could impair the Company’s ability to continue its business model.
The Company’s efforts to comply with changing certification standards may prove costly, and
if it fails to comply, it may lose business.
The Company’s operations must meet the standards of government agencies. If the Company
fails to obtain any necessary certifications in a timely manner, the Company’s ability to operate
its business may be adversely affected and it may lose customers. As a result, its business,
prospects, revenues and operating results may be materially adversely affected.
The Company anticipates that it will encounter a long sales and implementation cycle
requiring significant resource commitments.
The implementation of the Company’s operations involves significant resource commitments.
The Company expends substantial time and money educating potential clients as to the value of
its operations and assessing the feasibility of integrating its systems and processes with theirs.
The potential client may not engage the Company’s operations and services offered. Failure to
engage clients may have a negative impact on revenue and income.
If the Company may be unable to prevent third parties from infringing upon or
misappropriating its intellectual property or otherwise gaining access to its technology, its
business, financial condition and results of operations, and its ability to compete effectively,
could be materially and adversely affected.
The Company’s success may depend in part on its ability to protect its intellectual property.
However, such intellectual property rights may be difficult to protect. Monitoring and defending
the Company’s intellectual property rights can entail significant expense, and the outcome is
unpredictable, especially when dealing with the federal government, which imposes strict
marketing requirements for the protection of intellectual property and generally takes an
aggressive posture toward rights in intellectual property used in the performance of its contracts.
The Company may initiate additional claims or litigation, against third parties for infringement
of its proprietary rights or to establish the validity of its proprietary rights. Any such litigation,
whether or not it is ultimately resolved in the Company’s favor, could result in significant
expense to it and divert the efforts of Company’s technical and management personnel. If the
Company fails to protect its intellectual property rights adequately, the Company’s competitors
might gain access to its technology and its business would be harmed.
The Company’s operations may infringe or be alleged to infringe on the intellectual property
rights of others, which could lead to costly disputes or disruptions.
If patent holders or other holders of intellectual property initiate legal proceedings against the
Company or a customer, the Company may be forced into protracted and costly litigation. Any
allegation of infringement against the Company could be time consuming and expensive to
defend or resolve, result in substantial diversion of management resources, cause product
shipment delays, or force the Company to enter into royalty or license agreements rather than
dispute the merits of such allegation. The Company may not be successful in defending such
litigation and it may not be able to procure any required royalty or license agreements on terms
acceptable to it, or at all. The Company’s technologies may not be able to withstand third-party
claims against their use.
Risks Relating to the Offering.
This is a “best efforts” offering with a minimum offering amount, and the Company has
critical cash requirements that may not be satisfied by this Offering.
This is a “best efforts” offering with a minimum offering amount of $25,000. However, the
Company may accept lesser subscription amounts upon receipt of the required subscription
documents, regardless of the amount of the total subscriptions the Company has received. If the
Maximum Offering Amount is not received, the Company will only be able to partially
implement the business strategies outlined in this Memorandum and will require additional funds
for full implementation of post-Acquisition plans. Even if the Company receives the Maximum
Offering Amount, it may require significant additional amounts of capital. If required, the
Company intends to seek additional capital needed to fund the operations through corporate
partnerships or public or private equity or debt financings. Additional financing may not be
available on terms acceptable to the Company, or at all. Should the Company raise funds through
the incurrence of debt, it may become subject to covenants that may significantly restrict the
Company operations. In the event the Company issues additional equity, the Company’s
shareholders may suffer significant dilution. If the Company is unable to obtain financing on
acceptable terms or at all, its ability to continue the business as planned will be significantly
impaired and it may cause the Company to cease operations.
The Company has not retained independent counsel to represent its interests in connection
with this Offering, and thus Investors have not received any benefits that the involvement of
independent counsel might bring to the Offering.
All of the outstanding Shares of the Company is owned by affiliates of the Company, which is
represented by counsel in connection with this Offering. The Company, the shareholders of
which will own a majority of the outstanding shares of the Company following the Offering, is
also represented by counsel in connection with this Offering. Investors are advised to seek their
own independent counsel in connection with their decision to invest in the Company and to
discuss this point with such counsel.
The Company has not paid and does not intend to pay dividends in the near future.
The Company does not expect to pay cash dividends on the Company’s SAFEs in the foreseeable
future. Assuming the Company could eliminate any probable short-term or other deficit, any
future determination to declare or pay dividends will be at the discretion of the Company’s Board
and will be dependent on the Company’s results of operations, financial condition, contractual
and legal restrictions and other factors deemed relevant by the Board.
The SAFEs have not been registered under the Securities Act and there are restrictions on
transferability of the SAFEs.
The SAFEs have not been registered under the Securities Act or under any other applicable
securities law. The Company is relying on certain exemptions from applicable securities laws in
offering and selling these SAFEs. Unless the SAFEs are registered under the Securities Act and
under any other applicable securities laws, the SAFEs may not be offered or sold except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and other applicable securities laws. Investor will be required to make certain
representations and agree to restrictions on transfer necessary to satisfy the requirements of the
exemptions from registration, and the certificates representing the SAFEs purchased will bear a
legend including that they are so restricted. Accordingly, Investor may be unable to sell these
SAFEs for an indefinite period. In addition, Investor should be able to withstand a total loss of
Investor’s investment.
All SAFEs that will be issued in the Acquisition and in this Offering will be “restricted
securities” as defined by Rule 144 under the Securities Act and cannot be resold without
registration except in reliance on Rule 144 or another applicable exemption from registration.
There can be no resale of SAFEs in reliance upon Rule 144 until 12 months after the initial sale.
No prediction can be made as to the effect, if any, that future sales of restricted SAFEs, or the
availability of such SAFEs for sale, will have on the market price of the shares prevailing from
time to time, if such a market is developed. Sales of substantial amounts of such shares in the
public market, or the perception that such sales may occur, could adversely affect the then
prevailing market price of the SAFEs.
The Company has broad discretion in the application of proceeds from the Offering.
The proposed allocation of the net proceeds of this Offering represents the Company’s best
estimate of the expected use of funds to finance the Company activities based upon its current
objectives and perceived market conditions. However, changes in circumstances or strategic
approaches may result in a significantly different allocation of the funds depending upon the
Company’s management and Board’s assessments of the Company’s needs at the time.
Future issuances of the Company Shares could dilute current stockholders and adversely
affect the market if it develops.
The Company has the authority to issue as many Shares as deemed necessary, with shareholder
approval. These future issuances could be at values substantially below the price paid for shares
pursuant to SAFEs by Investors in this Offering, which would result in significant dilution to
those investors. In addition, the Company could issue large blocks of shares to fend off unwanted
tender offers or hostile takeovers without further shareholder approval, which would not only
result in further dilution to Investors in this Offering but could adversely affect the market if one
were to develop.
The fact that the Company founders, directors, affiliates and officers will own over 50% of the
Company’s Shares may decrease Investor’s influence on shareholder decisions.
The Company’s founders, officers, directors, general partners and affiliates in the aggregate, will
beneficially own over 50% of the Company Shares after the sale of the Maximum Offering
Amount. As a result, the Company’s officers, directors and general partners will have the ability
to influence management and affairs and the outcome of matters submitted to shareholders for
approval, including the election and removal of directors, amendments to bylaws, and any
merger, consolidation or sale of all or substantially all of the Company assets.
Additional Risks Related to This Offering.
There is no public market for the SAFEs, so Investors may be unable to dispose of their
investment.
There is no public market for SAFEs. Even if a potential buyer could be found, the transferability
of SAFEs is restricted by the provisions of the Securities Act and the laws and regulations of the
individual states and countries where the SAFEs are being offered and sold, which generally
prohibit transfer absent a registration of such SAFEs with the applicable regulatory authority or
an exemption from the registration requirements of such regulatory authority.
Investors should expect to hold their SAFEs for an indefinite period of time.
Investors have no rights to redeem SAFEs or withdraw from the Company or to otherwise obtain
the return of the investments. Therefore, Investor must be capable of bearing the economic risks
of this investment with the understanding that Investor’s interest in the SAFEs may not be
liquidated for some time. Investor should expect to hold the SAFEs for an indefinite period of
time.
The Board and the officers the Company designates will make all management decisions.
Except as otherwise set forth in our Certificate and Bylaws, the Company’s Board and
designated officers will have the right to make all decisions with respect to the Company’s
management. Other than the information set forth in this Memorandum, Investors will not have
an opportunity to evaluate the specific investments that will be financed with the proceeds of this
offering or with future operating income. Investor should not purchase SAFEs unless Investor is
willing to entrust all aspects of Company’s management to the Board and designated officers.
Holders of the SAFEs have no right to replace any members of the Board or such officers, as that
right is retained solely by the Board.
The Board and the officers the Company designates may change the Company’s operating
policies without a vote of Investors.
Because the Board and the officers may change the Company’s investment and operating policies
at any time without a vote of Investors, such changes may cause the Company to see a reduction
in return on investment. In such event, the Company’s financial results and Investor’s investment
may be adversely affected.
Investor has no ability to withdraw from the investment.
Generally, ability to withdraw from the investment is limited to situations where Investor is able
to transfer SAFEs to another person, which transfers are subject to limits as described herein.
The Company’s management will have broad discretion over the use of the net proceeds from
this Offering.
At present, the net proceeds of the Offering are expected to be used for (i) paying for the costs of
this Offering, (ii) the future development of the platform, (iii) general corporate purposes, which
may include capital expenditures, acquisitions, debt repayments, cybersecurity upgrades,
augmenting technology, infrastructure and personnel, and short term investments, among other
things, (iv) legal and accounting expenses. The failure by the Company’s management to apply
these funds effectively could have a material adverse effect on the Company and the value of the
SAFEs.
Only certain persons and entities are able to acquire SAFEs.
Only limited categories of persons and entities may purchase SAFEs. The Company expects that
these limitations will limit liquidity in the SAFEs, and the limitations may have a material
adverse effect on the development of any trading market in the SAFEs. The SAFEs have not
been registered under the Securities Act or any United States state securities laws or under the
securities laws of any other jurisdiction and may not be offered or sold within the United States
or to, or for the account or benefit of, United States persons except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act and
applicable U.S. state securities laws. No action has been taken in any jurisdiction to permit a
public offering of the SAFEs. Moreover, in addition to legal restrictions, by acquiring SAFEs,
holders agree to additional transfer restrictions described in this Memorandum. A purchaser of
the SAFEs and an owner of beneficial interests in those SAFEs must be able to bear the
economic risk of their investment in the SAFEs indefinitely.
The tax treatment of the SAFEs is uncertain and there may be adverse tax consequences for
Investors upon certain future events.
The tax characterization of the SAFEs is uncertain, and each Investor must seek its own tax
advice in connection with an investment in the Shares. An investment in the SAFEs may result in
adverse tax consequences to Investors, including withholding taxes, income taxes and tax
reporting requirements. Each Investor should consult with and must rely upon the advice of its
own professional tax advisors with respect to the United States and non-U.S. tax treatment of an
investment in the SAFEs and the purchase rights contained therein.
The tax characterization of the SAFEs also affects the Company’s tax liability in connection with
the Offering. In addition, the accounting consequences are uncertain, and there is a possibility
that the proceeds of the Offering might be treated as a liability rather than equity for accounting
purposes, which would reduce the Company’s net book value compared to equity treatment.
The offering price of the SAFEs has been determined arbitrarily.
The price of the SAFEs has not been determined by any independent financial evaluation, market
mechanism or by any auditors, and is therefore, to a large extent, arbitrary. No audit firm will
review management’s valuation and, therefore, there will be no opinion from any such firm as to
the fairness of the offering price as determined by our management. As a result, the price of the
shares received upon conversation of the SAFE(s) in this Offering may not reflect the value
perceived by the market. There can be no assurance that the shares will be worth the price for
which they are offered, and Investors may, therefore, lose a portion or all of their investment.
The SAFEs are an illiquid investment.
An investment in the Company requires a long-term commitment with no certainty of return.
Although some of the Company’s operations may generate current cash flow, there can be no
assurance that the Company will be able to realize such cash flow or otherwise be able to effect a
successful realization or exit strategy. There can be no assurance that the Company obtains
enough cash flow to continue operations. Even if the Company effects a successful realization or
exit strategy the proceeds therefrom will not flow to the shareholders.
If the Company ceases operations, the SAFEs will have limited or no value or utility.
The Company is conducting this Offering to raise capital for the development of the platform and
to fund ongoing operations. The SAFEs have only the value and utility as connected to such
operations, and in the event that the Company is unable to successfully develop the platform and
continue its operations thereon, the SAFEs will have limited or no value or utility.
The SAFEs do not represent a right to any profits of the Company.
Other than as set forth herein, the SAFEs do not grant equity stake nor profit sharing in the
Company and do not represent an ownership right or direct claim in the operations, revenues,
profits or intellectual property, either present or future. Investors should be aware that their
investments are not refundable or redeemable, and thus Investors must accept the inherent risk of
operational failure at any stage of development. The SAFEs will not provide any redemption
rights. The Company reserves the right to change the utility value and/or intended usages of the
SAFEs at any point in the future.
There is no established public market for SAFEs, and it is not expected that one will develop.
There is no established trading market for the SAFEs, and it is not expected that one will
develop. There will be no trading market available for the SAFEs when issued, no designated
exchange and peer-to-peer transfers will be permitted unless and until shareholders are notified
otherwise by the Company and informed of the requirements to and conditions do so. As a result,
if and when the SAFEs become transferable, they may only be traded on very limited range of
venues, including U.S. registered exchanges or regulated alternative trading systems for which a
Form ATS has been properly submitted to the SEC. Currently, the Company is unaware of any
operational ATS or exchange capable of supporting secondary trading in the SAFEs.
Investors should be prepared to hold their SAFEs indefinitely. Moreover, even if the SAFEs
become transferable, the Company may rely on technology, including smart contracts, to
implement certain restrictions on transferability in accordance with the federal securities laws.
There can be no assurance that such technology will function properly, which could result in
technological limitations on transferability and expose the Company to legal and regulatory
issues.
In the event that the SAFEs remain untradeable for a significant period of time or indefinitely,
the value of the SAFEs would be materially and adversely affected.
In addition, the liquidity of any market for the SAFEs will depend on a number of factors,
including:
●
Number of holders of SAFEs;
●
Company’s performance and financial condition;
●
Market for similar digital SAFEs; and
●
Interest of traders in making a market in the SAFEs.
Company cannot assure Investors that the market, if any, for the SAFEs will be free from
disruptions or that they may not adversely affect the ability to sell SAFEs. Therefore, Company
cannot assure that Investors will be able to sell the SAFEs at a particular time or that the price
Investors receive when selling will be favorable.
Repurchase or redemption of SAFEs.
Investors do not have the right to compel the Company to redeem SAFEs. The Company may,
however, purchase outstanding SAFEs from time to time. The Company may allocate funds for
the open-market purchases or privately negotiated transactions in SAFEs from time to time when
deemed to be in the best interest of the Company. The shareholders and the officers the Company
names may or may not decide to allocate any funds for the repurchase or redemption of our
SAFEs.
Holders of the SAFEs will generally not have voting rights and will generally have no ability
to influence the decisions of the Company.
Holders of the SAFEs have no voting rights, except those required by Delaware law. As a result,
except with respect to matters required to be submitted to shareholders under Delaware law, all
matters submitted to shareholders will be decided by the vote of the Board of the Company. As a
result, holders of the SAFEs will have no ability to elect directors or, except with respect to
matters required to be submitted to shareholders under Delaware law, to determine the outcome
of any other matters submitted to a vote of the Company’s Board. The interests of holders
entitled to vote on such matters may differ from, or conflict with, the interests of the Board.
The SAFEs are “Restricted Securities.”
The SAFEs in this Offering have not been registered under the Securities Act or under the
securities laws of the states in which they will be offered. You will not be able to resell the
SAFEs unless they are subsequently registered or an exemption from registration is available.
The Company has no obligation to register the SAFEs under the 1933 Act or any state securities
law. The Company will refuse to transfer Investor’s SAFEs to a potential buyer if such a transfer
would violate federal or state securities laws.
No guarantee of any return of your investment.
There is no assurance that the Company will be able to pay distributions. Thus, it is possible
Investors may not receive any distribution on the SAFEs. In addition, there is no guarantee that,
in the event of liquidation, Investors will receive sufficient funds to provide themselves with a
return on investment. Furthermore, there is no guarantee that Investors will be repaid any or all
of their investment. There can be no assurance as to whether or when Investors will get the
invested capital returned. The potential will exist for a partial or total loss of the investment.
Investors will not have a secured interest in the operations of the Company.
Other limitations on voluntary and involuntary transfers; including one-year requirement.
In addition to restrictions of the transfer of the SAFEs that are imposed by law, the SAFEs are
subject to numerous contractual limitations that will substantially limit Investors’ ability to
transfer SAFEs. Each purchaser of SAFEs offered hereby will, by signing the SAFE, agrees to
become a party to the Company’s Bylaws.
Limited redemption rights.
The Company offers no guaranteed rights of redemption. Investors should be cognizant that they
will not be able to demand redemption of the SAFEs under any circumstances. Their investments
will be “locked up” for at least one (1) year and should therefore be viewed as a long-term and
illiquid investment.
No voting rights.
The SAFEs in this Offering provide no governance rights and voting rights. Investors will not
have any right to participate in the management of the Company. The Board will own all of the
Company’s shares, and thereby will control day to day activities of the Company and all
decisions. You should not invest in the SAFEs unless you are willing to entrust all decisions to
the Board.
The placement price was arbitrarily determined.
The price of the SAFEs in this Offering was arbitrarily determined by the Company and should
not be considered as an objective indication of the actual value of the Company or the securities
being offered and it bears no relationship to the Company’s assets, earnings, book value or any
other objective value. Investors must rely on their own business and investment background and
their own investigation of the business and affairs of the Company in determining whether to
invest in the SAFEs. The Company makes no representation as to the value of the SAFEs, and
there can be no assurance that Investors will be able to sell their SAFEs at any price.
No registration rights.
The Company does not intend to register the SAFEs or any of our securities with the Securities
and Exchange Commission, and Investors will have no right to require the Company to do so.
Conflicts of Interest
The following discussion enumerates certain potential conflicts of interest that should be
carefully evaluated before making an investment in SAFEs. The following is not intended as an
exhaustive list of the potential conflicts. Instances may arise where the interest of the
shareholders and/or their affiliates may potentially or actually conflict with the interests of the
Company. Neither the shareholders nor the officers the Company names will be required to
manage the Company as their sole and exclusive function and are entitled to have other business
interests and may engage in other business activities in addition to those relating to the Company.
The shareholders and the officers the Company names may also form and devote their time to
other investment partnerships with activities similar to those of the Company and may also have
conflicts of interest in allocating time, services and functions among the Company and other
business ventures. Neither the shareholders nor the officers the Company names are required to
refrain from such management activities or to disgorge profits from such activities. By acquiring
SAFEs, each Investor will be deemed to have acknowledged the existence of any such actual or
potential conflicts of interest and to have waived any claim with respect to any liability arising
from the existence of any such conflicts of interest.
Neither the Company nor the shareholders owe the Investor any fiduciary duties.
Direct investors in companies are generally owed an obligation by the company and its
management of good faith, fairness in all dealings and other fiduciary duties. However, to the
extent permitted by law, Investors will not be entitled to any such protections from the Company
or the shareholders. Accordingly, Investors will have very limited, if any, rights of recovery
against the Company or the shareholders if such parties engage in gross negligence or act against
the interests of Investors. Furthermore, the Company has no obligation to Investors to enforce
any rights that it may be deemed to have against other shareholders or its officers.
The foregoing risks do not purport to be a complete explanation of all the risks involved in
acquiring SAFEs. Potential Investors are urged to read this entire Memorandum before making a
determination whether to invest in SAFEs.
Holders of SAFEs will have no voting rights and may have conflicts of interest with other
shareholders.
The Shares, if issued, will have no voting rights or other management or control rights in the
Company. Accordingly, the Board of the Company will control decisions for the Company that
in other companies would require shareholder approval, including the amendment of the
Certificate and Bylaws, the election of directors and significant business transactions, such as a
merger or other sale of our Company or our assets.
There may be occasions when certain individuals involved in the development of Company
operations may encounter potential conflicts of interest, such that said party may avoid a loss,
or even realize a gain, when other Investors in this Offering or in the Company are suffering
losses.
There may be occasions when certain individuals involved in the development of the operations
or the Company may encounter potential conflicts of interest, such that said party may avoid a
loss, or even realize a gain, when other Investors in the are suffering losses. Investors in SAFEs
may also have conflicting investment, tax, and other interests with respect to SAFEs investments,
which may arise from the terms of the SAFEs, the property, the timing of the development of the
operations, other share pre-sales, or other factors. Decisions made by the key personnel of the
Company on such matters may be more beneficial for some Investors than for others.
The foregoing list provides some, but not all, of the Risk Factors and other factors that could
impact the Company’s ability to achieve the results described in any forward-looking statement.
Investors should not place undue reliance on our forward-looking statements. Before investing in
the SAFEs, Investor should be aware that the occurrence of the events described above and
elsewhere in this Memorandum could seriously harm the Company’s business, prospects,
operating results and financial conditions. The Company undertakes no obligation to update any
forward-looking statements for any reason, even if new information becomes available or other
events occur in the future.
STATEMENT AS TO INDEMNIFICATION
Our Certificate and Bylaws provides for indemnification of the shareholders and our officers
under certain circumstances, which could include liabilities relating to securities laws. The SEC
mandates the following disclosure of its position on indemnification for liabilities under the
federal securities laws:
“Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling an issuer, the Company has been informed
that in the opinion of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.”
FEDERAL INCOME TAX CONSEQUENCES
The Company is a corporation and expects to be taxed for U.S. income tax purposes as such. We
and our investors will be subject to U.S. federal income tax and may also be subject to state,
local and foreign income tax taxes in states and localities in which we are deemed to be doing
business. Except where we reference specific states and countries, this discussion does not cover
state, local or foreign income tax consequences you may incur in connection with your
investment.
Except as to disclosure of the Company’s withholding and reporting requirements under U.S.
income tax law as to possible payments to be made to holders of our SAFEs presented herein,
this Memorandum does not otherwise address any of the other applicable aspects of U.S. federal
income taxation that may be relevant to you, including, the federal income tax ramifications as to
the purchase, ownership or disposition of the SAFEs. This summary is not tax advice. The tax
treatment of a holder will vary depending upon the holder’s particular situation. Accordingly, this
summary does not purport to deal with all aspects of U.S. federal income taxation that may be
relevant to an Investor’s decision to purchase our SAFEs, nor any tax consequences arising under
the laws of any state, locality or foreign jurisdiction.
You are urged to consult your own tax advisors as to the specific tax consequences of
purchasing, owning and disposing of any SAFEs, including any federal, state or local tax
consideration. No ruling has been or will be requested from the Internal Revenue Service
regarding any matter affecting our investors or us. Tax benefits should not be considered a
primary investment feature of our SAFEs. Opinions and statements made in this memorandum
may not be sustained by a court if contested by the Internal Revenue Service. Any contest of this
sort with the Internal Revenue Service could materially adversely impact your investment in our
SAFEs. Additionally, the costs of any contest with the Internal Revenue Service will be borne by
our investors, whether directly or indirectly. An investment in us may be materially modified by
future legislative or administrative changes or future court decisions. Such changes and decisions
may be subject to retroactive application.
In recent years, there have been a number of proposals made in Congress by legislators,
government agencies and by the executive branch of the federal government for changes in the
federal income tax laws. In December 2017, the Tax Cuts and Jobs Act was signed into law
making sweeping changes to the revenue laws of the United States commencing for taxpayer tax
years commencing on or after January 1, 2018. In that connection, the Internal Revenue Service
continues to adopt regulations and procedures implementing the Tax Cuts and Jobs Act and
compliance with the new U.S. revenue laws and procedures is evolving. Additionally, numerous
private interest groups continue to lobby for regulatory and legislative changes in certain areas of
the U.S. federal income tax law. It is impossible to predict the effect of any proposals that might
be adopted upon the income tax treatment presently associated with investment in the SAFEs or
the effective date, which could be retroactive, of any legislation that may derive from any past or
future proposal.
We strongly urge you to consider ongoing developments in this uncertain area and to
consult your own tax advisors in assessing the risks of investment in the SAFEs.
U.S. Income Tax Withholding
To ensure collection of U.S. income tax, the payor of fixed or determinable annual or periodic
income from U.S. sources to any nonresident alien individual or foreign partnership, trust, estate,
or Company is required to withhold taxes. Respective to any distributions in respect of SAFEs,
therefore, we would be deemed to be a payor.
A payee, on the other hand, is defined as the person to whom a payment is made, regardless of
whether such person is the beneficial owner of the amount paid. A foreign payee is a payee who
is a foreign person, while a U.S. payee is a U.S. person. The determination of the withholding
agent concerning the status of the payee (U.S. or foreign) and the characteristics of a payee, such
as whether the payee is a beneficial owner or intermediary, or an individual, Company or
flow-through payee, is made on the basis of a withholding certificate that is a Form W-8, a Form
8233 (indicating foreign status of the payee or beneficial owner) or a Form W-9 (indicating U.S.
status of the payee). A nonresident alien is generally defined as an individual whose residence is
not within the United States and who is not a citizen of the United States. However, an alien who
meets either the lawful permanent residence test (i.e., the green card test) or the substantial
presence test for the calendar year is considered a U.S. resident. An alien is a resident alien for a
calendar year if he or she is a lawful permanent resident at any time during the calendar year.
Under the substantial presence test, an alien is a resident alien if he or she has been present in the
United States for at least 31 days during the current year and at least 183 days during the
three-year period that includes the current year.
Generally, a person that makes a payment of U.S. source interest, dividends, royalties, and
certain other types of income to a foreign person, such as Company payments that may be paid in
respect of the SAFEs, must deduct and withhold 30 percent from the payment. A lower rate of
withholding may apply under the Code, the regulations, or an income tax treaty. Under the Code,
a withholding agent, in the case of the Company either the Company or its designee, must make
an income tax return on Form 1042, Annual Withholding Tax Return for U.S. Source Income of
Foreign Persons, reporting the tax withheld and also must file an information return reporting the
amounts on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.
Payors of interest, dividends, royalties, gross proceeds from the sales of securities, and other
fixed or determinable income must report payments on the appropriate Form 1099 series form,
unless an exception applies. It is not certain how income, if any, to be paid in respect of the
Company’s SAFEs would be classified, albeit that we believe same would be deemed dividends.
Payment information regarding U.S. taxpayers is generally reportable on a Form 1099 series
form, and the Company will be required to obtain a Form W-9 from any U.S. taxpayer SAFEs
purchasers. Form W-9, Request for Taxpayer Identification Number (“TIN”) and Certification is
used to determine whether to treat a payee or beneficial owner as a U.S. person. A payee must
certify that he or she is a U.S. person (including a U.S. resident alien). Form W-9 will require
that the purchaser of our SAFEs provide his or her TIN and certify that he or she is a U.S. person
or a U.S. resident alien. If the Company would not receive a Form W-9, it must generally backup
withhold at a 24-percent rate for tax years beginning after December 31, 2017, and before
January 1, 2026, and report the payment on Form 1099. Collected backup withholding amounts,
if any, must be reported on Form 945, Annual Return of Withheld Federal Income Tax.
An exception to the Form 1099 reporting provisions applies if the payee is a foreign person. A
payor can treat a person as a "foreign person" if the payor can reliably associate the payment
with documentation that establishes that the person is a foreign beneficial owner of the income or
a foreign payee. A foreign person may not use Form W-9 to furnish his or her taxpayer
identification number to a payor. Rather, foreign payees must use the appropriate Form W-8. The
IRS Form W-8 series of forms is made up of certificates that are used to establish foreign status.
A payor does not have to backup withhold on payments to foreign beneficial owners or foreign
payees because backup withholding applies only to amounts that the payor must report on Form
1099.
Generally, all nonresident aliens and foreign corporations, foreign partnerships, and foreign trusts
and estates, that have income from sources within the United States, not effectively connected
with the conduct of a trade or business within the United States, will be subject to withholding at
a rate of 30 percent unless a lower treaty rate applies.
The Form W-8 series of IRS forms are certificates provided to withholding agents to establish
foreign status. In this context, the Company, or its third-party designee, would be the
“withholding agent.” Non-U.S. taxpayer investors in our SAFEs will be required to provide us or
our designee with one of Form W-8BEN, W-8BEN-E or W-8ECI depending on investor status.
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding (Individuals) is used exclusively by individuals and should be provided to the
Company or its designee, as applicable, as the withholding agent or payer by a beneficial owner
to claim foreign status, claim beneficial ownership of income and, if applicable, claim a reduced
rate of or exemption from withholding.
Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding
and Reporting (Entities) allows an entity to certify as to its status as a beneficial owner or payee
for purposes of Chapter 3 and Chapter 61 of the Code, as well as to its status under Chapter 4 of
the Code, as a payee or account holder of a foreign financial entity. The form can also be used by
a beneficial owner to seek a reduced rate of withholding under a treaty.
Form W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With
the Conduct of a Trade or Business in the United States, form should be used to establish foreign
status, claim beneficial ownership and claim that income is effectively connected with the
conduct of a trade or business in the United States. We believe, but have not endeavored, to
obtain any formal ruling of the IRS confirming same, nor do we anticipate doing so, that any
amounts paid to holders of our SAFEs will be classified as income effectively connected income
with a United States trade or business for these purposes.
WE URGE YOU TO CONSULT AND RELY UPON YOUR OWN TAX ADVISOR WITH
RESPECT TO YOUR OWN TAX SITUATION, POTENTIAL CHANGES IN
APPLICABLE LAWS AND REGULATIONS AND THE FEDERAL AND STATE
CONSEQUENCES ARISING FROM AN INVESTMENT IN THE SAFES. THE COST
OF THE CONSULTATION COULD, DEPENDING ON THE AMOUNT CHARGED TO
YOU, DECREASE ANY RETURN ANTICIPATED ON YOUR INVESTMENT.
NOTHING IN THIS MEMORANDUM IS OR SHOULD BE CONSTRUED AS LEGAL
OR TAX ADVICE TO ANY SPECIFIC INVESTOR, AS INDIVIDUAL
CIRCUMSTANCES MAY V ARY. THIS FEDERAL INCOME TAX CONSEQUENCES
SECTION OF THIS MEMORANDUM ONLY PROVIDES THE CURRENT STATE OF
TAX LAWS. YOU SHOULD BE AWARE THAT THE INTERNAL REVENUE SERVICE
MAY NOT AGREE WITH ALL TAX POSITIONS TAKEN BY US AND THAT
LEGISLATIVE, ADMINISTRATIVE OR COURT DECISIONS MAY REDUCE OR
ELIMINATE YOUR ANTICIPATED TAX BENEFITS.
LEGAL MATTERS
The Company’s Counsel will review the legality of our issuance of the SAFEs offered without
registration under the Securities Act or state securities laws pursuant to certain exemptions
therefrom provided under Regulation D pursuant to the Securities Act and state securities law for us.
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