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SpeedNet, LLC.

SpeedNet, LLC.

The first satellite-based LTE-5G network to Africa.

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Deal Type

Equity

Funding Goal

$1,965,000

Current Reservations

$325,000

Minimum Reservation

$10,000

Maximum Reservation

$5,000,000

Deal Stage

Series A

Pre-money Valuation

$3,000,000

Open Date

11/20/2019

Closing Date

02/20/2020

Elevator Pitch

The first company that introduces a high-speed wireless mobile service to an African market will win a substantial market share almost immediately. The thirst for such service is overwhelming.

KPIs

4,900 Users
12 Employees
$3,000,000 Sales
20% ROI
Cash Flow Positive

Company Overview

THIS IS A SECURITY OFFERING UNDER REG. D 506(C) ONLY FOR ACCREDITED INVESTORS. (foreign investors are exempt from this rule). ALL SUBSCRIPTIONS GO TO ESCROW ACCOUNT, AND WILL BE REFUNDED IF NO MINIMUM HAS BEEN RAISED ON OR BEFORE 20/02/2020. DETAILED MEMORANDUM ENCLOSED.

For the last 20+ years, my company has provided satellite connectivity throughout Africa and other emerging economies. We have served private, public, military, and government customers. We design, construct, activate, maintain, and monitor systems for 7/24/365 satellite connectivity.

About 3 years ago, while on a trip at Bamako, Mali, I needed to stay in-touch with my company's New York office. The only option available was to buy data from a local operator which was extremely expensive and slow to browse. Throughout my business trips in Africa, I experienced similar low quality of subscribed service from operators in other countries including: Sierra Leone, Liberia, Guinea, Guinea Bissau, Bennin, Senegal, Ivory Coast and others. After speaking with my local agents and representatives, I realized that there is a market in West Africa for high quality cellular data service and that users would gladly pay a premium for it relative to the status quo. Furthermore, offering high-speed data to mobile users will allow them to use popular voice applications like: "whatsapp", "Viber", "Skype" to save on the charge for billable minutes by local providers.

Leveraging the technologies and intellectual property that my company had developed, I found an economical solution to use a satellite-based backhaul capability to provide an advanced wireless LTE network to service mass users with speeds of 10-15 times faster than the local services that rely on an old 2G & 3G technology. Moreover, we can provide these advanced LTE services at or below the current market rates. In addition to that technological advantage, my company also brings an understanding of the local market as well as personal connections and exclusive licenses with local governmental authorities.

In support of this revelation, a new company was formed, SpeedNet, LLC., to realize the full potential of this this opportunity.

Traction

  • The operator's license was granted by the government of Nigeria to "MM Telcom Global, Ltd." a subsidiary of SpeedNet, LLC. 01/15/2019

    July, 2019
  • The operator's license was granted by the government of Mali to the "HTI, S. A." a subsidiary of SpeedNet, LLC., that has 4,900 customers.

    March, 2019
  • The operator's license was granted by the government of Sierra Leone to the "Ignite" (SL) Ltd. network. a subsidiary of Speednet, LLC.

    January, 2019

Press Mentions

Key Customers & Partners

Seydou Coulibaly (HTI, S. A Bamako, Mali) Eng. Sam Sunday. (MM Telcom, Ltd.) Nigeria. Moses Juanam (Ignite network, Freetown. SL)

Testimonials

Major Lee Keliy
Major Lee Keliy
Communications Officer / British Army
"During the last 3 years, The International Military Advisory and Training Team (IMATT) has been widely dispersed across the country, necessitating a spread of communications that is beyond the capabilities of the mobile telephone companies in Sierra Leone. My predecessors approached a number of satellite providers to ascertain whether or not a cost-effective internet solution could be achieved and MM Telcom Corporation was selected as the best option to provide the solution. "
Wayne A. Morra, Ph.D.
Wayne A. Morra, Ph.D.
Associate Professor of Economics.
"As the MMTelcom homepage clearly states: MMTelcom provides an uninterruptible VSAT internet service. The installation of MMTelcom’s VSAT Internet System designed to serve our study abroad academic program in Malabo, Equatorial Guinea was handled in a timely and professional manner. The system has performed well since it was installed three years ago. It's easy to use and we've had no problems. The system has performed well since it was installed three years ago. It's easy to use and we've had no problem"
Anthony Siakor
Anthony Siakor
IT Director, Cuttington University (Liberia)
"Cuttington University has been subscribing its Internet Service from MM Telcom since July of 2005. Besides Internet subscription, MM Telcom has been providing technical assistance and equipment recommendations to us in building the telecommunication infrastructures for our institution. Over the years, MM Telcom has demonstrated a high level of efficiency, competency, and an excellent rapport with our institution. They are exceptional when it comes to troubleshooting to reduce our down time."
Major A. J. Gray
Major A. J. Gray
Advisor CIS
"To ensure the International Military Advisory and Training Team (Sierra Leone) (IMATT(SL)) can function to its full potential it is critical that it can rely on stable, comprehensive and modern Satellite Communication (SatCom) system for both administrative and operational applications. the professional and prompt support MM Telcom Corporation provides has ensured IMATT(SL) has received excellent service throughout the duration of my year in country. I am in no doubt that we have the most functional system."

Frequently Asked Questions

Why the local operators cannot match our SpeedNet service?

Unlike the American economy, the African is a “cash” economy. The phone carriers charge for minutes and /or blooks of data usage purchased by “calling cards” and loaded into the phones. Customers trying to save on “minutes” by using internet voice apps like “WhatsApp”, “Viber” & “Skype” that are free. The carriers built their networks using 2G & 3G technology and to maximize profits, oversubscribing the service to a point of degradation where the voice apps become choppy and cannot be used. That forces the users to buy more voice “minutes” and use data only for browsing that is extremely slow as well. Downloading large files like songs or videos can be done after 02:00 AM. Since we intend to provide high-speed LTE service, this constrains will disappear, and the carriers will need to change their business model and provide voice connectivity for no charge like we have in the states. Doing that will undermine the “cash cow” model they ride on now and it will be cheaper for them to buy us out that compete.

Is it allowed to use voice applications on mobile phones in Africa?

Unlike in the states where voice communications over land or mobile phone are not measured, in Africa, the users pay per minutes consumed. By personal meetings with the regulators in Mali, Nigeria, and Guinea, all regulators declared that voice applications over the internet considered date (not voice) therefore are covered by our licenses.

How professional is the company Chief Of Technology?

The company founder Michael Marom has 25+ years of experience running a high tech company that provided satellite connectivity data/voice networks to customers overseas (mostly West Africa). The enclosed references attest to his technical and personal ability to manage and support in real-time such complex networks.

Is Africa a place that money can be made?

Africa is an emerging red-hot economy that grows faster than the United States. the demand for high-speed internet service suppresses the local operators' ability to provide such service. Some people say that Africa is the last frontier where money can be made.

Is the company positioned for the 5G revolution?

part of our operator's licenses, we also assign to a chunk of frequency. The frequency is the countries resources same as minerals, oil and so on. The infrastructure of cell towers we build or lease to cover the markets, together with the bandwidth, would act as the stepping stone and will put us the rare position to have ready infrastructure for the 5G deployment anticipated for 2021. To be the first to market with 5G technology in Africa is a proposition of once in a generation.

How the company & investors, can supervise the subsidiaries from wrong doing?

Very simple, we control the satellite connectivity, we control the microwave links, and we control the cell towers' wireless transmitters. we control the billing system and make sure that the daily sales receipts agree with the bank statements. More so, we place surveillance cameras in each subsidiary office and can monitor activity in real-time. In addition, we will develop a portal where the company management and major investors can monitor financial data in real-time as well.

Is this company has the chance to be the investor "Unicorn"?

The company has a largely sought service for the African market. in a survey done by the HTI S.A (Mali) providing internet service to their 4,900 customers, 100% answered that they will migrate to the new company to take advantage on the greater internet speed. Even though it gives us z partial market indication, it also provides us the answer about market readiness, desire, and willingness to migrate to a new provider.

Is communication a good business?

It's a good business because of its essential service to the public, it's mostly run by computers, it is a residual type of business. Once a new customer enrolls, he/she pays for the service month after month, and most importantly, its a 24/7 business that when the investor sleep, the business continues to make money.

Risks & Disclosures

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RISK FACTORS

This section is taken from our offering pursuant to Reg. D 506(c), and it's open only for accredited investors. To view full disclosure please refer to our PPM in the Company's documents.

An investment in our securities involves a high degree of risk. If any of the risks stated below actually occur, our business, financial conditions and operations shall be materially affected.

Risks Related to Our Business

We are a recently activated business with no operating history to date.

We are a newly activated business with a limited operating history. Our 80% owned subsidiaries, NSAC, MSAC, and SLMAC are or will be newly formed entities with limited operating histories. Potential investors should be aware of the difficulties generally encountered by a newly formed enterprise with no or limited operating history. These difficulties include, but are not limited to, marketing, competition, and unanticipated costs and expenses. In view of the fact that we are a newly formed business which has recently commenced business activities, if our business and development plans prove to be unsuccessful, Investors could lose all, or a substantial portion, of their investments.

If we sell the minimum of $1,965,000 of the offered Class A Units, but less than the maximum of $16,500,000 of the offered Class A Units, which we may decide to do in our sole and absolute discretion, we may be unable to obtain sufficient capital to implement and sustain our business or pursue our growth strategy.

If we close upon the sale of only the minimum $1,965,000 amount of Class A Units, we would only be able to initially target one market and would need to obtain additional funding or use cash flow from operations, if available, to target the next markets.

If we are unable to sell the intermediate or the maximum dollar amount of Class A Units or if we do not generate sufficient funds from our operations, we may have to seek other sources of financing in order to fund our ongoing operational needs, the probability of which shall increase as we raise less money pursuant to this Offering. If we obtain additional funds through an offering of additional securities, investors in this Offering may be subject to a substantial dilution in their potential ownership interest of us. If we obtain additional funds through a debt offering, our ability to generate a profit may be adversely affected and investors may lose all or substantially all of their investment. If adequate funds are not available from operations or additional sources of financing, our business will be materially adversely affected.

If we oversubscribe the Offering and increase the maximum raise by up to thirty (30%) percent, the equity interests of Class A Units will be diluted as well as their percentage share of income.

Even if we sell all of the offered dollar amounts of Class A Units, we may need additional financing to develop our business and to meet our capital requirements.

We believe that the proceeds of this Offering shall be sufficient to enable us to engage in operations to the extent that we believe desirable. See the “USE OF PROCEEDS” on page 37.

The sale of the maximum amount of $16,500,000 in Class A Units offered shall enable us to engage in initial operations in Bamako, Mali; Lagos and Abuja, Nigeria; and Freetown, Sierra Leone, in accordance with our licenses for Mali, Nigeria, and Sierra Leone. We anticipate, based upon our internal forecasts and assumptions relating to our operations, that the proceeds from this Offering, together with anticipated revenues from operations, shall be sufficient to satisfy our contemplated cash requirements for operations in Bamako, Mali; Lagos & Abuja, Nigeria; and Freetown, Sierra Leone in excess of 12 months after the Final Closing of this Offering.

However, even if we sell the maximum dollar amount of Class A Units in this Offering, there can be no assurance that we will have sufficient funds to continue the development and marketing of our services and, if we do not have sufficient funds, we would likely need to raise additional capital to fund our ongoing operational needs. In such an event, if we are unable to obtain additional financing, it is possible that we may be unable to achieve our stated business objectives.

We shall be dependent upon the following: (i) future earnings; (ii) the availability of funds from private sources, including, but not limited to, our Class A members and Class B members and loans (iii) private or public offerings of our securities and (iv) the availability of funds from other sources. If additional capital is raised through borrowing or other debt financing, which we may not be able to obtain, we will incur substantial interest expenses. Sales of equity to raise needed capital would dilute, on a pro-rata basis, the percentage of ownership of all holders of Class A Units and Class B Units. Further, market conditions for private and public offerings are subject to uncertainty and there can be no assurance when or whether a private and/or public offering shall be successfully completed or that other funds shall be made available to us. In view of our limited operating history, our ability to obtain additional funds may be limited. Such financing may only be available, if at all, upon terms and conditions which may not be reasonable and/or acceptable to us. If adequate funds are not available from operations or additional sources of financing, our business shall be materially adversely affected. Therefore, although selling the total amount of Class A Units offered shall best meet our plans for business operations, there remains a risk that an investor may experience a complete loss of his investment if we require additional funding, but do not obtain it.

Reliance on the company for management

All decisions with respect to the management of the Company will be made exclusively by the Managers of the Company. The Noteholders do not have the right or power to take part in the management of the Company. Accordingly, no person should purchase a Note unless he is willing to entrust all aspects of the management of the Company to existing Management.

We may be unable to obtain market acceptance to expand our operations.

We shall require significant expenditures, management resources and time to develop and market our services. There can be no assurance that we shall be successful in gaining market acceptance of our services.

Limited transferability of the notes

The transferability of the Notes in this offering is limited, and potential investors should recognize the nature of their investment in the offering. It is not expected that there will be a public market for The Notes because there will be only a limited number of investors and restrictions on the transferability of Notes. The Notes have not been registered under the Securities Act of 1933, as amended, or qualified or registered under the securities laws of any state and, therefore, the Notes cannot be resold unless they are subsequently so registered or qualified or an exemption from such registration is available. The offering also contains restrictions on the transferability of the Notes. Accordingly, purchasers of Notes will be required to hold such Notes to maturity unless otherwise approved by the Company. The Company does not intend to register the Notes under the Securities Act of 1933.

Regulations

The Company is subject to various federal and state laws, rules and regulations governing, among other things, the licensing of, and procedures that must be followed by, mortgage owners and disclosures that must be made to consumer borrowers. Failure to comply with these laws may result in civil and criminal liability and may, in some cases, give consumer borrowers their right to rescind their mortgage loan transactions and to demand the return of finance charges paid to the company. Because the Company’s business is highly regulated, the laws, rules, and regulations applicable to the Company are subject to subsequent modification and change. The Company believes it is in full compliance with any and all applicable laws, rules and regulations.

Competition

Our management believes that we may have numerous competitors which currently sell cellular communications and mobile internet services, including minutes and data. Our management is not aware of any companies in Bamako, Mali; Lagos & Abuja, Nigeria; and Freetown, Sierra Leone which offer faster data transmission speeds at better prices than the LTE services we intend to offer. We know of no LTE or 5G mobile data telecommunications systems other mobile data telecommunications systems being offered in Bamako, Mali; Lagos & Abuja, Nigeria; or Freetown, Sierra Leone, with comparable speed, at the present time. However, additional companies may commence offering services based on new technologies and discoveries or even offer LTE or 5G service. It will be incumbent upon us to continue to develop and refine our technology. See “Competition” on page 42 for additional details.

Intellectual Property

We possess no patents, copyrights or trademarks at the present time. We may decide for business reasons to retain certain knowledge which we consider proprietary as confidential and elect to protect such information as a trade secret, as business confidential information or as know-how. In that event, we must rely upon trade secrets, know-how, confidentiality and non-disclosure agreements, and continuing technological innovation to maintain our competitive position. There can be no assurance that others will not independently develop substantially equivalent proprietary information or otherwise gain access to or disclose such information.

Government Regulation

Our operations may be subject to regulations applicable to our business operations, especially those rules, regulations, and statutes, country-wide and local, in Mali, Nigeria, and Sierra Leone, as well as other areas in West Africa in which we intend to operate. Although we shall make every effort to comply with applicable statutes, rules, and regulations, there can be no assurance of our ability to do so. If we are unable to comply with such statutes, rules, and regulations, such noncompliance may have an adverse effect on our operations.

Corruption in Africa

corruption has been more than prevalent in Africa. In fact, corruption has become pervasive and has affected all sectors of the government and civil society including the executive, judiciary, police, and even the private sector. The main causes being a deep lack of political will to fight corruption and neopatrimonialism.

Foreign Corrupt Practice Act.

The Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq. ("FCPA"), was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. As of now, we already obtained our operational licenses from Mali, Sierra Leone, and Nigeria.

We may experience significant fluctuations in our operating results.

Our revenues and operating results may fluctuate due to a combination of factors, including, but not limited to, difficulties in constructing, developing, producing and marketing our services. Consequently, it is highly uncertain what our operating results will be in the near future. Our revenues and operating results may also fluctuate based upon the number and extent of potential financing activities. Thus, there can be no assurance that we will be able to reach profitability on a quarterly or annual basis.

We may be subject to additional risks associated with doing business in foreign countries.

We intend to do business in foreign markets, especially in Mali, Nigeria, and Sierra Leone and other areas of West Africa, such as Guinea and Liberia. In addition to the language barriers, different presentations of financial information, different business practices, and other cultural differences and barriers which may make it difficult to evaluate business decisions or transactions. Ongoing business risks may result from conducting business in foreign countries, including, without being limited to, the international political situation, the local political situation, uncertain legal systems and applications of law, prejudice against foreigners, corrupt practices, uncertain economic policies and potential political and economic instability, which may be exacerbated in various foreign countries. There can be no assurance that we would be able to enforce business contracts or protect our intellectual property rights, if any, in foreign countries.

In doing business in foreign countries we may also be subject to risks, including, but not limited to, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, expropriation, corporate and personal liability for violations of local laws, possible difficulties in collecting accounts receivable, increased costs of doing business in countries with limited infrastructure and language differences and political unrest, terrorism, epidemics and crime. We also may face competition from local companies that have longer operating histories, greater name recognition, and broader customer relationships and industry alliances in their local markets, and it may be difficult to operate profitably in some markets as a result of such competition. Foreign economies may differ favorably or unfavorably from the United States economy in growth of the gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payments positions, and in other respects.

When doing business in foreign countries, we may be subject to uncertainties with respect to those countries’ legal systems and application of laws, which may impact our ability to enforce our agreements and may expose us to lawsuits.

Legal systems in many foreign countries are new, unclear, and continually evolving. There can be no certainty as to the application of laws and regulations in particular instances. Many foreign countries do not have a comprehensive system of laws, and the existing regional and local laws are often in conflict and subject to inconsistent interpretation, implementation, and enforcement. New laws and changes to existing laws may occur quickly and sometimes unpredictably. These factors may limit our ability to enforce agreements with our current and future customers and licensees. Furthermore, it may expose us to lawsuits by our customers in which we may not be adequately able to protect ourselves.

When doing business in certain foreign countries, we may be unable to fully comply with local and regional laws which may expose us to financial risk.

When doing business in certain foreign countries, we may be required to comply with informal laws and trade practices imposed by local and regional government administrators. Local taxes and other charges may be levied depending upon the local needs for tax revenues and may not be predictable or evenly applied. These local and regional taxes/charges and governmentally imposed business practices may affect our cost of doing business and may require us to constantly modify our business methods to comply with these local rules and to lessen the financial impact and operational interference of such policies. In addition, it is often extremely burdensome for businesses operating in foreign countries to comply with some of the local and regional laws and regulations. Our failure to maintain compliance with the local laws may result in hefty fines and fees which may have a substantial impact upon our cash flow, cause a substantial decrease in our revenues, and may affect our ability to continue operations.

Various administrative agencies in foreign countries have informal rule enforcement with which we may not be able to comply.

Although we expect to be able to operate within changing administratively imposed business practices and otherwise to comply with the informal enforcement rules of the various administrative agencies in the countries where we will operate, there can be no assurance that we will be able to do so. If local or regional governments or administrators in foreign countries impose new practices or levies which we cannot effectively respond to, or if administrators suddenly commence enforcing those rules that they have not previously enforced, our operations and financial condition could be materially and adversely impacted. Our ability to appeal many of the local and regionally imposed laws and regulations may be limited, and we may not be able to seek adequate redress for laws that materially damage our business and affect our ability to continue operation.

Many foreign judiciaries are relatively inexperienced in enforcing the laws which exist, which may expose us to costly litigation and uncertain outcomes.

If we are involved in litigation in a foreign country, we may not be able to properly evaluate the possible outcome. This may expose us to costly litigation. Furthermore, we may be exposed to potential inequitable judicial results. Either of those scenarios may have a material adverse effect upon our business or financial condition.

Currency fluctuations, while not presently ascertainable, may adversely affect our earnings.

Fluctuations in exchange rates, primarily those involving the U.S. dollar, may affect our costs and operating margins, which in turn could affect our revenues. In addition, these fluctuations could result in exchange losses and increased costs.

We are dependent upon licenses to construct, market and operate our telecommunications systems.

The licenses we have obtained to construct, market and operate our telecommunications systems in Mali, Sierra Leone and Nigeria are for three years, one-year, and 5 years renewable terms, respectively. The Nigeria license is for a five-year term and renewable. Although the licenses do not contain on their faces specific restrictions on renewal, other than payment of license fees, there can be no assurance that any of our licenses will be renewed. In the event of non-renewal, we would be compelled to seek new licenses or purchase an existing license or joint venture with existing licensees or sell our business. There is no guarantee that we could do any of the foregoing, which could result in the loss of the business in such an area or country. We will also separately require allocations of certain electromagnetic-radio frequencies to operate our systems and, although expected, there is no guarantee that the appropriate government entities will provide us with the proper or optimal frequencies.

Risks Related to Local Rules and Regulations Regarding Construction and Placement.

Although we are unaware of any local rule or regulation which would act as a substantive obstacle to construction and placement of our satellite and microwave towers or other towers and equipment, there can be no assurance that prior to the commencement of our construction and operations, that there will not exist local rules or regulations or approval processes which would deter, compromise or prohibit our ability to construct and place such towers or equipment, which could result in the loss of the business in such area or country.

Risks Related to Our Financial Forecasts

We have set forth a table which summarizes our financial forecasts with respect to certain revenues and expenses related to the services which are intended to be offered initially by the Company through 2021 but does not include revenues or expenses which may be generated or incurred from sources which are not included in such tables, including, but not limited to, joint ventures and licenses. There can be no assurance that we shall be able to achieve the financial forecasts upon which such tables are based. The forecasts which are contained in such tables were prepared by our management based upon assumptions concerning circumstances and events which have not yet occurred. The anticipated results which are set forth therein are subject to changes and variations as future operations and events actually occur. Moreover, although we reasonably expect, to the best of our knowledge and belief, that the results to be achieved by us will be as set forth in the forecasts, such forecasts are not guarantees, and there can be no assurance that any of the potential benefits which are described therein will occur. Furthermore, there may be differences between the forecasted and actual results because events and circumstances frequently do not occur as expected and the differences may be material.

Risks Related to Our Management

Our success depends upon certain key members of management, the loss of whom could disrupt our business operations.

We depend upon the services of Michael Marom, a Manager, the CEO, and President and Matan Marom, who is a Manager and our Chief Financial and secretary Officer. The loss of services of these individuals could adversely disrupt our operations. We do not maintain "key man" life insurance on the life of any of our employees. To the extent that their services become unavailable, we will be required to retain other qualified persons and there can be no assurance that we shall be able to employ qualified persons upon acceptable terms.

We are dependent upon attracting and retaining highly skilled personnel.

We believe our future success will depend largely upon our ability to attract and retain highly skilled management, consultants and advisors in the following areas: operations, sales and marketing, and finance, both in the United States and in West Africa, including Mali, Nigeria, and Sierra Leone. Competition for such personnel is intense and there can be no assurance that we will be successful in attracting and retaining such personnel. The inability to attract or retain qualified personnel in the future, or delays in hiring required personnel, particularly consultants providing research and development, sales and marketing, and chartering operations services, could have a material adverse effect upon our business, results of operations and financial condition.

Our Managers and Officers will have substantial influence over our operations and control substantially all of our business matters.

Our board of Managers currently consists of Michael Marom, Matan Marom, and peter Sisca. The persons responsible for conducting and managing our day-to-day operations are Michael and Matan Marom. We do not benefit from the multiple judgments which a greater number of Managers or officers may provide, and we rely completely upon the judgment of Michael and Matan Marom in making business decisions, with the assistance of our other Manager on matters which require the judgment of the board of Managers.

Our Management will have discretion with respect to certain items in the Use of Proceeds from this Offering.

Our management intends to use the proceeds substantially as stated in the “Use of Proceeds” section of this Memorandum, and we are finalizing certain agreements which require that a substantial amount of the proceeds of our offering pursuant to this Memorandum shall be utilized in a specific manner. Notwithstanding the foregoing, our management has the right, in its sole and absolute discretion, to vary the use of the proceeds.

There can be no assurance that our management's use of proceeds generated through this Offering will prove optimal or translate into revenue or profitability for the Company. Investors are urged to consult with their attorneys, accountants, and personal investment advisors prior to making any decision to invest in the Company.

As is the case with any business, particularly one with no operations, it should be expected that certain expenses unforeseeable to our management at this juncture will arise in the future.

Risks Related to Our Class A Units

The Class A Units being offered pursuant to this Memorandum are not registered with the Securities and Exchange Commission.

The Class A Units being offered pursuant to this Memorandum has not been registered pursuant to the 1933 Act or under the securities laws of any state (“blue sky” laws). They are offered pursuant to an exemption from registration under the 1933 Act in reliance upon intended compliance with the provisions of Section 4(2) of the 1933 Act and Rule 506 of Regulation D thereunder. The Class A Units which we shall issue will be restricted and cannot be freely traded. Accordingly, the Class A Units may not be sold, pledged, hypothecated, donated or otherwise transferred, whether or not for consideration, unless the Class A Units are registered or unless an exemption from registration applies. Although the Class A Units will not be registered in various states, we shall comply with the registration or other qualification requirements concerning the offering of securities in each state in which the Class A Units will be offered. In addition to restrictions under federal laws, the Class A Units, purchased in one state cannot be sold, transferred, pledged or hypothecated in another state unless an exemption under state securities law applies.

There is no present market for the Class A Units and there can be no assurance that any will develop. We are not presently a reporting company under either Section 13(a) or 15(d) of the 1934 Act and therefore, we do not presently file any reports with the SEC. There can be no assurance that we will ever become a reporting company. In addition, there can be no assurance if, and when, a public market will develop and whether our Class A Units will be able to be resold either at or near their original offering price. Investors should understand that the Class A Units are not liquid and may have little or no value if an Investor desires to liquidate his or her investment in the Class A Units. Accordingly, Class A Units should not be purchased by anyone who requires liquidity or who cannot afford a complete loss of his investment.

The lack of liquidity and significant risks associated with an investment in our Company makes the purchase of the Class A Units suitable only for an Investor who has substantial net worth, who has no need for liquidity with respect to this investment, who understands the risks involved and has reviewed these risks with his or her legal and investment advisors, and who has adequate means of providing for his or her current and foreseeable needs and contingencies.

The Subscription Price of the Class A Units pursuant to this Offering has been arbitrarily determined.

We have arbitrarily determined the interest earned by the Class A Units. We can give no assurance that any of the Class A Units, if transferable, could be sold for the dollar amount of the Class A Units purchased by a Subscriber.

We have never paid distributions on our Membership Interests.

We have never paid any distributions on our Membership Interests. The future declaration of any distributions shall be in the sole and absolute discretion of the board of Managers and shall depend upon our earnings, capital requirements, financial position, general economic conditions, and other pertinent factors. It is also possible that the terms of any future debt financing may restrict the payment of dividends. To date, no dividends have been paid on our Membership Interests. We presently intend to retain a portion of all earnings and profits, if any, for the development and expansion of our business.

We may issue more Class A Units or other membership Units in future offerings, which will result in substantial dilution to our Members and Subscribers.

Any additional offerings of Class A Units or other Membership Interests by us may result in substantial dilution in the percentage of our Membership Interests held by our then existing members. Moreover, the Class A Units or other Membership Interests issued in any such offering may be valued upon an arbitrary or non-arm's-length basis by our Management, resulting in an additional reduction in the percentage of Membership Interests held by our then existing members. To the extent that additional Class A Units or other Membership Interests are issued, dilution of the interests of our members will occur and the rights of the holders of Class A Units might be materially adversely affected.

If we become a publicly-traded company, we may be subject to the Securities and Exchange Commission's "penny stock" rules if our membership Units sell below $5.00 per share.

We are not a public company and we do not currently intend to have our securities publicly traded. However, there can be no assurance that this will not change, and our Membership Interests may in the future be subject to the penny stock rules (Rule 15c2- 11) under the Securities Exchange Act of 1934 which regulates broker-dealer practices for transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than U.S. $5.00 and are generally not traded on a national stock exchange or on NASDAQ. They are securities issued by companies that have minimal net tangible assets and short corporate histories as well as minimal revenues. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the United States Securities and Exchange Commission (the “SEC”) which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.

In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.

The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for our Membership Interests. As long as our membership Units are subject to the penny stock rules, the holders of such membership Units may find it more difficult to sell their securities. The requirement that broker-dealers comply with this rule will deter broker-dealers from recommending or selling our membership Units, thus further adversely affecting the liquidity and share price of our membership Units, as well as our ability to raise additional capital.

We may issue other classes of membership Units which could have a material adverse effect upon the market value of the Class A Units.

With the approval of our Board of Managers and the holders of a majority of our Membership Interests, we could issue a new class of Membership Interests with rights greater than those of holders of Class A Units. We would then have the authority with the approval of our board of Managers and the holders of a majority of the holders of our Membership Interests to additional classes of Membership Interests from time to time in one or more series, and to fix the number of Membership Interests, the relative rights, voting rights, liquidation preferences and any other preferences, special rights and qualifications of any such classes. The rights of holders of our Membership Interests shall be subject to and may be adversely affected by, the rights of the holders of new classes of Membership Interests which might be issued in the future. New classes of Membership Interests also could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting Membership Interests. This could delay, defer, or prevent a change in control. Additionally, any such issuance of new classes of Membership Interests could dilute the percentage ownership interest of our members. Any issuance of new classes of Membership Interests could adversely affect the rights of holders of Membership Interests and the value of the Membership Interests, including the Class A Units. Currently, the Company does not intend to issue any other classes of membership Units.

We are not a public company and do not currently intend for our securities to be publicly traded. If we become a publicly-traded company in the future, our Membership Interests may never be listed on NASDAQ, the New York Stock Exchange, the American Stock Exchange, or one of the other national securities exchanges or markets.

We are not a public company and we do not currently intend to have our securities publicly traded. If at some future date we determine to become a publicly-traded company, until such time as our Membership Interests are listed upon any of the several NASDAQ markets, the New York Stock Exchange, the American Stock Exchange, or one of the other national securities exchanges or markets, of which there can be no assurance, accurate quotations as to the market value of our securities may not be possible. Furthermore, our Membership Interests may never be listed on any market. Sellers of our securities are likely to have more difficulty disposing of their securities than sellers of securities which are listed upon any of the several NASDAQ markets, the New York Stock Exchange, the American Stock Exchange, or one of the other national securities exchanges or markets.

Factual Data

The information which we have set forth in this Memorandum was obtained from our management, who will benefit substantially from the transactions contemplated herein. Such information necessarily incorporates significant assumptions as well as factual matters. There can be no assurance that such information is complete or accurate.

Documents

Confidential

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