LunaCapital.Fund

LCF 2025 LLC Private Placement Memorandum


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 CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, Regulation D, Rule 506(c)

Luna Capital Fund Logo

LCF 2025, LLC

A Wyoming Limited Liability Company

____________________________________

$7,500,000

Minimum Offering Amount: $375,000

$1,500 per Promissory Note (Note)

MINIMUM PURCHASE PER INVESTOR- 1 Promissory Note

10% Annual Rate of Return, Paid at the Discretion of the Manager

Maturity Date: 48 months after the Company makes its first loan or by December 31, 2025, whichever the Manager decides

Redemption at Maturity - $1,500 per Note

Convertible to Membership Units at Maturity – 1,500 Membership Units per Note

______________________________________

LCF 2025, LLC, a Wyoming Limited Liability Company (hereinafter referred to as the “COMPANY”), is offering by means of this Confidential Private Placement Memorandum a minimum of Two Hundred Fifty (250) and a maximum of Five Thousand (5,000) Unsecured Promissory Notes (“Notes”) at an offering price of One Thousand Five Hundred ($1,500) Dollars per Note, for a minimum of Three Hundred Seventy Five Thousand Dollars ($375,000) and a maximum total of Seven Million Five Hundred Thousand Dollars ($7,500,000), to qualified accredited investors who meet the Investor Suitability Requirements set forth herein (see “INVESTOR SUITABILITY REQUIREMENTS”).  Each Investor must agree to purchase the Notes, as a lender to the Company, for investment purposes only, and execute a Subscription Agreement in the form contained in the accompanying Subscription Booklet (see “TERMS OF THE OFFERING”).

 

ACCREDITED INVESTORS ONLY

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVESTMENT IN THE UNSECURED NOTES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK (SEE “RISK FACTORS”).  INVESTORS MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD AND BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT.

The issue date of this Private Placement Memorandum is December 31, 2020.

 

Offering Price

Selling Commissions

Proceeds to Company

Per Unit

$1,500

$0

$1,500

Minimum Units

$375,000

$0

$375,000

Maximum Units

$7,500,000

$0

$7,500,000

 LCF 2025, LLC
140B Purcellville Gateway Drive, #203
Purcellville, VA 20132

Email: contact@lunacapital.fund

 

The closing date of this Private Placement Memorandum is December 31, 2021.

IMPORTANT NOTICES

This Confidential Private Placement Offering Memorandum (“Memorandum”) is submitted to you on a confidential basis solely for the purpose of evaluating the specific transaction described herein.  Beyond your immediate family, attorney or tax advisor, this information shall not be photocopied, reproduced or distributed to others without the prior written consent of LCF 2025, LLC (“Company”).  If the recipient determines not to purchase any of the Notes offered hereby, it will promptly return or delete all material received in connection herewith without retaining any copies.

DISCLAIMERS

            THE NOTES OFFERED HEREBY IN THIS OFFERING MEMORANDUM HAVE NOT BEEN REGISTERED WITH, OR APPROVED, BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, NOR HAVE SUCH NOTES OR THIS MEMORANDUM BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF ANY STATE OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE.  THIS OFFERING IS BASED ON THE EXEMPTION FROM SUCH REGISTRATION AS SET FORTH IN §4(2) AND RULE 506(c) OF REGULATION D OF THE SECURITIES ACT OF 1933, AS AMENDED.

            THE INVESTMENT DESCRIBED IN THIS MEMORANDUM INVOLVES RISKS, AND IS OFFERED ONLY TO INDIVIDUALS WHO CAN AFFORD TO ASSUME SUCH RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO AGREE TO PURCHASE THE NOTES ONLY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD THE TRANSFER, RESALE, EXCHANGE OR FURTHER DISTRIBUTION THEREOF.  THERE WILL BE NO PUBLIC MARKET FOR THE NOTES ISSUED PURSUANT TO THIS OFFERING MEMORANDUM.  THE RESALE OF THE NOTES ARE LIMITED BY FEDERAL AND STATE SECURITIES LAWS AND IT IS THEREFORE RECOMMENDED THAT EACH POTENTIAL INVESTOR SEEK COUNSEL SHOULD THEY DESIRE MORE INFORMATION.

            THE PRICE OF THE NOTES AS DESCRIBED IN THIS OFFERING MEMORANDUM HAS BEEN ARBITRARILY DETERMINED BY THE SPONSORS OF THIS INVESTMENT, AND EACH PROSPECTIVE INVESTOR SHOULD MAKE AN INDEPENDENT EVALUATION OF THE FAIRNESS OF SUCH PRICE UNDER ALL THE CIRCUMSTANCES AS DESCRIBED IN THE ATTACHED OFFERING MEMORANDUM.

            NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THIS MEMORANDUM, EXCEPT SUCH INFORMATION AS IS CONTAINED OR REFERENCED IN THIS MEMORANDUM.  ONLY INFORMATION OR REPRESENTATIONS CONTAINED OR REFERENCED HEREIN MAY BE RELIED UPON AS HAVING BEEN MADE BY THE COMPANY.  PROSPECTIVE INVESTORS WHO HAVE QUESTIONS CONCERNING THE TERMS AND CONDITIONS OF THIS PRIVATE PLACEMENT MEMORANDUM OR WHO DESIRE ADDITIONAL INFORMATION OR DOCUMENTATION TO VERIFY THE INFORMATION CONTAINED HEREIN SHOULD CONTACT THE COMPANY.  PROJECTIONS OR FORECASTS CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM, OR OTHER MATERIALS, MUST BE VIEWED ONLY AS ESTIMATES. ALTHOUGH ANY PROJECTIONS CONTAINED IN THIS MEMORANDUM ARE BASED UPON ASSUMPTIONS WHICH THE COMPANY BELIEVES TO BE REASONABLE, THE ACTUAL PERFORMANCE OF THE COMPANY MAY DEPEND UPON FACTORS BEYOND THE CONTROL OF THE COMPANY.  NO ASSURANCE CAN BE GIVEN THAT THE COMPANY’S ACTUAL PERFORMANCE WILL MATCH ITS INTENDED RESULTS.

Cautionary Note Regarding Forward-Looking Statements

This Memorandum contains, and our officers and representatives may from time to time make, "forward-looking statements". Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Jurisdictional North American Securities Administrators Association (NASAA) Legends

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 THIS MEMORANDUM HAVE 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.

  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 THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  2. NOTICE TO ALASKA RESIDENTS ONLY: THE SECURITIES OFFERED HAVE 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 THIS DOCUMENT SINCE THE DOCUMENT IS 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 HAVE 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 AVAILABLE.
  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 VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO THEIR PURCHASE, APPROVED OR DISAPPROVED THIS OFFERING OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
  5. FOR CALIFORNIA 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 CALIFORNIA 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 CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS OFFERING ARE EXPRESSLY CONDITION UPON SUCH QUALIFICATIONS BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
  6. FOR COLORADO RESIDENTS ONLY: THE SECURITIES HAVE 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 AVAILABILITY 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: SHARES ACQUIRED BY CONNECTICUT RESIDENTS ARE BEING SOLD AS A TRANSACTION EXEMPT UNDER SECTION 36- 409(b) (9) (A) OF THE CONNECTICUT, UNIFORM SECURITIES ACT. THE SHARES HAVE 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 SHARES.
  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 HAVE 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 THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
  10. NOTICE TO FLORIDA RESIDENTS ONLY: THE SHARES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH THE FLORIDA DIVISION OF SECURITIES AND INVESTOR PROTECTION UNDER THE FLORIDA SECURITIES ACT. THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF SAID ACT. THE SHARES HAVE 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 RELEVANT 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 AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER." THE AVAILABILITY 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 AVOID 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 THIS PROSPECTUS 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 THIS PROSPECTUS.
  13. NOTICE TO IDAHO RESIDENTS ONLY: THESE SECURITIES EVIDENCED HEREBY HAVE 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 HAVE 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 PROSPECTUS. 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 HAVE 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 AVAILABLE. 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 HAVE NOT BEEN RECOMMENDED; THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. 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 81-5-6 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 RULE 808 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 AVAILABLE 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 THIS MEMORANDUM, 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 SHARES HAVE 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 SHARES.
  22. NOTICE TO MASSACHUSETTS RESIDENTS ONLY: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES DIVISION OF THE COMMONWEALTH OF MASSACHUSETTS NOR HAS THE SECRETARY OF THE COMMONWEALTH PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
  23. TO RESIDENTS OF MICHIGAN: NO SALE OF THE SECURITIES WILL BE MADE TO RESIDENTS OF THE STATE OF MICHIGAN WHO ARE UNACCREDITED INVESTORS IF THE AMOUNT OF SUCH INVESTMENT IN THE SECURITIES WOULD EXCEED TEN PERCENT (10%) OF SUCH INVESTOR'S NET WORTH (EXCLUDING PRINCIPAL RESIDENCE, FURNISHINGS THEREIN AND PERSONAL AUTOMOBILES).
  24. 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.
  25. NOTICE TO MINNESOTA RESIDENTS ONLY: THESE SECURITIES BEING OFFERED HEREBY HAVE 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.
  26. NOTICE TO MISSISSIPPI RESIDENTS ONLY: THE SHARES 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 VALUE 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.
  27. 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 HAVE 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.
  28. NOTICE TO MONTANA RESIDENTS ONLY: IN ADDITION TO THE INVESTOR SUITABILITY STANDARDS THAT ARE OTHERWISE APPLICABLE, ANY INVESTOR WHO IS A MONTANA RESIDENT MUST HAVE A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) IN EXCESS OF FIVE (5) TIMES THE AGGREGATE AMOUNT INVESTED BY SUCH INVESTOR IN THE SHARES.
  29. 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.
  30. NOTICE TO NEVADA 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 49:3-60(b) OF THE NEVADA SECURITIES LAW. THE INVESTOR IS HEREBY ADVISED THAT THE ATTORNEY GENERAL OF THE STATE OF NEVADA 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 APPROVAL OF THE ISSUE, OR SALE THEREOF, BY THE BUREAU OF SECURITIES OR THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEVADA. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. NEVADA 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.)
  31. 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 AVAILABLE 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 APPROVAL 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.
  32. NOTICE TO NEW JERSEY RESIDENTS ONLY: IF YOU ARE A NEW JERSEY RESIDENT AND YOU ACCEPT AN OFFER TO PURCHASE THESE SECURITIES PURSUANT TO THIS MEMORANDUM, YOU ARE HEREBY ADVISED THAT THIS MEMORANDUM HAS 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.
  33. NOTICE TO NEW MEXICO RESIDENTS ONLY: THESE SECURITIES HAVE 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 THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  34. NOTICE TO NEW YORK RESIDENTS ONLY: THIS DOCUMENT HAS 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 SHARES OFFERED HEREIN AND HAS MADE NO ARRANGEMENTS WITH BROKERS OF OTHERS TO TRADE OR MAKE A MARKET IN THE SHARES. 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 HAVE BEEN MADE AND THERE IS NO ASSURANCE THAT ANY BROKERS WILL EVER HAVE SUCH AN INTEREST IN THE SECURITIES OF THE COMPANY OR THAT THERE WILL EVER BE A MARKET THEREFORE.
  35. 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 HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FORGOING AUTHORITIES HAVE NOT CONFIRMED ACCURACY OR DETERMINED ADEQUACY OF THIS DOCUMENT. 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.
  36. NOTICE TO NORTH DAKOTA RESIDENTS ONLY: THESE SECURITIES HAVE 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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  37. 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 107.03(2) 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.
  38. NOTICE TO OKLAHOMA RESIDENTS ONLY: THESE SECURITIES ARE OFFERED FOR SALE IN THE STATE OF OKLAHOMA IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION FOR PRIVATE OFFERINGS. ALTHOUGH A PRIOR FILING OF THIS MEMORANDUM AND THE INFORMATION HAS BEEN MADE WITH THE OKLAHOMA SECURITIES COMMISSION, SUCH FILING IS PERMISSIVE ONLY AND DOES NOT CONSTITUTE AN APPROVAL, 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.
  39. NOTICE TO OREGON RESIDENTS ONLY: THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE CORPORATION COMMISSION OF THE STATE OF OREGON UNDER PROVISIONS OF OAR 815 DIVISION 36. THE INVESTOR IS ADVISED THAT THE COMMISSIONER HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION STATEMENT AND HAS NOT REVIEWED THIS DOCUMENT SINCE THE DOCUMENT IS 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.
  40. NOTICE TO PENNSYLVANIA 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 HAVE 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 HAVE 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 PENNSYLVANIA SECURITIES ACT OF 1972 (70 PS § 1-207(m), YOU MAY ELECT, WITHIN TWO (2) BUSINESS DAYS AFTER THE FIRST TIME YOU HAVE 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 PROSPECTUS) 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 ENSGTI 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 PENNSYLVANIA WHO ARE NON-ACCREDITED INVESTORS IF THE AMOUNT OF SUCH INVESTMENT IN THE SECURITIES WOULD EXCEED TWENTY (20%) OF SUCH INVESTOR'S NET WORTH (EXCLUDING PRINCIPAL RESIDENCE, FURNISHINGS THEREIN AND PERSONAL AUTOMOBILES). EACH PENNSYLVANIA 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 HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE PENNSYLVANIA 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.
  41. NOTICE TO RHODE ISLAND RESIDENTS ONLY: THESE SECURITIES HAVE 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 THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
  42. 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 THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  43. 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 THIS MEMORANDUM IS 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 APPROVAL TO THESE SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
  44. NOTICE TO TENNESSEE RESIDENTS 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 HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. 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.
  45. NOTICE TO TEXAS RESIDENTS ONLY: THE SECURITIES OFFERED HEREUNDER HAVE 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 AVAILABLE. 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.
  46. 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.
  47. NOTICE TO VERMONT RESIDENTS ONLY: THESE SECURITIES HAVE 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 THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
  48. 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.
  49. NOTICE TO WASHINGTON RESIDENTS ONLY: THE ADMINISTRATOR OF SECURITIES HAS NOT REVIEWED THE OFFERING OR PRIVATE PLACEMENT MEMORANDUM AND THE SECURITIES HAVE 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 AVAILABLE.
  50. 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.
  51. NOTICE TO WISCONSIN RESIDENTS ONLY: IN ADDITION TO THE INVESTOR SUITABILITY STANDARDS THAT ARE OTHERWISE APPLICABLE, ANY INVESTOR WHO IS A WISCONSIN RESIDENT MUST HAVE 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 SHARES OFFERED HEREIN.
  52. FOR WYOMING RESIDENTS ONLY: ALL WYOMING RESIDENTS WHO SUBSCRIBE TO PURCHASE SHARES OFFERED BY THE COMPANY MUST SATISFY THE FOLLOWING MINIMUM FINANCIAL SUITABILITY REQUIREMENTS IN ORDER TO PURCHASE SHARES: A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) OF TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000); AND THE PURCHASE PRICE OF SHARES SUBSCRIBED FOR MAY NOT EXCEED TWENTY PERCENT (20%) OF THE NET WORTH OF THE SUBSCRIBER; AND “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.

During the course of the Offering and prior to any sale, each offeree of the Shares and his or her professional advisor(s), if any, are invited to ask questions concerning the terms and conditions of the Offering and to obtain any additional information necessary to verify the accuracy of the information set forth herein.  Such information will be provided to the extent the Company possess such information or can acquire it without unreasonable effort or expense.

EACH PROSPECTIVE INVESTOR WILL BE GIVEN AN OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, MANAGEMENT OF THE COMPANY CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORTS OR EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM.  IF YOU HAVE ANY QUESTIONS WHATSOEVER REGARDING THIS OFFERING, OR DESIRE ANY ADDITIONAL INFORMATION OR DOCUMENTS TO VERIFY OR SUPPLEMENT THE INFORMATION CONTAINED IN THIS MEMORANDUM, PLEASE WRITE OR CALL:

Investor Relations Email: contact@lunacapital.fund

1. SUMMARY OF THE OFFERING

            THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY MORE DETAILED INFORMATION THAT MAY APPEAR ELSEWHERE IN THIS PRIVATE PLACEMENT MEMORANDUM.  EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PRIVATE PLACEMENT MEMORANDUM IN ITS ENTIRETY.

Luna Capital Fund (LCF) 2025, LLC (the “Company”) was formed on January 23, 2020 as a Wyoming Limited Liability Company.  The Company is an early stage company in the business of operating as a non-bank private direct lender, pending its ability to raise capital and identify appropriate investment opportunities.  The purpose of the Company is to lend private equity funds to small market deals and earn back the principal, targeting 10% interest, and seeking a 10% carried interest in the target companies by 2026, all for a 0.75% management fee. The company intends to pay its preferred rate of return and principal through funds earned from the companies we lend to.

The Securities offered are Two Hundred Fifty (250) Notes issued by the Company at One Thousand Five Hundred ($1,500) Dollars per Note, payable in cash at the time of subscription (see “Exhibit “B” for copy of Promissory Note).  The minimum purchase is one (1) Note.  As debt, the Notes should have a Preferred Return of an annual rate of return of ten (10%) percent simple interest, targeted to be paid at least annually, with a maturity date of forty eight (48) months from the date of the Company making its first loan or December 31, 2026, whichever the Company’s Manager decides.  The Notes offered pursuant to this Private Placement Memorandum will be unsecured.  

Notes are convertible at maturity to Membership Units of LCF 2025 LLC, at 1,500 Membership Units per Note.  The Notes may also convert if the Manager sells the Company via an Acquisition and the Noteholders will be subject to the drag-along provisions of the Operating Agreement. Membership Units have rights as outlined in EXHIBIT F of this Offering. The Principal may be prepaid, at the sole discretion of the Company, without a prepayment penalty.  Should such prepayment occur the convertible option may be exercised at that time.  This offering will commence on December 31, 2020, and will terminate no later than December 31, 2021, unless extended by the Company (see “TERMS OF THE OFFERING”).

The gross proceeds of the offering will be a minimum of Three Seventy Five Thousand ($375,000) Dollars and a maximum of Seven Million Five Hundred Thousand ($7,500,000) Dollars. The use of the proceeds is intended for making direct loans to companies seeking private equity capital or for short-term secured and unsecured lending. We will target a return of twelve (12%) percent—with the goal of covering the Preferred Return and management fees—and a targeted 10% carried interest, as described herein (see “USE OF PROCEEDS”).

2. THE COMPANY

LCF 2025, LLC (the “Company”) was formed on January 23, 2020, as a Wyoming Limited liability company.  At the date of this offering, Eight Million Five Hundred Thousand (8,500,000) of the Company’s Membership Units were authorized, One Million (1,000,000) were issued and Seven Million Five Hundred Thousand (7,500,000) were outstanding and available to Noteholders as defined in the Operating Agreement.  The Company is in the business of private equity finance, with particular emphasis on direct lending to the small market. 

2.1 OPERATIONS

LCF 2025, LLC is a subsidiary of Luna Capital Fund, Inc. Luna Capital Fund, Inc. operates the website LunaCapital.fund. LunaCapital.fund is neither registered with nor approved by FINRA as a crowdfunding portal. LunaCapital.fund is not a crowdfunding portal. Luna Capital Fund, Inc. is a non-bank lender offering crowdfunded private equity. Luna Capital Fund, Inc. is not responsible for any of the liabilities of LCF 2025, LLC. Luna Capital Fund, Inc. raises individual rounds of private equity crowdfunding with a target maturity or exit goal. The LCF 2025, LLC is an investment fund focused on earning its Preferred Return between 2020 and 2026 with an exit goal of the year 2026. LCF 2025, LLC provides direct lending to companies seeking financing for acquisitions or growth. Some of the funds may be used for direct lending to peer to peer lending opportunities, including inventory financing or factoring. Generally, these direct loans may be unsecured. If direct lending is provided as part of a business acquisition project, LCF 2025, LLC will seek at least 10% equity stake (i.e., carried interest) in the acquired company; however, this is a goal and the actual negotiated result with each company may vary. To achieve its target exit goals, LCF 2025, LLC may refinance its debt or encourage the parties it has an equity stake in to conclude a sale via merger, acquisition, or public listing. However, LCF 2025, LLC does not have sole control over such decisions. Additionally, LCF 2025, LLC may not be able to attain a senior, secured position in the debt portion of the capital stack of the companies it lends to.

2.2 BUSINESS PLAN

SEE “EXHIBIT D - BUSINESS PLAN.”

LCF 2025, LLC’s Business Plan, included as Exhibit D of this Memorandum and specifically incorporated herein, was prepared by the Company using assumptions set forth in the Business Plan, including several forward looking statements.  Each prospective investor should carefully review the Business Plan before purchasing Notes.  Management makes no representations as to the accuracy or achievability of the underlying assumptions and projected results contained herein.

3.0 MANAGEMENT

3.1 LLC MANAGERS

The success of the company is dependent upon the services and expertise of existing management.  At the present time, Luna Capital Fund, Inc. is the Manager of LCF 2025, LLC and its powers are described in the Company’s Operating Agreement (EXHIBIT E). Officers designated by Luna Capital Fund, Inc. are involved in the management of the Company, and include:

President - Has a BS in Business Management with a Minor in Economics from Elon University, and a degree in Bank Management from the Virginia Banker’s Association. Has been in banking and finance for 14 years working as a credit analyst and loan workout specialist prior to becoming a commercial loan officer. Has spent the last 8 years in commercial lending, managing a portfolio over $125M and 75 clients. Has closed over 25 transactions on an annual basis and spent the last 3 years in commercial lending as a senior manager focused on building and transitioning new teams. 

Chief Investment Officer - Has an MBA from Johns Hopkins University, a PhD from Virginia Tech, and has held senior management roles in management consulting, business intelligence consulting, and strategic sales for ecommerce companies. In addition to building and managing profitable companies, has led capital investment projects for online ecommerce involving >$250M capital expense earning >20% net margins, and breaking even in 5-7 years. As a sales leader, has managed a pipeline of 1,200+ opportunities with a total addressable value over the next 5-10 years valued at $15bn in incremental revenue. Is a graduate of the US Military Academy at West Point.

Senior Advisor and Investment Committee Member - Has experience as the Chief Technology Officer of a Big Data analysis company, from inception through its successful sale to a public company. Was an engineer at Google where he worked on the integration of search and geospatial technologies such as Google Maps. Served as a cryptologist in the US Air Force and as an Infantry leader in the US Army. Is a graduate of the US Military Academy at West Point

The management team may be further developed and expanded with qualified and experienced executives, professionals and consultants, as the Company matures and grows. The officers designated by Luna Capital Fund, Inc. are compensated by Luna Capital Fund, Inc. The officers designated by Luna Capital Fund, Inc. may be compensated by other organizations for their time and devote the balance of their time and effort accordingly.

4.0 TERMS OF THE OFFERING

4.1 GENERAL TERMS OF THE OFFERING

This Private Placement Memorandum is offering a minimum of Two Hundred Fifty (250) and a maximum of Five Thousand (5,000) Notes at One Thousand Five Hundred ($1,500) Dollars per Note, for a minimum of Three Hundred Seventy Five Thousand ($375,000) Dollars and a maximum of Seven Million Five Hundred Thousand ($7,500,000) Dollars to a select group of Investors who satisfy the Investor Suitability Requirements (see “INVESTOR SUITABILITY REQUIREMENTS”).  The Company has the authority to sell fractional Notes at its sole discretion.  The Company has set a minimum offering proceeds figure of $375,000 (the “minimum offering proceeds”) for this Offering.

4.2 MINIMUM OFFERING AMOUNT - HOLDING ACCOUNT

The Company will hold all funds in a US-based, FDIC-insured bank account until the minimum number of Notes are sold.

4.3 NON-TRANSFERABILITY OF NOTES

The Notes have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered in reliance upon an exemption under §4(2) and Rule 506 of Regulation D of the Securities Act, as amended, and rules and regulations hereunder.  The Notes have not been registered under the securities laws of any state and will be offered pursuant to an exemption from registration in each state.  A purchaser may transfer or dispose of the Note only if such Notes are subsequently registered under the Securities Act, or if an exemption from registration is available, and pursuant to an opinion of counsel acceptable to the Company and its counsel to the effect that the Notes may be transferred without violation of the registration requirements of the Securities Act or any other securities laws.

4.4 CLOSING THE OFFERING

The Notes are offered and closed only when a properly completed Subscription Agreement (Exhibit A); Note (Exhibit B), and Investor Acknowledgement (Exhibit C) are submitted by the investing Subscriber or his/her Investor Representatives and are received and accepted by the Company, and when the Company meets the Minimum Offering.  The Subscription Agreement as submitted by an investing Subscriber or his/her Investor Representatives shall be binding once the Company signs the Subscription Agreement, Note and the funds delivered by the potential Investor to the Company with the Subscription Agreement has been cleared by the financial institution in which they are deposited by the Company.  The Notes will be delivered to qualified Investors upon acceptance of their subscriptions via email and incorporating a Unique Document ID generated by WP-esignature.  All funds collected from investing Subscribers will be deposited in a designated account under the control of the Company.  Investors subscribing to the Notes may not withdraw or revoke their subscriptions at any time prior to acceptance by the Company, except as provided by certain state laws, or if more than thirty (30) days have passed after receipt of the Subscription Agreement by the Company without the Company accepting the Investor’s funds and delivering all applicable documents to such Investor.  The proceeds of this Offering will be used only for the purpose set forth in this Private Placement Memorandum (see “USE OF PROCEEDS”).

The Company may close in whole or in part or terminate this Offering under any of the following conditions:

  1. Upon reaching the minimum offering amount of Three Hundred Seventy Five Thousand ($375,000) Dollars
  1. Upon receipt of the maximum Offering subscription amount of Seven Million Five Hundred Thousand ($7,500,000) Dollars
  1. Notwithstanding the above, this offer shall terminate on December 31, 2021; or on such later date not exceeding thirty (30) days thereafter to which the Company, in its sole discretion, may extend this Offering. If the Company fails to raise the minimum offering amount it will return each Subscriber’s funds less any third party transaction fees (e.g., credit card transaction fees, bank

5.0 PLAN OF DISTRIBUTION

5.1 OFFERING OF NOTES

The Notes will be offered to prospective lenders (i.e., accredited investors) by Officers and Directors of the Company and qualified licensed personnel, pursuant to State and Federal security rules and regulations.  This Offering is made solely through this Private Placement Memorandum.  The Company and its Officers and Directors or other authorized personnel will use their best efforts during the Offering period to find eligible accredited investors who desire to subscribe to the Notes in the Company.  These Notes are offered on a “best efforts” basis, and there is no assurance that any or all of the Notes will be closed.  The Company has the authorization to offer fractional Notes at its sole discretion.  At present, the Company is not offering fractional Notes. The Offering period will begin as of the date of this Private Placement Memorandum and will close upon the happening of such occurrences as defined herein (see “TERMS OF THE OFFERING”).

5.2 PAYMENTS TO BROKER DEALERS OR INVESTMENT ADVISORS

The Company has the power to pay fees or commissions to qualified Broker Dealers, Registered Investment Advisors or any other person qualified under other applicable federal and state security laws. At present, the Company has not retained any Broker Dealers or Registered Investment Advisors for this Offering.

6.0 DESCRIPTION OF NOTES

6.1 NOTES

The Company is offering Five Thousand (5,000) Notes of the Company to potential investors at One Thousand Five Hundred ($1,500) Dollars per Note, payable in cash at the time of the subscription.  The minimum purchase is one (1) note.  The Notes should have an annual rate of return of ten (10%) percent simple interest over the term thereof, with a maturity date of forty-eight (48) months from the date the Company makes its first Loan or December 31, 2026, whichever the Manager designates.  The Preferred Return may be paid in accordance with the Operating Agreement.  The Company plans to pay all principal at Maturity.  Principal may be prepaid at the sole discretion of the Company, without a prepayment penalty.  Notes are convertible at Maturity to Membership Units, at 1,500 Membership Units per Note. The Notes may also convert if the Manager sells the Company via an Acquisition and the Noteholders will be subject to the drag-along provisions of the Operating Agreement. The Notes will be issued in the form attached hereto and incorporated herein by reference as though set forth in full herein as Exhibit B.

6.2 SECURITY FOR PAYMENT OF THE NOTES

The Notes being offered by the Company in this Private Placement Offering are unsecured Notes.

6.3 REPORTS TO NOTEHOLDERS

The Company will furnish annual unaudited reports to its Noteholders one hundred twenty (120) days after its fiscal year.  The Company may issue other interim reports to its Noteholders as it deems appropriate.  The Company’s fiscal year ends on December 31st of each year.

7.0 USE OF PROCEEDS

The gross proceeds of the Offering will be a minimum of Three Hundred Seventy Five Thousand ($375,000) Dollars and a maximum of Seven Million Five Hundred Thousand ($7,500,000) Dollars.  The table below sets forth the use of proceeds for both the maximum and minimum offering amounts.

Sources

 

Maximum Amount

Percent of Proceeds

Minimum Amount

Percent of Proceeds

Proceeds From Sale of Notes

$7,500,000

100%

$375,000

100%

Application of Proceeds   

Offering Expenses (1)

$2,500

0.0003%

$2,500

0.0067%

Commissions (2)

$0

0%

$0

0%

 

 

 

 

 

Total Offering Expenses & Fees

$2,500

0.0003%

$2,500

0.0067%

 

 

 

 

 

Net Offering Proceeds

$7,497,500

99.9%

$347,500

99.9%

 

 

 

 

 

Marketing

$0

 

$0

 

Web Site Development

$0

 

$0

 

Debt Reduction

$0

 

$0

 

Legal, Accounting

$0

 

$0

 

Working Capital for Direct Lending

$0

 

$0

 

Equipment

$0

 

$0

 

 

 

 

 

 

Total Application of Proceeds

$7,497,500

100%

$347,500

100%

Footnotes:

(1)  Includes estimated memorandum preparation, filing, printing, legal, accounting and other fees and expenses related to the Offering. Other offering expenses and fees will be paid by the Manager.

(2)  This Offering is being sold by the officers and directors of the Company, who will not receive any compensation for their efforts.  No sales fees or commissions will be paid to such officers or directors.  Notes may be sold by registered brokers or dealers who are members of the FINRA and who enter into a Participating Dealer Agreement with the Company.  Such brokers or dealers may receive commissions up to ten percent (10%) of the price of the Notes sold.

8.0 CAPITALIZATION STATEMENT

8.1 CAPITALIZATION PRIOR TO AND AFTER THE OFFERING

The following table summarizes the capitalization of the Company prior to, and as adjusted to reflect, the issuance and sale of the maximum of Two Hundred (200) Notes or One Million ($1,000,000) Dollars.

 

AS ADJUSTED, 1/31/2021

AFTER THE OFFERING

Notes

-0-

$7,500,000

 

 

 

Membership Units

$.01 par value, 8,500,000 units authorized, 1,000,000 units issued and outstanding

$10,000

$10,000

 

 

 

Net Shareholders’ Equity

$10,000

$10,000

 

 

 

TOTAL CAPITALIZATION

$100

$7,510,000

9.0 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

9.1 RESULTS OF OPERATIONS

The Company is a development stage company and has not yet commenced its principal operations.

9.2 LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity and capital resources are dependent on its ability to raise sufficient capital to pay for the purchase price of the Promissory Notes. It has no or limited funds.

10.0 CERTAIN TRANSACTIONS

10.1 WYOMING LIMITED LIABILITY COMPANY

LCF 2025, LLC is a privately held Wyoming Limited liability company, incorporated on January 23, 2020 in accordance with its Operating Agreement (EXHIBIT E).

10.2 PRIVATE OFFERING OF NOTES

The Company is authorized to offer in this private offering, up to Seven Million Five Hundred Thousand ($7,500,000) Dollars of Notes to selected investors, effective on December 31, 2020 and subject to the Terms of the Offering.

11.0 FIDUCIARY RESPONSIBILITIES OF THE DIRECTORS AND OFFICERS OF THE COMPANY

11.1 GENERAL

The Officers and Manager of the Company are accountable to the Company and common shareholders as fiduciaries and such Officers and Manager are required to exercise good faith and integrity in managing the Company’s affairs and policies.  Each Noteholder of the Company, or their duly authorized representative, may inspect the books and records of the Company at any time during normal business hours.  A Noteholder may be able to bring an action on behalf of himself in the event the Noteholder has suffered losses in connection with the purchase or sale of the Note(s) in the Company, due to a breach of fiduciary duty by an Officer or the Manager of the Company, in connection with such sale or purchase, including the misrepresentation or misapplication by any such Officer or the Manager of the proceeds from the sale of these Notes, and may be able to recover such losses from the Company.

11.2 INDEMNIFICATION

Indemnification is permitted by the Company to directors, officers or controlling persons pursuant to Wyoming law.  Indemnification includes expenses, such as attorneys’ fees and, in certain circumstances, judgments, fines and settlement amounts actually paid or incurred in connection with actual or threatened actions, suits or proceedings involving such person and arising from their relationship with the Company, except in certain circumstances where a person is adjudged to be guilty of gross negligence or willful misconduct, unless a court of competent jurisdiction determines that such indemnification is fair and reasonable under the circumstances. 

12.0 RISK FACTORS

THIS INVESTMENT INVOLVES A DEGREE OF RISK.  AN INDIVIDUAL CONTEMPLATING INVESTMENT IN THIS OFFERING SHOULD GIVE CAREFUL CONSIDERATION TO THE ELEMENTS OF THE RISK SUMMARIZED BELOW, AS WELL AS THE OTHER RISK FACTORS IDENTIFIED ELSEWHERE IN THIS PRIVATE PLACEMENT MEMORANDUM.

12.1 FORMATION OF THE COMPANY

The Company was formed on January 23, 2020.  It is therefore subject to all the risks inherent in the creation of a new Company.  Unforeseen expenses, complications and delays may occur with a new Company.  Some of the risk factors that affect a new company could lead it to dissolve or declare bankruptcy before it is able to complete its business plans.

12.2 CONTROL BY THE COMPANY

After completion of this offering, the Company will own one hundred percent (100%) of the issued and outstanding Membership Units.  Such ownership will enable the Company to continue to elect all the Managers and to control the Company’s policies and affairs.  The Noteholders will not have any voting rights in the Company, except as otherwise allowed in the Operating Agreement. Noteholders will not become Members of the Company until the Notes mature and convert.

12.3 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 LLC.  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.

12.4 LIMITED TRANSFERABILITY OF THE NOTES

The transferability of the Notes in this offering are 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 of 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.

12.5 CAPITALIZATION OF THE COMPANY

Prior to this offering, the Company was funded with $10,000 by its founding members. There have been no other offerings or private placements in the Company. Independent of the amounts raised in this offering the Company does not have any other assets available to use to pay principal or interest on the Notes.  It will only be able to pay principal and interest on the Notes if it is successful in its Business Plan and the Risk Factors or other risks do not materialize and affect the Company.

12.6 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, private equity debt financing companies.  Failure to comply with these laws may result in civil and criminal liability.  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 material compliance with any and all applicable laws, rules and regulations.

12.7 CUSTOMER BASE AND MARKET ACCEPTANCE

For more than a year the Company’s founders attempted to purchase certain profitable, yet asset lite businesses. Many of the businesses also relied on contract employees. Those two conditions made it difficult to get debt financing for the acquisitions. Banks disapproved because there was no collateral and US Small Business Administration (SBA)-backed investment companies could not lend because the businesses did not have 51% of their employees in the United States. As a non-bank lender providing crowdfunded private debt financing, the Company intends to raise debt financing from private, accredited lenders and source funding opportunities that traditional banks and SBA-backed lenders cannot service. Although the company believes there is a market and that its website will be an efficient method for sourcing deals, the inability of the Company to source and perform due diligence on the deals could have a material adverse effect on the company.  Although the Company believes that its service and its interactive e-commerce website offers advantages over competitive companies and related products, no assurance can be given that LCF 2025, LLC’s services and e-commerce website will attain a degree of market acceptance on a sustained basis or that it will generate fees, principal and interest revenue sufficient for sustained profitable operations.

12.8 COMPETITION

Competition for LCF 2025, LLC and its services comes generally from angel investors, other private equity funds, accredited investors, other non-bank lenders, banks, and venture capital funds. The market for business acquisitions is growing. As the California Association of Business Brokers outlines, the 70 million “baby boomers” in the United States who own businesses will “sell or bequeath $10 trillion worth of assets over the next two decades. These assets are held in more than 12 million privately owned businesses. More than 70 percent of these companies are expected to change hands.”[1] Private equity firms are stratified into the fund sizes they raise and the investments they make. The largest, like Blackstone or the Carlyle Group raise billions of dollars and buy assets for hundreds of millions. The middle market and the lower-middle market firms number in the dozens and make investments as small as $50 million. The Company operates firmly in the small market based on our size.  To put the competitive landscape in perspective, in Inc. magazine’s 2019 top 50 list[2] of private equity firms, only two—4%—had investment criteria that focused on the small market (e.g., $1M of EBITDA or $5M of revenues).

While there does exist some current competition, Management believes that LCF 2025, LLC’s products are competing in an under-served segment of the market.  The market is under-served because a) the target companies do not fit current underwriting standards (e.g., employment, collateral), b) they are in emerging business models that are misunderstood (e.g., software as a service, ecommerce brands), and c) they are small enough that larger competitors would have to close numerous deals to allocate the funds they have raised.  Further, LCF 2025, LLC has developed a 91 item due diligence process across 13 functional areas to understand the risks and opportunities in a business. The expertise of Management combined with the innovative nature of its marketing approach and underwriting unique to the market segment, set the Company apart from its competitors.  However, there is the possibility that new competitors could innovate and produce competing products or services with similar focus.  Likewise, these new competitors could be better capitalized than LCF 2025 LLC, which could give them a significant advantage.  There is the possibility that the competitors could capture significant market share of LCF 2025, LLC’s intended market.

12.9 RELATED PARTIES

LCF 2025, LLC and its parent company Luna Capital Funds, Inc. are related parties. Luna Capital Funds, Inc. has other funds with different target maturity dates (e.g., 2025, 2027, etc.). The Management of the Company holds managerial or consulting responsibilities in these related parties. There is the possibility that their duties to those entities, funds, and investors could conflict with LCF 2025, LLC’s business purpose.  The Company does not perceive any conflicts of interest at this time, and it is in the Company’s interest to ensure it is successful to remain a going concern.

12.10 OTHER RISK FACTORS

The Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness we have currently incurred or may incur in the future.

The Notes will not be secured by any of our assets or any of the assets of our subsidiaries. As a result, the Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes.

The Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

The Notes are obligations exclusively of LCF 2025, LLC and not of any of our subsidiaries or peer vintage funds. None of our subsidiaries is a guarantor of the Notes and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.  Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors (including trade creditors) and holders of preferred stock, if any, of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes will be structurally subordinated to all indebtedness and other liabilities (including trade payables) of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.

The loans the Company makes may not be repaid in a timely manner or ever.

The Company relies, in part, upon the principal and interest received on its outstanding loans to fund the repayment of principal and payment of interest on the Notes. There can be no assurance that borrowers will repay their loans promptly, particularly in a difficult economic environment. Therefore, there can be no assurance that the Company will be able to make payments to noteholders as scheduled. There is a risk that defaulted or delinquent loans may result in insufficient liquidity or assets to satisfy all outstanding Notes. This risk could become magnified if the US or other economies experience contraction or recessions.

Notes are subject to all the risks associated with unsecured investments.

The Notes are unsecured general obligations of the Company and are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not insured by any federal or state agency, including the FDIC and SIPC. Payment of principal and interest will depend upon the financial condition of the Company. Further, no sinking fund or other similar deposit has been or will be established by the Company to provide for the repayment of the Notes. Therefore, the relative risk level may be higher for the Notes than for other securities.

The interest rate applicable to a Note is fixed at the time of issue.

Interest rates offered for the Notes may change at the Company's discretion, within the available range of 0%-4%. Should commercial rates rise, the Company is not legally obligated to pay a higher rate or to redeem the principal or allow an early redemption of a Note prior to its maturity.

The Company may change its policies and procedures.

At various points in this prospectus the Company describes its policies and procedures, such as its preferred rate of return goal and its business plan. These descriptions are intended to help investors understand the Company's current operational plans. The Company, however, reserves the right to change its policies and procedures at any time.

The Notes are intended to be held to maturity with no early redemption option.

Investors should plan to hold their Note for the full term selected. The Notes have no rights of redemption for noteholders. In extreme circumstances, at the Company's sole discretion and on such terms as the Company may require, the Company may allow an early redemption. However, this cannot be guaranteed.

There is not expected to be any secondary market in the Notes.

The nature of this program does not afford the opportunity of a public or secondary market. Consequently, the purchase of a Note should be viewed as an investment to be held to maturity.

The Company will issue additional Notes that will rank equally with the Notes purchased by any noteholder.

The Issuer will issue additional Notes pursuant to supplemental offerings, without the consent or approval of the owners of any Notes then outstanding. Those additional Notes will be issued on a parity with any of the other Notes.

Noteholders have no ability to remove or replace the Company's directors or committee members or to participate in the management or control of the Company.

Under the operating agreement of the Company, Noteholders have no ability to remove or replace directors or committee members. In addition, Noteholders do not have any right to participate in the management or control of the Company or any right or authority to act for or bind the Company.

Bankruptcy and other laws may place limitations on the remedies the Company has as a lender and may provide additional protections for other noteholders.

The Company's remedies as a creditor upon default by any of its investments and loans will be subject to various laws, regulations, and legal principles that provide protections to impact partners. Under existing laws (including, without limitation, the Federal Bankruptcy Code), the remedies specified by the Company's loan agreements and collateral documents (if any) may not be readily available or may be limited. Furthermore, the laws of a particular jurisdiction may change or make it impractical or impossible to enforce specific covenants in the loan agreements and collateral documents (if any). In addition, the Company's legal and contractual remedies, including those specified in its loan agreements and collateral documents (if any), typically require judicial actions, which are often subject to discretion and delay. A court may refuse to order the specific performance of the covenants contained in the loan agreements and collateral documents.

There is risk that a counterparty may not perform.

The Company will enter into various business relationships. It is possible one or more of these counterparties could engage in fraud or otherwise not perform under their agreements with the Company. In addition, it is possible that these counterparties may terminate their contracts with the Company prior to the contracts’ expiration. In such case, the Company would need to engage new counterparties, who may not offer the same services as these counterparties.

The Company, and its vendors, rely on technology and technology-related services.

The majority of the Company's records are stored and processed electronically, including records of its Notes receivable and Notes payable. The Company relies to a certain extent upon third party vendors for providing hardware, software, and services for processing, storing, and delivering information. The Company's electronic records include confidential noteholder information and proprietary information regarding the Company's operations. Electronic processing, storage, and delivery has inherent risks such as the potential for hardware failure, virus or malware infection, input or programming errors, inability to access data when needed, permanent loss of data, and/or unauthorized access to data or theft of data. While the Company and its vendors take measures to protect against these risks, it is possible that these measures will not be completely effective and that there may be other risks that have not been identified because they are different or unknown or that may emerge in the future. If the Company were to experience large scale data inaccuracy, inability to access data for an extended time period, permanent loss of data, data breach, failure of its vendors to perform as contracted, or other significant issues regarding data, it could adversely affect all aspects of the Company's operations.

Certain tax consequences.

There is risk that the federal, state, and local income tax results of holding Notes may not match an investor’s expectations. Additionally, there is always a risk that changes may be made in the tax laws, which could have an adverse effect on ownership of Notes.

Investors do not have independent legal counsel.

No independent counsel has been retained to represent investors. All investors are encouraged to consult with their legal and tax advisors prior to making an investment in the Notes.

The Company has a considerable degree of discretion in utilizing the Note proceeds.

The Company exercises discretion in lending, and making other limited investments with the proceeds of this offering by conducting, or delegating to staff to conduct, a rigorous due diligence of an applicant’s financial and program information, credit history, capital structure, liquidity, and management track record. Nevertheless, there can be no assurance that losses in the Company's loans or investments will not occur.

If the Company forecloses on a loan it has made, the borrower’s collateral underlying that loan (if any) may not be of sufficient value to cover the outstanding amount owed.

The Company's loans may be (but are typically not) secured by collateral. In the event of a loan default, the collateral securing such loans may not be adequate and there is no assurance that the Company could successfully recover an amount equal to the amount of the defaulted loan. A declining market in the relevant collateral could further depress the value of the Company's loan collateral or delay or limit the Company's ability to dispose of the loan collateral and increase the possibility of a loss following a foreclosure.

The Company is dependent upon the continued services of certain key personnel.

The President and Directors or any member of the senior management team could leave the Company at any time, leaving a temporary vacancy in a key position. The Company tries to ensure a depth of management such that a departure will not impede the Company's functioning. However, there can be no assurance of continuity in the Company's key personnel. The Company does not maintain key person insurance.

There are risks associated with borrowing by the Company.

The Company may borrow funds on a short-term basis for liquidity and cash management. The preferred method of such borrowing is through a line of credit, overdraft facility or other unsecured facility provided by a financial institution. It may be necessary to provide security in order to arrange such a line of credit. It is possible that the Company may default on its loans, which may cause such counterparties to seek recourse against the Company.

The Company’s loan loss reserve may not be adequate.

The Company’s loan portfolio loan loss reserve and capital holdback for alternative investments may not be adequate to meet all potential losses in connection with the Company’s financing activities.

From time to time, the Company may become involved in litigation in the ordinary course of its activities.

Litigation can be time consuming and costly, and there can be no assurance that the Company will not become involved in litigation that could have an adverse impact on its activities or financial condition. If the Company’s subsidiaries become subject to claims or litigation, the Company may be liable. The Company has taken legal steps to be a separately incorporated and a separate legal entity apart from its affiliates and, as such, the Company should not be liable for claims made against them or other affiliated organizations. It is possible, however, that in the event of claims against the Company’s affiliated organizations, the claimants might contend that the Company is also liable. Such claims, if upheld by the courts, could negatively affect the Company’s financial condition.

It is the Company’s view that this offering of Notes is exempt from registration under the federal securities laws, and from state securities laws in several of the states in which the Company is offering the Notes.

If it is determined that the Notes are not exempt from federal and/or state securities laws, the Company may be required to make rescission offers and/or be subject to other penalties for which the Company may not have the funds available to repay noteholders in such states.

The offering described in this prospectus is being made in reliance upon exemptions from registration provided by Section 3(a)(4) of the Securities Act, Section 3(c)(10) of the Investment Company Act.

Reliance on these exemptions does not, however, constitute a representation or guarantee that such exemptions are indeed available. The Company may seek to qualify, register, or otherwise obtain authorization for the offering in certain other states where the Company believes such qualification, registration or other authorization is required.

In addition, the Company has no obligation, and does not intend, to register the Notes for resale.

There is no trading market for the Notes at present and no trading market is expected to develop in the future. Investors should therefore consider the Notes as an investment to be held until maturity.

There is limited regulatory oversight with respect to the Company.

The Company does not intend to register as an investment company under the Investment Company Act, in reliance upon Section 3(c)(10) of the Investment Company Act. Accordingly, the provisions of the Investment Company Act, which, among other matters, require investment companies to have a majority of disinterested directors, will not apply. In addition, the Notes are being offered under an exemption from federal registration pursuant to Section 3(a)(4) of the Securities Act. As such, this prospectus will not be submitted to or reviewed by the Securities and Exchange Commission.

Changes in the regulations to which the Company is subject, including those related to its lending activities, could have an adverse impact on the Company’s operations and its ability to make payments on the Notes.

The Company is not currently subject to regulation as a bank, but some of its operations are subject to regulation by federal, state and local governmental authorities. Although the Company believes that its activities are in compliance in all material respects with applicable local, state and federal laws, rules and regulations, there can be no assurance that this is the case or that more restrictive laws, rules and regulations governing the Company’s lending activities will not be adopted in the future which could make compliance much more difficult or expensive, restrict its ability to originate loans, further limit or restrict the amount of interest and other charges earned under loans the Company originates, or otherwise adversely affect the Company’s operations or prospects, which could adversely affect its ability to operate and to make payments under the Notes and potentially lead to the termination of the offering of or termination, winding-up or liquidation of the Company.

13.0 PRINCIPAL SHAREHOLDERS

As of the date of this Offering, the Company has One Million (1,000,000) Membership Units issued and outstanding to the Managers and Members identified in the Company’s Operating Agreement. Seven Million Five Hundred Thousand (7,500,000) Membership Units are available for Noteholders contemplated in this Offering.

14.0 HOW TO INVEST

An Investor who meets the qualifications as set forth in this Private Placement Memorandum may subscribe for at least the minimum purchase herein of One (1) Note (One Thousand Five Hundred ($1,500) Dollars) by carefully reading this entire Private Placement Memorandum in its entirety and by then completing and electronically signing a complete Subscription Agreement inclusive of all Exhibits and Attachments and any follow-up requests for information by the Company  The final electronically signed version (a Unique Document ID generated from WP-esignature and emailed to the Subscriber) of this Private Placement Memorandum contains identical copies of the following exhibits contained in the Private Placement Memorandum, including:

Exhibit A        INSTRUCTIONS TO SUBSCRIBERS and SUBSCRIPTION AGREEMENT: This contains complete instructions to Subscribers and should be read in its entirety by the prospective investor prior to investing.  The Subscription Agreement must be signed by the Investor and its final form is a Unique Document ID generated from WP-esignature and emailed to the Subscriber.

Exhibit B         PROMISSORY NOTE: This Note will be signed by an authorized representative of LCF 2025, LLC

Exhibit C        INVESTOR ACKNOWLEDGEMENT: This Acknowledgement requires a Subscriber to acknowledge they meet the definition of a qualified accredited investor.

Exhibit D    LCF 2025, LLC Business Plan

           
Copies of all the above referenced documents are included with this Private Placement Memorandum.  For discussion of the actions of the Company upon receipt of a properly completed request to invest by a Subscriber, please see “TERMS OF THE OFFERING.”  Investors must include a settled electronic payment made payable to Luna Capital Fund, Inc. for the benefit of LCF 2025, LLC, along with the SUBSCRIPTION AGREEMENT, NOTE, AND INVESTOR ACKNOWLEDGEMENT.  Delivery of the documents referred to above, together with a payment to the Company for the value of the Notes the Investor is subscribing to will be automatically emailed to the Company (a Unique Document ID generated from WP-esignature) as follows: LCF 2025, LLC at contact@luncapital.fund

15.0 INVESTOR SUITABILITY REQUIREMENTS

15.1 INTRODUCTION

                        Potential Investors should have experience in making investment decisions or such Investors should rely on their own tax consultants or other qualified investment advisors in making this investment decision.

15.2 GENERAL SUITABILITY

                        Each potential Investor will be required to represent the following by execution of a Subscription Agreement:

  1. The Investor has such knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in this Offering. 
  2. The Investor has the ability to bear the economic risk of this investment, has adequate means to provide for his, her or its current needs and personal contingencies, has no need for liquidity in this investment and could afford the complete loss of the investment.
  3. The Investor is acquiring the Note(s) for his, her or its own account for investment purposes only and not with a view toward subdivision, resale, distribution or fractionalization thereof, or for the account of others, and has no present intention of selling or granting any participation in, or otherwise distributing, the Note(s).
  4. The Investor’s overall commitment to invest in the Note(s) is not disproportionate to his, her or its net worth and the investment in these Note(s) will not cause such overall commitment to become excessive.
  5. The Investor has read and understands this Private Placement Memorandum and all its exhibits.

15.3 ACCREDITED INVESTORS

                        In addition to satisfying the “General Standards” as defined above, all Subscribers for Shares must each satisfy one of the “Accredited Investors” economic suitability standards as defined below:

  1. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds One Million ($1,000,000) Dollars excluding the value of the primary residence of such natural person;
  2. Any natural person who had an individual income in excess of Two Hundred Thousand ($200,000) Dollars in each of the two most recent years, or joint income with that person’s spouse in excess of Three Hundred Thousand ($300,000) Dollars in each of those years and has a reasonable expectation of reaching the same income level in the current year;
  3. Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of the 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 under Section 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 benefits of its employees if such plan has total assets in excess of Five Million ($5,000,000) Dollars; 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 Five Million ($5,000,000) Dollars if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
  4. Any private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940);
  5. 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 Five Million ($5,000,000) Dollars;
  6. 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;
  7. Any trust, with total assets in excess of Five Million ($5,000,000) Dollars, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and
  8. Any entity in which all of the equity owners are Accredited Investors.

                        NOTE:  Entities (a) which are formed for the purpose of investing in the Company, or (b) the equity owners of which have contributed additional capital for the purpose of investing in the Company, shall be “looked through” and each equity owner must meet the definition of an accredited investor in any of paragraphs 1, 2, 3, 4, 5, 6 or 7 above and will be treated as a separate subscriber who must meet all suitability requirements.

15.4 ACCEPTANCE OF SUBSCRIPTION AGREEMENT BY THE COMPANY

                        The Investor Suitability Requirements referred to in this section represent minimum requirements for potential Investors.  Satisfaction of these standards does not necessarily mean that participation in this Offering constitutes a suitable investment for such a potential Investor or that the potential Investors’ Subscription will be accepted by the Company.  The Company may, in fact, modify such requirements as circumstances dictate.  All Subscription Agreements submitted by potential Investors will be carefully reviewed by the Company to determine the suitability of the potential Investor in this Offering.  The Company may, in its sole discretion, refuse a Subscription in this Offering to any potential Investor who does not meet the applicable Investor Suitability Requirements or who otherwise appears to be an unsuitable Investor in this Offering.  The Company will not necessarily review or accept a Subscription Agreement in the sequential order in which it is received. 

16.0 LITIGATION

            To the best knowledge of the Company, the Company and its Managers have no lawsuits pending, no legal actions pending or judgments entered against the Company or Managers and no legal actions are contemplated against the Company and/or its Managers.

17.0 ADDITIONAL INFORMATION

            Reference materials described in this Private Placement Memorandum are available for inspection at the office of the company during normal business hours.  It is the intention of the Company that all potential Investors are given full access to such information for their consideration in determining whether to purchase the Notes being offered.  Prospective Investors should contact the Company for access to information regarding the matters set forth or other information concerning the Company.  Representatives of the Company will also answer all inquiries from potential Investors concerning the Company and any matters relating to its proposed operations or present activities.  The Company will afford potential Investors and their representatives the opportunity to obtain any additional information reasonably necessary to verify the accuracy or the source of any representations or information contained in this Private Placement Memorandum.  All contracts entered into by the Company are subject to modifications and the Company may make any changes in any such contracts as deemed appropriate in its best discretion.  Such recent amendments may not be circulated to Subscribers prior to the time of closing this Offering.  However, potential Investors and their representatives may review such material or make inquiry of the Company concerning any of these and any other matters of interest.  

18.0 FORECASTS OF FUTURE OPERATING RESULTS

            Any forecasts and proforma financial information which may be furnished by the Company to prospective Investors or which are part of the Company’s business plan, are for illustrative purposes only and are based upon assumptions made by Management regarding hypothetical future events.  There is no assurance that actual events will correspond with the assumptions or that factors beyond the control of the Company will not affect the assumptions and adversely affect the illustrative value and conclusions of any forecasts. See the advisory again on Forward-looking Statements.

19.0 ELECTRONIC SIGNATURES AND SERVICES IN THIS TRANSACTION

            The final electronic version of this Agreement may include other terms, status, and audit information from Stripe, PayPal, Word Press, WooCommerce, or Approve Me™ the maker of WP-esignature. This information is extraneous to this Subscription Agreement and will not alter the meaning or terms and conditions of this Private Placement Memorandum in any way.

20.0 GLOSSARY OF TERMS

            The following terms used in this Memorandum shall (unless the context otherwise requires) have the following respective meanings:

                        ACCEPTANCE.  The acceptance by the Company of a prospective investor’s subscription.

                        ACCREDITED INVESTORS.  Those investors who meet the criteria set forth in “INVESTOR SUITABILITY REQUIREMENTS.”

                        BROKER-DEALER.  A person or firm licensed with the FINRA, the SEC and with the securities or corporate commissions department of the state in which it sells investment securities and who may employ licensed agents for that purpose.

                        COMPANY.  Refers to LCF 2025, LLC, a Wyoming Limited Liability Company.

                        NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (FINRA).  A self-regulating body which licenses brokers and dealers handling securities offerings, reviews the terms of an offering’s underwriting arrangements and advertising literature and, while not a governmental agency, acts as a review service watchdog to make sure that its regulations and those of the SEC are followed for the Investor’s protection in offerings of securities.

                        NOTE.  Each One Thousand Five Hundred ($1,500) Dollar investment will be represented by one (1) Promissory Note issued by LCF 2025, LLC, a Wyoming Limited Liability Company.  The Promissory Notes issued hereunder may collectively be referred to as the “Notes.”

                        SECURITIES ACT OF 1933.  A federal act regulated and enforced by the SEC that requires, among other things, the registration and use of a prospectus whenever a security is sold (unless the security or the manner of the Offering is expressly exempt from such registration process).

                        SECURITIES EXCHANGE ACT OF 1934.  A federal act regulated and enforced by the SEC which supplements the Securities Act of 1933 and contains requirements which were designed to protect investors and to regulate the trading (secondary market) of securities.  Such regulations require, among other things, the use of prescribed proxy statements when investors’ votes are solicited; the disclosure of management and large shareholders’ holding of securities; controls on the resale of such securities; and periodic (monthly, quarterly, annually) filing with the SEC of financial and disclosure reports of the Issuer.

                        SECURITIES AND EXCHANGE COMMISSION (SEC).  An independent United States government regulatory and enforcement agency which supervises investment trading activities and registers companies and those securities which fall under its jurisdiction.  The SEC also administers statutes to enforce disclosure requirements that were designed to protect investors in securities offerings.

                        SUBSCRIPTION DOCUMENTS.  Consists of the Note, Subscription Agreement, Investor Acknowledgement and a payment for the Note(s) to be purchased submitted by each prospective Investor to the Company.

                        TERMINATION DATE.  The earlier to occur of the date on which all Notes are sold or December 31, 2021.

 

 

 

EXHIBIT A

 

 

 

SUBSCRIPTION AGREEMENT

 The Subscriber is identified in the Electronic Signature portion of this Private Placement Memorandum (a Unique Document ID generated from WP-esignature and emailed to the Subscriber).

The Amount Loaned is identified in the Electronic Receipt for each Note or Transaction.

The Number of Notes is identified in the Electronic Receipt for each Transaction.

LCF 2025, LLC

SUBSCRIPTION DOCUMENTS

OFFERING OF A MINIMUM OF TWO HUNDRED FIFTY (250) AND A MAXIMUM OF FIVE THOUSAND (5,000) UNSECURED PROMISSORY NOTES

ONE THOUSAND FIVE HUNDRED ($1,500) DOLLARS PER NOTE

December 31, 2020

_______________________________________

SUBSCRIPTION INSTRUCTIONS

(please read carefully)

_______________________________________

 

 Each subscriber for the Unsecured Promissory Notes, One Thousand Five Hundred ($1,500) Dollars per Note (the “Notes”) of LCF 2025, LLC, a Wyoming Limited Liability Company (“the Company”), must complete and execute the Subscription Documents in accordance with the instructions set forth below.  The completed documents (a Unique Document ID generated from WP-esignature and also emailed to the Subscriber) are automatically sent to LCF 2025, LLC at contact@lunacapital.fund.

 

Payment for the Securities should be made via our website LunaCapital.fund and enclosed with the documents as directed in Section III below. 

1. These Subscription Documents contain all of the materials necessary for you to purchase the Notes. This material is arranged in the following order:

  • Subscription Agreement
  • Promissory Note
  • Confidential Prospective Purchaser’s Acknowledgement

2. All investors must complete in detail, date, initial, and sign the Subscription Documents where appropriate. All applicable sections must be filled in.

3. Payment for the Notes must be made electronically as provided below:

Please follow the instructions on our website and subsequent emails for payment.

All funds received from subscribers will be placed in a segregated Holding Account of the Company.  Once the minimum offering amount has been reached the funds will be transferred to the Company’s operating account and will be available for use.

SPECIAL INSTRUCTIONS

Please email the items identified below to contact@lunacapital.fund.

FOR CORPORATIONS.  Include copy of Board resolution designating the corporate officer authorized to sign on behalf of the corporation, a Board resolution authorizing the investment, and financial statements.

FOR PARTNERSHIPS.  Provide a complete copy of the partnership agreement, Acknowledgement, and financial statements for each General Partner.

FOR TRUSTS.  Provide a complete copy of the instruments or agreements creating the trust, as amended to date.

FOR LIMITED LIABILITY COMPANIES. Provide a complete copy of the Operating Agreement and a resolution signed by the Manager or a Member with banking responsibilities that acknowledges the Member authorized to evaluate this Offering and complete the Subscription.

 

 

Fund 2026 - Subscription Agreement

To:       LCF 2025, LLC

            140B Purcellville Gateway Drive, #203

            Purcellville, VA 20132

To the Managers:

1. Subscription.  The undersigned hereby subscribes for the number of Notes of LCF 2025, LLC (the “Company”), a Wyoming Limited Liability Company that they may transact for via LunaCapital.fund, and agrees to loan to the Company One Thousand Five Hundred ($1,500) Dollars per Note for an aggregate loan of the amount they transact for via LunaCapital.fund (the “Loan Amount”) upon the terms and subject to the conditions (a) set forth herein, and (b) described in the Confidential Private Placement Memorandum (“Private Placement Memorandum”) dated December 31, 2020 together with all exhibits thereto and materials included therewith, and all supplements, if any, related to this offering.  The minimum loan is One Thousand Five Hundred ($1,500) Dollars.  

2. Note Offering.  The Company is offering a minimum of Two Hundred Fifty (250) and up to a maximum of Five Thousand (5,000) Notes at One Thousand Five Hundred ($1,500) Dollars per Note, with a minimum subscription of one (1) Note (the “Offering”).  The minimum aggregate loan to the Company will be Three Hundred Seventy Five Thousand ($375,000) Dollars and the maximum aggregate loan to the Company from this Offering will be Seven Million Five Hundred ($7,500,000) Dollars. Notes are convertible at maturity to Membership Units, at 1,500 Membership Units per Note.  The Notes may also convert if the Manager sells the Company via an Acquisition and the Noteholders will be subject to the drag-along provisions of the Operating Agreement. The Offering is being made to a limited number of qualified accredited investors pursuant to an exemption available under the Securities Act of 1933 (the “Act”), specifically Rule 506(c) promulgated under Regulation D, and under certain other laws, including the securities law of certain states.

3. Documents to be Delivered.  The undersigned is delivering to the Company executed copies of this Subscription Agreement (the “Agreement”), the Note(s), Investor Acknowledgement, and all other applicable exhibits and documents (the “Subscription Documents”).  The Subscription Documents should be delivered to LCF 2025, LLC via our website subscription process at LunaCapital.fund, i.e., a Unique Document ID generated from WP-esignature that is emailed to the Subscriber and the Company.  The undersigned understands and agrees that he or it will not become a “Holder” of the Note(s) and the Company shall not become a “Maker” of the Note(s) unless and until the Agreement and Note(s) are executed by the Company.   

4. Making of Loan Amount.  The undersigned, simultaneously with the delivery of the Subscription Documents to the Company, hereby tenders to the Company the Loan Amount by electronic payment made payable to Luna Capital Fund, Inc. for the benefit of LCF 2025, LLC in the amount indicated in the Electronic Receipt of the Transaction.

5. Acceptance or Rejection of Subscription.  The undersigned understands and agrees that the Company reserves the right, exercisable in its sole discretion, to accept or reject any subscription, in whole or in part, for any reason and that the undersigned will be notified by the Company as promptly as practicable as to whether his or its subscription has been accepted or rejected.  If the undersigned's subscription is accepted, in whole or in part, by the Company, the Company will execute this Agreement and the Note(s) and return them to the undersigned.  If this subscription is rejected by the Company, either in whole or in part, all funds, in the case of a rejection of the subscription in whole, or those funds representing the amount of the subscription not accepted by the Company, in the case of a rejection of the subscription in part, will be returned to the undersigned as promptly as practicable.  If this subscription is rejected in whole by the Company, this Agreement shall be null, void and of no effect.  The undersigned does not have the right to withdraw or revoke his or its subscription during the Offering period, except as provided by certain state laws, except that if more than thirty (30) days shall have passed from the date the Company received completed and executed Subscription Documents and the Loan Amount from the undersigned (the “Acceptance Period”), and the Company has not accepted the subscription during the Acceptance Period, the undersigned may withdraw his or its subscription at any time after the Acceptance Period up until such time that the Company subsequently decides, in its sole discretion, to accept the subscription in whole or in part.

6. Offering Period.  The Company may close in whole or in part or terminate this Offering under any of the following conditions:

  • a. Upon reaching the minimum offering amount of Three Hundred Seventy Five Thousand ($375,000) Dollars
  • b. Upon receipt of the maximum Offering subscription amount of Seven Million Five Hundred Thousand ($7,500,000) Dollars
  • c. Notwithstanding the above, this offer shall terminate on December 31, 2021; or on such later date not exceeding thirty (30) days thereafter to which the Company, in its sole discretion, may extend this Offering.

7. Closing of the Loan.  The Note(s) subscribed for herein shall not be deemed made by the Company or held by the undersigned until this Agreement and the Note(s) have been countersigned by the Company, and until the funds delivered by the undersigned to the Company with the Subscription Documents have been deposited in the Holding Account and have been cleared by the applicable bank of the Company (the “Effective Date”).  Upon the Effective Date, (a) the undersigned shall have loaned to the Company the Loan Amount, (b) the undersigned shall become the Holder and the Company shall become the Maker of the Note(s) subscribed for by the undersigned, and (c) both the undersigned and the Company shall be bound by the terms of the Private Placement Memorandum and the Subscription Documents and any other undertakings described herein. 

8. Representations and Warranties. 

                        (a)        The Company hereby represents and warrants as follows:

                                    (i)         The Company is a Limited Liability Company duly organized, validly existing and in good standing under the laws of the State of Wyoming and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted;

                                    (ii)        This Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws from time to time in effect which affect creditor’s rights generally and by legal and equitable limitations on the availability of specific performance and other equitable remedies under or by virtue of this Agreement).  The Company has all requisite power and authority, corporate and other, to execute and deliver this Agreement and the Note(s) and to consummate the transactions contemplated hereby.  All persons who have executed this Agreement and the Note(s) on behalf of the Company have been duly authorized to do so by all necessary corporate action.  Neither the execution and delivery of this Agreement and the Note(s) nor the consummation of the transactions contemplated hereby will (A) violate any provision of the Certificate of Incorporation or Operating Agreement of the Company, as currently in effect; (B) violate any judgment, order, injunction, decree or award against, or binding upon, the Company or the securities, assets, properties, operations or business of the Company; or (C) violate any law or regulation applicable to the Company or to the securities, assets, properties, operations or business of the Company.

                        (b)        In order to induce the Company to accept the subscription made hereby, the undersigned hereby represents and warrants to the Company as follows:

                                    (i)         The undersigned has received the Private Placement Memorandum and the Subscription Documents.  The undersigned has read and understands the Private Placement Memorandum and Subscription Documents and the information contained in those documents concerning the Company and this Offering or has caused his or its representative to read and examine the Private Placement Memorandum and Subscription Documents.  The undersigned has relied only on the information about the Company contained in these documents and his or its own independent investigation in making his or its subscription.  The undersigned understands that the Notes will be issued with the rights and subject to the conditions described in the Private Placement Memorandum and Subscription Documents;

                                    (ii)        The undersigned is familiar with the terms and conditions of the Offering and is aware that his or its investment involves a degree of risk and the undersigned has read the section in the Private Placement Memorandum titled “Risk Factors.”

                                    (iii)       The undersigned hereby specifically accepts and adopts each and every provision of this Agreement and acknowledges and agrees with each and every provision of this Agreement and, upon acceptance by the Company of the subscription made hereby, agrees to be bound by such provisions.

                                    (iv)       The undersigned acknowledges and is aware that there is no assurance as to the future performance of the Company.

                                    (v)        The undersigned, if an individual (A) has reached the age of majority in the state in which he resides and (B) is a bona fide resident and domiciliary (not a temporary or transient resident) of the state set forth below his signature on the signature page hereof and has no present intention of becoming a resident of any other state or jurisdiction.  The undersigned, if a partnership, corporation, limited liability company, trust or other entity, was organized or incorporated under the laws of the jurisdiction set forth below the signature made on its behalf on the signature page hereof and has no present intention of altering the jurisdiction of its organization, formation or incorporation.

                                    (vi)       The undersigned has the financial ability to bear the economic risk of an investment in the Offering, has adequate means of providing for his or its current needs and personal contingencies, has no need for liquidity in the Note(s) and could afford a complete loss of his, her, or its investment in the Offering. 

                                    (vii)      The undersigned represents and warrants to the Company that he or it comes within one of the categories of investors as defined in EXHIBIT C (Investor Suitability Acknowledgement) hereto.

                                    (viii)     The undersigned has been given the opportunity to review the merits of an investment in the Offering with tax and legal counsel or with an investment advisor to the extent the undersigned deemed advisable.

                                    (ix)       The undersigned's overall commitment to invest in the Note(s), which are not readily marketable, is not disproportionate to his or its net worth and his or its investment in the Offering will not cause such overall commitment to become excessive.

                                    (x)        The undersigned has such knowledge and experience in financial and business matters that he or it is capable of evaluating the merits and risks of an investment in the Offering.

                                    (xi)       The undersigned has been given a full opportunity to ask questions of and to receive (A) answers from the Company and its Managers concerning the terms and conditions of this Offering and the business of the Company and (B) such other information as he or it desired in order to evaluate an investment in the Offering, and all such questions have been answered to the full satisfaction of the undersigned.  No oral or written representations have been made or oral or written information furnished to the undersigned or the undersigned's advisors in connection with the Offering or interests that were in any way inconsistent with this Subscription Agreement. 

                                    (xii)      If the undersigned is a corporation, limited liability company, partnership, trust or other entity, it is authorized and qualified to make this loan to the Company and the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so.

                                    (xiii)     If the undersigned is a corporation, limited liability company or partnership, the person signing this Agreement on its behalf hereby represents and warrants that the information contained in this Agreement completed by any shareholders of such corporation, members of such limited liability company or partners of such partnership is true and correct with respect to such shareholder, member or partner (and if any such shareholder is itself a corporation, limited liability company or partnership, with respect to all persons having an equity interest in such corporation, limited liability company or partnership, whether directly or indirectly) and that the person signing this Agreement has made due inquiry to determine the truthfulness and accuracy of the information contained in this Agreement.

                                    (xiv)     The purchase of the Note(s) by the undersigned has been duly authorized, and the execution, delivery and performance of this Agreement does not conflict with the undersigned's partnership agreement, certificate of incorporation, by-laws, articles of organization, operating agreement or any agreement to which the undersigned is a party and this Agreement is a valid and binding agreement enforceable against the undersigned in accordance with its terms.

                                    (xv)      The undersigned hereby represents that he, she, or it is subscribing for the Notes as principal or as trustee, solely for the account of the undersigned, for investment purposes only and not with a view to, or for, subdivision, resale, distribution, or fractionalization thereof, in whole or in part, or for the account, in whole or in part, of others, and, except as disclosed herein, no other person has a direct or indirect beneficial interest in the Note(s).  The undersigned will hold the Note(s) as an investment and has no reason to anticipate any change in circumstances or other particular occasion or event, which would cause the undersigned to attempt to sell any of the Note(s).

                                    (xvi)     The undersigned acknowledges his or its understanding that (A) the Offering of the Note(s) by the Company has not been registered under the Act, as amended, or the securities laws of certain states in reliance on specific exemptions from registration, (B) the Confidential Memorandum and Subscription Documents have not been filed with or reviewed by the Securities and Exchange Commission or the securities department of any state and no securities administrator of any state or the federal government has recommended or endorsed this Offering or made any finding or determination relating to the fairness of an investment in the Company, and (C) the Offering of the Note(s) by the Company is intended to be exempt from registration pursuant to Section 4 (2) of the Act and the rules promulgated thereunder by the Securities and Exchange Commission, and that the undersigned’s Note(s) cannot be sold, pledged, assigned or otherwise disposed of unless they are registered under the Act or an exemption from such registration is available. 

                                    (xvii)    The undersigned represents and warrants that he or it will not transfer or convey all or part of his or its financial interest in the Note(s) unless such Note(s) are subsequently registered under the Act, or an exemption from such registration is available and without (A) the prior written consent of the Company and (B) an opinion of counsel acceptable to the Company and its counsel to the effect that the Note(s) may be transferred without violation of the registration requirements of the Act or any applicable state securities laws, as may be amended from time to time.  The undersigned further acknowledges that there can be no assurance that the Company will file any registration statement for the Note(s) for which the undersigned is subscribing, that such registration statement, if filed, will be declared effective or, if declared effective, that the Company will be able to keep it effective until the undersigned sells the Note(s) registered thereon.

                                    (xviii)   The undersigned understands that this Agreement is subject to the Company’s acceptance and may be rejected by the Company at any time in its sole discretion in whole or any part prior to issuance of the Note(s) with respect to the undersigned’s subscription, notwithstanding prior receipt by the undersigned of notice of acceptance of the undersigned’s subscription.  The Company reserves the right to withdraw the Offering at any time.

                                    (xix)     The undersigned acknowledges that this Agreement shall become binding upon the undersigned when it is countersigned by the Company and the undersigned is not entitled to cancel, terminate, or revoke this subscription before or after acceptance by the Company, except as otherwise provided in this Agreement.

                                    (xx)      All information provided by the undersigned in the Investor Acknowledgement and Investor Representative Acknowledgement (if applicable) which accompanies this Agreement is true and accurate in all respects, and the undersigned acknowledges that the Company will be relying on such information to its possible detriment in deciding whether the Company can make these Note(s) to the undersigned without giving rise to the loss of an exemption from registration under the applicable securities laws.

9. Foreign Person.  If the undersigned has indicated on the signature page of this Agreement that he, she or it is a foreign person, he, she or it agrees to notify the Company in writing within sixty (60) days of becoming a nonresident alien, foreign corporation, foreign partnership, foreign trust, foreign estate or other foreign entity, as the case may be.

10. Indemnity.  The undersigned agrees to indemnify and hold harmless the Company, its Officers, its Managers, members, agents, attorneys and affiliates and each other person, if any, who controls any thereof, within the meaning of Section 15 of the Act, against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty or breach or failure by the undersigned to comply with any covenant or agreement made by the undersigned herein or in this Agreement or in any other document furnished by the undersigned to any of the foregoing in connection with this transaction.

11. Notice.  All notices in connection with this Agreement shall be in writing and personally delivered or delivered via overnight mail, with written receipt therefor, or sent by certified mail, return receipt requested, to each of the parties hereto at their addresses set forth above (or such other address as may hereafter be designated by either party in writing in accordance with this Section 11) with a copy, in the case of notice to the Company, to LCF 2025, LLC, at 140B Purcellville Gateway Drive, #203, Purcellville, VA 20132.  Such notice shall be effective upon personal or overnight delivery or five (5) days after mailing by certified mail.

12. Miscellaneous.

                        (a)        This Agreement is not assignable by the undersigned.  This Agreement shall be binding upon and shall inure to the benefit of the parties, their successors and, subject to the above limitation, their assigns, and shall not be enforceable by any third party.

                        (b)        This Agreement shall be deemed to have been made in the State of Wyoming and any and all performance hereunder, or breach thereof, shall be interpreted and construed pursuant to the laws of the State of Wyoming without regard to conflict of laws rules applied in State of Wyoming.  The parties hereto hereby consent to personal jurisdiction and venue exclusively in the State of Wyoming with respect to any action or proceeding brought with respect to this Agreement.

                        (c)        This Agreement contains all oral and written agreements, representations and arrangements between the parties with respect to its subject matter, and no representations or warranties are made or implied, except as specifically set forth herein.  No modification, waiver or amendment of any of the provisions of this Agreement shall be effective unless in writing and signed by both parties to this Agreement.

                        (d)       No waiver of any breach of any terms of this Agreement shall be effective unless made in writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall be construed as a waiver of any subsequent breach of that term or of any other term of the same or different nature.

                        (e)        If any provision or portion of this Agreement or the application thereof to any person or party or circumstances shall be invalid or unenforceable under applicable law, such event shall not affect, impair, or render invalid or unenforceable the remainder of this Agreement.

                        (f)        Each of the parties hereto shall cooperate and take such actions, and execute such other documents, at the execution hereof or subsequently, as may be reasonably requested by the other in order to carry out the provisions and purposes of this Agreement.

            IN WITNESS WHEREOF, the undersigned, by his or its execution hereof, agrees to be bound by this Agreement.

The agreement is executed on the day and time indicated by the online signature receipt published from LunaCapital.fund’s website, i.e., the Unique Document ID generated by WP-esignature and emailed to the Subscriber and the Company.

ACCEPTANCE

The terms of the foregoing, including the subscription described therein, are agreed to and accepted on the day and time indicated by the online signature receipt published from LunaCapital.fund’s website, i.e., the Unique Document ID generated from WP-esignature and emailed to the Subscriber and the Company.

 

 

 

EXHIBIT B

 

 


PROMISSORY NOTE

 

THIS NOTE HAS BEEN MADE FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH THE DISTRIBUTION THEREOF AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THIS NOTE MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED (“TRANSFER”) UNLESS IT IS SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE MAKER CONSENTS IN WRITING TO SUCH TRANSFER.

 

            LCF 2025, LLC, a Wyoming Limited Liability Company, with offices at 140B Purcellville Gateway Drive, #203, Purcellville, VA 20132 (the “Maker”), for value received, promises to pay to the Individual and/or legal entity designated in this Note as the “HOLDER,” the principal sum of One Thousand Five Hundred ($1,500) Dollars with an annualized rate of return of ten percent (10%).  The Preferred Return shall be due and payable annually and based on the commencement date of the Note.  The entire Principal shall be due and payable to the Holder at Maturity or no later than forty-eight (48) months from the date the company makes its first loan, whichever date the Manager designates.  Maker may at any time or from time to time make a voluntary prepayment, whether in full or in part, of this Note, without premium or penalty. The Notes are convertible at Maturity or Default to Membership Units at 1,500 Membership Units per Note. The Notes may also convert if the Manager sells the Company via an Acquisition and the Noteholders will be subject to the drag-along provisions of the Operating Agreement.

1.0 NOTES

            This Note in the principal amount of One Thousand Five Hundred ($1,500) Dollars per Note, or any fractional amounts, is offered for sale by the Maker, pursuant to that certain “Private Placement Memorandum” dated December 31, 2020.  The Note shall be the senior debt of the Maker.

2.0 EVENTS OF DEFAULT

            A default shall be defined as one or more of the following events (“Event of Default”) occurring and continuing:

(a)        The Maker shall dissolve or terminate the existence of the Maker. 

(b)        The Maker shall file a petition in bankruptcy, make an assignment for the benefit of its creditors, or consent to or acquiesce in the appointment of a receiver for all or substantially all of its property, or a petition for the appointment of a receiver shall be filed against the Maker and remain unstayed for at least ninety (90) days.

            Upon the occurrence of an Event of Default, the Holder of this Note may, by written notice to the Maker, declare the unpaid principal amount and all accrued interest of the Note immediately due and payable.

3.0 SECURITY FOR PAYMENT OF THE NOTE(S)

            The Note(s) offered by the Maker are unsecured.

4.0 COMMENCEMENT DATE OF THE NOTE

            The Commencement Date of the Note shall be the “Effective Date,” as defined in that certain “Subscription Agreement” attached as Exhibit A to the Private Placement Memorandum.

5.0 STATUS OF HOLDER

            The Maker may treat the Holder of this Note as the absolute owner of this Note for the purpose of making payments of principal or interest and for all other purposes, and shall not be affected by any notice to the contrary, unless the Maker so consents in writing.

6.0 SECURITIES ACT RESTRICTIONS

            This Note has not been registered for sale under the Act.  This Note may not be sold, offered for sale, pledged, assigned or otherwise disposed of, unless certain conditions are satisfied, as more fully set forth in the Subscription Agreement.

7.0 ATTORNEY'S FEES

            Each party in an action to enforce this Note shall be responsible for their own attorneys’ fees, costs and collection expense.

8.0 MISCELLANEOUS

            (a)        Successors and Assigns.  The Holder may not assign, transfer or sell this Note to any party without the express written consent of the Maker.  This Note shall be binding upon and shall inure to the benefit of the parties, their successors and, subject to the above limitation, their assigns, and shall not be enforceable by any third party.

            (b)        Entire Agreement.  This Note contains all oral and written agreements, representations and arrangements between the parties with respect to its subject matter, and no representations or warranties are made or implied, except as specifically set forth herein.  No modification, waiver or amendment of any of the provisions of this Note shall be effective unless in writing and signed by both parties to this Note.

            (c)        Notices.  All notices in connection with this Note shall be in writing and personally delivered or delivered via overnight mail, with written receipt therefor, or sent by certified mail, return receipt requested, to each of the parties hereto at their addresses set forth above (or such other address as may hereafter be designated by either party in writing in accordance with this Section 8) with a copy to LCF 2025, LLC, 140B Purcellville Gateway Drive, #203, Purcellville, VA 20132.  Such notice shall be effective upon personal or overnight delivery or five (5) days after mailing by certified mail.

            (d)       Section Headings.  The headings of the various sections of the Note have been inserted as a matter of convenience for reference only and shall be of no legal effect.

            (e)        Severability.  If any provision or portion of this Note or the application thereof to any person or party or circumstances shall be invalid or unenforceable under applicable law, such event shall not affect, impair, or render invalid or unenforceable the remainder of this Note.

            (f)        Applicable Law.  This Note shall be deemed to have been made in the State of Wyoming, and any and all performance hereunder, or breach thereof, shall be interpreted and construed pursuant to the laws of the State of Wyoming without regard to conflict of laws rules applied in the State of Wyoming.  The parties hereto hereby consent to personal jurisdiction and venue exclusively in the State of Wyoming with respect to any action or proceeding brought with respect to this Note.

Maker:

LCF 2025, LLC, a Wyoming Limited Liability Company

140B Purcellville Gateway Drive, #203

Purcellville, VA 20132

Holder:

The Holder is the entity or individual identified in the electronic signature receipt from LunaCapital.fund website transaction, and possesses the Unique Document ID generated by WP-esignature and was emailed to the Subscriber/Holder and the Company.

 

 

 

EXHIBIT C

 

 

 

Investor Suitability Acknowledgement

LCF 2025, LLC

 

By signing this Private Placement Memorandum, which results in a Unique Document ID generated by WP-esignature and emailed to the Subscriber and the Company, I (the Investor) acknowledge and respresent the following without reservation.

  1. I have experience in making investment decisions or am relaying on my own tax consultants or other qualified investment advisors in making this investment decision.
  2. The Investor has such knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in this Offering.
  3. The Investor has the ability to bear the economic risk of this investment, has adequate means to provide for his, her or its current needs and personal contingencies, has no need for liquidity in this investment and could afford the complete loss of the investment.
  4. The Investor is acquiring the Note(s) for his, her or its own account for investment purposes only and not with a view toward subdivision, resale, distribution or fractionalization thereof, or for the account of others, and has no present intention of selling or granting any participation in, or otherwise distributing, the Note(s).
  5. The Investor’s overall commitment to invest in the Note(s) is not disproportionate to his, her or its net worth and the investment in these Note(s) will not cause such overall commitment to become excessive.
  6. The Investor has read and understands this Private Placement Memorandum and all its exhibits, disclaimers, and warnings.
  7. In addition to satisfying the “General Standards” as defined above, all Subscribers for Shares must each satisfy one of the “Accredited Investors” economic suitability standards as defined below. As the Investor, I meet one or more of these standards:
    1. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds One Million ($1,000,000) Dollars excluding the value of the primary residence of such natural person;
    2. Any natural person who had an individual income in excess of Two Hundred Thousand ($200,000) Dollars in each of the two most recent years, or joint income with that person’s spouse in excess of Three Hundred Thousand ($300,000) Dollars in each of those years and has a reasonable expectation of reaching the same income level in the current year;
    3. Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(a)(13) of the 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 under Section 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 benefits of its employees if such plan has total assets in excess of Five Million ($5,000,000) Dollars; 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 Five Million ($5,000,000) Dollars if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
    4. Any private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940);
    5. 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 Five Million ($5,000,000) Dollars;
    6. 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;
    7. Any trust, with total assets in excess of Five Million ($5,000,000) Dollars, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii); and
    8. Any entity in which all of the equity owners are Accredited Investors.

 

NOTE:  Entities (a) which are formed for the purpose of investing in the Company, or (b) the equity owners of which have contributed additional capital for the purpose of investing in the Company, shall be “looked through” and each equity owner must meet the definition of an accredited investor in any of paragraphs 1, 2, 3, 4, 5, 6 or 7 above and will be treated as a separate subscriber who must meet all suitability requirements.

Prospective Investor’s Representations

            The information contained in this Acknowledgement is true and complete, and the undersigned understands that the Company and its counsel will rely on such information for the purpose of complying with all applicable securities laws as discussed above.  The undersigned agrees to notify the Company promptly of any change in the foregoing information which may occur prior to any purchase by the undersigned of securities from the Company.  The undersigned also agrees that he/she/it has the appropriate permission of their spouse or entity to make this investment and these representations.

The signature for this Exhibit is found at the end of the Unique Document ID generated by WP-esignature as emailed to the Subscriber and the Company.

 

 

 

EXHIBIT D 

 

 

 

LCF 2025, LLC BUSINESS PLAN

 

This business plan is subject to the DISCLAIMERS listed at the outset.

 

Business Overview. The Company is a development stage company in the business of private equity finance, with particular emphasis on direct lending to the small market. 

LCF 2025, LLC is a subsidiary of Luna Capital Fund, Inc. Luna Capital Fund, Inc. operates the crowdfunding platform LunaCapital.fund. Luna Capital Fund, Inc. is a non-bank lender offering crowdfunded private equity. Luna Capital Fund, Inc. raises individual rounds of private equity crowdfunding with a target maturity or exit goal.

LCF 2025, LLC is an investment fund focused on earning its Preferred Return between 2020 and 2025 with an exit goal of the year 2025. LCF 2025, LLC provides direct lending to companies seeking financing for acquisitions or growth. Some of the funds may be used for direct lending to peer to peer lending opportunities, including inventory financing or factoring. Generally, these direct loans are unsecured. If direct lending is provided as part of a business acquisition project, LCF 2025, LLC will seek a 10% equity stake (i.e., carried interest) in the acquired company. To achieve its target exit goals, LCF 2025, LLC may refinance its debt or encourage the parties it has an equity stake in to conclude a sale via merger, acquisition, or public listing. However, LCF 2025, LLC does not have sole control over such decisions.

For more than a year the Company’s founders attempted to purchase certain profitable, yet asset lite businesses. Many of the businesses also relied on contract employees, which is common in e-commerce platforms. These entrepreneurs may also not be in a position to offer personal guarantees. Those three conditions made it difficult to get debt financing for the acquisitions. Banks disapproved because there was no collateral and US Small Business Administration (SBA)-backed investment companies could not lend because the businesses did not have 51% of their employees in the United States. Our investment thesis follows.

Web3. Web1 was the internet before Twitter and Facebook. Web2 has been the drive to social media built on a foundation of internet protocols 4 and 6 plus smart mobile. Web3 applies decentralization as a principle and blends these technologies with blockchain design patterns. There are numerous communities driving Web3 with different motivations: immutability, decentralized governance, open source software development, anti-fiat sentiments, and anti-censorship. There are of course builders and technologists trying new things and mimicking known patterns like domain name services, certificates, object storage, indexing, payment systems, and marketplaces.

In Search of Alternatives. Banks do not pay enough interest.[1] Only 4% of companies offer pensions.[2] The majority of companies offer a defined contribution (e.g., 401k) plan instead.[3] These plans invest in traditional assets like currencies, treasuries, bonds, but are typically over-weight in US equities.[4] More than 80% of Standard and Poor’s 500 (S&P 500) listed companies are buying back their own shares to enhance their earnings per share.[5] The “traditional” investments of the past are losing their luster. Sixty six percent of Millennials do not want to invest in the stock market; more than three quarters of Millennials want alternative investments.[6]

The Great Fracking. The United States has energy independence in oil and natural gas because small operators with low costs of capital and low barriers to entry fracked the global energy sector.[7] The same thing is happening in other sectors but in different ways. Uber is fracking the taxi sector. The wholesale and retail sectors are being fracked by individual brands (e.g., harrys.com, purple.com, nike.com/nike-by-you, bollandbranch.com) and ecommerce platforms (e.g., shopify.com, etsy.com, overstock.com, ebay.com, walmart.com, alibaba.com, and amazon.com) providing direct-to-consumer deliveries. The financial sector is being fracked by new fintech companies (e.g., sofi.com, robinhood.com, paypal.com). Local labor markets are being fracked by new freelance sites (e.g., fivrr.com, upwork.com, freeeup.com) that provide access to a global workforce. The information and news sectors are being fracked by bloggers, tweets, podcasts, streaming services, apps, chat services, chat bots, and innumerable variations.[8] These rumor-laden channels are driving more irrational investment behavior in the stock markets.[9] Now panic-stricken consumers and employees believe their entire way of life is going to be replaced by automation and artificial intelligence.[10]

Alternatives. Given how much change there appears to be in traditional business models, sectors, and asset classes, perhaps it is no wonder Millennials are looking for investment alternatives. They are not alone though. Even traditional (i.e., older), affluent investors are searching for alternatives via self-directed IRAs.[11] Institutional investors are also perceive alternative assets will grow to $14 trillion by 2023.[12]

The first “exotic” alternative available to them—in the most traditional equity investment setting—is value investing.[13] The more esoteric currency options are cryptocurrencies.[14] The more exotic alternative for debt is peer-to-peer lending and inventory financing.[15] If you want to speculate, there are new products and companies to fund.[16] If you do not want to wait for initial public offerings of “unicorns” you can buy the shares founders hold or you can invest earlier at the private placement stage.[17] There are new real estate investment options too.[18] Finally, it is also feasible to buy online companies or online assets (e.g., take out a loan with your domain name as collateral).[19]

JOBS Act. Passed in 2012 by President Obama, the Jumpstart Our Business Startups (JOBS) Act provides a crowdfunding regulation and relaxes the listing criteria and investment limits on unaccredited and accredited investors.[20] This improves the individual investors’ access to alternative capital raising methods and enables companies to raise equity capital outside of broker-dealers more easily. An example is Fundrise.com. Using the JOBS Act, a small group of entrepreneurs gained SEC approval for their JOBS Act offering and used the proceeds to build a new electronic REIT platform that has 500,000 investors and $2bn in real estate assets (e.g. individual homes and apartments).[21]

 Our Vision. Our vision is to be the premier investment alternative for individual and institutional investors who want exposure to private equity direct lending via convertible notes. LCF 2025, LLC is a subsidiary of Luna Capital Fund, Inc. Luna Capital Fund, Inc. operates the LunaCapital.fund platform that is the web-based crowdfunding infrastructure that enable accredited investors to invest in structured portfolios of private, direct lending. LunaCapital.fund’s positioning statement is:

a non-bank lender crowd-funding private equity investment alternatives

The current investment alternatives for individual investors are largely traditional investments – stocks, bonds, and options – offered by personal advisors, online brokers, or robo-advisors. Really forward-leaning investors may have crypto-currency exposure, but this approach is not as effective as an asset allocation portfolio like the one designed for Yale University’s endowment.[22] Professional and institutional investors such as pension funds and wealth managers have developed diversification strategies that incorporate many more alternative investments. Portfolios like Yale’s have the target allocations and returns summarized in Table 1 below.

Table 1. Yale Endowment’s Asset Allocation and Performance

Asset Class

Allocation and Annual Historical Return

Portfolio’s Performance

Hedge Funds

22% allocation, 9% return

2018    12%

2017    11%

2016      3%

2015    11%

2014    20%

2013    12%

2012      5%

2011    22%

2010      9%

2009   -24%

2008     4%

2007   28%

2006   23%

2005   22%

2004   19%

2003     8%

2002     1%

2001     9%

2000   41%

1999   12%

Domestic Equities

4% allocation, 13% return

Foreign Equities

15% allocation, 5% return

Private Equity Buy-outs

15% allocation, 14% return

Venture Capital

16% allocation, 77% return

Natural Resources

7.5% allocation, 16% return

Real Estate

12.5% allocation, 11% return

Fixed Income

5% allocation, 5% return

Cash

2% allocation

Business Model and Value Proposition. LCF 2025, LLC’s primary focus is providing direct lending to businesses and partnerships seeking to complete private equity buy-outs in the small market. LCF 2025, LLC’s business model is straight forward. LCF 2025, LLC issues convertible notes to accredited investors with dividend target preferred return of 10% annually. LCF 2025, LLC lends the proceeds of those notes at target interest rates of 12% and a 10% carried interest. LCF 2025, LLC receives a 0.75% management fee annually. This arrangement ensures LCF 2025, LLC’s interests are aligned with its fund members.

LCF 2025, LLC focuses on lending into buy-outs for profitable, established companies in the small market. This is lower risk than an investor making a similar private placement into an angel investment or a seed round backed by venture capital or crowd-funding offerings (e.g., Regulation A, Regulation CF).

Market Size and Competition. Competition for LCF 2025, LLC and its services comes generally from angel investors, other private equity funds, accredited investors, other non-bank lenders, banks, and venture capital funds. The market for business acquisitions is growing. As the California Association of Business Brokers outlines, the 70 million “baby boomers” in the United States who own businesses will “sell or bequeath $10 trillion worth of assets over the next two decades. These assets are held in more than 12 million privately owned businesses. More than 70 percent of these companies are expected to change hands.”[3] Private equity firms are stratified into the fund sizes they raise and the investments they make. The largest, like Blackstone or the Carlyle Group raise billions of dollars and buy assets for hundreds of millions. The middle market and the lower-middle market firms number in the dozens and make investments as small as $50 million. The Company operates firmly in the small market based on our size.  To put the competitive landscape in perspective, in Inc. magazine’s 2019 top 50 list[4] of private equity firms, only two—4%—had investment criteria that focused on the small market (e.g., $1M of EBITDA or $5M of revenues).

While there does exist some current competition, Management believes that LCF 2025, LLC’s products are competing in an under-served segment of the market.  The market is under-served because a) the target companies do not fit current underwriting standards (e.g., employment, collateral), b) they may be in emerging business models that are misunderstood (e.g., software as a service, ecommerce brands), and c) they are small enough that larger competitors would have to close numerous deals to allocate the funds they have raised.

To mitigate competitive effects and ensure LCF 2025, LLC is making prudent loans, it has developed a 91 item due diligence process across 13 functional areas to understand the risks and opportunities in a business. The expertise of Management combined with the innovative nature of its marketing approach and underwriting unique to the market segment, set the Company apart from its competitors.

The other form of competition comes from other investment instruments. Accredited investors have the option of investing in traditional asset classes or saving their money in a bank. However, many investors already are over-weight in these asset classes and are searching for alternatives to an FDIC insured bank account offering less than 3% interest or certificates of deposit offering less than 5% interest.

Management. The success of the company is dependent upon the services and expertise of existing management.  At the present time, Luna Capital Fund, Inc. is the Manager of LCF 2025, LLC as described in the Company’s Operating Agreement. Officers designated by Luna Capital Fund, Inc. are actively involved in the management of the Company, and include:

President: Has a BS in Business Management with a Minor in Economics from Elon University, and a degree in Bank Management from the Virginia Banker’s Association. Has been in banking and finance for 14 years working as a credit analyst and loan workout specialist prior to becoming a commercial loan officer. Has spent the last 8 years in commercial lending, managing a portfolio over $125M and 75 clients. Has closed over 25 transactions on an annual basis and spent the last 3 years in commercial lending as a senior manager focused on building and transitioning new teams. 

Chief Investment Officer: Has an MBA from Johns Hopkins University, a PhD from Virginia Tech, and has held senior management roles in management consulting, business intelligence consulting, and strategic sales for ecommerce companies. In addition to building and managing profitable companies, has led capital investment projects for online ecommerce involving >$250M capital expense earning >20% net margins, and breaking even in 5-7 years. As a sales leader, has managed a pipeline of 1,200+ opportunities with a total addressable value over the next 5-10 years valued at $15bn in incremental revenue. Is a graduate of the US Military Academy at West Point.

Senior Advisor and Investment Committee Member: Has experience as the Chief Technology Officer of a Big Data analysis company, from inception through its successful sale to a public company. Was an engineer at Google where he worked on the integration of search and geospatial technologies such as Google Maps. Served as a cryptologist in the US Air Force and as an Infantry leader in the US Army. Is a graduate of the US Military Academy at West Point.

 

 

 

EXHIBIT E

 

 

 

LCF 2025, LLC FINANCIALS

  

FINANCIAL EXHIBITS INCLUDE:

12% Loan Amortization Schedule

10% Loan Amortization Schedule

Pro Forma Profit and Loss Statement

Multi-Year Projected Balance Sheet

 

12% Loan Amortization Schedule

 

The amortization schedule below shows the expected principal and interest LCF 2025, LLC may generate if it is successful in its business plan and is able to lend $7.48M at 12% to other companies and entrepreneurs over a 48 month period. The total interest that might be earned if all principal and interest is paid is $1.974M.

Luna Capital Fund Inc LCF 2025 LLC 12% Loan Amortization Schedule

 

 

10% Loan Amortization Schedule

 

The amortization schedule below shows the expected principal and interest LCF 2025, LLC may pay if it is successful in its business plan and is able to borrow $7.5M at 10% from Noteholders who agree to a 48 month loan period. The total interest that might be paid if all interest is paid is $1.63M.

Luna Capital Fund Inc LCF 2025 LLC 10% Amortization Schedule

 

 

Pro Forma Profit and Loss Statement

 

The pro forma profit and loss statement below is based on estimates and is subject to the DISCLAIMERS section herein. The estimates include optimistic borrowing and lending conditions whereby LCF 2025, LLC is able to make $7.48M of loans for 48 months at 12% and that the borrowers repay 100% of the principal and interest on time. The estimate also assumes the optimistic view that LCF 2025, LLC is able to make timely principal and interest payments to its Noteholders. LCF 2025, LLC and the Manager do not intend to make annual principal and interest payments. The scenario also assume LCF 2025, LLC is able to keep all expenses within the budget allocated to “Management Fee.” As this is an early stage company, it does not have a track record it can point to or rely upon for gauging the accuracy of these estimates. Consult the Risk Factors section of this Private Placement Memorandum for further discussion of the risks Noteholders must be aware.

Luna Capital Fund Inc LCF 2025 LLC Pro Forma Profit and Loss

 

Multi-Year, Projected Balance Sheet

 

The pro forma, multi-year balance sheet is based on estimates and is subject to the DISCLAIMERS section herein. The estimates include optimistic borrowing and lending conditions whereby LCF 2025, LLC is able to make $7.48M of loans for 48 months at 12% and that the borrowers repay 100% of the principal and interest on time. The estimate also assumes the optimistic view that LCF 2025, LLC is able to make timely principal and interest payments to its Noteholders. LCF 2025, LLC and the Manager do not intend to make annual principal and interest payments. The scenario also assume LCF 2025, LLC is able to keep all expenses within the budget allocated to “Management Fee.” As this is an early stage company, it does not have a track record it can point to or rely upon for gauging the accuracy of these estimates. Consult the Risk Factors section of this Private Placement Memorandum for further discussion of the risks Noteholders must be aware.

Luna Capital Fund Inc LCF 2025 LLC Pro Forma Balance Sheet

 

Simulation of an Individual Note

 

The pro forma simulation of an individual note (below) is based on estimates and is subject to the DISCLAIMERS section herein. The estimates include optimistic borrowing and lending conditions whereby LCF 2025, LLC is able to make $7.48M of loans for 48 months at 12% and that the borrowers repay 100% of the principal and interest on time. The estimate also assumes the optimistic view that LCF 2025, LLC is able to make timely principal and interest payments to its Noteholders. LCF 2025, LLC and the Manager do not intend to make annual principal and interest payments. The scenario also assume LCF 2025, LLC is able to keep all expenses within the budget allocated to “Management Fee.” As this is an early stage company, it does not have a track record it can point to or rely upon for gauging the accuracy of these estimates. Consult the Risk Factors section of this Private Placement Memorandum for further discussion of the risks Noteholders must be aware.

 

Luna Capital Fund LCF 2025 LLC Note Simulation

 

Notes.

  1. Assumes LCF 2025, LLC is able to borrow at 10% annually and lend at 12% annually with a 0.75% management fee.
  2. Assumes a $748k initial valuation of the 10% carried interest.
  3. Assumes 8.5M membership units.
  4. The carried interest is not liquid and there is no change in its valuation.

 

 

 

EXHIBIT F

 

 

 

LCF 2025, LLC OPERATING AGREEMENT

 

             Any securities created by this operating agreement, if any, have not been registered with the United States Securities and Exchange Commission in reliance upon an exemption from such registration set forth in the Securities Act of 1933 provided by Section 4(2) thereof, nor have they been registered under the securities or Blue Sky laws of any other jurisdiction.  The interests created hereby have been acquired for investment purposes only and may not be offered for sale, pledged, hypothecated, sold or transferred except in compliance with the terms and conditions of this operating agreement and in a transaction which is either exempt from registration under such Acts or pursuant to an effective registration statement under such Acts.

            THIS OPERATING AGREEMENT is made and entered into effective as of the 23rd day of January, 2020, by the parties who have executed counterparts of this Operating Agreement as indicated on the signature page(s) attached and includes the Members identified in Exhibit 1.

ARTICLE 1.  DEFINITIONS

            The following terms used in this Operating Agree­ment shall have the following meanings (unless otherwise expressly provided herein):

            "Affiliate."  With respect to any Person, (i) in the case of an individual, any blood relative of such Person, (ii) any officer, director, trustee, partner, member, manager, employee or holder of ten percent (10%) or more of any class of the voting securities of or equity interest in such Person; (iii) any corporation, partnership, limited liability company, trust or other entity controlling, controlled by or under common control with such Person; or (iv) any officer, director, trustee, partner, member, manager, employee or holder of ten percent (10%) or more of the outstanding voting securities of any corporation, partnership, limited liability company, trust or other entity controlling, controlled by or under common control with such Person.

            “Applicable Preferred Return.”  No earlier than twelve (12) months after it makes its first loans, the Company shall pay to Noteholders a Preferred Return of 10.00% per annum. The Preferred Return shall be paid incrementally one (1) to four (4) times per year as the Manager deems fit. Only Noteholders who have invested the Minimum Investment as described in the Company’s Regulation D, 506(c) Offering shall receive their pari passu share of the Applicable Preferred Return.

            "Articles of Organization."  The Articles of Organization of LCF 2025 LLC, as filed with the Wyoming Secretary of State, as the same may be amended from time to time.

            "Capital Account."  A capital account maintained in accordance with the rules contained in Section 1.704‑1(b)(2)(iv) of the Regulations, as amended from time to time.

            "Capital Contribution."  Any contribution to the capital of the Company in cash or property by a Member whenever made. The principal, but not exclusive, form of contribution is via the Company’s Regulation D, Rule 506(c) Offering.

            "Code."  The Internal Revenue Code of 1986, as amended from time to time.

            "Company."  LCF 2025 LLC, a Wyoming limited liability company.

            “Conversion Right.”  The right of a Noteholder to become a Member via the terms and conditions of the Company’s Regulation D, Rule 506(c) Offering.

            “Disability.”  The failure or inability of a Manager or Member to fulfill his obligations under this Operating Agreement for a period in excess of ninety (90) consecutive days.

            "Distributable Cash."  All cash received by the Company from Company operations, plus any cash that becomes available from Reserves, less the sum of the following to the extent paid or set aside by the Company:  (i) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (ii) all cash expenditures incurred in the operation of the Company's business; and (iii) Reserves.

            "Economic Interest."  A Member's share of one or more of the Company's Net Profits, Net Losses and rights to distributions of the Company's assets pursuant to this Operating Agreement and the Wyoming Business Corporation Act, as amended (Wyoming Act), not including any right to vote on, consent to or otherwise participate in any decision of the Members.

            "Entity."  Any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association or any foreign trust or foreign business organization, or any other legal entity.

            "Fiscal Year."  The Company's fiscal year shall end on December 31st unless otherwise decided by a Majority Vote of the Managers.           

            “Gross Asset Value.”  With respect to any asset, the asset's adjusted basis for Federal income tax purposes, adjusted as provided in this Agreement.

            "Initial Capital Contribution."  The initial contribution to the capital of the Company made by a Member pursuant to this Operating Agreement. The principal, but not exclusive, form of contribution is via the Company’s Regulation D, Rule 506(c) Offering.

            "Interest."  Any interest in the Company, including a Membership Interest, an Economic Interest, any right to vote or participate in the business of the Company, or any other interest in the Company.

             “Liquidation.”  Defined as set forth in Section 1.704-1(b)(2)(ii)(g) of the Regulations.

            "Majority Interest."  Ownership Percentages of Members which, taken together, constitute a majority of all Ownership Percentages.

            "Majority Vote."  (i) With respect to Members, the vote or written consent of Members holding a majority of the Ownership Percentages held by all such Members entitled to vote on or consent to the issue in question; (ii) with respect to Managers, the vote or written consent of a majority of the Managers entitled to vote on or consent to the issue in question.

            "Manager."  One or more managers designated pursuant to this Operating Agreement.  A Manager is not required to be a Member of the Company.

            "Member."  Each Person who executes this Operating Agreement or a counterpart thereof as a Member and each of the Persons who may hereafter become Members as provided in this Operating Agree­ment. The Members are listed in Exhibit 1.

            "Membership Interest."  A Member's entire Interest in the Company including such Member's Economic Interest and the right to participate in the management of the business and affairs of the Company, including the right to vote on, consent to, or otherwise participate in any decision or action of or by the Members granted pursuant to this Operating Agreement.

            "Net Profits" and "Net Losses."  The Company's taxable income or loss determined in accordance with Code Section 703(a) for each of its Fiscal Years (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) will be included in taxable income or loss); provided, such Net Profits and Net Losses will be computed as if items of tax-exempt income and nondeductible, non-capital expenditures (under Code Section 705(a)(1)(B) and 705(a)(2)(B)) were included in the computation of taxable income or loss.  If any Member contributes property to the Company with an initial book value to the Company different from its adjusted basis for federal income tax purposes to the Company, or if Company property is revalued pursuant to Section 1.704‑1(b)(2)(iv)(f) of the Regulations or as otherwise required by the Regulations, Net Profits and Net Losses will be computed as if the initial adjusted basis for federal income tax purposes to the Company of such contributed or revalued property equaled its initial book value to the Company as of the date of contribution or revaluation. All profits are considered K-1 Profits and not 1099 interest income as defined by the Code.

            “Noteholder”  A individual or entity that is a qualified accredited investor that has fully executed the Subscription Agreement and Promissory Note offered via the Company’s Confidential Private Placement Memorandum via the Company’s Regulation D, Rule 506(c) Offering (Notes). Noteholders have a conversion right to become a Member at the maturity of the Notes.

            "Officer."  One or more individuals appointed by the Managers to whom the Managers delegate specified responsibilities.  The Managers may, but shall not be required to, create such offices as they deem appropriate, including, but not limited to, a President, Executive Vice President, Senior Vice Presidents, Vice Presidents, Secretary and Treasurer.  The Officers shall have such duties as are assigned to them by the Managers from time to time.  All Officers shall serve at the pleasure of the Managers and the Managers may remove any Officer from office without cause and any Officer may resign at any time.

            "Operating Agreement."  This Operating Agreement as originally executed and as amended from time to time.

            "Ownership Percentage."  For each Member, the ownership percentage in the Company, as set forth herein, or as otherwise established and agreed to by the Members by Majority Vote.  For purposes of the provisions hereof relating to actions taken or approval by Members, including voting, written consents or other approval, only Ownership Percentages held by Members shall be taken into account.

            "Person."  Any individual or Entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such "Person" where the context so permits.

            "Reserves."  Funds set aside and amounts allocated to reserves in amounts determined by the Managers for working capital and to pay taxes, insurance, debt service or other costs or expenses incident to the ownership or operation of the Company's business.

             "Treasury Regulations" or "Regulations."  The federal income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

ARTICLE 2.  FORMATION OF COMPANY

Section 2.1  Formation.  On January 23, 2020, the Company was formed as a Wyoming limited liability company by the filing of the Certificate of Organization (Exhibit 2) with the Secretary of State of Wyoming in accordance with the provisions of the Wyoming Act.  All actions taken by the Organizer of the Company are hereby ratified and approved by the Members and Managers and the Organizer shall have no liability to the Company or to third parties for any reason whatsoever.

Section 2.2  Name.  The name of the Company is LCF 2025, LLC.

Section 2.3  Principal Place of Business.  The principal place of business of the Company is 140B Purcellville Gateway Dr. #203, Purcellville, VA 20132.  The Company may locate its places of business and registered office at any other place or places as the Managers may from time to time deem advisable.

Section 2.4  Registered Office and Registered Agent.  The Company's initial registered office shall be at 1712 Pioneer Ave Ste. 7000, Cheyenne, Wyoming 82001.  The initial registered agent is Luna Capital Fund, Inc.  The registered office and registered agent may be changed from time to time by the Managers pursuant to the Wyoming Act and the applicable rules promulgated thereunder.

Section 2.5  Term.  The term of the Company commenced on the date the Articles of Organization were filed with the Secretary of State of Wyoming and shall continue until the Company is dissolved and its affairs wound up in accordance with the provisions of this Operating Agreement or the Wyoming Act.

ARTICLE 3.  BUSINESS OF COMPANY

            The business of the Company (the “Business”) is to enter into any business arrangement or relationship, exercise all rights and powers and engage in all activities as determined by the Manager, which a limited liability company may legally exercise pursuant to the Act.  In furtherance thereof, the Company may exercise all powers necessary to or reasonably connected with the Company's business which may be legally exercised by limited liability companies under the Wyoming Act, and may engage in all activities necessary, customary, convenient, or incident to any of the foregoing.

            The Manager has the sole discretion for defining the Business. The Business is presently organized as a non-bank lender.

ARTICLE 4.  NAMES AND ADDRESSES OF MEMBERS

            The names, Ownership Percentages and addresses of the current Members are set out on Exhibit "1" attached hereto and incorporated herein. Upon the close of the offering all names and addresses of members will be consolidated onto one document and delivered to each member via U.S. Mail or electronic mail.

ARTICLE 5.  RIGHTS AND DUTIES OF MANAGERS

Section 5.1  Management.  The business and affairs of the Company shall be managed by its Managers.  The Managers shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business.  Except as otherwise provided herein, at any time when there is more than one Manager, all decisions and actions of the Managers shall be approved by the Majority Vote of the Managers.  Powers vested in Managers may not be modified by the Members. Luna Capital Fund, Inc., the Fund’s sole Manager, shall remain the sole Manager (General Manager).

Section 5.2  Number, Tenure and Qualifications.  The Company shall initially have one (1) Manager (General Manager). Luna Capital Fund, Inc. shall serve as sole Manager. The Manager may designate other Managers. Managers shall hold office until their successor shall have been elected and qualified or until earlier death, disability, resignation or removal.  Subject to the foregoing, Managers shall be elected or removed by the affirmative Majority Vote of Luna Capital Fund, Inc.

Section 5.3   Deadlock. INTENTIONALLY DELETED.

Section 5.4  Certain Powers of Managers.  Without limiting the generality of Section 5.1, the Managers shall have power and authority, on behalf of the Company:

            (a)        To acquire property from any Person as the Managers may determine.  The fact that a Manager or a Member is directly or indirectly affiliated or connected with any such Person shall not prohibit the Managers from dealing with that Person;

            (b)        To borrow money for the Company from banks, other lending institutions, Managers, Members, or Affiliates of a Manager or Member on such terms as the Managers deem appropriate, and in connection therewith, to hypothecate, encumber and grant security interests in the assets of the Company to secure repayment of the borrowed sums.  No debt shall be contracted or liability incurred by or on behalf of the Company except by the Managers, or by agents or employees of the Company expressly authorized to contract such debt or incur such liability by the Managers;

            (c)        To purchase liability and other insurance to protect the Company's property and business;

            (d)        To hold and real and/or personal property in the name of the Company;

            (e)        To invest any Company funds temporarily (by way of example but not limitation) in time deposits, short-term governmental obligations, commercial paper or other investments;

             (f)        To sell or otherwise dispose of all or substantially all of the assets of the Company as part of a single transaction or plan so long as such disposition is not in violation of or a cause of a default under any other agreement to which the Company may be bound;

            (g)        To execute on behalf of the Company all instruments and documents, including, without limitation: checks, drafts, notes and other negotiable instruments, mortgages or deeds of trust, security agreements, financing statements, documents providing for the acquisition, mortgage or disposition of the Company's property, assignments, bills of sale, leases, partnership agreements, operating agreements of other limited liability companies, and any other instruments or documents necessary, in the opinion of the Managers, to the business of the Company;

            (h)        To employ accountants, legal counsel, managing agents or other experts to perform services for the Company and to compensate them from Company funds;

            (i)        To enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Managers may approve;

            (j)        To pay any Manager a reasonable fee for services;

            (k)        To create offices and designate Officers; and

            (l)         To do and perform all other acts as may be necessary or appropriate to the conduct of the Company's business.

Unless authorized to do so by the Managers of the Company, no attorney-in-fact, employee or other agent of the Company shall have any power or authority to bind the Company in any way, to pledge its credit or to render it liable for any purpose.  No Member shall have any power or authority to bind the Company unless the Member has been authorized by the Managers to act as an agent of the Company in accordance with the previous sentence.

Section 5.7  Liability for Certain Acts.  No Manager or Member has guaranteed or shall have any obligation with respect to the return of a Member’s Capital Contributions or profits from the operation of the Company. Notwithstanding the Wyoming Act, no Manager or Member shall be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member except loss or damage resulting from the intentional misconduct or knowing violation of law or a transaction for which such Manager received a personal benefit in violation or breach of the provisions of the Operating Agreement.  Each Manager shall be entitled to rely on information, opinions, reports or statements, including but not limited to financial statements or other financial data prepared or presented by:  (i) any one or more Members, Managers, Officers or employees of the Company whom the Manager reasonably believes to be reliable and competent in the matter presented, (ii) legal counsel, public accountants, or other persons as to matters the Manager reasonably believes are within the person’s professional or expert competence, or (iii) a committee of Managers of which he or she is not a member if the Manager reasonably believes the committee merits confidence.

Section 5.8  Managers Have No Exclusive Duty to Company.  Any Manager may have other business interests and may engage in other activities in addition to those relating to the Company.  Neither the Company nor any Member shall have any right, by virtue of this Operating Agreement, to share or participate in such other investments or activities of the Manager or to the income or proceeds derived therefrom.  The Managers shall incur no liability to the Company or to any of the Members as a result of engaging in any other business or venture.

Section 5.9  Bank Accounts.  The Managers may from time to time open bank accounts in the name of the Company, and designated Manager(s) shall be the sole signatories thereon, unless the Managers determine otherwise.

Section 5.10  Indemnity of the Managers, Members, Officers, Employees and Other Agents.  To the fullest extent permitted by the Wyoming Act, the Company shall indemnify each Manager and Member and make advances for expenses to each Manager and Member arising from any loss, cost, expense, damage, claim or demand, in connection with the Company, the Manager’s or Member’s status as a Manager or Member of the Company, the Manager’s, General Manager’s or Member’s participation in the management, business and affairs of the Company or such Manager’s or Member’s activities on behalf of the Company.  To the fullest extent permitted by the Wyoming Act, the Company shall also indemnify its Officers, employees and other agents who are not Managers or Members arising from any loss, cost, expense, damage, claim or demand in connection with the Company, any such Person’s participation in the business and affairs of the Company or such Person’s activities on behalf of the Company.

Section 5.11  Resignation.  Any Manager of the Company may resign at any time by giving thirty (30) days written notice to the Members of the Company.  The resignation of any Manager shall take effect upon the date specified in such notice, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.  The resignation of a Manager who is a Member shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of the Manager as a Member or an Event of Dissociation, except as provided in Section 12.

Section 5.12  Removal.  Managers may only be removed by Luna Capital Fund, Inc.

Section 5.13  Vacancies.  Any vacancy occurring for any reason in the number of Managers of the Company shall be filled by the unanimous vote of the remaining Managers and by the unanimous vote of the Members if there are no remaining Managers.

Section 5.14  Compensation.  The General Manager will charge the Company: a) 0.75% management fee for capital under management and b) a 0.75% management fee for assets under management. Capital under management includes proceeds from the Company’s Regulation D, Rule 506(c) Offering. Assets under management includes funds invested or loaned for the purpose of earning Members the Applicable Preferred Return.

                             ARTICLE 6.  RIGHTS AND OBLIGATIONS OF MEMBERS

Section 6.1  Limitation on Liability.  Each Member's liability shall be limited as set forth in the Wyoming Act.

Section 6.2  No Liability for Company Obligations.  No Member will have any personal liability for any debts or losses of the Company.

Section 6.3  List of Members.  Upon written request of any Member, the Company shall provide a list showing the names, addresses and Ownership Percentage of all Members and the other information required by the Wyoming Act.

Section 6.4  Approvals of Members.  The Members shall have no right to make any decisions with regard to the Company, notwithstanding the Wyoming Act, except as otherwise set forth herein.

Section 6.5  Addition of Members.  Members may only be added to the Membership of the Company through the maturity of the Convertible Notes offered in the Company’s Regulation D, Rule 506(c) Offering, unless the Manager deems otherwise.

ARTICLE 7.  MEETINGS OF MANAGERS

Section 7.1  Meetings.  Meetings of the Managers, for any purpose or purposes, may be called by the Majority Vote of the Managers.

Section 7.2  Place of Meetings.  The Persons calling any meeting may designate any place, either within or outside the State of Wyoming, as the place of meeting for any meeting of the Managers.  If no designation is made the place of meeting shall be the principal executive office of the Company.

Section 7.3  Notice of Meetings.  Written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than two (2) nor more than fifty (50) days before the date of the meeting, either personally, by electronic mail, or by US mail, by or at the direction of the Managers calling the meeting, to each Manager entitled to vote at such meeting.  If mailed, such notice shall be deemed to be delivered two calendar days after being deposited in the US mail, addressed to the Manager at its address as it appears on the books of the Company, with postage thereon prepaid.

Section 7.4  Meeting of All Managers.  If all of the Managers shall meet at any time and place, either within or outside of the State of Wyoming, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any lawful action may be taken.

Section 7.5  Record Date.  For the purpose of determining Managers entitled to notice of or to vote at any meeting of Managers or any adjournment thereof, or Members entitled to receive payment of any distribution, or in order to make a determination of Managers for any other purpose, the date on which notice of the meeting is mailed or the date on which the distribution is made, as the case may be, shall be the record date for such determination of Managers unless the Managers shall otherwise specify another record date.  When a determination of Managers entitled to vote at any meeting of Managers has been made as provided in this Section, such determination shall apply to any adjournment thereof.

Section 7.6  Quorum.  Managers holding a Majority Interest represented in person or by proxy, shall constitute a quorum at any meeting of Managers.  In the absence of a quorum at any such meeting, a majority of the Managers so represented may adjourn the meeting from time to time for a period not to exceed sixty (60) days without further notice.  However, if at the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Manager of record entitled to vote at the meeting.  At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.  The Managers present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of Ownership Percentages whose absence would cause less than a quorum to be present.

Section 7.7  Manner of Acting.  The Majority Vote of the Managers shall be the act of the Managers.

Section 7.8  Proxies.  A Manager may vote in person or by proxy executed in writing by the Manager or by a duly authorized attorney-in-fact.  Such written proxy shall be delivered to the Company at meetings described in Section 7.4.

Section 7.9  Action by Managers Without a Meeting.  Action required or permitted to be taken by the Managers at a meeting may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by the Managers entitled to vote.  Action taken under this Section is effective when the Managers required to approve such action have signed the consent, unless the consent specifies a different effective date.  The record date for determining Managers entitled to take action without a meeting shall be the date the first Manager signs a written consent.  Any signature delivered by facsimile or electronic document signing (e.g., Docusign, Adobe .pdf image) is acceptable.

Section 7.10  Waiver of Notice.  When any notice is required to be given to any Manager, a waiver thereof in writing signed by the person entitled to such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice.

Section 7.11  Meeting by Telephone.  Managers may also meet by conference telephone call if all Managers can hear one another on such call and the requisite notice is given or waived.

ARTICLE 8.  CONTRIBUTIONS TO THE COMPANY AND CAPITAL LOANS

Section 8.1  Members' Capital Contributions.  Each Member shall contribute the amount set forth next to such Member's name on Exhibit "1" hereto as the Member's Initial Capital Contribution. The principal, but not sole, method for meeting the Initial Capital Contribution is via the Company’s Regulation D, Rule 506(c) Offering, and only via conversion of the associated Promissory Note into Membership Units.

Section 8.Loans to CompanyThe Company may borrow funds from Members on terms and conditions as negotiated by the Managers.  Repayment of such loans shall be on the terms and conditions negotiated by the Managers.

Section 8.Additional Capital Contributions.     Except as otherwise may be expressly provided herein, the Members shall not be required to make additional capital contributions.  The Manager shall have the discretion to request, in writing, additional Capital Contributions from each Member via the Company’s Regulation D, Rule 506(c) Offering.

Section 8.Failure to Pay Capital Any Person who seeks to be a Member by signing the Subscription Agreement of the Company’s Regulation D, Rule 506(c) Offering, but fails to provide the funds necessary to meet the minimum investment of the Offering or the amount agreed to in their Subscription Agreement, shall not have a right to be a Member or to any Member Interests.

Section 8.Capital AccountsA Capital Account shall be established and maintained for each Member in accordance with the following provisions:

a)                   To each Member's Capital Account there shall be credited such Member's Capital Contributions, such Member's distributive share of Profits and any items in the nature of income or gain that are specially allocated pursuant to this Agreement, and the amount of any liabilities of the Company that are assumed by such Member, or which are secured by any assets of the Company distributed to such Member.

b)                  To each Member's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Company assets distributed to such Member pursuant to any provision of this Agreement, such Member's distributive share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to this Agreement, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.

c)                   If ownership of any Membership Interest in the Company is assigned in accordance with the terms of this Agreement, the assignee shall succeed to the Capital Account of the assignor to the extent it relates to the assigned Membership Interest.

d)                  In determining the amount of any liability for purposes of Subsections 3.04(a) and (b) above, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

e)                   To each Member's Capital Account, there shall be debited or credited, as the case may be, adjustments which are necessary to reflect a revaluation of Company assets to reflect the Gross Asset Value of all Company assets, as required by Regulations Section 1.704-1(b)(2)(iv)(f) and Section 3.08.

            The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 704 of the Code and Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations.  The Company shall make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company's balance sheet as computed for book purposes in accordance with Section 1.704-1(b)(2) (iv)(q) of the Regulations.

Section 8.Gross Asset Value The Gross Asset Value of any asset of the Company shall be equal to the asset's adjusted basis for Federal income tax purposes, except as follows:

a)                The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the contributing Member and the Company.

b)               The Gross Asset Values of all Company assets, excluding goodwill, going concern value and similar intangible assets except to the extent purchased by the Company, shall be adjusted to equal their respective gross fair market values in connection with (and to be effective immediately prior to) the following events: (1) the acquisition of an additional Membership Interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (2) the distribution by the Company to a Member of more than a de minimis amount of property (including cash) as consideration for an interest in the Company; and (3) the Liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that an adjustment pursuant to clauses (1) and (2) above shall be made only if such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company.

c)                The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution.

d)               The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 10.01 hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this Subsection to the extent that an adjustment pursuant to Subsection (b) above is made in connection with a transaction that would otherwise result in an adjustment pursuant to this Subsection.

e)                If the Gross Asset Value of an asset has been determined or adjusted, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

ARTICLE 9.  DISTRIBUTIONS TO MEMBERS

Section 9.1  Distributions.  All distributions shall be made to the Members as the Managers may determine, as cash flow allows, in proportion to their respective Ownership Percentages at the time of distribution; provided, that following the dissolution of the Company, distributions shall be made in accordance with Section 14.3 hereof.

Section 9.2  Limitation Upon Distributions.  No distribution shall be made to Members if prohibited by the Wyoming Act.

Section 9.3  Preferred Return and Return of Capital Contributions.  No earlier than twelve (12) months after making its first loan, the Company may pay to Noteholders a Preferred Return of 10.00% per annum. The Preferred Return shall be paid incrementally one (1) to four (4) times per year as the Manager deems fit. Only Members who have invested the Minimum Investment as described in the Company’s Regulation D, Rule 506(c) Offering shall receive their pari passu share of the Preferred Return.

If the Managers elect to return a Member’s Capital Contribution the Member will not be owed any interest, and the Capital Contribution may be net of certain money transfer fees.

Section 9.4  Priority and Return of Capital.  No Member shall have priority over any other Member, either as to the return of Capital Contributions or as to Net Profits, Net Losses or distributions.  This Section shall not apply to loans (as distinguished from Capital Contributions) which a Member has made to the Company.

ARTICLE 10.  ALLOCATIONS OF NET PROFITS AND NET LOSSES

            Except as otherwise set forth herein, Net Profits and Net Losses shall be allocated for each Fiscal Year to the Members in proportion to their respective Ownership Percentages. Generally, the Company’s Business is to engage in direct private lending in exchange for a twelve percent (12%) preferred dividend and a ten percent (10%) carried interest. The Company will also pay the Manager a management fee.

ARTICLE 11.  BOOKS AND RECORDS

Section 11.1  Accounting Period.  The Company's accounting period shall be the Fiscal Year.

Section 11.2  Records and Reports.  At the expense of the Company, the Managers shall maintain records and accounts of all operations and expenditures of the Company.  The Company shall keep at its principal place of business the following records:

            (a)        A current list of the full name and last known address of each Member and Manager;

            (b)        Copies of records to enable a Member to determine the relative voting rights, if any, of the Members;

            (c)        A copy of the Articles of Organization of the Company and all amendments thereto;

            (d)        Copies of the Company's federal, state, and local income tax returns and reports, if any, for the three most recent years;

            (e)        Copies of this Operating Agreement, together with any amendments thereto; and

            (f)        Copies of any financial statements of the Company for the three most recent years.

The books and records shall at all times be maintained at the principal office of the Company and shall be open to the reasonable inspection and examination of the Members, or their duly authorized representatives during reasonable business hours.

Section 11.3  Tax Returns.  The Managers shall cause the preparation and timely filing of all tax returns required to be filed by the Company pursuant to the Code and all other tax returns deemed necessary and required in each jurisdiction in which the Company does business.  Copies of such returns, or pertinent information therefrom, shall be furnished to the Members within a reasonable time after the end of the Company's fiscal year.

ARTICLE 12.  TRANSFERABILITY

Section 12.1  General Prohibition.  Except as otherwise permitted by this Agreement, no Member may assign, convey, sell, transfer, liquidate, encumber, or in any way alienate by operation of law or otherwise (collectively a "Transfer"), all or any part of his Interest unless otherwise specifically permitted by this Agreement or unless approved by the Manager, which consent may be given or withheld in the sole discretion of the Manager.  Any attempted Transfer of all or any portion of an Interest without the necessary consent or as otherwise permitted hereunder, shall be null and void and shall have no effect whatsoever. Any Person to whom an Interest is attempted to be transferred in violation of this Section 12.1 shall not be entitled to receive Distributions, Net Profits, or Net Losses from the Company or have any other rights in or with respect to the Interests.

Section 12.2  Permitted Transfers.  A Member shall be free at any time to Transfer up to ten percent (10%) of his Membership Interest to any one or more of that Member's Family Members.  For purposes of this Article, a Member’s “Family Members” shall mean the Member’s spouse, marital partner, children, and trusts for the primary benefit of the Member himself or such spouse, marital partner, or children.  For purposes of this Agreement, a Transfer permitted under this Section 12.2 shall be referred to as a “Permitted Transfer.”  A Member may transfer greater than ten percent (10%) of his Membership Interest for estate planning purposes if he first obtains the consent of the Manager and the transfer is permissible by law.

            (a)        Dilution for New Members. Following the completion of the Company’s Offering, the Manager may elect to permit other Persons as new Members via additional offerings. In the event the Manager elects to admit other Person as new Members in the Company, the Interests of all the other Members shall be diluted on a pro rata basis in order to provide Interests to the new Members provided that the Interest of an individual Member shall never be diluted below one percent. The Manager shall be permitted to solely determine the terms and conditions upon which to admit another Person as a new Member in the Company.

            (b)        Drag Along Rights. In the event the Manager approves Transfer (“Approved Transfer”) of all of the Membership Interests of the Company or all or substantially all of its assets, the Members shall consent to and raise no objections to the Approved Transfer of the Company. The Manager shall notify Noteholders of its Regulation D, Section 506(c) offering of an Approved Transfer, which may trigger a conversion of their Notes to Membership Units per the terms of the Private Placement Memorandum. If the Approved Transfer of the Company is structured as sale of Membership Interests the Members (including newly converted Noteholders) shall agree to sell or merge all of their Membership Interests on the terms and conditions approved by the Manager. Members shall be required to make representations and warranties in connection with any Approved Transfer as to such Member’s ownership of his/her/its Membership Interests to be Transferred free and clear of all lien or other encumbrances and such Member’s power and authority to effect such Approved Transfer. Approved Transfers are not considered 12.4(a) Option Events as defined below.

Section 12.3  Conditions of Transfer and Assignment.  A transferee of an Interest shall become a Member only if approved by the Manager and if the following conditions have been satisfied:

            (a)        the transferor, his legal representative or authorized agent must have executed a written instrument of transfer of such Interest in the form and substance satisfactory to the Manager approving the transaction;

            (b)        the transferee must have executed a written agreement, in form and substance satisfactory to the Manager approving the transaction, to assume all of the duties and obligations of the transferor under this Operating Agreement with respect to the transferred Interest and to be bound by and subject to all of the terms and conditions of this Operating Agreement;

            (c)        the transferor, his legal representative or authorized agent, and the transferee must have executed a written agreement, in form and substance satisfactory to the Manager approving this transaction to indemnify and hold the Company, the Managers and the other Members harmless from and against any loss or liability arising out of the transfer;

            (d)        the transferee must have executed such other documents and instruments as the Manager approving the transaction may deem necessary to effect the admission of the transferee as a Member, including the Company’s Regulation D, 506(c) Offering or subsequent offerings appropriate to the transferee’s status as an accredited or unaccredited investor; and

            (e)        unless waived by the Manager approving the transaction, the transferee or the transferor must have paid the expenses incurred by the Company in connection with the admission of the transferee to the Company.

Section 12.4  Option Rights

            (a)        Option Events.  Upon the occurrence of any one of the following situations (hereinafter individually referred to as an “Option Event”), the Interest of the Member who suffers or causes an Option Event (“Leaving Member”) shall be subject to the option to purchase set forth in this Section.

                        (i)         Death.  Upon the death of a Member.

                        (ii)        Disability.  Upon the Disability of a Member.  As used herein, “disability” shall mean any illness or condition which causes a Member to be unable to perform his duties in the manner in which such duties were previously performed by such Member for a continuous period of ninety (90) days or more, the same being determined by a doctor licensed to practice medicine in the state of such Member’s residence.

                        (iii)       Insolvency.  Upon the Insolvency of a Member.  As used herein, “Insolvency of a Member” shall mean that the Member filed a voluntary petition or had an involuntary petition filed against him under any federal or state bankruptcy or insolvency act or law, or in the event a receiver or trustee is appointed as custodian of such Member’s property, or such Member has failed to pay any judgment against him at least ten (10) days prior to the date on which any of his assets may be lawfully sold to satisfy such judgment, or such Member shall suffer an attachment, sequestration or garnishment to be levied against or the assets of such Member.

                        (iv)       Divorce.  If in connection with the dissolution of the marriage of any married Member, the Member enters into a property settlement agreement or any court issues an interlocutory decree or other order, the terms of which transfer or award all or part of the Interest of the Member in the Company to the Member’s spouse, whether as a confirmation or a disposition of the spouse’s property rights or otherwise.

                        (v)        Voluntary Withdrawal as Member/Manager.  Upon a Member’s voluntary withdrawal as a Member or Manager of the Company.

                        (vi)        Failure to Perform Obligations.  Upon a Member’s failure to perform any of its obligations under this Agreement, either as a Member or Manager, and the same has not been cured or cure has not been commenced within ten (10) days from date of  notice of such breach has been delivered to the Member by the other Member.

            (b)        Exercise of Option.  Upon occurrence of an Option Event or the receipt of written notice from the Leaving Member of the occurrence of an Option Event, the Company shall have the irrevocable option exercisable for thirty (30) days after the receipt of notice of the Option Event and the determination of the Purchase Price pursuant to Section 12.5 below to purchase the Leaving Member’s Membership Interest affected by the Option Event for the Purchase Price determined pursuant to Section 12.5 below.  In the event the Company does not exercise its option to purchase, the other Members (“Other Members”) each shall have the right to purchase a pro rata share of the Leaving Member’s Membership Interest exercisable for thirty (30) days after the date the Company elects (affirmatively or otherwise) not to purchase such Interest.  If neither the Company nor the Other Members elect to purchase the entire Interest of the Leaving Member, the remaining Leaving Member’s Interest (“Remaining Interest”) shall be transferred to the Leaving Member’s heirs, administrators, estate, representatives, custodians, trustees, or assigns.

Section 12.5  Purchase Price/Company Valuation.  The value of the Leaving Member’s Interests shall be based on the Net Asset Value established at the last financial reporting period (e.g., quarterly or annually). If the Leaving Member disputes the valuation, they must provide written objection as part of their written notice exercising their Option Event. Within twenty (20) days after notice is received of the occurrence of the Option Event, the Manager and Members shall meet to unanimously establish the fair market value of the Company.  If the Manager and Members cannot agree upon the fair market value of the Company, the Members shall select an independent appraiser who shall establish the fair market value of the Company within sixty (60) days after his selection.  If the Members are unable to unanimously select an independent appraiser, then the Leaving Member shall select one independent appraiser and the Other Members select one independent appraiser and the two independent appraisers shall have sixty (60) days after their selection to determine the fair market value of the Company.  The Leaving Member and the Other Members shall pay all costs charged by their respective appraiser.  If there is less than a ten percent (10%) difference between the values established by each such appraiser, the average of such values shall be the fair market value of the Company.  If the difference between the values established by the appraisers is greater than ten percent (10%), then the two appraisers shall, within twenty (20) days after establishing their values, appoint a third independent appraiser who shall determine the fair market value of the Company, and the fair market value established by this third independent appraiser shall be final and binding upon the Company and its Members.  The cost of the third independent appraiser shall be borne by the Leaving Member or the Other Members, as the case may be, whose appraiser established a fair market value farthest away from the fair market value established by the third independent appraiser.  The Purchase Price shall be established by multiplying the fair market value of the Company by the Ownership Percentage represented by the Membership Interest of the Leaving Member.

Section 12.6  Payment of Purchase Price.  The Purchase Price shall be paid to the Leaving Member by delivering ten percent (10%) of the Purchase Price in cash at the consummation of the transfer of the Leaving Member’s Interest.  The balance of the Purchase Price shall be paid by delivering a promissory note, signed by the Company or, as the case may be, the Other Members which shall be due and payable in sixty (60) equal monthly installments of principal and interest, with interest to accrue on the unpaid principal balance of the note at the rate of six percent (6%) per annum.  The closing of the purchase of the Leaving Member’s Interest shall take place within sixty (60) days after the Purchase Price has been established in accordance with this Agreement.

Section 12.7  Failure to deliver Voting Rights/Membership Interest.  If a Member or other Person, including but not limited to the heir, administrator, estate, representative, custodian, trustee, or spouse of Leaving Member, becomes obligated to sell, transfer or assign any Membership Interest to the Company or the Other Members under this Operating Agreement (the “Obligated Person”) and fails to deliver such Membership Interest in accordance with the terms of this Operating Agreement, the Company or such Other Members may, in addition to all other remedies it or they may have, tender to the Obligated Person, at the address set forth herein or such place as Obligated Person may be located, the Purchase Price for such Membership Interest as is herein specified and then transfer such Membership Interest on the books and records of the Company to the person entitled hereunder to receive the Membership Interest.

ARTICLE 13.  ISSUANCE OF ADDITIONAL MEMBERSHIP INTERESTS

            Any Person approved by all of the Managers may become a Member in the Company by the issuance by the Company of Membership Interests for such consideration as the Managers shall unanimously determine.  The Managers shall determine at the time of such issuance of Membership Interests the Ownership Percentage of such newly admitted Member (with the Ownership Percentages of the then-existing Members being decreased respectively, per Section 12.2(a).)

ARTICLE 14.  DISSOLUTION AND TERMINATION

Section 14.1  Dissolution.

            (a)        The Company shall be dissolved upon the occurrence of any of the following events:

                        (i)  by the Majority Vote of the Members plus the unanimous vote of the Managers; or

                        (ii)  the sale of all or substantially all of the Company's assets and the collection of all proceeds therefrom; or

                        (iii)  upon receiving a bona fide, court ordered Decree of Dissolution in accordance with the Wyoming Act (Section 17-16-1405).

            (b)        A Member shall not voluntarily withdraw from the Company or take any other voluntary action which causes an Event of Dissociation.

            (c)        Unless otherwise approved by a Majority Vote of the Managers, a Member who suffers or incurs an Event of Dissociation or whose status as a Member is otherwise terminated (a "Withdrawing Member"), regardless of whether such termination was the result of a voluntary act by such Withdrawing Member, shall not be entitled to receive the fair value of his Membership Interest, and such Withdrawing Member shall lose all of his right to vote on any of the matters designated to the Members herein, and such Withdrawing Member shall also lose any and all rights to participate in the business and affairs of the Company (for which Members have been designated pursuant hereto).  The Withdrawing Member in this case shall own only an Economic Interest in the Company.

            (d)        Damages for breach of Section 14.1(b) shall be monetary damages only (and not specific performance), and such damages may be offset against distributions by the Company to which the Withdrawing Member would otherwise be entitled.

Section 14.2  Effect of Dissolution.  Upon dissolution, the Company shall cease to carry on its business, except as permitted by the Wyoming Act.  Upon dissolution, the Managers shall file a statement of commencement of winding up and publish the notice permitted by the Wyoming Act.

Section 14.3  Winding-Up, Liquidation and Distribution of Assets.

            (a)        Upon dissolution, an accounting shall be made by the Company's accountants of the accounts of the Company and of the Company's assets, liabilities and operations, from the date of the last previous accounting until the date of dissolution.  The Manager(s), or if none, the Persons or Persons selected by Majority Vote of the Members (the "Liquidators") shall immediately proceed to wind up the affairs of the Company.

            (b)        If the Company is dissolved and its affairs are to be wound up, the Liquidators shall:

                        (i)  Sell or otherwise liquidate all of the Company's assets as promptly as practicable (except to the extent the Liquidators may determine to distribute any assets to the Members in kind);

                        (ii)  Allocate any profit or loss resulting from such sales to the Members in accordance with the terms herein;

                        (iii)  Discharge all liabilities of the Company, including liabilities to Members and Managers who are creditors, to the extent otherwise permitted by law, other than liabilities to Members for distributions, and establish such Reserves as may be reasonably necessary to provide for contingencies or liabilities of the Company;

                        (iv)  Distribute the remaining assets to the Members, either in cash or in kind, in accordance with the positive balance (if any) in each Member's Capital Account (as determined after taking into account all Capital Account adjustments for the Company's Fiscal Year during which the liquidation occurs), with any balance in excess thereof being distributed in proportion to the Members' respective Ownership Percentages.  Any such distributions in respect to Capital Accounts shall, to the extent practicable, be made in accordance with the time requirements set forth in Section 1.704‑1(b)(2)(ii)(b)(2) of the Treasury Regulations; and

                        (v)  If any assets of the Company are to be distributed in kind, the net fair market value of such assets shall be determined by independent appraisal or by agreement of the Members.  Such assets shall be deemed to have been sold as of the date of dissolution for their fair market value, and the Capital Accounts of the Members shall be adjusted pursuant to the provisions of this Operating Agree­ment to reflect such deemed sale.

            (c)        Notwithstanding anything to the contrary in this Operating Agreement, upon a liquidation within the meaning of Section 1.704‑1(b)(2)(ii)(g) of the Treasury Regulations, if any Member has a deficit Capital Account (after giving effect to all contributions, distributions, allocations and other Capital Account adjustments for all taxable years, including the year during which such liquidation occurs), such Member shall have no obligation to make any Capital Contribution to reduce or eliminate the negative balance of such Member's Capital Account.

            (d)        Upon completion of the winding-up, liquidation and distribution of the assets, the Company shall be deemed terminated.

Section 14.4  Certificate of Termination.  When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefore and all of the remaining property and assets have been distributed to the Members, a certificate evidencing such termination may be executed and filed with the Secretary of State of Wyoming in accordance with the Wyoming Act.

Section 14.5  Return of Contribution Nonrecourse to Other Members.  Except as provided by law or as expressly provided in this Operating Agreement, upon dissolution, each Member shall look solely to the assets of the Company for the return of the Member's Capital Account.  If the Company property remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to return the Capital Account of one or more Members, including, without limitation, all or any part of that Capital Account attributable to Capital Contributions, then such Member or Members shall have no recourse against any other Member.

ARTICLE 15.  MISCELLANEOUS PROVISIONS

Section 15.1  Compliance with Regulations.  The provisions of this Agreement are intended to comply with, and in some cases are required by, Code Section 704(b) and 704(c) and the regulations thereunder.  Some of the language in this Agreement is taken directly from or is based on such Regulations.  These provisions are intended to be interpreted in such a manner as to comply with such Regulations.  The Managers may make any modification to the manner in which the Capital Accounts are computed that the Managers determine is appropriate in order to comply with such Regulations, provided that such modification is not likely to have a material effect on the amount intended to be distributable to any Member upon the dissolution of the Company.  The Managers may also make any modification the Managers deem appropriate to comply with such Regulations if unanticipated events might otherwise cause this Agreement to not comply with such Regulations.

Section 15.2  Application of Wyoming Law.  This Operating Agreement, and the application or interpretation hereof, shall be governed exclusively by its terms and by the Wyoming Act.

Section 15.3  No Action for Partition.  No Member has any right to maintain any action for partition with respect to the property of the Company.

Section 15.4  Execution of Additional Instruments.  Each Member hereby agrees to execute such other and further statements of interest and holdings, designations, powers of attorney and other instruments necessary to comply with any laws, rules or regulations.

Section 15.5  Construction.  Whenever the singular number is used in this Operating Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa.

Section 15.6  Headings.  The headings in this Operating Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of this Operating Agree­ment or any provision hereof.

Section 15.7  Waivers.  The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Operating Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.

Section 15.8  Rights and Remedies Cumulative.  The rights and remedies provided by this Operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies.  Such rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

Section 15.9  Exhibits.  All exhibits referred to in this Operating Agreement and attached hereto are incorporated herein by this reference.

Section 15.10  Heirs, Successors and Assigns.  Each and all of the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Operating Agreement, their respective heirs, legal representatives, successors and assigns.

Section 15.11  Creditors.  None of the provisions of this Operating Agreement shall be for the benefit of or enforceable by any creditors of the Company or by any Person not a party hereto.

Section 15.12  Counterparts.  This Operating Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

Section 15.13  Federal Income Tax Elections; Tax Matters Partner.  All elections required or permitted to be made by the Company under the Code shall be made by Managers.  For all purposes permitted or required by the Code, the Members constitute and appoint Luna Capital Fund, Inc. as Tax Matters Partner.  The provisions on limitations of liability of the Managers and Members and indemnification set forth herein shall be fully applicable to the Tax Matters Partner in his capacity as such.  The Tax Matters Partner may resign at any time by giving written notice to the Company and each of the other Members.  Upon the resignation of the Tax Matters Partner, a new Tax Matters Partner may be elected by Majority Vote of the Managers.

Section 15.14  Notices.  Any and all notices, offers, demands or elections required or permitted to be made under this Operating Agreement ("Notices") shall be in writing, signed by the party giving such Notice, and shall be deemed given and effective (i) when hand-delivered (either in person or by commercial courier), or (ii) on the third (3rd) business day (which term means a day when the United States Postal Service, or its legal successor ("Postal Service") is making regular deliveries of mail on all of its regularly appointed week-day rounds following the day (as evidenced by proof of mailing) upon which such notice is deposited, postage pre-paid, certified mail, return receipt requested, with the Postal Service, and addressed to the other party at such party's respective address as set forth on Exhibit "A," or at such other address as the other party may hereafter designate by Notice.

Section 15.15  Certificate of Non-Foreign Status.  In order to comply with § 1445 of the Code and the applicable Treasury Regulations thereunder, in the event of the disposition by the Company of a United States real property interest as defined in the Code and Treasury Regulations, each Member shall provide to the Company an affidavit stating, under penalties of perjury, (i) the Member's address, (ii) United States taxpayer identification number, and (iii) that the Member is not a foreign person as that term is defined in the Code and Treasury Regulations.  Failure by any Member to provide such affidavit by the date of such disposition shall authorize the Managers to withhold fifteen percent (15%) of each such Member's distributive share of the amount realized by the Company on the disposition.

Section 15.16  Amendments.  Any amendment to this Operating Agreement shall be made in writing and must be approved by the Majority Vote of the Managers.

Section 15.17  Invalidity.  The invalidity or unenforceability of any particular provision of this Operating Agreement shall not affect the other provisions hereof, and the Operating Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.  If any particular provision herein is construed to be in conflict with the provisions of the Wyoming Act, the provisions of this Operating Agreement shall control to the fullest extent permitted by applicable law.  Any provision found to be invalid or unenforceable shall not affect or invalidate the other provisions hereof, and this Operating Agreement shall be construed in all respects as if such conflicting provision were omitted.

Section 15.18  Arbitration.  Any dispute, controversy or claim arising out of or in connection with, or relating to, this Operating Agreement or any breach or alleged breach hereof shall, upon the request of any party involved, be submitted to, and settled by, arbitration in the City of Cheyenne, State of Wyoming, pursuant to the commercial arbitration rules then in effect of the American Arbitration Association (or at any time or at any other place or under any other form of arbitration mutually acceptable to the parties so involved).  Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the highest court of the forum, state or federal, having jurisdiction.  The expenses of the arbitration shall be borne equally by the parties to the arbitration, provided that each party shall pay for and bear the cost of its own experts, evidence and counsel's fees, except that in the discretion of the arbitrator, any award may include the cost of a party's counsel if the arbitrator expressly determines that the party against whom such award is entered has caused the dispute, controversy or claim to be submitted to arbitration as a dilatory tactic.

Section 15.19  Determination of Matters Not Provided for in This Operating Agreement.  The Managers shall decide any and all questions arising with respect to the Company and this Operating Agreement which are not specifically or expressly provided for in this Agreement.

Section 15.20  Further Assurances.  The Managers each agree to cooperate, and to execute and deliver in a timely fashion any and all additional documents necessary to effectuate the purposes of the Company and this Operating Agreement.

Section 15.21  No Partnership Intended for Non-Tax Purposes.  The Members have formed the Company under the Wyoming Act, and expressly disavow any intention to form a partnership under Wyoming's Uniform Partnership Act, Wyoming's Uniform Limited Partnership Act or the partnership act or laws of any other state.  The Members do not intend to be partners one to another or partners as to any third party except for tax purposes.  To the extent any Member, by word or action, represents to another person that any other Member is a partner or that the Company is a partnership, the Member making such wrongful representation shall be liable to any other Member who incurs personal liability by reason of such wrongful representation.

Section 15.22  Time.  Time is of the essence of this Operating Agreement, and to any payments, allocations and distributions provided for under this Operating Agreement.

 

            IN WITNESS WHEREOF, the undersigned have set their hands and seals as of the date and year set forth on the first page herein.

Luna Capital Fund Inc Signature

 

 

Luna Capital Fund, Inc., Member and Manager
for and on behalf of Luna Capital Fund, Inc.

 

 

 

EXHIBIT "1"

 

 

 

Members

 

NAME

CAPITAL CONTRIBUTION

ADDRESS

NUMBER OF MEMBERSHIP UNITS OWNED

PERCENTAGE OF OWNERSHIP

LUNA CAPITAL FUND, INC.

$10,000

104B Purcellville Gateway Drive #203 Purcellville, VA 20132

1,000,000

100%

Available

 

 

7,500,000

 

 

 

 

 

EXHIBIT "2"

 

 

 

Certificate of Organization