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Funded
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Based in the small town of Sawyer in southwest Michigan, Fruitbelt LLC is a privately owned beverage development, marketing and distribution company founded in 2013 by partners Michele Gazzolo and Beth Denton, whose aim is to formulate, sustainably source, market and sell drinks made from ingredients native to American Midwestern orchards.
Fruitbelt Sparkling Tonic sits at the confluence of trends: a concern for healthier food and drink, a growing interest and concern in regional/sustainable food cultivation, and a desire to be engaged with producers to create something delicious.
Fruitbelt aims to address these concerns with a drink iconic of our history and fruit-growing traditions. We have brought to market a line of novel tart sparkling drinks made with pressed juice (each bottle containing 20-25% juice from American single-origin orchards), sweetened with organic honey and spiked with our own orchard bitters that highlight the botanics of the orchard. Fruitbelt is better-for-you, mid-calorie (60 calories), smaller format (8.5 oz/250 mL), free of colorants, fruit flavorings and preservatives (no artificial anything), and cold-pasteurized for shelf stability. We have a clean label.
Our formulation efforts stem from providing something that is healthful, authentic and delightful; that is as conflict-free as possible; and that tells the story of the American orchard, from the dirt to the bees to the people who tend their crops.
We have two flavors with more in the pipeline: Tart Cherry with Ginger+Chicory and Crisp Apple with Lime+Dandelion with plans for more flavors. All have these ideas in common:
• 20% domestic fruit juice;
• 100% natural;
• Sweetened with organic honey;
• More tart to fit closely with new industry standards for sugar content and shifting palates;
• Mid-calorie, smaller format, 14 g sugar/60 cal/250 mL (8.5 oz);
• Featuring a unique blend of orchard bitters (much like what is found in many European drinks) which come from botanicals found in American orchards;
• Malic and citric acids to boost anti-oxidant qualities;
• No colorants, fruit flavors or preservatives;
• Cold-pasteurized for shelf stability and BPA Free.
Tart Cherry contains tart Montmorency cherry juice from a Michigan orchard along with ginger extract and chicory root. Crisp Apple contains juice from the same Michigan orchard with extracts of lime, caraway and dandelion root.
Our drinks will always be more tart than sweet in order to highlight the healthier anthocyanins and flavonoids that are contained in them. Our unique bitters highlight the botanics found in an orchard AND contain healthful qualities. We use botanicals that seem exotic, but are actually found in our back yards, like chicory and dandelion root, propolis from bees, aronia and heirloom apples.
While the traditional CSD category continues to decline due to concerns over health, better-for-you NA beverages are expected to continue gaining share, especially those categories which contain some juice and identify as “craft”. There is ~$35 billion dollars in play by 2020 for these smaller brands in the overall NA beverage category. Juice-based craft soda is an emerging sub-category, in which only a few viable juice-based sodas are available. None originate in Michigan, only 2 hail from the Midwest, none use our cold-sterilization method of preservation and none offer a smaller glass packaging format.
In addition to adding to the line-up of the full-flavored Fruitbelt people are growing accustomed to, we will introduce a branch off this line, a very low calorie (0-10 calories) botanical water. This line will be more bitter-forward and will contain native/unique juice extracts.
Established in 2013, Fruitbelt conducted its first production run in January 2016 with a co-packer in Scranton, PA, with another successful production run in January 2018. Current product and operational status includes: Bringing a CEO on board effective January 1, 2019, a woman with impressive experience in Beverage/Food; 1 national distribution company (we are working out of 3 of UNFI's regional warehouses), 2 regional distribution companies, and 1 national re-distribution company; direct sales and self-distribution to local businesses; a VP of Sales with 35 years in the natural food/beverage category; 2 brokerage groups — one in retail (Greenspoon) and the other in food-service (Elohi); recent reformulation to improve COGS while remaining true to our brand; slight branding tweak to highlight premium quality of the drinks. Additionally, we completed Chicago’s Good Food Business Accelerator and have gained strong mentorship and introductions from our associations there.
Financial Summary
Previous Fundraise Summary
| Security Type | Revenue Share | |
|---|---|---|
| Investor Eligibility | All Investors |
Offering Materials
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Financials
This is an overview of the previous and planned financings of the business, including the capital needs the business is looking to cover in the current financing.
Funding Uses for Target Raise ($55 k)
Build Inventory
$50,000
| Description | First Production Run - $50K each (.87 cents per bottle * 24 bottles in a case * 78 cases in a pallet * 32 pallet minimum run) |
|---|---|
| Timing | A one-time payment 2 months after investments close. |
Funding Uses for Max Raise ($137 k)
In addition to target raise
Build Inventory
$50,000
| Description | Second Production Run - $50K each (.87 cents per bottle * 24 bottles in a case * 78 cases in a pallet * 32 pallet minimum run) |
|---|---|
| Timing | A one-time payment 3 months after investments close. |
Other
$25,000
| Description | Contingency to cover Interest Payments, Debt Repayments, Other Expenses |
|---|---|
| Timing | 3 monthly payments beginning 1 month after investments close. |
Remaining funding uses include cash buffer and Localstake Marketplace fees. See offering materials for full details.
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Q&A
Provide us with some background on your products and services.
Fruitbelt Sparkling Tonic sits at the confluence of trends: a concern for healthier food and drink, a growing interest and concern in regional/sustainable food cultivation, and a desire to be engaged with producers to create something delicious.
Fruitbelt addresses these concerns with a drink iconic of our history and fruit-growing traditions. We have brought to market a line of novel tart sparkling drinks made with pressed juice (each bottle containing 25% juice from American single-origin orchards), sweetened with native honey and spiked with a proprietary orchard bitters. Fruitbelt is better-for-you, mid-calorie (60 calories), smaller format (8.5 oz/250 mL), free of colorants, fruit flavorings and preservatives (no artificial anything), and cold-pasteurized for shelf stability. We have a clean label.
We currently have 2 flavors: Bright Cherry Ginger and Crisp Apple Lime Caraway. These drinks can be purchased at select natural food grocery stores, on-premise pubs/restaurants/distilleries and independent grocers. The SRP from the cooler is $2.49/bottle. We have 4-packs available for placement on shelves as a stand-alone drink as well as a mixer for the home-cocktail enthusiast. The SRP for these: $8.99. We currently have key distribution partners in Michigan, Indiana, Ohio, Wisconsin, and Illinois. We have several self-distributed accounts within a 35-mile radius of Sawyer, MI.
What is your product development timeline?
Fruitbelt entered the beverage market with two flavors -- Tart Cherry with Ginger+Chicory and Crisp Apple with Lime+Dandelion. We have another flavor lined up for a trial run late summer -- Elderberry with Elderflower+Propolis and Blueberry with Juniper. Other flavor possibilities for our original line of Sparkling Fruit Tonics include Wild Plum, Red Currant, Saskatoon, and/or Blackberries. Additionally, within the year we will launch our Fruitbelt Sparkling Bitters Waters! These are zero-very low calorie (no additional sugar or sweetening) and are more bitter-forward. In keeping with recent "comebacks" -- kombucha, switchel, shrubs, etc..., we believe bitters is the next comeback kid and are avidly preparing for that. Two flavors awaiting trial runs include Original (our local-exotic bitters+sparkling water) and Saskatoon-Aronia (saskatoon extract along with our local-exotic bitters and sparkling water).
Since Fruitbelt owns its trademark in the alcoholic segment as well, we are seriously considering entering that space in the near future. There is significant opportunity for growth in this segment to make a “pre-mixed” alcoholic offering. There are very few offerings currently available – it’s really a wide-open space. We could use any of our tonics along with spirits from a local/regional maker as an example. This effort, of course, would require its own business plan along with projections.
What is your production process?
Michigan, inarguably, has great juice and orchardists. However, creating a drink using cold sterilization (as is prevalent in Europe) is not possible in our state. We looked for over a year for a Michigan production partner and came up empty. This realization led us first to an orchard in Maine that actually does have the cold-sterilization capability, BUT not the correct bottling line! We ultimately found our co-packing partner, CSD Co-Packers, in Scranton, PA. A renovated Coca-Cola plant managed by third-generation soda-maker Mark Fiorina (formerly of Boylan Soda), this facility has several bottling lines, equipment for the cold-sterilization process, expert technicians and a willingness to take on a smaller company in the start-up phase. In 2015, we conducted our first test run at this facility. In January 2016 we had our first production and in February of that year began selling our product.
Since our production facility is located in PA and we're trying to minimize carbon footprint whenever possible while maintaining the customer's yen for supporting a company they can believe in, we take care with sourcing. Our tart McIntosh apple juice and Montmorency cherry juice comes from King Orchards in Traverse City. Our unique Orchard Bitters uses flora from the orchard to create a delectable liquid, bringing in the story of the heirloom apple and bitter greens and roots -- exotics from our own yards! Believe it or not, there is no organic honey available anywhere in the US. We wanted to ensure the highest quality honey, while at the same time eventually going for non-GMO certification (only organic honey satisfies that group). We use TrueSource verified organic honey from the Amazon rainforest. What we've created is "An Orchard in a bottle" -- from the soil, to the trees, to the bees, to the plants, to the people who tend all this wonder!
All of our ingredients have short timeframes in which to get them -- generally within a week. Once all the ingredients are in-house at the co-manufacturer, the drink comes together and is bottled within a few hours.
Gallery
What is your competitive advantage?
In a world where healthy choices in a carbonated beverage can be difficult to find, Fruitbelt offers a refreshingly simple, almost storybook alternative: a wholesome, novel, not-too-sweet, festive and widely appealing drink made from ingredients that don't have to hide behind euphemistic language.
We may have a smaller bottle (on purpose), but there are big ideas in there:
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Fruitbelt uses pressed juice from American orchards. It will always be tart and convey the richness of the orchard ecosystem. Currently, our drinks contain up to 25% juice, higher than any other American craft sparkling beverage.
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Who are your competitors?
There are fewer than 15 fruit and juice-based craft beverage brands. Fruitbelt has higher percentages of fruit juice than most, lower calories and more alignment with growing demand for locally/domestically sourced ingredients. Fruitbelt is formulated and positioned for competitive advantage.
Gallery
Provide detail on your hiring plans
At this time, we "hire" people on a contractual basis, as independent contractors. But over time and as we add more salespeople, this is likely to change. As we continue to grow, we will hire dedicated salespeople to keep the sales numbers burning bright. Mark Delbridge, our current VP of sales, is an expert at managing and growing a salesforce. He's been a great fit for our company.
What is the composition of your current team?
Our current team is comprised of:
- Michele Gazzolo -- CEO, Marketing, capital raise
- Beth Denton -- formulation, sourcing, operations
- Mark Delbridge -- VP of sales to include sales strategy/planning, sales expertise, business strategy, investor relations support, broker/distribution management
- GreenSpoon Retail Brokerage
- Elohi -- food-service brokerage, sales in midwest for natural channels, universities, hospitals and some premium on-premise
- Stephanie Lind -- Board Member/mentor, distribution/supply chain guidance/funding/leadership guidance
- Michael Movitz -- Movitz Group, board member/mentor, strategic planning/fundraise
- Fortune Fish & Gourmet -- Midwest regional distributor
- Cherry Capital Foods -- Michigan distributor
- UNFI -- national distribution company focusing on 3 warehouses for our introduction
- Accountant
- Bookkeeper
How do you market your product or service?
Taking into consideration Fruitbelt’s competition, market trends, in-field research and more, it is apparent that of the fruit-based drinks available in the market, we are: the lowest in calories/sugar; the fruit comes from American orchards; our ingredients (including honey and bitters) are emblematic of the American orchard – we’ve created “An Orchard in a Bottle”; and the cold-sterilization method of preservation is truly unique to this category as a way to preserve the delicate juice enzymes.
We have tested our messages in the marketplace. Of the various perceived benefits, here is the ranking:
- 100% natural – highest ranked. Our fans want a clean label, all natural.
- Sweetened with organic honey
- Cold pressed process
- Lower calories, no artificial flavors
- Made with pressed juice from American orchards
Further, the concept “Orchard in Every Bottle” performs and resonates well with people: It makes them want to learn more about the brand; conveys uniqueness; grabs attention; visually intriguing, purchase intent; and it justifies the price.
Social Media…. Improving Fruitbelt’s social media presence is key on a number of levels: to educate, to entice and to reward. Our fans do not respond to traditional forms of advertising, relying instead on social media streams. We have engaged a social media content developer (on contractual basis) to help us navigate this domain. We predict we’ll spend 15% of our budget in social media alone (ie creation/implementation of campaigns, creating content). We will build on our current followers and reach our target market, gaining metrics along the way. We will use our current psychographic/demographic information in an effort to do this.
PR…. We have found that public relations in the form of print and radio really do generate sales. We need to capitalize on our local efforts and branch into new territory. We are currently talking with market influencers to introduce them to our brand and looking for ways to make it easy for the media to get information about us (for example, by providing media packets on our website). Free forms of advertising are, of course, important to this start-up.
Website…. Our website will encompass an overhaul in the coming months to incorporate more educational information about our suppliers, our mission and philosophy, and recipes/pairings for cocktails/food. We’d like to incorporate more cocktail videos. Our website conveys the simplicity and beauty of our drinks, where they can be found and ideas around our company’s formation.
How do you sell your product or service?
Our marketing strategy stems directly from our value proposition and positioning statement. This, coupled with an understanding of our target fans, will help us hone our marketing attempts.
For a new company such as ours, resources need to be spent on marketing – 60% of our budget is dedicated to social media, marketing strategy, public relations, demos/sampling (retail/non-retail), trade spend, (ie promos/price reductions), trade shows…. We work to gain traction in a particular area, expand distribution to those key areas....
Personnel…. One key element for generating sales is relying on people who are prevalent in this space. Mark Delbridge, VP Sales, is part of the Fruitbelt team in an effort to reach bigger accounts at attain greater sales volume. We have 2 brokers -- Greenspoon in the retail grocery space and Elohi in the food service space. AND we are bringing on a CEO who has impressive depth in the natural beverage/food space, beginning January 2019.
Who are your target customers?
Please see the graphic for details about customer segmentation.
What is your current customer pipeline?
Our strategy is getting into grocery channels with a focus of natural. Our principal customer in this channel is Whole Foods. We are currently selling in 15 Whole Foods in the midwest region. Through a program of demos/promos and introducing a 4-pack, we expect to increase velocity in these channels, which we project will result in sales of 4-6 cases per month/sore. The great thing about Whole Foods is they make it easy to track sales and accumulate meaningful data. We are using this to chart progress around promos/demos and are seeing great progression! We have a large customer (Houston's -- national redistributor) which will help populate a larger footprint AND they'll direct ship to smaller customers who they don't work with. This will allow us to extend our reach in the midwest, allow responsible growth that we can support, while at the same time introducing our product to more progressive markets (east and west coasts) in urban settings.
Do you have current customers?
We primarily sell wholesale to distributors, though we do sell direct to some local accounts in our direct area (ie small specialty stores, restaurants, delis). Currently we have two regional distributors (Fortune Fish & Gourmet, based in IL, and Cherry Capital in MI) who delivers to all of our Whole Foods accounts and specialty stores. Whole Foods is our largest account -- 15 stores in the Midwest -- and accounts for 90% of our sales. Typically, this distributor orders 1-2 pallets/month. Additionally, we have 1 distributor for Michigan (Cherry Capital Foods -- there is some territory/customer type overlap, tho not much, with Fortune Fish) that typically sells to specialty grocery stores, farmers markets, restaurants and delis. In particular, CCF has extensive reach to the northern part of the lower peninsula of MI, an area known for its orchards and tourists. This is a new relationship so we'll be paying careful attention to progress. In July, we on-boarded the largest distributor in the natural foods channel -- UNFI. To start, we're in 3 of their warehouses -- Greenwood, IN; Minneapolis, MI; and Racine, WI. We are in the UNFI Next program which identifies and works with up-and-coming brands such as Fruitbelt. UNFI will broaden our depth and reach into the Midwest, very much excited by this prospect. Additionally, when we're ready (with proper funding) to push our brand nationally, UNFI will be our go-to distributor for that.
All of these distributors, plus Houston's (a national re-distributor), service our type of customer -- natural food, clean-label-loving customers.
Gallery
Team
Michele Gazzolo
Co-founder and CEO
Michele Gazzolo is a natural merchant who grew up working at her family's pharmaceutical distribution company in Chicago, among boxes, jars, forklifts, shelves and telephones. A former retail store owner, she is skilled in marketing/PR and excels at anticipating trends, envisioning possibility, inventing and orchestrating games. Most recently she was instrumental in capital formation, team formation and strategy for a clean tech software startup now entering commercialization. When not slicing apples or dicing prose, she enjoys walking on moors and merrymaking with friends. BA, Williams; MA, U of Chicago and UIC.
Beth Denton
Co-founder, Soda Muse and Orchard Liaison
Background Check
Beth Denton, food-grower and hands-on educator, delights in exploring obscure fruit varieties and conducting culinary and botanical experiments in kitchen and garden. In two years she has taught herself mixology, chemistry, how to use a carbonation stone to make tiny bubbles, and how to build poetic, aromatic and delectable sodas out of regional ingredients. Beth's imagination, tenacity and indefatigable curiosity make work seem like the best kind of adventure.
Paul Gazzolo
Board Member
Advisory Board Member
https://www.linkedin.com/in/paulgazzolo/
Stephanie Lind
Board Member
Consultant
https://www.linkedin.com/in/stephlind/
Elohi
Service Provider
Midwest sales in food service
Armstrong & Reist
Service Provider
Accountant
Bill Daly
Service Provider
Legal
https://www.linkedin.com/in/williamjdaly/
Fortune Fish & Gourmet
Service Provider
Distribution partner for Midwest
Cherry Capital Foods
Service Provider
Regional distribution partner in Michigan only. Hyper-local, interesting MI-based brands. https://www.linkedin.com/company/cherry-capital-foods/
UNFI
Service Provider
The leading independent national distributor of natural foods. They are coming on board in July in 3 midwest warehouses. https://www.linkedin.com/company/united-natural-foods/
Greenspoon
Service Provider
Green Spoon is a national natural food + beverage brokerage company that represents the most disruptive and emerging consumer packaged goods in the industry. https://www.facebook.com/greenspoonsales/
Steve Gaither
Service Provider
A member of a collective of the top CPG minds in the business who provide consulting, advisory, brokerage and investment expertise.
https://www.linkedin.com/in/jbchicago/
Mark Delbridge
Service Provider
VP Sales, 30+ years in building sales in the natural food/beverage channels
https://www.linkedin.com/in/mark-delbridge-02155711/
Houston's
Service Provider
National Re-Distributor
About Fruitbelt LLC
Location Details
| Status | Still Looking |
|---|---|
| Location Type | Home Office |
| Comments | Having an office outside of our homes is untenable at this point, just like many start-ups. When we get an office on Main Street USA, it will indeed be cause for celebration as we will have moved beyond cash-flow issues and are well on our way. |
Risks & Disclosures
Limited operating history
The Company was founded in April 2013, is an early stage company with limited operating history upon which to evaluate its business and has generated limited revenues to date. The Company is not currently profitable. Although management of the Company currently anticipates that its business strategy will be successful, the Company may not be able to achieve the revenue growth in the coming years necessary to achieve profitability. The Company's prospects also must be considered in light of the risks and difficulties frequently encountered by early stage companies in today's business environment. The Company may not be successful in addressing these risks, and the business strategy may not be successful.
Sufficient insurance coverage
The cost of insurance policies maintained by the Company to protect the Company's business and assets could increase in the future. In addition, some types of losses, such as losses resulting from natural disasters, generally are not insured because they are uninsurable or it is not economically practical to obtain insurance to cover them. Moreover, insurers recently have become more reluctant to insure against these types of events. Should an uninsured loss or a loss in excess of insured limits occur, this could have a material adverse effect on the Company's business, results of operations and financial condition.
No audited financial statements
The Company has not yet sought to have its financial information audited by an independent certified public accountant and there is no assurance that it will do so in the future. All financial information provided in the Offering Materials has been prepared by the Company's management team and has not been reviewed or compiled by an independent accounting firm.
Employees or related third parties may engage in misconduct or other improper activities
The Company is exposed to the risk that employee fraud or other misconduct could occur. Misconduct by employees could include misappropriation of trade secrets or other intellectual property or proprietary information of the Company or other persons or entities and failing to disclose unauthorized activities. It is not always possible to deter or detect employee misconduct, and the precautions taken to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses. The misconduct of one or more of the Company's employees or key third party partners may have a material adverse effect on the Company's business, results of operations, prospects, and financial condition.
Limited ability to protect intellectual property rights
The Company's business model is dependent on certain proprietary formulas and recipes. As such, licensing, developing and protecting the proprietary nature of this technology is crucial to the success of the Company. The Company will rely on intellectual property laws, all of which offer only limited protection. Competitors may infringe upon any patents or trademarks that the Company takes out on its proprietary technology. Failure to adequately protect its intellectual property from current competitors or new entrants to the market could have a material adverse effect on the Company's business, operating results, and financial condition. If the Company resorts to legal proceedings to enforce the Company's intellectual property rights, the proceedings could be burdensome and expensive and could involve a high degree of risk.
The Company has not applied for, and has no plans to apply for, intellectual property protection through trademarks or patents. Failure to adequately protect its intellectual property from current competitors or new entrants to the market could have a material adverse effect on the Company's business, operating results, and financial condition. Additionally, the Company may become subject to third-party claims that it infringed upon their proprietary rights or trademarks. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against the Company or the payment of damages by the Company.
The Company is obligated to indemnify its management
Executive officers and managers of the Company owe certain duties to the Company they serve in connection with the use of its assets. Executive officers and managers are fiduciaries, and as such are under obligations of trust and confidence to the Company and owners to act in good faith and for the interest of the Company and its owners, with due care and diligence. Notwithstanding the foregoing, the Company is obligated to indemnify officers and managers of the Company for actions or omissions to act by such officers and managers of the Company on behalf of the Company that are authorized under the organizational documents of the Company. In addition, an officer may be entitled to advancement of expenses they may incur associated with or in defense of charges, claims or legal action arising from such person’s position as an officer or manager of the Company, which could result in a decrease in the assets available for Investors in certain circumstances. The assets of the Company will be available to satisfy these indemnification obligations. Such obligations will survive dissolution of the Company. There are very limited circumstances under which the management of the Company can be held liable to the Company. Accordingly, it may be very difficult for the Company or any Investor to pursue any form of action against the management of the Company.
Control of the Company
The managers, officers and/or directors comprising the Company’s management team will have sole management authority over the business of the Company, regardless of the opposition of Investors to pursue an alternate course of action. Investors will not become members of the Company and shall have no voting, dividend, minority ownership rights, or other rights or status as a member of the Company as a result of his, her or its investment. Investors will have no right to vote with respect to the management or to participate in any decision regarding management of the Company’s business.
Need to maintain existing, and develop new products and services
The success of the Company is dependent upon the Company's ability to maintain a certain level of quality in, and enhance existing products and services as well as to develop and introduce in a timely manner new products and services that keep pace with evolving industry standards, and respond to changing customer requirements. If the Company is unable to develop and introduce new products and services or enhancements in a timely manner in response to changing market conditions or customer requirements, while maintaining a certain level of quality in its existing products and services, the Company's business, financial condition and results of operations would be materially adversely affected.
Existing and potential litigation
Although management is unaware of any threatened or pending litigation against the Company or management, there can be no assurance that future claims will not be asserted and that, even if without merit, the cost to defend against such claims would not be significant, thus having a material adverse effect on the Company's business, financial condition and results of operations. The Company has never filed any lawsuit against any other person or entity, or been the subject of a lawsuit.
Competition from other businesses
The Company will compete in a competitive market with numerous established and startup beverage manufacturers. The Company expects competition to increase in the future. If and when the Company expands the scope of its product and service offerings, it may compete with a greater number of companies across a wider range of products and services. Many of the Company's current competitors and potential new competitors may have longer operating histories, greater name recognition, larger client bases and significantly greater financial, technical and marketing resources than the Company. These advantages may allow them to respond more quickly to new or emerging technologies, changes in laws or regulations, and changes in client and/or user requirements. There can be no assurance that the Company will be able to compete successfully in its chosen markets and competitive pressures may materially and adversely affect the Company's business, prospects, financial condition and results of operations. Any significant success of the Company's competitors can damage relationships with its customers and service providers, diminish the Company's market share, and present significant obstacles to the further development of the Company.
The Company's management will have broad discretion in use of proceeds
The Company has preliminarily designated the use of the proceeds from this Offering for building inventory, general working capital purposes and other necessary expenditures as determined in the discretion of management. Accordingly, the Company's management will have significant flexibility and broad discretion in applying the proceeds of the Offering. The failure of management to apply these funds effectively could have a material adverse effect on the Company's business, results of operations, prospects, and financial condition.
Reliance on key management employees and future personnel
The success of the Company is dependent on the efforts of a limited number of key people. The Company has not made plans to purchase key person life insurance. The loss of key personnel could have a serious adverse effect on the Company's prospects, business, operating results, and financial condition. To fulfill its operating plans, the Company's future success also depends on its ability to identify, attract, hire, train, retain and motivate additional highly-specialized personnel to fulfill various roles within the Company. Competition for such personnel is intense and there can be no assurance that the Company can attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain the necessary personnel could materially and adversely affect the Company's business, prospects, financial condition and results of operations.
Unpredictability of future revenues; Potential fluctuation in operating results
Because the Company has limited operating history, the ability to forecast revenues is limited. The Company's future financial performance and operating results may vary significantly from projected amounts and fluctuate substantially from quarter to quarter due to a number of factors, many of which are likely to be outside of the Company's control. These factors, each of which could adversely affect results of operations and future valuation, include:
• demand for the Company's products and services;
• introduction or enhancement of products and services by the Company and its competitors;
• actual capital expenditures required to bring the Company's products and services to market;
• market acceptance of new products and services of the Company and its competitors;
• price reductions by the Company or its competitors or changes in how products and services are priced;
• the Company's ability to attract, train and retain qualified personnel;
• the amount and timing of operating costs and capital expenditures related to the development and expansion of the Company's business, operations and infrastructure;
• unexpected costs and delays relating to the expansion of operations;
• change in federal or state laws and regulations;
• timing and number of strategic relationships that are established;
• loss of key business partners; and
• fluctuations in general economic conditions.
The projections of the Company's future operating costs are based upon assumptions as to future events and conditions, which the Company believes to be reasonable, but which are inherently uncertain and unpredictable. The Company's assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur. Due to these uncertainties and the other risks outlined herein, the actual results of the Company's future operations can be expected to be different from those projected, and such differences may have a material adverse effect on the Company's prospects, business or financial condition. Any projections that were prepared or provided by the Company were not prepared with a view toward public disclosure or complying with the published guidelines of the American Institute of Certified Public Accountants or the Securities Exchange Commission regarding projected financial information. Under no circumstances should such information be construed to represent or predict that the Company is likely to achieve any particular results.
Agreement for proposed location has not been finalized
The Company has not yet secured a location for its operations outside of its home office. It is the Company’s expectation that a location will be secured at such time as it becomes necessary to expand outside of its current space. In the future, if the Company is not able to secure the necessary location, and on reasonable terms, the Company’s operations and financial condition will be adversely affected.
Reliance on third parties for product inputs
The Company will rely on various third parties to provide its product inputs and other goods and services. These third parties may become unable to or refuse to continue to provide these goods and services on commercially reasonable terms consistent with the Company’s business practices, or otherwise discontinue a service important for the Company to continue to operate under normal conditions. If the Company fails to replace these goods and services in a timely manner or on commercially reasonable terms, the operating results and financial condition of the Company could be harmed. In addition, the Company exercises limited control over third-party vendors, which increases vulnerability to problems with goods and services those vendors provide. If the goods and services of the third parties were to fail to perform as expected, it could subject the Company to potential liability, adversely affect renewal rates, and have an adverse effect on the Company's financial condition and results of operations.
Need to establish new and maintain existing customer relationships
The market for the Company's products and services is rapidly evolving. The Company is unable to predict whether its products and services will continue to satisfy new and existing customer demands or if they will be supplanted by new products and services. To date, the Company has developed limited customer relationships. The Company's efforts to market and sell its services could be significantly affected by competitive developments and changes in consumer tastes. If this occurs and if the Company is unable to adapt quickly enough to the change, it may fail to develop additional customer relationships, and maintain those relationships, and its business, financial condition and results of operations could be materially adversely affected.
In addition, the Company is reliant on a limited number of distributors as customers. If the Company is unable to attract additional distributors, or loses a relationship with one of its key distributor customers, its business, financial condition and results of operations could be materially adversely affected.
No assurances of sufficient financing; Additional capital may be required
Although the Company believes the proceeds of this Offering, along with other planned financings, will provide adequate funding to develop and successfully support its business plans, there can be no assurances that such funds will be adequate. If the Company's cash requirements exceed current expectations, the Company may need to raise additional equity or debt capital, beyond what is being sought with current efforts. There can be no assurance that adequate additional financing on acceptable terms will be available when needed. The unavailability of sufficient financing when needed would have a material adverse effect on the Company and could require the Company to terminate its operations. The Company is in the process of securing additional financing, through a planned convertible debt offering of up to $750,000 in the fall of 2018, to provide necessary capital for planned capital expenditures not covered under the Offering. If the Company is unable to close the additional financing on the terms and the timeline that is currently anticipated, the Company's financial and operational results may be adversely affected, and if the Company is left without sufficient capital, Investors could lose all, or a significant portion of, their investment.
General tax considerations
Investors in the RSAs are urged to consult their tax advisors concerning the federal, state, local and foreign income tax consequences of acquiring, owning, and disposing of, the RSAs as well as the application of state, local and foreign income and other tax laws. Any federal tax discussion contained in these Offering Materials, including any attachments, was written in connection with the Offering of the RSAs by the Company, and is not intended or written to be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government. Nothing in these Offering Materials shall be deemed tax or legal advice by the Company or its members.
The tax-related information herein summarizes certain material U.S. federal income tax aspects of the purchase and ownership of the RSAs. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations thereunder, published administrative rulings, and judicial decisions in effect on the date of the Offering Materials. No assurance can be given that future legislative or administrative changes or court decisions will not significantly modify the statements expressed in these Offering Materials. Any such changes may or may not be retroactive with respect to transactions completed prior to the effective dates of such changes.
The tax-related information herein is a general discussion of U.S. federal income tax consequences of investing in RSAs by individuals and does not purport to deal with all federal income tax consequences applicable thereto or the federal income tax consequences applicable to all categories of Investors, some of which may be subject to special rules (e.g., Investors who do not reside in or citizens of the U.S.). This discussion is not intended as a substitute for careful tax planning. Any federal tax discussion contained in these Offering Materials, including any attachments, was written in connection with the offering of RSAs by the Company, and is not intended or written to be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government. Investors are urged to consult their own tax advisors, lawyers, or accountants with specific reference to their own tax situations.
Backup withholding with respect to the RSAs
Under certain circumstances, interest paid on RSAs may be subject to "backup withholding" of federal income tax. Backup withholding does not apply to corporations and certain other exempt recipients which may be required to establish their exempt status. Backup withholding generally applies if, among other circumstances, a non-exempt holder fails to furnish his or her correct social security number or other taxpayer identification number. Special backup withholding rules may apply when payment is made through one or more financial institutions or by a custodian, nominee, broker or other agent of the shareholder. If applicable, Investors should contact their brokers to ensure that the appropriate procedures are followed which will prevent the imposition of backup withholding.
Gain or loss on disposition of the RSAs
If the RSAs are sold, the selling holder will recognize gain or loss equal to the difference between the amount realized from the sale and the selling holder's adjusted basis in the RSAs. The adjusted basis generally will equal the cost of the RSAs paid by the seller, increased by any OID on the RSAs included in the seller's income and reduced (but not below zero) by any payments on the RSAs. Because the RSAs are characterized as contingent payment debt instruments under the Code and Treasury Regulations, any gain recognized upon a sale, exchange, retirement, or other disposition of an RSAs will generally be treated as interest income and any loss will be ordinary to the extent of prior interest income inclusion.
No analysis has been done of potential state or local tax consequences
Investors should consider potential state and local tax consequences of an investment in the RSAs and they are urged to consult their own tax advisor to determine the state and local income tax consequences of investing in the RSAs. The Offering Materials make no attempt to summarize the state and local tax consequences to potential investors.
Investors will recognize interest income on the RSAs each year even if no payments are actually received
Investors in the RSAs, regardless of whether the Investor reports income under the cash or accrual method of accounting, will be required to recognize interest income from the RSAs each year under the original issue discount ("OID") rules contained in the Code, even if no payments are made with respect to the RSAs (so called "phantom income"). Because both the amount of each payment and the timing of the payments to holders of the RSAs are contingent on the Company's ability to generate revenue, a fixed payment schedule cannot be established. Consequently, the Company is required to use the "noncontingent bond method" contained in the Treasury Regulations to determine annual interest and principal payments to the Investors in the RSAs.
In general, under the noncontingent bond method the Company must first determine the yield at which a debt instrument with terms and conditions similar to the RSAs could be issued by the Company (the "comparable yield") and prepare a projected payment schedule for the RSAs which reasonably reflects the relative expected timing and amounts of the payments to be received by the Investors in the RSAs. Accruals of interest are then attributed to each day included in the projected payment schedule. If no payments are made during the year, the amount of interest reported to the holder would be equal to the amounts accrued as interest based on the project payment schedule. If payments are made during the year, the actual interest reported with respect to the RSAs is determined by adjusting the amounts derived from the projected payment schedule for any differences between the actual payments made and the projected payment schedule. A positive adjustment occurs when the actual amount paid exceeds the projected amount, while a negative adjustment occurs when the actual amount paid is less than the projected amount.
All adjustments are netted for the tax year. A net positive adjustment is treated as additional interest for the year. A net negative adjustment first reduces the interest accrued on the RSAs for the current year, then is treated as an ordinary loss to the extent of interest previously accrued on the RSAs, and any excess adjustment is carried forward to future years. If any net negative adjustment remains at the time of a sale or retirement of the RSAs, it is treated as a reduction in the proceeds received. A risk exists that the IRS could dispute these determinations which could impact the amount, character and timing of the payments reported by the Company to the Investors in the RSAs.
The RSAs will be treated as debt for federal income tax purposes
The Company intends to treat RSAs as debt for federal tax purposes. No clear guidance exists that definitively provides that an RSA is either debt or equity for federal tax purposes; and thus, a risk exists that the Internal Revenue Service could successfully assert that RSAs should be treated as equity instead of debt. Such a determination is dependent upon all attendant facts and circumstances surrounding the issuance and holding of an RSA, including, but not limited to the following:
• the presence or absence of an unconditional promise to pay a sum certain at a fixed maturity date;
• the right to enforce payment of principal and interest;
• the status of the contribution in relation to regular corporate creditors (whether or not subordinate to general creditors);
• the intent of the parties, especially as to non-tax purposes
• the names given to the certificates evidencing the indebtedness;
• the source of payments;
• participation in management flowing as a result;
• thin or adequate capitalization;
• identity of interest between creditor and stockholder;
• source of interest payments;
• the ability of the entity to obtain loans from outside lending institutions;
• the extent to which the advance was used to acquire capital assets or to meet current operating expenses; and
• the failure of the debtor to repay on the due date or to seek a postponement, as well as the actual payment of the interest.
If the IRS were to prevail that RSAs should be treated as equity for tax purposes, each holder would be considered to be a member of the Company and, because the Company is taxed as a partnership, interest payments received by a holder would be recharacterized as distributions from a partnership, which could impact the tax treatment of the holder. Because a partnership generally is not a taxable entity, it will incur no federal income tax liability. Rather, each holder would be required to take into account in computing its federal income tax liability its allocable share of income, gains, losses, deductions, and credits of the Company, regardless of whether cash distributions are made.
Investors are required to indemnify and reimburse the Administrative Agent; There will be little or no recourse against the Administrative Agent.
As a condition of agreeing to the terms of the RSAs, the Investor has agreed to indemnify and reimburse the Administrative Agent, ratably from and against any and all actual liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (other than those expenses and costs to be borne by the Administrative Agent in the ordinary course of its or its agents’ fulfillment of administrative agent services), which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of the RSAs or any action taken or omitted under the RSAs, provided that the Investor shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.
Investors are reliant on the Administrative Agent for servicing and collections
The Investors will not be able to pursue collection against the Company themselves. If the Administrative Agent were to become subject to a bankruptcy or similar proceeding or were to otherwise become unable to perform its duties under the RSAs, enforcement of Investors’ rights could be uncertain, recovery of funds due on the RSAs may be substantially delayed, and any funds recovered may be substantially less than the amounts due or to become due on the RSAs. There is no provision in the RSAs for a party to replace the Administrative Agent.
Disputes may be resolved only through mandatory binding arbitration
The RSAs provide that any claims or disputes between the Investor and the Company and its affiliates and agents (including the Placement Agent) must be resolved by confidential mandatory binding arbitration before a private dispute resolution service and forum provider. Investors will not have a right to litigate claims through a trial, and will be required to knowingly and voluntarily waive their rights to litigate any claims in a court.
The obligations of the Company under the RSAs will be unsecured obligations
The Company's obligations under the RSAs will be unsecured obligations. Therefore, upon the occurrence of an event of default under the RSAs, an Investor will have no recourse against the assets of the Company and rights that the Investor may have under the RSAs will be subordinate and inferior to the Company's other creditors at such time, if any.
Investors will not become members of the Company
Investors will not become members of the Company and shall have no rights to share in the Company’s net assets (other than pursuant to their RSAs), cash flow, or net income, and shall have no voting or dividend rights, as a result of his, her or its investment. Investors shall only be entitled to their pro rata share of collected gross revenue of the Company, up to the Maximum Revenue Share Amount. The only return on the investment is the monthly revenue share payments set forth in the RSAs.
Investors may not receive a return of their investment amounts and there is no guarantee of return
Investors will be entitled to receive a return on their investment only through the RSAs and the monthly revenue share payments thereunder. The only source of funds for the repayment of the Investors' investment amounts and a return on such investment amounts is the Company's operations. The return to Investors and the future value of the investment will depend on a number of factors which cannot be predicted at this time and which may be beyond the control of the Company. These include the general, local, and industry-related economic conditions. In the event that the Company does not generate sufficient revenues from operations, the Investors may not receive any return at all and may lose a substantial portion (or possibly all) of their investment amounts. Neither the Company nor the Placement Agent makes any representations or warranties with respect to any return on an investment in the Company. There can be no assurance that an Investor will receive any return on an investment in the Company or realize any profits on such Investor's investment in the Company.
Restrictions on transferability
The RSAs offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on the exemption from registration in Securities Act Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. As a result, the RSAs are subject to restrictions on transferability and resale and may not be transferred or resold by any Investor except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required. In addition, there is no market for the RSAs being offered and the Company does not expect that any market will be developed in the foreseeable future.
No market; Lack of liquidity
There currently is no public or other trading market for the RSAs being offered or any other securities of the Company and there can be no assurance that any market may ever exist for the RSAs being offered or any other securities of the Company. If a public market does develop, factors such as competitors' announcements about performance, failure to meet securities analysts' expectations, changes in laws, government regulatory action, and market conditions for the industry in which the Company operates in general could harm the price of the Company's publicly traded securities. The Company has no obligation to register the RSAs being offered or any other securities under the Securities Act or any state securities laws. Investors should be prepared to hold their RSAs for an indefinite period.
The RSAs are offered on a best efforts basis
The RSAs are being offered by the Company on a best efforts basis as specified herein. The Company will begin using the net proceeds of the Offering immediately. To the extent that the Company does not raise the full $137,500 amount that it is seeking in this Offering, some or all of the business objectives and financial forecasts of the Company may be delayed and/or unfilled. There can be no assurances that the Company will raise the full amount of $137,500 sought through this Offering.
The Revenue Share Percentage will be shared with existing creditors
The Company has $29,500 in outstanding principal for convertible promissory notes (the "Notes") previously issued to certain investors. Holders of the Notes will be given the opportunity to convert the principal and interest owed to them under the Notes into a revenue sharing agreement on the same terms as the RSAs being offered to Investors in the Offering. Any amounts converted into RSAs by holders of the Notes will be included in the calculation of the Revenue Percentage and Monthly Revenue Share Amount under the RSAs.
Officer and manager participation in the Offering
Any securities subscribed for by officers or managers of the Company (or their affiliates or related persons thereof) will be counted in determining the amount raised in the Offering. At the commencement of this Offering, it is not expected that the officers or managers of the Company will participate in the Offering.
Fees for placement agent services
As compensation for Localstake Marketplace LLC’s services in connection with the Offering, Localstake Marketplace LLC shall be entitled to receive a placement fee paid by the Company (the "Placement Fee"). Below is a breakdown of the Gross Proceeds, estimated Placement Fee and Net Proceeds for the Offering.
- Gross Proceeds: $137,500
- Estimated Placement Fee: $4,500
- Net Proceeds: $133,000
Subscribing for an investment and transferring funds
Investors interested in subscribing for the RSAs will be required to complete and return to the Company the Subscription Documents, as described herein. Payment of the investment amount is preferred via electronic ACH transfer, but may also be made by check or domestic wire. Instructions for each method of payment will be provided upon investment via the Company Offering Profile.
Use of proceeds in the Offering
The Company intends to use the net proceeds of this Offering for building inventory, general working capital purposes and other necessary expenditures as determined in the discretion of management of the Company, as explained in further detail on the Funding tab of the Company Offering Profile.
Securities laws being utilized and investor qualifications
This Offering is made in reliance upon an exemption from registration under the federal Securities Act of 1933, as amended (the "Securities Act") as set forth in Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. Regulation D sets forth certain restrictions as to the nature of purchasers of securities offered pursuant thereto. The RSAs will be offered and sold only to persons who meet certain qualifications, including, but not limited to, being either (i) "accredited investors" ("Accredited Investors") as defined in Rule 501(a) of Regulation D promulgated by the United States Securities and Exchange Commission under the Securities Act, (ii) persons who have, either alone or with a purchaser representative, such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investment, or (iii) "non-accredited investors" whose investment in the RSAs would not equal or exceed any percentage or dollar limit imposed by the registration exemption being relied upon in their state of residence ((i), (ii) and (iii) collectively referred to as the "Qualified Investors"). The minimum investment that will be accepted by the Company from a Qualified Investor is $500.
The Company's acceptance of investments and cancellations
The Company reserves the right to accept, through execution of a countersignature on the Subscription Documents, an Investor’s subscription for RSAs at any time prior to the Termination Date of the Offering and may reject the Subscription Documents based upon the Company’s review thereof for any reason or for no reason. Should the Company receive investment commitments for greater than the Offering Amount, the Company will determine, in its sole discretion, which subscriptions to accept up to the Offering Amount.
If the Investor has chosen to transfer their investment funds electronically, these funds will be transferred from their linked bank account as specified on the Company Offering Profile to a deposit account in the name of the Company, forty-eight (48) hours after the Company’s acceptance thereof. If the Investor has chosen another form of funds transfer, the Investor will receive a notice containing instructions for transferring funds to the deposit account in the name of the Company. Investors may cancel their investment commitment in the RSAs, using the methods made available on the Company Offering Profile, and have their investment funds returned (if applicable) for any reason up to forty-eight (48) hours after the Closing applicable to the Investor’s investment. If an Investor has not canceled his, her or its investment commitment in the RSAs prior to such deadline, the Investor’s subscription for the RSAs shall be irrevocable by the Investor, and will be documented through the receipt of an executed copy of the RSAs, which will also be recorded and maintained on the books of the Company. The Company does not intend to employ the services of a transfer agent.
Certain risks associated with best efforts offerings
There can be no assurances that the Company will raise the entire Offering Amount or the entire amount of any targeted amount of commitments set forth on the Company Offering Profile. Potential investors that have expressed an interest in the Offering and indicated a commitment amount may subsequently cancel their investment commitment, fail to fund all or a portion of their commitment amount, or the Company may reject all or a portion of their commitment amount. Subscribers should not place any reliance on the Company’s receipt of commitments in an amount equal to or greater than the targeted minimum amount of commitments set forth on the Company Offering Profile as an indication that the Company has or will receive such amount. Upon a Subscriber’s subscription for the RSAs becoming irrevocable as set forth herein, such Subscriber shall be required to pay his, her or its investment funds to the Company regardless of the amount of Offering proceeds received by the Company as of such date.
Closing procedures for the Offering
The Offering shall be available to potential Investors until the final closing of the sale and purchase of the RSAs (the "Final Closing"), which will occur upon the earlier of (i) the date the Company has closed on the purchase and sale of RSAs for the entire Offering Amount, (ii) 12 months from the date the Offering was initiated, or (iii) the Company terminates the Offering in its sole and absolute discretion (the "Termination Date").
The RSAs are offered by the Company on a best efforts basis as specified herein. There is no aggregate minimum amount of RSAs that must be sold in the Offering, and each individual investment transaction will be closed on an Investor-by-Investor basis upon the Company’s acceptance of an Subscriber’s subscription for the RSAs by its execution of such Subscriber’s Qualified Investor Questionnaire and Subscription Agreement, and counterpart signature page to the Revenue Sharing Agreement (collectively, the "Subscription Documents") together with a form of payment as specified on the Localstake Marketplace. There is no provision for the escrow of any part of the proceeds from the sale of the RSAs prior to the termination of the Offering, and unless a Subscriber cancels their investment commitment in the RSAs within forty-eight (48) hours after the Company’s acceptance of such Subscriber’s Subscription Documents by its execution thereof, there will be no refunds of amounts tendered unless the subscription is rejected by the Company. The Company will immediately use the net proceeds of this Offering as such funds are raised.
Securities to be offered to investors
The offering materials being accessed by you (the "Offering Materials") on the Company's profile page (located at https://localstake.com/businesses/fruitbelt-llc-michigan) (the "Company Offering Profile") relate to the offer and sale of revenue sharing agreements (collectively, the "RSAs") in Fruitbelt LLC, a limited liability company organized in Michigan (the "Company"). The Company is seeking to raise up to $137,500 (the "Offering Amount") from potential investors (each, an "Investor" and collectively, the "Investors") through the offer and sale of the RSAs. The RSAs entitle investors to their pro rata share of up to 7.0% (the "Revenue Share Percentage") of the gross revenue collected by the Company each calendar month, commencing with the first full calendar month immediately following the closing (the “Closing”) of the Offering applicable to the Investor’s subscription, as defined in the Revenue Sharing Agreement, until such time as the investor has received payments totaling in the aggregate 1.4 times such investor’s original investment amount (the "Maximum Revenue Share Amount"). If the Company raises the entire Offering Amount, the Revenue Share Percentage will be 7.0%. If the Company raises less than the entire Offering Amount, the Revenue Share Percentage will be a percentage equal to the greater of 4.0% and the value determined by the following formula: ((total amount raised in this Offering/$137,500) x 7.0%).
The Company will be available to you to answer questions and furnish additional information
The Company will make available to you, upon request, copies of material agreements and other documents relating to the Company and will afford you the opportunity to ask questions and receive answers from the Company concerning its business and financial condition. The Company will also provide you an opportunity to meet with representatives of the Company to obtain other additional information.
Each investment is subject to the terms and conditions of the Investor Registration Agreement
Each Investor's subscription for and purchase of the RSAs is governed by, and subject to, the terms and conditions of the Investor Registration Agreement entered into between the Placement Agent and such Investor, including, without limitation, the investment limits established by the Placement Agent for such Investor, the Placement Agent's rights to terminate the offering or any Investor's registration with the Placement Agent.
No solicitation in any state or other jurisdiction in which such solicitation is not authorized
The Offering Materials do not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or other jurisdiction in which such an offer or solicitation is not authorized. Except as otherwise indicated, the offering materials speak as of the date the Offering was initiated. Neither access to the Offering Materials nor any sale of the RSAs shall, under any circumstances, create an implication that there has been no change in the Company's affairs from the date the Offering was initiated.
The terms, conditions and restrictions of the RSAs are fully set forth in the Offering Materials
The terms, conditions and restrictions of the RSAs are fully set forth in the Revenue Sharing Agreement, which you will be required to execute if you decide to invest, the form of which has been provided to you in the Offering Materials section for this Offering on the Company Offering Profile. You should not invest unless you have completely and thoroughly reviewed the provisions of the Revenue Sharing Agreement. In the event that any of the terms, conditions, or other provisions of the Revenue Sharing Agreement are inconsistent with or contrary to the information provided in the Offering Materials, that agreement will control. Any additional information or representations given or made by the Company in connection with the Offering, whether oral or written, are qualified in their entirety by the information set forth in the Offering Materials, including, but not limited to, the risks of investment.
The Company reserves the right to reject some or all of any prospective investment
The offer of the RSAs by the Company is subject to prior sale and certain other conditions. The Company reserves the right, in the Company's sole discretion and for any reason, to withdraw, cancel, or modify the Offering and to accept or reject some or all of any prospective investment. The Company will have no liability to any Investor in the event that the Company takes any of these actions.
The Offering Materials do not purport to be all-inclusive
The Offering Materials provided to Investors do not purport to be all-inclusive or contain all of the information that you may desire in investigating the Company. You must rely on your own examination of the Company and the terms of the Offering, including the merits and risks involved in making an investment in the RSAs. Prior to making an investment decision, you should consult your own counsel, accountants, and other advisors and carefully review and consider all of the Offering Materials provided and the other information that you acquire. You should not construe any statements made in the Offering Materials provided as investment, tax or legal advice.
Only the Offering Materials may be relied upon in connection with this Offering
Only the information expressly set forth in the Offering Materials or contained in documents furnished by the Company upon request may be relied upon in connection with this Offering. No person has been authorized to give any information or to make any representations other than those contained in the Offering Materials and, if given or made, such information or representations must not be relied upon. Access to the Offering Materials at this time does not imply that information therein is correct as of any time subsequent to this date.
The information presented in the Offering Materials was prepared by the Company and contains "forward-looking" statements
The Offering Materials (together with any amendments or supplements and any other information that may be furnished by the Company) includes or may include certain forward-looking statements, estimates, and projections with respect to the Company's anticipated future performance. Examples of forward-looking statements include statements regarding the Company's future sales, purchase orders, financial results, operating results, acquisitions, business and monetization strategies, projected costs, revenues, products, competitive positions and plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "would," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements, estimates, and projections are not guarantees of future performance and reflect various assumptions of the Company's management that may or may not prove correct and involve various risks and uncertainties over which the Company may have no influence or control. No independent party has verified or confirmed the reasonableness of the assumptions that form the basis of the forecasts. These and many other factors could affect the Company's future financial and operating results, and could cause actual results to differ materially from expectations based on forward-looking statements made in the Offering Materials or elsewhere by the Company (or on its behalf). The likelihood of the Company's success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with growing a startup business. There can be no assurance that the Company will generate any particular level of revenue or will be able to continue to operate profitably. The Placement Agent expressly disclaims any representation or warranty regarding involvement in or responsibility for any forward looking statements contained in the Offering Materials.
The Company will have the right to refuse any subscription in its sole discretion
The Company will have the right to refuse any subscription in its sole discretion and for any reason (or no reason), including the Company’s belief that an Investor does not meet the applicable suitability requirements or that exemptions from the registration requirements of any applicable jurisdiction are not available with respect to the issuance of the RSAs to any Investor under this Offering. The Company may make or cause to be made such further inquiry and obtain such additional information as it deems appropriate with regard to the suitability of Investors. The Company reserves the right to modify the suitability standards with respect to certain Investors in order to comply with any applicable state or local laws, rules, regulations or otherwise.
There is no market for the RSAs and no such market is expected to develop
The RSAs are subject to restrictions on transferability and resale and may not be transferred or resold by any Investor except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required. Investors may be required to bear the financial risks of the investment in the Company for an indefinite period of time. Persons who desire liquidity from this investment should not invest.
Investors will be subject to certain suitability requirements
The RSAs will not be sold to an Investor until such Investor delivers an executed representation, as contained in the Qualified Investor Questionnaire and Subscription Agreement, that he, she or it is a Qualified Investor and meets certain standards. Persons who are not Qualified Investors are not permitted to invest. The fact that a person is a Qualified Investor represents the minimum suitability requirement for an Investor, and compliance with such standards does not necessarily indicate that this would be a suitable investment for such person.
The RSAs have not been registered under the Securities Act
The RSAs offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on the exemption from registration in Securities Act Sections 3(b) and 4(2) thereof and in the rules of Regulation D promulgated thereunder. The investment contemplated by the RSAs has not been recommended, approved, or disapproved by the SEC, or any state securities commission, or other regulatory authority, nor have any of these authorities passed upon or endorsed the merits of this Offering or the accuracy, completeness, or adequacy of the Offering Materials. Any representation to the contrary is a criminal offense.
An investment in the RSAs is speculative and involves a high degree of risk
An investment in the Company should not be made by persons unable to bear the risk of loss of their entire investment or by persons who may have a need for liquidity from their investment. In making an investment decision, you must rely on your examination of the Company and the terms of the Offering, including the merits and the risks involved. Like all investments, an investment in the Company involves the risk of the loss of capital, and the RSAs should not be purchased by anyone who cannot afford the loss of his, her or its entire investment. Investors must be prepared to bear the economic risk of an investment in the Company for an indefinite period of time and be able to withstand a total loss of their investment. Investors are encouraged to consult their own investment or tax advisors, accountants, legal counsel, or other advisors to determine whether an investment in the RSAs is appropriate.
Provision of services by management and their affiliates
Management of the Company may have conflicts in allocating time, services and functions of management and staff between and among the Company and any other affiliates in which they may be shareholders and other business ventures in which they are involved, as described below. The officials representing management believe that they are fully capable of discharging such responsibilities. Failure to do allocate enough time to accomplish these tasks may have material adverse affect on the Company's operational and financial performance.
Michele Gazzolo is also manager of Two Hen Farm, LLC, a marketing entity out of which Fruitbelt LLC was born. Michele spends 100% of her working time on Fruitbelt LLC at this time.
Beth Denton is also manager of L.B.D. Enterprises Inc. L.B.D. Enterprises Inc. requires approximately 25% of Beth's working time each month, leaving approximately 75% devoted to Fruitbelt LLC.
An investment in the Company involves a high degree of risk, and should be regarded as speculative. Prospective investors should carefully consider these investment risks, among others, in addition to the other information presented in the Offering Materials, in evaluating the Company for investment. The risks listed herein are not a complete list of potential risks facing the Company and it may encounter unexpected risks in the future, which, may adversely affect its performance.
Express Interest
If the business begins fundraising, you will be able to review and complete the investment steps.
Expressing Interest FAQ
Expressing interest covers a few different functions. First, it acts as your indication to the business that you have a potential interest in considering an investment. It is also the means by which you are able to access additional materials from the business. The reason you must express interest to view this information is so that the business can keep track of who has accessed their sometimes confidential information. Lastly, expressing interest allows you to keep in touch and stay updated on the progress of the business as they work through their fundraise.
An expression of interest is non-binding. Providing a dollar amount of interest to the business is exclusively a way for them to get a better understanding of whether there is sufficient aggregate interest from investors to support their fundraise goals. If you do not provide a dollar amount to the business, this is fine, but they may decide to cancel their fundraise if they do not have a clear enough picture as to whether there is enough interest to meet their goals.
Yes. Interest can be cancelled at any time, and after cancelling the business will have no means by which to contact you. If you cancel your interest, you can always express interest again if you change your mind.
Yes. The business will be able to contact you through Localstake Marketplace platform messaging. They will not receive any other personal contact information (i.e. email address, phone number, etc.).
When you express interest in a business, they will receive a notification that you are interested. On their investor management interface, they will see your name, state of residence, occupation, and amount of investment.
Commit to Invest
Once you've indicated interest, you can commit to invest or provide feedback to the business about your potential investment.
Committing to Invest FAQ
Committing to invest should constitute a binding commitment on the part of the investor that you are going to follow through on investing the amount you have provided to the business. You should only commit to invest once you are sure that you want to invest in the opportunity.
Note that you are not guaranteed a spot in the fundraise until the business has approved your investment. Once you have committed and the business has finalized their investment terms, you can continue on to complete your investment and submit it to the business for approval.
A commitment shoud be treated as binding. If you do not plan to move forward with an investment, you should not commit to doing so. However, you are not irrevocably committed to investing until 3 days after the business has approved your investment and countersigned your investment documents.
You can commit to invest at any time. Commitments help show traction in the fundraise to other investors, so the earlier you are ready to make your commitment, the better. This will help the business in its efforts to attract additional investors to their fundraise.
The business owners are the only people that will have this information. No other investors will know that you committed to invest, only that someone committed to invest. The aggregate amount of commitments is shared with other interested investors.
No. You will still need to provide an electronic signature on the investment documents and select a method to transfer your funds. You will need to wait to complete these steps until the business has finalized their investment terms.
Sign Documents
Once you have committed to invest, you will review and sign the investment documents.
Signing Documents FAQ
When you make an investment in a business, you enter into legally binding contract that outlines your rights as an investor. The specific documents you sign will vary based upon the type of security you are investing in (i.e. debt or equity). Every investment will include an investor questionnaire document that will be pre-populated with information from your investment account that provides proof of your eligibility to invest in the offering. These documents act as your proof of investment and provide all of the details about your investment and your role as an investor. You should read these documents carefully before investing.
All of the documents are listed in the Investment Docs section of the page. Here you can download and print the documents for your review. However, you will need to sign the documents electronically on the website.
Your investment documents will be pre-populated with information from your investment account to help identify you, including your SSN which the business needs in order to produce tax documents for your investment. There will also be information about your personal financial situation on the documents to help provide proof of your eligibility to invest in the offering.
In order to sign the documents, you will use our proprietary e-signature tool. You will have the opportunity to review each document that you will be signing and then select a signature or create your own to be added to the documents.
Yes, once the business has accepted your investment and countersigned your investment documents, a copy of your signed agreement will be stored on your Investment Portfolio page on Localstake Marketplace.
We can help you complete an investment for the following investor types: self-directed IRA, joint with spouse, entities, and trusts. Contact us if you would like to make an investment of a type other than as an individual.
Transfer Funds
Once you have reviewed and signed investment documents, you will choose how you would like to transfer funds.
Transferring Funds FAQ
The business owner will then receive your proposed investment and accept and countersign it.
For most fundraises, there are three options to choose from when transferring investment funds.
- 1. Electronic Transfer - transfer your funds by electronic ACH transfer. You will need to connect a personal bank account in order to use this transfer method.
- 2. Wire Transfer - call your bank and give them instructions on where you would like your investment funds to be sent. With a wire transfer, you will receive instructions on where to transfer the funds after the business accepts your investment.
- 3. Check - When selecting to make your investment by check, you will receive instructions on where to mail your check after the business accepts your investment.
Note that, due to difficulty in tracking funds, the option to mail a check is typically only available for investment amounts of $5,000 or greater, and in some cases may not be available at all.
If you transfer your funds via electronic transfer, the funds will be transferred from your bank account as soon as the business reaches their fundraise target and accepts your investment. You will receive a notice two business days prior to the electronic transfer occurring. If you transfer funds via check or wire, you will need to complete the fund transfer outside of the Localstake Marketplace platform.
If you would like to change something about your investment, such as the information on your investment documents, or to decrease the amount of your investment, please contact us. If you only wish to increase the amount of your investment, you can make a second investment by clicking the 'Invest Again' button.
You may cancel your investment at any time up to 48 hours after the business has countersigned your documents. To cancel your investment, please contact us.
Businesses send payments to investors over the Localstake Marketplace platform
If the business you invest in reaches their funding goal, they will be making payments to you over the Localstake Marketplace platform. If you use electronic transfer for your investment, these payments will be made back to the bank account you linked for your electronic transfer. If you do not set up an electronic transfer for your initial investment, you may do so on your bank account page once you log in.
If the business you invest in does not reach their funding goal, your investment funds do not need to be transferred to the business and will remain in your account.
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