Fillable Printable Sample Private Placement Memorandum
Fillable Printable Sample Private Placement Memorandum
Sample Private Placement Memorandum
C:\2002 REG D SEMINAR\MODEL POM.DOC
Sample Private Placement Memorandum
Jean E. Harris
Greenberg Traurig, LLP
Phoenix, AZ
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Private Placement Memorandum Copy No. __________
ABC CORPORATION
1,250,000 Shares
SERIES 1 CONVERTIBLE PREFERRED STOCK
$2.00 per Share
We are offering a minimum of 500,000 and a maximum of 1,250,000 shares of our Series 1 Convertible Preferred
Stock (the "Shares"). There is no publicmarket forthe Shares orany other securities ofour company, and no such
market will develop as a result of this offering.
THE SHARES OFFEREDHEREBY ARE HIGHLY SPECULATIVE,AND AN INVESTMENT IN
SHARES INVOLVES AHIGH DEGREE OFRISKAND IMMEDIATE AND SUBSTANTIAL DILUTION
FROM THE OFFERING PRICE. SEE "RISK FACTORS" AND "DILUTION."
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF1933, AS
AMENDED (THE"SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS, ANDARE
BEING OFFERED AND SOLD IN RELIANCE ONEXEMPTIONS FROMTHE REGISTRATION
REQUIREMENTS OF THESE LAWS. THE SHARES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
REGULATORYAUTHORITY NOR HASTHE COMMISSION OR ANY STATEREGULATORY
AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE
ACCURACYOR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARYIS UNLAWFUL. THE SHARES MAY NOT BE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS ORAN OPINION OF
COUNSEL IN FORMAND SUBSTANCE ACCEPTABLE TO THE COMPANYAND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
Number of
Shares Offered
(1)
Offering
Price
Selling
Commissions
(2) (3)
Proceeds to
Company
(4)
Per Share --- $ 2.00 $ 0.20 $ 1.80
Total Minimum 500,000 $1,000,000 $100,000 $ 900,000
Total Maximum 1,250,000 $2,500,000 $250,000 $2,250,000
(1)We are offering a minimum of 500,000 and a maximum of 1,250,000 Shares at the price indicated. See "Terms of the Offering."
(2)Estimated total commissions based on 10% of the offering price of the Shares sold to investors. Excludes a non-accountable expense
allowance of 2% of the proceeds of this offering and the value of a five-year warrant to purchase up to 125,000 additional Shares at a price
of $2.40 per share to XYZ, Inc. (the "Placement Agent"). We also have agreed to indemnify the Placement Agent against certain civil
liabilities, including liabilities under the Securities Act.
(3)The Placement Agent has agreed to offer the Shares on an agencyand "best efforts" basis. The offering will be terminated if the minimum
number of Shares is not subscribed for by October 31, 2001, unless sooner terminated or extended as provided herein. Funds paid by
investors will beheld inanescrow account and will be returned promptly ifthe offering is terminated. The minimum investment is
$20,000, subject to our right to accept a lesser amount.
(4)Beforedeductingoffering expenses payable by us, estimated to be approximately $50,000, and the non-accountable expense allowance
payable to the Placement Agent of up to $50,000.
XYZ, Inc.
The date of this Private Placement Memorandum is October 1, 2001.
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(i)
No person has been authorized to give anyinformation ortomake any representations in connection
with the offer made bythis private placement memorandum, nor has any personbeen authorized togive any
information or make any representations other than those contained in this private placement memorandum,
and if given or made, such information or representations must not be relied upon. This private placement
memorandum does not constitute an offer to sell or solicitation of an offertobuy in any jurisdiction in which
such offer or solicitation would be unlawful or to any person towhom it is unlawful to make such offer or
solicitation. Neither the delivery of this private placement memorandum nor any sale made hereunder shall,
under any circumstances, createan implication that there as has been no change in the affairs of our
company since the date hereof.
This private placement memorandum is submitted on aconfidential basis foruse bya limited
number solely in consideration of the purchase of the Shares describedhereinin aprivate placement. The
acceptance of this private placement memorandum constitutes an agreement on the part of the recipient
hereofand the recipient's representatives to maintain the confidentialityofthe information containedherein.
This private placement memorandum may not be reproduced in whole or in part. Theuse of this private
placement memorandum for any purpose other than an investment in the Shares described herein is not
authorized and is prohibited.
TABLE OF CONTENTS
Page
Summary...............................................................................................................................................................1
Risk Factors..........................................................................................................................................................6
Use of Proceeds..................................................................................................................................................11
Capitalization......................................................................................................................................................12
Dilution...............................................................................................................................................................12
Selected Financial Data......................................................................................................................................14
Management's Discussion and Analysis of Financial Condition and Results of Operations..............................15
Business..............................................................................................................................................................16
Management.......................................................................................................................................................17
Certain Transactions...........................................................................................................................................19
Principal Stockholders........................................................................................................................................19
Description of Securities....................................................................................................................................20
Terms of the Offering.........................................................................................................................................24
Legal Matters......................................................................................................................................................25
Experts................................................................................................................................................................26
Additional Information.......................................................................................................................................26
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SUMMARY
The followingsummary is qualified in its entirety by the detailed information appearing elsewhere inthis
private placement memorandum. See "Risk Factors"for information to beconsideredbyprospective investors. All
information in this private placement memorandum assumes a one-for-threereverse stock split, various
modifications to the terms of the Existing Preferred Stock, and the conversion of certain outstanding debt into Series
E Preferred Stock.
The Company
Introduction
We provide solutions that ____________________________________. These solutions include providing
______________________________________________________. We believe we differentiate our services by
__________________________________________.
The principal services we provide for________________________________ currently include the
following:
•
•
Market Opportunity and Strategy
______________________ reports that the _____ market was $205 million in 1997 and is estimated to
growto$12 billion by the end of 2001. The Gartner Group predicts that by 2003, more than 137 million users
worldwide, including one-third of the U.S. work force, will be engaging in some formof remote access. We believe
the following are key driving forces behind our current market opportunity:
the growth of ____________________________,
the increasing demand for __________________,
the increase in remote access ________________,
the increasing demand for _______________, and
the adoption of ____________________________.
Our goal is tobe a leading single-source provider of solutions that ____________________________
___________________________________. Key elements of the strategy to achieve this goal include the following:
•
•
•
•
Principal Offices
Our principal offices are locatedat ____________________________,_________________________,
telephone (___) ___________, facsimile (___) ___________. We were incorporated in Delaware in 1999.
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The Offering
Securities Offered
We are offering a minimum of 500,000 and a maximum of 1,250,000Shares at $2.00 per share.The
minimum purchase per investor is 10,000 Shares, or $20,000.
The Shares will be convertible into Common Stock on a one-for-one basis, subject to adjustments to reflect
any stock splits, stock dividends, and recapitalizations (the"Conversion Ratio"). At the option of the holders, the
Shares will be convertible intoCommon Stock at the then Conversion Ratio at any time prior to redemption. The
Shares will be converted automatically into Common Stock at the Conversion Ratio then in effect upon the closing
of an initial public offering.
The Shares will have a Liquidation Preference over the Existing Preferred Stock (as defined below) and the
Common Stock in an amountequal tothe purchase price per shareplus any accrued and unpaid dividends. Unless
previously converted, the Shares will be redeemable at our option at a price equal to the Liquidation Preference, and
at the option of the holders at a price equal tothe Liquidation Preference plus 4% per annum, commencing four and
ten years, respectively, after the completion of this offering. In the event of any liquidation, dissolution, or winding
up of our company, the Shares will have a preference over our Common Stock and any outstanding Existing
Preferred Stock in an amount equal to the Liquidation Preference of the Shares. For this purpose, a merger or
consolidation thatresults in the stockholders of our company owning 50% or less of thevoting power of the
surviving entity or a sale of substantially all of our assets (each a "Change in Control") will be treated as a
liquidation. However, holders of the Shares may elect to convert the Shares into Common Stock immediately prior
to any such event, in which case they wouldreceive consideration upon the event as holders of Common Stock in
lieu of a Liquidation Preference.
The holders of the Shares will have voting rights equal to the same proportion of Common Stock tobe
owned after conversion and will have certain registration rights as describedherein and, voting as a class, will be
entitled to vote upon certain matters that would adversely affect their rights and preferences as holders of Shares and
to elect no less than one member of our Board of Directors. See "Description of Securities - Series 1 Convertible
Shares."
Use of Proceeds
The net proceeds of this offering will be usedto expand ourmarketing, sales, anddistribution capabilities;
purchase or lease touch screen terminals for the electronic ordering and sale of our products and services; implement
our ordering system;provide funding for strategic acquisitions; and provide working capital. We believe that the net
proceeds will be sufficient to fund our operations for approximately 12to 15 months in the event of the Maximum
offering.
Shares Outstanding
There arecurrently outstanding 150,000shares of our Common Stock; 700,000 shares of our Series A
Convertible Preferred Stock, 200,000shares of our SeriesBConvertible Preferred Stock, 400,000 shares of our
Series C Convertible Preferred Stock, 800,000 shares of our SeriesD Convertible Preferred Stock, and 400,000
shares of our Series E Convertible Preferred Stock (the "Existing Preferred Stock"). The Existing Preferred Stock is
convertible into Common Stock on aone-for-one basis, subject to adjustments to reflect any stock splits, stock
dividends, and recapitalizations. Assuming completion ofthis offering and the conversion of the Shares and the
Existing Preferred Stock, we would have outstanding 3,150,000 shares of Common Stock (if the minimum number
of Shares is sold) or 3,900,000 shares of Common Stock (if the maximum number of Shares is sold). In addition, we
will issue to the Placement Agent five-year warrants to purchase up to 125,000 Shares at a price of $2.40 per share.
Furthermore, we have theright togrant stockoptions to acquire upto800,000shares of Common Stock under our
1999 Stock Option Plan. There are options outstanding to purchase 200,000 shares of Common Stock at this time.
