Chapter 8 Securities Homework
Chapter 8 Securities Homework
Read (skim) the attached private placement memorandum.
Answer the questions and then print off the answers only and turn in at class.
1. Can this be a Subchapter S corporation and give your explanation?
Answer:
2. Identify, copy and paste herein three references to federal securities law from the memorandum and define a legal term in the reference (the first one I have provided below – define one of the bold and underlined terms):
a. Suitability Standards The Shares will only be sold to persons who are “accredited investors” as defined under Regulation Dpromulgated under the Securities Act of 1933, as amended (the “Securities Act”). See “INVESTOR SUITABILITY STANDARDS.
Definition:
b. (Insert)
Definition:
c. (Insert)
Definition:
3. Cut and paste the language underneath from the memorandum where it says that this is ‘not a sale of a security’. Why is this relevant?
Answer:
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
BeyondGaming, Inc.
Confidential Copy No.: _______ Offeree:
Date:
For Accredited Investors Only
$500,000
250,000 COMMON SHARES AT $2.00 PER SHARE
This Confidential Private Placement Memorandum relates to a private offering (the “Offering”) of up to 250,000 Common Shares, no par value (the “Shares”) of BeyondGaming, LLC., an Ohio limited liability corporation (“Gaming” or the “Company”), for a total Offering of $500,000. The Company is currently organized as an Ohio limited liability company and has operated as such since June of 2009. Prior to the issuance of any Shares in the Offering, the Company will be reorganized as an Ohio C-corporation, with Common Shares issued in exchange for the membership interests currently outstanding. Assuming that all Shares offered hereby are issued, such Shares will represent forty percent (40%) of the total number of Common Shares outstanding, calculated after the assumed issuance of 1,000,000 Common Shares that are reserved for this transaction and issuance to preferred shareholders, current owners and stock options, or warrants that the Board of Directors may elect to grant as incentive compensation for officers, managers and key employees of the Company.
Concurrently herewith, Company is also offering up to 50,000 Preferred Shares with a $10 Face Value, 8% Cumulative Dividend. The terms and conditions of that offering are disclosed herein in the Dilution Table only, and for a greater understanding of the relationship between the Common Shares being offered herein and said Preferred Shares, please read the attached Articles of Organization and Preferred Shareholder Purchase Agreement which have been included in the booklet for your consideration. The Shares and Preferred Shares have different benefits and drawbacks which may or may not impact your investment decision.
The Company will manage a social network that is specifically targeted at the gaming industry. The Company’s services provide “gamers”, those that play games virtually against other competitors, a communication tool and network to game, either competitively for money or just for fun, with other gamers around the globe. Further, the site will be a marketplace for all things gaming, such as hardware and software that game enthusiasts would be likely to buy. The Company will use the proceeds from this Offering to enhance current software and web site, market its gaming services, and infrastructure.
The Shares are being offered pursuant to exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws. The Shares are available only to investors who (i) acquire the Shares for their own account for investment and not resale, (ii) have certain business and financial expertise, and (iii) are “accredited investors.” See “INVESTOR SUITABILITY STANDARDS.” The Shares are being offered by officers, directors and employees of the Company on a “best efforts” basis without any requirement that any minimum number of Shares be sold. The Company intends to continue the Offering until December 31, 2010, but it may terminate or extend the Offering at its discretion. The Offering may be terminated by the Company at any time, regardless of the number of Shares sold. See “THE OFFERING AND PLAN OF DISTRIBUTION.”
Sales Net
Offering Price (1) Commissions (2) Proceeds
Per Common Share $2.00 $0.00 $2.00
Per Preferred Shares $10.00 $10.00
Total Offering (3) $500,000 $0.00 $500,000
________________________________________________________________________________________________
(1) The Offering Price per Share has been determined by the Company on the basis of certain projections of earnings and cash flow, discounted to present value. See “PRO-FORMA REVENUES, EXPENSES AND CASH FLOW”, which is provided in the accompanying business plan. The Company makes no representation that the offering price is or will be the fair market value of its Common Shares or that such Shares could be resold for such amount. The offering price has no relation to the current assets, book value, earnings (loss) or net worth of the Company. See “RISK FACTORS-Determination of the Offering Price.” Each prospective investor should make an independent evaluation of the fairness of such price under all of the circumstances described in this Memorandum. Chapter 8 Securities Homework.
