CLOUD TORONTO – FYBN CORE+ GROWTH & INCOME FUND LLC

a New York limited liability company

 

 

 

 

 

PRIVATE PLACEMENT MEMORANDUM

 

Offer of Class B Limited Liability Company Units

 

 

 

 

 


 

October 16, 2023


 

 

 

 

 

 

Questions and requests for information may be directed to:

 

CLOUD TORONTO – FYBN CORE+ GROWTH & INCOME FUND LLC

970 Peachtree Industrial Blvd, Suite 1-2, Suwanee, GA 30024

408 856 5031

Email: di.mo@cloudtoronto.us

 

 

 

 

 

 

 

This is not an offer to sell or a solicitation of an offer to buy the Units described herein in any jurisdiction to any person to whom it is unlawful to make such an offer or sale.


CLOUD TORONTO – FYBN  CORE+ GROWTH & INCOME FUND LLC

a New York limited liability company

 

 

THIS OFFERING IS LIMITED TO ACCREDITED INVESTORS


 

Minimum Subscription for Class B Units: $250,000.00


 

Initial Price Per Class B Unit: $1,000.00


 

 

This Private Placement Memorandum (this “Memorandum”) describes the offering (the “Offering”) of limited liability company interests in CLOUD TORONTO – FYBN  CORE+ GROWTH & INCOME FUND LLC, a New York limited liability company (the Fund”). The Units (as defined below) will be sold pursuant to and in accordance with the terms set forth in this Memorandum. The Units will be sold exclusively to “Accredited investors” (as such term is defined in Rule 501 of Regulation D, as promulgated under Section 4(2) of the Securities Act of 1933 (as amended, the “Securities Act”)).

 

It is intended that the Fund will be treated as a partnership for federal income tax purposes. The Fund will be managed by its manager, Cloud Toronto – FYBN  Core+ Growth & Income Fund GP LLC, a New York limited liability company (the “Managing Member”), an affiliate of the Fund’s sponsor.

 

The purpose of the Fund is to acquire, develop, manage, operate, lease, and sell, directly or indirectly, commercial real estate properties consistent with the Fund’s investment strategy of acquiring quality income- producing and value-add commercial properties, which do not require significant development, that are either operated by Affiliates of the Managing Member or unrelated third parties, and, in some circumstances, leased under short term and long-term leases to creditworthy tenants. The Fund may also invest in: (i) equity interests in entities that have developed and/or acquired quality income producing commercial properties and are either operated by Affiliates of the Managing Member or unrelated third parties, (ii) debt securities (e.g., promissory notes, mezzanine debt instruments) secured by security interests in commercial properties (such investments collectively the “Real Estate Portfolio”), and (iii) in shares of publicly-traded securities issued by real estate investment trusts (“REITs”) (up to a maximum amount of twenty-five (25%) percent of net assets the Fund) (“REIT Portfolio and together with the Real Estate Portfolio, the “Fund Portfolio”).

 

The Fund Portfolio will be held through Cloud Toronto – FYBN  Core+ Growth & Income Fund REIT, LLC (the “REIT Subsidiary”). The Fund will act as manager of the REIT Subsidiary and the Fund will invest substantially all its assets into Common Units (as such term is defined in the REIT Subsidiary operating agreement) of the REIT Subsidiary. Further information with respect to the REIT Subsidiary is set out in the REIT PPM Supplement (the “REIT Supplement”) attached to this Memorandum as Appendix C. Investors are encouraged to read both the Memorandum and the REIT Supplement in their entirety.

 

The sponsor of the Fund (the Sponsor”) is Cloud Toronto – FYBN   The Wealth Development Company, a trade name used to refer to a group of affiliated entities directly or indirectly controlled by Cloud Toronto – FYBN Cos, Inc., a New York corporation. The Sponsor is a middle market alternative asset manager who has been involved in acquiring, managing, and disposing of commercial real estate-related assets for over thirteen years.

 

This Memorandum provides important information you should know before investing in the Units. Please read it carefully before you invest and keep it for future reference. You should rely only on the information contained in this Memorandum or information to which we have referred to you. We have not authorized anyone to provide you with additional information or information different from that contained in this Memorandum.


Brief Overview of the Units

 

A general description of the rights, preferences, and restrictions associated with the Units is set forth below. Each Investor should carefully read this Private Placement Memorandum (this “Memorandum”) and the Limited Liability Company Agreement (the “LLC Agreement”), a copy of which has been enclosed as Appendix A, to understand certain risks associated with acquiring Units and the rights, restrictions, and obligations associated with the Units.

 

Class B Units

The class of limited liability company units being offered hereunder is referred to as the “Class B Units.” The Class B Units are being offered at a price per Class B Unit as indicated at the beginning of this Memorandum, and thereafter at the applicable Net Asset Value per Unit on the applicable Dealing Day (as defined below). The holders of the Class B Units are referred to herein collectively as the Class B Members and each a Class B Member.” The Class B Units will have limited voting rights, as described in the LLC Agreement. Class B Members are entitled to participate in the income and profit of the Fund, subject to the Managing Member Performance Allocation.

 

Class B Units will be subject to a Managing Member Performance Allocation (as further described below) of twenty (20%) percent.

To assist in funding and diversification of the Fund, the Managing Member, in its discretion, may create and offer other classes of Units in the Fund which may carry different rights and be subject to different fees and commissions.

 

The Class B Members together with other members identified in the LLC Agreement are referred to herein collectively as the Participating Members and each a Participating Member.” The Class B Units together with any other Units identified in the LLC Agreement shall be referred to as the “Participating Units. The Participating Members are also referred to herein collectively as the “Investors” and each an “Investor.

 

A summary of the Managing Broker Dealer Fees and sales commission limits for Class B Units permitted under the LLC Agreement and as described in further detail in this Memorandum is set out below:

 

Managing Broker Dealer Fees

Class B Units

Managing Broker Fee:

 

Based on gross assets raised attributable to the Managing Broker Dealer

0.7%

Sales Commissions

 

Based on transaction value

To be paid to duly licensed Affiliated Agents of the Managing Broker- Dealer and who are also affiliated with the Managing Member

Up to 2%

Marketing Reallowance

 

Based on transaction value

To be paid to Selling Group Members of the Managing Broker-Dealer

Up to 1%

Managing Member Units

 

The Managing Member intends to make capital contributions equal at least one (1%) percent of the capital contributions of all of the Participating Members. The Managing Member may make a capital contribution to the Fund no less frequently than semi-annually, so that the Managing Member capital contribution equals at least one


(1%) percent of the capital contributions of all of the Participating Members. The Managing Member may offset capital contributions to the extent Cloud Toronto – FYBN Cos or its affiliates make direct investments in underlying holdings of the Fund.

Distribution Policy

 

The Fund will receive dividends from the REIT Subsidiary as further described in the REIT Supplement. Subject to receipt of such dividends, the Managing Member intends to declare and make periodic distributions to Members, provided however that any such dividends will first be used to satisfy applicable fees and expenses, and redemption requests from Investors that are accepted by the Managing Member. Any distributions made by the Fund are at the discretion of the Managing Member, considering factors such as the Fund’s earnings, cash flow, capital needs and general financial condition and the requirements of applicable law. As a result, the Fund’s distribution rates and payment frequency may vary from time to time.

 

Brief Overview of the Offering

 

The Units are being offered on a continuous basis commencing on the date of this Memorandum on a best- efforts basis. Funds tendered by Investors in the Offering will be released immediately to the Fund on the relevant Dealing Day upon acceptance of a subscription by the Managing Member and/or the Fund and after review and approval by the Managing Broker. The Units are offered subject to acceptance, prior sale, and withdrawal, cancellation, or modification of the offer at any time without notice.

 

The Offering is made on a “best efforts — no minimum” basis which means that the Managing Broker and the participating brokers are only required to use their best efforts to sell the Units. In a best efforts offering, the Managing Broker is not guaranteeing the sale of a certain number of Units, and will not purchase any outstanding Units. There is no requirement that any minimum number of Units be sold before the gross subscription proceeds (“Proceeds”) are released to the Fund and applied in its business. Therefore, there can be no assurance that any minimum number of Units will be sold.

 

The Units are offered through Young America Capital, LLC1, a registered broker/dealer and member FINRA/SIPC (the Managing Broker”). Upon receipt of the executed acceptance of the Subscription Agreement (the “Subscription Agreement”), a copy of which has been enclosed as Appendix B, the Investor will deposit, preferably via wire transfer (though checks will be accepted) the subscription amount delivered directly to an account of the Fund, with such proceeds available for use by the Fund in accordance with the terms and conditions of the LLC Agreement immediately upon receipt.

 

Units may be purchased at an initial price per Unit indicated at the beginning of this Memorandum and thereafter at their Net Asset Value per Unit on the first Business Day of each month (a “Dealing Day”). For an initial purchase of Units, a properly executed Subscription Agreement must be received by Cloud Toronto – FYBN  before 5:00 p.m. New York time at least five (5) Business Days prior to the Dealing Day. Notifications received less than five (5) Business Days prior to purchase will be accepted solely at the Managing Member’s discretion. For subsequent purchases, Units may be purchased on the first Business Day of each month provided that the Managing Member received proper written notice before 5:00 p.m. New York time at least five (5) Business Days prior to the relevant Dealing Day. Any payments submitted in the form of a transfer in kind will be executed solely at the Managing Member’s discretion and may require additional notice. Payments for the purchase must be received by Cloud Toronto – FYBN  by 3:00 p.m. New York time at least three (3) Business Days prior to the Dealing Day and will be processed at the Net Asset Value as of the close of business on the Dealing Day. In the event the Fund does not receive payment, in whole or in part, by the designated time, the Investor will be liable to the Fund for any related losses.

 

The Managing Member may elect in its absolute discretion to accept subscription payments from prospective investors, in whole or in part, in specie or in kind rather than in cash. This election may be made generally or in any particular case. The Managing Member will use the same valuation procedures used in determining Net Asset Value


1 Information about the Managing Broker is available at FINRA’s BrokerCheck website: https://brokercheck.finra.org/.


to determine the value to be attributed to the relevant assets to be transferred or assigned to the Fund as of the relevant Dealing Day. Any prospective investor seeking to contribute assets will be responsible for all costs involved in changing the ownership of and the transfer of the relevant assets unless the Managing Member otherwise agrees. Upon receipt of properly completed subscription materials and such legal and other transfer documentation as the Managing Member and Cloud Toronto – FYBN  in their sole discretion may require, Cloud Toronto – FYBN  will allot the requisite number of Units in the normal manner. The Managing Member reserves the right to decline to register any prospective investor until the subscriber has been able to prove title to the assets in question and make a valid transfer thereof.

For purposes of this Memorandum, a Business Day is any day on which banks are open for business in the United States and/or such other day or days as the Managing Member may from time to time determine.

 

The individual minimum subscription for Class B Units is Fifty Thousand Dollars ($250,000.00), unless otherwise waived by the Managing Member. Subscriptions are subject to acceptance or rejection by the Managing Member, in the Managing Member’s sole and absolute discretion, subject to the terms and conditions of the Subscription Agreement. Rejected subscriptions and subscription funds will be returned to subscribers without interest within thirty (30) days of rejection.

 

The date of this Memorandum is October 16, 2023.


 

TABLE OF CONTENTS


 

CAPTION                                                                                                                                                                                  PAGE

FREQUENTLY ASKED QUESTIONS……………………………………………………………………………………………………………………………….. 1

IMPORTANT GENERAL CONSIDERATIONS………………………………………………………………………………………………………………….. 6

CONDITIONS TO RECEIVING THIS MEMORANDUM……………………………………………………………………………………………………. 8

FORWARD LOOKING STATEMENTS……………………………………………………………………………………………………………………………. 9

WHO MAY INVEST; SUITABILITY STANDARDS………………………………………………………………………………………………………….. 10

PRIVACY NOTICE……………………………………………………………………………………………………………………………………………………… 13

SUMMARY OF OFFERING AND FUND TERMS…………………………………………………………………………………………………………… 14

CLOUD TORONTO – FYBN  EXECUTIVE SUMMARY…………………………………………………………………………………………………… 29

GENERAL RISK FACTORS………………………………………………………………………………………………………………………………………….. 33

INVESTMENT OBJECTIVES, STRATEGY, AND POLICIES……………………………………………………………………………………………… 60

MANAGEMENT………………………………………………………………………………………………………………………………………………………… 70

MANAGEMENT FEES AND COMPENSATION……………………………………………………………………………………………………………. 74

INDEMNIFICATION AND LIMITATION OF LIABILITY………………………………………………………………………………………………….. 78

DESCRIPTION OF UNITS…………………………………………………………………………………………………………………………………………… 79

CONFLICTS OF INTEREST………………………………………………………………………………………………………………………………………….. 83

AMENDMENTS TO LLC AGREEMENT……………………………………………………………………………………………………………………….. 86

TAX CONSIDERATIONS…………………………………………………………………………………………………………………………………………… 89

ERISA……………………………………………………………………………………………………………………………………………………………………….. 94

SUPPLEMENTAL SALES MATERIAL…………………………………………………………………………………………………………………………… 97


APPENDICES

 

A               LLC Agreement

 

B               Subscription Agreement

 


 

FREQUENTLY ASKED QUESTIONS


 

The following questions and answers about this offering of equity securities (this “Offering”) highlight material information regarding the Fund and this Offering. Each Investor should read this Private Placement Memorandum (this “Memorandum”), including the section entitled “Risk Factors,” before deciding to purchase the equity securities offered hereunder.

 

Q:    What is CLOUD TORONTO – FYBN  CORE+ GROWTH & INCOME FUND LLC?

 

A:   The Fund is a distinguished New York limited liability company (LLC) established with the primary objective of making strategic investments in a diverse portfolio of real estate properties, gas stations, real estate-related equity investments, including Real Estate Investment Trusts (REITs), and other real estate-related assets. Guided by the Managing Member’s expertise and vision, The Fund seeks to identify and invest in opportunities that offer an attractive risk-return profile.

 

Investment Focus:

At The Fund, our investment strategy is rooted in the belief that a well-diversified portfolio is essential for sustainable growth and resilience in the real estate market. We target a variety of assets and investment vehicles to achieve our objectives:

 

Real Estate Properties: We selectively invest in a range of real estate properties, with a keen focus on identifying promising market opportunities and high-potential properties.

 

Gas Stations: Recognizing the importance of the energy and convenience retail sector, The Fund has a strategic interest in gas station investments.

 

Real Estate-Related Equity Investments: We actively explore opportunities in real estate-related equity investments, including holdings in REITs, to harness the benefits of collective real estate ownership.

 

Other Real Estate-Related Assets: In addition to traditional investments, The Fund remains open to exploring unique and innovative real estate-related assets, adapting to changing market dynamics.

 

Continuous Offering:

The Fund is dedicated to ensuring accessibility and inclusivity for potential investors. We offer three distinct classes of limited liability company units on a continuous basis, starting from the initial Dealing Day upon acceptance of subscriptions from Participating Members. This approach allows investors to enter and exit the Fund as they see fit, providing flexibility and convenience.

 

Mission:

Our mission at The Fund is to maximize returns for our investors by carefully curating a diversified portfolio that not only delivers strong financial performance but also manages risks effectively. We are dedicated to delivering long-term value through informed and strategic investments.

 

Conclusion:

The Fund is committed to the pursuit of excellence in real estate investment. With a focus on diversity, continuous offerings, and a strong commitment to risk management, we invite potential investors to explore the opportunities presented by The Fund. Our team of experts is here to guide you through the dynamic world of real estate investments and deliver attractive risk-adjusted returns. Join us on this journey as we build and manage a portfolio that aligns with your financial objectives and aspirations.

 

Q:    What assets will the Fund own?

 

A:  The purpose of the Fund is to acquire, develop, manage, operate, lease, and sell, directly or indirectly, commercial real estate properties consistent with the Fund’s investment strategy of acquiring quality income- producing and value-add commercial properties, which do not require significant development, that are either operated by Affiliates of the Managing Member or unrelated third parties, and, in some circumstances, leased under short term and long-term leases to creditworthy tenants. The Fund may also invest in: (i) equity interests in entities that have developed and/or acquired quality income producing commercial properties and are either operated by Affiliates of the Managing Member or unrelated third parties, (ii) debt securities (e.g., promissory notes, mezzanine debt instruments) secured by security interests in commercial properties, and (iii) in shares of publicly traded real-estate investment trusts “REITs” (up to a maximum amount of twenty-five (25%) percent of net assets the Fund) (“REIT Portfolio”).

 

Q:    What are the major risks to the investment?

 

A:   Investment in the Units of the Fund offered hereby involves risk, including the risk of a significant loss of the investment and the general economic failure of the Fund. Some of these risks are described in more detail in the section labeled “Risk Factors.”

 

Q:    Who will select the investments that the Fund will invest into?

 

A:  The Fund’s Managing Member is Cloud Toronto – FYBN  Core+ Growth & Income Fund GP LLC, a New York limited liability company. Investment decisions of the Fund will be made by the Managing Member, although the Managing Member may, at times, engage affiliated and third-party investment managers to assist in these efforts.

 

 

Q:    Who is Cloud Toronto – FYBN ?

 

A:   One Sponsor of the Fund is Cloud Toronto – FYBN  – The Wealth Development Company, a trade name used to refer to a group of affiliated entities directly or indirectly controlled by Cloud Toronto – FYBN Cos Inc., a New York corporation. Cloud Toronto – FYBN  is an alternative asset manager, sponsor of private funds, and real estate developer. This Sponsor has been involved in acquiring, managing, and disposing of real estate-related assets for over thirteen years. See section Cloud Toronto – FYBN  Executive Summary” for additional information concerning Cloud Toronto – FYBN  – The Wealth Development Company and a full list of the Affiliates (defined herein) of Cloud Toronto – FYBN  that are referenced above.

 

Q:    What is the Fund’s targeted rate of return?

 

A:  The Fund will strive to acquire assets at a discount to current market through core plus and value-add acquisition strategies. The Fund’s target is to provide outsized risk-adjusted returns targeting a nine to fourteen percent (9% – 14%), fund-level internal rate of return (IRR). There is no guarantee, however, that the Fund will achieve these results and risks do exist that may result in a significant or complete loss or your investment. The target returns established by us take into consideration a variety of assumptions, and there is no guarantee that the assumptions upon which the target returns are based will materialize.

 

The Fund will pursue real estate investment strategies generally categorized as Core Plus and Value Add” which includes stabilization, re-tenanting, small renovations, adaptive re-use, and substantial renovations of existing assets. Estimated returns are based on past performance of a generalized core plus and value-add strategy. Within commercial real estate investing, Core Plus and Value Add investment opportunities are typically viewed as low to moderate risk respectively. Further details on the generally accepted real estate investment risk profiles are set out below.

 

 

 

 

 

 

 

 

What is a gas station investment?

 

A gas station investment involves purchasing or operating a gas station with the expectation of generating a return on your investment.

 

What are the key factors to consider before investing in a gas station?

 

Key factors include location, competition, financial stability, and regulatory requirements.

 

Is it profitable to invest in a gas station?

 

Profitability depends on factors like location, management, and market conditions. It can be profitable but isn’t guaranteed.

 

What are the different types of gas station investments?

 

You can invest in existing gas stations, buy a franchise, or build a new station from the ground up.

 

How important is the location of a gas station?

 

Location is critical. High traffic areas with limited competition are generally more profitable.

 

What licenses and permits are required to operate a gas station?

 

The specific requirements vary by location, but typically include business licenses, environmental permits, and safety certifications.

 

What are the typical operating costs for a gas station?

 

Operating costs include fuel purchases, employee salaries, maintenance, utilities, and insurance.

 

How can I finance the purchase of a gas station?

 

You can finance a gas station through personal savings, loans, or by partnering with investors.

 

What are the risks associated with gas station investments?

 

Risks include fluctuating fuel prices, environmental liabilities, and changes in consumer behavior.

 

How do I determine the value of a gas station?

 

The value is often based on factors like cash flow, location, property value, and potential for growth.

 

Are there any environmental concerns associated with gas station investments?

 

Yes, potential environmental contamination from fuel leaks is a concern. Proper maintenance and compliance with regulations are essential.

 

Can I convert a gas station into another type of business?

 

Converting a gas station into another business may be possible, but it depends on local zoning regulations and structural considerations.

 

What is the typical return on investment (ROI) for a gas station?

 

ROI varies widely, but a well-run gas station can provide a reasonable return on investment over time.

 

What are the advantages of owning a franchise gas station?

 

Franchise gas stations offer brand recognition, marketing support, and established operational processes.

 

How can I attract customers to my gas station?

 

Offering competitive fuel prices, convenience store items, and loyalty programs can help attract and retain customers.

 

Is it a good idea to buy a gas station with a convenience store?

 

Combining a gas station with a convenience store can enhance profitability as it offers additional revenue streams.

 

Are there tax benefits to owning a gas station?

 

Tax benefits may include deductions for operating expenses, depreciation, and potential credits for environmental cleanup costs.

 

What is the typical lease structure for gas station operators?

 

Lease structures vary, but they can include fixed rent, percentage-based rent, or a combination of both.

 

How can I mitigate the risk of fuel price fluctuations?

 

Diversifying revenue streams, optimizing inventory management, and monitoring fuel price trends can help mitigate this risk.

 

Is it possible to sell my gas station investment in the future?

 

Yes, you can sell your gas station investment. The ease of sale and potential profit depend on market conditions and the condition of your business.

 

A “Core Plus” investment strategy typically involves properties that are considered to be a step above core properties but still require some level of active management to achieve their full potential. While whether a gas station property qualifies as “Core Plus” depends on various factors, here are some considerations:

 

Location: A gas station’s location is critical. If it is in a prime, high-traffic area with strong demographics and limited competition, it may qualify as Core Plus.

Property Condition: The condition of the gas station property matters. If it is well-maintained and up-to-date, it may be more likely to be classified as Core Plus.

Income Stability: Gas stations with consistent and predictable income, such as long-term tenant leases, may be more appealing as Core Plus investments.

Potential for Value-Add: Properties with untapped potential, such as the ability to expand the convenience store, add additional services, or optimize operations, can qualify as Core Plus if they offer opportunities for value enhancement.

Market Trends: Consider the current and future market trends for gas stations in the area. Is there a growing demand for fuel and convenience store services?

Regulatory Compliance: Ensure that the gas station complies with all environmental, safety, and zoning regulations. Properties that have already addressed potential regulatory issues may be more attractive.

Lease Terms: If there are long-term lease agreements in place with reputable tenants, it can enhance the property’s Core Plus status.

Financial Performance: Evaluate the historical financial performance of the gas station. A property with a track record of generating consistent income may be viewed more favorably.

Competitive Analysis: Assess the competitive landscape. If the gas station has a competitive advantage, such as offering unique services or having strong brand recognition, it may qualify as Core Plus.

Exit Strategy: Consider your exit strategy. A Core Plus property should have the potential for capital appreciation over time, allowing you to sell it at a higher value.

It’s important to note that the classification of a property as Core, Core Plus, or any other category can vary depending on individual investment criteria and market conditions. Investors and real estate professionals typically use these categories as a general guideline, but the specific classification of a property should be based on a comprehensive analysis of its unique attributes and potential.

 

Before classifying a gas station property as Core Plus, it’s advisable to consult with real estate experts and conduct thorough due diligence to determine if the property aligns with your investment goals and risk tolerance.

 

The Company, FYBN Gas Station Investment Fund Systems, is a gas station / cstore developer focused on artificial intelligence, machine learning, and deep learning processing for research, government, and corporate organizations.

 

The Company is subject to a number of significant risks that could result in a reduction in its value and the value of the Company Securities, potentially including, but not limited to:

 

Inability of the Company to complete an initial public offering of its securities, merger, buyout or other liquidity event, Inability to expand and maintain market acceptance for the Company’s services and products in the United States,

Inability to gain access to international markets and comply with all applicable local laws and regulations,

Rapidly changing consumer preferences and market trends,

Inability to achieve management’s projections for growth, to maintain or increase historical rates of growth, or to achieve growth based on past or current trends,

Inability to develop, maintain and expand successful marketing relationships, affiliations, joint ventures and partnerships that may be needed to continue and accelerate the Company’s growth and market penetration,

Difficulties in managing rapid growth effectively,

Inability to keep pace with rapid industry, technological and market changes that could affect the Company’s services, products and business,

Potential costs and business disruption that may result if the Company’s customers complain or assert claims regarding the Company’s technology,

Failure to adequately address data security and privacy concerns in compliance with U.S. and international laws, rules and policies,

Technological problems, including potentially widespread outages and disruptions in Internet and mobile commerce, Performance issues arising from infrastructure changes, human or software errors, website or third-party hosting disruptions, network disruptions or capacity constraints due to a number of potential causes including technical failures, cyber attacks, security vulnerabilities, natural disasters or fraud,

Inability to adequately secure and protect intellectual property rights,

Potential claims and litigation against the Company for infringement of intellectual property rights and other alleged violations of law, Difficulties in complying with applicable laws and regulations, and potential costs and business disruption if the Company becomes subject to claims and litigation for legal non-compliance, Changes in laws and regulations materially affecting the Company’s business,

Liability risks and labor costs and requirements that may jeopardize the Company’s business,

Ongoing need for substantial additional capital to support operations, to finance expansion and/or to maintain competitive position, Issuance of additional Company equity securities at prices dilutive to existing equity holders, Dependence on and inability to hire or retain key members of management and a qualified workforce, Potential significant and unexpected declines in the value of Company equity securities, including prior to, during, and after an initial public offering, and Other risks that are not generally disclosed or known, in part because the Company is privately held and does not provide risk disclosure in publicly available reports. In addition, the gas station / cstore industry is highly competitive, and the Company may not be able to compete effectively against the other businesses in its industry. The Company faces competition from a large number of competitors, including EXXON MOBIL, CHEVRON, BP, SHELL and Other Private Operators and Owners Like Quik Trip, WAWA, etc, some of which have longer operating histories, significantly greater financial, technical, marketing, distribution and other resources and greater name recognition than the Company does. These and other companies may develop new services and products and marketing and distribution channels in advance of the Company or establish business models or technologies disruptive to the Company’s business. Moreover, current and future competitors of the Company may also make strategic acquisitions or establish cooperative relationships among themselves or with others. By doing so, they may increase their ability to meet the needs of customers and potential customers. To the extent that the Company is not able to compete successfully against current and future competitors, the Company’s business, results of operations and financial condition may suffer. It is impossible for anyone to know with any certainty which of the companies will be more successful than the others, and an investment will be subject to all of the risks inherent in any investment in a nascent business and industry with a number of different competitors.

 

The business of the Company and investment in the Company Securities may also be jeopardized by stagnant economic conditions and by political, geopolitical, regulatory, financial and other developments in the United States, Europe, China, the Middle East and elsewhere around the world, including incidents of war and terrorism, outbreaks and pandemics of serious communicable diseases such as COVID-19 and Ebola, and natural and man- made disasters that are beyond the Company’s control and could disrupt its business and adversely affect its performance and financial condition.

 

Investing in CLOUD TORONTO – FYBN Gas Station Investment Funds, which have over 400 gas stations in Georgia and a software platform that covers over 1000 cities in the state, presents an intriguing opportunity in the gas station business. Here are some key points to consider:

 

Diversification: With over 400 gas stations in Georgia, your investment is well-diversified across locations and markets, reducing the impact of any single market’s fluctuations on your overall portfolio.

Market Coverage: The software platform covering over 1000 cities in Georgia can provide valuable data and insights to optimize the gas station operations, such as pricing strategies, inventory management, and marketing efforts.

Profitability: The gas station business typically operates on thin profit margins, but a 40 – 45% profit range suggests efficient operations and potentially competitive advantages in terms of pricing, product offerings, or services.

Cash Flow: The heavy cash flow nature of the business can be advantageous for investors, providing a consistent stream of income that can be reinvested or distributed as returns.

Operational Intensity: It’s important to recognize that gas stations are highly operational- intensive businesses. Proper management, maintenance, compliance with regulations, and customer service are critical for success.

Economies of Scale: Having a significant number of gas stations in the portfolio may allow for economies of scale in procurement, marketing, and management, potentially increasing profitability.

Market Stability: Georgia’s gas station market may be relatively stable due to consistent demand for fuel and essential goods, making it less susceptible to economic downturns.

Exit Strategy: Consider your exit strategy. A well-managed portfolio of gas stations can be attractive to potential buyers or investors looking for stable income streams.

Risk Management: Despite the potential rewards, it’s important to assess and manage risks associated with gas station investments, including environmental compliance, competition, fuel price fluctuations, and regulatory changes.

Due Diligence: Before investing, conduct thorough due diligence on the specific gas stations in the portfolio. Evaluate their locations, market conditions, financial performance, and any potential value-add opportunities.

Tax Considerations: Work closely with tax professionals to understand the tax implications of your investment, including depreciation, deductions, and any tax credits available in Georgia.

Professional Management: Consider whether the investment funds have experienced and professional management in place to oversee the operations, maintenance, and strategic direction of the gas station portfolio.

Long-Term Strategy: Determine whether your investment aligns with a long-term strategy, as the gas station business can provide stable income over an extended period.

Before making any investment, consult with financial advisors and conduct a comprehensive analysis to ensure that it aligns with your investment goals, risk tolerance, and financial strategy. Additionally, seek legal and financial advice to fully understand the terms and conditions of your investment in FYBN Gas Station Investment Funds.

 

Q:    What management fees will be paid to the Managing Member or its Affiliates?

 

A:   The various management fees paid encompass the costs of ensuring a competent management team is in place making decisions daily for sourcing, acquiring, and providing oversight for the Fund’s assets. Please refer to the section labeled “Management Fees and Compensation”.

 

Q:    What is the per Unit purchase price?

 

A:  After their initial issue, the Units will be sold at the then-current “Net Asset Value” or “NAV”, which is generally the prior month’s NAV per unit for such class, plus applicable upfront selling commissions and Managing Broker Dealer Fees as further described below.

 

Q:    How is the NAV per Unit calculated?

 

A:   The per Unit NAV of the Fund is calculated by Cloud Toronto – FYBN  each month, based on the net asset values of the Fund’s investments (including the REIT Portfolio), with the addition of any other assets (e.g., cash on hand), and the deduction of liabilities.

 

Properties held by the Fund will be valued at least once per year. The Managing Member, however, at its sole and absolute discretion, can revalue properties held by the Fund more frequently. In valuing these investments, Cloud Toronto – FYBN  has implemented a valuation process that is commonly utilized in the real estate investment industry by completing multi-year forecasts on each underlying asset, making assumptions on future financing activities, and applying industry accepted discount factors to achieve a valuation via discounted cash flow (DCF) analysis. Cloud Toronto – FYBN  may also obtain third-party appraisals for comparison purposes to the DCF results.

 

The REIT Portfolio will be valued using readily available market quotations. If a market quotation is not readily available or is deemed unreliable, or if an event that is expected to affect the value of a security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the New York Stock Exchange, the fair value of a security will be determined in good faith under policies and procedures established

by and under the supervision of Cloud Toronto – FYBN . Further details are set out below under “Net Asset Value Determination and Valuation Policy.”

 

Q:    Where will the Fund buy properties?

 

A:  The Fund will select markets for acquisitions based on simple criteria we’ve defined as “growth markets.” In choosing specific geographic areas, the Fund seeks a long-term trend toward population growth, evidenced by a recent track record that extends a minimum of 10 years.

 

Q:    What is the anticipated life cycle of the Fund?

 

A:  The Fund is being offered on a continuous open-end basis. In an open-end fund structure, an Investor may request redemptions of their units on a quarterly basis, but the Fund is not obligated to redeem any Units and may choose to redeem only some, or even none, of the Units that have been requested to be redeemed in any particular quarter in the Managing Member’s sole and absolute discretion. While the Managing Member may consider a liquidity event at any time in the future, the Managing Member does not currently intend to undertake such consideration for three to five years from each individual asset purchases, and the Fund is not obligated by its LLC Agreement or otherwise to affect a liquidity event at any time.

Q:    What will the Fund do with the money raised in this offering?

 

A:   The funds raised in this offering will primarily be utilized to purchase and renovate real estate related assets, and operate those assets for cash flow and value growth. On a temporary basis, the Fund may also lend a small portion of its total capital to real estate related assets with the goal of earning interest on not-yet-deployed capital.

 

Q:    Who can buy Units?

 

A:   An Investor may buy Units pursuant to this Memorandum if you are an “Accredited Investor” as described in the offering memorandum. See section entitled “Who May Invest; Suitability Standards.

 

Q:    Is there any minimum investment required?

 

A:   Yes. Generally, an Investor must invest at least $250,000. Fund management has the discretion to accept a lower minimum investment amount.

 

Q:    How do I subscribe?

 

A: Securities are offered through Young America Capital, LLC, a registered broker/dealer and member FINRA/SIPC.

 

Prospective investors who would like to subscribe for the Units must carefully read this Memorandum. If, after carefully reading the entire Memorandum, obtaining any other information available and being fully satisfied with the results of pre-investment due diligence activities, a prospective investor would like to purchase Units, they must complete and sign a Subscription Agreement and any supporting documentation as requested. The Subscription Agreement submission process is managed by the Managing Broker. An example of the Subscription Agreement a prospective investor would complete is attached as Appendix B. An investor must purchase at least the minimum purchase amount of $250,000 (subject to the other provisions contained in this Memorandum) and the full purchase price must be wired to the Fund upon submission of the completed Subscription Agreement. Instructions for completing the Subscription Agreement will be provided by Cloud Toronto – FYBN  or the Managing Broker, along with detailed instructions for making payment via wire transfer.

 

As part of the subscription process, prospective investors are required to provide a third-party verification of their accredited investor status. The Managing Broker will request this verification as a part of, or separate from, your completed Subscription Agreement. Acceptance of the prospective Investor’s subscription by the Fund is at the Managing Member’s sole and absolute discretion, and the Fund will notify each prospective Investor of receipt and

acceptance of the subscription. In the event the Fund does not accept a prospective Investor’s subscription for the Units for any reason, the Fund will promptly return the funds to such subscriber in accordance with the terms of this Memorandum.

 

Q:    If an Investor buys Units in this Offering, how may the Investor later sell them?

 

A:   There is no current market for the Units. The Fund and the Managing Member do not expect that a public market will ever develop, and the Fund’s Certificate of Formation does not require a liquidity event at a fixed time in the future. Therefore, redemption of Units by the Fund, which must be agreed to by the Managing Member in its sole and absolute discretion, will likely be the only way for an Investor to dispose of its Units.

 

Q:    Will an Investor be notified of how its investment is doing?

 

A:   Yes. The Fund will strive to provide each Investor with periodic updates on the performance of its investment in the Fund, including (except for certain items such as K-1 tax statements, each of these shall be provided in the discretion of the Managing Member):

 

·         An investor update letter, distributed quarterly;

·         An annual report;

·         An annual audit; and

·         An annual Form K-1 tax statement.

 

Q:    When will an Investor receive detailed tax information?

 

A:   Every effort shall be made to furnish each Participating Member with its IRS Form K-1 for the preceding year by March 31st of each fiscal year. Due to the unpredictable nature of tax preparation timing, primarily by third parties who the Fund may rely on to provide a K-1, Fund Management advises all Investors to extend their tax filing deadlines each year.

 

Q:    What is the anticipated timing of distributions for this Fund?

 

A:   While the Fund expects that distributions will be made following deployment of the Proceeds, there may be a delay in the receipt of cash flow from invested capital that is available for regular distribution during the first 2-3 years of the Fund. Even then, timing of distributions will be dependent on the status of the projects and cash needs of the Fund, and it is not anticipated that any amounts will be available for distribution until a significant number of the projects that the Fund invests into are fully stabilized (i.e., a significant number of tenants (ninety percent (90%)+ based on rentable square footage for any given project) have commenced using the property and are paying rents).

 

Q:    Who can help answer questions?

 

A:    Questions and requests for information may be directed to:

 

970 Peachtree Industrial Blvd, Suite 1-2, Suwanee, GA 30024

 

408 856 5031

email: di.mo@cloudtoronto.us


 

IMPORTANT GENERAL CONSIDERATIONS


 

This Memorandum does not constitute an offer to sell or a solicitation of an offer to buy by anyone in any state in which the offer or solicitation is not authorized or in which the person making the offer or solicitation is not qualified to do so, to any person to whom it is unlawful to make the offer or solicitation, or to any person other than the offeree to whom this Memorandum has been delivered (each an “Offeree” and collectively, the “Offerees”).

 

No dealer, salesperson, or other person has been authorized in connection with this Offering to give an Offeree any information or make any representation other than those contained in this Memorandum and, if given or made, that information or representations may not be relied upon. Each Offeree is advised to conduct its own thorough investigation of the Fund and the terms of the Offering, including the merits and risks involved, before making an investment in the Units. This Memorandum supersedes in its entirety any preliminary transaction summary or term sheet, or any other oral or written information heretofore delivered to each Offeree. Prior to the sale of the securities, the Fund is hereby providing each Offeree the opportunity to ask questions and to obtain any additional information concerning the Fund and the terms and conditions of the Offering that the Offeree wishes to obtain.

 

The securities offered in connection with this Memorandum are being offered and will be sold in reliance on the exemption from the registration requirements of the Securities Act provided in section 4(a)(2) and Rule 506 of Regulation D to a limited number of investors that are “Accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act.

 

This investment is suitable only for subscribers of substantial net worth that are willing, and have the financial capability, to bear the economic risk of an investment for an indefinite period of time. There is no public trading market for the securities, nor is it contemplated that one will develop in the foreseeable future. Any transfer or resale of the Units or any interest or participation therein will be subject to restrictions under the Securities Act and as provided in the LLC Agreement.

 

Purchasers of the Units will be required to make (pursuant to the Subscription Agreement and investor questionnaire, copies of which are attached hereto as Appendix B) certain acknowledgments, representations, and agreements upon initial issuance, including representations with respect to their net worth or income and their authority to make this investment, as well as representations that they are familiar with and understand the terms, conditions, and risks of this offering.

 

Certain of the terms of the LLC Agreement, Subscription Agreement, and other documents delivered herein are described in this Memorandum. These descriptions do not purport to be complete, and each summary description is subject to, and qualified in its entirety by reference to, the actual text of the relevant document. Any purchase of Units should be made only after a complete and thorough review of the provisions of this Memorandum, the LLC Agreement, and the remaining documents delivered hereto. In the event that any of the terms, conditions or other provisions of the LLC Agreement are inconsistent with or contrary to the description of terms in this Memorandum, the LLC Agreement will govern.

 

An investment in the Units involves a high degree of risk. An independent investigation should be undertaken by each subscriber regarding the suitability of his, her or its investment in the Units.

 

Offerees are not to construe the contents of this Memorandum, or any information made available as described below as legal or tax advice. Each subscriber should consult his, her or its’ own counsel, accountant, business, and financial advisors as to legal, tax, and related matters concerning the purchase of the Units.

 

The market, financial, and other forward-looking information presented in this Memorandum represents the subjective views of the Managing Member and is based on assumptions the Managing Member believes are reasonable but that may or may not prove to be correct. There can be no assurance that the Managing Member’s views are accurate or that the Managing Member’s estimates will be realized. Nothing in this Memorandum is or should be relied on as

a promise as to the future performance or condition of the Fund. Industry experts may disagree with these assumptions and with the Managing Member’s view of the market and the prospects for the Fund.

 

In purchasing the Units, custodians, trustees, and other fiduciaries of an individual retirement account (“IRA”) or simplified employee pension (“SEP”) qualifying under Section 408 of the Internal Revenue Code of 1986, as amended (the “Code”), KEOGH plans, and retirement plans as described in Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (collectively, “Qualified Plans”) should consider the possible application of ERISA and related provisions of the Code, as well as whether an investment by a Qualified Plan in the Fund would be permissible under the governing instruments of the Qualified Plan. The Department of Labor has issued regulations which affect the type of investments in which Qualified Plans may invest, including investments in companies such as the Fund. Less than twenty-five (25%) percent of the total number of Units sold will be sold to Qualified Plans, and transfer of the Units to Qualified Plans will be restricted so that less than twenty-five (25%) percent of the Units outstanding at any time will be owned by Qualified Plans.

 

Offerees whose authority is subject to legal investment restrictions should consult their own legal advisors to determine whether, and if so, to what extent, the Units will constitute legal investments for them.

 

This Memorandum presents information with respect to the Fund as of the date hereof. The delivery of this Memorandum at a time after the date on the cover does not imply that the information herein is correct as of any time subsequent to that date.

 

Each Offeree of the Units and its representatives and beneficial owners, if any, are invited to ask questions concerning the terms, conditions, and other aspects of this Memorandum and to obtain any additional information with respect to the Units, the Fund, and the Managing Member that they deem necessary or advisable to supplement or to verify the accuracy of the information contained herein and, in the case of documents referred to herein, to request that such documents be made available.

 

NASAA UNIFORM DISCLOSURE

 

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

FLORIDA RESIDENTS

 

IF SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, AND YOU PURCHASE SECURITIES HEREUNDER, THEN YOU MAY VOID SUCH PURCHASE EITHER WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY YOU TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THIS PRIVILEGE IS COMMUNICATED TO YOU, WHICHEVER OCCURS LATER.


 

By accepting delivery of this Memorandum, each Offeree understands and agrees to comply with the following:

 

·         the information contained herein is confidential;

 

·         the Offeree will not make any photocopies of this Memorandum or any related documents;

 

·         the Offeree will not distribute this Memorandum or disclose any of its contents to any persons other than to those persons, if any, that the Offeree retains to advise the Offeree with respect to its contents;

 

·         the Offeree will review this Memorandum, including statistical, financial, and other numerical data, with the Offeree’s legal, regulatory, tax, accounting, investment, or other advisors. Neither the Fund nor the Managing Member intends in this Memorandum to furnish legal, regulatory, tax, accounting, investment, or other advice;

 

·         the Managing Member may reject any offer to purchase Units, in whole or in part, for any reason or no reason; and

 

·         if an Offeree does not purchase Units or if the Offering is terminated, on request of the Fund or the Managing Member, the Offeree will return this Memorandum and all attached documents to the Managing Member.

 

This Memorandum has been prepared for use by a limited group of accredited investors to consider the purchase of Units. The Fund reserves the right to modify or terminate the Offering process at any time.


 

Information contained in this Memorandum contains “forward-looking statements.” Forward- looking statements reflect the Fund’s current expectations or forecasts of future events. Forward-looking statements can be identified by words such as “will,” “believes,” “expects,” “may,” “should,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. The matters identified in the “Risk Factors” section constitute cautionary statements identifying important factors with respect to forward-looking statements, including certain risks and uncertainties. Other factors could also cause actual results to vary materially from the future results covered in the forward-looking statements contained herein.

 

Any projections, estimates, or other forecasts contained in this Memorandum are forward-looking statements that have been prepared by the Fund and are based on assumptions that the Fund believes are reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. Accordingly, the projections are only an estimate. Actual results may, and most likely will, vary from the projections, and the variations may be material.

 

Statements in this Memorandum relate only to events as of the date on which the statements are made. None of the Fund, the Managing Member or any of their respective Affiliates (defined herein) has any obligation to update or otherwise revise any projections, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if underlying assumptions do not come to fruition.

 

The Fund is offering and selling the Units in reliance on an exemption from the registration requirements of the Securities Act and state laws. Accordingly, distribution of the Memorandum has been strictly limited to persons believed meet the requirements set forth below. Participation in the Offering is limited to Accredited Investors who make the representation set forth below and furnish supporting documentation as is requested by, and acceptable to, the Fund. The Fund reserves the right, in its sole and absolute discretion, to reject any subscription based on any information that may become known or available to it about the suitability of an Investor or for any other reason, or no reason.

 

As investment in the Units involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in this investment. Only Investors who (i) represent in writing that they meet the Investor suitability requirements set herein and as many be required under federal or state law, and (ii) supply the Fund with acceptable Accredited Investor verification documentation, as requested by the Fund, may acquire the Units. The Fund has the right to and will rely on the written representations an Offeree makes and supporting information supplied by an Offeree. Each Offeree must provide truthful and accurate information.

 

The Investor suitability requirements stated below represent minimum suitability requirements established by the Fund. However, an Offeree’s satisfaction of these requirements will not necessarily mean that the Units are a suitable investment for the Offeree, or that the Fund will accept the Offeree as an investor. Furthermore, the Managing Member may modify those requirements in its sole and absolute discretion, and any modification may change the suitability requirements for investors.

 

You (as the Offeree) must represent in writing that you meet, among other, all of the following requirements (the “Investor Suitability Requirements”).

 

(a)               You have received, read, and fully understand the Memorandum and are basing your decision to invest on the information contained in the Memorandum. You have relied only on the information contained in the Memorandum and have not relied on any representations made by any other person;

 

(b)               You understand that an investment in the Units involves substantial risks and you are fully cognizant of and understand all of the risks relating to an investment in the Units, including those risks discussed in the “Risk Factors” section of the Memorandum;

 

(c)               Your overall commitment to investments that are not readily marketable is not disproportionate to your individual net worth, and your investment in the Units, will not cause such overall commitment to become excessive;

 

(d)               You have adequate means of providing for your financial requirements, both current and anticipated, and have no need for liquidity in this investment;

 

(e)               You can bear and are willing to accept the economic risk of losing your entire investment in the Units;

 

(f)                You are acquiring the Units for your own account and for investment purposes only and have no present intention, agreement or arrangement for the distribution, transfer, assignment, resale, or subdivision of the Units;

 

(g)               You have sufficient knowledge and experience in financial and business matters that you are capable of evaluating the merits of investing in the Units and have the ability to protect your own Units in connection with this investment; and You are an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act.

 

An Accredited investor is any:

 

(a)                 Natural person that has (i) individual net worth (as defined below), or joint net worth with his or her spouse or spousal equivalent, of more than $1,000,000; or (ii) individual income in excess of $200,000, or joint income with his or her spouse or spousal equivalent in excess of $300,000, in each of the two most recent years and has a reasonable expectation of reaching the same income level in the current year;

 

(b)                 Natural person that is a holder of (i) a General Securities Representative license (Series 7); (ii) a Private Securities Offerings Representative license (Series 82); or (iii) an Investment Adviser Representative license (Series 65).

 

(c)                 Corporation, Massachusetts or similar business trust, partnership, limited liability company or organization described in Code Section 501(c)(3) of the Internal Revenue Code (the “Code”), not formed for the specific purpose of acquiring Units, with total assets over $5,000,000;

(d)                 Trust with total assets over $5,000,000, not formed for the specific purpose of acquiring Units and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in Units as described in Rule 506(b)(2)(ii) under the Securities Act;

 

(e)                 Broker-dealer registered under Section 15 of the Exchange Act, as amended;

 

(f)                  Investment adviser registered pursuant to Section 203 of the Investment Advisers Act of 1940 or registered pursuant to the laws of a state;

(g)                 Investment adviser relying on the exemption from registering with the Commission under Section 203(l) or (m) of the Investment Advisers Act of 1940;

 

(h)                 Investment company registered under the Investment Company Act or a business development company (as defined in Section 2(a)(48) of the Investment Company Act);

(i)                  Small business investment company licensed by the Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended;

 

(j)                  Rural Business Investment Company as defined in Section 384(A) of the Consolidated Farm and Rural Development Act;

(k)                 An employee benefit plan within the meaning of ERISA, if the investment decision is made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are Accredited Investors;

(l)                  Private business development company (as defined in Section 202(a)(22) of the Investment Advisors Act of 1940, as amended);

 

(m)               Bank as defined in Section 3(a)(2) of the Securities Act, any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, or any insurance company as defined in Section 2(a)(13) of the Securities Act;

(n)                 Plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets of more than $5,000,000;

(o)                 Entity in which all of the equity owners are Accredited Investors. If you rely on this section, you are required to have each equity owner of that entity complete an Investor Questionnaire to certify the owner’s status as an Accredited Investor.

(p)                 Entity of a type not listed in Sections (d) – (o), not formed for the specific purpose of acquiring Units, owning investments in excess of $5,000,000.

 

(q)                 A “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1): (i) with assets under management in excess of $5,000,000; (ii) that is not formed for the specific purpose of acquiring Units; and (iii) whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment.

 

(r)                  A “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1), of a family office meeting the requirements in Section (q) above and whose prospective investment in the issuer is directed by such family office pursuant to (r)(iii) above.

For purposes of calculating your net worth, net worth means the excess of total assets at fair market value (including personal and real property but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities exclude any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the securities were purchased but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the closing date for the sale of securities for the purpose of investing in the securities. In the case of fiduciary accounts, the net worth and/or income suitability requirements must be satisfied by the beneficiary of the account, or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Units.

 

In addition, the SEC has issued certain no action letters and interpretations in which it deemed certain trusts to be Accredited Investors, such as a trust where the trustee is a bank as defined in Section 3(a)(2) of the Securities Act and revocable grantor trusts established by individuals who meet the requirements of clause (a) or (b) of the first sentence of paragraph (h) of the Investor Suitability Requirements. However, these no-action letters and interpretations are fact specific and should not be relied upon without close consideration of your unique circumstance.


 

The Fund and the Managing Member value each Offerees privacy and are providing this Privacy Notice as a courtesy to each of the Offerees.

 

The Fund and the Managing Member do not disclose nonpublic personal information about Offerees and Investors to third parties other than as described below.

 

The Fund and the Managing Member collect information about each Offeree (such as name, address, social security number, assets, and income) from discussions with the Offerees and Investors, from documents that may deliver to the Fund and the Managing Member (such as the Subscription Agreement) and in the course of providing services to Investors and Offerees. In order to service an Investor’s account and effect the transactions described herein, the Fund and the Managing Member may provide an Offeree’s personal information to our Affiliates and to firms that assist us in servicing an Investor’s account and have a need for such information, such as any fund administrator, investor relations administrator, auditors, or accountants. The Fund and the Managing Member do not otherwise provide information about Offerees and Investors to outside firms, organizations, or individuals except as required or permitted by law. Any party that receives this information will use it only for the services required and as allowed by applicable law or regulation and is not permitted to share or use this information for any other purpose. Notwithstanding the above, the Managing Member and the Fund will have no liability to an Offeree or Investor to the extent that the information described above becomes publicly known, except to the extent that the Managing Member’s or the Fund’s actions constitute gross negligence or willful misconduct.

 

California law requires certain data security requirements of Personal Information by covered businesses and grants residents of California certain rights with respect to obtaining information about their personal data that is maintained by a covered business. The Fund and the Managing Member will comply with these requirements. Among other rights, California law permits residents of California to opt-out of certain disclosures of Personal Information to third parties. In some circumstances, any person may elect to opt-out of the sharing of his, her or its Personal Information with third parties and may do so by submitting a request in writing or by contacting the Fund by telephone.


 

This summary highlights some of the most significant information contained elsewhere in this Memorandum. Because it is a summary, it does not contain all of the information that may be important to a potential investor. To understand this offering fully, a potential investor should read the entire Memorandum carefully, including, without limitation, the information discussed under the caption “Risk Factors” before making a decision to invest in the Units. Unless specifically noted otherwise, references throughout this Memorandum to the Fund will include the Managing Member (as defined below) and any agent authorized to act on the Fund’s behalf.

 

The Fund:

The Fund is a New York limited liability company formed on November 30, 2022. The Fund operates as a pooled investment that will (i) offer and sell limited liability company units in the Fund to certain high net worth and qualified investors in exchange for capital subscriptions from the investors, and (ii) use the proceeds contributed by the investors to acquire, indirectly through its investment in the REIT Subsidiary, and one or more holding companies (the “Holding Companies”) a diversified portfolio of income producing real estate assets with potential value growth.

Managing Member:

The Managing Member is a limited liability company organized in the State of New York on November 30, 2022. The Managing Member is responsible for all management decisions of the Fund. The Managing Member is not registered as an investment advisor.

Principals:

Dilip Mooparakath and Darshana Somaiya are the directors of the Board of Directors of Cloud Toronto – FYBN Cos. and authorized to act on behalf of Cloud Toronto – FYBN Cos. Dilip Mooparakath and Darshana Somaiya together are the parties empowered to act on behalf of the Sponsor and the Managing Member (collectively, the “Principals”).

Affiliates:

An affiliate with reference to the Fund or Managing Member includes such entity’s officers, directors, members, partners, shareholders, managers, employees, agents, and the Principals (collectively the Affiliates”).

Investment Strategy:

The Fund’s primary investment objectives are:

 

·         to acquire:

o    quality income-producing and value-add commercial properties, which do not require significant development, that are either operated by Affiliates of the Managing Member or unrelated third parties, and, in some circumstances, leased under short term and long-term leases to creditworthy tenants;

 

o    equity interests in entities that have developed and/or acquired quality income producing commercial properties and are either operated by Affiliates of the Managing Member or unrelated

third parties;


o    debt securities (e.g., promissory notes, mezzanine debt instruments) secured by security interests in commercial properties; and

 

o    shares of publicly traded REITs. No more than twenty-five (25%) percent of the Fund’s assets will be invested in REITs (“REIT Portfolio”).

 

 

The above-listed activities may be changed or modified by the Managing Member in its sole and absolute discretion.

Investment Risks:

The Fund’s investment strategy is speculative and entails substantial risks, including, among others: dependency on key individuals, risks associated with real estate investing, litigation risk, risks arising from the use of leverage, and the risk that exit strategies from positions may be unavailable and have limited liquidity. The use of leverage, in particular, can exacerbate potential losses suffered by the funds. An Investor should not invest in the Fund unless: (1) it is fully able to bear the financial risks of its investment for an indefinite period of time; and (2) it can sustain the loss of all or a significant part of its investment and any related realized or unrealized profits.

The Units:

A general description of the rights and preferences of the Units is set forth below. Each Investor should carefully read this Memorandum and the LLC Agreement to understand certain risks associated with acquiring Units and the rights and obligations associated with the Units.

 

Class B Units The holders of Class B Units are entitled to participate in the income and profit of the Fund, subject to the Managing Member Performance Allocation. The Class B Units will have limited voting rights, as described further in this Memorandum.

 

The Class B Units will be subject to a Managing Member Performance Allocation (as further described below) of twenty (20%) percent.

 

Managing Member Units – The Managing Member intends to make capital contributions equal at least one (1%) percent of the capital contributions of all of the Participating Members. The Managing Member may make a capital contribution to the Fund no less frequently than semi-annually, so that the Managing Member capital contribution equals at least one (1%) percent of the capital contributions of all of the Participating Members. The Managing Member shall receive Managing Member Units in return for such capital contributions. Cloud Toronto – FYBN Cos or other affiliates of the Managing Member wishing to make capital contributions to the Fund shall also receive Managing Member Units.

 

The Fund will receive dividends from the REIT Subsidiary as further described in the REIT Supplement. Subject to receipt of such dividends, the Managing Member intends to declare and make periodic distributions to Members, provided however that any such dividends will first be used to satisfy applicable fees and expenses, and redemption requests from Investors that are accepted by the Managing

Member. Any distributions made by the Fund are at the discretion of the Managing Member, considering factors such as the Fund’s

 


 

earnings, cash flow, capital needs and general financial condition and the requirements of applicable law. As a result, the Fund’s distribution rates and payment frequency may vary from time to time.

The Offering:

The Units are being offered on a continuous basis commencing on the date of this Memorandum. Funds tendered by Investors in the Offering will be released immediately to the Fund on the relevant Dealing Day upon acceptance of a subscription by the Managing Member and/or the Fund and after review and approval by the Managing Broker. The Units are offered subject to acceptance, prior sale, and withdrawal, cancellation, or modification of the offer at any time without notice.

 

The Units are offered through Young America Capital, LLC, a registered broker/dealer and member FINRA/SIPC (the “Managing Broker”). Upon receipt of the executed acceptance of the Subscription Agreement (the “Subscription Agreement”), the Investor will deposit, preferably via wire transfer (though checks will be accepted), the subscription amount which will be delivered directly to an account of the Fund, with such proceeds available for use by the Fund in accordance with the terms and conditions of the LLC Agreement immediately upon receipt. A copy of the Subscription Agreement has been enclosed as Appendix B.

 

The Offering is made on a “best efforts-no minimum” basis which means that the Managing Broker and the participating brokers are only required to use their best efforts to sell the Units. In a best efforts offering, the Managing Broker is not guaranteeing the sale of a certain number of Units, and will not purchase any outstanding Units. There is no requirement that any minimum number of Units be sold before the Proceeds are released to the Fund and applied in its business. The Fund is offering to sell any combination of Participating Units with a dollar value.

Selling Commissions:

The Fund will engage duly licensed and registered broker-dealers to assist with its offer and sale of Units. The Partnership may engage and terminate such broker-dealers as it determines necessary, and the Fund may determine the amount of compensation to be paid to such broker- dealers. The Fund has initially entered into an agreement with Young America Capital, LLC, a Florida limited liability company (“Skyway”), as its managing broker-dealer. Skyway is a broker-dealer registered with the Securities and Exchange Commission and other necessary state or other regulators, and a member of the Financial Industry Regulatory Authority Inc. (“FINRA”).

 

Certain employees of Cloud Toronto – FYBN  Services, LLC, an New York limited liability company (“Services”), an affiliate of the Fund, will be registered representatives of Skyway (“Affiliated Agents”). Skyway will pay sales commissions to Affiliated Agents for their sale of Units. Affiliated Agents may perform other services on behalf of Services that are not part of such Affiliates Agents’ relationship with Skyway and not involving the offer and sale of securities.

 

Please note that Affiliated Agents with Cloud Toronto – FYBN Cos (but who are licensed and managed through Skyway) will receive selling commissions up to two (2.00%) percent of the subscription proceeds

in the Offering from the sale of Class B Units. Other fees that will be

 


paid to Skyway include a Managing Broker Fee of 0.7% of the gross offering proceeds from the sale of Units attributable to Skyway.

 

The Fund and/or Managing Broker may also enter into selling agreements with third-party FINRA licensed broker-dealers (“Soliciting Broker”), pursuant to which such Soliciting Brokers will assist with placing other Classes of Units.

 

Below is a summary of the Managing Broker Dealer Fees and sales commission limits permitted under the LLC Agreement:

 

Managing Broker Dealer Fees

Class B Units

Managing Broker Dealer Fee:

 

(based on gross assets raised attributable to the

Managing Broker Dealer)

0.7%

Sales Commissions

 

(based on transaction value)

 

(to be paid to duly licensed Affiliated Agents of the Managing Broker-Dealer and who are also affiliated with the Managing Member)

up to 2%

Marketing Reallowance

(based on transaction value) (to be paid to Selling Group Members of the

Managing Broker-Dealer)

Up to 1%

 


Individual       Minimum Investment Amount:


The individual minimum subscription for Class B Units is Fifty Thousand Dollars ($250,000), unless otherwise waived by the Managing Member. Subscriptions are subject to acceptance or rejection by the Managing Member, in the Managing Member’s sole and absolute discretion, subject to the terms and conditions of the Subscription Agreement. Rejected subscriptions and subscription funds will be returned to subscribers without interest within thirty (30) days of rejection.


 


Special Tax or Regulatory Parallel Funds:


The Managing Member may, in its discretion, create additional partnerships or other vehicles (“Parallel Funds”), for Investors with special investment needs, including Investors with special legal, regulatory, tax or other requirements. The Parallel Funds generally will invest side-by-side with the Fund on substantially the same terms and conditions as the Fund, including the sharing of organizational and other Fund expenses. The Parallel Funds may contain different terms and conditions than the Fund.


Calculation of Net Asset Value:

The NAV per Unit of the Fund is calculated by Cloud Toronto – FYBN  each month, based on the net asset values of the Fund’s investments (including the REIT Portfolio), with the addition of any other assets (e.g., cash on hand), and the deduction of liabilities.

 

Properties held by the Fund will be valued at least once per year. The Managing Member, however, at its sole and absolute discretion, can revalue properties held by the Fund more frequently. In valuing these investments, Cloud Toronto – FYBN  has implemented a valuation process that is commonly utilized in the real estate investment industry by completing multi-year forecasts on each underlying asset, making assumptions on future financing activities, and applying industry accepted discount factors to achieve a valuation via discounted cash flow (DCF) analysis. Cloud Toronto – FYBN  may also obtain third-party appraisals for comparison purposes to the DCF results.

The REIT Portfolio will be valued using readily available market quotations. If a market quotation is not readily available or is deemed unreliable, or if an event that is expected to affect the value of a security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the New York Stock Exchange, the fair value of a security will be determined in good faith under policies and procedures established by and under the supervision of Cloud Toronto – FYBN . Further details are set out below under “Net Asset Value Determination and Valuation Policy.”

Fund Term:

The Fund is being offered on a continuous basis. While the Managing Member may consider a liquidity event at any time in the future, the Managing Member does not currently intend to undertake such consideration for three to five years from each individual asset purchase, and the Fund is not obligated by its charter, its LLC Agreement, or otherwise to effect a liquidity event at any time.

Diversification:

The Fund does not have fixed guidelines for diversification and may concentrate its investments in particular types of real estate investments and may utilize different investment strategies, depending on the Managing Member’s assessment of the available investment opportunities, including only purchasing a single property.

NAV Capital Accounts:

The Fund will establish and maintain on its books a capital account (“NAV Capital Account”), for each Member and the Managing Member, into which their capital contribution(s) (each a “Capital Contribution”), will be credited and in which certain other transactions will be reflected as further described in the LLC Agreement.

Management Fee:

The Managing Member will be entitled to receive compensation in the form of an ongoing Asset Management Fee. The Asset Management Fee with respect to the Participating Units shall be accrued for and payable monthly in arrears, equal to one-twelfth (1/12th) of the annualized fee of one and one half (1.5%) percent of the Net Asset Value of the Participating Units as of the close of business on the last Business Day of the relevant month calculated before deduction of theAsset Management Fee, or any accrued but unallocated Managing Member Performance Allocation and before any withdrawals.


 

All Participating Members’ NAV Capital Accounts (as defined herein) will pay the Asset Management Fee on a pro rata basis, which can be waived, rebated or shared with another person in the Managing Member’s absolute discretion. No Asset Management Fee shall be payable with respect to the Managing Member Units.

Managing Member Performance Allocation:

The Managing Member shall be entitled to receive an allocation (the “Managing Member Performance Allocation”) from the Fund equal to twenty (20%) percent of the Total Return, subject to a seven (7%) percent Hurdle Amount, and a High-Water Mark (each as defined below). Such allocation will be measured on a calendar year basis (the “Performance Period”), accrued monthly and paid annually.Managing Member Units will not be subject to any Managing Member Performance Allocation.

Hurdle Amount

 

The Fund employs a Hurdle Amount which represents a level of return that the Fund must achieve before the Managing Member is entitled to the Managing Member Performance Allocation.

The “Hurdle Amount for any Performance Period means an amount that results in a seven (7%) percent annualized internal rate of return (“IRR”) on the Net Asset Value of the Units outstanding at the beginning of the relevant Performance Period and all Units issued since the beginning of such Performance Period, taking into account the timing and amount of all distributions accrued or paid (without duplication) on all such Units and all issuances of Units over the Performance Period and calculated in accordance with recognized industry practices.

The ending Net Asset Value of the Units used in calculating the IRR will be calculated on a gross basis (i.e., before giving effect to any allocation/accrual to the Managing Member Performance Allocation). For the avoidance of doubt, the calculation of the Hurdle Amount for any period will exclude any Units redeemed during such period, as redeemed Units will be subject to the Managing Member Performance Allocation upon their redemption as described below.

 

Loss Carryover and High Watermark

The High Watermark is a measure utilized by the Fund to ensure that the Managing Member Performance Allocation is only charged when at the end of the Performance Period, the Fund’s value is above its previous highest level at the end of a prior Performance Period (the “High Water Mark”), so as to avoid the Managing Member being paid again for making back prior gains. So, if the overall return of the Fund is negative, then the Fund must make up the shortfall (the “Loss Carryover Amount”) in the next year, or later years, before another Managing Member Performance Allocation will be allocated.

 

The Loss Carryover Amount shall initially equal zero and shall

cumulatively increase by the absolute value of any negative Total Return in a Performance Period and decrease by any positive Total


Return in a Performance Period. The Loss Carryover Amount shall at no time be less than zero.

The calculation of the Loss Carryover Amount will exclude the Total Return related to any Units redeemed during the Performance Period, as such Units will be subject to the Managing Member Performance Allocation upon redemption. The amount by which Total Return falls below the Hurdle Amount will not be calculated for the purposes of the Loss Carryover Amount and will be carried forward to subsequent periods.

 

The effect of the loss Carryover Amount is that past annual Total Return losses must be gained back and so offset the positive annual Total Return for purposes of the calculation of the Managing Member Performance Allocation. The Managing Member will also be allocated a Managing Member Performance Allocation with respect to all Units that are redeemed at the end of any quarter (in connection with redemptions of Units) in an amount calculated as described above with the relevant Performance Period being pro-rated to the portion of the year for which such redeemed Units were outstanding, and proceeds for any such redemption will be reduced by the amount of any such Managing Member Performance Allocation applicable to those redeemed Units.

 

Allocation of Excess Profits and the Managing Member Performance Allocation

The Managing Member will be allocated the Managing Member Performance Allocation in an amount equal to:

 

If the Total Return for the Performance Period exceeds the sum of:

(i)    the Hurdle Amount for that Performance Period; and

 

(ii)   the Loss Carryover Amount (any such excess, “Excess Profits”),

One hundred (100%) percent of such annual Excess Profits until the total amount allocated to the Managing Member equals twenty (20%) percent of the sum of (x) the Hurdle Amount for that Performance Period and (y) any amount allocated to the Managing Member pursuant to this clause (the “Catch-Up”); and

 

To the extent there are remaining Excess Profits, twenty (20%) percent of such remaining Excess Profits.

The “Total Return” for the Performance Period shall equal the sum of: (i) all distributions accrued or paid (without duplication) on the Units outstanding at the end of such period since the beginning of the Performance Period (ii) the change in aggregate Net Asset Value of such Units since the beginning of the Performance Period, before giving effect to (x) changes resulting solely from the proceeds of issuances of Units, and (y) any allocation/accrual to the Managing Member Performance Allocation.


 

For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the Net Asset Value of the Units issued during the then current Performance Period but (ii) exclude the proceeds from the initial issuance of such Units.

Allocation of Income, Gain and Loss:

Income, expense, gain and loss of the Fund will generally be allocated pro-rata among Members’ NAV Capital Accounts.

Transaction Fees:

The Managing Member or any of its Affiliates may also be paid fund formation, management, and other fees as would be paid in the normal course of business, including, without limitation, in connection with accounting, property management, leasing, acquisition, maintenance and construction margin, development and disposition of properties acquired by the Fund; provided, however, any fees paid by the Fund to the Managing Member or its Affiliates for the provision of such services shall be no greater than the Fund would pay to an unaffiliated third party providing such services in either (i) Maricopa County, New York, for services provided to the Fund as a whole, or (ii) the county and state where any Fund property is located, for services provided in connection with a specific Fund property.

Fund Expenses:

The Fund shall pay or reimburse the Managing Member (or its Affiliates) for certain Organizational and Operating Expenses, and Underwriting Expenses and Other Expenses (in each case as defined below) incurred or paid on behalf of the Fund or the REIT Subsidiary prior to or after the formation of the Fund and the REIT Subsidiary. The aggregate amount of the Organizational and Operating expenses will not exceed one percent (1%) of the total Capital Contributions of all Participating Members of this Offering as of the termination of this Offering (the “O&O Expense Cap”). The amount of any Organizational and Operating Expenses incurred on behalf of the Fund or the REIT Subsidiary shall be accrued and at the end of each calendar quarter the Managing Member shall determine the amount of any new Capital Contributions over such period, and the Fund shall reimburse the Managing Member accordingly, up to the amount of the O&O Expense Cap.“Organizational and Operating Expenses include, but are not limited to (i) legal fees for preparing Fund and REIT Subsidiary organizational documents and related agreements and resolutions, (ii) organizational expenses of the Fund (i.e., fees, costs and expenses of and incidental to the formation, qualifications to do business and fund raising of the Fund (iii) due diligence expenses (including travel and marketing expenses of the Managing Member, its affiliates and agents); (iv) technology processing platforms; (v) filing fees; (vi) marketing due diligence fees including third party due diligence reports; (vi) sales team travel, seminars, and broker dealer conferences; (vii) training and education meetings for registered representatives of our participating broker-dealers (viii) permissible forms of non-cash compensation to registered representatives of our participating broker-dealers (in each case to the extent consistent with Cloud Toronto – FYBN Cos internal policies and procedures).Underwriting and Other Expenses” include, but are not limited to: (i) underwriting fees and expenses (subject to applicable FINRA


 

limitations) including without limitation, travel and entertainment expenses; (ii) the Management Fee and affiliate fees including, but not limited to, accounting expenses, acquisition and disposition, loan placement and loan guaranty, construction and development fees and the Managing Member Performance Allocation; (iii) taxes payable by the Fund (iv) interest and other expenses relating to any Fund indebtedness; (v) bonding expenses; (vi) premiums for insurance protecting the Fund and the partners and employees of the Managing Member and its affiliates and other persons entitled to indemnification from the Fund from liabilities to third parties for activities on behalf of the Fund; (vii) fees incurred by the Fund for special advisory or consulting services; (viii) the legal and other fees, costs and expenses of and incidental to the purchase and sale (including qualification and registration) of portfolio assets, including fees associated with the development and management of portfolio properties (payable at then- current market rates in the Managing Member’s discretion), (ix) banking, dead deals, registration, qualification, depositary, custodial and similar fees and expenses; (x) transfer, capital and other taxes, duties and costs incurred in acquiring, holding, selling and otherwise disposing of Fund assets; (xi) costs and expenses of the tax matters partner; and (xii) all extraordinary fees, costs and expenses; (xii) the accounting fees, costs and expenses of the Fund and the REIT Subsidiary, including without limitation, the annual audit of the Fund and the REIT Subsidiary (as applicable), (xiii) the preparation of the annual and any interim financial statements of the Fund and the REIT Subsidiary and the federal and state tax returns of the Fund and the REIT Subsidiary; (xiv) costs and expenses associated with meetings of the Members, communications with Members and preparation of Fund status reports; (xv) costs and expenses associated with informal meetings of Members with the Managing Member and of committees of the Fund, including costs and expenses of the Advisory Board; (xvi) indemnification costs and expenses, and the legal fees, cost and expenses of counsel for the Fund in any legal action, proceeding or investigation, including any threatened action, proceeding or investigation, and the amount of any judgments or settlements paid in connection with such action, proceeding or investigation; (xvii) the fees, costs and expenses relating to the evaluation, purchase, holding and sale of portfolio assets, including (without limitation) expenses related to due diligence and other fees and expenses, including salaries of Cloud Toronto – FYBN Cos employees with respect to work attributable to investments made by the Fund, (xviii) all other legal fees, costs and expenses incident to the Fund, its management and activities; (xix)fees incurred by the Fund for special advisory or consulting services; and

(xx) costs and expenses associated with the dissolution and winding up of the Fund.

Side Letters:

The Managing Member has the absolute discretion to create additional classes of Units from time to time without notice to the existing Members and may vary the terms of this Memorandum with respect to any Member and may enter into confidential side letters or other similar agreements (“Side Letters”), with certain Members and may issue confidential supplements to this Memorandum related to such Members which are not provided or disclosed to other Members. Such terms may waive or modify the application of any provision of the

LLC Agreement with respect to such Member, without obtaining the consent of or giving notice to any other Member; provided, however


 

that any such Side Letter will not adversely impact the rights of the other Investors. Terms may differ according to the types of investment strategies employed, carried interests charged, Managing Broker Dealer Fees, minimum and maximum subscription amounts, Investor eligibility requirements and in other respects in the complete and sole discretion of the Managing Member.

Fiscal Year:

The fiscal year of the Fund shall end on December 31 of each year (each a “Fiscal Year”), which Fiscal Year may be changed by the Managing Member, in its sole and absolute discretion.

Borrowings:

The Managing Member believes in utilizing leverage in a moderate fashion. Considering this leverage strategy, the Managing Member intends to follow the restrictions described below under “Investment Objectives, Strategy, and Policies with respect to the use of leverage. No such restrictions are expressly described in the LLC Agreement, and the Managing Member is under no obligation to follow such guidelines.

Reports to Members:

Any Member or its respective designated representative shall have the right, at any reasonable time, to have access to and inspect and copy the contents of books and records of the Fund; provided, however, that confidential communications between the Fund and its legal counsel may be withheld from a Member in the Managing Member’s reasonable discretion.

 

In addition, all Members will receive the information necessary to prepare federal and state income tax returns following the conclusion of such Fiscal Year as soon thereafter as is reasonably practical. In addition to annual financial statements, the Managing Member intends to provide Members with quarterly reports showing the performance of the Fund’s investments.

 

The Managing Member may agree to provide Members with additional information on the underlying investments of the Fund, as well as access to the Managing Member and its employees for relevant information.

Redemptions and Redemption Fee:

Lockup

 

Participating Members may request redemptions of their Units as of the last Business Day of each quarter (a Redemption Date”) upon at least 60 days’ prior written notice to the Managing Member. The Managing Member is under no obligation to agree to any such redemption request and may choose to redeem only some, or even none, of the Units that have been requested to be redeemed in any particular quarter in its sole discretion. In addition, Participating Members are not permitted to make redemptions of Units until one

(1) year after the issuance of the relevant Units, subject to waiver in the sole discretion of the Managing Member (the “Lockup”).

 

The ability of the Managing Member to fulfill redemption requests is subject to a number of limitations. As a result, redemptions of Units may not be available during a given quarter. To the extent the

Managing Member agrees to choose to redeem Units in a particular quarter, it will only redeem Units as of the opening of the Redemption


 

Date. Redemptions will be made at the Net Asset Value per Unit on the relevant Redemption Date.

Redemption Fee

 

If a Class B Member requests a redemption of any portion of their Units following the expiration of the Lockup applicable to such Member’s Units, the amount of any such redemption proceeds paid to the Member will be reduced by a fee (the “Redemption Fee”) as further described below.

 

The amount of any Redemption Fee with respect to a Class B Member that requests a redemption of any portion of their Units shall be calculated by reference to a percentage of the Net Asset Value attributable to such Class B Member’s redeemed Units, as follows:

 

·         Redemptions in months 13 24: 3% Fee

·         Redemptions in months 25 36: 2% Fee

·         Redemptions in months 37 48: 1% Fee

Thereafter, no Redemption Fee shall be applied to a redemption by a Class B Member.

 

Processing Fee

Class B Members requesting a redemption of their Units after the expiration of the Lockup and any applicable Redemption Fee will bear a processing fee of $500 which will be deducted from any redemption proceeds received by such Member.

 

Limits on Aggregate Redemptions

The aggregate Net Asset Value of total redemptions of all classes of Units is limited to no more than five (5%) percent of the Fund’s Net Asset Value per calendar quarter (measured using the average aggregate Net Asset Value as of the end of the immediately preceding three months). In the event that the Managing Member determines to redeem some but not all of the Units submitted for redemption during any quarter, Units redeemed at the end of the quarter will be redeemed on a pro rata basis. All unsatisfied redemption requests must be resubmitted after the start of the next quarter.

Transferability of Units:

There is no current market for the Units. The Fund and the Managing Member do not expect that a public market will ever develop, and the Fund’s Certificate of Formation does not require a liquidity event at a fixed time in the future. Therefore, a redemption of Units by the Fund, which must be agreed to by the Managing Member in its sole and absolute discretion, will likely be the only way for an investor to dispose of its Units. While the redemption program of the Fund was designed to allow investors to request redemptions of an investor’s Units, the Funds ability to fulfill redemption requests is subject to a number of limitations.

 

Most significantly, the majority of the Fund’s assets will most likely

consist of real estate assets which cannot generally be readily liquidated without impacting the Fund’s ability to realize full value


 

upon disposition of such assets. As noted above, any redemption requests by an investor will require the approval of the Managing Member, which may be withheld in its sole and absolute discretion and may be subject to Redemption Fees. As a result, an investor’s ability to have its Units redeemed by the Fund may be limited, and the Units should be considered a long-term investment with limited liquidity. Also, under the LLC Agreement, the Managing Member can unilaterally redeem out a Member from its Units in its sole and absolute discretion. The Managing Member does not intend to exercise its right to force a redemption of a Member except in very limited circumstances involving a Member who is causing significant disruption to the Fund as whole.

ERISA and Other Employee Benefit Plans and Accounts:

Pension, profit-sharing or other employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), individual retirement accounts, Keogh Plans or other plans covered by Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), and entities deemed to hold the plan assets of each of the foregoing (each a “Benefit Plan Investor”), governmental plans, foreign employee benefit plans and certain church plans not subject to ERISA (such plans which are not Benefit Plan Investors are referred to herein as “Other Benefit Plans”), may generally purchase Units in the Fund subject to the considerations described in this Memorandum. The Managing Member intends to conduct the operations of the Fund so that the assets of the Fund will not be considered “plan assets” of any plan investor. Fiduciaries of Benefit Plan Investors and Other Benefit Plans are urged to review carefully the matters discussed in this Memorandum and consult with their own legal and financial advisors before making an investment decision.

 

If requested by any tax-exempt Investors that are ERISA or governmental pension funds, the Managing Member will facilitate the formation of a group trust through which those pension funds would invest in the Fund. The group trust, and not the Investors would be expected to report and pay the federal income taxes resulting from unrelated business taxable income generated by the Fund.

 

Investors subject to ERISA should consult their own advisors as to the effect of ERISA on an investment in the Fund. The Managing Member will make reasonable efforts to conduct the affairs and operations of the company in such a manner that the Fund will qualify as a venture capital operating company under ERISA.

Certain Tax Considerations:

Income or gain of the Fund may be subject to withholding tax, income tax or other tax in the jurisdictions where investments are located. Each Investor is advised to consult its own tax advisor as to the tax consequences of an investment in the Fund, including the application of state and local tax laws.

Voting Rights and Amendments:

The voting rights of Members are very limited. Other than as explicitly set forth in the LLC Agreement, Members have no voting rights as to the Fund or its management.Generally speaking, the LLC Agreement may only be amended by the consent of the Managing Member and the Members holding a majority


 

of the outstanding Units, provided however, the Managing Member may amend the LLC Agreement in certain other times. See Section

15.20 of the LLC Agreement for a full list of items that may allow the Managing Member to unilaterally amend the LLC Agreement.

Liability of Members:

Except as otherwise expressly required by law, a Member, in its capacity as such, shall have no liability in excess of (i) its obligation to pay the purchase price for its Units under the LLC Agreement and

(ii) as otherwise required under New York Law. No Member shall be personally liable for any debts or obligations of the Fund.

Other Activities of Managing Member and its Affiliates:

Neither the Managing Member nor its Affiliates is required to manage the Fund as their sole and exclusive function. Each may engage in other business activities, including competing ventures and/or other unrelated employment. In addition to managing the Fund, the Managing Member and its Affiliates may establish other private investment funds in the future which employ an investment strategy similar to that of the Fund.

Exculpation and Indemnification:

The Managing Member will be generally liable to third parties for all obligations of the Fund to the extent such obligations are not paid by the Fund or are not by their terms limited to recourse against specific assets. The Fund (but not the Members individually) is obligated to indemnify the Managing Member and its managers and members from any claim, loss, damage, or expense incurred by such persons relating to the business of the Fund, provided that such indemnity is otherwise not prohibited by law.

Termination:

Upon termination, the Fund shall be dissolved and wound-up. The Managing Member or, if there is no Managing Member, a liquidator or other representative (the Representative”), appointed by a majority of the interest of the Members shall proceed with the orderly sale or liquidation of the assets of the Fund and shall apply and distribute the proceeds of such sale or liquidation in the following order of priority, unless otherwise required by law: (i) first, to pay all expenses of liquidation; (ii) second, to pay all creditors of the Fund (including Members who are creditors) in the order of priority provided by law or otherwise; (iii) third, to the establishment of any reserve which the Managing Member or the Representative may deem necessary; and

(iv) fourth, to the Members or their legal representatives in accordance with the liquidation distribution provisions set forth above.

Advisory Board:

The Fund shall have an Advisory Board consisting of at least three members (the “Advisory Board Members”) appointed by the Managing Member; provided, however, that all of the of the Advisory Board Members shall be Members or their designated representatives. Subject to the foregoing, the Managing Member may, in its sole and absolute discretion, increase the size of the Advisory Board. Any Advisory Board Member may, at any time, resign from the Advisory Board or be removed, with or without cause, by the Managing Member. All such appointments, designations, resignations, and removals shall be effective upon notice to the Fund. The Managing Member shall consult with the

Advisory Board, but the Advisory Board shall have no authority to manage the Fund.


No Registration Rights:

The Units will not be registered under the Securities Act and the Members will not have any registration rights associated with their respective Units.

How to Subscribe:

Securities are offered through the Managing Broker, a registered broker/dealer and member FINRA/SIPC.

 

Prospective investors who would like to subscribe for the Units must carefully read this Memorandum. If, after carefully reading the entire Memorandum, obtaining any other information available and being fully satisfied with the results of pre-investment due diligence activities, a prospective investor would like to purchase Units, they must complete and sign a Subscription Agreement and any supporting documentation, as requested. The Subscription Agreement submission process is managed by the Managing Broker. An example of the Subscription Agreement a prospective investor would complete is attached as Appendix B. An investor must purchase at least the minimum purchase amount of $250,000 (subject to the other provisions contained in this Memorandum) and the full purchase price must be paid upon submission of the completed Subscription Agreement. Instructions for completing the Subscription Agreement will be provided by the Managing Dealer, along with detailed instructions for making payment via wire transfer.

 

As part of the subscription process, prospective investors are required to provide a third-party verification of their accredited investor status. This is a regulatory requirement and therefore, if the investor fails to produce the necessary third-party verification, their subscription must be rejected. The Managing Broker will request this verification as part of, or separate from, your completed Subscription Agreement. Acceptance of the prospective Investor’s subscription by the Fund is in the Managing Member’s sole and absolute discretion, and the Fund will notify each prospective Investor of receipt and acceptance of the subscription. In the event the Fund does not accept a prospective Investor’s subscription for the Units for any reason, the Fund will promptly return the funds to such subscriber in accordance with the terms of this Memorandum.

Eligible Investors:

In order to invest in the Fund, an Investor must meet certain minimum eligibility requirements, including qualifying as an “Accredited Investor,” as defined in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder. The Subscription Agreement sets forth in detail the definitions of an Accredited Investor. An Investor must check the appropriate places in the Subscription Agreement to represent to the Fund that it is an Accredited Investor and submit to the Fund and the Managing Broker any third-party verification of such Accredited Investor status as determined needed by the Fund and the Managing Broker, in order to be able to purchase Units. The Managing Member may reject any Investor’s subscription for any reason or for no reason.

Inquiries:

Each Investor is invited to, and it is highly recommended that an Investor, meet with the Managing Member for a further explanation of the terms and conditions of this offering and to obtain any additional information necessary to verify the information contained in this

Memorandum, to the extent the Managing Member possesses such


information or can acquire it without unreasonable effort or expense. Requests for such information should be directed to:

 

970 Peachtree Industrial Blvd, Suite 1-2, Suwanee, GA 30024

 

408 856 5031

Email: di.mo@cloudtoronto.us


 

CLOUD TORONTO – FYBN  EXECUTIVE SUMMARY


 

Cloud Toronto – FYBN  Executive Summary

 

Cloud Toronto – FYBN  provides high net worth individuals and the investment advisers who serve them access to sophisticated, private real estate investments that have been traditionally reserved for institutions.

 

Cloud Toronto – FYBN ’s mission is to build wealth for and with their clients while transforming the assets and communities they touch.

Cloud Toronto – FYBN  achieves this mission by providing well-structured residential, commercial, and hospitality real estate investments, utilizing, to the extent beneficial to the investment project as a whole, a vertically integrated business model that includes acquisitions, development, construction, asset management and disposition.

 

Key Items on Cloud Toronto – FYBN :

 

·         As of 2023, Cloud Toronto – FYBN  is celebrating its 13th year since.

 

·         For the 8-year period from 2013 through 2021, Cloud Toronto – FYBN  experienced 41% weighted average annual net growth in aggregate capital invested from outside investors in its various investments.

 

·         Cloud Toronto – FYBN ’s accredited investor base is growing since 2017.

 

·         Cloud Toronto – FYBN  has launched and exited several multi-asset, discretionary private real estate funds, single-asset private debt and equity offerings in its operating history.

 

Cloud Toronto – FYBN  is an established Alternative Investment Sponsor and fund manager specifically focused on the Greater Southwest and Southeast Growth Region, with an investment team designed to execute on ground-up development and repositioning of existing, middle-market, real estate assets (generally $1m – $500m in project value), and with an institutional-grade administrative infrastructure designed to support a large base of investors and multiple funds, Cloud Toronto – FYBN  believes it is well positioned to manage the Fund.

 

For financial reporting purposes, Cloud Toronto – FYBN , as represented by the legal entity Cloud Toronto – FYBN Cos Inc., consolidates some assets within its management or ownership, as required by generally accepted accounting principles (GAAP). To that extent, some of the capital or assets the company manages are including within the consolidated financial statements and some of the capital or assets are eliminated as required by GAAP.

 

Cloud Toronto – FYBN ’s Competitive Strengths:

 

Creating Access

 

Cloud Toronto – FYBN  focuses on creating wealth for its clients by providing access to high quality real estate investments. Cloud Toronto – FYBN  believes that capital organized privately into structured funds offers investors an optimal balance of risk-adjusted return and investment performance. By allowing investors, who may not otherwise be able to purchase a large asset, to participate with a minimum investment as low as $250,000, Cloud Toronto – FYBN  provides typical real estate investors access to sophisticated strategies and assets that they may not otherwise have.


Vertical Integration

 

While Cloud Toronto – FYBN ’s business model is in part analogous to that of a financial asset manager, their model is built on a full- service approach. They have complemented traditional asset management functions with a hands-on approach to real estate investing. Specifically, Cloud Toronto – FYBN  employs in-house experts in asset management, leasing, construction management, development, finance, and capital formation. Their model is designed to leverage the scale of best-in- class third party service providers, such as general contractors and property managers, which maintain the control of hands-on management – such as Cloud Toronto – FYBN ‘s construction management professionals and asset managers.

 

Extensive relationships and sourcing network

 

Cloud Toronto – FYBN  leverages its real estate services businesses in order to source deals for their funds. In addition, management has extensive relationships with major industry participants in each of the markets in which they currently operate. Their local presence and reputation in these markets have enabled them to cultivate key relationships with major holders of property inventory, in particular, financial institutions, throughout the real estate community.

 

Targeted market opportunities

 

Cloud Toronto – FYBN  focuses on markets that have a long-term trend of population growth and income improvement in states with business and investment-friendly governments. Cloud Toronto – FYBN  generally avoids engaging in direct competition in over- regulated and saturated markets.

 

Structuring expertise and speed of execution

 

Prior real property acquisitions completed by Cloud Toronto – FYBN  have taken a variety of forms, including direct property investments, joint ventures, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership. Cloud Toronto – FYBN  believes they have developed a reputation of being able to quickly execute, as well as originate and creatively structure acquisitions, dispositions, and financing transactions.

 

Focus on the middle market

 

Cloud Toronto – FYBN ’s focus on middle market opportunities offers their investors significant alternatives to active, equity investing that provide attractive returns to investors. This focus has allowed them to offer a diversified range of real estate investment opportunities, particularly for accredited investors. While Cloud Toronto – FYBN  will often enter into large projects, it breaks those projects into phases to allow middle-market participants to invest.

 

Risk protection and investment discipline

 

Cloud Toronto – FYBN  underwrites their investments based upon a thorough examination of property economics and a critical understanding of market dynamics and risk management strategies. They conduct an in-depth sensitivity analysis on each of their acquisitions. This analysis applies various economic scenarios that include changes to rental rates, absorption periods, operating expenses, interest rates, exit values and holding periods. Cloud Toronto – FYBN  uses this analysis to develop their disciplined acquisition strategies.

 

Cloud Toronto – FYBN  Management Team

 

Dilip Mooparakath, Chief Executive Officer of Cloud Toronto – FYBN

 

Cloud Toronto is a visionary company founded by Dilip Mooparakath, a seasoned professional with a rich history in advertising, branding, and a successful transition into the IT hardware and software industry. Established in 2012 in Cupertino, California, Cloud Toronto has consistently demonstrated its commitment to innovation and excellence, continually expanding its portfolio to include groundbreaking ventures in commercial real estate and cutting-edge AI technology.

 

Founder’s Journey:

Dilip Mooparakath embarked on his career in advertising and branding, spending over a decade in the dynamic landscape of Mumbai, India. Following this enriching experience, he ventured briefly into the vibrant market of Toronto, Canada, gaining valuable international exposure.

 

Diversification into IT Hardware and Software:

In a strategic move, Cloud Toronto transitioned into the field of Cloud-Based Infrastructure as a Service (IaaS). This venture enabled the company to provide enterprise-level IT hardware and software solutions to a global clientele. With a focus on cutting-edge technology, the company has consistently delivered innovative solutions, catering to the ever-evolving needs of the IT industry.

 

Commercial Real Estate Solutions:

In 2017, Cloud Toronto expanded its horizons by delving into the domain of commercial real estate. Specializing in solutions tailored to the gas station and convenience store (C-store) businesses, the company has brought efficiency and innovation to the real estate market.

 

FYBN App:

An epitome of the company’s innovative spirit, Cloud Toronto created the FYBN App. This AI-based application has revolutionized the evaluation of retail business value. It provides invaluable insights and analytics, making it an indispensable tool for businesses in the competitive retail sector. The FYBN App has garnered recognition for its ability to provide real-time data-driven decision support.

 

Leadership and Education:

Dilip Mooparakath’s exceptional leadership is anchored in a solid educational foundation. He holds an MBA from Xavier Institute of Management (XIM) and is a graduate of Mumbai University. These qualifications, combined with years of hands-on experience, have positioned him as a dynamic and influential figure in the corporate world.

 

Market Position:

Today, Cloud Toronto enjoys a dominant presence in the gas station and convenience store business, competing head-to-head with established industry giants. The company’s unique blend of IT expertise, commercial real estate solutions, and AI-powered tools has firmly established its reputation as an industry leader and innovator.

 

Mission:

Cloud Toronto is dedicated to creating and implementing innovative solutions that empower businesses to thrive in an ever-changing marketplace. We are committed to the principles of excellence, integrity, and continuous improvement, ensuring that our clients stay ahead in their respective industries.

 

Conclusion:

Cloud Toronto, led by the visionary Dilip Mooparakath, is an embodiment of innovation, adaptability, and a relentless pursuit of excellence. With a history of success in advertising, IT hardware, software, and commercial real estate, and the groundbreaking FYBN App, the company continues to shape the future of businesses and industries across the globe. We invite you to explore the possibilities with us and experience the transformational power of Cloud Toronto.

 

GENERAL RISK FACTORS


 

Investment in the Units of the Fund offered hereby involves risk, including the risk of a complete loss of the investment and the general economic failure of the Fund. The following factors should be considered carefully in evaluating an investment in the Units offered hereby. The risks and uncertainties described below are not the only ones relevant to the Fund. The investment described herein involves a substantial risk and represents an illiquid investment. An investor should be able to bear the loss of the investor’s entire investment. You are urged to read this Memorandum and the attached exhibits and consult with your own legal, tax, and financial advisors before investing in the Fund. In certain applicable circumstances, “Fund” may refer to or include the Fund’s Affiliates, including any entities formed for the purpose of holding title to assets of the Fund.

 

GENERAL RISKS RELATED TO AN INVESTMENT IN THE FUND

 

 

The Fund is considered a “blind pool.”

Because the Fund has not identified all of the specific assets that the Fund may purchase with investment proceeds and operating proceeds, this is a “blind pool.” An investor will not be able to evaluate the economic merit of the Fund’s investments until after investments have been made.

 

To be successful, the Fund and its Managing Member (and its advisors) must, among other things:

 

·         identify and acquire investments that further the Fund’s investment objectives;

·         rely on the Fund’s advisors and their Affiliates to attract, integrate,

motivate, and retain qualified personnel to manage our day-to-day operations;

·         respond to competition for our targeted investments as well as for

potential investors;

·         rely on Affiliates and third parties to continue to build and expand the Fund’s operations structure to support its business; and

·         be continuously aware of, and interpret, market trends and conditions.

 

The Fund may not succeed in achieving these goals, and a failure to do so could cause the Fund’s investors to lose a significant portion of the value of their investment in the Fund.

An investment in the Units has limited liquidity. There is no public market for the Units and the Fund’s limited redemption program may not have sufficient liquidity to redeem Units. As a result, an investor should purchase Units as a long-term investment.

There is no current market for the Units. The Fund and the Managing Member do not expect that a public market will develop in the near future, if ever, and the Fund’s Certificate of Formation and LLC Agreement do not require a liquidity event at a fixed time in the future. Therefore, redemption of Units by the Fund, which must be agreed to by the Managing Member in its sole and absolute discretion, will likely be the only way for an investor to dispose of its Units. While the redemption program of the Fund was designed to allow investors to request redemptions of an Investor’s Units, the Funds ability to fulfill redemption requests is subject to a number of limitations. Most significantly, the vast majority of the Fund’s assets consist of properties that cannot generally be readily

liquidated without impacting the Fund’s ability to realize full value upon their disposition. Consequently, the Fund may not always have a sufficient


 

amount of cash to immediately satisfy redemption requests. If the Managing Member believes that redemption requests place an undue burden on the Fund’s liquidity, adversely affect its operations or risk having an adverse impact on the Fund as a whole, or otherwise determines that investing liquid assets in real properties or other illiquid investments rather than meeting redemption requests is in the best interests of the Fund as a whole, then the Managing Member may choose to redeem fewer Units than are the subject of redemption requests, or none at all. As a result, Members ability to have Units redeemed may be limited and at times a Member may not be able to liquidate their investment, any redemption requests by a Member will require the approval of the Managing Member, which may be withheld in its sole and absolute discretion.

Redemption rights of Members are subject to limitations.

The Managing Member may choose to redeem fewer Units than have been requested in any particular quarter to be redeemed by a Member or none at all, in its discretion at any time. This may be due to a lack of readily available funds because of adverse market conditions beyond the Managing Member’s control, the need to maintain liquidity for the Fund’s operations or because the Managing Member has determined that investing in real property or other illiquid investments is a better use of the Fund’s capital than redeeming Units. In addition, the aggregate NAV of total redemptions is limited, in any calendar quarter, to no more than five (5%) percent. of the Fund’s aggregate NAV (measured using the average aggregate NAV at the end of the immediately preceding three months). The Managing Member may make exceptions to, modify, or suspend redemptions of Units if in its reasonable judgment it deems such action to be in the Fund’s best interest and the best interest of our Members. All unsatisfied redemption requests must be resubmitted after the start of the next quarter, or upon the recommencement of the Unit redemptions, as applicable.

The Managing Member has the unilateral ability to redeem a Member. As a result, an Investor’s Units may be redeemed prior to the Investor achieving its investment objectives and may be redeemed at a valuation that the Investors disagrees with.

The Managing Member has the sole authority under Section 6 of the LLC Agreement to redeem the Units of a Member. Such Units will be redeemed at the relevant Net Asset Value per Unit. As a result, an Investor’s Units may be redeemed prior to the Investor achieving its investment objectives and may be redeemed at a valuation that the Investors disagrees with (Full Liquidation Value).

Property Valuations and Valuation Methodologies may not always be timely or reflect the realizable value of an asset.

For the purposes of calculating monthly NAV, valuations of properties held within the Fund will occur at least annually. Annual appraisals may be delayed for a short period in exceptional circumstances. Property valuations will be used to determine the NAV per Unit of a Class in connection with the issuance and redemption of Member Units. Because some time may lapse between the valuation of a property and the issuance or redemption of Member Units, the applicable property valuation may not accurately be reflected in the NAV per Unit as of the day of the acquisition or redemption, as applicable. Significant events may have occurred that materially changes the valuation of Fund properties including, without limitation, market fluctuations, natural disasters, unexpected lease vacancies, or defaults. The Managing Member may, but is not obligated to, adjust valuations of properties completed to account for the issuance of

additional Units (and any capital contributions made in connection


 

therewith), the redemption of Units (and the use of funds and proceeds to effectuate such redemptions), the sale, financing, or refinancing of the Fund’s assets, distribution of capital to Members and the Managing Member, and the retirement of any debt of the Fund.

 

The methodology for conducting valuations of properties held by the Fund will blend recent valuations and valuation opinions to determine the value of the individual value of the assets and will include utilizing applicable financial statements.

 

The valuation methodologies used to value the Fund’s properties and certain of the Fund’s investments will involve subjective judgments and projections and may not be accurate. Valuation methodologies will also involve assumptions and opinions about future events, which may or may not turn out to be correct. Valuations and appraisals of the Fund’s properties and other investments will be only estimates of fair value. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond the Fund’s control and the control of the Managing Member. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, the carrying value of an asset may not reflect the price at which the asset could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the appraisal. There will be no retroactive adjustment in the valuation of such assets, the NAV of Units for issuance or redemptions or NAV-based fees we paid to the Managing Member to the extent such valuations prove to not accurately reflect the realizable value the Fund’s assets. Because the price a Member will pay for Units, and the price at which Units may be redeemed are generally based on our prior month’s NAV per Unit, a Member may pay more than realizable value or receive less than realizable value for its investment.

A Member’s interest in the assets of the Fund will be diluted as additional Units are issued.

Holders of Participating Units will not have preemptive rights to any further Units the Fund issues in the future. The Fund shall have authority to issue an unlimited number of Units (including fractional Units) and the Fund may issue additional Units effective prior to the opening of business on each Dealing Day unless prohibited by the Managing Member. To the extent the Fund issues additional Units after a Member’s purchase in the Offering, such Member’s percentage ownership interest in the Fund will be diluted.

Economic events may adversely affect the Fund’s cash flow and ability to achieve its investment objectives.

Economic events affecting the United States economy, including events occurring outside the United States, such as the general negative performance of the real estate sector or the negative performance of the

U.S. economy as a whole, could depress the valuations of the Fund’s assets or cause decreased cash flow. Such events may cause Members to seek redemption of their Units or prohibit the Fund from raising additional capital through the sale of additional Units.

Moreover, if the Fund decides to sell certain assets to increase the Fund’s cash flow or redeem Units, such events may negatively impact the Fund’s ability to achieve its investment objectives.


COVID-19 could have a material impact on the Fund’s investments and operations, and the Fund will continue to monitor the COVID- 19 situation closely.

Beginning in late 2019, China, as well as several other countries, experienced an outbreak of a highly contagious form of an upper respiratory infection caused by COVID-19, a novel coronavirus strain commonly referred to as coronavirus. On January 30, 2020, the World Health Organization declared this outbreak a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19. There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a potential pandemic, and, as a result, the ultimate impact of the COVID-19 outbreak, COVID-19’s variants, or a similar health epidemic is highly uncertain and subject to change.

 

The COVID-19 pandemic has resulted in significant and widespread economic disruptions to, and uncertainty in, the global and U.S. economy, including in the regions in which we operate. More specifically, COVID- 19 has led to disruptions in regional and global trade markets and the logistics necessary to import, export, and deliver products and materials to companies and their customers. These disruptions and delays in the supply chain have led to a lack of availability of certain products and materials and inflation of the price of raw materials in the construction industry. The foregoing could impair the Fund’s ability to maintain operational standards, disrupt the operations of the Fund’s service providers, and lead to increased development and construction costs.

 

Cybersecurity and data privacy risks may have also increased during the COVID-19 pandemic, in part because of the increase in remote working, social distancing measures and increased reliance on remote connectivity for many aspects of the economy.

 

The Fund does not yet know the full extent of potential delays or impacts on its projected investments and operations or the global economy as a whole. However, the effects could have a material impact on the Fund’s investments and operations, and the Fund will continue to monitor the COVID-19 situation closely.

As of the date of this Memorandum, the United States market (as well as the larger global markets) are experiencing inflation in asset prices that have not been present in the market since the 1980’s, and such inflation may adversely affect the Fund’s financial condition and results of operations.

An increase in inflation could have an adverse impact on the Fund’s development costs, labor and service provider costs, floating rate mortgages, credit facilities, property operating expenses, and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ revenues and, in turn, our percentage rents, where applicable. In addition, leases of long-term duration or which include renewal options that specify a maximum rate increase may result in below-market lease rates over time if we do not accurately estimate inflation or market lease rates. Provisions of leases designed to mitigate the risk of inflation and unexpected increases in market lease rates, such as periodic rental increases, may not adequately protect the Fund’s operations from the impact of inflation or unexpected increases in market lease rates. If the Fund’s operating, development and other expenses are increasing faster than anticipated, the Fund’s business,

financial condition, results of operations, cash flows or our ability to satisfy


our debt service obligations or to pay distributions could be materially adversely affected.

 


Supply chain disruptions could create unexpected development, renovation or maintenance costs or delays and/or could impact the Fund’s tenants’ businesses, any of which could have a negative effect on the Fund’s results of operations.


The construction and building industry, similar to many other industries, has recently experienced worldwide supply chain disruptions due to a multitude of factors that are beyond the Fund’s control, including the COVID-19 pandemic, and such disruptions may continue to occur. Materials, parts and labor have also increased in cost over the recent past, sometimes significantly and over a short period of time. Because the Fund will be engaged in large-scale development projects, small-scale construction projects, such as building renovations and maintenance or and tenant improvements required under leases are a routine and necessary part of the Fund’s business, the Fund will most likely incur costs for a property development, renovation or maintenance that exceeds original estimates due to increased costs for materials or labor or other costs that are unexpected. The Fund also may be unable to complete renovation of a property or tenant space on schedule due to supply chain disruptions or labor shortages. In addition, tenants’ businesses may also be affected by supply chain issues (particularly for our industrial or retail properties), which could impact their ability to meet their obligations to us under their leases.


 


The Fund may make distributions from sources other than cash flow from operations, which may negatively impact the valuation of the Fund.


The Fund may make distributions from sources other than cash flow from operations, including borrowings by the Fund or its Affiliates, proceeds from offerings of the Units, or proceeds from assets sales, which may reduce the amount of capital the Fund ultimately may invest and negatively impact the value of the Fund and a Member’s investment.


 

 

 


The amount and source of distributions the Fund may make to its Members is uncertain and the Fund may be unable to generate sufficient cash flows from its operations to make distributions to the Members at any time in the future.


The Fund has not established a minimum distribution payment level, and the Fund’s ability to make distributions to its Members may be adversely affected by a number of factors, including the risk factors described in this Subscription Agreement. The Managing Member will make determinations regarding distributions based upon, among other factors, the Fund’s financial performance, its debt service obligations, its debt covenants, and capital expenditure requirements. Among the factors that could impair the Fund’s ability to make distributions to Members are:

 

·         the limited size of the Fund’s portfolio;

·         the Fund’s inability to invest, on a timely basis and in attractive investments, the proceeds from sales of Units;

·         the Fund’s inability to realize attractive risk-adjusted returns on its

investments;

·         unanticipated expenses or reduced revenues that reduce cash flow or non-cash earnings;

·         defaults in the Fund’s investment portfolio or decreases in the value of

its properties; and

·         the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.


As a result, the Fund may not be able to make distributions to the Members at any time in the future, and the level of any distributions the Fund does make to the Members may not increase or even be maintained over time.

 


Purchasers of Units by the Fund’s Affiliates in this Offering should not influence investment decisions of independent, unaffiliated investors.


Affiliated persons of the Fund may purchase Units. There are no written or binding commitments with respect to the acquisition of Units by these parties, and there can be no assurance as to the amount, if any, of Units these parties may acquire in the Offering. Any Units purchased by Affiliates will be purchased for investment purposes only. However, the investment decisions made by Affiliates who make such purchases should not influence an investor’s decision to invest in the Units, and an investor should make its own independent investment decision.


 


This is a “best efforts” offering. If the Fund is unable to raise a substantial amount of capital in the near term, the Fund may have difficulties investing in additional properties and/or repaying or refinancing indebtedness and the investor’s ability to achieve the Fund’s investment objectives, including diversification of our portfolio type and location, could be adversely affected.


This offering is being made on a “best efforts” basis, which means that the Fund, the sponsor of the Fund, and the broker-dealers participating in this Offering are only required to use their best efforts to sell the Units and have no firm commitment or obligation to purchase of the Units. As a result, the Fund may not be able to raise a substantial amount of additional capital in the near term. If the Fund is not able to accomplish this goal, the Fund may have difficulty in identifying and purchasing further suitable properties on attractive terms in order to meet the Fund’s investment objectives. Therefore, there could be a delay between the time the Fund receives net proceeds from the sale of Units and the time the Fund invests the new proceeds. For the Members, this could cause a substantial delay in the time it takes for their investment to realize the full potential returns. This could also adversely affect the Fund’s ability to pay regular distributions of cash flow from operations to the Members. If the Fund fails to timely invest the new proceeds of this Offering, the Fund’s ability to achieve its investment objections, including further diversification of the Funds’ portfolio by property and asset type and location, could be adversely affected. Failure to raise substantial capital also could hamper the Fund’s ability to repay or refinance indebtedness. In addition, subject to our investment policies, the Fund is not limited in the number or size of these investments or the percentage of net proceeds that the Fund may dedicate to a single investment. If the Fund uses all or substantially all of the future proceeds from this Offering to acquire one or a few investments, the likelihood of the Fund’s profitability being affected by the performance of any one of the Fund’s investments will increase, and an investment in the Units will be subject to greater risk.


 


If the Fund is unable to raise a sufficient amount of capital with respect to the Members Units, the Fund may not be able to construct a diverse portfolio of investments, and the value of a Member’s investment in the Fund may fluctuate more widely with the performance of specific investments.


The Fund is dependent upon the proceeds to be received from this Offering to conduct the Fund’s proposed investment activities. If the Fund is unable to raise a sufficient amount of capital with respect to the Members Units, the Fund may not be able to construct a diverse portfolio of investments, and the value of a Member’s investment in the Fund may fluctuate more widely with the performance of specific investments. An investor’s investment in Units would be subject to greater risk to the extent that the Fund lacks a diversified portfolio of investments. In addition, the Fund’s fixed operating expenses, as a percentage of gross income, would be higher, and the Fund’s financial condition and ability to pay distributions could be adversely affected if the Fund is unable to raise substantial funds in this Offering.


The Fund may suffer from delays if the Fund and its advisors are not able to locate suitable investments, which could adversely affect its ability to pay distributions and to achieve the Fund’s investment objectives.


If the Fund is able to raise capital quickly during this Offering, the Fund may have difficulty in identifying and purchasing suitable assets in a timely and efficient fashion. This may impact the value of a Member’s investment in the Member Units and the Fund’s ability to pay distribution to its Members.


 


The Managing Member has sole and absolute discretion of the Fund’s investment policies.


The Managing Member has sole and absolute discretion of the Fund’s investment and operational policies, including the Fund’s policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization, and distributions, at any time without the consent of Members, which could result in the Fund making investments that are differing from, and possibly riskier than, the types of investment described in this Memorandum. A change to the Fund’s investment strategy may, among other things, increase the Fund’s exposure to interest rate risk, default risk, and market fluctuations, all of which could affect the Fund’s ability to achieve the Fund’s investment objectives.


 


The Fund’s participation in a co- ownership arrangement may subject it to risks that otherwise may not be present in other investments.


The Fund may enter into co-ownership arrangements with respect to a portion of the assets the Fund acquires. Co-ownership arrangements involve risks generally not otherwise present with an investment in other assets, such as the following:

 

·         the risk that a co-owner may at any time have economic or business interests or goals that are or become inconsistent with the Fund’s business interests or goals;

·         the risk that a co-owner may be in a position to take action contrary to the Fund’s instructions or requests or contrary to our policies or objectives;

·         the possibility that an individual co-owner might become insolvent or bankrupt, or otherwise default under the applicable loan financing documents, which may constitute an event of default under all of the applicable loan financing documents or allow the bankruptcy court to reject the agreements entered into by the co-owners owning interests in the relevant property;

·         the possibility that a co-owner might not have adequate liquid assets to make cash advances that may be required in order to fund operations, maintenance, and other expenses related to the property, which could result in the loss of current or prospective tenants and may otherwise adversely affect the operation and maintenance of the property, and could cause a default under the loan financing documents applicable to the property and may result in late charges, penalties, and interest, and may lead to the exercise of foreclosure and other remedies by the lender;

·         the risk that a co-owner could breach agreements related to the property, which may cause a default under, and possibly result in personal liability in connection with, any loan financing documents applicable to the property, violate applicable securities laws, result in a foreclosure, or otherwise adversely affect the property and the co-ownership arrangement;

·         the risk that a default by any co-owner would constitute a default under any loan financing documents applicable to the property that


could result in a foreclosure and the loss of all or a substantial portion of the investment made by the co-owner;

·         the risk that the Fund could have limited control and rights, with management decisions made entirely by a third-party; and

·         the possibility that the Fund will not have the right to sell the property at a time that otherwise could result in the property being sold for its maximum value.

In the event that the Fund’s interests become adverse to those of the other co-owners, the Fund may not have the contractual right to purchase the co- ownership interests from the other co-owners. Even if the Fund is given the opportunity to purchase such co-ownership interests in the future, the Fund cannot guarantee that the Fund will have sufficient funds available at the time to purchase co-ownership interests from the co-owners.

 

The Fund may want to sell its co-ownership interests in a given property at a time when the other co-owners in such property do not desire to sell their interests. Therefore, because the Fund anticipates that it will be much more difficult to find a willing buyer for its co-ownership interests in a property than it would be to find a buyer for a property owned outright, the Fund may not be able to sell its interest in a property at the time the Fund would like to sell.

 

The co-ownerships interests may also be owned by Affiliates of the Fund or the sponsor of the Fund. There is no guarantee that such Affiliates will make decisions with respect to such real property or real property assets that are in the best interests of the Fund, and the Managing Member and the Fund may have no ability to require such Affiliates to act in the best interests of the Fund. Such adverse decisions may affect an investment in the Units or the Fund’s ability to make distributions to the Members.

 


The Fund is subject to privacy law compliance risks.


The adoption, interpretation and application of consumer, data protection and/or privacy laws and regulations (“Privacy Laws“) in the United States, Europe, and elsewhere are often uncertain and in flux. Compliance with Privacy Laws could significantly impact current and planned privacy and information security related practices, the collection, use, sharing, retention and safeguarding of personal data and current and planned business activities of the Fund Sponsors, the Fund and the Fund investments, and as such could increase costs and require the dedication of additional time and resources to compliance for such entities. A failure to comply with such Privacy Laws by any such entity or their service providers could result in fines, private and governmental legal action, sanctions, or other penalties, which could materially and adversely affect the results of operations and overall business, as well as have a negative impact on reputation and Fund performance. As Privacy Laws are implemented, interpreted, and applied, compliance costs for the Fund, and/or the Fund investments are likely to increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place.

 

For example, California has passed the California Consumer Privacy Act of 2018 and the California Privacy Rights Act of 2020, and the EU has enacted the General Data Protection Regulation (EU 2016/679), each of which broadly impacts businesses that handle various types of personal data. Such laws impose stringent legal and operational obligations on regulated businesses, as well as the potential for significant penalties.


Other jurisdictions, including other U.S. states, have passed similar laws, including the Colorado Privacy Act and the Virginia Consumer Data Protection Act, and other states have proposed or are considering similar Privacy Laws, which if enacted could impose similarly significant costs and operational and legal obligations. Such Privacy Laws and regulations are expected to vary from jurisdiction to jurisdiction, thus increasing costs, operational and legal burdens, and the potential for significant liability for regulated entities.

 


The Fund is subject to risks relating to cybersecurity.


The Fund, the Fund Sponsors, the Managing Member, any portfolio company or other subsidiary of the Fund and any of their investments and their respective affiliates, service providers, customers and counterparties use computers, other electronic devices, networks, software, on-line services and other tools (collectively, “Information Systems“) to process, store and transmit large amounts of electronic information, including without limitation information relating to (i) Fund transactions, (ii) the members of the Fund, and (iii) the business of the Fund and other Fund investments, including their customers and counterparties (collectively, “Data“). Data may include confidential information such as market sensitive data and personally identifiable information of members of the Fund, customers, and other parties. Information Systems are not able to protect Data under all circumstances and personnel may also fail to manage and update these Information Systems sufficiently to protect Data. In addition, computer malware, viruses, and computer hacking, and phishing attacks have become more prevalent and may occur on the Information Systems at any time and may successfully compromise the Information Systems’ security processes. Any breach of these or other Information Systems may cause Data to be lost or improperly accessed, used or disclosed, may impair performance, reliability and access to the Information Systems, may impair performance, reliability and access to the Information Systems, and cause the Managing Member, the Fund Sponsors, the Fund, its portfolio companies or other subsidiaries and other Fund investments and their respective affiliates, service providers, customers and/or counterparties to suffer, among other things, financial loss, disruption of business, liability to third parties, regulatory intervention or reputational damage. Any of the foregoing events could have a material adverse effect on the Fund, the Fund Sponsors, the Manger, the members of the Fund, and the members’ investments therein.


 

 

RISKS RELATED TO THE MANAGING MEMBER AND ITS ADVISORS AND AFFILIATES

 

 


The Fund’s Managing Member, including its advisors and Affiliates, face conflicts of interest caused by their compensation arrangements with the Fund, which could result in actions that are not in the long-term best interests of

the Fund’s investors.


The Fund’s Managing Member, including its advisors and Affiliates, are entitled to substantial fees from the Fund under the terms of the LLC Agreement and certain other agreements, including management contracts. These fees could influence the judgment of the Managing Member and its Affiliates in performing services for the Fund.


The Fund’s Managing Member faces a conflict of interest because the fees it receives for services are based on the Fund’s NAV, which the Managing Member and its affiliates are responsible for determining.


The Managing Member is paid an Asset Management Fee for its services based on the Fund’s NAV, which is calculated by the Managing Member and its affiliates. In addition, the calculation of the Managing Member Performance Allocation is based in part upon the Fund’s net assets (which is a component of its NAV). The calculation of the Fund’s NAV includes certain subjective judgments with respect to estimating, for example, the value of the Fund’s portfolio and accrued expenses, net portfolio income and liabilities, and therefore, the Fund’s NAV may not correspond to realizable value upon a sale of those assets. The Managing Member may benefit from the Fund retaining ownership of assets at times when Members may be better served by the sale or disposition of our assets in order to avoid a reduction in the Fund’s NAV. If the Fund’s NAV is calculated in a way that is not reflective of its actual NAV, then the purchase price of Units or the redemption proceeds of Units on a given date may not accurately reflect the value of the Fund’s portfolio, and a Member’s Units may be worth less than the purchase price or more than the redemption amount. The valuation of the Fund’s investments will affect the amount and timing of the Asset Management Fee paid to the Managing Member and its Managing Member Performance Allocation. As a result, there may be circumstances where the Managing Member is incentivized to determine valuations that are higher than the actual fair value of our investments.


 


Payment of fees to the Managing Member and its advisors and Affiliates will reduce the cash available for investment and distribution and will increase the risk that an investor will not be able to recover the amount of its investment in the Units.


The Managing Member and its advisors and Affiliates perform services for the Fund in connection with the distribution of the Fund’s Units, the selection and acquisition of the Fund’s investments, and the management of the Fund’s assets. The Fund pays its advisors and Affiliates fees for these services, which will reduce the amount of cash available for investments or distributions to the Fund’s Members. The fees the Fund pays to its Managing Member and its Affiliates decrease the value of the Fund’s portfolio and increase the risk investors may not receive a return on their investment in the Units.


 


The Managing Member faces conflicts of interest relating to the incentive fee structure under the Fund’s LLC Agreement, which could result in actions that are not necessarily in the long-term best interests of the Fund’s investors.


Pursuant to the terms of the LLC Agreement, the Managing Member is entitled to the Managing Member Performance Allocation based on the profits of the Fund. The Managing Member, therefore, could be motivated to recommend riskier investments in order for the Fund to generate the specified levels of performance that would entitle the Managing Member to incentive compensation.


 


The Managing Member and its Affiliates face conflicts of interest with respect to the allocation of investment opportunities between the Fund and other investment programs that are managed by Affiliates of the Managing Member.


The Fund relies on the Managing Member and its Affiliates and advisors to identify and select potential investment opportunities on the Fund’s behalf. At the same time, the Managing Member’s Affiliates and advisor manage other investment programs sponsored by the sponsor of the Fund that may have investment objectives and investment strategies that are similar to the Fund’s objectives and strategies. As a result, such Affiliates and advisors could face conflicts of interest in allocating acquisition opportunities as they become available. Each investor will not have the opportunity to evaluate the manner in which these conflicts of interest are resolved before or after making the investment in Units.


The Managing Member’s advisors and officers, including its key personnel and officers, face conflicts of interest related to the positions they hold with affiliated and unaffiliated entities, which could hinder the Fund’s ability to successfully implement its business strategy and to generate returns to the Members.


The Managing Member is managed by Cloud Toronto – FYBN Cos. The management team of Cloud Toronto – FYBN Cos each have other business interests as well. As a result, key personnel may have duties to other entities and their stockholders, members, and Members, in addition to business interests in other entities. These duties to such other entities and persons may create conflicts with the duties that they owe indirectly to the Fund. There is a risk that their loyalties to these other entities could result in actions or inactions that are adverse to the Fund’s business and violate their fiduciary duties to the Fund, which could harm the implementation of the Fund’s investment strategy and its investment and leasing opportunities.

 

Conflicts with the Fund’s business and interests are most likely to arise from involvement in activities related to (1) allocation of new investments and management time and services between the Fund and the other entities,

(2) the Fund’s purchase of properties from, or sale of properties to, affiliated entities, (3) the timing and terms of the investment in or sale of an asset, (4) development of the Fund’s properties by Affiliates, (5) investments with Affiliates of the Managing Member, and (6) compensation to the Managing Member and its Affiliates. If the Fund does not successfully implement its investment strategy, the Fund may be unable to maintain or increase the value of its assets and its operating cash flows and ability to pay distributions could be adversely affected.


 


The Fund’s success depends to a significant degree upon certain key personnel of the Managing Member. If the Managing Member is unable to obtain key personnel, the Fund’s ability to achieve its investment objectives could be delayed or hindered, which could adversely affect the Fund’s ability to pay distributions to Members.


The Fund’s success depends to a significant degree upon the contributions of certain executive officers and other key personnel of the Managing Member, as described in detail in this Memorandum, each of whom would be difficult to replace. The Fund cannot guarantee that all of these key personnel, or any particular person, will remain affiliated with the Fund, its sponsor of the Fund, and/or advisors and Affiliates. If any of the Fund’s key personnel were to cease their affiliation with the Managing Member, the Fund’s operating results could suffer. Further, as of the date of this Memorandum the Fund does not separately maintain key person life insurance on any person and the Fund may not do so in the future. The Fund believes that its future success depends, in large part, upon the Managing Member’s ability to hire and retain highly skilled managerial, operational, and marketing personnel. Competition for such personnel is intense, and the Fund cannot assure potential investors that the Fund’s Sponsor, Managing Member, or advisors will be successful in attracting and retaining such skilled personnel. If the Managing Member or its Affiliates lose or are unable to obtain the services of key personnel, the Fund’s ability to implement its investment strategies could be delayed or hindered, and the amount available for distribution to the Members may decline.


 


The Fund’s Sponsors are affiliate entities of the Managing Member and, therefore, each investor will not have the benefit of an independent review of the Memorandum or of the Fund that customarily is performed.


The Fund’s Sponsors are affiliate entities of the Managing Member and, as a result, are not in