PART II AND III 2 tm2033161d1_partiiandiii.htm PART II AND III

 

Post-Qualification Offering Circular No. 3

File No. 024-11178

 

This Post-Qualification Offering Circular Amendment No. 3 amends the Offering Circular of Collectable Sports Assets, LLC (the “Company”) originally qualified on July 22, 2020 and most recently amended effective October 8, 2020 solely to add to the Offering Circular information with respect to sixteen additional series of Interests to be offered by the Company.

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. To the extent not already qualified under Regulation A, these securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained. This Preliminary Offering Circular constitutes the Final Offering Circular for Series #RUTHGEHRIGBALL, Series #CURRYBASKET, Series #LEBRONROOKIE, Series #MANTLEMINT1953, #SERIESJORDANPSA10, #COBBMINTE98, #LUKAROOKIE, #MAHOMESROOKIE and #MAGICBIRDDRJ.

 

PRELIMINARY OFFERING CIRCULAR

DATED OCTOBER 15, 2020

 

Collectable Sports Assets, LLC

 

333 Westchester Avenue, Suite W2100

White Plains, NY 10604

914-372-7337

www.collectable.com

 

Best Efforts Offering of Series Membership Interests

 

Collectable Sports Assets, LLC, a Delaware series limited liability company (“we,” “us,” “our,” “CSA” or the “Company”) is offering, on a best efforts basis, a minimum (the “Total Minimum”) to a maximum (the “Total Maximum”) of membership interests of each of the series of the Company described below in the “Series Membership Interests Overview” and in the “USE OF PROCEEDS AND DESCRIPTION OF UNDERLYING ASSETS” section of this Offering Circular. The sale of membership interests is being facilitated by Dalmore Group, LLC (the “BOR” or “Dalmore”), a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and member of FINRA, which is registered in each state where the offer or sales of the Interests will occur. It is anticipated that Interests will be offered and sold only in states where the BOR is registered as a broker-dealer. For the avoidance of doubt, the BOR does not and will not solicit purchases of Interests or make any recommendations regarding the Interests to prospective investors.

 

All of the series of the Company offered hereunder may collectively be referred to herein as the “Series” and each, individually, as a “Series”. The interests of all Series described above may collectively be referred to herein as the “Interests” and each, individually, as an “Interest” and the offerings of the Interests may collectively be referred to herein as the “Offerings” and each, individually, as an “Offering.” See “Description of the Interests Offered” for additional information regarding the Interests.

 

 

 

Each Offering is being conducted under Tier II of Regulation A (17 CFR 230.251 et. seq.) and the information contained herein is being presented in Offering Circular format. The Company is not offering, and does not anticipate selling, Interests in any of the Offerings in any state where the BOR is not registered as a broker-dealer. The subscription funds advanced by prospective Investors as part of the subscription process will be held in a non-interest-bearing escrow account with North Capital Private Securities Corporation, which is acting as the escrow agent (“Escrow Agent”), and will not be commingled with the operating account of the Series, until, if and when there is a Closing with respect to that Series. See “Plan of Distribution and Subscription Procedure” and “Description of Interests Offered” for additional information.

 

 Series Membership Interests Overview Price to
Public		 Underwriting
Discounts &
Commissions (1)(2)(3)
 Number
of Units		 Proceeds
to Issuer		 Proceeds to
other persons(4) 
             
Series #RUTHGEHRIGBALL Per Unit $36.00 $0.36 -- -- --
  Total Minimum $72,000 $1,720 2,000 $1,040 $69,240
  Total Maximum $90,000 $1,900 2,500 $20,760 $69,240
             
Series #CURRYBASKET Per Unit $20.00 $0.20 -- -- -- 
  Total Minimum $40,000 $1,400 2,000 $460 $38,140
  Total Maximum $50,000 $1,500 2,500 $11,860 $38,140
             
Series #LEBRONROOKIE Per Unit $25.00 $0.25 -- -- -- 
  Total Minimum $50,000 $1,500 2,000 $550 $47,950
  Total Maximum $60,000 $1,600 2,400 $12,050 $47,950
             
Series #KAWHIBASKET Per Unit $30.00 $0.30 -- -- --
  Total Minimum (5) $42,000 $1,420 1,400 $691 $39,890
  Total Maximum $50,000 $1,500 1,667 $10,111 $39,890
             
Series #MANTLEMINT1953 Per Unit $25.00 .25 --   --
  Total Minimum (6) $1,000,000 $10,520 40,000 $2,280 $987,200
  Total Maximum (6) $1,200,000 $12,510 48,000 $200,290 $987,200
             
Series #JORDANPSA10 Per Unit $10.00 $0.10 -- -- --
  Total Minimum $100,000 $2,000 10,000 $1,000 $97,000
  Total Maximum  $120,000 $2,200 12,000 $20,800 $97,000
             
Series #COBBMINTE98 Per Unit $35.00 $0.35 -- -- --
  Total Minimum $350,000 $4,500 10,000 $2,700 $342,800
  Total Maximum $385,000 $4,850 11,000 $37,350 $342,800
             
Series #LUKAROOKIE Per Unit $7.00 $0.07 -- -- --
  Total Minimum (7) $154,000 $2,515 22,000 $1,635 $149,850
  Total Maximum (7) $200,000 $2,975 26,857 $47,172 $149,850
             
Series #MAHOMESROOKIE Per Unit $15.00 $0.15 -- -- --
  Total Minimum (8) $75,000 $1,734 5,000 $1,916 $71,350
  Total Maximum (8) $112,500 $2,109 7,500 $39,041 $71,350
             
Series #MAGICBIRDDRJ Per Unit $80.00 $0.80 -- -- --
  Total Minimum $352,000 $4,470 4,400 $930 $346,600
  Total Maximum $360,000 $4,550 4,500 $8,850 $346,600

 

 

 

 

 

Series #JACKIEROBINSONAUTOBAT Per Unit $48.00 $0.48 -- -- --
  Total Minimum (9) $48,000 $1,470 1,000 $680 $45,850
  Total Maximum (9) $52,800 $1,518 1,100 $5,432 $45,850
             
Series #UNITAS1965JERSEY Per Unit $20.00 $0.20 -- -- --
  Total Minimum (10) $103,000 $2,007 5,150 $1,143 $99,850
  Total Maximum (10) $106,000 $2,037 5,300 $4,113 $99,850
             
Series #ALIWBCBELT Per Unit $10.00 $0.10 -- -- --
  Total Minimum (11) $128,000 $2,234 12,800 $416 $125,350
  Total Maximum (11) $135,000 $2,304 13,500 $7,346 $125,350
             
Series #CHAMBERLAINHSUNIFORM Per Unit $25.00 $0.25 -- -- --
  Total Minimum (12) $144,000 $2,408 5,760 $1,242 $140,350
  Total Maximum (12) $146,500 $2,443 5,860 $3,717 $140,350
             
Series #ALCINDORUCLAJACKET Per Unit $16.00 $0.16 -- -- --
  Total Minimum (13) $116,000 $2,134 7,250 $516 $113,350
  Total Maximum (13) $120,000 $2,174 7,500 $4,476 $113,350
             
Series #TROUTGLOVE Per Unit $20.00 $0.20 -- -- --
  Total Minimum $322,000 $4,054 16,100 $9,596 $308,350
  Total Maximum $326,000 $4,094 16,300 $13,556 $308,350
             
Series #55JACKIEROBINSONPSA10 Per Unit $36.00 $0.36 -- -- --
  Total Minimum $360,000 $4,372 10,000 $278 $355,350
  Total Maximum $367,200 $4,444 10,200 $7,406 $355,350
             
Series #MOOKIEBETTSGLOVE Per Unit $50.00 $0.50 -- -- --
  Total Minimum $68,000 $1,647 1,360 $403 $65,950
  Total Maximum $70,000 $1,667 1,400 $2,383 $65,950
             
Series #LEBRONBLACKREFRACTOR Per Unit $25.00 $0.25 -- -- --
  Total Minimum $145,000 $2,430 5,800 $720 $141,850
  Total Maximum $150,000 $2,480 6,000 $5,670 $141,850
             
Series #LAMARJACKSONBASKET Per Unit $8.00 $0.08 -- -- --
  Total Minimum $88,000 $1,868 11,000 $982 $85,150
  Total Maximum $90,000 $1,888 11,250 $2,962 $85,150
             
Series #GIANNISRPA Per Unit $20.00 $0.20 -- -- --
  Total Minimum $132,000 $2,302 6,600 $448 $129,250
  Total Maximum $136,000 $2,342 6,800 $4,408 $129,250
             
Series #BRADYROOKIE Per Unit $10.00 $0.10 -- -- --
  Total Minimum $69,000 $1,669 6,900 $181 $67,150
  Total Maximum $71,000 $1,689 7,100 $2,161 $67,150
             
Series #1986WAX Per Unit $25.00 $0.25 -- -- --
  Total Minimum (14) $148,500 $2,460 5,940 $690 $145,350
  Total Maximum (14) $150,000 $2,475 6,000 $2,175 $145,350
             
Series #SEAVER1971PSA10 Per Unit $25.00 $0.25 -- -- --
  Total Minimum (15) $52,000 $1,486 2,080 $989 $49,525
  Total Maximum (15) $52,500 $1,491 2,100 $1,484 $49,525
             
Series #GRETZKYOPEECHEE1979 Per Unit $1.00 $.01 -- -- --
  Total Minimum $79,500 $1,748 79,500 $402 $77,350
  Total Maximum $81,000 $1,763 81,000 $1,887 $77,350
             
Series #ZIONRPABGS9 Per Unit $20.00 $.20   -- --
  Total Minimum $129,000 $2,236 6,450 $1,054 $125,710
  Total Maximum $132,000 $2,266 6,600 $4,024 $125,710
             

 

 

 

 

 

(1) Dalmore will be acting as a broker of record and entitled to a Brokerage Fee as reflected herein and described in greater detail under “Plan of Distribution and Subscription Procedure – Broker” and “– Fees and Expenses” for additional information.

  

(2) We expect to engage a firm to act either as a transfer agent or as custodian of interests and hold accounts for interest holders in connection with the Company’s offerings (either, a “Custodian”). It is anticipated that the Custodian will be entitled to a Custody Fee as reflected herein and described in greater detail under “Plan of Distribution and Subscription Procedure – Custodian” and “– Fees and Expenses” for additional information.

 

(3) No underwriter has been engaged in connection with the Offering (as defined below) and neither the BOR, nor any other entity, receives a finder’ fee or any underwriting or placement agent discounts or commissions in relation to any Offering of Interests (as defined below).

 

(4) See “USE OF PROCEEDS AND DESCRIPTION OF UNDERLYING ASSETS”. The Manager will purchase a 0.05% interest in each Series. There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own. Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy any Total Minimum or for any other reason in order to close an Offering.

 

(5) Asset seller is obtaining interests in the Series based upon retaining 45% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $63,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $70,350 (2,345 units) and a Total Maximum of $78,350 (2,612 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(6) Asset seller is obtaining interests in the Series based upon retaining 60% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $2,325,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $2,395,000 (95,800 units) and a Total Maximum of $2,595,000 (103,800 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(7) Asset seller is obtaining interests in the Series based upon retaining 20% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $170,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $188,000 (26,857 units) and a Total Maximum of $233,997 (33,428 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(8) Asset seller is obtaining interests in the Series based upon retaining 50% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $120,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $135,000 (9,000 units) and a Total Maximum of $172,500 (11,500 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

 

 

(9) Asset seller is obtaining interests in the Series based upon retaining 51% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $75,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $86,250 (1,797 units) and a Total Maximum of $91,050 (1,897 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(10) Asset seller is obtaining interests in the Series based upon retaining 51% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $175,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $192,250 (9,613 units) and a Total Maximum of $195,250 (9,763 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(11) Asset seller is obtaining interests in the Series based upon retaining 75% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $400,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $428,000 (42,800 units) and a Total Maximum of $435,000 (43,500 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(12) Asset seller is obtaining interests in the Series based upon retaining 51% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $250,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $271,500 (10,860 units) and a Total Maximum of $274,000 (10,960 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(13) Asset seller is obtaining interests in the Series based upon retaining 51% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $. Valuing the seller’s interest using that valuation would result in a Total Minimum of $ ( units) and a Total Maximum of $ ( units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(14) Asset seller is obtaining interests in the Series based upon retaining 25% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $175,000. Valuing the seller’s interest using that valuation would result in a Total Minimum of $192,250 (7,690 units) and a Total Maximum of $193,750 (7,750 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

(15) Asset seller is obtaining interests in the Series based upon retaining 45% of the specified value of the Underlying Asset. The value of the Underlying Asset was established at $77,500. Valuing the seller’s interest using that valuation would result in a Total Minimum of $86,875 (3,475 units) and a Total Maximum of $87,375 (3,495 units). The table reflects only those Interests being offered to purchasers other than the asset seller.

 

 

 

 

The Company is managed by CS Asset Manager, LLC, a Delaware limited liability company (the “Manager”).

 

It is anticipated that the Company’s core business will be the identification, acquisition, marketing and management of memorabilia and collectible items, collectively referred to as “Memorabilia Assets” or the “Asset Class,” for the benefit of the investors. The Series assets referenced in the “Use of Proceeds and Description of Underlying Assets” section may be referred to herein, collectively, as the “Underlying Assets” or each, individually, as an “Underlying Asset.” Any individuals, dealers or auction company which owns an Underlying Asset prior to a purchase of an Underlying Asset by the Company in advance of a potential offering or the closing of an offering from which proceeds are used to acquire the Underlying Asset may be referred to herein as an “Asset Seller.” See “Description of the Business” for additional information regarding Asset Classes.

 

The Manager also will serve as the asset manager (the “Asset Manager”) for each Series of the Company and provides services to the Underlying Assets in accordance with each Series’ asset management agreement.

 

Interests represent an investment in a particular Series and thus indirectly the Underlying Asset and do not represent an investment in the Company or the Manager generally. We do not anticipate that any Series will own any assets other than the Underlying Asset associated with that Series. However, we expect that the operations of the Company, including the issuance of additional Series of Interests and their acquisition of additional assets, will benefit Investors by enabling each Series to benefit from economies of scale.

 

A purchaser of the Interests may be referred to herein as an “Investor” or “Interest Holder.” There will be a separate closing with respect to each Offering (each, a “Closing”). The Closing of an Offering will occur on the earliest to occur of (i) the date subscriptions for the Total Maximum Interests for a Series have been accepted or (ii) a date determined by the Manager in its sole discretion, provided that subscriptions for the Total Minimum Interests of such Series have been accepted. If a Closing has not occurred, an Offering will be terminated upon the earlier of: (i) the date which is one year (which period may be extended with respect to a particular Series by an additional six months by the Manager in its sole discretion) from the date the Offering Circular or Amendment, as applicable, that is applicable to that Series is qualified by the U.S. Securities and Exchange Commission (the “Commission”); or (ii) any date on which the Manager elects to terminate the Offering for a particular Series in its sole discretion.

 

No securities are being offered by existing security-holders.

 

 

 

A purchase of Interests in a Series does not constitute an investment in either the Company or an Underlying Asset directly, or in any other Series of Interest. This results in Investors having limited voting rights, which are solely related to a particular Series, and are further limited by the Amended and Restated Limited Liability Company Agreement of the Company (as amended from time to time, the “Operating Agreement”), described further in this Offering Circular. Investors will have voting rights only with respect to certain matters, primarily relating to amendments to the Operating Agreement that would adversely change the rights of the Interest Holders and removal of the Manager for “cause”. The Manager and the Asset Manager thus retain significant control over the management of the Company, each Series and the Underlying Assets. Furthermore, because the Interests in a Series do not constitute an investment in the Company as a whole, holders of the Interests in a Series are not expected to receive any economic benefit from, or be subject to the liabilities of, the assets of any other Series. In addition, the economic interest of a holder in a Series will not be identical to owning a direct undivided interest in an Underlying Asset because, among other things, a Series will be required to pay corporate taxes before distributions are made to the holders, and the Asset Manager will receive a fee in respect of its management of the Underlying Asset.

 

There is currently no public trading market for any Interests, and an active market may not develop or be sustained. If an active public or private trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your Interests at any price. Even if a public or private market does develop, the market price could decline below the amount you paid for your Interests.

 

The Interests offered hereby involve a high degree of risk and are highly speculative in nature, and should be purchased only by persons who can afford to lose their entire investment. There can be no assurance that the Company’s investment objectives will be achieved or that a secondary market would ever develop for the Interests, whether via third party registered broker-dealers or otherwise. Prospective Investors should obtain their own legal and tax advice prior to making an investment in the Interests and should be aware that an investment in the Interests may be exposed to other risks of an exceptional nature from time to time. See the “Risk Factors” section of the Offering Circular.

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN ANY OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO HTTP://WWW.INVESTOR.GOV.

 

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

 

 

 

TABLE OF CONTENTS

COLLECTABLE SPORTS ASSETS, LLC

 

SECTION  Page
   
CAUTIONARY NOTE STATEMENT REGARDING FORWARD-LOOKING STATEMENTS  
   
OFFERING SUMMARY 2
   
RISK FACTORS 23
   
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST 40
   
DILUTION 45
   
USE OF PROCEEDS AND DESCRIPTION OF UNDERLYING ASSETS 46
   
SERIES #RUTHGEHRIGBALL 46
   
SERIES #CURRYBASKET 50
   
SERIES #LEBRONROOKIE 54
   
SERIES #KAWHIBASKET 58
   
SERIES #MANTLEMINT1953 62
   
SERIES #JORDANPSA10 65
   
SERIES #COBBMINTE98 67
   
SERIES #LUKAROOKIE 69
   
SERIES #MAHOMESROOKIE 72
   
SERIES #MAGICBIRDDRJ 74
   
SERIES #JackieRobinsonAutoBat 76
   
SERIES #Unitas1965Jersey 79
   
SERIES #AliWBCBelt 83
   
SERIES #ChamberlainHSUNIFORM 87
   
SERIES #AlcindorUCLAJACKET 91
   
SERIES #TroutGlove 95
   
SERIES #55JackieRobinsonPSA10 98
   
SERIES #MookieBettsGlove 101
   
SERIES #LeBronBlackRefractor 104
   
SERIES #LamarJacksonBasket 107
   
SERIES #GiannisRPA 110
   
SERIES #BradyRookie 113
   
SERIES #1986WAX 116
   
SERIES #Seaver1971PSA10 119
   
SERIES #gretzkyopeechee1979 122
   
SERIES #zionrpaBGS9 125
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 128
   
PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE 131
   
DESCRIPTION OF THE BUSINESS 141
   
MANAGEMENT 154
   
COMPENSATION 160
   
PRINCIPAL INTEREST HOLDERS 160
   
DESCRIPTION OF INTERESTS OFFERED 161
   
MATERIAL UNITED STATES TAX CONSIDERATIONS 170
   
WHERE TO FIND ADDITIONAL INFORMATION 175
   
Financial Statements F-1

 

EXHIBITS TO OFFERING CIRCULAR

1.

Amended and Restated Limited Liability Company Agreement (as amended to date)

2.Form of Subscription Agreement
3.Escrow Agreement

 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The information contained in this Offering Circular includes some statements that are not historical and that are considered “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our development plans for our business; our strategies and business outlook; anticipated development of the Company, the Manager and each Series of the Company; and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations). These forward-looking statements express the Manager’s expectations, hopes, beliefs, and intentions regarding the future. In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates”, “believes”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “might”, “plans”, “possible”, “potential”, “predicts”, “projects”, “seeks”, “should”, “will”, “would” and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward looking statements, but the absence of these words does not mean that a statement is not forward-looking.

 

The forward-looking statements contained in this Offering Circular are based on current expectations and beliefs concerning future developments that are difficult to predict. Neither the Company nor the Manager can guarantee future performance, or that future developments affecting the Company or the Manager will be as currently anticipated. These forward-looking statements are not guarantees of future performance and involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Among such risks, trends and other uncertainties, which in some instances are beyond our control, are:

 

•Our ability to identify genuine items of sports memorabilia and appropriately price and purchase them;

 

•Our ability to develop and implement programs that will generate revenues from the assets that are acquired;

 

•Our ability to monetize any assets that we acquire at an appropriate time;

 

•The volatility of the sports memorabilia markets;

 

  • Our ability to manage the expenses associated with owning, insuring and maintaining the assets that we acquire;

 

•The impact and duration of adverse conditions in certain aspects of the economy affecting the economy in general and the sports memorabilia business, in particular;

 

•Competition; and

 

•Other risks detailed from time to time in our publicly filed documents.

 

 

 

The list of risks and uncertainties set forth above is only a summary of what we believe are some of the most important factors and is not intended to be exhaustive. You should carefully review the risks and information contained in this Offering Circular and any accompanying supplement, including, without limitation, the “Risk Factors” section of this Offering Circular. New factors may also emerge from time to time that could materially and adversely affect us. All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should any of the parties’ assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements. These forward-looking statements speak only as of the date of this Offering Circular or the date of any applicable supplement. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

Trademarks and Trade Names

 

From time to time, we own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This Offering Circular may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this Offering Circular is not intended to, and does not imply, a relationship with us or an endorsement or sponsorship by or of us. Solely for convenience, the trademarks, service marks and trade names referred to in this Offering Circular may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

 

Additional Information

 

You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with additional information or information different from that contained in this Offering Circular filed with the Commission. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, certain Series of Interests only in jurisdictions where offers and sales are permitted. This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor may there be any sales of these securities in, any state or other jurisdiction in which such offer, solicitation or sale would be unlawful before registration or qualification of the offer and sale under the laws of such state or jurisdiction. The information contained in this Offering Circular is accurate only as of the date of this document, regardless of the time of delivery of this Offering Circular or any sale of a Series of Interests. Our business, financial condition, results of operations, and prospects may have changed since that date.

 

1

 

  

 

OFFERING SUMMARY

 

The following summary is qualified in its entirety by the more detailed information appearing elsewhere herein and, in the Exhibits, hereto. You should read the entire Offering Circular and carefully consider, among other things, the matters set forth in the section captioned “Risk Factors.” You are encouraged to seek the advice of your attorney, tax consultant, and business advisor with respect to the legal, tax, and business aspects of an investment in the Interests. All references in this Offering Circular to “$” or “dollars” are to United States dollars.

 

The Company:

The Company is Collectable Sports Assets, LLC, a Delaware series limited liability company formed January 20, 2020.

   
Underlying Assets and Offering Price Per Interest: It is anticipated that the Company’s core business will be the identification, acquisition, marketing and management of memorabilia and collectable items, the Memorabilia Asset, as the Underlying Assets of the Company.  It is not anticipated that any Series would own any assets other than its respective Underlying Asset, plus cash reserves for maintenance, storage, insurance and other expenses pertaining to each Underlying Asset and amounts earned by each Series from the monetization of the Underlying Asset.  The Underlying Asset for each Series that currently is being offered by this Offering Circular is described below and the Offering Price per Interest for each Series is detailed in the Use of Proceeds and Description of Underlying Assets section of this Offering Circular.

 

  SERIES #RuthGehrigball
  Sport Baseball
  Professional League Major League Baseball
  Player(s) Babe Ruth & Lou Gehrig
  Team  New York Yankees
  Season 1933
  Memorabilia Type Signed baseball
  Authentication PSA/DNA (AH05008) / Beckett (A17335)
  Grade PSA/DNA 7.5 / Beckett (Ruth 8, Gehrig 7)

 

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  SERIES #CURRYBASKET
  Sport Basketball
  Professional League National Basketball Association
  Player Stephen Curry
  Team  Golden State Warriors
  Season 2009-2010
  Memorabilia Type Trading Cards (set of 3)
  Manufacturer Panini National Treasure and Topps
  Card # in Set (1) 64/99; (2) 1146; (3) not numbered
  Total Cards in Set (1) 99; (2) 2009; (3) not numbered
  Subject Stephen Curry
  Authentication (1) PSA 43276099; (2) SGC 4009679-010; (3) SGC 4009679-003
  Grade (1) NM-MT 8; (2) A-AUTH; (3) Auto grade 9

 

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  SERIES #LEBRONROOKIE
  Sport Basketball
  Professional League National Basketball Association
  Player(s)

LeBron James

  Team  Cleveland Cavaliers
  Season 2003
  Memorabilia Type Rookie trading card, autographed
  Authentication Beckett (003865873)
  Grade Beckett 9.5 with subgraded 10, 9.5, 9.5, 9 / Autograph graded 10

 

  SERIES #KAWHIBASKET
  Sport Basketball
  Professional League National Basketball Association
  Player(s) Kawhi Leonard
  Team  San Antonio Spurs
  Season 2012-2013
  Memorabilia Type Rookie trading cards
  Authentication Collection of 30 cards. Serial Numbers listed on page 53-54
  Grade PSA 10 GEM-MT

 

4

 

 

  SERIES #MANTLEMINT1953
  Sport Baseball
  Professional League Major League Baseball
  Player(s) Mickey Mantle
  Team  New York Yankees
  Season 1953
  Memorabilia Type Trading card
  Manufacturer Topps
  Card # in set 82 – Short Print
  Population Report 1 of 2 (as of 7/1/2020)
  Subject Mickey Mantle
  Authentication PSA 24690215
  Grade PSA GEM-MINT 10; PWCC-E Serial Number: 797731

 

  SERIES #JORDANPSA10
  Sport Basketball
 

Professional League

 National Basketball Association
  Player

Michael Jordan

  Team  Chicago Bulls
  Season 1986-1987
  Memorabilia Type Trading Card
  Manufacturer Fleer
  Card # in Set 57 of 132
  Population Report

315 (as of 9/16/2020)

  Subject

Michael Jordan

  Authentication

PSA 22651769

  Grade

Gem Mint 10

 

  SERIES #COBBMINTE98
  Sport Baseball
  Professional League Major League Baseball
  Player Ty Cobb
  Team  Detroit Tigers
  Season 1910
  Memorabilia Type Trading Card
  Manufacturer Anonymous
  Total cards in set

30

 

Population Report

 1 of 2
  Subject Ty Cobb
  Authentication PSA 41584312
  Grade GEM Mint 10

 

  SERIES #LUKAROOKIE
  Sport Basketball
  Professional League National Basketball Association
  Player Luka Doncic
  Team Dallas Mavericks
  Season 2018-2019
  Memorabilia Type Trading Card
  Manufacturer Panini
  Card Number 63
  Population 99
  Subject Luka Doncic
  Authentication BGS 0011695136
  Grade 9 Mint, Centering 9.5, Edges 9, Corners 9, Surface 9, Autograph 10

 

  SERIES #MAHOMESROOKIE
  Sport Football
  Professional League National Football League
  Player Patrick Mahomes
  Team Kansas City Chiefs
  Season 2017
  Memorabilia Type Trading Card
  Manufacturer Panini (Flawless Rookie Patch Autographs Emerald)
  Card Number 1
  Print Run 5
  Subject Patrick Mahomes
  Authentication BGS 0010704662
  Grade 9.5 Gem Mint, Centering 9.5, Edges 9.5, Corners 9.5, Surface 10, Autograph 10

 

  SERIES #MAGICBIRDDRJ
  Sport Basketball
  Professional League National Basketball Association
  Player Magic Johnson, Larry Bird, Julius Erving
  Team Los Angeles Lakers, Boston Celtics, Philadelphia 76ers
  Year 1980
  Memorabilia Type Trading Card
  Manufacturer Topps- Scoring Leader
  Set Number N/A
  Population Report 23 (PSA Gem Mint 10’s)
  Subject Magic Johnson, Larry Bird, Julius Erving
  Authentication PSA 23073896
  Grade Gem Mint 10

 

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  SERIES #JROBINSONAUTOBAT
  Sport Baseball
  Professional League Major League Baseball
  Player Jackie Robinson
  Team Dodgers
  Season 1949-1950
  Memorabilia Type Baseball Bat
  Manufacturer Hillerich & Bradsby
  Subject Jackie Robinson
  Authentication James Spence Authentication #BB63117
  Grade N/A

 

  SERIES #UNITAS1965Jersey
  Sport Football
  Professional League National Football League
  Player Johnny Unitas
  Team Baltimore Colts
  Season 1965
  Memorabilia Type Jersey
  Manufacturer Macgregor
  Subject Johnny Unitas
  Authentication

LOA from Sports Investors Authentication 2009 l9Gl

Photo Match Letter from Sports

Investors Authentication 2009 l9Gl

LOA from JSA for Autograph BB63122

  Grade N/A

 

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  SERIES #ALIWBCBELT
  Sport Boxing
  Professional League World Boxing Council
  Athlete Muhammad Ali
  Team N/A
  Season N/A
  Memorabilia Type Championship Belt
  Manufactured in/ Designed by France/Huguerin
  Subject Muhammad Ali
  Authentication Craig Hamilton
  Grade N/A

 

  SERIES #ChamberlainHSUniform
  Sport Basketball
  Professional League National Basketball Association
  Player Wilt Chamberlain
  Team Overbrook High School
  Season 1953-1955
  Memorabilia Type Jersey and Shorts
  Manufacturer

Jersey--N/A

Shorts--Rawlings

  Subject Wilt Chamberlain
  Authentication

LOA from Sports Investors Authentication 200919G4

LOA from JSA for Autograph BB63119

  Grade N/A

 

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  SERIES #AlcindorUCLAJacket
  Sport Basketball
  College UCLA
  Player Lew Alcindor
  Team UCLA
  Season 1969
  Memorabilia Type Warm Up Jacket
  Manufacturer  
  Subject Lew Alcindor
  Authentication Sports Investors Authentication #200926F2
  Grade N/A

 

  SERIES #TroutGlove
  Sport Baseball
  Professional League Major League Baseball
  Player Mike Trout
  Team Los Angeles Angels
  Year 2015-2016
  Memorabilia Type Gameworn Fielder’s Glove
  Manufacturer Nike
  Subject Mike Trout
  Authentication PSA 1G00500
  Grade N/A

 

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  SERIES #55JackieRobinsonPSA10
  Sport Baseball
  Professional League Major League Baseball
  Player Jackie Robinson
  Team Brooklyn Dodgers
  Year 1955
  Memorabilia Type Card
  Manufacturer Topps
  Set Number 50
  Population Report 1 (PSA Gem Mint 10)
  Subject Jackie Robinson
  Authentication PSA 07002118
  Grade Gem Mint 10

 

  SERIES #MookieBettsGlove
  Sport Baseball
  Professional League Major League Baseball
  Player Mookie Betts
  Team Boston Red Sox
  Year 2018
  Memorabilia Type Gameworn Fielder’s Glove
  Manufacturer Wilson
  Subject N/A
  Authentication PSA 1G00537
  Grade N/A

 

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  SERIES #LebronBlackRefractor
  Sport Basketball
  Professional League National Basketball Association
  Player LeBron James
  Team Cleveland Cavaliers
  Year 2003
  Memorabilia Type Trading Card
  Manufacturer Topps
  Set Number 111
  Population Report 27 (Beckett  Gem Mint 9.5+)
  Subject LeBron James
  Authentication Beckett 0009987911
  Grade Gem Mint 9.5

 

  SERIES #LamarJacksonBasket
  Sport Football
  Professional League National Football League
  Player Lamar Jackson
  Team Baltimore Ravens
  Year 2018
  Memorabilia Type Trading Cards
  Manufacturer Panini
  Set Number

National Treasures: 165

Cracked Ice: 112B

Championship Ticket: 112A

Clear Ticket: 112B

 

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  Population Report

National Treasures: 61 (Beckett 9+)

Cracked Ice: 13 (Beckett 9+)

Championship Ticket: 13 (Beckett 9.5+)

Clear Ticket: 7 (Beckett 9.5+)

  Subject Lamar Jackson
  Authentication

Beckett:

0011849828

0012437610

0012437609

0012437608

  Grade

National Treasures: 9

Cracked Ice: 9

Championship Ticket: 9.5

Clear Ticket: 9.5

 

  SERIES #GiannisRPA
  Sport Basketball
  Professional League National Basketball Association
  Player Giannis Antetokounmpo
  Team Milwaukee Bucks
  Year 2013
  Memorabilia Type Card
  Manufacturer Panini
  Set Number 130
  Population Report 4 (PSA Mint 9+)
  Subject Giannis Antetokounmpo
  Authentication PSA 44386206
  Grade Mint 9

 

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  SERIES #BradyRookie
  Sport Football
  Professional League National Football League
  Player Tom Brady
  Team New England Patriots
  Year 2000
  Memorabilia Type Trading Card
  Manufacturer SP Authentic
  Set Number 118
  Population Report 98 (PSA Gem Mint 10’s)
  Subject Tom Brady
  Authentication PSA 23437316
  Grade Gem Mint 10

 

  SERIES #1986Wax
  Sport Basketball
  Professional League National Basketball Association
  Player Various
  Team Various
  Year 1986
  Memorabilia Type Trading Cards
  Manufacturer Fleer
  Set Number N/A
  Population Report N/A
  Subject Various
  Authentication N/A

  Grade N/A

 

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  SERIES #SEAVER1971PSA10
  Sport Baseball
  Professional League Major League Baseball
  Player Tom Seaver
  Team New York Mets
  Year 1971
  Memorabilia Type Trading Card
  Manufacturer Topps
  Set Number 160
  Population Report 1 (PSA Gem Mint 10s)
  Subject Tom Seaver
  Authentication 03000903
  Grade Gem Mint 10

 

  

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  SERIES #GretzkyOpeechee1979
  Sport Hockey
  Professional League National Hockey League
  Player Wayne Gretzky
  Team Edmonton Oilers
  Year 1979
  Memorabilia Type Trading Cards
  Manufacturer O-Pee-Chee
  Number 18
  Population Report 89 (PSA 9)
  Subject Wayne Gretzky
  Authentication 24660286
  Grade PSA 9

 

  SERIES #ZionRPABGS9
  Sport Basketball
  Professional League National Basketball Association
  Player Zion Williamson
  Team New Orleans Pelicans
  Year 2019-20
  Memorabilia Type Trading Cards
  Manufacturer Panini
  Number 108
  Population Report 8 (Beckett Mint 9+)
  Subject Zion Williamson
  Authentication 0012261016
  Grade Beckett Mint 9

 

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Securities offered:

Investors will acquire membership interests in a Series of the Company, each of which is intended to be separate for purposes of assets and liabilities. It is intended that owners of Interest in a Series will only have an interest in assets, liabilities, profits and losses pertaining to the specific Underlying Assets owned by that Series. For example, an owner of Interests in Series #RUTHGEHRIGBALL will only have an interest in the assets, liabilities, profits and losses pertaining to the Series #RUTHGEHRIGBALL and its related operations. See the “Description of Interests Offered” section for further details. The Interests will be non-voting except with respect to certain matters set forth in the Amended and Restated Limited Liability Company Agreement of the Company (as amended from time to time, the “Operating Agreement”). Investors may not vote on any matter except: (1) the removal of the Manager; (2) the dissolution of the Company upon the for-cause removal of the Manager, and (3) an amendment to the Operating Agreement that would

 

·enlarge the obligations of, or adversely effect, an Interest Holder in any material respect;
·reduce the voting percentage required for any action to be taken by the holders of Interests in the Company under the Operating Agreement;
·change the situations in which the Company and any Series can be dissolved or terminated;
·change the term of the Company (other than the circumstances provided in the Operating Agreement); or
·give any person the right to dissolve the Company.

 

 The purchase of membership interests in a Series of the Company is an investment only in that Series (and with respect to that Series’ Underlying Asset) and not, for the avoidance of doubt, in (i) the Company, (ii) any other Series of Interests, (iii) Collectable Technologies, Inc., (iv) the Manager, (v) the Asset Manager or (vi) the Underlying Asset associated with the Series or any Underlying Asset owned by any other Series of Interests..
  
Investors:Each Investor must be a “qualified purchaser”. See “Plan of Distribution and Subscription Procedure – Investor Suitability Standards” for further details. The Manager may, in its sole discretion, decline to admit any prospective Investor, or accept only a portion of such Investor’s subscription, regardless of whether such person is a “qualified purchaser”. Furthermore, the Manager anticipates only accepting subscriptions from prospective Investors located in states where the BOR is registered.

 

Manager:CS Asset Manager, LLC, a Delaware limited liability company, will be the Manager of the Company and of each Series. The Manager, together with its affiliates, will own a minimum of 0.5% of each Series upon the Closing of an Offering.

 

Advisory Board: The Manager intends to assemble a network of advisors with experience in the asset class (an “Advisory Board”) to assist the Manager in identifying, acquiring and managing collectible Underlying Assets.

 

Broker:

We have an agreement with Dalmore Group, LLC (Dalmore), a New York limited liability company (“Dalmore” or the “BOR”). The BOR will be acting as broker of record and is entitled to a Brokerage Fee as reflected herein. The sale of membership interests is being facilitated by the BOR, a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and member of FINRA and SIPC, and is registered in each state where the offer or sales of the Interests will occur. It is anticipated that Interests will be offered and sold only in states where the BOR is registered as a broker-dealer. For the avoidance of doubt, the BOR does not and will not solicit purchases of Interests or make any recommendations regarding the Interests to prospective investors.

 

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Custodian:The Company expects to enter into an agreement with a firm to act as Custodian (which also may be a transfer agent) the purpose of holding the Interests issued in any of the Company’s offerings (the “Custody Agreement”). Each Investors’ account will be created upon the signing of the agreement with the Custodian and all Investors who previously purchased Interests in Offerings of the Company, ongoing or closed, would be required to opt in to allow the creation of an account for them.

 

Minimum and Maximum Interest purchase: The minimum subscription by an Investor is one (1) Interest in a Series and the maximum subscription by any Investor is for Interests representing 10% of the total Interests of a Series, although such maximum thresholds may be waived by the Manager in its sole discretion. Such limits do not apply to the Manager and/or affiliates of the Manager. The Manager and/or its affiliates must purchase a minimum of 0.5% of Interests of each Series at the Closing of its each Offering. The Manager may purchase greater than 2% of Interests of any Series (including in excess of 10% of any Series) at the applicable Closing, in its sole discretion. The purchase price, the Offering Price per Interest times the number of Interests purchased, will be payable in cash at the time of subscription.

 

Offering size: The Company may offer a Total Minimum and a Total Maximum of Interests in each Series Offering as set forth above and as detailed for each Series in the “Use of Proceeds and Description of Underlying Assets” section of this Offering Circular. The Manager and/or its affiliates must own a minimum of 0.5% of Interests of each Series at the Closing of its applicable Offering. The Manager may purchase greater than 2% of Interests of any Series at the applicable Closing, in its sole discretion.

 

Escrow Agent: North Capital Private Securities Corporation (“NCPS”) a Delaware corporation.

 

Escrow:The subscription funds advanced by prospective Investors as part of the subscription process will be held in a non-interest-bearing escrow account with Escrow Agent and will not be commingled with the operating account of any Series, until if and when there is a Closing with respect to that Investor.

 

  When the Escrow Agent has received instructions from the Manager or the BOR that the Offering will close, and the Investor’s subscription is to be accepted (either in whole or part), then the Escrow Agent shall disburse such Investor’s subscription proceeds in its possession to the account of the Series. Amounts paid to the Escrow Agent are categorized as Offering Expenses.

 

  If the applicable Offering is terminated without a Closing, or if a prospective Investor’s subscription is not accepted or is cut back due to oversubscription or otherwise, such amounts placed into escrow by prospective Investors will be returned promptly to them without interest. Any costs and expenses associated with a terminated offering will be borne by the Manager.

 

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Offering Period: There will be a separate closing for each Offering. The Closing of an Offering for a particular Series will occur on the earliest to occur of (i) the date subscriptions for the Total Maximum Interests of such Series have been accepted by the Manager or (ii) a date determined by the Manager in its sole discretion, provided that subscriptions for the Total Minimum Interests of such Series have been accepted. If the Closing for a Series has not occurred, the applicable Offering shall be terminated upon the earlier of: (i) the date which is one year (which period may be extended with respect to a particular Series by an additional six months by the Manager in its sole discretion) from the date this Offering Circular, or an Amendment, as applicable, that is applicable to a particular Series, is qualified by the Commission; or (ii) any date on which the Manager elects to terminate such Offering in its sole discretion.

 

Lock-Up Period: Upon the Closing of an Offering for a particular Series, a 90-day lock-up period will commence starting the day of the Closing, before Interests in the particular Series may be transferred by any Investor in such Series.

 

Additional Investors: The Asset Seller may purchase a portion of the Interests in each Series or may be offered Interests of such Series as a portion of the purchase price for such Underlying Asset. There is also no limit on the amount that the Manager or Asset Manager may invest in any Series.

 

Use of proceeds: The proceeds received by a Series from its respective Offering will be applied in the following order of priority upon the Closing:

 

(i)Brokerage Fee: A fee payable to the BOR equal to 1.00% of the gross proceeds of each Offering as compensation for brokerage services;

 

  (ii)  Acquisition Cost of the Underlying Asset: Actual cost of the Underlying Asset paid to the Asset Sellers (which may have occurred prior to the Closing).  The Company will typically acquire Underlying Assets through the following methods:

 

1)Consignment – the Company enters into an agreement with an Asset Seller to market an Underlying Asset. The owner of the Underlying Asset, the “consignor,” retains full ownership of the Underlying Asset until the related Series closes. Upon closing the Series, the consignor will be paid the consignment price established by the consignor.

 

2)Upfront purchase – the Company acquires an Underlying Asset from an Asset Seller prior to the launch of the offering related to the Series

 

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3)Purchase agreement – the Company enters into an agreement with an Asset Seller to acquire an Underlying Asset, which may expire prior to the closing of the offering for the related Series, in which case the Company is obligated to acquire the Underlying Asset prior to the closing

 

4)Purchase option agreement – the Company enters into a purchase option agreement with an Asset Seller, which gives the Company the right, but not the obligation, to acquire the Underlying Asset.

 

  The Company’s acquisition method for each Underlying Asset is noted the “Use of Proceeds and Description of Underlying Assets” section of this Offering Circular.

 

(iii)Offering Expenses: In general, these costs include actual legal, accounting, escrow, filing, wire-transfer, compliance costs and custody fees incurred by the Company in connection with an Offering (and excludes ongoing costs described in Operating Expenses), as applicable, paid to legal advisors, brokerage, escrow, underwriters, printing, financial institutions, accounting firms and the Custodian, as the case may be.

 

(iv)Acquisition Expenses: These include costs associated with the evaluation, investigation and acquisition of the Underlying Asset, plus any interest accrued on loans made to the Company by the Manager or the Asset Manager, an affiliate of the Manager or Asset Manager, a director, an officer or a third party for funds used to acquire the Underlying Asset or any options in respect of such purchase. Except as otherwise noted, any such loans to affiliates of the Company accrue interest at the Applicable Federal Rate (as defined in the Internal Revenue Code of 1986 as amended (the “Code”)) and other loans and options accrue as described herein.

 

(v)Sourcing Fee to the Manager: A fee paid to the Manager as compensation for identifying and managing the acquisition of the Underlying Asset, not to exceed the maximum Sourcing Fee for the applicable Series, as detailed in the “Use of Proceeds and Description of Underlying Assets” section of this Offering Circular with respect to each Series. The Manager or the Asset Manager pays the Offering Expenses and Acquisition Expenses on behalf of each Series and may be reimbursed, in whole or in part, by the Series from the proceeds of a successful Offering. See “Use of Proceeds” and “Plan of Distribution and Subscription Procedure – Fees and Expenses” sections for further details.

 

Operating expenses: Operating Expenses are costs and expenses, allocated in accordance with the Company’s expense allocation policy (see “Description of the Business – Allocations of Expenses” section), attributable to the activities of each Series including:

 

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•costs incurred in managing the Underlying Asset, including, but not limited to storage, maintenance and transportation costs (other than transportation costs described in Acquisition Expenses);

 

•costs incurred in preparing any reports and accounts of the Series, including any tax filings and any annual audit of the accounts of the Series (if applicable) or costs payable to any third-party registrar or transfer agent and any reports to be filed with the Commission including periodic reports on Forms 1-K, 1-SA and 1-U;

 

•any indemnification payments; and

 

•any and all insurance premiums or expenses in connection with the Underlying Asset, including insurance required for utilization at and transportation of the Underlying Asset to events under any Premium Membership Programs (as described in “Description of the Business – Business of the Company”) that we might develop (excluding any insurance taken out by a corporate sponsor or individual paying to showcase an asset at an event but including, if obtained, directors and officers insurance of the directors and officers of the Manager or the Asset Manager).

 

  The Manager or the Asset Manager has agreed to pay and not be reimbursed for Operating Expenses incurred prior to the Closing with respect to each offering notated in the “USE OF PROCEEDS AND DESCRIPTION OF UNDERLYING ASSETS” section of this Offering Circular.

 

  Operating Expenses of a Series incurred post-Closing shall be the responsibility of the applicable Series. However, if the Operating Expenses of a particular Series exceed the amount of reserves retained by or revenues generated from the applicable Underlying Asset (an “Operating Expenses Reimbursement Obligation”), the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the particular Series, on which the Manager may impose a reasonable rate of interest, and be entitled to reimbursement of such amount from future revenues generated by the applicable Underlying Asset (“Operating Expenses Reimbursement Obligation(s)”), and/or or (c) cause additional Interests to be issued in the applicable Series in order to cover such additional amounts.

 

  No Series generated any revenues and we don’t expect any Series to generate any revenue until early 2021, if at all, and expect each Series to incur Operating Expenses Reimbursement Obligations, or for the Manager or the Asset Manager to pay such Operating Expenses incurred and not seek reimbursement, to the extent such Series does not have sufficient reserves for such expenses. See discussion of “Description of the Business – Operating Expenses” for additional information.

 

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Further issuance of Interests: A further issuance of Interests of a Series may be made in the event the Operating Expenses of that Series exceed the income generated from its Underlying Asset and cash reserves of that Series. This may occur if the Company does not take out sufficient amounts under an Operating Expenses Reimbursement Obligation or if the Manager or the Asset Manager does not pay for such Operating Expenses without seeking reimbursement. In addition, the Operating Agreement gives the Manager the authority to cause the Company to issue Interests to Investors as well as to other Persons for less than the original offering price (or no consideration) and on such terms as the Manager may determine, subject to the terms of the Series Designation applicable to such Series of Interests. Such issuances may result in dilution to Investors. See “Dilution” for additional information.

 

Asset Manager: CS Asset Manager, LLC, which serves as the Manager, also will serve as the asset manager responsible for managing each Series’ Underlying Asset (the “Asset Manager”) as described in the Asset Management Agreement for each Series.

 

Free Cash Flow: Free Cash Flow for a particular Series equals its net income as determined under U.S. generally accepted accounting principles, (“GAAP”), plus any change in net working capital and depreciation and amortization (and any other non-cash Operating Expenses) less any capital expenditures related to its Underlying Asset. The Manager may maintain Free Cash Flow funds in separate deposit accounts or investment accounts for the benefit of each Series.

 

Management Fee: As compensation for the services provided by the Asset Manager under the Asset Management Agreement for each Series, the Asset Manager will be paid a semi-annual fee of up to 50% of any Free Cash Flow generated by a particular Series. The Management Fee will only become due and payable if there is sufficient Free Cash Flow to distribute as described in Distribution Rights below. For tax and accounting purposes the Management Fee will be accounted for as an expense on the books of the Series.

 

Distribution Rights: The Manager has sole discretion in determining what distributions of Free Cash Flow, if any, are made to Interest Holders of a Series. Any Free Cash Flow generated by a Series from the utilization of its Underlying Asset shall be applied by that Series in the following order of priority:

 

•repay any amounts outstanding under Operating Expenses Reimbursement Obligations for that Series, plus accrued interest;

 

•thereafter to create such reserves for that Series as the Manager deems necessary, in  its sole discretion, to meet future Operating Expenses of that Series; and;

 

•thereafter, no less than 50% (net of corporate income taxes applicable to that Series) by way of distribution to the Interest Holders of that Series, which may include the Asset Sellers of its Underlying Asset or the Manager or any of its affiliates, and;

 

•up to 50% to the Asset Manager in payment of the Management Fee for that Series.

 

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Timing of Distributions:The Manager may make semi-annual distributions of Free Cash Flow remaining to Interest Holders of a Series, subject to the Manager’s right, in its sole discretion, to withhold distributions, including the Management Fee, to meet anticipated costs and liabilities of such Series. The Manager may change the timing of potential distributions to a Series in its sole discretion.

 

Fiduciary Duties: The Manager may not be liable to the Company, any Series or the Investors for errors in judgment or other acts or omissions not amounting to willful misconduct or gross negligence, since provision has been made in the Operating Agreement for exculpation of the Manager. Therefore, Investors have a more limited right of action than they would have absent the limitation in the Operating Agreement.

 

Indemnification:None of the Manager, or its affiliates, the Company, the Asset Manager, nor any current or former directors, officers, employees, partners, shareholders, members, controlling persons, agents or independent contractors of the Manager, the Company or the Asset Manager, members of the Advisory Board, nor persons acting at the request of the Company or any Series in certain capacities with respect to other entities (collectively, the “Indemnified Parties”) will be liable to the Company, any Series or any Interest Holders for any act or omission taken by the Indemnified Parties in connection with the business of the Company or a Series that has not been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

 

  The Company or, where relevant, each Series of the Company (whether offered hereunder or otherwise) will indemnify the Indemnified Parties out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as Indemnified Parties with respect to any act or omission that has not been determined by a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence. Unless attributable to a specific Series or a specific Underlying Asset, the costs of meeting any indemnification will be allocated pro rata across each Series based on the value of each Underlying Asset.

 

Transfers:The Manager may refuse a transfer by an Interest Holder of its Interest if such transfer would result in (a) there being more than 2,000 beneficial owners in a Series or more than 500 beneficial owners that are not “accredited investors”, (b) the assets of a Series being deemed plan assets for purposes of ERISA, (c) such Interest Holder holding in excess of 19.9% of a Series, (d) result in a change of U.S. federal income tax treatment of the Company and/or a Series, or (e) the Company, any Series, the Manager, its affiliates, or the Asset Manager being subject to additional regulatory requirements. Furthermore, , transfers of Interests may only be effected pursuant to exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”) and permitted by applicable state securities laws. See “Description of Interests Offered – Transfer Restrictions” for more information.

 

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Governing law: To the fullest extent permitted by applicable law, the Company and the Operating Agreement will be governed by Delaware law and any dispute in relation to the Company and the Operating Agreement is subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, except where federal law requires that certain claims be brought in federal courts, as in the case of claims brought under the Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the Delaware exclusive forum provision set forth in the Operating Agreement will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Exchange Act or the Securities Act, respectively, or the respective rules and regulations promulgated thereunder, or otherwise limit the rights of any Investor to bring any claim under such laws, rules or regulations in any United States federal district court of competent jurisdiction. If an Interest Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement, it would be required to do so in the Delaware Court of Chancery to the extent the claim is not vested in the exclusive jurisdiction of a court or forum other than the Delaware Court of Chancery, or for which the Delaware Court of Chancery does not have subject matter jurisdiction, or where exclusive jurisdiction is not permitted under applicable law.
   
Certain Tax Considerations The Company expects to be treated as a partnership for U.S. federal income tax purposes and for each Series to be treated as either a partnership or as a disregarded entity.  None of the Company or any Series will elect to be taxed as a corporation.  As a partnership, the Company itself generally will not be subject to U.S. federal income tax.  Rather, each Member will be required to report on its own federal income tax return its allocable share (based upon allocation to each particular Series) of the Company’s items of taxable income, gain, loss, deduction and credit for the taxable year of the Company ending with or within the taxable year of such Member, regardless of whether or not cash or other property is distributed to such Member.  Prospective investors should also be aware that their ability to utilize their allocable shares of losses, if any, from the Company or any Series to offset other income may be limited by a variety of Internal Revenue Code provisions, and that, in general, the taxation of partnerships and their partners is extremely complex.  Each prospective investor is urged to consult with its own tax advisor as to the tax consequences of an investment in any Series.

 

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RISK FACTORS

 

The Interests offered hereby are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose their entire investment. There can be no assurance that the Company’s investment objectives will be achieved or that a secondary market would ever develop for the Interests, whether via third party registered broker-dealers or otherwise. The risks described in this section should not be considered an exhaustive list of the risks that prospective Investors should consider before investing in the Interests. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance and/or the value of the Interests. If any of these risks actually occurs, the value of the Interests may be materially adversely affected. Prospective Investors should obtain their own legal and tax advice prior to making an investment in the Interests and should be aware that an investment in the Interests may be exposed to other risks of an exceptional nature from time to time. The following considerations are among those that should be carefully evaluated before making an investment in the Interests.

 

Risks relating to the structure, operation and performance of the Company

 

An investment in an Offering constitutes only an investment in that Series and not in the Company or directly in any Underlying Asset.

 

An Investor in an Offering will acquire an ownership interest in the Series of Interests related to that Offering and not, for the avoidance of doubt, in (i) the Company, (ii) any other Series of Interests, (iii) the Manager, (iv) the Asset Manager or (v) directly in the Underlying Asset associated with the Series or any Underlying Asset owned by any other Series of Interests.

 

A purchase of Interests in the Series does not constitute an investment in either the Company or the Underlying Asset directly.  This results in limited voting rights of the Investor, which are solely related to a particular Series and are further limited by the Operating Agreement of the Company, described further in this Offering Circular. Investors will have voting rights only with respect to certain matters, primarily relating to amendments to the Operating Agreement that would adversely change the rights of the Interest Holders and removal of the Manager for “cause”.  The Manager and the Asset Manager thus retain significant control over the management of the Company and the Underlying Asset. Furthermore, because the Interests in the Series do not constitute an investment in the Company as a whole, holders of the Interests in the Series are not expected to receive any economic benefit from, or be subject to the liabilities of, the assets of any other Series.  In addition, the economic interest of a holder in the Series will not be identical to owning a direct undivided interest in an Underlying Asset because, among other things, a Series will be required to pay corporate taxes before distributions are made to the holders, and the Asset Manager will receive a fee in respect of its management of the Underlying Asset.

 

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There is currently no public trading market for our securities and an active market in which investors can resell their Interests may not develop.

 

There is currently no public trading market for our Interests, and an active market may not develop or be sustained.  If an active public trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your shares at any price.  Even if a public or private market were to develop, the market price could decline below the amount you paid for your shares.

 

There may be state law restrictions on an Investor’s ability to sell the Interests.

 

Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration and (2) govern the reporting requirements for broker-dealers and stock brokers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. Also, the broker must be registered in that state. We do not know whether our securities will be registered, or exempt, under the laws of any states. A determination regarding registration will be made by the broker-dealers, if any, who agree to serve as the market-makers for our Interests. There may be significant state blue sky law restrictions on the ability of Investors to sell, and on purchasers to buy, our Interests. In addition, Tier 2 of Regulation A limits qualified resales of our Interests to 30% of the aggregate offering price of a particular offering. Investors should consider the resale market for our securities to be limited. Investors may be unable to resell their securities, or they may be unable to resell them without the significant expense of state registration or qualification.

 

We do not have an operating history and, as a result, there is a limited amount of information about us on which to base an investment decision.

 

The Company and each Series, as well as the Manager, were recently formed and have not generated any revenues and have no operating history upon which prospective Investors may evaluate their performance. No guarantee can be given that the Company or any Series will achieve their investment objectives, that the value of the Underlying Asset will increase or that the Underlying Asset will be successfully monetized.

 

There can be no guarantee that the Company will reach its funding target from potential investors with respect to any Series or future proposed Series of Interests.

 

Due to the start-up nature of the Company, there can be no guarantee that the Company will reach its funding target from potential investors with respect to any Series or future proposed Series of Interests. In the event the Company does not reach a funding target, it may not be able to achieve its investment objectives by acquiring additional Underlying Assets through the issuance of further Series of Interests and monetizing them together with previous interests to generate distributions for Investors. In addition, if the Company is unable to raise funding for additional Series of Interests, this may negatively affect any investors already holding interests as they will not see the benefits that might transpire from economies of scale following the acquisition by other Series of Interests of additional Underlying Assets and other monetization opportunities (e.g., hosting events with the collection of Underlying Assets, affiliate arrangements, or asset sponsorships).

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There is substantial doubt about our ability to continue as a going concern.

 

The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.

 

There are few, if any, businesses that have pursued a strategy or investment objective similar to the Company’s.

 

We believe that the number of other companies that have crowdfunded collectibles or proposes to run a platform for crowdfunding of interests in collectibles is limited to date.  The Company and the Interests may not gain market acceptance from potential Investors, potential Asset Sellers or service providers within the collectibles industry, including insurance companies, storage facilities or maintenance partners. This could result in an inability of the Manager to manage and monetize the Underlying Assets profitably. This could negatively affect the issuance of further Series of Interests and additional Underlying Assets being acquired by the Company. This would further inhibit market acceptance of the Company and if the Company does not acquire any additional Underlying Assets, Investors would not receive any benefits that might transpire from economies of scale (such as potential reduction in storage costs if large numbers of Underlying Assets are stored at one facility, possible group discounts on insurance, and the ability to monetize Underlying Assets through asset sponsorships, affiliate arrangements, membership events or other monetization opportunities, as described below, that would require the Company to own a substantial number of underlying assets).

 

The Offering amount exceeds the value of Underlying Asset.

 

The size of each Offering will exceed the purchase price of the Underlying Asset as at the date of such Offering because the proceeds of the Offering in excess of the purchase price of the Underlying Asset will be used to pay fees, costs and expenses incurred in making this Offering, as well as acquiring the Underlying Asset). If the Underlying Asset had to be sold and there had not been substantial appreciation of the Underlying Asset prior to such sale, there may not be sufficient proceeds from the sale of the Underlying Asset to repay Investors the amount of their initial investment (after first paying off any liabilities on the Underlying Asset at the time of the sale including but not limited to any outstanding Operating Expenses Reimbursement Obligation) or any additional profits in excess of this amount.

 

Excess Operating Expenses could materially and adversely affect the value of Interests and result in dilution to Investors.

 

Operating Expenses related to a particular Series incurred post-Closing shall be the responsibility of the Series.  However, if the Operating Expenses of a particular Series exceed the amount of revenues generated from the Underlying Asset of that Series, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the particular Series, on which the Manager may impose a reasonable rate of interest, and be entitled to reimbursement of such amount from future revenues generated by the applicable Underlying Asset (“Operating Expenses Reimbursement Obligation(s)”), and/or (c) cause additional Interests to be issued in order to cover such additional amounts.

 

If there is an Operating Expenses Reimbursement Obligation, this reimbursable amount between related parties would be repaid from the Free Cash Flow generated by the applicable Series and could reduce the amount of any future distributions payable to Investors in that Series. If additional Interests are issued in a particular Series, this would dilute the current value of the Interests of that Series held by existing Investors and the amount of any future distributions payable to such existing Investors. Further, any additional issuance of Interests of a Series could result in dilution of the holders of that Series.

 

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We are reliant on the Manager and Asset Manager and their respective personnel. Our business and operations could be adversely affected if the Manager or Asset Manager lose key personnel.

 

The successful operation of the Company (and therefore, the success of the Interests) is in part dependent on the ability of the Manager and the Asset Manager to source, acquire and manage the Underlying Assets. As the Company has only been in existence since January 2020 and is an early-stage startup company, it has no significant operating history that would evidence its ability to source, acquire, manage and utilize any Underlying Assets.

 

The success of the Company (and therefore, the Interests) will be highly dependent on the expertise and performance of the Manager and the Asset Manager and their respective teams, their expert network and other investment professionals (which include third party experts) to source, acquire, manage and monetize Underlying Assets. There can be no assurance that these individuals will continue to be associated with the Manager or the Asset Manager. The loss of the services of one or more of these individuals could have a material adverse effect on the Underlying Assets and, in particular, their ongoing management and use to support the investment of the Interest Holders.

 

Furthermore, the success of the Company and the value of the Interests is dependent on there being critical mass from the market for the Interests and also the Company being able to acquire a number of Underlying Assets in multiple Series of Interests so that the Investors can benefit from economies of scale that could transpire from holding more than one Underlying Asset (such as potential reduction in transport costs if a large number of Underlying Assets are transported at the same time). In the event that the Company is unable to source additional Underlying Assets due to, for example, competition for such Underlying Assets or lack of Underlying Assets available in the marketplace, then this could materially and negatively affect the success of the Company and each Series by hindering its ability to acquire additional Underlying Assets through the issuance of further Series of Interests and monetizing them, including through exhibiting the Underlying Assets at public events, including any Premium Membership Programs that might be developed in order to generate distributions for Investors.

 

The Manager and Asset Manager and certain of their affiliates may have conflicts of interest that could negatively affect the performance of a Series and of the Company.

 

The Manager and Asset Manager and their respective affiliates may have a number of matters on which they have positions that conflict with the interests of the Company and its Investors that could negatively affect the performance of a Series and of the Company. See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”

 

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If the Company’s series limited liability company structure is not respected, then Investors may have to share any liabilities of the Company with all Investors and not just those who hold the same Series of Interests as them.

 

The Company is structured as a Delaware series limited liability company that issues a separate Series of Interests for each Underlying Asset. Each Series of Interest will merely be a separate Series and not a separate legal entity. Under the Delaware Limited Liability Company Act (the “LLC Act”), if certain conditions (as set forth in Section 18-215(b) of the LLC Act) are met, the liability of Investors holding one Series of Interests is segregated from the liability of Investors holding another Series of Interests and the assets of one Series of Interests are not available to satisfy the liabilities of other Series of Interests.  Although this limitation of liability is recognized by the courts of Delaware, there is no guarantee that if challenged in the courts of another U.S. State or a foreign jurisdiction, such courts will uphold a similar interpretation of Delaware’s series limited liability company statute. While we are not aware of any jurisdiction not honoring this interpretation, some jurisdictions’ limited liability company statutes do not provide for series LLCs. Although series LLC legislation is increasingly being adopted, which should increase the likelihood that the separateness of the Series will be respected, there is uncertainty whether other jurisdictions will honor such interpretation. If the Company’s series limited liability company structure is not respected, then Investors may have to share any liabilities of the Company with all Investors and not just those who hold the same series of interests as them. Furthermore, while we intend to maintain separate and distinct records for each Series of Interests and account for them separately and otherwise meet the requirements of the LLC Act, it is possible a court could conclude that the methods used did not satisfy Section 18-215(b) of the LLC Act and thus potentially expose the assets of a particular Series to the liabilities of another Series of Interests.  The consequence of this is that Investors may have to bear higher than anticipated expenses which would adversely affect the value of their Interests or the likelihood of any distributions being made by the Series to the Investors. In addition, we are not aware of any court case that has tested the limitations on inter-series liability provided by Section 18-215(b) in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of one Series of Interests should be applied to meet the liabilities of the other Series of Interests or the liabilities of the Company generally where the assets of such other Series of Interests or of the Company generally are insufficient to meet our liabilities.

 

For the avoidance of doubt, at the time of this filing, none of the Company or any Series has commenced operations, are not capitalized and have no assets or liabilities and no Series will commence operations, be capitalized or have assets and liabilities until such time as a closing related to such Series has occurred.

 

If any fees, costs and expenses of the Company are not allocable to a specific Series of Interests, they will be borne proportionately across all the Series of Interests.  Although the Manager will allocate fees, costs and expenses acting reasonably and in accordance with its allocation policy (see “Description of the Business – Allocations of Expenses” section), there may be situations where it is difficult to allocate fees, costs and expenses to a specific Series of Interests and therefore, there is a risk that a Series of Interests may bear a proportion of the fees, costs and expenses for a service or product for which another series of Interests received a disproportionately high benefit.

 

There can be no guarantee that any liquidity mechanism for secondary sales of Interests will develop or that registered broker-dealers will desire to facilitate liquidity in the Interests for a level of fees that would be acceptable to Investors or at all.

 

Liquidity for the interests would in large part depend on the market supply of and demand for interests, as well as applicable laws and restrictions under the Company’s Operating Agreement. There can be no assurance that trading will occur on a regular basis or at all. Further, the frequency and duration of any trading periods would be subject to adjustment by broker-dealers, who might not find the level of fees that could be generated by any market activity in the Interests to be attractive enough for them to be interested in starting or maintaining a market in the Interests.

 

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We do not anticipate the use of Manager-owned Interests for liquidity or to facilitate the resale of Interests held by Investors.

 

Currently, the Manager does not intend to sell any Interests which it holds or may hold prior to the liquidation of an Underlying Asset.  Thus, the Manager does not currently intend to take any action which might provide liquidity or facilitate the resale of Interests held by Investors. However, the Manager may from time to time transfer a small number of Interests to unrelated third parties for promotional purposes.

 

Abuse of our advertising or social platforms may harm our reputation or user engagement.

 

The Asset Manager may provide content or post ads about the Company and Series through various social media platforms that may be influenced by third parties. Our reputation or user engagement may be negatively affected by activity that is hostile or inappropriate to other people, by users impersonating other people or organizations, by disseminating information about us or to us that may be viewed as misleading or intended to manipulate the opinions of our users, or by the use of the Asset Manager’s products or services, that violates our terms of service or otherwise for objectionable or illegal ends. Preventing these actions may require us to make substantial investments in people and technology and these investments may not be successful, adversely affecting our business.

 

If we are unable to protect our intellectual property rights, our competitive position could be harmed, or we could be required to incur significant expenses to enforce our rights.

 

Our ability to compete effectively is dependent in part upon our ability to protect any proprietary technologies that we develop. We also will rely on service marks, trade secret laws, and confidentiality procedures to protect our intellectual property rights. There can be no assurance these protections will be available in all cases or will be adequate to prevent our competitors from copying, reverse engineering or otherwise obtaining and using our technology, proprietary rights or products. To prevent substantial unauthorized use of our intellectual property rights, it may be necessary to prosecute actions for infringement and/or misappropriation of our proprietary rights against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention, and there can be no assurance we will be successful in such action. If we are unable to protect our intellectual property, it could have a material adverse effect on our business and on the value of the Interests.

 

Our results of operations may be negatively impacted by the coronavirus outbreak.

 

In December 2019, a novel strain of coronavirus, or COVID-19, was reported to have surfaced in Wuhan, China. COVID-19 has spread to many countries, including the United States, and was declared to be a pandemic by the World Health Organization. Efforts to contain the spread of COVID-19 have intensified and the U.S., Europe and Asia have implemented severe travel restrictions and social distancing. The impacts of the outbreak are unknown and rapidly evolving. A widespread health crisis has adversely affected and could continue to affect the global economy, resulting in an economic downturn that could negatively impact the value of the Underlying Assets and Investor demand for Offerings and the Asset Class generally.

 

The continued spread of COVID-19 has also led to severe disruption and volatility in the global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. It is possible that the continued spread of COVID-19 could cause a further economic slowdown or recession or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

The extent to which COVID-19 affects our financial results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 outbreak and the actions to contain the outbreak or treat its impact, among others. Moreover, the COVID-19 outbreak has had and may continue to have indeterminable adverse effects on general commercial activity and the world economy, and our business and results of operations could be adversely affected to the extent that COVID-19 or any other pandemic harms the global economy generally.

 

Actual or threatened epidemics, pandemics, outbreaks, or other public health crises may adversely affect our business.

 

Our business could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of novel coronavirus, or COVID-19. The risk, or public perception of the risk, of a pandemic or media coverage of infectious diseases could adversely affect the value of the Underlying Assets and our Investors or prospective Investors financial condition, resulting in reduced demand for the Offerings and the Asset Class generally. Further, such risks could cause a limited attendance at membership experience events that we might sponsor or in which we might participate, or result in persons avoiding holding or appearing at in-person events. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could cause employees of the Asset Manager, in whom we rely to manage the logistics of our business, including any membership experience programs that we might develop, or on-site employees of partners to avoid any involvement with our programs, which would adversely affect our ability to hold such events or to adequately staff and manage our businesses.  “Shelter-in-place” or other such orders by governmental entities could also disrupt our operations, if employees who cannot perform their responsibilities from home, are not able to report to work.

 

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Risks relating to the Offerings

 

We are offering our Interests pursuant to Tier 2 of Regulation A and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our Interests less attractive to Investors as compared to a traditional initial public offering.

 

As a Tier 2 issuer, we are subject to scaled disclosure and reporting requirements that may make an investment in our Interests less attractive to Investors who are accustomed to enhanced disclosure and more frequent financial reporting. The differences between disclosures for Tier 2 issuers versus those for emerging growth companies include, without limitation, only needing to file final semiannual reports as opposed to quarterly reports and far fewer circumstances that would require a current disclosure. In addition, given the relative lack of regulatory precedent regarding the recent amendments to Regulation A, there is some regulatory uncertainty in regard to how the Commission or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to. For example, a number of states have yet to determine the types of filings and amount of fees that are required for such an offering. If our scaled disclosure and reporting requirements, or regulatory uncertainty regarding Regulation A, reduces the attractiveness of the Interests, we may be unable to raise the funds necessary to fund future offerings, which could impair our ability to develop a diversified portfolio of Underlying Assets and create economies of scale, which may adversely affect the value of the Interests or the ability to make distributions to Investors.

 

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions.

 

As a Tier 2 issuer, we will not need to provide a report on the effectiveness of our internal controls over financial reporting, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a Tier 2 issuer. We are in the process of evaluating whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations.

 

If a regulator determines that the activities of either the Manager or Asset Manager require its registration as a broker-dealer, the Asset Manager or Manager may be required to cease operations and any Series of Interests offered and sold without such proper registration may be subject to a right of rescission.

 

The sale of membership interests is being facilitated by the BOR, a broker-dealer registered under the Exchange Act and member of FINRA, which is registered in each state where the offer or sales of the Interests will occur. It is anticipated that Interests will be offered and sold only in states where the BOR is registered as a broker-dealer.  For the avoidance of doubt, the BOR will not solicit purchases and will not make any recommendations regarding the Interests.  Neither the BOR, nor any other entity, receives a finder’s fee or any underwriting or placement agent discounts or commissions in relation to any Offering of Interests. If a regulatory authority determines that the Asset Manager or the Manager, neither of which is a registered broker-dealer under the Exchange Act or any state securities laws, has itself engaged in brokerage activities that require registration, the Asset Manager or the Manager may need to stop operating and therefore, the Company would not have an entity managing the Series’ Underlying Assets.  In addition, if the Manager or Asset Manager is found to have engaged in activities requiring registration as “broker-dealer” without either being properly registered as such, there is a risk that any Series of Interests offered and sold while the Manager or Asset Manager was not so registered may be subject to a right of rescission, which may result in the early termination of the Offerings.

 

If we are required to register under the Exchange Act, it would result in significant expense and reporting requirements that would place a burden on the Manager and Asset Manager and may divert attention from management of the Underlying Assets by the Manager and Asset Manager or could cause Asset Manager to no longer be able to afford to run our business.

 

The Exchange Act requires issuers with more than $10 million in total assets to register its equity securities under the Exchange Act if its securities are held of record by more than 2,000 persons or 500 persons who are not “accredited investors”.  While our Operating Agreement presently prohibits any transfer that would result in any Series being held of record by more than 2,000 persons or 500 non-“accredited investors”, there can be no guarantee that we will not exceed those limits and the Manager has the ability to unilaterally amend the Operating Agreement to permit holdings that exceed those limits.  Series may have more than 2,000 total Interests, which would make it more likely that there accidentally would be greater than 2,000 beneficial owners of or 500 non- “accredited investors” in that Series.  If we are required to register under the Exchange Act, it would result in significant expense and reporting requirements that would place a burden on the Manager and Asset Manager  and may divert attention from management of the Underlying Assets by the Manager and Asset Manager or could cause Asset Manager to no longer be able to afford to run our business.

 

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If the Company were to be required to register under the Investment Company Act or the Manager or the Asset Manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of each Series and the Manager and the Asset Manager may be forced to liquidate and wind up each Series of Interests or rescind the Offerings for any of the Series or the offering for any other Series of Interests.

 

The Company is not registered and will not be registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and neither the Manager nor the Asset Manager is or will be registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”) and the Interests do not have the benefit of the protections of the Investment Company Act or the Investment Advisers Act. The Company, the Manager and the Asset Manager have taken the position that the Underlying Assets are not “securities” within the meaning of the Investment Company Act or the Investment Advisers Act, and thus the Company’s assets will consist of less than 40% investment securities under the Investment Company Act and the Manager and the Asset Manager are not and will not be advising with respect to securities under the Investment Advisers Act. This position, however, is based upon applicable case law that is inherently subject to judgments and interpretation. If the Company were to be required to register under the Investment Company Act or the Manager or the Asset Manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of each Series and the Manager and the Asset Manager may be forced to liquidate and wind up each Series of Interests or rescind the Offerings for any of the Series or the offering for any other Series of Interests.

 

Possible Changes in Federal Tax Laws.

 

The Code is subject to change by Congress, and interpretations of the Code may be modified or affected by judicial decisions, by the Treasury Department through changes in regulations and by the Internal Revenue Service through its audit policy, announcements, and published and private rulings. Although significant changes to the tax laws historically have been given prospective application, no assurance can be given that any changes made in the tax law affecting an investment in any Series of Interests of the Company would be limited to prospective effect. For instance, prior to effectiveness of the Tax Cuts and Jobs Act of 2017, an exchange of the Interests of one Series for another might have been a non-taxable ‘like-kind exchange’ transaction, while transactions now only qualify for that treatment with respect to real property. Accordingly, the ultimate effect on an Investor’s tax situation may be governed by laws, regulations or interpretations of laws or regulations which have not yet been proposed, passed or made, as the case may be.

 

Risks Specific to the Industry and the Asset Class

 

Potential negative changes within the Asset Class.

 

Sports memorabilia as an Asset Class is subject to various risks, including, but not limited to, currency fluctuations, changes in tax rates, consumer confidence and brand exposure, as well as risks associated with the Asset Class in general, including, but not limited to, economic downturns and the availability of desirable Memorabilia Assets. Changes in the Asset Class could have a material and adverse effect upon the Company’s ability to achieve its investment objectives of acquiring additional Underlying Assets through the issuance of further Series of Interests and monetizing them through affiliate partnerships, membership events, asset sponsorships or other monetization mechanisms to generate distributions for Investors.

 

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Lack of Diversification.

 

It is not anticipated that any Series would own assets other than its respective Underlying Asset, plus potential cash reserves for maintenance, storage, insurance and other expenses pertaining to the Underlying Asset and amounts earned by such Series from the monetization of the Underlying Asset. Investors looking for diversification will have to create their own diversified portfolio by investing in other opportunities in addition to any one Series.

 

Industry concentration and general downturn in industry.

 

Given the concentrated nature of the Underlying Assets (i.e., only Memorabilia Assets) any downturn in the Asset Class is likely to impact the value of the Underlying Assets, and consequently the value of the Interests. Popularity within categories of the broader market (e.g. baseball or football) can impact the value of the Underlying Assets within categories of the Asset Class (e.g. baseball cards or football jerseys), and consequently the value of the Interests. Furthermore, as the Asset Class is comprised of collectible items, the value of such Memorabilia Assets may be impacted if an economic downturn occurs and there is less disposable income for individuals to invest in the Asset Class. In the event of a downturn in the industry, the value of the Underlying Assets is likely to decrease.

 

Volatile demand for the assets in the Asset Class.

 

Volatility of demand for luxury goods, in particular high value Memorabilia Assets, may adversely affect a Series’ ability to achieve its investment purpose. The Asset Class has been subject to volatility in demand in recent periods, particularly around certain categories of assets and investor tastes (ex. trading cards). Demand for high value Memorabilia Assets depends to a large extent on general, economic, political, and social conditions in a given market as well as the tastes of the collector community and in the case of sports, the general fan community resulting in changes of which Memorabilia Assets are most sought after.

 

Volatility in demand may lead to volatility in the value of the Underlying Assets, which may result in further downward price pressure and adversely affect the Company’s ability to achieve its objective of acquiring additional Underlying Assets through the issuance of further Series of Interests and monetizing Underlying Assets through exhibiting them at public events, including any Premium Membership Programs that we might develop to generate distributions for Investors.

 

In addition, the lack of demand may reduce any further issuance of Series of Interests and acquisition of more Underlying Assets, thus limiting the benefits the Investors  already holding Series of Interests could receive from there being economies of scale (e.g., cheaper insurance due to a number of Underlying Assets requiring insurance) and other monetization opportunities (e.g., hosting shows with the collection of Memorabilia Assets). These effects may have a more pronounced impact given the limited number of Underlying Assets held by the Company in the short-term.

 

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We will rely on data from past auction sales and insurance data, among other sources, in determining the value of the Underlying Assets, and have not independently verified the accuracy or completeness of this information. As such, valuations of the Underlying Assets may be subject to a high degree of uncertainty and risk.

 

As explained in “Description of the Business”, the Asset Class is difficult to value. We understand that there are companies with stated intentions to create platforms that will help create a market by which the Interests (and, indirectly, the Underlying Assets) may be more accurately valued due to the creation of a larger market for the Asset Class than exists from current means. Such platforms, however, do not currently exist and the development of one that functions appropriately is uncertain. We, for example, currently, have no plans to develop such a platform. Until such a platform is developed, however, valuations of the Underlying Assets will be based upon the subjective approach taken by the members of the Manager’s expert network and members of the Advisory Board, valuation experts appointed by the Asset Seller or other data provided by third parties (e.g., auction results and previous sales history). Due to the lack of third-party valuation reports and potential for one-of-a-kind assets, the value of the Underlying Assets may be more difficult for potential investors to compare against a market benchmark. Furthermore, if similar assets to the Underlying Assets are created or discovered it could in turn negatively affect the value of the Underlying Assets. The Manager sources data from past auction sales results and insurance data; however, it may rely on the accuracy of the underlying data without any means of detailed verification. Consequently, valuations may be uncertain.

 

Risks relating to the Underlying Assets

 

The value of the Underlying Assets and, consequently, the value of an Investor’s Interests can go down as well as up.

 

Valuations are not guarantees of realizable price, do not necessarily represent the price at which the Interests may be sold and the value of the Underlying Assets may be materially affected by a number of factors outside the control of the Company, including, any volatility in the economic markets, the condition of the Underlying Assets and physical matters arising from the state of their condition.

 

Competition in the Asset Class from other business models.

 

There is potentially significant competition for Memorabilia Assets from many different market participants, including those with existing fractional ownership offerings. While the majority of transactions continue to be peer-to-peer with very limited public information, other market players such as dealers, trade fares and auction houses continue to play an increasing role. Furthermore, the presence of corporations such as eBay or Amazon in the Asset Class adds further competition from non-traditional players.

 

This competition may negatively affect the liquidity of the Interests, as it is dependent on the Company acquiring attractive and desirable Memorabilia Assets to ensure that there is an appetite of potential investors for the Interests. In addition, there are companies that are developing crowd funding models for other alternative asset classes such as cars, art or wine, who have entered the Asset Class as well. Others may do so in the future, increasing the competition within the Asset Class.

 

The valuation of a Memorabilia Asset may be negatively affected by the reputation of the person, group or matter with which it is associated.

 

The value of a Memorabilia Asset is likely to be connected to its association with, a certain person or group or in connection with certain events (prior to or following the acquisition of the Underlying Asset by the Company). In the event that such person, group or event loses public affection, then this may adversely impact the value of the Memorabilia Asset and therefore, the Series of Interests that relate to such Underlying Asset. For example, San Francisco Giants’ outfielder Barry Bonds was on a career path to becoming a first-ballot Hall of Famer due to his home run records. At the turn of the century his game used memorabilia and cards were at a premium. However, steroid use and a poor public image not only put his Hall of Fame election in doubt but also damaged the value of his memorabilia. The same can also be said for a promising rookie whose career either ends prematurely due to injury or does not meet all the early expectations placed on them.

 

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The valuation of a Memorabilia Asset may be negatively affected by the reputation or brand of the manufacturer of Memorabilia Assets.

 

The Underlying Assets of the Company will consist of Memorabilia Assets from a very wide variety of manufacturers, many of which are still in operation today. The demand for the Underlying Assets, and therefore, each Series of Interests, may be influenced by the general perception of the Underlying Assets that manufacturers are producing today. In addition, the manufacturers’ business practices may result in the image and value of the Underlying Asset produced by certain manufacturers being damaged. This in turn may have a negative impact on the Underlying Assets made by such manufacturers and, in particular, the value of the Underlying Assets and, consequently, the value of the Series of Interests that relate to such Underlying Asset. For example, the reputation of a manufacturer of certain sporting equipment that is used by a prominent player may negatively affect the collectability of such equipment.

 

Title, authenticity or infringement claims on an Underlying Asset.

 

There is no guarantee that an Underlying Asset will be free of any claims regarding title and authenticity (e.g., counterfeit, altered, manipulated, or previously stolen items) even after verification through a third-party authenticator, or that such claims may arise after acquisition of an Underlying Asset by a Series of Interests. The Company may not have complete ownership history or records for an Underlying Asset. In the event of a title or authenticity claim against the Company, the Company may not have recourse against the Asset Seller or the benefit of insurance and the value of the Underlying Asset and the Series that relates to that Underlying Asset, may be diminished. Furthermore, the Company and the Underlying Asset could be adversely affected if a piece of memorabilia, such as a sports card, was found to be created without all appropriate consents, such as consent from the athlete or league.

 

There are risks associated with reliance on third party authenticators.

 

While there is no guarantee that an Underlying Asset will be free of fraud, we intend to mitigate this risk by having the item graded or authenticated by a reputable firm. In the event of an authenticity claim against an authenticated item, the Company may have recourse for reimbursement from the authenticator, although there can be no guarantee of the Company’s ability to collect or the authenticator’s ability to pay.

 

Furthermore, authenticators may occasionally make mistakes by either giving their approval or grade to a counterfeit card or piece of memorabilia. Sometimes this mistake is not uncovered until years later when evidence to the contrary surfaces or updated scientific methods are applied. The Company may not have recourse, if such an event occurs, and the value of the Underlying Asset will likely deteriorate. A piece of an Underlying Asset may also be mislabeled by an authenticator such as giving it the wrong year or attributing it to the wrong person, which may adversely affect its value.

 

Additionally, it is possible that there are unknown issues with an Underlying Asset that are not immediately apparent but arise at a later date. For example, prior storage and display methodologies for an Underlying Asset might have adverse effects that are only apparent at a later date. Even through the asset undergoes an authentication process, there are still scenarios where these issues may not be apparent at the time of authentication. Finally, there is reputational risk of the authenticator, which may fall out of favor with collectors, which may impact the value of all items authenticated by the particular authenticator.

 

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Third party liability.

 

Each Series will assume all of the ownership risks attached to its Underlying Asset, including third party liability risks. Therefore, a Series may be liable to a third party for any loss or damages incurred by such third party in connection with the Series’ Underlying Asset. This would be a loss to the Series and, in turn, adversely affect the value of the Series and would negatively impact the ability of the Series to make distributions.

 

An Underlying Asset may be lost or damaged by causes beyond the Company’s control while being transported or when in storage or on display. There can be no guarantee that insurance proceeds will be sufficient to pay the full market value of an Underlying Asset which has been damaged or lost which will result in a material and adverse effect in the value of the related Interests.

 

Any Underlying Asset may be lost or damaged by causes beyond the Company’s control when in storage or on display. There is also a possibility that an Underlying Asset could be lost or damaged while being exhibited at a public event. Any damage to an Underlying Asset or other liability incurred as a result of participation in these programs, including personal injury to participants, could adversely impact the value of the Underlying Asset or adversely increase the liabilities or Operating Expenses of its related Series of Interests. Further, when an Underlying Asset has been purchased, it will be necessary to transport it to the Asset Manager’s preferred storage location or as required to participate in any public event. An Underlying Asset may be lost or damaged in transit, and transportation, insurance or other expenses may be higher than anticipated due to the locations of particular events.

 

Although we intend for the Underlying Assets to be insured at replacement cost (subject to policy terms and conditions), in the event of any claims against such insurance policies, there can be no guarantee that any losses or costs will be reimbursed, that an Underlying Asset can be replaced on a like-for-like basis or that any insurance proceeds would be sufficient to pay the full market value (after paying for any outstanding liabilities including, but not limited to any outstanding balances under Operating Expenses Reimbursement Obligations), if any, of the Interests. In the event that damage is caused to an Underlying Asset, this will impact the value of the Underlying Asset, and consequently, the Interests related to the Underlying Asset, as well as the likelihood of any distributions being made by the applicable Series to its Investors.

 

In addition, at a future date, once developed, the Manager may decide to expand Premium Membership Programs to include the ability of a member in those programs to become the caretaker of Underlying Assets for a certain period of time for an appropriate fee, assuming that the Manager believes that such models are expected to result in higher overall financial returns for all Investors in any Underlying Assets used in such models.  The feasibility from an insurance, safety, technological and financial perspective of such models has not yet been analyzed but may significantly increase the risk profile and the chance for loss of or damage to any Underlying Asset if utilized in such models.

 

Insurance of Underlying Assets may not cover all losses which will result in a material and adverse effect in the valuation of the Series related to such damaged Underlying Assets.

 

Insurance of any Underlying Asset may not cover all losses. There are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes, terrorism or acts of war that may be uninsurable or not economically insurable. Inflation, environmental considerations and other factors, including terrorism or acts of war, also might make insurance proceeds insufficient to repair or replace an asset if it is damaged or destroyed. Under such circumstances, the insurance proceeds received might not be adequate to restore a Series’ economic position with respect to its affected Underlying Asset. Furthermore, the Series related to such affected Underlying Assets would bear the expense of the payment of any deductible. Any uninsured loss could result in both loss of cash flow from, and a decrease in value of, the affected Underlying Asset and, consequently, the Series that relates to such Underlying Asset.

 

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Forced sale of Underlying Assets.

 

The Company may be forced to cause its various Series to sell one or more of the Underlying Assets (e.g., upon the bankruptcy of the Manager) and such a sale may occur at an inopportune time or at a lower value than when the Underlying Assets were first acquired or at a lower price than the aggregate of costs, fees and expenses used to purchase the Underlying Assets. In addition, there may be liabilities related to the Underlying Assets, including, but not limited to Operating Expenses Reimbursement Obligations on the balance sheet of any Series at the time of a forced sale, which would be paid off prior to Investors receiving any distributions from a sale. In such circumstances, the capital proceeds from any Underlying Asset and, therefore, the return available to Investors of the applicable Series, may be lower than could have been obtained if the Series held the Underlying Asset and sold it at a later date.

 

Lack of distributions and return of capital.

 

The revenue of each Series is expected to be derived primarily from the use of its Underlying Asset in public events where the Underlying Asset may be exhibited or in Premium Membership Programs that might be developed.  Premium Membership Programs, however, may not develop with respect to the Company or any Underlying Asset and there can be no assurance that any Premium Membership Programs will be developed or, if they are developed, that they will generate sufficient proceeds to cover fees, costs and expenses with respect to any Series. In the event that the revenue generated in any given year does not cover the Operating Expenses of the applicable Series, the Manager or the Asset Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) provide a loan to the Series in the form of an Operating Expenses Reimbursement Obligation, on which the Manager or the Asset Manager may impose a reasonable rate of interest, and/or (c) cause additional Interests to be issued in the applicable Series in order to cover such additional amounts.

 

Any amount paid to the Manager or the Asset Manager in satisfaction of an Operating Expenses Reimbursement Obligation would not be available to Investors as a distribution. In the event additional Interests in a Series are issued, Investors in such Series would be diluted and would receive a smaller portion of distributions from future Free Cash Flows, if any. Furthermore, if a Series or the Company is dissolved, there is no guarantee that the proceeds from liquidation will be sufficient to repay the Investors their initial investment or the market value, if any, of the Interests at the time of liquidation. See “Potentially high storage, maintenance and insurance costs for the Underlying Assets” for further details on the risks of escalating costs and expenses of the Underlying Assets.

 

Market manipulation or overproduction Market manipulation may be a risk with the Asset Class.

 

Market manipulation may be a risk with the Asset Class. For example, one trading card manufacturer was caught secretly producing examples of hard to find and valuable cards that were given to its executives. This loss of faith in the company led to a devaluation of the cards involved. Another example is that a modern football and baseball player is issued many uniforms over the course of a season. The more a team issues, the less exclusive said item becomes. Also, many players have exclusive contracts with outlets that sell the players game used uniforms and equipment. There is no way of knowing if a company or player is secretly hoarding items which might be “dumped” in the market at a later date.

 

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Environmental damage could negatively affect the value of an Underlying Asset which will result in a material and adverse effect in the value of the related Interests.

 

Improper storage may lead to the full or partial destruction of an item. For instance, trading cards, tickets, posters or other paper piece can be destroyed by exposure to water or moisture. Likewise, equipment such as a bat may warp, or a leather glove may grow mold due to exposure to the elements. Autographs that are signed with inferior writing instruments or rendered on an unstable substrate may fade or “bleed,” thereby reducing its value to collectors. Some of the defects may not be initially visible or apparent, for example moisture in a frame, and may only become visible at a later date, at which point the value of the Underlying Asset and in turn the Series may be negatively affected.

 

Potentially high storage and insurance costs for the Underlying Assets.

 

In order to protect and care for the Underlying Assets, the Manager must ensure adequate storage facilities, insurance coverage and, if required, maintenance work. The cost of care may vary from year to year depending on changes in the insurance rates for covering the Underlying Assets and changes in the cost of storage for the Underlying Assets, and if required, the amount of maintenance performed. It is anticipated that as the Company acquires more Underlying Assets, the Manager may be able to negotiate a discount on the costs of storage, insurance and maintenance due to economies of scale. These reductions are dependent on the Company acquiring a number of Underlying Assets and service providers being willing to negotiate volume discounts and, therefore, are not guaranteed.

 

If costs turn out to be higher than expected, this would impact the value of the Interests related to an Underlying Asset, the amount of distributions made to Investors holding the Interests, on potential proceeds from a sale of the Underlying Asset (if ever), and any capital proceeds returned to Investors after paying for any outstanding liabilities, including, but not limited to any outstanding balances under Operating Expenses Reimbursement Obligation. See “Lack of distributions and return of capital” for further details of the impact of these costs on returns to Investors.

 

The general sentiment of underlying fan base may negatively affect the value of memorabilia.

 

This is particularly prominent in sports memorabilia, but also holds true for memorabilia categories such as movie franchises, musicians, and others.

 

By example, leagues such as the NBA, MLB, NHL and NFL have a long and reliable fan base. However, events, such as player strikes, general public appeal of a league or a particular sport, may have an impact on the associated Underlying Assets. For instance, the NHL strike of 1994-1995 caused a loss of fan interest. Upstart leagues such as the USFL in football may cause an early interest in memorabilia from that league but may lose interest from lack of success.

 

Similarly, various forms of Memorabilia Assets go in and out of favor with collectors. For example, there was a renewed interest in soccer within the United States after the U.S. team won the Women’s World Cup in 2012. When there were no further victories on the same scale, the value of and interest in women’s soccer memorabilia generally returned to previous levels.

 

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Risks Related to Ownership of our Interests

 

Because a market may not develop for interests and there may be limited distributions of Free Cash Flow, in order for Investors to realize a return, the Underlying Asset in a Series must be sold for an amount in excess of the price paid for the asset and that pays the expenses associated with ownership and management of the Underlying Asset by the Series.

 

As indicated, our Interests are illiquid and a market may not develop for trading Interests. Also, as described in “Lack of distributions and return of capital,” there are substantial risks that utilization of the Underlying Assets will not generate cash flow that will be distributable to Interest holders. Therefore, Interest holders generally will realize their investment return, if any, only upon the sale of the Underlying Asset and distribution of the proceeds to the Interest holders of that Series. As indicated, there are risks associated with the valuation of the Underlying Assets as well as the possible fluctuation of their values over time, which could result in Interest holders receiving less than they originally invested in the Series or, in some cases, a total loss of their investment if the value of an Underlying Asset decreased substantially and/or there were accrued Operating Expenses for which the Manager was required to be reimbursed, thereby deleting the amount pf proceeds, if any, available for Series holders.

 

As an Investor, you will have limited voting rights.

 

The Manager has a unilateral ability to amend the Operating Agreement and the allocation policy in certain circumstances without the consent of the Investors. The Investors only have limited voting rights in respect of the Series of Interests. Investors may not vote on any matter except: (1) the removal of the Manager; (2) the dissolution of the Company upon the for-cause removal of the Manager, and (3) an amendment to the Operating Agreement that would:

 

·enlarge the obligations of, or adversely effect, an Interest Holder in any material respect;
·reduce the voting percentage required for any action to be taken by the holders of Interests in the Company under the Operating Agreement;
·change the situations in which the Company and any Series can be dissolved or terminated;
·change the term of the Company (other than the circumstances provided in the Operating Agreement); or
·give any person the right to dissolve the Company.

 

Investors will therefore be subject to any amendments the Manager makes (if any) to the Operating Agreement and allocation policy and also any decision it takes in respect of the Company and the applicable Series, which the Investors do not get a right to vote upon. Investors may not necessarily agree with such amendments or decisions and such amendments or decisions may not be in the best interests of all of the Investors as a whole but only a limited number.

 

Furthermore, the Manager can only be removed as manager of the Company and each Series in very limited circumstances, following a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with the Company or a Series of Interests. Investors would therefore not be able to remove the Manager merely because they did not agree, for example, with how the Manager was operating an Underlying Asset.

 

The offering price for the Interests determined by us does not necessarily bear any relationship to established valuation criteria such as earnings, book value or assets that may be agreed to between purchasers and sellers in private transactions or that may prevail in the market if and when our Interests can be traded publicly.

 

The price of the Interests is a derivative result of our negotiations with Asset Sellers based upon various factors including prevailing market conditions, our future prospects and our capital structure, as well as certain expenses incurred in connection with the Offering and the acquisition of each Underlying Asset. These prices do not necessarily accurately reflect the actual value of the Interests or the price that may be realized upon disposition of the Interests.

 

Future sales, or the perception of future sales, by the Manager or our affiliates in any market that might develop for our Interests following any Offering could cause the market price for our Interests to decline.

 

After any Offering, the sale of our Interests in any market that might develop, or the perception that such sales could occur, could harm the prevailing market price of Interests. These sales, or the possibility that these sales may occur, also might make it more difficult for us to additional Interests in any Series in the future at a time and at a price that we deem appropriate.

 

Because securities issued in a Regulation A offering are deemed not to be “restricted securities” for purposes of the U.S. federal securities laws. Therefore, the Interests sold in any Offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, or Rule 144, including our directors, executive officers and other affiliates, which must be sold only in compliance with the limitations described below in “If you were to be or become an affiliate, your resales if Interests could be restricted.”

 

If you were to be or become an affiliate, your resales if Interests could be restricted.

 

Persons acquiring Interests that are or become “affiliates” (such as officers, directors or persons who own large amounts of a class of securities (generally more than 10%)) are subject to the resale limitations of Rule 144. In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell within any three-month period, a number of Interests that does not exceed the greater of: (i) 1% of the number of Interests then outstanding; or (ii) the average reported weekly trading volume of those Interests (assuming that a market developed that provided a basis for such reporting) during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. Additionally, sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale, current public information and notice provisions of Rule 144 that could be difficult to meet, making it extremely difficult for affiliates to resell Interests that they acquire.

 

The Manager has unlimited discretion to issue additional Interests, which could be for lower than the original offering price are or for no consideration, and which could materially and adversely affect the value of Interests and result in dilution to Investors.

 

If additional Interests are issued in a particular Series, this would dilute the current value of the Interests of that Series held by existing Investors and the amount of any future distributions payable to such existing Investors. Further, any additional issuance of Interests of a Series could result in dilution of the holders of that Series. Under the Operating Agreement, the Manager has the authority to cause the Company to issue Interests to Investors as well as to other Persons for less than the original offering prices (or for no consideration) and on such terms as the Manager may determine, subject to the terms of the Series Designation applicable to such Series of Interests, which may result in dilution to Investors. See “DILUTION”.

 

If a market ever develops for the Interests, the market price and trading volume of our Interests may be volatile.

 

If a market develops for the Interests, the market price of the Interests could fluctuate significantly for many reasons, including reasons unrelated to our performance, any Underlying Asset or any Series, such as reports by industry analysts, Investor perceptions, or announcements by our competitors regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other companies, whether large or small, within our industry experience declines in their share price, the value of Interests may decline as well.

 

In addition, fluctuations in operating results of a particular Series or the failure of operating results to meet the expectations of Investors may negatively impact the price of our securities. Operating results may fluctuate in the future due to a variety of factors that could negatively affect revenues or expenses in any particular reporting period,  including vulnerability of our business to a general economic downturn; changes in the laws that affect our operations; competition; compensation related expenses; application of accounting standards; seasonality; and our ability to obtain and maintain all necessary government certifications or licenses to conduct our business.

 

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Funds from purchasers accompanying subscriptions for the Interests will not accrue interest while in escrow.

 

The funds paid by a subscriber for Interests will be held in a non-interest-bearing escrow account until the admission of the subscriber as an Investor in the applicable Series, if such subscription is accepted. Purchasers will not have the use of such funds or receive interest thereon pending the completion of the Offering. No subscriptions will be accepted, and no Interests will be sold unless valid subscriptions for the Offering are received and accepted prior to the termination of the applicable Offering Period. It is also anticipated that subscriptions will not be accepted from prospective Investors located in states where the BOR is not registered as a broker-dealer. If we terminate an Offering prior to accepting a subscriber’s subscription, escrowed funds will be returned promptly, without interest or deduction, to the proposed Investor.

 

Any dispute in relation to the Operating Agreement is subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, except when federal law requires that certain claims be brought in federal courts. Our Operating Agreement, to the fullest extent permitted by applicable law, provides for Investors to waive their right to a jury trial.

 

Each Investor will covenant and agree not to bring any claim in any venue other than the Court of Chancery of the State of Delaware, or if required by U.S. federal law, a U.S. federal court, as in the case of claims brought under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provisions will not apply to suits brought to enforce any duty or liability created by the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction, and Investors will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

 

If an Interest Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement and such claim was governed by state law, it would have to bring such claim in the Delaware Court of Chancery. Our Operating Agreement, to the fullest extent permitted by applicable law and subject to limited exceptions, provides for Investors to consent to exclusive jurisdiction to Delaware Court of Chancery and for a waiver of the right to a trial by jury, if such waiver is allowed by the court where the claim is brought.

 

If we opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the Delaware, which govern our Operating Agreement, by a federal or state court in the State of Delaware, which has exclusive jurisdiction over matters arising under the Operating Agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial.

 

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We believe that this is the case with respect to our Operating Agreement and our Interests. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the Operating Agreement. Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the Operating Agreement with a jury trial. No condition, stipulation or provision of the Operating Agreement or our Interests serves as a waiver by any Investor or beneficial owner of our Interests or by us of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder. Additionally, the Company does not believe that claims under the federal securities laws shall be subject to the jury trial waiver provision, and the Company believes that the provision does not impact the rights of any Investor or beneficial owner of our Interests to bring claims under the federal securities laws or the rules and regulations thereunder.

 

These provisions may have the effect of limiting the ability of Investors to bring a legal claim against us due to geographic limitations and may limit an Investor’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us. Furthermore, waiver of a trial by jury may disadvantage an investor to the extent a judge might be less likely than a jury to resolve an action in the investor’s favor. Further, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, an action or proceeding against us, then we may incur additional costs associated with resolving these matters in other jurisdictions, which could materially and adversely affect our business and financial condition.

 

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ACTUAL AND POTENTIAL CONFLICTS OF INTEREST

 

We have identified the following conflicts of interest that may arise in connection with the Interests, in particular, in relation to the Company, the Manager and the underlying assets. The conflicts of interest described in this section should not be considered as an exhaustive list of the conflicts of interest that prospective Investors should consider before investing in the Interests.

 

Consignors and others who contribute Underlying Assets with respect to a Series (who may include affiliates of the Company and the Manager), set prices at which the Underlying Assets would be sold to the Company – and those prices may not be based upon arms-length negotiations and may not fully reflect the value of the Underlying Assets, which often is difficult to determine. Persons who consign or contribute memorabilia to the Company that will comprise Underlying Assets for one or more Series that may be offered by the Company establish the price(s) that the Company will pay for the asset(s). Although the Company intends to endeavor to determine the appropriate market price for each asset being acquired (and therefore the basis for each Series being issued), these prices are often difficult to determine and, when affiliates of the Company or the Manager are the consignors or contributors, these prices will not be determined on an arms-length basis. In these cases, there will be an inherent conflict of interest as the affiliates attempt to maximize the amount that the Company pays for the Underlying Asset. Additionally, the Manager will receive a sourcing fee that is based on a percentage of the price at which an Underlying Asset is sold to the Company, so the Manager also will have an incentive to increase the price paid for the Underlying Asset. The more paid by the Company decreases the likelihood of a positive return on the investment over time.

 

Our Operating Agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of the Manager.

 

Our Operating Agreement provides that the Manager, in exercising its rights in its capacity as the Manager, will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us or any of our investors and will not be subject to any different standards imposed by our operating agreement, the Delaware Limited Liability Company Act or under any other law, rule or regulation or in equity. These modifications of fiduciary duties are expressly permitted by Delaware law.

 

We do not have a conflicts of interest policy.

 

The Company, the Manager and their affiliates will try to balance the Company’s interests with their own.  However, to the extent that such parties take actions that are more favorable to other entities than the Company, these actions could have a negative impact on the Company’s financial performance and, consequently, on distributions to Investors and the value of the Interests.  The Company has not adopted, and does not intend to adopt in the future, either a conflicts of interest policy or a conflicts resolution policy.

 

Payments from the Company to the Manager, the Asset Manager and their respective employees or affiliates.

 

The Manager and the Asset Manager will engage with, on behalf of the Company, a number of brokers, dealers, Asset Sellers, insurance companies, storage providers and other service providers and thus may receive in-kind discounts, for example, free shipping or servicing.  In such circumstances, it is likely that these in-kind discounts may be retained for the benefit of the Manager or the Asset Manager and not the Company, or may apply disproportionately to other series of interests. The Manager or the Asset Manager may be incentivized to choose a broker, dealer or Asset Seller based on the benefits they are to receive, or all Series of Interests collectively are to receive rather than that which is best for the Series.

 

Members of Manager’s management, as well as any expert network and Advisory Board members may often be sports memorabilia dealers and brokers themselves and therefore will be incentivized to sell the Company their own sports memorabilia collectibles at potentially inflated market prices. For example, five of the first six Series of the Company have, as underlying assets, memorabilia that is has been consigned by Zev Partners, Inc. (“Zev Partners”), which is wholly-owned by the Epstein Family Trust under agreement dated December 29, 2017 (the “Epstein Trust”), the beneficiaries of which are the immediate family members of Jason Epstein, our President and founder. Mr. Epstein is the trustee of the Epstein Trust. Because the consignment price is not based upon arms-length negotiations, that may result in the Company paying a higher price for the asset than would be the case if the price were to be established by arms-length negotiations. This would favor Zev Partners rather than the Company and its investors. Additional information with respect to the purchase and sales prices of each of these assets is set forth in “USE OF PROCEEDS AND DESCRIPTION OF THE UNDERLYING ASSETS” below. In certain cases, a member of the Advisory Board could be the Asset Seller and could receive an identification fee for originally locating the asset. In some cases, affiliates of the Manager/Asset Manager may receive Sourcing and other fees for presenting assets to the Company to purchase on behalf of a Series of Interests. The Company’s officers and directors also are investors in Collectable Technologies, Inc., which is the sole member of the Manager/Asset Manager and will benefit, directly or indirectly, by fees paid by the Company or any Series to them, such as sourcing fees, reimbursement of costs and distributions of Free Cash Flow.

 

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Members of the expert network and the Advisory Board may also be Investors, in particular, if they are holding Interests acquired as part of a sale of an Underlying Asset (i.e., as they were the Asset Sellers).  They may therefore promote their own self-interests when providing advice to the Manager or the Asset Manager regarding an Underlying Asset (e.g., by encouraging the liquidation of such Underlying Asset so they can receive a return in their capacity as an Investor).

 

If the Operating Expenses exceed the revenue from an Underlying Asset and any cash reserves, the Manager has the option to cause the Series to incur an Operating Expenses Reimbursement Obligation to cover such excess. As interest may be payable on such loan, the Manager may be incentivized to cause the Series to incur an Operating Expenses Reimbursement Obligation to pay Operating Expenses rather than look elsewhere for additional sources of income or to repay any outstanding Operating Expenses Reimbursement Obligation as soon as possible rather than make distributions to Investors. The Manager may also choose to issue additional Interests to pay for Operating Expenses instead of causing the Company to incur an Operating Expenses Reimbursement Obligation, even if any interest payable by the Series on any Operating Expenses Reimbursement Obligation may be economically more beneficial to Interest Holders than the dilution incurred from the issuance of additional Interests.

 

Potential future brokerage activity.

 

Either the Manager or one of its affiliates may in the future register with the Commission as a broker-dealer in order to be able to facilitate liquidity in the Interests. The Manager, or its affiliates, may be entitled to receive fees based on volume of trading and volatility of the Interests and such fees may be in excess of what the Asset Manager receives via the Management Fee or the appreciation in the interests it holds in each series of interests.  Although an increased volume of trading and volatility may benefit Investors as it will assist in creating a market for those wishing to transfer their Interests, there is the potential that there is a divergence of interests between the Manager and those Investors, for instance, if the Underlying Asset does not appreciate in value, this will negatively affect the price of the Interests, but may not adversely affect the profitability related to the brokerage activities of the Manager (i.e., the Manager would collect brokerage fees whether the price of the Underlying Asset increases or decreases).

 

The Manager’s ownership of multiple series of interests may result in conflicts.

 

The Manager or its affiliates will acquire interests in each series of interests for their own accounts and may transfer these interests, either directly or through brokers.  While the Manager or its affiliates do not currently intend to transfer these Interests prior to the liquidation of an Underlying Asset, in the future, they may, from time to time, transfer these interests, either directly or through brokers, or otherwise, subject to the restrictions of applicable securities laws and filing any necessary amendment to this Offering Circular. Depending on the timing of the transfers, this could negatively affect the interests held by the Investors (e.g., driving price down because of supply and demand and over availability of interests).  This ownership in each of the series of interests may result in a divergence of interests between the Manager and the Investors who hold only one or certain series of interests (e.g., the Manager or its affiliates, if registered as a broker-dealer with the Commission, may disproportionately market or promote a certain series of interests, in particular, where they are a significant owner, so that there will be more demand and an increase in the price of such series of interests).

 

Allocations of income and expenses as between series of interests might not be truly proportionate.

 

The Manager may appoint a service provider to service the entire collection of the Underlying Assets  (e.g., storage, insurance, maintenance or media material creation) with respect to a number of sports memorabilia collectibles that comprise the underlying assets.  Although appointing one service provider may reduce cost due to economies of scale, such service provider may not necessarily be the most appropriate for a particular Underlying Asset (e.g., it may have more experience in servicing other assets or asset classes).  In such circumstances, the Manager would be conflicted from acting in the best interests of the underlying assets as a whole or an individual Underlying Asset.

 

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There may be situations when it is challenging or impossible to accurately allocate income, costs and expenses to a specific series of interests and certain series of interests may get a disproportionate percentage of the cost or income, as applicable. In such circumstances, the Manager would be conflicted from acting in the best interests of the Company as a whole or the individual Series.  While we presently intend to allocate expenses as described in “Description of the Business – Allocations of Expenses”, the Manager has the right to change this allocation policy at any time without further notice to Investors.

 

Other Conflicting interests of the Manager, the Asset Manager and the Investors.

 

The Manager or its affiliates are obligated to purchase a minimum of 0.5% of Interests of all offerings, at the same terms as all other Investors. However, the Manager may, in its sole discretion, acquire additional Interests, at the same terms as all other Investors.  If there is a lack of demand for Interests in a particular Series during such Series’ initial offering, the Manager in its sole discretion may acquire (“top-off”) additional Interests (at the same terms as all other Investors) in order for an offering for such Series of Interests to have a Closing. The Manager will engage in such activity in the future if it reasonably believes at such time this to be in the best interests of Investors or potential Investors. Such activity may result in a reduced level of liquidity in the secondary trading market for any Series in which it makes such a decision.

 

The Manager and the Asset Manager may receive sponsorship from servicing providers to assist with the servicing of certain Underlying Assets.  If sponsorship is not obtained for the servicing of an Underlying Asset, the Investors who hold Interests connected to the Underlying Asset requiring servicing would bear the cost of the fees. The Manager or the Asset Manager may in these circumstances, decide to carry out a different standard of service on the Underlying Asset to preserve the expenses which arise to the Investors and therefore, the amount of Management Fee the Asset Manager receives.  The Manager or the Asset Manager may also choose to use certain service providers because they get benefits from giving them business, which do not accrue to the Investors.

 

The Manager will determine whether to liquidate the Underlying Asset, should an offer to acquire the whole Underlying Asset be received. As the Manager, Asset Manager or their respective affiliates, if registered as a broker-dealer with the Commission, would receive fees on the trading volume in the Interests connected with an underlying asset, they may be incentivized not to realize such underlying asset even though Investors may prefer to receive the gains from any appreciation in value of such underlying asset. Furthermore, when determining to liquidate an underlying asset, the Manager will do so considering all the circumstances at the time, this may include obtaining a price for an underlying asset that is in the best interests of a substantial majority but not all the Investors.

 

The Manager may be incentivized to use more popular Memorabilia Assets at public events, including those that may be a part of any Premium Membership Programs that are developed as this may generate higher Free Cash Flow to be distributed to the Asset Manager, an affiliate of the Manager, and Investors in the Series associated with that particular Underlying Asset.  This may lead certain Underlying Assets to generate lower distributions than the Underlying Assets of other Series of Interests.  The use of Underlying Assets at the such public events could increase the risk of the Underlying Asset getting damaged and could impact the value of the Underlying Asset and, as a result, the value of the related Series of Interests.  The Manager may therefore be conflicted when determining whether to use the Underlying Assets at a public event to generate revenue or limit the potential of damage being caused to them.

 

In addition, Collectable Technologies, Inc., may participate in or conduct activities that one might consider related to an Underlying Asset but for which the Series might receive little or no compensation. As an example, if a sports celebrity made an appearance at which admission was charged and a Series owned one or more items of memorabilia associated with that celebrity that were to be exhibited at the event, the Manager would determine, in its discretion, what payment would be made to the Series to be allowed to exhibit the item. That amount would not be determined on an arms-length basis and could result in a payment to the Series that did not represent the fair value of exhibiting the item or in no payment at all. In contrast, if merchandise (e.g., shirts, cups) were produced using the image of the item, amounts attributable to the sales of that merchandise would be payable to the Series and available, to the extent determined by the Manager, for distribution as Free Cash Flow. The use of Underlying Assets at the such public events also could increase the risk, at the potential expense of the holder of Interests, that an Underlying Asset could be damaged and affect the value of the Underlying Asset and, as a result, the value of the related Series of Interests.  The Manager/Asset Manager may be conflicted when determining whether to use the Underlying Assets at a public event to generate revenue that might disproportionately benefit Collectable Technologies, Inc. rather than the Series holders.

 

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The Manager has the ability to unilaterally amend the Operating Agreement and allocation policy.  As the Manager is party, or subject, to these documents, it may be incentivized to amend them in a manner that is beneficial to it as manager of the Company or the Series or may amend it in a way that is not beneficial for all Investors. In addition, the Operating Agreement seeks to limit the fiduciary duties that the Manager owes to its Investors. Therefore, the Manager is permitted to act in its own best interests rather than the best interests of the Investors.  See “Description of the Interests Offered” for more information.

 

Manager’s Fees and Compensation.

 

None of the compensation set forth under “Compensation of the Manager” was determined by arms’ length negotiations. Investors must rely upon the duties of the Manager of good faith and fair dealing to protect their interests, as qualified by the Operating Agreement. While the Manager believes that the consideration is fair for the work being performed, there can be no assurance made that the compensation payable to the Manager will reflect the true market value of its services.

 

Fees for arranging events or monetization in addition to the Management Fee.

 

As the Manager will acquire a percentage of each series of interests, it may be incentivized to attempt to generate more earnings with those underlying assets owned by those series of interests in which it holds a greater stake.

 

Although we currently have no plans to develop a liquidity platform that would allow trading in the Interests, were we to do so, any profits generated from such a platform (e.g., through advertising and from issuing additional interest in underlying assets) and from issuing additional Interests in Underlying Assets will be for the benefit of the Manager and Asset Manager ((e.g., Sourcing Fees) and, therefore, Collectable Technologies, Inc and its investors. In order to increase its revenue stream, the Manager may therefore be incentivized to issue additional series of interests and acquire more underlying assets rather than focus on monetizing any underlying assets already held by existing series of interests.

 

Conflicts between the Advisory Board and the Company.

 

The Operating Agreement of the Company provides that the resolution of any conflict of interest approved by the Advisory Board shall be deemed fair and reasonable to the Company and the Members and not a breach of any duty at law, in equity or otherwise.  As part of the remuneration package for Advisory Board members, they may receive an ownership stake in the Manager. This may incentivize the Advisory Board members to make decisions in relation to the underlying assets that benefit the Manager rather than the Company.

 

As a number of the Advisory Board members are in the sports memorabilia collectibles industry, they may seek to sell collectibles to, acquire collectibles from, or service collectibles owed by, the Company.

 

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Conflicts between the Legal Counsel, the Company and the Collectable Parties.

 

The counsel of the Company (“Legal Counsel”) is also counsel to the Manager, the Asset Manager and their respective affiliates and may serve as counsel with respect to other series of interests (collectively, the “Collectable Parties”).  Because Legal Counsel represents both the Company and the Collectable Parties, certain conflicts of interest exist and may arise. To the extent that an irreconcilable conflict develops between the Company and any of the Collectable Parties, Legal Counsel may represent the Collectable Parties and not the Company or the Series. Legal Counsel may, in the future, render services to the Company or the Collectable Parties with respect to activities relating to the Company as well as other unrelated activities.  Legal Counsel is not representing any prospective Investors of any Series Interests in connection with this Offering and will not be representing the members of the Company other than the Manager, although the prospective Investors may rely on the opinion of legality of Legal Counsel provided as Exhibit 12.1. Prospective Investors are advised to consult their own independent counsel with respect to the other legal and tax implications of an investment in any Series that we offer.

 

Our affiliates’ interests in other Collectable Parties.

 

The officers and directors of Collectable Technologies, Inc., which is the sole member of the Manager and as well as the Asset Manager for the Company, are also officers and directors and/or key professionals of other Collectable Parties. These persons have legal obligations with respect to those entities that are similar to their obligations to us. As a result of their interests in other Collectable Parties, their obligations to other investors and the fact that they engage in and will continue to engage in other business activities on behalf of themselves and others, they will face conflicts of interest in allocating their time among us and other Collectable Parties and other business activities in which they are involved. These separate entities all require the time and consideration of Collectable Technologies, Inc. and affiliates, potentially resulting in an unequal division of resources to all Collectable Parties. However, we believe that Collectable Technologies, Inc. has sufficient professionals to fully discharge all responsibilities to the Company and each Series.

 

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DILUTION

 

Dilution means a reduction in value, control or earnings of the Interests the Investor owns.  There will be no dilution to any Investors associated with any Offering. However, from time to time, additional Interests in the Series offered under this Offering Circular may be issued in order to raise capital to cover the applicable Series’ ongoing operating expenses. See “Description of the Business – Operating Expenses” for further details. In addition, the Operating Agreement gives the Manager the authority to cause the Company to issue Interests to Investors as well as to other Persons for less than the original offering price (or for no consideration) and on such terms as the Manager may determine, subject to the terms of the Series Designation applicable to such Series of Interests, which may result in dilution to Investors.

 

The Manager must acquire a minimum of 0.5% of the Interests (which may be through acceptance of Interests in satisfaction of all or a portion of the fees that may be due the Manager) in connection with any Offering, however, the Manager, in its sole discretion, may acquire greater than 0.5% of the Interests in any Offering. In all circumstances, the Manager or its affiliated purchase will pay the price per share offered to all potential Investors hereunder.

 

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USE OF PROCEEDS AND DESCRIPTIONS OF UNDERLYING ASSETS

 

The following pages describe the use of proceeds and the Underlying Assets for the six Series currently being offered by the Company. As additional Memorabilia Assets are located and marketed by the Company or, as the final prices for any of the Underlying Assets are established, this Offering Circular will be amended or supplemented, as appropriate.

 

SERIES #RUTHGEHRIGBALL

1930’s dual signed baseball by Babe Ruth & Lou Gehrig

 

Use of Proceeds - SERIES #RUTHGEHRIGBALL

 

The following illustrates the estimated use of proceeds of this Offering (including from Series #RUTHGEHRIGBALL Interests acquired by the Manager) if the Total Minimum ($72,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $63,000:

 

    Dollar
Amount		     Percentage of Gross
Cash Proceeds		  
Uses                
Cash Portion of the Asset Cost   $ 63,000       87.50 %
Broker Dealer  & Escrow (1)   $ 2,204       3.06 %
Legal   $ 1,250       1.74 %
Marketing & Re-Authentication   $ 1,000       1.39 %
Offering Expenses   $ 1,000       1.39 %
Acquisition Expenses (Insurance, Maintenance, Transport) (2)   $ 600       0.83 %
Sourcing Fee (cash portion)(3)   $ 1,890       2.63 %
Total Fees and Expenses   $ 7,944       9.98 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 1,056       2.21 %
Total Proceeds   $ 72,000       100 %

 

(1)Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #RUTHGEHRIGBALL Sellers
(2) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(3) In addition to the cash portion of the Sourcing Fee, the Manager will receive 35 units, which represents the portion ($1,260) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (10 units) for $360.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

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On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
 
Agreement Type   Consignment
Date of Agreement   7/7/2020
Expiration Date of Agreement   2/28/2021
Selling Entity   Zev Partners(1)
Total Sourcing Fee as a percentage of Consignment Price   5%
Sourcing Fee Payable in Cash   3%
Sourcing Fee Payable in Series Equity Interest   2%

 

(1)Zev Partners is affiliated with Jason Epstein, our founder and President. The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Zev Partners rather than the Company.   See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  Zev Partners acquired the Underlying Asset for $50,000. Zev Partners based the consignment price that it would accept on a professional appraisal performed on December 26, 2019 that reported the retail value of the Underlying Asset was $75,000. In the example set forth above, Zev Partners would realize a profit of $13,000.

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

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DESCRIPTION OF #RUTHGEHRIGBALL

 

Investment Overview

 

  · Upon completion of the Series #RUTHGEHRIGBALL Offering, Series #RUTHGEHRIGBALL will purchase a 1930’s dual signed baseball by Babe Ruth & Lou Gehrig (The “Series Babe Ruth and Lou Gehrig Signed Ball” or the “Underlying Asset” with respect to Series #RUTHGEHRIGBALL, as applicable), the specifications of which are set forth below.
·Babe Ruth, byname of George Herman Ruth, Jr., also called the Bambino and the Sultan of Swat, was an American professional baseball player. Ruth has been called an American original, undoubtedly the game’s first great slugger and the most celebrated athlete of his time.

·Over the course of his career, Ruth broke baseball's most important slugging records, including most years leading a league in home runs, most total bases in a season, and highest slugging percentage for a season.

·Ruth was a major figure in revolutionizing and revitalizing America’s national game from a massive public disillusionment following the Black Sox Scandal of 1919.

·Ruth primarily played right field for the New York Yankees. His career spanned from 1914-1935.

·During Ruth’s career, he won seven World Series championships and one Most Valuable Player award. He was inducted into baseball’s Hall of Fame, a Monument Park honoree, and a member of Major League Baseball’s All-Century Team and All-Time Team.

·Lou Gehrig, byname of Henry Louis Gehrig, was a stalwart New York Yankees first baseball. Gehrig is chiefly known for playing in 2,130 consecutive games for the Yankees, a magnificent streak long thought to have been unbreakable, until Cal Ripken, Jr. came along.

·Gehrig wore uniform number four, because he hit behind Babe Ruth, number three. One of the most magnificent hitters and run producers in history, Gehrig was always overshadowed by Ruth, who was not only an unparalleled hitter, but was as outgoing and flamboyant as Gehrig was reserved and quiet.

·During Gehrig’s 17 seasons, the Yankees won seven pennants and six World Series championships. He was voted the greatest first baseball of all time by the Baseball Writers Association of America,  honored with a United States postage stamp, and was the leading vote-getter for Major League Baseball’s All Century Team.

·After Gehrig suffered and died from a mysterious neuromuscular disease, amyotrophic lateral sclerosis, or ALS, the disease later became known as “Lou Gehrig’s Disease.”

·

Ruth and Gehrig were teammates with the New York Yankees from 1925-1934, forming one the most formidable tandems in baseball history. The powerful and potent lineup anchored by Ruth and Gehrig became known as “Murderers’ Row.”

 

Asset Description

 

Overview and authentication

 

·

The official major league baseball is signed by Babe Ruth and Lou Gehrig at the peak of their fame when they formed a dynamic duo as part of the New York Yankees legendary Murderers’ Row.

·Because Ruth followed Gehrig in the Yankees lineup, and both were two of the fiercest sluggers in history, their legends are forever intertwined. A baseball signed by both players is highly collectible.

 

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·The official National League baseball dates to 1933 because reference guides indicate that it was manufactured from 1926 through 1933 and it bears a stamp on the side of William Bramham, the Minor League President starting in 1933.

·The underlying asset has been authenticated by PSA/DNA (certification number: AH05008) and Beckett Authentication (A17335), two leading authentication companies.

 

Notable Features:

 

·Ruth and Gehrig autographs in tandem on the same ball are relatively rare because Gehrig, due to shyness, was a much less common signer than Ruth.

·Both authentication companies gave the ball high numerical grades on scales of one to ten. PSA/DNA gave the overall ball’s condition and the strength of the autographs a combined 7.5 (the equivalent of a near mint plus). Beckett graded the Ruth an 8 (near mint/mint) and the Gehrig 7 (near mint). Due to the tendency of vintage autographs to fade and balls to show handling, these are exceptionally high grades.

·The Underlying Asset retails all the original manufacturer’s sharp stamping indicating it was the best ball money could buy at the time because it was used at the highest level of professional baseball.

·The Underlying Asset includes the original box containing the ball, a rare and desirable addition. These boxes were usually thrown away.

 

Notable Defects:

 

The underlying asset shows signs of wear consistent with its age and condition grade from PSA/DNA and Beckkett.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series Ruth and Gehrig Signed Ball going forward.

 

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SERIES #CURRYBASKET

 

2009-2010 Stephen Curry National Treasure Rookie Card AND 2009-2010 Tops Gold and Base Stephen Curry Rookie Cards 

 

Use of Proceeds – SERIES #CURRYBASKET

 

The following illustrates the estimated use of proceeds of this Offering (including from Series #CURRYBASKET Interests acquired by the Manager) if the Total Minimum ($40,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $33,000:

 

    Dollar
Amount		     Percentage of Gross
Cash Proceeds		  
Uses            
Cash Portion of the Asset Cost   $ 33,000       82.50 %
Broker Dealer  & Escrow (1)   $ 1,893       4.73 %
Legal   $ 1,250       3.13 %
Marketing & Re-Authentication   $ 1,000       2.50 %
Offering Expenses   $ 1,000       2.50 %
Acquisition Expenses (Insurance, Maintenance, Transport) (2)   $ 400       1.0 %
Sourcing Fee (cash portion)(3)   $ 990       2.48 %
Total Fees and Expenses   $ 6,533       16.33 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 467       1.17 %
Total Proceeds   $ 40,000       100 %

 

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #CURRYBASKET Sellers.
(2) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(3) In addition to the cash portion of the Sourcing Fee, the Manager will receive 33 units, which represents the portion ($660) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (10 units) for $200.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

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Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
 
Agreement Type   Consignment
Date of Agreement   7/7/2020
Expiration Date of Agreement   2/28/2021
Selling Entity   Zev Partners(1)
Total Sourcing Fee as a percentage of Consignment Price   5%
Sourcing Fee Payable in Cash   3%
Sourcing Fee Payable in Series Equity Interest   2%

 

(1)Zev Partners is affiliated with Jason Epstein, our founder and President. The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Zev Partners rather than the Company.  See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  Zev Partners acquired the Underlying Assets for $28,900. Zev Partners based the consignment price that it would accept on publicly available sales data of comparable items. In the example set forth above, Zev Partners would realize a profit of $4,100.

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses, (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

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Description of SERIES #CURRYBASKET

 

Investment Overview

 

  · Upon completion of the Series #CURRYBASKET Offering, Series #CURRYBASKET will purchase three assets:  a 2009-2010 Playoff  National Treasures Stephen Curry Rookie Card #206 Patch Autograph/99, a 2009 Topps Gold Basketball Stephen Curry Rookie RC #321, and a 2009 Topps Basketball Stephen Curry Rookie RC #321  (The “Underlying Assets” with respect to Series #STEPHCURRY, as applicable), the specifications of which are set forth below.
  · Wardell Stephen “Steph” Curry II was drafted 7th overall by the Golden State Warriors in the 2009 NBA Draft, and has remained with the Warriors until present. His remarkable career achievements include three NBA championships, two NBA Most Valuable Player Awards, six NBA All Star selections and  three All-NBA First Team awards.  
  · He is commonly cited as one of the greatest shooters in NBA history and is credited with revolutionizing the game of basketball by inspiring teams to regularly utilize the three-point shot. Curry has set the record for most three pointers made in a regular season three times, and currently ranks third all-time in NBA history. 
  · Curry had a prodigious collegiate career at little-known Davidson College. There, he was twice named Southern Conference Player of the Year and set the all-time scoring record for both Davidson and the Southern Conference.
  · We value the 2009-2010 Playoff National Treasures card at $30,000, the 2009-2010 Topps Gold at $2,000, and the 2009-2010 Topps Base at $1,000, amounting to a total cash value of assets of $33,000.

 

Asset Description

 

Overview and authentication

 

  · The 2009-2010 Playoff National Treasures Stephen Curry Rookie Card #206 Patch Autograph/99 only produced 99 copies, making it the rarest of Curry rookie cards in circulation. 
  · The 2009-2010 Playoff National Treasures card contains a jumbo patch piece occupying a good third of the card’s front. In addition, the card contains an on-card signature in blue link below the Golden State Warriors patch.  Additionally, Curry is pictured in his Warriors gear, compared to Upper Deck’s high-end take which features him in his collegiate uniform. 
  · The 2009-2010 Playoff National Treasures Stephen Curry Rookie Card #206 Patch Autograph/99 was authenticated and graded by PSA. It received a PSA 8 NM-MT grade.
  · The 2009-2010 Topps Gold Basketball Stephen Curry Rookie RC #321 is a limited edition gold border  rookie base card, with only 2009 in circulation. This card is #1146 out of 2009. The previous owner had the card hand signed by Stephen Curry through Steiner Sports.  The autograph has been validated by SGC with an “A” meaning the autograph is authentic.
  · The 2009-2010 Topps Base Basketball Stephen Curry Rookie RC #321 was also hand signed by Stephen Curry through Steiner Sports. The autograph has been validated and graded by SGC, with an “A” meaning the autograph is authentic and an auto grade of “9”.

 

Notable Features:

 

  · The 2009-2010 Playoff National Treasures Stephen Curry Rookie Card #206 Patch Autograph/99 contains a patch of his Golden State Warriors jersey on the front of the card, with a blue signature below it. Stephen Curry, written out in script, appears above the jersey patch. The top quadrant of the card contains a picture of Curry in his Warriors jersey. The card contains a black and white trim.
  · The 2009-2010 Topps Basketball Stephen Curry Rookie RC #321 displays a picture of Curry smiling. The photo shows him during his rookie year, wearing a white Warriors warm-up shirt. The Gold edition contains a gold border, while the base card has a white border. 

 

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Notable Defects:

 

The underlying assets show signs of wear consistent with their age and condition grade from PSA, SGC and SGC, respectively.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series #CURRYBASKET going forward.

 

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SERIES #LEBRONROOKIE

2003 SP Authentic LeBron James Rookie Card

 

Use of Proceeds – SERIES #LEBRONROOKIE

 

The following illustrates the estimated use of proceeds of this Offering (including from Series #LEBRONROOKIE Interests acquired by the Manager) if the Total Minimum ($50,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $42,500:

 

    Dollar Amount     Percentage of Gross
Cash Proceeds		  
Uses                
Cash Portion of the Asset Cost   $ 42,500       85.00 %
Broker Dealer  & Escrow (1)   $ 1,992       3.98 %
Legal   $ 1,250       2.50 %
Marketing & Re-Authentication   $ 1,000       2.0 %
Offering Expenses   $ 1,000       2.0 %
Acquisition Expenses (Insurance, Maintenance, Transport) (2)   $ 425       0.85 %
Sourcing Fee (cash portion)(3)   $ 1,275       2.55 %
Total Fees and Expenses   $ 6,942       13.88 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 559       1.12 %
Total Proceeds   $ 50,000       100 %

 

(1)Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #LEBRONROOKIE Sellers.

 

  (2) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.

 

  (3) In addition to the cash portion of the Sourcing Fee, the Manager will receive 34 units, which represents the portion ($850) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (10 units) for $250.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

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Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
 
Agreement Type   Consignment
Date of Agreement   7/7/2020
Expiration Date of Agreement   2/28/2021
Selling Entity   Zev Partners (1)
Total Sourcing Fee as a percentage of Consignment Price   5%
Sourcing Fee Payable in Cash   3%
Sourcing Fee Payable in Series Equity Interest   2%

 

(1)Zev Partners is affiliated with Jason Epstein, our founder and President. The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Zev Partners rather than the Company. See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  Zev Partners acquired the Underlying Asset for $21,000. Zev Partners based the consignment price that it would accept on publicly available sales data of nearly identical items. In the example set forth above, Zev Partners would realize a profit of $21,500.

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses, (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

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DESCRIPTION OF #LEBRONROOKIE

 

Investment Overview

 

·Upon completion of the Series #LEBRONROOKIE Offering, Series #LEBRONROOKIE will purchase a 2003 SP Authentic LeBron James Rookie Card (The “Series LEBRONROOKIE” or the “Underlying Asset” with respect to Series #LEBRONROOKIE, as applicable), the specifications of which are set forth below.

·LeBron James, also called King James, is an American professional basketball player. James is frequently discussed as one of the greatest basketball players of all time, and certainly one of America’s most influential and popular athletes of his generation.

·Over the course of his career, James has won three NBA championships, three NBA Finals MVP awards, and four NBA’s Most Valuable Player awards. while playing for the Cleveland Cavaliers, Miami Heat and Los Angeles Lakers.

·James is the three-time AP Athlete of the Year and two-time Sports Illustrated Sportsperson of the Year.

·James has played for three teams during his career, the Cleveland Cavaliers, Miami Heat and Los Angeles Lakers, and his playing career has spanned from 2003-present.

·James has taken a vocal stance against social issues like racial inequality, police shootings, and even political affairs, and has empowered other athletes to use their platform in similar ways.

·In 2010, James made a controversial decision to leave his hometown Cleveland Cavaliers to play for the Miami Heat, a nationally televised announcement deemed “The Decision.” After winning two championships with the Heat, LeBron triumphantly returned to the Cavaliers and brought the city of Cleveland its first major professional sports championship since 1964, and the first-ever championship won by the Cleveland Cavaliers franchise.

 

Asset Description

 

Overview and authentication

 

·The 2003 SP Authentic #148 LeBron James AU Rookie Card is one of the most desired of LeBron’s rookie productions. Only 500 of its kind were produced.

·The card features LeBron James in his dunk pose while playing for the Cleveland Cavaliers. The card is signed by James in blue ink across the bottom center of the card.

·The underlying asset has been authenticated by Beckett (003865873). The card received a 9.5 with subgraded 10, 9.5, 9.5, 9. The autograph received a grade of 10.

·LeBron James has recently surpassed Michael Jordan on the all-time scoring list, cementing his legacy as one of the greatest and most investable athletes in history.

 

Notable Features:

 

·This LeBron Rookie Card is one of the most coveted, rare, and pristine in circulation. Only 500 of its kind were produced.

·Limited Edition rookie card with only 500 produced. This particular card is #218 of 500.

·The autograph received a percent 10 grade, and is beautifully stuck in blue ink.

 

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Notable Defects:

 

The underlying asset shows signs of wear consistent with its age and condition grade from Beckett.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series #LEBRONROOKIE going forward.

 

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SERIES #KAWHIBASKET

2012 Panini Prizm PSA 10 Kawhi Leonard Rookie Cards – 30x

 

Use of Proceeds – SERIES #KAWHIBASKET

 

The following illustrates the estimated use of proceeds of this Offering (including from Series #KAWHIBASKET Interests acquired by the Manager, but excluding the retained interest of the seller of the Underlying Asset) if the Total Minimum ($42,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $34,650:

 

    Dollar Amount     Percentage of Gross
Cash Proceeds		  
Uses                
Cash Portion of the Asset Cost (1)   $ 34,650       82.50 %
Broker Dealer  & Escrow (2)   $ 1,905       4.54 %
Legal   $ 1,250       2.98 %
Marketing & Re-Authentication   $ 1,000       2.38 %
Offering Expenses   $ 850       2.02 %
Acquisition Expenses (Insurance, Maintenance, Transport) (3)   $ 600       1.43 %
Sourcing Fee (cash portion)(4)   $ 1,040       2.48 %
Total Fees and Expenses   $ 6,645       15.82 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 705       1.68 %
Total Proceeds   $ 42,000       100 %

  

(1) The price that the seller/consignor has established for this asset is $63,000.  The seller will contribute the asset to the Series in exchange for 945 Interests in the Series, which represents 45% of the agreed-upon value of the Underlying Asset.  The amount set forth in the table represents 55% of the agreed-upon price ($63,000) of the asset.
(2)Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #KAWHIBASKET Sellers.
(3) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(4) In addition to the cash portion of the Sourcing Fee, the Manager will receive 42 units, which represents the portion ($1,260) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (7 units) for $210.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

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Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
Agreement Type   Consignment
Date of Agreement   9/25/2020
Expiration Date of Agreement   3/01/2021
Selling Entity   Zev Partners (1)
Total Sourcing Fee as a percentage of Consignment Price   5%
Sourcing Fee Payable in Cash   3%
Sourcing Fee Payable in Series Equity Interest   2%

 

(1)Zev Partners is affiliated with Jason Epstein, our founder and President. The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Zev Partners rather than the Company.  See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  Zev Partners acquired the Underlying Asset for $10,300. Zev Partners based the consignment price that it would accept on publicly available sales data of nearly identical items. In the example set forth above, Zev Partners would realize a profit of $52,700 (assuming that the value of the 45% interest in the Series is $28,350).

  

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses, (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

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DESCRIPTION OF #KAWHIBASKET

 

Investment Overview

 

·Upon completion of the Series #KAWHIBASKET Offering, Series #KAWHIBASKET will purchase thirty unique Kawhi Leonard 2012 Panini Prizm Rookie Cards, all graded PSA 10.

·Kawhi Leonard is an American professional basketball player. Leonard is frequently discussed as one of the most clutch and well-rounded basketball players in NBA history.

·Over the course of his career, Leonard has won two NBA championships, two NBA Finals MVP awards, four-time NBA All-Star selection, two-time All-NBA First Team, and two-time NBA Defensive Player of the Year.

·Leonard was the 15th overall pick in the 2011 draft by the Indiana Pacers, but was traded that night to the San Antonio Spurs.

·After seven seasons with the Spurs, Leonard was traded to the Toronto Raptors. He led the Raptors to their first NBA championship in franchise history. He subsequently moved to Los Angeles and signed with the Los Angeles Clippers as a free agent in July 2019.

 

Asset Description

 

Overview and authentication

 

·Series #KAWHIBASKET represents a collection of thirty Kawhi Leonard 2012-2013 Panini Prizm Rookie Cards, all graded PSA GEM-MT 10. Serial numbers for each individual asset is listed in the table below.

·The 2012 Panini Prizm Rookie Cards are a coveted and valuable collectors item.

·The cards feature Kawhi Leonard in his black, white and silver Spurs jersey palming the ball in his right hand.

·2012-2013 was the first production run for Panini Prizm cards, a popular line which has continued to expand, adding another notable element to its significance.

·The make-up of the original 2012-2013 Prizm is unique and primitive compared to more contemporary vintages of this category. For example, the 2018-10291 Panini Prizm set has over 30 parallels. Kawhi Leonard’s 2012-2013 Prizm RC has just three.

·Kawhi Leonard’s historic NBA finals run with the Toronto Raptors, and his recent move to Los Angeles, has elevated his stature as a premier investable athlete.

·According to PSAcard.com, there are only 766 Kawhi Leonard 2012 Panini Prizm GEM-MT 10’s in population. This offering represents thirty of them.

·We estimate the value of each card to be between $2,100 per card, based on recent sales transactions.

 

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Serial Numbers of Each Asset within Series #KAWHIBASKET (all PSA 10 GEM-MT 2012-2013 Panini Prizm RC’s)

 

  42148573     26067512  
  28428122     25716186  
  27158291     42148547  
  26366481     27672083  
  26631487     26366459  
  26366475     27158289  
  27158429     27158292  
  27610752     25114006  
  28178495     27947215  
  27589591     28428121  
  27871423     28268006  
  28428126     42574748  
  42655479     26155154  
  28428128     27947208  
  25514989     28712083  

 

Notable Features:

 

·According to PSA’s Population Report, there are 7,154 Kawhi Leonard 2012 Panini Prizm’s in circulation, but only 766 graded PSA GEM-MT 10.

·This offering contains 30 PSA GEM-MT 10 Kawhi Leonard 2012-2013 Panini Prizm cards.

 

Notable Defects:

 

The underlying asset shows signs of wear consistent with its age and condition grade from PSA.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series #KAWHIBASKET going forward.

 

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SERIES #MANTLEMINT1953

1953 Topps Mickey Mantle – PSA 10 GEM MINT

 

Use of Proceeds - SERIES #MANTLEMINT1953

 

The following illustrates the estimated use of proceeds of this Offering (including from Series #MANTLEMINT1953 Interests acquired by the Manager, but excluding the retained interest of the seller of the Underlying Asset) if the Total Minimum ($1,000,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $930,000.

 

    Dollar
Amount		     Percentage of Gross
Cash Proceeds		  
Uses                
Cash Portion of the Asset Cost (1)   $ 930,000       93.00 %
Broker Dealer  & Escrow (2)   $ 10,570       1.06 %
Legal   $ 1,250       0.13 %
Marketing & Re-Authentication   $ 11,700       1.17 %
Offering Expenses   $ 1,000       0.10 %
Acquisition Expenses (Insurance, Maintenance, Transport) (3)   $ 20,000       2.00 %
Sourcing Fee (cash portion)(4)   $ 23,250       2.33 %
Total Fees and Expenses   $ 67,770       6.78 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 2,230       0.22 %
Total Proceeds   $ 1,000,000       100 %

 

(1) The price that the seller/consignor has established for this asset is $2,325,000. The seller will contribute the asset to the Series in exchange for 55,800 Interests in the Series, which represents 60% of the agreed-upon value of the Underlying Asset. The amount set forth in the table represents 40% of the agreed-upon price ($930,000) of the asset.
(2) Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #MANTLEMINT1953 Sellers

(3) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(4) In addition to the cash portion of the Sourcing Fee, the Manager will receive 3,720 units, which represents the portion ($93,000) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (200 units) for $5,000.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
 
Agreement Type   Consignment
Date of Agreement   7/10/2020
Expiration Date of Agreement   12/1/2020
Selling Entity   Evan Mathis
Total Sourcing Fee as a percentage of Consignment Price   5%
Sourcing Fee Payable in Cash   1%
Sourcing Fee Payable in Series Equity Interest   4%

  

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  (1) The asset seller is a shareholder in the Company’s parent company, Collectable Technologies, Inc. but is not an  officer, director or greater than 5% shareholder of that company.  The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Mathis rather than the Company. See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  The consignment price was determined using comps of other high profile, high graded Mickey Mantle cards. The last recorded sale of a 1952 Topps Mickey Mantle PSA 9 was in April 2018 for $2,880,000. A 1952 PSA 10, according to many seasoned collectors, is worth $10,000,000. Mantle Topps 1952's come at a premium, as 1952 is his rookie card, to the 1953 Topps Mantle cards; however, the underlying asset in Series #MantleMint1953 is more rare than the 1952 Topps PSA 9. According to PSA Population reports, there are six 1952 Topps Mickey Mantle PSA 9's in circulation. Comparatively, there are only two 1953 Topps Mickey Mantle PSA 10's in circulation. The asset seller acquired the Underlying Asset for $1,150,000. In the example set forth above, the asset seller would realize a “profit” of $1,175,000 (assuming that the value of the 60% interest in the Series is $1,395,000).

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

DESCRIPTION OF #MANTLEMINT1953

 

Investment Overview

 

  • Upon completion of the Series #MANTLEMINT1953 Offering, Series #MANTLEMINT1953 will purchase a 1953 Topps baseball card of Mickey Mantle. (The “Series Mickey Mantle Card” or the “Underlying Asset” with respect to Series #MANTLEMINT1953, as applicable), the specifications of which are set forth below.
     
  • Mickey Mantle is the most beloved post-war player and rivals Babe Ruth in all-time popularity. His cards and memorabilia command some of the highest prices of any sports collectibles.

  

  • Mantle’s numbers jump off his Hall of Fame plaque: “Hit 536 Home Runs. Won League Homer Title and Slugging Crown Four Times. Made 2415 Hits. Batted .300 or Over in Each of Ten Years With Top of .365 in 1957. Voted Most Valuable Player 1956-57-62. Named on 20 A.L. All-Star Teams.”

 

  • Mantle was the linchpin of the Yankee’s epic dynasty during the 1950s and early 1960.  He collected seven World Championship rings while hitting a record 18 World Series home runs.

 

  • The Mick was a classic five-tool player with a unique ability to hit for power and average, run fast, throw far, and field well. He was as perfect a player as the 1953 Topps is a perfect card.

 

  • Some see Mantle as Goliath, Davey Crockett, John Wayne and Joe DiMaggio all rolled up into one American hero, ably assisted by his almost supernatural hitting power that led to a bevy of tape measure home runs. His 560-foot home run is the furthest anyone has hit in the game’s history.

 

  • He symbolized the 1950s —a period of American exceptionalism, peace, and prosperity and the golden era of baseball when all three New York teams dominated the country’s national pastime.

 

  • The Commerce Comet’s humble origins from small-town America to the heights of fame and fortune are the stuff of the American Dream.

 

  • Starting in the late 1970s, Mantle ushered in the sports collectible craze through his autograph appearances and the soaring value of his early baseball cards.

 

 Asset Description

 

Overview and authentication

 

  • The 1953 Topps Mickey Mantle has been designated a gem mint 10 on a scale of one to ten by PSA, the sports collectible industry’s top grading company. Only one other exists in the world, compared to three 1952 Topps Mantle cards.

 

  • The mint PSA 9 mint Mantle has soared in value from $88,000 in 2009 to $396,000 in 2019. It is five times more common than the PSA 10.

 

  • The 1953 Topps is his most iconic card besides the 1952 Topps and 1951 Bowman, owing to its  distinctive and beautiful artwork.

 

  • Many collectors believe that the 1953 Topps is Mantle's best-looking card. It also emanates from his rookie era.

 

  • In 1989, Marriott paid $121,000 (the equivalent of $250,000 today) for the original 3 1/4 x 1/2 inch artwork for the card to display it across the country.  

 

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  • The 1953 set is the only mainstream card that  is illustrated by Topps which has produced cards since 1951. “Mantle's deep stare into the distance mixed with the color scheme of blues and reds give this card a classy look and feel,” wrote one hobby writer. “The facsimile autograph in red adds a nice touch, as well.”

 

  • The card is a “short print,” meaning it was produced in far fewer quantities than other cards.

 

  • The 1953 Topps set is one of the most condition sensitive because of its design.  The notable red name plate is prone to chipping and wear. The smallest nicks and dings expose the white paper stock beneath.
     
  • The PSA 10 Mantle originated from an incredibly pristine 1953 hoard in Canada found by pioneering card dealer Alan “Mr. Mint” Rosen. It was later acquired by a connoisseur who collected the best of  the best. After PSA graded it a perfect 10 in 2015, long time collector and dealer Tony Arnold of TonyeTrade.com sold it to Super Bowl champion and memorabilia collector Evan Mathis.

 

Notable Features:

 

  • Print standards were inferior back then, so the centering seldom achieves 50/50 proportion that would yield a perfect grade as this one has. Most 1953 Topps have borders favoring one side.  The print focus and registration is flawless, too. There is no speckling in the blue, as is often case with this card. The card’s overall freshness and gloss makes it appear as though it was just pulled from a pack, showing no wear to the edges and four razor-sharp corners. It has been perfectly preserved since the year it was made.

 

Notable Defects:

 

There are none.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series #MANTLEMINT1953 going forward.

  

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SERIES #JORDANPSA10

1986-1987 Fleer #57 Rookie Card of Michael Jordan, PSA Gem Mint 10

 

Use of Proceeds - SERIES #JORDANPSA10

 

 The following illustrates the estimated use of proceeds of this Offering (including from Series #JORDANPSA10 Interests acquired by the Manager) if the Total Minimum ($100,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $87,000.

 

    Dollar
Amount 		    Percentage of Gross
Cash Proceeds 		 
Uses                
Cash Portion of the Asset Cost   $ 87,000       87.00 %
Broker Dealer  & Escrow (1)   $ 2,086       2.09 %
Legal   $ 1,250       1.25 %
Marketing & Re-Authentication   $ 1,000       1.00 %
Offering Expenses   $ 2,250       2.25 %
Acquisition Expenses (Insurance, Maintenance, Transport) (2)   $ 1,050       1.05 %
Sourcing Fee (cash portion)(3)   $ 4,350       4.35 %
Total Fees and Expenses   $ 11,986       11.99 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 1,014       1.01 %
Total Proceeds   $ 100,000       100 %

 

(1) Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #JORDANPSA10 Sellers
(2) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(3) In addition to the cash portion of the Sourcing Fee, the Manager will receive 87 units, which represents the portion ($870) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (50 units) for $500.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table

  

Agreement Type  Consignment 
Date of Agreement   9/14/2020 
Expiration Date of Agreement   3/01/2021 
Selling Entity   Chris Allen 
Total Sourcing Fee as a percentage of Consignment Price   6%
Sourcing Fee Payable in Cash   5%
Sourcing Fee Payable in Series Equity Interest   1%

   

  (1) The asset seller is a shareholder in the Company’s parent company, Collectable Technologies, Inc. but is not an  officer, director or greater than 5% shareholder of that company.  The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Mathis rather than the Company. See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  The consignment price has been determined based on recent public transactions of similar items.  For example, as of the date of this Offering Circular, the most recent Jordan ’86 Fleer Rookie card graded 10 by PSA sold for $93,480 at Goldin Auctions on August 23, 2020. The asset seller acquired the Underlying Asset for $37,877.

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. The Company is not expected to keep any of the proceeds from the Series Offering. The Series is expected to keep Cash on the Series Balance Sheet in the amount listed in the Use of Proceeds Table from the proceeds of the Series Offering for future Operating Expenses. In the event that less than the Maximum Series Interests are sold in connection with the Series Offering, the Manager may pay, and not seek reimbursement for, the Brokerage Fee, Offering Expenses and Acquisition Expenses and may waive the Sourcing Fee.

 

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DESCRIPTION OF SERIES #JORDANPSA10

 

Investment Overview

 

  • Upon completion of the Series #JORDANPSA10 Offering, Series #JORDANPSA10 will purchase a 1986-1987 Fleer #57 Rookie Card of Michael Jordan (The “Underlying Asset” with respect to Series #JORDANPSA10, as applicable), the specifications of which are set forth below.
  • Michael Jordan debuted with the Bulls in the 1984-1985 season and played with the team until the end of the 1993-1994 NBA season during which time he led the Bulls to three NBA Championships, when he retired for the first time to play Minor League Baseball. He then came out of retirement and returned to the Bulls from 1995 – 1998, leading the team to another three additional NBA Championships, before retiring for the second time. He came out of retirement again and played for the Washington Wizards, until the end of his NBA career, from 2001 to 2003.
  • Michael Jordan had a career average of 30.1 points per game, setting an NBA record that still stands today.
  • During Michael Jordan’s career, he won six NBA championships (tied for ninth in NBA history) and was awarded five Most Valuable Player awards (tied for second in NBA history).
  • As his Basketball Hall of Fame biography reads,  “Jordan embodied greatness on the court and redefined superstar athlete off it. His unmistakable style - the wagging tongue, the baggy shorts, the signature line of sneakers - helped make the 14-time All Star the most recognizable person on the planet.”

 

 Asset Description

 

Overview and authentication

 

  • The 1986-1987 Fleer #57 Rookie Card of Michael Jordan was printed as part of a set of 132 cards.
  • 1986-87 Fleer Basketball is one of the most important sports card sets of all-time. The Michael Jordan Rookie Card is one of the most desired and important cards of all time.
  • Due to the popularity of ESPN’s documentary “The Last Dance”, Jordan related sports memorabilia and cards have been some of the best performing items in 2020.
  • The 1986-87 Fleer #57 Michael Jordan Rookie Card has certainly benefited from “The Last Dance”. In mid-April 2020, a PSA 10 sales record was set with a $51,600 sale. A mere 36 days later, a new PSA 10 record was set - $99,630. On August 23, 2020, a PSA 10 sold for $93,480 at Goldin Auctions.
  • The cards have a distinct design highlighted by borders that are red, white and blue. A thin yellow frame holds in both the player photo and nameplate. The bottom of the card has the player's name, team and position. The crown-style Fleer logo appears at the top of the card with a small ribbon that reads "Premier," highlighting the fact that it's the company's first basketball card set.  

 

Notable Features:

 

  • The face of the card features a picture of Michael Jordan in a Chicago Bulls Jersey holding a basketball in his right hand above the hoop in midair with another player beside him from the opposing team.  The face of the card features the player’s name, team and position along with the Fleer logo in the upper right-hand corner. The border of the card is red, blue and white. The background shows the blurred image of the crown in attendance.
  • The reverse side of the card shows the card number 57 of 132 in the top right corner and the company name and logo in the top left corner. The team name and logo are prominently displayed in the center of the card above the players name in bold. Below that is the players DOB, height, weight, and college.  In the center of the card in white are statistics from 1984-85 and 1985-1986.

 

Notable Defects:

 

There are none.

 

Depreciation

 

The Company treats Memorabilia and Collectibles assets as collectible and therefore will not depreciate or amortize the Series #JORDANPSA10 going forward.

 

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SERIES #COBBMINTE98

1910 E98 Ty Cobb Red PSA 10 GEM MINT

 

Use of Proceeds - SERIES #COBBMINTE98

 

 The following illustrates the estimated use of proceeds of this Offering (including from Series #COBBMINTE98 Interests acquired by the Manager) if the Total Minimum ($350,000) is raised in this Offering and if the Cash Portion of the Asset Cost is $315,000.

 

    Dollar
Amount		     Percentage of Gross
Cash Proceeds		  
Uses                
Cash Portion of the Asset Cost   $ 315,000       90.00 %
Broker Dealer  & Escrow (1)   $ 4,551       1.30 %
Legal   $ 1,250       0.36 %
Marketing & Re-Authentication   $ 4,975       1.42 %
Offering Expenses   $ 1,000       0.29 %
Acquisition Expenses (Insurance, Maintenance, Transport) (2)   $ 4,725       1.35 %
Sourcing Fee (cash portion)(3)   $ 15,750       4.50 %
Total Fees and Expenses   $ 32,251       9.21 %
Cash on Series Balance Sheet (including Manager’s portion of Sourcing Fee used to acquire Interests)   $ 2,794       0.79 %
Total Proceeds   $ 350,000       100 %

 

(1) Calculation of Brokerage Fee (1% of gross proceeds) excludes proceeds from the sale of Interests to the Manager, its affiliates, or the #COBBMINTE98 Sellers
(2) To the extent that Acquisition Expenses are lower than anticipated, or proceeds in excess of the Total Minimum are received in the Offering, any overage would be maintained in an operating account for future Operating Expenses.
(3) In addition to the cash portion of the Sourcing Fee, the Manager will receive 90 units, which represents the portion ($3,150) of the Sourcing Fee to be received in units.  The Manager also will purchase an additional 0.05% interest (50 units) for $1,750.  There is no limit on the amount of Interests in a Series that the Manager or its affiliates may own.  Neither the Manager nor any of its affiliates, however, intend to purchase Interests in the Offering in order satisfy the Total Minimum or for any other reason in order to close the Offering.

 

On the date listed in the Series Detail Table below, the Company entered into the agreement listed in the Series Detail Table regarding the Series with the Asset Seller for the Cash Portion of the Asset Cost listed in the Use of Proceeds Table.

 

Upon the closing of the Offering, proceeds from the sale of the Series Interests will be distributed to the account of the Series. The Series will complete the agreement and pay the Asset Seller the amounts listed in the Series Detail Table. At that time, the Series will own a 100% interest in the Underlying Asset.

 

Series Detail Table
 
Agreement Type  Consignment 
Date of Agreement   9/1/2020 
Expiration Date of Agreement   2/01/2021 
Selling Entity   Evan Mathis 
Total Sourcing Fee as a percentage of Consignment Price   6%
Sourcing Fee Payable in Cash   5%
Sourcing Fee Payable in Series Equity Interest   1%

   

  (1) The asset seller is a shareholder in the Company’s parent company, Collectable Technologies, Inc. but is not an  officer, director or greater than 5% shareholder of that company.  The consignment price has not been determined by arms-length bargaining; accordingly, that price may be more than would be paid in an arms-length transaction and, therefore, favor Mathis rather than the Company. See “ACTUAL AND POTENTIAL CONFLICTS OF INTEREST.”  The consignment price has been determined based on recent public transactions of similar items and the movement of high profile pre-war cards since that transaction occurred.  The seller acquired the Underlying Asset as part of a 1,500 ungraded card deal for $1,750,000; as such, it is difficult to ascertain the exact profit or loss the seller will experience as a result of this transaction.  

 

In addition to the costs of acquiring the Underlying Asset, proceeds from the Series Offering will be used to pay the following, listed in the Series Detail Table and the Use of Proceeds Table above (i) the Brokerage Fee to the BOR, (ii) the Offering Expenses (iii) the Acquisition Expenses, including but not limited to the items described in the Use of Proceeds Table above, except as to the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses, and (iv) the cash portion of the Sourcing Fee to the Manager as consideration for assisting in the sourcing of the Series. Of the proceeds of the Series Offering, the Cash on Series Balance Sheet listed in the Use of Proceeds Table will remain in the operating account of the Series for future Operating Expenses.

 

The allocation of the net proceeds of this Series Offering set forth above, represents our intentions based upon our current plans and assumptions regarding industry and general economic condition