Form 1-A Worthy Property Bonds,

June 23, 2021 5:27 PM EDT

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      Boca Raton
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      561-288-8467
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      The foregoing issuances were pursuant to Rule 506(b) of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, for transactions by an issuer not involving any public offering.
    
  



 

As filed with the Securities and Exchange Commission on June 23, 2021

 

File No. 024-________

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1-A

 

REGULATION A OFFERING CIRCULAR

UNDER THE SECURITIES ACT OF 1933

 

Worthy Property Bonds, Inc.

(Exact name of issuer as specified in its charter)

 

Florida

(State of other jurisdiction of incorporation or organization)

 

One Boca Commerce Center

551 NW 77 Street, Suite 212

Boca Raton, FL 33487

Phone: (561) 288-8467

(Address, including zip code, and telephone number,

including area code of issuer’s principal executive office)

 

Sally Outlaw

Chief Executive Officer

One Boca Commerce Center

551 NW 77 Street, Suite 212

Boca Raton, FL 33487

Phone: (561) 288-8467

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

Copy to:

Laura Anthony, Esq.

Craig D. Linder, Esq.

Anthony L.G., PLLC

625 N. Flagler Drive, Suite 600

West Palm Beach, FL 33401

Phone: (561) 514-0936

Fax: (561) 514-0832

 

6199   86-3192320

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

 

 

 

 

 

Preliminary Offering Circular

June 23, 2021

Subject to Completion

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission. Information contained in this preliminary offering circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the United States Securities and Exchange 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.

 

Worthy Property Bonds, Inc.

 

WORTHY PROPERTY BONDS

MAXIMUM OFFERING AMOUNT: $75,000,000

MINIMUM OFFERING AMOUNT: $0

 

Worthy Property Bonds, Inc., (the “Company,” “we,” “us,” “our,” or “ours”) a newly formed entity, is offering up to $75,000,000 (“Maximum Offering Amount”) of our “Worthy Property Bonds” on a best efforts basis in increments of $10.00. Of such Maximum Offering Amount, we are offering up to (i) $74,880,000 of our Worthy Property Bonds for cash and (ii) $120,000 of our Worthy Property Bonds as rewards under our Worthy Property Bond Rewards Program (as described below) for eligible referrals (not for cash). For more information on the terms of Worthy Property Bonds being offered, please see “Description of the Worthy Property Bonds” beginning on page 35 of this offering circular.

 

We will offer and sell our Worthy Property Bonds described in this offering circular on a continuous basis directly through the Worthy Websites at www.worthybonds.com and www.joinworthy.com or though the Worthy App which may be downloaded for free from the Apple Store or from Google Play. The aggregate initial offering price of the Worthy Property Bonds will not exceed $75,000,000 in any 12-month period, and there is no minimum number of Worthy Property Bonds that need to be sold as a condition of closing this offering. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold in this offering. Offers and sales of the Worthy Property Bonds will be made by our management who will not receive any commissions or other remunerations for their efforts. We reserve the right to engage the services of a registered broker-dealer who will offer, sell and process the subscriptions for the Worthy Property Bonds, although we do not presently expect to engage such selling agent. If any broker-dealer or other agent/person is engaged to sell our Worthy Property Bonds, we will file a post-qualification amendment to the offering statement of which this offering circular forms a part disclosing the names and compensation arrangements prior to any sales by such persons. See “Plan of Distribution” in this offering circular.

 

We have also created the Worthy Property Bond Rewards Program (“Bond Rewards Program”) to provide (i) investors (each a “Referrer”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for referring a friend or family member to open an account on the Worthy Fintech Platform to join the Worthy community and (ii) new members of the Worthy community (each a “Referree”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for opening an account on the Worthy Fintech Platform as a result of an eligible referral. Each eligible Referrer and eligible Referree will be entitled to receive an award of one Worthy Property Bond valued at $10.00 each (each a “Bond Reward”) per eligible referral, subject to a limitation of 50 Worthy Property Bonds per Referrer account and Referree account per calendar year. Bond Rewards will be fulfilled through Worthy Property Bonds issued under the offering statement of which this offering circular forms a part. For more information on the terms and conditions of Worthy Property Bond Rewards Program, please see “Plan of Distribution Worthy Property Bond Rewards Program” on page 40 of this offering circular.

 

The approximate date of the commencement of the proposed sales or awards to the public of the Worthy Property Bonds will be within two calendar days from the date on which the offering is qualified by the Securities and Exchange Commission (the “SEC”) and on a continuous basis thereafter until the maximum number of Worthy Property Bonds offered hereby is sold or awarded. The minimum purchase is $10.00 and funds received will not be placed in escrow and will be immediately available to us. All offering expenses will be borne by us and will be paid out of the proceeds of this offering. The termination of the offering will occur on the earlier of (i) the date that subscriptions for and rewards of the Worthy Property Bonds offered hereby equal $75,000,000 or (ii) an earlier date determined by the Company in its sole discretion. The offering of Worthy Property Bonds for cash could terminate prior to the Bond Rewards Program offering if we have sold all of the Worthy Property Bonds but have not issued all of the Worthy Property Bonds in the Bond Rewards Program offering. The Bond Rewards Program offering could terminate prior to the offering of Worthy Property Bonds for cash if all of the Worthy Property Bonds offered in the Bond Rewards Program offering have been awarded but not all of the Worthy Property Bonds for cash have sold. If one of these offerings has closed but the other offering is ongoing, we will inform investors by filing a supplement to this offering circular with the SEC.

 

No public market has developed nor is expected to develop for Worthy Property Bonds, and we do not intend to list Worthy Property Bonds on a national securities exchange or interdealer quotational system.

 

Investing in our securities involves a high degree of risk, including the risk that you could lose all of your investment. Please read the section entitled “Risk Factors” beginning on page 9 of this offering circular about the risks you should consider before investing.

 

Generally, no sale may be made to you in this 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 www.investor.gov.

 

 

 

 

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” and, as such, have elected to comply with certain reduced public company reporting requirements. See “Offering Summary—Emerging Growth Company Status.”

 

   Price to Public   Selling Agent
Commissions
   Proceeds,
Before
Expenses, to
Worthy
Community
Bonds II, Inc. (1)
 
Per Worthy Property Bond  $10.00   $0.00   $10.00 
Total(2)  $74,880,000   $0.00   $74,880,000 

 

(1) Before the payment of our expenses in this offering which we estimate will be approximately $100,000. See “Use of Proceeds” appearing on page 18 of this offering circular. All expenses of the offering will be paid for by us using the proceeds of this offering.
   
(2) Assumes that the maximum aggregate offering amount of $74,880,000 in cash proceeds is received by us.

 

THE SEC 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 THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”); HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

We believe that we fall within the exception of an investment company provided by Section 3(c)(5)(C) of the Investment Company Act of 1940. Section 3(c)(5)(C) provides an exemption for a company that is primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. If for any reason we fail to meet the requirements of the exemption provided by Section 3(c)(5)(C) we will be required to register as an investment company, which could materially and adversely affect our proposed plan of business.

 

Our principal office is located at One Boca Commerce Center, 551 NW 77 Street Suite 212, Boca Raton, Florida 33487 and our phone number is (561) 288-8467. Our corporate website address is located at www.worthybonds.com. Information contained on, or accessible through, the website is not a part of, and is not incorporated by reference into, this offering circular.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

This offering circular is following the disclosure format of Part I of SEC Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

 

The date of this offering circular is ________________, 2021

 

 

 

 

We are offering to sell, and seeking offers to buy, Worthy Property Bonds only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with any information other than the information contained in this offering circular. The information contained in this offering circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this offering circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this offering circular. This offering circular will be updated and made available for delivery to the extent required by the federal securities laws.

 

For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this offering circular in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to the offering and the distribution of this offering circular.

 

TABLE OF CONTENTS

 

  Page No. 
THIRD PARTY DATA 2
TRADEMARKS AND COPYRIGHTS 2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 2
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS 3
OFFERING CIRCULAR SUMMARY 3
THE OFFERING 7
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA 9
RISK FACTORS 9
USE OF PROCEEDS 17
INVESTMENT COMPANY ACT LIMITATIONS 18
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18
OUR BUSINESS 23
ORGANIZATIONAL STRUCTURE 31
MANAGEMENT 32
CONFLICTS OF INTEREST 33
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS 33
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 34
DESCRIPTION OF THE WORTHY PROPERTY BONDS 35
INDEMNIFICATION OF DIRECTORS AND OFFICERS 37
PLAN OF DISTRIBUTION 39
APPOINTMENT OF AUDITOR 45
LEGAL MATTERS 45
EXPERTS 45
WHERE YOU CAN FIND ADDITIONAL INFORMATION 45
INDEX TO FINANCIAL STATEMENTS F-1

 

Unless the context otherwise indicates, when used in this offering circular, the terms “the Company,” “we,” “us,” “our” and similar terms refer to Worthy Property Bonds, Inc., a Florida corporation, and our wholly-owned subsidiary Worthy Lending V, LLC, a Delaware limited liability company, which we refer to as “Worthy Lending V.” We use a twelve-month fiscal year ending on March 31st. In a twelve-month fiscal year, each quarter includes three-months of operations; the first, second, third and fourth quarters end on June 30th, September 30th, December 31st, and March 31st respectively.

 

The information contained on, or accessible through, the websites at www.worthybonds.com and www.joinworthy.com are not part of, and is not incorporated by reference in, this offering circular.

 

1

 

 

THIRD PARTY DATA

 

Certain data included in this offering circular is derived from information provided by third-parties that we believe to be reliable. The discussions contained in this offering circular relating to such information is taken from third-party sources that the Company believes to be reliable and reasonable, and that the factual information is fair and accurate. Certain data is also based on our good faith estimates which are derived from management’s knowledge of the industry and independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified such third-party information, nor have we ascertained the underlying economic assumptions relied upon therein. While we are not aware of any material misstatements regarding any market, industry or similar data presented herein, such data was derived from third party sources and reliance on such data involves risks and uncertainties.

 

TRADEMARKS AND COPYRIGHTS

 

We own or have applied for rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect our business. This offering circular may also contain trademarks, service marks and trade names of other companies, 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 should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this offering circular are listed without their ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property of their respective owners.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This offering circular contains forward looking statements that are subject to various risk and uncertainties and that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Many of these statements are contained under the headings “Offering Circular Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Forward-looking statements are generally identifiable by use of forward-looking terminology such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should,” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information. Our ability to predict future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual outcomes could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could cause our forward-looking statements to differ from actual outcomes include, but are not limited to, those described under the heading “Risk Factors.” Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this offering circular. Furthermore, except as required by law, we are under no duty to, and do not intend to, update any of our forward-looking statements after the date of this offering circular, whether as a result of new information, future events or otherwise.

 

You should read thoroughly this offering circular and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Risk Factors appearing elsewhere in this offering circular. Other sections of this offering circular include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this offering circular, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

 

2

 

 

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

 

Our Worthy Property Bonds are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering is exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our Worthy Property Bonds offered hereby are offered and sold only to “qualified purchasers” or at a time when our Worthy Property Bonds are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our Worthy Property Bonds does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

 

To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who:

 

  1. has a net worth, or joint net worth with the person’s spouse or spousal equivalent, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person; or
     
  2. had earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse or spousal equivalent exceeding $300,000 for those years and has a reasonable expectation of reaching the same income level in the current year; or
     
  3. is holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status; or
     
  4. is a “family client,” as defined by the Investment Advisers Act of 1940, of a family office meeting the requirements in Rule 501(a) of Regulation D and whose prospective investment in the issuer is directed by such family office pursuant to Rule 501(a) of Regulation D.

 

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details.

 

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

 

OFFERING CIRCULAR SUMMARY

 

This summary highlights certain information about us and this offering contained elsewhere in this offering circular. Because it is only a summary, it does not contain all the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this offering circular. Before you decide to invest in our securities, you should read the entire offering circular carefully, including “Risk Factors” beginning on page 9 and our financial statements and the accompanying notes included in this offering circular.

 

Overview

 

We are a newly formed company and to date our activities have involved the organization of our Company. We are a wholly owned subsidiary of Worthy Financial, Inc. (“WFI”) which owns a fintech platform and mobile app (the “Worthy App”) that allows its users to digitally purchase “Worthy Bonds.” Purchases can be made in several ways including by rounding up the users’ debit card and checking account linked credit card purchases and other checking account transactions and thereafter use the “round up” dollars in increments of $10.00 to purchase Worthy Property Bonds from the Company. WFI also owns its proprietary website allowing direct purchases of Worthy Property Bonds (collectively the “Worthy Fintech Platform”).

 

On April 9, 2021, the Company was formed as a Florida corporation and issued 100 shares of its $0.001 per share par value common stock in exchange for $5,000 to WFI. WFI is the sole shareholder of the Company’s common stock.

 

We are an early stage company, which, through our wholly owned subsidiary Worthy Lending V, LLC (“Worthy Lending V”), a Delaware limited liability company, plan to implement our business model. Our business model is centered primarily around purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. We anticipate that (i) at least 55% of our assets will consist of “mortgages and other liens on and interests in real estate” (“Qualifying Interests”), (ii) at least an additional 25% of our assets will consist of “real estate-type interests” (subject to proportionate reduction if greater than 55% of our assets are Qualifying Interests), and (iii) not more than 20% of our total assets consist of assets that have no relationship to real estate provided the amount and nature of such activities do not cause us to lose our exemption from regulations as an investment company pursuant to the Investment Company Act of 1940, or the “40 Act.” Qualifying Interests are assets that represent an actual interest in real estate or are loans or liens “fully secured by real estate” but exclude securities in other issuers engaged in the real estate business. Real estate-type interests include certain mortgage-related instruments including loans where 55% of the fair market value of the loan is secured by real property at the time the issuer acquired the loan and agency partial-pool certificates. We will sell Worthy Property Bonds in this offering to provide the capital for these activities.

 

3

 

 

The Worthy Property Bonds:

 

  are priced at $10.00 each;
  represent a full and unconditional obligation of our company;
  bear interest at 5% per annum; provided, however, if a bond holder agrees to waive the right to demand repayment by the Company for 12 months, the Company will pay an additional 1.00% of interest (“Interest Rate Premium”), increasing the interest rate to 6%, during such 12-month period. For clarification purposes, we will pay interest on interest (compounded interest) and credit such interest to bondholders’ Worthy accounts;
  are subject to repayment at any time at the demand of the holder, unless the holder agrees to waive the right to demand repayment for 12 months in order to receive an Interest Rate Premium;
  are subject to redemption by us at any time;
  are not payment dependent on any underlying real estate loans or investments;
  are transferable; and
  are unsecured.

 

For more information on the terms of Worthy Property Bonds being offered, please see “Description of the Worthy Property Bonds” beginning on page 35 of this offering circular.

 

We are offering up to (i) 7,488,000 of our Worthy Property Bonds, with an aggregate principal amount of $74,880,000, for cash and (ii) 12,000 of our Worthy Property Bonds, with an aggregate principal amount of $120,000, as rewards under our Worthy Property Bond Rewards Program (as described below) for eligible referrals (not for cash).

 

Except as otherwise provided herein, the Worthy Property Bonds are subject to repayment at the demand of bond holders at any time. The bond holder has the right to cause the Company to repay the bond upon five (5) days’ notice and the outstanding principal balance together with the interest earned through the repurchase date will be credited to the bondholder’s account within five (5) business days; provided, however, if the bond holder requests a repayment of Worthy Property Bonds in the aggregate principal amount greater than $50,000, the Company may make such repayment to such bond holder within thirty (30) days of the request for such repayment.

 

We have created the Worthy Property Bond Rewards Program (“Bond Rewards Program”) to provide (i) investors (each a “Referrer”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for referring a friend or family member to open an account on the Worthy Fintech Platform to join the Worthy community and (ii) new members of the Worthy community (each a “Referree”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for opening an account on the Worthy Fintech Platform as a result of an eligible referral. The Referree would not be required to fund his or her account on the Worthy Fintech Platform in order for the Referrer and the Referree to each receive a Bond Reward. In other words, the Referree would not be required to purchase a Worthy Property Bond in order for the Referrer and the Referree to each receive a Bond Reward. Each eligible Referrer and eligible Referree will be entitled to receive an award of one Worthy Property Bond valued at $10.00 each (each a “Bond Reward”) per eligible referral, subject to a limitation of 50 Worthy Property Bonds per Referrer account and Referree account per calendar year. Bond Rewards will be fulfilled through Worthy Property Bonds issued under the offering statement of which this offering circular forms a part. For more information on the terms and conditions of Worthy Property Bond Rewards Program, please see “Plan of Distribution Worthy Property Bond Rewards Program” on page 40 of this offering circular.

 

The termination of the offering will occur on the earlier of (i) the date that subscriptions for and rewards of the Worthy Property Bonds offered hereby equal $75,000,000 or (ii) an earlier date determined by the Company in its sole discretion. We reserve the right to terminate this offering for any reason at any time. The offering of Worthy Property Bonds for cash could terminate prior to the Bond Rewards Program offering if we have sold all of the Worthy Property Bonds but have not issued all of the Worthy Property Bonds in the Bond Rewards Program offering. The Bond Rewards Program offering could terminate prior to the offering of Worthy Property Bonds for cash if all of the Worthy Property Bonds offered in the Bond Rewards Program offering have been awarded but not all of the Worthy Property Bonds for cash have sold. If one of these offerings has closed but the other offering is ongoing, we will inform investors by filing a supplement to this offering circular with the SEC.

 

The Company has not yet generated any revenue and has no operating history. Our management has raised substantial doubt about our ability to continue as a going concern based on these conditions and our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report with respect to our audited consolidated financial statements for the period from April 9, 2021 (inception) to April 30, 2021. We expect to generate income from (i) the difference between the interest rates we charge on our real estate loans and mortgages and other investments which we have acquired and the interest we will pay to the holders of Worthy Property Bonds and (ii) profits we realize on the sale of the interests in real estate that we acquire. We also expect to use up to 5% of the proceeds from sales of Worthy Property Bonds to provide working capital for our company until such time as our revenues are sufficient to pay our operating expenses.

 

Until sufficient proceeds have been received by us from the sale of Worthy Property Bonds in this offering, we will rely on advances from our parent as to which we have no assurances. We will not be paying back any of the funds advanced to us by WFI and therefore there is no interest rate or maturity associated with such advances. WFI is not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in this offering. If we do not raise sufficient funds in this offering or if our parent declines to make advances to us, we will not be able to implement our business plan, or may have to cease operations altogether.

 

As Worthy Lending V is a wholly owned subsidiary of the Company, we expect that the real estate loans and other assets of Worthy Lending V, and the returns from the operations of such real estate loans and assets, will generally remain available to support and fund the payment obligations of the Company with respect to the Worthy Property Bonds. While there is no formal security agreement in place with respect to these real estate loans and other assets within Worthy Lending V (and while any current and future creditors of Worthy Lending V may also have recourse to the assets of the entity), as the Company is the sole member of Worthy Lending V we expect that the Company will retain the right at any time to cause the distribution of available funds from Worthy Lending V up to the Company so that the Company may meet such payment obligations.

 

In order to operate our Company for 12 months, we estimate that $3,000,000 in funds will be required. If we fail to generate at least $25,000,000 from our sales of Worthy Property Bonds, we may not be able to fully carry out our plan of operations.

 

Competitive Strengths

 

We believe we benefit from the following competitive strengths:

 

We are part of the Worthy Community. The Worthy App and websites (the “Worthy FinTech Platform”) are targeted primarily to the millennials who are part of the fastest growing segment of our population. We believe that they have a basic distrust of traditional banking institutions yet they have a need to accumulate assets for retirement or otherwise. The Worthy FinTech Platform provides for a savings and investing alternative for the millennials.

 

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We focus on an underserved banking sector. Due to higher costs, we believe that banks cannot profitably serve the sub-prime mortgage industry.

 

Recent Developments

 

COVID-19

 

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2020 (COVID-19) which in March 2020, has been declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

 

Possible areas that may be affected include, but are not limited to, higher redemption rate of holders of the Worthy Property Bonds, a decline in the demand for loans by potential borrowers or higher default rates by borrowers, and unavailability of professional services and other resources. In addition, the employees of companies that provide services to us could be medically or mentally affected by the pandemic and may be required to work remotely. This situation could cause of reduction in productivity or the inability to complete critical tasks for the Company.

 

The entire actual effects of the spread of COVID-19 are difficult to assess at this time as the actual effects will depend on many factors beyond the control and knowledge of the Company. However, the spread of COVID-19, if it continues, may cause an overall decline in the economy as a whole and therefore may materially harm our business, results of operations and financial condition

 

As of the date of this filing, the Company has not experienced significant impact related to the COVID-19 pandemic.

 

Emerging Growth Company Status

 

We are an “emerging growth company” as defined in the JOBS Act, which permits us to elect not to be subject to certain disclosure and other requirements that otherwise would have been applicable to us had we not been an “emerging growth company.” These provisions include:

 

  reduced disclosure about our executive compensation arrangements;
  no non-binding advisory votes on executive compensation or golden parachute arrangements; and
  exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

 

We may take advantage of these exemptions for up to five years or such earlier time as we are no longer an “emerging growth company.” We will qualify as an “emerging growth company” until the earliest of:

 

  the last day of our fiscal year following the fifth anniversary of the date of completion of this offering;
  the last day of our fiscal year in which we have annual gross revenue of $1.0 billion or more;
  the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or
  the last day of the fiscal year in which we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the “Exchange Act.”

 

Under this definition, we will be an “emerging growth company” upon completion of this offering and could remain an “emerging growth company” until as late as October, 2024.

 

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

 

Risks Affecting Us

 

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” beginning on page 9. These risks include, but are not limited to the following:

 

  We are an early-stage startup with no operating history, and we may never become profitable;
  Absent any additional financing or advances from our parent company, other than the sale of the Worthy Property Bonds, we may be unable to meet our operating expenses;
  In addition to the sale of the Worthy Property Bonds, we are dependent on advances from our parent company in order to meet our operating expenses and our parent company is under no obligation to advance us any funds;
  We have no operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful;
  The amount of repayments that bond holders demand at a given time may exceed the amount of funds we have available to make such payments which may result in a delay in repayment or loss of investment to the bond holders;
  Public health epidemics or outbreaks (such as the novel strain of coronavirus (COVID-19)) could adversely impact our business;
  We operate in a highly regulated industry, and our business may be negatively impacted by changes in the regulatory environment;
  Our business may be negatively impacted by worsening economic conditions and fluctuations in the credit market;
  Competition in our industry is intense;
  Holders of Worthy Property Bonds are exposed to the credit risk of our company;
  There has been no public market for Worthy Property Bonds and none is expected to develop; and
  We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.

 

Our management has raised substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report with respect to our audited consolidated financial statements for the period from April 9, 2021 (inception) to April 30, 2021.

 

5

 

 

Corporate Information

 

We were incorporated under the laws of the State of Florida on April 9, 2021. On April 9, 2021, the Company was founded with the issuance of 100 shares of our $0.001 per share par value common stock for $5,000 to WFI. WFI is the sole shareholder of the Company’s common stock. Our wholly owned subsidiary Worthy Lending V was organized under the laws of the State of Delaware on April 9, 2021. Our principal executive offices are located at One Boca Commerce Center, 551 NW 77 Street, Suite 212, Boca Raton, Florida 33487, and our telephone number is (561) 288-8467. Our fiscal year end is March 31st. The information which appears on our websites, or is accessible through our websites, at www.worthybonds.com and www.joinworthy.com are not part of, and is not incorporated by reference into, this offering circular.

 

We have not generated any revenues since our formation. We are a wholly-owned subsidiary of Worthy Financial, Inc., a Delaware corporation which we refer to as “WFI.”

 

We are presently dependent on advances from our parent, WFI, to provide capital for our operations. We will not be paying back any of the funds advanced to us by WFI and therefore there is no interest rate or maturity associated with such advances. WFI, reported revenues of $4,015,508 for the year ended December 31, 2020 and had a net loss of $4,119,032. At December 31, 2020, WFI had liabilities exceeding assets of $7,344,143 and had an accumulated deficit of $9,104,547. WFI reported its financial results in their Annual Report on Form C-AR dated April 30, 2021 filed with the Securities and Exchange Commission on April 30, 2021, on a consolidated basis with Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc., and Worthy Management, Inc., its wholly owned subsidiaries.

 

Involvement in Certain Legal Proceedings

 

On September 30, 2016, the SEC issued an Order Instituting Cease-and-Desist Proceedings under Administrative Proceeding File No. 3-17605 pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (collectively, the “Order”) against D’Arelli Pruzansky, P.A. (the “Firm”), Joseph D’Arelli, CPA, and Mitchell Pruzansky, CPA (collectively, the “Respondents”). Respondents consented to the Order pursuant to Offers of Settlement, accepted by the SEC, pursuant to which Respondents neither admitted nor denied the findings in the Order. During a PCAOB inspection in July 2015, the Firm was informed that it had failed to comply with the SEC’s partner rotation requirements because Mr. D’Arelli and Mr. Pruzansky performed quarterly reviews after being the lead audit partner for five consecutive audits, with respect to two issuer audit clients. In August 2015, the Firm reviewed all of its engagements and self-reported instances of such rotation issues regarding additional issuer audit clients. Respondents were ordered to cease and desist from committing or causing any violations and any future violations of Sections 10A(j) and 13(a) of the Securities Exchange Act of 1934 and Rules 10A-2 and 13a-13 thereunder and to pay the SEC, jointly and severally, a civil penalty of $50,000.

 

Organizational Structure

 

The following reflects the current organization structure of WFI:

 

 

  (1) Worthy Financial, Inc. owns 100% of the issued and outstanding capital stock of Worthy Management, Inc., Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Property Bonds, Inc.
  (2) Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Property Bonds, Inc. are each a party to a management services agreement with Worthy Management, Inc.
  (3) Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Property Bonds, Inc. own 100% of the issued and outstanding membership interests of Worthy Lending, LLC, Worthy Lending II, LLC, Worthy Lending III, LLC Worthy Lending IV, LLC and Worthy Lending V, LLC, respectively.

 

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THE OFFERING

 

Securities offered by us:   Up to $75,000,000 of Worthy Property Bonds on a “best efforts” basis. We are offering up to (i) $74,880,000 of our Worthy Property Bonds for cash and (ii) $120,000 of our Worthy Property Bonds as rewards under our Worthy Property Bond Rewards Program for eligible referrals (not for cash).
     
Offering Price per Worthy Property Bonds for Cash:   $10.00 per each Worthy Property Bond.
     
Description of the Worthy Property Bonds:   The Worthy Property Bonds:
       
    are priced at $10.00 each;
       
    represent our full and unconditional obligation;
       
    bear interest at 5% per annum; provided, however, if a bond holder agrees to waive the right to demand repayment by the Company for 12 months, the Company will pay an additional 1.00% of interest (“Interest Rate Premium”), increasing the interest rate to 6%, during such 12-month period. For clarification purposes, we will pay interest on interest (compounded interest) and credit such interest to bondholders’ Worthy accounts;
       
    are subject to repayment at any time at the demand of the holder, unless the holder agrees to waive the right to demand repayment for 12 months in order to receive an Interest Rate Premium;
       
    are subject to redemption by us at any time;
       
    are not payment dependent on any real estate loans or investments;
       
    are transferable; and
       
    are unsecured.
     
Principal amount of Worthy Property Bonds:   We will not issue Worthy Property Bonds offered hereby in excess of $75 million principal amount during any 12-month period. The Worthy Property Bonds offered hereby will be offered on a continuous basis. As of the date of this offering circular we have not sold any Worthy Property Bonds.
       
Regulation A Tier:   Tier 2
       
Worthy Property Bond purchasers:   Accredited investors pursuant to Rule 501 and non-accredited investors. Pursuant to Rule 251(d)(2)(C), non-accredited investors who are natural persons may only invest the greater of 10% of their annual income or net worth. Non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.
       
Securities outstanding prior to this offering:   100 shares of our common stock, all of which are owned by WFI.
     
Securities Outstanding after the offering   100 shares of our common stock, all of which are owned by WFI.
       
Manner of offering:   We will offer and sell our Worthy Property Bonds described in this offering circular on a continuous basis directly through the Worthy Website at www.worthybonds.com or though the Worthy App which may be downloaded for free from the Apple Store or from Google Play. This offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold in this offering. Offers and sales of the Worthy Property Bonds will be made by our management who will not receive any commissions or other remunerations for their efforts. We reserve the right to engage the services of a registered broker-dealer who will offer, sell and process the subscriptions for the Worthy Property Bonds, although we do not presently expect to engage such selling agent. If any broker-dealer or other agent/person is engaged to sell our Worthy Property Bonds, we will file a post-qualification amendment to the offering statement of which this offering circular forms a part disclosing the names and compensation arrangements prior to any sales by such persons. Please see “Plan of Distribution” beginning on page 39 of this offering circular.
     
Worthy Property Bond Rewards Program:   We have created the Worthy Property Bond Rewards Program (“Bond Rewards Program”) to provide (i) investors (each a “Referrer”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for referring a friend or family member to open an account on the Worthy Fintech Platform to join the Worthy community and (ii) new members of the Worthy community (each a “Referree”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for opening an account on the Worthy Fintech Platform as a result of an eligible referral. Each eligible Referrer and eligible Referree will be entitled to receive an award of one Worthy Property Bond valued at $10.00 each (each a “Bond Reward”) per eligible referral, subject to a limitation of 50 Worthy Property Bonds per Referrer account and Referree account per calendar year. Bond Rewards will be fulfilled through Worthy Property Bonds issued under the offering statement of which this offering circular forms a part. For more information on the terms and conditions of Worthy Property Bond Rewards Program, please see “Plan of Distribution Worthy Property Bond Rewards Program” on page 40 of this offering circular.

 

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Minimum and Maximum Investment Amount   The minimum investment amount per subscriber is $10. There is no maximum investment amount per subscriber.
     
Investment Amount Restrictions   Generally, no sale may be made to you in this 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, you are encouraged to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, you are encouraged to refer to www.investor.gov.
     
Voting Rights   The Worthy Property Bonds do not have any voting rights.
     
Risk Factors   Purchasing the Worthy Property Bonds and our business in general is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” beginning on page 9.
     
How to invest:   Please visit the Worthy Website at www.worthybonds.com and click the “Get Started” link at the top of the home page. You may also download the Worthy App and use it to invest. Please see “Plan of Distribution” appearing later in this offering circular.
     
Use of proceeds:  

If we sell all $74,880,000 of gross proceeds from the Worthy Property Bonds offered under this offering circular for cash, we estimate our net proceeds, after deducting estimated offering expenses of approximately $100,000, will be approximately $74,780,000. We intend to use the proceeds from this offering to implement the business model described above and for general corporate purposes including the costs of this offering. See “Use of Proceeds.”

 

We will not receive any proceeds from the issuance of up to $120,000 worth of Bond Rewards under the Bond Rewards Program for eligible referrals (not for cash).

     

Transfer Agent

 

  The Company will act as its own transfer agent and maintain the Company’s share register. As of the date of this offering circular, we have not engaged a transfer agent, and do not intend to engage a transfer agent until such time as we determine it is necessary.
     
Termination of the offering   The termination of the offering will occur on the earlier of (i) the date that subscriptions for and rewards of the Worthy Property Bonds offered hereby equal $75,000,000 or (ii) an earlier date determined by the Company in its sole discretion. We reserve the right to terminate this offering for any reason at any time. The offering of Worthy Property Bonds for cash could terminate prior to the Bond Rewards Program offering if we have sold all of the Worthy Property Bonds but have not issued all of the Worthy Property Bonds in the Bond Rewards Program offering. The Bond Rewards Program offering could terminate prior to the offering of Worthy Property Bonds for cash if all of the Worthy Property Bonds offered in the Bond Rewards Program offering have been awarded but not all of the Worthy Property Bonds for cash have sold. If one of these offerings has closed but the other offering is ongoing, we will inform investors by filing a supplement to this offering circular with the SEC.

 

8

 

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

 

The following table presents our summary historical consolidated financial data for the period indicated. The summary historical consolidated financial data for the period from April 9, 2021 (inception) through April 30, 2021 and the balance sheet data as of April 30, 2021 and is derived from the audited consolidated financial statements.

 

Historical results are included for illustrative and informational purposes only and are not necessarily indicative of results we expect in future periods, and results of interim periods are not necessarily indicative of results for the entire year. You should read the following summary financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this Offering Circular.

 

  

April 9, 2021

(inception)

through

April 30, 2021

 
     
Statement of Operations Data     
Total revenues  $0 
Gross profits  $0 
Total operating expenses  $35,532 
Loss from operations  $(35,532)
Nonoperating income (expense)  $0 
Net loss  $(35,532)
Net loss per share, basic and diluted  $(355.32)
      
Balance Sheet Data (at period end)     
Cash and cash equivalents  $50,000 
Working capital  $14,468 
Total assets  $50,000 
Total liabilities  $35,532 
Stockholder’s equity  $14,468 

 

(1) Working capital represents total assets less total liabilities.

 

RISK FACTORS

 

Investing in our securities involves risks. In addition to the other information contained in this offering circular, you should carefully consider the following risks before deciding to purchase our securities in this offering. The occurrence of any of the following risks might cause you to lose all or a part of your investment. Some statements in this offering circular, including statements in the following risk factors, constitute forward-looking statements. Please refer to “Cautionary Statement Regarding Forward-Looking Statements” for more information regarding forward-looking statements.

 

Below is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

 

  We are an early-stage startup with no operating history, and we may never become profitable;
  Absent any additional financing or advances from our parent company, other than the sale of the Worthy Property Bonds, we may be unable to meet our operating expenses;
  In addition to the sale of the Worthy Property Bonds, we are dependent on advances from our parent company in order to meet our operating expenses and our parent company is under no obligation to advance us any funds;
  We have no operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful;
  The amount of repayments that bond holders demand at a given time may exceed the amount of funds we have available to make such payments which may result in a delay in repayment or loss of investment to the bond holders;
  Public health epidemics or outbreaks (such as the novel strain of coronavirus (COVID-19)) could adversely impact our business;
  We operate in a highly regulated industry, and our business may be negatively impacted by changes in the regulatory environment;
  Our business may be negatively impacted by worsening economic conditions and fluctuations in the credit market;
  Competition in our industry is intense;
  Holders of Worthy Property Bonds are exposed to the credit risk of our company;
  There has been no public market for Worthy Property Bonds and none is expected to develop; and
  We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.

 

Risks Related to our Industry

 

The lending industry is highly regulated. Changes in regulations or in the way regulations are applied to our business could adversely affect our business.

 

Changes in laws or regulations or the regulatory application or judicial interpretation of the laws and regulations applicable to us could adversely affect our ability to operate in the manner in which we intend to conduct business or make it more difficult or costly for us to participate in or otherwise make loans. A material failure to comply with any such laws or regulations could result in regulatory actions, lawsuits, and damage to our reputation, which could have a material adverse effect on our business and financial condition and our ability to participate in and perform our obligations to investors and other constituents.

 

The initiation of a proceeding relating to one or more allegations or findings of any violation of such laws could result in modifications in our methods of doing business that could impair our ability to collect payments on our loans or to acquire additional loans or could result in the requirement that we pay damages and/or cancel the balance or other amounts owing under loans associated with such violation. We cannot assure you that such claims will not be asserted against us in the future.

 

Worsening economic conditions may result in decreased demand for loans, cause borrowers’ default rates to increase, and harm our operating results.

 

Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant tightening of credit markets, historically have created a difficult environment for companies in the lending industry. Many factors, including factors that are beyond our control, may have a detrimental impact on our operating performance. These factors include general economic conditions, unemployment levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism, pandemic like the recent coronavirus (COVID-19) and catastrophes.

 

We primarily lend to sub-prime real estate borrowers. Accordingly, our borrowers have historically been, and may in the future remain, more likely to be affected or more severely affected than large enterprises by adverse economic conditions. These conditions may result in a decline in the demand for loans by potential borrowers or higher default rates by borrowers.

 

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There can be no assurance that economic conditions will remain favorable for our business or that demand for loans in which we participate or default rates by borrowers will remain at current levels. Reduced demand for loans would negatively impact our growth and revenue, while increased default rates by borrowers may inhibit our access to capital and negatively impact our profitability. Further, if an insufficient number of qualified borrowers apply for loans, our growth and revenue would be negatively impacted.

 

The recent outbreak of COVID-19 may cause an overall decline in the economy as a whole, and may materially harm our business, results of operations and financial condition

 

The Company’s operations may be affected by the recent and ongoing outbreak of COVID-19 which in March 2020, has been declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

 

Possible areas that may be affected include, but are not limited to, higher redemption rate of holders of the Worthy Property Bonds, a decline in the demand for loans by potential borrowers or higher default rates by borrowers, and unavailability of professional services and other resources. In addition, the employees of companies that provide services to us could be medically or mentally affected by the pandemic and may be required to work remotely. This situation could cause of reduction in productivity or the inability to complete critical tasks for the Company.

 

The entire actual effects of the spread of COVID-19 are difficult to assess at this time as the actual effects will depend on many factors beyond the control and knowledge of the Company. However, the spread of COVID-19, if it continues, may cause an overall decline in the economy as a whole and therefore may materially harm our business, results of operations and financial condition.

 

Our management team has limited experience in mortgage loan underwriting.

 

Our management team has limited experience in mortgage loan underwriting. If the method adopted by the Company for evaluating real estate property related to a potential real estate loan and for establishing interest rates for the corresponding real estate loan proves flawed, investors may not receive the expected yield on the Worthy Property Bonds.

 

We have limited experience in managing real estate investments or developing real estate projects.

 

If the borrower is unable to repay its obligations under a loan from us, we may foreclose on the real estate property. Although we will seek out purchasers for the property, we or experienced third parties engaged by us may have to take an active role in the management of the real estate or the project. Prospective investors should consider that the members of our management have limited experience in managing real estate or developing real estate projects. No assurances can be given that we or third parties engaged by us can manage real estate or operate real estate projects profitably.

 

Competition for employees is intense, and we may not be able to attract and retain the highly skilled employees whom we need to support our business.

 

Competition for highly skilled personnel, especially data analytics personnel, is extremely intense, and we could face difficulty identifying and hiring qualified individuals in many areas of our business. We may not be able to hire and retain such personnel. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we intend to invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to serve borrowers could diminish, resulting in a material adverse effect on our business. We currently have no full time employees. However, management and staffing are presently provided by Worthy Management, Inc., a wholly owned subsidiary of our parent company.

 

We operate in a competitive market which may intensify, and competition may limit our ability to implement our business model and have a material adverse effect on our business, financial condition, and results of operations.

 

We operate in a competitive market which may intensify, and competition may limit our ability to implement our business model and have a material adverse effect on our business, financial condition, and results of operations. Our competitors may be able to have a lower cost for their services which would lead to borrowers choosing such other competitors over the Company. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and investments, offer more attractive pricing or other terms and establish more relationships than us.

 

Risks Related to Our Company

 

We are an early-stage startup with no operating history, and we may never become profitable.

 

We do not expect to be profitable for the foreseeable future. If we are unable to obtain or maintain profitability, we will not be able to attract investment, compete, or maintain operations.

 

Our management has raised substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report with respect to our audited consolidated financial statements for the period from April 9, 2021 (inception) to April 30, 2021.

 

We are an early-stage startup with no operating history, and we may never become profitable. Our management has raised substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm has included an explanatory paragraph in their opinion on our audited consolidated financial statements for the period from April 9, 2021 (inception) to April 30, 2021, that states that there is a substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. There is substantial doubt about our ability to continue as a going concern. No assurances can be given that we will generate sufficient revenue or obtain necessary financing to continue as a going concern. No assurances can be given that we will achieve success in selling the Worthy Property Bonds.

 

We are dependent on advances from our parent company and the funds to be raised in this offering in order to be able to implement our business plan.

 

Until sufficient proceeds have been received by us from the sale of Worthy Property Bonds in this offering we will rely on advances from our parent as to which we have no assurances. WFI is not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in this offering. If we do not raise sufficient funds in this offering or if our parent declines to make advances to us, we will not be able to implement our business plan, or may have to cease operations altogether.

 

10

 

 

If we do not raise sufficient funds in this offering or if our parent company declines to make advances to us we won’t be able to implement our business plan.

 

We have not generated any revenues and we are dependent on the proceeds from this offering to provide funds to implement our business model. Given the uncertainty of the amount of Worthy Property Bonds that we will sell makes it difficult to predict our planned operations. Until sufficient proceeds have been received by us from the sale of Worthy Property Bonds we will rely on advances from our parent as to which we have no assurances. WFI is not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in this offering. If we do not raise sufficient funds in this offering or if our parent company declines to make advances to us we won’t be able to implement our business plan.

 

We have no operating history in a evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

 

We have no operating history in an evolving industry that may not develop as expected. Assessing our business and future prospects is challenging in light of the risks and difficulties we may encounter. These risks and difficulties include our ability to:

 

  increase the number and total volume of loans and other credit products extended to borrowers;
  improve the terms on which loans are made to borrowers as our business becomes more efficient;
  increase the effectiveness of our direct marketing and lead generation through referral sources;
  favorably compete with other companies that are currently in, or may in the future enter, the business of lending to sub-prime real estate borrowers;
  successfully navigate economic conditions and fluctuations in the credit market; and
  effectively manage the growth of our business.

 

We may not be able to successfully address these risks and difficulties, which could harm our business and cause our operating results to suffer.

 

The amount of repayments that bond holders demand at a given time may exceed the amount of funds we have available to make such payments which may result in a delay in repayment or loss of investment to the bond holders.

 

We will use our commercially reasonable efforts to maintain sufficient cash and cash equivalents on hand to honor repayment demands of bond holders. We anticipate setting aside a minimum of 20% of Worthy Property Bonds sales in cash and cash equivalents. However, in the event there are more demands for repayment to meet than our cash and cash equivalents on hand available, we may be required to (i) liquidate some of our loan portfolio and investments (which loans and investments qualify under the exemption provided by Section 3(c)(5)(C) of the Investment Company Act of 1940), (ii) seek commercial banks and non-bank lending sources, such as insurance companies, private equity funds and private lending organizations, for the provision of credit facilities, including, but not limited to, lines of credit, pursuant to which funds would be advanced to us, or (iii) seek capital contributions from our parent company, WFI. In the event that the above sources of funds to honor repayments cannot be realized within the time frame of the repayment requests of bond holders, bond holders might have to wait for repayment until the above sources are realized. If the above sources do not generate enough funds to honor bond holders’ requests for repayment, there is a risk that the bond holders may lose some or all of their investment in the Worthy Property Bonds.

 

If the information provided by borrowers is incorrect or fraudulent, we may misjudge a customer’s qualification to receive a loan, and our operating results may be harmed.

 

Although a significant part of our loan participation or loan decisions is based on appraisals of the real estate underlying the loans, our decisions are based partly on information provided to us by loan applicants. To the extent that these applicants provide information to us in a manner that we are unable to verify, we may not be able to accurately assess the associated risk. In addition, data provided by third-party sources is a significant component of our underwriting process, and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could harm our reputation, business, and operating results.

 

Our risk management efforts may not be effective.

 

We could incur substantial losses, and our business operations could be disrupted if we are unable to effectively identify, manage, monitor, and mitigate financial risks, such as credit risk, interest rate risk, liquidity risk, and other market-related risk, as well as operational risks related to our business, assets, and liabilities. To the extent our models used to assess the creditworthiness of potential borrowers do not adequately identify potential risks, the risk profile of such borrowers could be higher than anticipated. Our risk management policies, procedures, and techniques may not be sufficient to identify all of the risks we are exposed to, mitigate the risks that we have identified, or identify concentrations of risk or additional risks to which we may become subject in the future.

 

We will rely on various referral sources and other borrower lead generation sources, including lending platforms.

 

Unlike banks and other larger competitors with significant resources, we intend to rely on our smaller-scale marketing efforts, affinity groups, partners, and loan referral services to acquire borrowers. We do not have exclusive rights to referral services, and we cannot control which sub-prime loans or the volume of sub-prime loans we are sent. In addition, our competitors may enter into exclusive or reciprocal arrangements with their own referral services, which might significantly reduce the number of sub-prime mortgage borrowers we are referred. Any significant reduction in sub-prime mortgage borrower referrals could have an adverse impact on our loan volume, which will have a correspondingly adverse impact on our operations and our company.

 

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We are subject to a number of conflicts of interest arising out of our relationship with WFI and its subsidiaries which may not be resolved in our favor.

 

We are subject to a number of conflicts of interest arising out of our relationship with WFI and its subsidiaries, including the following:

 

  WFI is our parent company and our sole shareholder. WFI is also the sole shareholder of Worthy Management, Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., and Worthy Community Bonds II, Inc. Accordingly, its executive officers and directors have fiduciary obligations to a number of entities. This potential conflict of interest poses a risk that the executive officers and directors may exercise their fiduciary duties in favor of affiliated entities rather than us even though they have fiduciary duties to us;
     
  our executive officers and directors are also executive officers and directors of Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Management and they do not devote all of their time and efforts to our company. This potential conflict of interest poses a risk that the executive officers and directors may devote an insufficient amount of time and effort to operating our company because they are too busy devoting their time and effort to the operations of our affiliates; and
     
  the terms of the Management Services Agreement with Worthy Management were not negotiated on an arms-length basis and the amounts to be reimbursed thereunder will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement, will be determined by our executive officers and directors who are also executive officers and directors of Worthy Management notwithstanding that they are executive officers and directors of both our Company and Worthy Management. This potential conflict of interest poses a risk that the amount to be reimbursed by our company under the Management Services Agreement may be determined by the executive officers and directors to be higher in the absence of an arms-length arrangement at the expense of our company.

 

There are no assurances that any conflicts which may arise will be resolved in our favor, which could adversely affect our operations. In addition, as a bondholder you have no right to vote upon or receive notice of any corporate actions we may undertake which you might otherwise have if you owned equity in our company.

 

A significant disruption in our computer systems or a cybersecurity breach could adversely affect our operations.

 

We rely extensively on our computer systems to manage our loan origination and other processes. Our systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events and human error, and our disaster recovery planning cannot account for all eventualities. If our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience loss of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business and results of operations. Any compromise of our security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our security measures, which could harm our business.

 

Our ability to protect the confidential information of our borrowers and investors may be adversely affected by cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.

 

We process certain sensitive data from our borrowers and investors. While we have taken steps to protect confidential information that we receive or have access to, our security measures could be breached. Any accidental or willful security breaches or other unauthorized access to our systems could cause confidential borrower and investor information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our software are exposed and exploited, our relationships with borrowers and investors could be severely damaged, and we could incur significant liability.

 

Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, federal regulators and many federal and state laws and regulations require companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause borrowers and investors to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, we could lose borrowers and investors and our business and operations could be adversely affected.

 

Any significant disruption in service on our platform or in our computer systems, including events beyond our control, could prevent us from processing or posting payments on loans, reduce the attractiveness of our marketplace and result in a loss of borrowers or investors.

 

In the event of a system outage and physical data loss, our ability to perform our servicing obligations, process applications or make loans available would be materially and adversely affected. The satisfactory performance, reliability and availability of our technology are critical to our operations, customer service, reputation and our ability to attract new and retain existing borrowers and investors.

 

Any interruptions or delays in our service, whether as a result of third-party error, our error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with our borrowers and investors and our reputation. Additionally, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Our disaster recovery plan has not been tested under actual disaster conditions, and we may not have sufficient capacity to recover all data and services in the event of an outage. These factors could prevent us from processing or posting payments on the loans, damage our brand and reputation, divert our employees’ attention, reduce our revenue, subject us to liability and cause borrowers and investors to abandon our marketplace, any of which could adversely affect our business, financial condition and results of operations.

 

We contract with third parties to provide services related to our online web lending and marketing, as well as systems that automate the servicing of our loan portfolios. While there are material cybersecurity risks associated with these services, we require that our vendors provide industry-leading encryption, strong access control policies, Statement on Standards for Attestation Engagements (SSAE) 16 audited data centers, systematic methods for testing risks and uncovering vulnerabilities, and industry compliance audits to ensure data and assets are protected. To date, we have not experienced any cyber incidents that were material, either individually or in the aggregate.

 

12

 

 

If our estimates of loan receivable losses are not adequate to absorb actual losses, our provision for loan receivable losses would increase, which would adversely affect our results of operations.

 

We maintain an allowance for loans receivable losses. To estimate the appropriate level of allowance for loan receivable losses, we consider known and relevant internal and external factors that affect loan receivable collectability, including the total amount of loan receivables outstanding, historical loan receivable charge-offs, our current collection patterns, and economic trends. If customer behavior changes as a result of economic conditions and if we are unable to predict how the unemployment rate, housing foreclosures, and general economic uncertainty may affect our allowance for loan receivable losses, our provision may be inadequate. Our allowance for loan receivable losses is an estimate, and if actual loan receivable losses are materially greater than our allowance for loan receivable losses, our financial position, liquidity, and results of operations could be adversely affected.

 

We will face increasing competition of other sub-prime real estate lenders and, if we do not compete effectively, our operating results could be harmed.

 

We compete with other companies that make sub-prime real estate loans. If we are not able to compete effectively with our competitors, our operating results could be harmed.

 

Many of our competitors have significantly more resources and greater brand recognition than we do and may be able to attract borrowers more effectively than we do.

 

When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or credit terms prevalent in that market, which could adversely affect our market share or ability to explore new market opportunities. Our pricing and credit terms could deteriorate if we act to meet these competitive challenges. Further, to the extent that the fees we pay to our strategic partners and borrower referral sources are not competitive with those paid by our competitors, whether on new loans or renewals or both, these partners and sources may choose to direct their business elsewhere. All of the foregoing could adversely affect our business, results of operations, financial condition, and future growth.

 

The collection, processing, storage, use, and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, or differing views of personal privacy rights.

 

We receive, collect, process, transmit, store, and use a large volume of personally identifiable information and other sensitive data from borrowers and purchasers of the Worthy Property Bonds and services. There are federal, state, and foreign laws regarding privacy, recording telephone calls, and the storing, sharing, use, disclosure, and protection of personally identifiable information and sensitive data. Specifically, personally identifiable information is increasingly subject to legislation and regulations to protect the privacy of personal information that is collected, processed, and transmitted. Any violations of these laws and regulations may require us to change our business practices or operational structure, address legal claims, and sustain monetary penalties, or other harms to our business.

 

The regulatory framework for privacy issues in the United States and internationally is constantly evolving and is likely to remain uncertain for the foreseeable future. The interpretation and application of such laws is often uncertain, and such laws may be interpreted and applied in a manner inconsistent with other binding laws or with our current policies and practices. If either we or our third-party service providers are unable to address any privacy concerns, even if unfounded, or to comply with applicable laws and regulations, it could result in additional costs and liability, damage our reputation, and harm our business.

 

We are reliant on the efforts of Sally Outlaw and Alan Jacobs.

 

We rely on our management team and need additional key personnel to grow our business, and the loss of key employees or inability to hire key personnel could harm our business. We believe our success has depended, and continues to depend, on the efforts and talents of our executive officers, Sally Outlaw and Alan Jacobs. Ms. Outlaw and/or Mr. Jacobs have expertise that could not be easily replaced if we were to lose any or all of their services.

 

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We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.

 

We rely on the exception from the Investment Company Act set forth in Section 3(c)(5)(C) of the Investment Company Act, which excludes from the definition of investment company “any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses… (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The SEC Staff generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). We intend to acquire assets with the proceeds of this offering in satisfaction of such SEC requirements to fall within the exception provided by Section 3(c)(5)(C). Notwithstanding, it is possible that the staff of the SEC could disagree with any of our determinations. If the staff of the SEC were to disagree with our analysis under the Investment Company Act, we would need to adjust our investment strategy. Any such adjustment in our strategy could have a material adverse effect on us. If we are deemed to be an investment company, we may be required to register as an investment company if we are unable to dispose of the disqualifying assets, which could have a material adverse effect on us.

 

Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things:

 

  limitations on capital structure;
     
  restrictions on specified investments;
     
  restrictions on leverage or senior securities;
     
  restrictions on unsecured borrowings;
     
  prohibitions on transactions with affiliates; and
     
  compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

 

If we were required to register as an investment company but failed to do so, we could be prohibited from engaging in our business, and criminal and civil actions could be brought against us. Registration with the SEC as an investment company would be costly, would subject us to a host of complex regulations and would divert attention from the conduct of our business, which could materially and adversely affect us. In addition, we would no longer be eligible to offer our securities under Regulation A of the Securities Act if we were required to register as an investment company.

 

Compliance with Regulation A and reporting to the SEC could be costly.

 

Compliance with Regulation A could be costly and requires legal and accounting expertise. After qualifying this Form 1-A, we will be required to file an annual report on Form 1-K, a semiannual report on Form 1-SA, and current reports on Form 1-U.

 

Our legal and financial staff may need to be increased in order to comply with Regulation A. Compliance with Regulation A will also require greater expenditures on outside counsel, outside auditors, and financial printers in order to remain in compliance. Failure to remain in compliance with Regulation A may subject us to sanctions, penalties, and reputational damage and would adversely affect our results of operations.

 

We will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. Therefore, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our investors could receive less information than they might expect to receive from exchange traded public companies.

 

We will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year. Therefore, our investors could receive less information than they might expect to receive from exchange traded public companies.

 

Our lack of operating history makes it difficult for you to evaluate this investment.

 

We are a recently formed entity with no operating history and may not be able to successfully operate our business or achieve our investment objectives. We may not be able to conduct our business as described in our plan of operation.

 

We are subject to the risk of fluctuating interest rates, which could harm our planned business operations.

 

We expect to generate net income from the difference between the interest rates we charge borrowers or otherwise make from our permissible investments, including loan origination fees paid by borrowers, and the interest we will pay to the holders of Worthy Property Bonds. Due to fluctuations in interest rates, we may not be able to charge borrower’s an interest rate sufficient for us to generate income, which could harm our planned business operations

 

Any Bond Rewards you receive as a result of the Bond Rewards Program could have adverse tax consequences to you.

 

There is some uncertainty about the appropriate treatment of these Bond Rewards for income purposes. You may be subject to tax on the value of your Bond Rewards. If you receive Worthy Property Bonds under the Bond Rewards Program, upon receipt you will generally realize taxable income equal to the fair market value of the Worthy Property Bonds. Your participation in the Bond Rewards Program may increase the complexity of your tax filings and may cause you to be ineligible to file Internal Revenue Service Form 1040-EZ, if you would otherwise be eligible to file such form.

 

There are a number of risks associated with our having a verbal agreement (rather than a written agreement) with WFI governing our ability to utilize WFI’s Fintech Platform and the Worthy App including misunderstanding of the terms of the verbal agreement, dispute as to what was agreed to, as well as unwillingness of a court to enforce the agreement because we and WFI may not be able to prove the existence of the agreement or its terms, which could adversely affect our business, results of operations, financial condition and future growth.

 

Verbal agreements can lead to uncertainty about each party’s rights and obligations. A dispute may arise if there is nothing in writing explaining what both parties to the contract agreed to do.

 

On April 9, 2021, we entered into a verbal agreement with WFI to pay a license fee to WFI in the amount of $10 per active user per year. There are no other terms to such verbal agreement. In light of the fact that our agreement with WFI is a verbal contract (rather than a written contract), we and WFI are exposed to the following risks:

 

● the risk that we and WFI misunderstood an important term or terms of the contract, such as how much was to be paid or what services were to be performed;

 

● the risk that we and WFI will have a dispute regarding what was agreed to because we and WFI are only relying on memory; and

 

● the risk that a court will not enforce the contract because we and WFI may not be able to prove the existence of the contract or its terms.

 

If a dispute arises under our verbal agreement with WFI and a court is not willing to enforce the terms of such verbal agreement in our favor, this outcome could adversely affect our business, results of operations, financial condition, and future growth.

 

Risks Related to Worthy Property Bonds and this Offering

 

The characteristics of the Worthy Property Bonds, including interest rate, no maturity date, lack of collateral security or guarantee, and lack of liquidity, may not satisfy your investment objectives.

 

The Worthy Property Bonds may not be a suitable investment for you, and we advise you to consult your investment, tax and other professional financial advisors prior to purchasing Worthy Property Bonds. The characteristics of the notes, including no maturity date, repayable at your demand, redeemable by us, interest rate, lack of collateral security or guarantee, and lack of liquidity, may not satisfy your investment objectives. The Worthy Property Bonds may not be a suitable investment for you based on your ability to withstand a loss of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment risk profile, return objectives, investment experience and other factors. Prior to purchasing any Worthy Property Bonds, you should consider your investment allocation with respect to the amount of your contemplated investment in the Worthy Property Bonds in relation to your other investment holdings and the diversity of those holdings.

 

14

 

 

Holders of Worthy Property Bonds are exposed to the credit risk of our company.

 

Worthy Property Bonds are our full and unconditional obligations. If we are unable to make payments required by the terms of the notes, you will have an unsecured claim against us. Worthy Property Bonds are therefore subject to non-payment by us in the event of our bankruptcy or insolvency. In an insolvency proceeding, there can be no assurances that you will recover any remaining funds. Moreover, your claim may be subordinate to that of any senior creditors and any secured creditors to the extent of the value of their security.

 

The Worthy Property Bonds are unsecured obligations.

 

The Worthy Property Bonds do not represent an ownership interest in any specific Worthy loans, their proceeds, or their assets. The Worthy Property Bonds are unsecured general obligations of Worthy only and not any Worthy borrower. The Worthy Property Bonds will be general unsecured obligations, and will rank equally with all of our other unsecured debt unless such debt is senior to or subordinate to the Worthy Property Bonds by their terms. We may issue secured debt in our sole discretion without notice to or consent from the holders of Worthy Property Bonds. Therefore as unsecured obligations, there is no security to be provided to the holders of the Worthy Property Bonds.

 

There is no public market for Worthy Property Bonds, and none is expected to develop.

 

Worthy Property Bonds are newly issued securities. Although under Regulation A the securities are not restricted, Worthy Property Bonds are still highly illiquid securities. No public market has developed nor is expected to develop for Worthy Property Bonds, and we do not intend to list Worthy Property Bonds on a national securities exchange or interdealer quotational system. You should be prepared to hold your Worthy Property Bonds as Worthy Property Bonds are expected to be highly illiquid investments.

 

Holders of the Worthy Property Bonds will have no voting rights.

 

Holders of the Worthy Property Bonds will have no voting rights and therefore will have no ability to control the Company. The Worthy Property Bonds do not carry any voting rights and therefore the holders of the Worthy Property Bonds will not be able to vote on any matters regarding the operation of the Company. As a bondholder purchaser in this offering will have no right to vote upon or receive notice of any corporate actions we may undertake which you might otherwise have if you owned equity in our Company.

 

There is a risk that the Worthy Website will not be able to handle a large number of investors subscribing to this offering.

 

Although the Worthy Website has been designed to handle numerous purchase orders and prospective investors, we cannot predict the response of the Worthy Website to any particular issuance of Worthy Property Bonds pursuant to this offering circular. You should be aware that if a large number of investors try to access the Worthy Website at the same time and submit their purchase orders simultaneously, there may be a delay in receiving and/or processing your purchase order. You should also be aware that general communications and internet delays or failures unrelated to the Worthy Website, as well as website capacity limits or failures may prevent purchase orders from being received on a timely basis by the Worthy Website. We cannot guarantee you that any of your submitted purchase orders will be received, processed and accepted during the offering process.

 

There is a risk that the Worthy Website and the Worthy APP may be hacked.

 

We receive, collect, process, transmit, store, and use a large volume of personally identifiable information and other sensitive data from borrowers and purchasers of the Worthy Property Bonds and services on the Worthy Website and the Worthy App. There is a risk that the Worthy Website and the Worthy APP may be hacked. Worthy Property Bonds will be issued by computer-generated program on our website and electronically signed by us in favor of the investor. The Worthy Property Bonds will be stored by us and will remain in our custody for ease of administration. In today’s environment, cyberattacks are perpetrated by identity thieves, unscrupulous contractors and vendors, malicious employees, business competitors, prospective insider traders and market manipulators, so-called “hacktivists,” terrorists, state-sponsored actors and others. Many companies that utilize technology in the business operations, such as ours are subject to the risk that they may be hacked. Even the most diligent cybersecurity efforts will not address all cyber risks that the Company faces. We cannot assure you that we’ll be able to prevent any such hacks by third parties, and if we experience these hacks, the effects would case an adverse effect on our business operations and will jeopardize the privacy of our users date, and can lead to us having to cease operations altogether.

 

The Worthy Property Bond Holders may be subject to third party fees.

 

Worthy Property Bond investors are not charged a servicing fee for their investment, but you may be charged a transaction fee if your method of payment requires us to incur an expense. The transaction fee will be equal to the amount that the Company will be charged by the payment processor. Other financial intermediaries, however, if engaged by you, may charge you commissions or fees.

 

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Because the Worthy Property Bonds will have no sinking fund, insurance, or guarantee, you could lose all or a part of your investment if we do not have enough cash to pay.

 

There is no sinking fund, insurance or guarantee of our obligation to make payments on the Worthy Property Bonds. We will not contribute funds to a separate account, commonly known as a sinking fund, to make interest or principal payments on the Worthy Property Bonds. The Worthy Property Bonds are not certificates of deposit or similar obligations of, and are not guaranteed or insured by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, or any other governmental or private fund or entity. Therefore, if you invest in the Worthy Property Bonds, you will have to rely only on our cash flow from operations and possible funding from WFI, our parent company, for repayment of principal and interest upon your demand of repayment or upon redemption by us. If our cash flow from operations and possible funding from WFI, our parent company, are not sufficient to pay any amounts owed under the Worthy Property Bonds, then you may lose all or part of your investment.

 

By purchasing Worthy Property Bonds in this Offering, unless you opt-out in accordance with the terms of the Worthy Property Bond Investor Agreement, you are bound by the arbitration provisions contained in our Worthy Property Bond Investor Agreement to be used for subscriptions in this offering which limits your ability to bring class action lawsuits or seek remedies on a class basis and waives the right a trial by jury.

 

By purchasing shares in this Offering, unless you opt-out in accordance with the terms of the Worthy Property Bond Investor Agreement, you agree to be bound by the arbitration, jury waiver and class action waiver provisions contained in Section 13 of our Investor Purchase Agreement to be used for subscriptions on this offering. Pursuant to the terms of the Worthy Property Bond Investor Agreement, the holders of Worthy Property Bonds and the Company will agree to (i) resolve disputes of the holders of Worthy Property Bonds through binding arbitration or small claims court, instead of through courts of general jurisdiction or through a class action and (ii) waive the right to a trial by jury and to participate in any class action, except in cases that involve personal injury. Pursuant to the terms of the Worthy Property Bond Investor Agreement, if a holder of Worthy Property Bonds does not agree to the terms of the arbitration provision, the holder of Worthy Property Bonds may opt-out of the arbitration provision by sending an arbitration opt-out notice to the Company within thirty (30) days of the holder’s first electronic acceptance of the Worthy Property Bond Investor Agreement. If the opt-out notice is not received within thirty (30) days, the holder of Worthy Property Bonds will be deemed to have accepted all terms of the arbitration provision, including the class action and jury waiver. If the investor opts out of the arbitration provision, the investor has also opted out of the jury trial and class action waivers. As arbitration provisions in commercial agreements have generally been respected by federal courts and state courts of Florida, we believe that the arbitration provision in the Worthy Property Bond Investor Agreement is enforceable under federal law and the laws of the State of Florida. Although holders of Worthy Property Bonds will be subject to the arbitration provisions of the Worthy Property Bond Investor Agreement, the arbitration provisions do not preclude holders of Worthy Property Bonds from pursuing claims under the U.S. federal securities laws in federal courts. THE ARBITRATION PROVISION OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE ARBITRATION PROVISION OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 

The Worthy Property Bond Investor Agreement provides that, to the extent permitted by law, each party to the Worthy Property Bond Investor Agreement waives the right to a jury trial or class action of any claim they may have against us arising out of or relating to our Worthy Property Bonds or the Worthy Property Bond Investor Agreement. If we were to oppose a jury trial or class action demand based on such waiver, the court would determine whether the waiver was enforceable based upon the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial or class action. The bondholders of Worthy Property Bonds will be subject to these provisions of the Worthy Property Bond Investor Agreement to the extent permitted by applicable law. THE WAIVER OF THE RIGHT TO A JURY TRIAL AND CLASS ACTION CONTAINED IN THE WORTHY PROPERTY BOND INVESTOR AGREEMENT IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE JURY WAIVER AND CLASS ACTION WAIVER PROVISIONS OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 

If the investor opts out of the arbitration provision, the investor has also opted out of the jury trial and class action waivers. In the event that an investor does not opt-out, as described above, the rights of the adverse bond holder to seek redress in court would be severely limited. These restrictions on the ability to bring a class action lawsuit may result in increased costs and/or reduced remedies, to individual investors who wish to pursue claims against the Company.

 

By purchasing Worthy Property Bonds in this Offering, you are bound by the fee-shifting provision contained in our Bylaws, which may discourage you to pursue actions against us.

 

Section 7.40 of our Bylaws provides that “[i]f any action is brought by any party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action.”

 

In the event you initiate or assert a claims against us, in accordance with the dispute resolution provisions contained in our Bylaws, and you do not, in a judgment prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection with such claim, including, but not limited to, reasonable attorney’s fees and expenses and costs of appeal, if any.

 

THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 

16

 

 

USE OF PROCEEDS

 

If we sell all $74,880,000 of Worthy Property Bonds offered hereby for cash, we estimate we will receive net proceeds from this offering of approximately $74,780,000, after deducting the estimated offering expenses payable by us including our legal fees, accounting fees, financial printing costs, SEC filing fees, EDGAR fees, and other expenses of this offering which we estimate to be $100,000.

 

We intend to use (i) approximately 80% of the net proceeds from this offering to purchase or otherwise acquire mortgages and other liens on and interests in real estate as well as real estate-type interests and (ii) up to 5% of the proceeds for general corporate purposes, including the reimbursement amounts due under the Management Services Agreement (the “Management Services Agreement”) with Worthy Management, Inc., or “Worthy Management.” Reimbursement amounts due to Worthy Management under the Management Services Agreement will be paid using up to 5% of the proceeds of this offering and distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis. We reserve the right however to change the estimated use of proceeds from this offering at any time so long as doing so does not result in the loss of our exemption from the 40 Act.

 

If all of the Worthy Property Bonds being sold for cash are sold in this Offering on a “self-underwritten” basis through our officers and directors without utilizing broker-dealers to sell the Worthy Property Bonds, we expect to receive net proceeds from this Offering of approximately $74,780,000. If all of the Worthy Property Bonds being sold for cash are sold in this Offering through broker-dealers, we expect to receive net proceeds from this Offering in an amount equal to the gross proceeds in this Offering of approximately $74,780,000 minus estimated underwriting discounts and commissions to the broker-dealers.

 

17

 

 

However, we cannot guarantee that we will sell all of the Worthy Property Bonds being offered by us for cash. The following table summarizes how we anticipate using the gross proceeds of this Offering assuming the Worthy Property Bonds are not sold in this Offering through broker-dealers, depending upon whether we sell 25%, 50%, 75%, or 100% (Maximum Offering Amount) of the Worthy Property Bonds being offered in the Offering for cash:

 

  

If 25% of

Bonds

Sold for

Cash

  

If 50% of

Bonds

Sold for

Cash

  

If 75% of

Bonds

Sold for

Cash

  

If 100% of

Bonds

Sold for

Cash

 
Gross Proceeds  $18,720,000   $37,440,000   $56,160,000   $74,880,000 
Offering Expenses (Underwriting Discounts and Commissions to Placement Agent and other broker dealers)  $(0)  $(0)  $(0)  $(0)
                     
Net Proceeds  $18,720,000   $37,440,000   $56,160,000   $74,880,000 
                     
Our intended use of the net proceeds is as follows:                    
Fees for Qualification of Offering under Regulation A (includes legal, auditing, accounting, transfer agent, financial printer and other professional fees)  $(100,000)  $(100,000)  $(100,000)  $(100,000)
Acquisition of Mortgages and Other Liens on and Interests in Real Estate (Qualified Interests)   (12,103,000)   (24,271,000)   (36,439,000)   (48,607,000)
Acquisition of Real Estate-Type Interests   (2,793,000)   (5,601,000)   (8,409,000)   (11,217,000)
Acquisition of Assets Unrelated to Real Estate   (2,793,000)   (5,601,000)   (8,409,000)   (11,217,000)
Working Capital and General Corporate Purposes   (931,000)   (1,867,000)   (2,803,000)   (3,739,000)
Total Use of Proceeds  $18,720,000   $37,440,000   $56,160,000   $74,880,000 

 

We intend to use the net proceeds of this offering to acquire (i) “mortgages and other liens on and interests in real estate” constituting at least 55% of our assets (“Qualifying Interests”), (ii) “real estate-type interests” constituting at least 25% of our assets (subject to proportionate reduction if greater than 55% of our assets are Qualifying Interests), and (iii) assets that have no relationship to real estate constituting no more than 20% of our assets.

Pending use of the net proceeds from this offering, we may invest in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

 

The Company will not receive any proceeds from the redemption of up to $120,000 worth of Bond Rewards under the Bond Rewards Program for eligible referrals (not for cash).

 

INVESTMENT COMPANY ACT LIMITATIONS

 

A company that is treated as an “investment company” under the Investment Company Act of 1940 is subject to stringent and onerous regulation, like a mutual fund. Being an investment company is not illegal, but is very expensive. If the Company were treated as an investment company it would be very costly for our business.

 

We anticipate that (i) at least 55% of our assets will constitute “mortgages and other liens on and interests in real estate” (Qualifying Interests), (ii) at least 25% of our assets will constitute “real estate-type interests” (subject to proportionate reduction if greater than 55% of our assets are Qualifying Interests) and (iii) no more than 20% of our assets will constitute assets that have no relationship to real estate. As a result, and as discussed in detail below, we believe the Company will not be treated as an investment company because of the exemption under Section 3(c)(5)(C) of the Investment Company Act of 1940, which provides that an entity “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate” will not be treated as an investment company.

 

The SEC has taken the position that an issuer qualifies for the Section 3(c)(5)(C) exemption if the following three conditions are satisfied:

 

  1) At least 55% of its assets consist of “mortgages and other liens on and interests in real estate.” We refer to these as “Qualifying Interests.”
     
  2) At least an additional 25% of its assets consist of “real estate-type interests” (subject to proportionate reduction if greater than 55% of the issuer’s assets are Qualifying Interests).
     
  3) Not more than 20% of the issuer’s assets consist of assets that have no relationship to real estate.

 

The SEC has also taken the position that Qualifying Interests:

 

  1) Include assets that represent an actual interest in real estate or are loans or liens “fully secured by real estate.”
     
  2) Exclude interests in the nature of securities in other issuers engaged in the real estate business.

 

In addition, the SEC has taken the position that a mortgage loan will be treated as “fully secured by real property” where the following two conditions are satisfied:

 

  1) 100% of the fair market value of the loan was secured by real estate at the time the issuer acquired the loan. We refer to this as the “Date of Purchase Test.”
     
  2) 100% of the principal amount of the loan was secured by real estate at the time of origination. We refer to this as the “Date of Origination Test.”

 

Furthermore, the SEC has taken the position that real estate-type interests include:

 

  1) Certain mortgage-related instruments including loans where 55% of the fair market value of the loan is secured by real property at the time the issuer acquired the loan.
     
  2) Agency partial-pool certificates.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this offering circular. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this offering circular. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Our future operating results, however, are impossible to predict and no guaranty or warranty is to be inferred from those forward-looking statements.

 

Formation

 

We were incorporated under the laws of the State of Florida on April 9, 2021. On April 9, 2021, we issued 100 shares of our $0.001 per share par value common stock to WFI in exchange for $5,000. WFI is the sole shareholder of the Company’s common stock. Our wholly owned subsidiary Worthy Lending V was organized under the laws of the State of Delaware in April 2021.

 

Plan of Operations

 

We are a newly organized company and since inception have worked on organizational and development matters. In April 2021, WFI contributed funds to us to pay our operating expenses. We have not generated any revenues and we are dependent on the proceeds from this offering and advances from WFI to provide funds to implement our business model. The Company will not be paying back to WFI, any of the contributions made to the Company by WFI, therefore there is no interest rate or maturity associated with such contributions by WFI.

 

18

 

 

Upon qualification of this Offering, we will be accruing the reimbursement amount due to Worthy Management under the Management Services Agreement until the Company can make reimbursement payments to Worthy Management from up to 5% of the proceeds of this offering and distributions from Worthy Lending V, LLC, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis.

 

General

 

For the twelve months following the commencement of the offering, we will seek to sell our Worthy Property Bonds and invest the proceeds in sub-prime real estate loans and other permissible activities in accordance with our business model.

 

In order to operate our Company for 12 months, we estimate that $3,000,000 in funds will be required. The source of such funds is anticipated to be up to 5% of the net proceeds from our sales of Worthy Property Bonds in this offering and the remaining amount is expected to come from distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V). If we fail to generate at least $25,000,000 from our sales of Worthy Property Bonds, we may not be able to fully carry out our plan of operations.

 

We believe the proceeds from our sales of our Worthy Property Bonds together with distributions from Worthy Lending V, LLC, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V) will allow us to operate for twelve months. However, the extent of our operations will be less depending on the amount of proceeds received and the results of operations of our operating subsidiary.

 

We plan to start acquiring mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), real estate-typed interests, and assets unrelated to real estate in accordance with our business model as we receive funds from selling the Worthy Property Bonds in this offering through the efforts of the principals of the Company and through a network of referral sources including professional and business advisers, commercial banks and Chambers of Commerce and other business and trade organizations. The Company currently does not have any contracts with third parties related to the services it intends to provide.

 

Specific Plan of Operations and Milestones

 

Our plan of operations over the next 12-month period is as follows, assuming the sale of 25%, 50%, 75% and 100% of Worthy Property Bonds in this offering for cash, and does not include offering expenses of this offering of $100,000:

 

   If 25% of
Worthy Property Bonds Sold for Cash
   If 50% of
Worthy Property Bonds Sold for Cash
   If 75% of
Worthy Property Bonds Sold for Cash
   If 100% of
Worthy Property Bonds Sold for Cash
 
Gross Proceeds(1)  $18,720,000   $37,440,000   $56,160,000   $74,880,000 
                     
Acquisition of Mortgages and Other Liens on and Interests in Real Estate (Qualified Interests)  $12,103,000   $24,271,000   $36,439,000   $48,607,000 
Acquisition of Real Estate-Type Interests  $2,793,000   $5,601,000   $8,409,000   $11,217,000 
Acquisition of Assets Unrelated to Real Estate  $2,793,000   $5,601,000   $8,409,000   $11,217,000 
Working Capital and General Corporate Purposes  $931,000   $1,867,000   $2,803,000   $3,739,000 
Total Use of Net Proceeds (2)  $18,620,000   $37,340,000   $56,060,000   $74,780,000 

 

(1) Gross proceeds do not include a deduction of offering expenses of this offering of $100,000.

 

(2) Total Use of Net Proceeds accounts for the deduction of offering expenses of this offering of $100,000.

 

19

 

 

During the next 12 months, we intend to, among other things, have the 1-A declared qualified and start receiving net proceeds from this offering and pay the expenses of this offering with the net proceeds of this offering.

 

For the next 12 months, we plan to:

 

Acquisition of Mortgages and Other Liens on and Interests in Real Estate (Qualified Interests)

 

We plan to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). The expense of doing so will range from $1,000,000 to $1,500,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire mortgages in the amount of $12,103,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire mortgages in the amount of $24,271,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire mortgages in the amount of $36,439,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire mortgages in the amount of $48,607,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests).

 

Acquisition of Real Estate-Typed Interests

 

We also intend to acquire real estate-typed interests, and the expense of doing so will range from $200,000 to $400,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire real estate-typed interests in the amount of $2,793,000. If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire real estate-typed interests in the amount of $5,601,000. If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire real estate-typed interests in the amount of $8,409,000. Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire real estate-typed interests in the amount of $11,217,000.

 

Acquisition of Assets Unrelated to Real Estate

 

We also intend to acquire assets unrelated to real estate, and the expense of doing so will range from $200,000 to $400,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire assets unrelated to real estate in the amount of $2,793,000. If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire assets unrelated to real estate in the amount of $5,601,000. If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire assets unrelated to real estate in the amount of $8,409,000. Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire assets unrelated to real estate in the amount of $11,217,000.

 

Milestones

 

Our anticipated timeline for reaching the significant milestones in our plan of operations and the costs associated with our plan are set forth below:

 

September 2021 to November 2021:

 

  We expect to sell $30,000,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $195,000.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $45,000. 
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $60,000.

 

20

 

 

December 2021 to February 2022:

 

  We expect to sell $30,000,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $195,000.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $45,000.
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $60,000.

 

March 2022 to May 2022:

 

  We expect to sell $14,800,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $96,200.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $22,200.
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $29,600.

 

21

 

 

Liquidity and capital resources

 

At April 30, 2021 we had cash on hand of $50,000 and working capital of approximately $15,000. We do not have any external sources of capital and are dependent upon advances from WFI to provide funds for our operations until we begin receiving proceeds from the sale of Worthy Property Bonds in this offering. WFI, however, is under no obligation to advance us any funds.

 

In April of 2021, WFI purchased 100 shares of common stock, par value $0.001 per share, of the Company for $5,000 and contributed $45,000 of capital to the Company.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not yet generated any revenue and has no operating history. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report.

 

We are dependent on advances from WFI and proceeds from this offering to provide capital for our operations. WFI is not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in this offering. The consolidated financial statements do not include adjustments related to the recoverability and classifications of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

Contingent Liabilities

 

We may be subject to lawsuits, investigations and claims (some of which may involve substantial dollar amounts) that can arise out of our normal business operations. We would continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a thorough analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Because most contingencies are resolved over long periods of time, liabilities may change in the future due to new developments (including new discovery of facts, changes in legislation and outcomes of similar cases through the judicial system), changes in assumptions or changes in our settlement strategy. There were no contingent liabilities as of June 23, 2021.

 

Income Taxes

 

Worthy Property Bonds will receive interest income. At the end of the calendar year, investors with over $10 of realized interest will receive a form 1099-INT. These will need to be filed in accordance with the United States Tax Code. Investor’s tax situations will likely vary greatly and all tax and accounting questions should be directed towards a certified public accountant.

 

As of June 23, 2021, we had no federal and state income tax expense.

 

Significant Accounting Policies

 

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or “GAAP.” The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are fully described in Note 3 to our financial statements appearing elsewhere in this offering circular, and we believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.

 

22

 

 

OUR BUSINESS

 

Our History

 

We were incorporated under the laws of the State of Florida on April 9, 2021. On April 9, 2021, we issued 100 shares of our $0.001 per share par value common stock in exchange for $5,000 to WFI. WFI is the sole shareholder of the Company’s common stock. Our wholly owned subsidiary, Worthy Lending V, through which we plan to operate our business, was organized as a limited liability company under the laws of the State of Delaware on April 9, 2021.

 

Background – the Worthy group of companies

 

WFI was organized in 2016 to create a “Worthy Community” in an effort to help members achieve financial wellness. WFI was initially targeting the millennials who are surpassing the baby boomers as the nation’s largest living generation and to develop the Worthy Fintech Platform. WFI’s management believes that the millennial demographic in large part has a basic distrust of old guard financial institutions, is burdened by student loans and other debt, changes employment frequently and is unable to save money and/or fund a retirement program. At the same time there are two rapidly growing trends – peer financing and robo investing.

 

WFI formed Worthy Peer Capital, Inc. in 2016 as a wholly owned subsidiary of WFI. Worthy Peer Capital, Inc.’s business model is centered around providing loans for small businesses including loans to manufacturers, wholesalers, and retailers secured by inventory, accounts receivable and/or equipment and purchase order financing. To a lesser extent, Worthy Peer Capital, Inc. may also provide loans to other borrowers, acquire equity interests in real estate, make fixed income and/or equity investments, provide factoring financing and other types of loans and investments, provided the amount and nature of such activities does not cause it to lose its exemption from regulations as an investment company pursuant to the 40 Act.

 

In January 2018, Worthy Peer Capital, Inc. commenced a public offering pursuant to Regulation A of $50,000,000 aggregate principal amount of renewable worthy bonds under our qualified Offering Statement (File No. 024-10766).

 

In March 2018, WFI launched the Fintech Platform and Worthy App, a free mobile app which provides tools to help people easily invest including through “spare change” round ups. Round ups monetize debit card purchases, checking account linked credit card purchases and other checking account transactions by “rounding up” each purchase to the next higher dollar until the “round up” reaches $10.00 at which time the user can purchase a $10.00 Worthy Bond. As described below, we expect that the Worthy App will also permit purchasers of Worthy Demand Bonds to utilize it in the same way to purchase our bonds offered pursuant to this offering circular.

 

In August 2018, Worthy Peer Capital, Inc. formed Worthy Lending, LLC, a Delaware limited liability company, as a wholly owned subsidiary. Worthy Lending, LLC provides loan and investment origination and processing services for Worthy Peer Capital, Inc. In September 2018, Worthy Peer Capital, Inc. began deploying the capital it had raised through sales of its renewable bonds in accordance with its business model. On March 17, 2020, Worthy Peer Capital, Inc. completed the offering of renewable worthy bonds. From January 2018 through March 17, 2020, Worthy Peer Capital, Inc. sold approximately $50 million aggregate principal amount of renewable worthy bonds to 12,285 investors. As of June 21, 2021, $33,805,810 in principal amount of renewable worthy bonds has been repaid to bondholders at the demand of the bondholders.

 

In October 2019, WFI began an internal reorganization to more efficiently utilize personnel at both WFI and Worthy Peer Capital, Inc., including Worthy Lending, LLC.

 

In October 2019, WFI formed Worthy Management, Worthy Peer Capital II, Inc. and its wholly-owned subsidiary Worthy Lending II, LLC. Worthy Peer Capital, Inc.’s business model is centered around providing loans for small businesses including loans to manufacturers, wholesalers, and retailers secured by inventory, accounts receivable and/or equipment and purchase order financing.

 

In March 2020, Worthy Peer Capital II, Inc. commenced a public offering pursuant to Regulation A of $50,000,000 aggregate principal amount of renewable bonds under a qualified Offering Statement (File No. 024-11150). In March 2020, Worthy Peer Capital II, Inc. began deploying the capital it had raised through sales of its renewable bonds in accordance with its business model.

 

In June 2020, WFI formed Worthy Community Bonds, Inc. and its wholly-owned subsidiary Worthy Lending III, LLC. Worthy Community Bonds, Inc.’s business model is centered around providing loans for small businesses including loans to manufacturers, wholesalers, and retailers secured by inventory, accounts receivable and/or equipment and purchase order financing.

 

On October 1, 2020, Worthy Peer Capital II, Inc. completed the offering. From March 17, 2020 through October 1, 2020, Worthy Peer Capital II, Inc. sold approximately $50,000,000 aggregate principal amount of renewable worthy bonds to 17,823 investors. As of June 21, 2021, there is outstanding $28,057,530 principal amount of renewable bonds of Worthy Peer Capital II, Inc.

 

In September 2020, Worthy Community Bonds, Inc. commenced a public offering pursuant to Regulation A of $50,000,000 aggregate principal amount of demand bonds under a qualified Offering Statement (File No. 024-11279). In September 2020, Worthy Community Bonds, Inc. began deploying the capital it had raised through sales of its demand bonds in accordance with its business model.

 

On October 14, 2020, WFI filed an Offering Statement on Form 1-A with the SEC for a public offering pursuant to Regulation A of $20,000,000 of its common stock.

 

On November 25, 2020, Worthy Community Bonds II, Inc. filed an Offering Statement on Form 1-A with the SEC for a public offering pursuant to Regulation A of $50,000,000 aggregate principal amount of demand bonds.

 

On December 16, 2020, Worthy Peer Capital, Inc. filed an Offering Statement on Form 1-A with the SEC, as amended by Amendment No. 1 to Form 1-A filed with the SEC on January 28, 2021, for a public offering pursuant to Regulation A of $15,000,000 aggregate principal amount of renewal bonds and $60,000,000 aggregate principal amount of demand bonds.

 

On February 26, 2021, Worthy Community Bonds, Inc. completed the offering. From September 29, 2020 through February 26, 2021, Worthy Community Bonds, Inc. sold approximately $50,000,000 aggregate principal amount of demand bonds to 18,914 investors. As of June 21, 2021, there is outstanding $37,059,090 principal amount of demand bonds of Worthy Community Bonds, Inc.

 

On April 9, 2021, WFI formed us and our wholly-owned subsidiary Worthy Lending V, LLC (“Worthy Lending V”). Our business model is centered primarily around purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.

 

Our business model

 

We are an early stage company, which, through our wholly owned subsidiary Worthy Lending V, plan to implement our business model. Our business model is centered primarily around purchasing or otherwise acquiring mortgages and other liens on and interests in real estate. We anticipate that (i) at least 55% of our assets will consist of “mortgages and other liens on and interests in real estate” (“Qualifying Interests”), (ii) at least an additional 25% of our assets will consist of “real estate-type interests” (subject to proportionate reduction if greater than 55% of our assets are Qualifying Interests), and (iii) not more than 20% of our total assets consist of assets that have no relationship to real estate provided the amount and nature of such activities do not cause us to lose our exemption from regulations as an investment company pursuant to the Investment Company Act of 1940, or the “40 Act.” Qualifying Interests are assets that represent an actual interest in real estate or are loans or liens “fully secured by real estate” but exclude securities in other issuers engaged in the real estate business. Real estate-type interests include certain mortgage-related instruments including loans where 55% of the fair market value of the loan is secured by real property at the time the issuer acquired the loan and agency partial-pool certificates. We will sell Worthy Property Bonds in this offering to provide the capital for these activities

 

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Our company’s mission is to help sub-prime real estate borrowers.

 

The Worthy Property Bonds:

 

  are priced at $10.00 each;
  represent a full and unconditional obligation of our company;
  bear interest at 5% per annum; provided, however, if a bond holder agrees to waive the right to demand repayment by the Company for 12 months, the Company will pay an additional 1.00% of interest (“Interest Rate Premium”), increasing the interest rate to 6%, during such 12-month period. For clarification purposes, we will pay interest on interest (compounded interest) and credit such interest to bondholders’ Worthy accounts;
  are subject to repayment at any time at the demand of the holder, unless the holder agrees to waive the right to demand repayment for 12 months in order to receive an Interest Rate Premium;
  are subject to redemption by us at any time;
  are not payment dependent on any underlying real estate loans or investments;
  are transferable;
  are unsecured.

 

For more information on the terms of Worthy Property Bonds being offered, please see “Description of the Worthy Property Bonds” beginning on page 35 of this offering circular.

 

We have created the Worthy Property Bond Rewards Program (“Bond Rewards Program”) to provide (i) investors (each a “Referrer”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for referring a friend or family member to open an account on the Worthy Fintech Platform to join the Worthy community and (ii) new members of the Worthy community (each a “Referree”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for opening an account on the Worthy Fintech Platform as a result of an eligible referral. The Referree would not be required to fund his or her account on the Worthy Fintech Platform in order for the Referrer and the Referree to each receive a Bond Reward. In other words, the Referree would not be required to purchase a Worthy Property Bond in order for the Referrer and the Referree to each receive a Bond Reward. Each eligible Referrer and eligible Referree will be entitled to receive an award of one Worthy Property Bond valued at $10.00 each (each a “Bond Reward”) per eligible referral, subject to a limitation of 50 Worthy Property Bonds per Referrer account and Referree account per calendar year. Bond Rewards will be fulfilled through Worthy Property Bonds issued under the offering statement of which this offering circular forms a part. For more information on the terms and conditions of Worthy Property Bond Rewards Program, please see “Plan of Distribution Worthy Property Bond Rewards Program” on page 40 of this offering circular.

 

The Company has not yet generated any revenue and has a no operating history. Our management has raised substantial doubt about our ability to continue as a going concern based on these conditions and our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report with respect to our audited consolidated financial statements for the period from April 9, 2021 (inception) to April 30, 2021. We expect to generate income from (i) the difference between the interest rates we charge on our real estate loans and mortgages and other investments which we have acquired and the interest we will pay to the holders of Worthy Property Bonds and (ii) profits we realize on the sale of the interests in real estate that we acquire. We also expect to use up to 5% of the proceeds from sales of Worthy Property Bonds to provide working capital for our company until such time as our revenues are sufficient to pay our operating expenses.

 

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Until sufficient proceeds have been received by us from the sale of Worthy Property Bonds in this offering we will rely on advances from our parent as to which we have no assurances. WFI is not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in this offering. If we do not raise sufficient funds in this offering or if our parent declines to make advances to us, we will not be able to implement our business plan, or may have to cease operations altogether. We will not be paying back any of the funds advanced to us by WFI and therefore there is no interest rate or maturity associated with such advances.

 

Recent Developments

 

COVID-19

 

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2020 (COVID-19) which in March 2020, has been declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

 

Possible areas that may be affected include, but are not limited to, higher redemption rate of holders of the Worthy Property Bonds, a decline in the demand for loans by potential borrowers or higher default rates by borrowers, and unavailability of professional services and other resources. In addition, the employees of companies that provide services to us could be medically or mentally affected by the pandemic and may be required to work remotely. This situation could cause of reduction in productivity or the inability to complete critical tasks for the Company.

 

The entire actual effects of the spread of COVID-19 are difficult to assess at this time as the actual effects will depend on many factors beyond the control and knowledge of the Company. However, the spread of COVID-19, if it continues, may cause an overall decline in the economy as a whole and therefore may materially harm our business, results of operations and financial condition

 

As of the date of this filing, the Company has not experienced significant impact related to the COVID-19 pandemic.

 

Plan of Operations

 

We are a newly organized company and since inception have worked on organizational and development matters. In April 2021, WFI contributed funds to us to pay our operating expenses. We have not generated any revenues and we are dependent on the proceeds from this offering and advances from WFI to provide funds to implement our business model. The Company will not be paying back to WFI, any of the contributions made to the Company by WFI, therefore there is no interest rate or maturity associated with such contributions by WFI.

 

Upon qualification of this Offering, we will be accruing the reimbursement amount due to Worthy Management under the Management Services Agreement until the Company can make reimbursement payments to Worthy Management from up to 5% of the proceeds of this offering and distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis.

 

General

 

For the twelve months following the commencement of the offering, we will seek to sell our Worthy Property Bonds and invest the proceeds in sub-prime real estate loans, real estate interests and other permissible activities in accordance with our business model.

 

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In order to operate our Company for 12 months, we estimate that $3,000,000 in funds will be required. The source of such funds is anticipated to be up to 5% of the net proceeds from our sales of Worthy Property Bonds in this offering and the remaining amount is expected to come from distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V). If we fail to generate at least $25,000,000 from our sales of Worthy Property Bonds, we may not be able to fully carry out our plan of operations.

 

We believe the proceeds from our sales of our Worthy Property Bonds together with distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V) will allow us to operate for twelve months. However, the extent of our operations will be less depending on the amount of proceeds received and the results of operations of our operating subsidiary.

 

We plan to start acquiring mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), real estate-typed interests, and assets unrelated to real estate in accordance with our business model as we receive funds from selling the Worthy Property Bonds in this offering through the efforts of the principals of the Company and through a network of referral sources including professional and business advisers, commercial banks and Chambers of Commerce and other business and trade organizations. The Company currently does not have any contracts with third parties related to the services it intends to provide.

 

Specific Plan of Operations and Milestones

 

Our plan of operations over the next 12-month period is as follows, assuming the sale of 25%, 50%, 75% and 100% of Worthy Property Bonds in this offering for cash, and does not include offering expenses of this offering of $100,000:

 

   If 25% of
Worthy Property Bonds Sold for Cash
   If 50% of
Worthy Property Bonds Sold for Cash
   If 75% of
Worthy Property Bonds Sold for Cash
   If 100% of
Worthy Property Bonds Sold for Cash
 
Gross Proceeds(1)  $18,720,000   $37,440,000   $56,160,000   $74,880,000 
                     
Acquisition of Mortgages and Other Liens on and Interests in Real Estate (Qualified Interests)  $12,103,000   $24,271,000   $36,439,000   $48,607,000 
Acquisition of Real Estate-Type Interests  $2,793,000   $5,601,000   $8,409,000   $11,217,000 
Acquisition of Assets Unrelated to Real Estate  $2,793,000   $5,601,000   $8,409,000   $11,217,000 
Working Capital and General Corporate Purposes  $931,000   $1,867,000   $2,803,000   $3,739,000 
Total Use of Net Proceeds (2)  $18,620,000   $37,340,000   $56,060,000   $74,780,000 

 

(1) Gross proceeds do not include a deduction of offering expenses of this offering of $100,000.

 

(2) Total Use of Net Proceeds accounts for the deduction of offering expenses of this offering of $100,000.

 

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During the next 12 months, we intend to, among other things, have the 1-A declared qualified and start receiving net proceeds from this offering and pay the expenses of this offering with the net proceeds of this offering.

 

For the next 12 months, we plan to:

 

Acquisition of Mortgages and Other Liens on and Interests in Real Estate (Qualified Interests)

 

We plan to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). The expense of doing so will range from $1,000,000 to $1,500,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire mortgages in the amount of $12,103,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire mortgages in the amount of $24,271,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire mortgages in the amount of $36,439,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests). Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire mortgages in the amount of $48,607,000 from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests).

 

Acquisition of Real Estate-Typed Interests

 

We also intend to acquire real estate-typed interests, and the expense of doing so will range from $200,000 to $400,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire real estate-typed interests in the amount of $2,793,000. If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire real estate-typed interests in the amount of $5,601,000. If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire real estate-typed interests in the amount of $8,409,000. Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire real estate-typed interests in the amount of $11,217,000.

 

Acquisition of Assets Unrelated to Real Estate

 

We also intend to acquire assets unrelated to real estate, and the expense of doing so will range from $200,000 to $400,000, depending upon the success of the offering. If 25% of Worthy Property Bonds are sold for net proceeds of $18,620,000 during this time period, we intend to acquire assets unrelated to real estate in the amount of $2,793,000. If 50% of Worthy Property Bonds are sold for net proceeds of $37,340,000 we intend to acquire assets unrelated to real estate in the amount of $5,601,000. If 75% of Worthy Property Bonds are sold for net proceeds of $56,060,000 we intend to acquire assets unrelated to real estate in the amount of $8,409,000. Finally, if 100% of Worthy Property Bonds are sold for net proceeds of $74,780,000 we intend to acquire assets unrelated to real estate in the amount of $11,217,000.

 

Milestones

 

Our anticipated timeline for reaching the significant milestones in our plan of operations and the costs associated with our plan are set forth below:

 

September 2021 to November 2021:

 

  We expect to sell $30,000,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $195,000.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $45,000.
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $60,000.

 

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December 2021 to February 2022:

 

  We expect to sell $30,000,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $195,000.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $45,000.
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $60,000.

 

March 2022 to May 2022:

 

  We expect to sell $14,800,000 of Worthy Property Bonds.
  We anticipate that as part of our selling and marketing efforts to sell the Worthy Property Bonds, we plan to meet with groups whose members may be potential purchasers of our Worthy Property Bonds and we estimate the costs of this to be $20,000.
  We anticipate and intend to acquire mortgages from sub-prime real estate borrowers and other liens on and interests in real estate (Qualified Interests), and we estimate the costs of this to be $96,200.
  We anticipate and intend to acquire real estate-typed interests and we estimate the costs of this to be $22,200.
  We anticipate and intend to acquire assets unrelated to real estate and we estimate the costs of this to be $29,600.

 

Until sufficient proceeds have been received by us from the sale of Worthy Property Bonds we will rely on advances from our parent as to which we have no assurances. There can also be no assurances that we will be able to receive our desired amount of proceeds or any proceeds from this offering.

 

Worthy Fintech Platform

 

WFI has developed technology solutions, including the Worthy App and the Worthy Website, that facilitate the purchase of Worthy Property Bonds and provide information on accounts of the Worthy Bond investors. We refer to these as the “Worthy Fintech Platform.” These solutions have been expanded to offer the same technology solutions to purchasers of our bonds. We will pay a license fee to WFI in the amount of $10 per active user per year; provided that such amount will be subject to periodic review and modification. The term “active user” means an individual or entity that has registered on the Worthy Fintech Platform (provided name and email) and purchased at least one Worthy Property Bond.

 

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Worthy App

 

The Worthy App is designed to support the target market for our bonds which we believe is approximately 74 million millennials, who spend more than $600 billion a year. The Worthy App seeks to provide an easy way for our target market to micro invest including monetizing their debit card purchases, checking account linked credit card purchases and other checking account transactions by “rounding up” each purchase to the next higher dollar until the “round up” reaches $10.00 at which time the user can purchase a $10.00 Worthy Bond. The Worthy App is available via the web at worthybonds.com or for Apple iPhone users from the Apple Store and for Android phone users from Google Play.

 

Procedurally, Worthy App users download the application and simply link their bank account to the App. If engaging in the round-up feature, they connect their debit card or credit card to the App. Every time the user shops or completes any checking account transaction, the App automatically rounds up their purchase to the next dollar, tracks the spare change and then permits the user to use it to invest in the Worthy Property Bonds. The user’s bank accounts are monitored and the money is transferred via ACH once the round up amounts reach $10.00. Users can also make one time or recurring purchases of Worthy Property Bonds.

 

Worthy Website

 

The Worthy Website offers users the following features:

 

  Available online directly from us. You can purchase Worthy Property Bonds directly from us through the Worthy Website;
  No purchase fees charged. We will not charge you any commission or fees to purchase Worthy Property Bonds through the Worthy Website. However, other financial intermediaries, if engaged, may charge you commissions or fees;
  Invest as little as $10. You will be able to build ownership in Worthy Property Bonds over time by making purchases as low as $10;
  Flexible, secure payment options. You may purchase Worthy Property Bonds electronically or by wire transfer, and we will provide funding instructions; and
  Manage your portfolio online. You can view your bond purchases, redemptions, interest payments and other transaction history online, as well as receive tax information and other reports.

 

Following your initial purchase of Worthy Property Bonds, you can elect to participate in our auto-invest program, or the “Auto-Invest Program,” on the Worthy Website and App. This program allows you to automatically invest in additional Worthy Property Bonds on a reoccurring basis (e.g., daily, weekly or monthly) subject to an amount and investment parameters that you designate.

 

Marketing

 

Our Bonds will be marketed through our website, on-line information sources, social networks, institutional (Colleges and universities, charities, trade associations and employers) and other marketing partner sources of introduction and referral.

 

Worthy Causes

 

The Worthy Causes program helps non-profit organizations generate contributions from “smaller” donors via the spare change “round-up” tool on the Worthy App. Donors painlessly gather and donate funds by investing the “spare change” from their daily purchases throughout the year. We believe this program will offer the following advantages:

 

Painless giving, donors support their causes without altering their lifestyle;
All giving is magnified by 5% interest (6% during a 12-month period during which donors waived the right to demand repayment by the Company to donee); and
Supporting causes in the process.

 

To participate in this program, the donor simply links a debit or credit card within the Worthy App and every time the card is used it rounds the transactions up to the next whole dollar (so, for instance, $1.57 is rounded-up to $2.00). Whenever the “rounded-up” spare change reaches $10.00, a purchase of our Worthy Property Bonds is made. The bonds may then be donated to charitable causes, earning interest at 5% per year (6% during a 12-month period during which donors waived the right to demand repayment by the Company to donee) provided that the charity complies with new account on-boarding requirements. As an alternative to donating bonds to a charity, a bond holder could liquidate its account and contribute the proceeds from liquidation of the bonds to charitable causes. In addition to, or instead of, our round-up program, donors can also simply buy a desired number of bonds and donate them to the cause of their choice or they can set a recurring monthly amount to invest making it an easy way to contribute. Investors will not be charged any transfer fee for making contributions of Worthy Property Bonds via the Worthy Causes program.

 

Operations – Management Services Agreement with Worthy Management

 

On April 9, 2021 we entered into a Management Services Agreement (the “Management Services Agreement”) with Worthy Management, an affiliate. Worthy Management was established in October 2019 as part of the internal reorganization of the operations of our parent, WFI. This operational restructure was undertaken as a cost-sharing effort to more efficiently utilize personnel throughout the Worthy group of companies. As a result, our executive officers and the other personnel which provide services to us are all employed by Worthy Management.

 

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Under the terms of the Management Services Agreement, Worthy Management agreed to provide to the Company certain management services, personnel and office facilities, including all equipment and supplies, that are reasonable, necessary or useful for the day-to-day operations of the business of the Company, subject to such written direction provided by the Company to Worthy Management.

 

Pursuant to the Management Services Agreement, the Company agreed to reimburse Worthy Management for the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement. There is no interest rate or maturity associated with the obligations to reimburse Worthy Management under the Management Services Agreement. The reimbursement amounts payable to Worthy Management by the Company will accrue until the Company can make reimbursement payments to Worthy Management from up to 5% of the proceeds of this offering and distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis.

 

The reimbursement amount under the Management Services Agreement, will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses under the Management Services Agreement for the Company and will consist of both a to-be-determined portion of the annual salaries and employee benefits of our executive officers and the other personnel employed by Worthy Management based upon the amount of time they devote to us, as well as a pro-rata allocation of office expenses. We have not yet determined the amount of this monthly reimbursement amount as it will be based on the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement and as Worthy Management has not yet determined salary payment amounts or the benefits it’ll provide to our executive officers and the other personnel employed by Worthy Management.

 

There will be no fees under the Management Services Agreement.

 

The initial term of the Management Services Agreement will continue until the fifth anniversary of the effectiveness of such agreement and will automatically renew for successive one year terms. The Management Services Agreement can be terminated at any time upon 30 days’ prior written notice from one party to the other.

 

For additional information please see the Management Services Agreement, which is an exhibit to the offering statement of which this offering circular forms a part. See “Where You Can Find More Information” appearing later in this offering circular.

 

Employees

 

We do not have any full-time employees. We are dependent upon the services provided under the Management Services Agreement with Worthy Management for our operations.

 

Legal Proceedings

 

From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, nor are we aware of any threatened or pending legal proceedings, that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.

 

Executive Offices

 

Worthy Management provides office space to us under the terms of the Management Services Agreement described above. As described therein, we will reimburse Worthy Management a to-be-determined portion of the total office expenses associated with this office space. This amount has not been determined as of the date of this offering circular.

 

Competition

 

We compete with other companies that lend to the sub-prime mortgage industry. These companies include other sub-prime mortgage lenders. We seek to, but may not be able to effectively compete with such competitors.

 

We believe we benefit from the following competitive strengths:

 

We are part of the Worthy Community. The Worthy App and websites (the “Worthy FinTech Platform”) are targeted primarily to the millennials who are part of the fastest growing segment of our population. We believe that they have a basic distrust of traditional banking institutions yet they have a need to accumulate assets for retirement or otherwise. The Worthy FinTech Platform provides for a savings and investing alternative for the millennials.

 

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We focus on an underserved banking sector. Due to higher costs, we believe that banks cannot profitably serve the sub-prime mortgage industry.

 

No Public Market

 

Although under Regulation A the Worthy Property Bonds are not restricted, Worthy Property Bonds are still highly illiquid securities. No public market has developed nor is expected to develop for Worthy Property Bonds, and we do not intend to list Worthy Property Bonds on a national securities exchange or interdealer quotational system. You should be prepared to hold your Worthy Property Bonds as Worthy Property Bonds are expected to be highly illiquid investments.

 

ORGANIZATIONAL STRUCTURE

 

The following reflects the current organization structure of WFI:

 

 

  (1) Worthy Financial, Inc. owns 100% of the issued and outstanding capital stock of Worthy Management, Inc., Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Property Bonds, Inc.
  (2) Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc., and Worthy Property Bonds, Inc. are each a party to a management services agreement with Worthy Management, Inc.
  (3) Worthy Peer Capital, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc. Worthy Community Bonds II, Inc., and Worthy Property Bonds, Inc. own 100% of the issued and outstanding membership interests of Worthy Lending, LLC, Worthy Lending II, LLC, Worthy Lending III, LLC, Worthy Lending IV, LLC, and Worthy Lending V, LLC, respectively.

 

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MANAGEMENT

 

Directors and Executive Officers

 

The following table provides information on our current executive officers and directors:

 

Name   Age   Positions
         
Sally Outlaw   58   President, Chief Executive Officer and director
Alan Jacobs   79   Executive Vice President, Chief Operating Officer and director
Joseph D’Arelli   52   Senior Vice President and Chief Financial Officer
Jungkun (“Jang”) Centofanti   53   Senior Vice President, Chief Administrative Officer and Secretary

 

Sally Outlaw has served as our President, Chief Executive Officer and a member of our Board of Directors since our inception on April 9, 2021. Since 2016, she also has served as Chief Executive Officer of WFI where she engages in defining long term strategy, product development and implementing the company vision. In addition, since June 2016, Ms. Outlaw has served as Chief Executive Officer and a member of the Board of Directors of Worthy Peer Capital, Inc. where she engages in product development, customer acquisition and managing the team. Furthermore, since October 2019, she has served as the President, Chief Executive Officer and a member of the Board of Directors of Worthy Peer Capital II, Inc. and Worthy Management. Moreover, since June 30, 2020, Ms. Outlaw has served as our President, Chief Executive Officer and a member of our Board of Directors of Worthy Community Bonds, Inc. Moreover, since November 2, 2020, Ms. Outlaw has served as our President, Chief Executive Officer and a member of our Board of Directors of Worthy Community Bonds II, Inc. From October 2010 to December 2015 she was the president of Peerbackers LLC, which engaged in all aspects of crowd funding and provides services to help clients navigate the world of crowd finance including the capital and investment opportunities offered through The JOBS ACT. Ms. Outlaw was also president and CEO of Peerbackers Advisory LLC, formerly an inactive SEC-registered investment advisor and a wholly owned subsidiary of WFI prior to the voluntary dissolution of Peerbackers Advisory LLC on January 16, 2021. Ms. Outlaw received her B.A. in Communications and Media Studies from the University of Minnesota in 1984 and holds a Series 65 license as a Registered Investment Advisor. Ms. Outlaw brings knowledge and experience in the financial industry, which we believe will be of great value to our Company.

 

Alan Jacobs has served as our Executive Vice President, Chief Operating Officer and a member of our Board of Directors since inception on April 9, 2021 and serves as President of our Worthy Lending V subsidiary. Since 2016, Mr. Jacobs has served as an executive officer and member of the Board of Directors of WFI. In addition, since June 2016, he has served as Executive Vice President, Chief Operating Officer and a member of the Board of Directors of Worthy Peer Capital, Inc. and serves as President of Worthy Lending. Furthermore, since October 2019, Mr. Jacobs has served as Executive Vice President, Chief Operating Officer and a member of the Board of Directors of Worthy Peer Capital II, Inc. and Worthy Management and serves as President of our Worthy Lending II subsidiary. Moreover, since June 30, 2020, he has served as Executive Vice President, Chief Operating Officer and a member of the Board of Directors of Worthy Community Bonds, Inc. and serves as President of our Worthy Lending III subsidiary. In addition, since November 2, 2020, he has served as Executive Vice President, Chief Operating Officer and a member of the Board of Directors of Worthy Community Bonds II, Inc. and serves as President of our Worthy Lending IV, LLC subsidiary. For more than the past five years he has been engaged as a business consultant for various early stage companies. From 2016 to 2018 Mr. Jacobs was the Founder and President of CorpFin Management Group where he was focused on business development, strategic planning and corporate management. From September 2014 to December 2015, Mr. Jacobs was associated with ViewTrade Securities, a FINRA registered broker-dealer where he was focused on advisory and corporate services. Prior to that time and for more than 30 years, Mr. Jacobs was associated with several FINRA registered broker-dealers including Ladenburg Thalman, Josephthal & Company, and Capital Growth Securities. Mr. Jacobs received his bachelor’s degree from Franklin and Marshall College in 1963 and law degree from Columbia University in 1966. He was also president of Wheelchair Fitness Inc. and director of business development of SSTI, Inc. from 2015 to 2018. Mr. Jacobs brings knowledge and experience in the financial industry, which we believe will be of great value to our Company,

 

Joseph D’Arelli has served as our Senior Vice President and Chief Financial Officer since inception on April 9, 2021. He also serves as a Senior Vice President of our Worthy Lending V subsidiary. In addition, since August 2018, Mr. D’Arelli has served as Worthy Lending’s Executive Vice President and Chief Operating Officer. Furthermore, since October 2019, he has served as Senior Vice President and Chief Financial Officer of Worthy Peer Capital II, Inc. and Worthy Management and serves as a Senior Vice President of Worthy Lending II. Moreover, since June 30, 2020, he has served as our Senior Vice President and Chief Financial Officer of Worthy Community Bonds, Inc. and serves as a Senior Vice President of our Worthy Lending III subsidiary. In addition, since November 2, 2020, he has served as our Senior Vice President and Chief Financial Officer of Worthy Community Bonds II, Inc. and serves as a Senior Vice President of our Worthy Lending IV, LLC subsidiary. Mr. D’Arelli has over 25 years of experience in public accounting, including partnership and senior management positions, and he has extensive experience in auditing public and private companies in such industries as waste management, financial services; broker/dealers; distribution and technology companies, which we believe will be of great value to our Company. From June 2018 until joining Worthy Lending, Mr. D’Arelli was self-employed, providing business advisory and accounting consulting services. From November 2016 until June 2018, Mr. D’Arelli was employed by Attis Industries, Inc. (Nasdaq: ATIS) serving as Chief Financial Officer (November 2016 until April 2017) and SEC Compliance Director (April 2017 until June 2018). From October 2012 until May 2016 he was a partner/shareholder at D’Arelli Pruzansky, P.A., formerly a PCAOB registered accounting firm (the firm voluntarily withdrew as a member of the PCAOB. On March 29, 2018). He continues his affiliations with the American Institute of Certified Public Accountants (AICPA), New York State Society of Certified Public Accountants (NYSSCPA), Florida Institute of Certified Public Accountants (FICPA), and is a Certified Public Accountant in the state of Florida. Mr. D’Arelli received a Bachelor’s Degree in Accounting from St. John’s University in 1992.

 

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Jungkun (“Jang”) Centofanti has served as our Senior Vice President, Chief Administrative Officer and Secretary since inception on April 9, 2021. She is also Senior Vice President and Chief Administrative Officer of Worthy Lending V, LLC. Since January 2017, Ms. Centofanti has served as Vice President of Operations of our parent, WFI. Since August 2018, she has served as the Senior Vice President and Chief Administrative Officer of Worthy Lending, LLC. Since October 2019, Ms. Centofanti has served as Senior Vice President, Chief Administrative Officer and Secretary of Worthy Peer Capital II, Inc. and Worthy Management and also has served as the Senior Vice President and Chief Administrative Officer of Worthy Lending II, LLC. Since June 30, 2020, she has served as the Senior Vice President, Chief Administrative Officer and Secretary of Worthy Community Bonds, Inc. and also has served as the Senior Vice President and Chief Administrative Officer of Worthy Lending III, LLC. Since November 2, 2020, she has served as the Senior Vice President, Chief Administrative Officer and Secretary of Worthy Community Bonds II, Inc. and also has served as the Senior Vice President and Chief Administrative Officer of Worthy Lending IV, LLC. Ms. Centofanti has more than 25 years of operational and management experience, which we believe will be of great value to our Company. From September 2016 to July 2018 she was Senior Vice President of CorpFin Management Group, a South Florida-based business development and strategic planning company where she handled all aspects of administration, and from January 2017 to July 2018 she served as Vice President of Wheelchair Fitness Solution Inc. Prior to joining CorpFin Management Group, from 2011 to June 2015 she was Administrative and Customer Service Manager for DU20 Holistic Oasis, and from 2004 until 2010 she was Preschool Director for Hazel Crawford School, both South Florida-based companies. Ms. Centofanti received an Associate of Science in Fashion Marketing and Business from the Art Institute of Fort Lauderdale in 1989.

 

The term of office of each director is until the next annual election of directors and until a successor is elected and qualified or until the director’s earlier death, resignation or removal. Officers are appointed by the Board of Directors and serve at the discretion of the Board. There are no family relationships between any of the executive officers and directors.

 

Involvement in Certain Legal Proceedings

 

On September 30, 2016, the SEC issued an Order Instituting Cease-and-Desist Proceedings under Administrative Proceeding File No. 3-17605 pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (collectively, the “Order”) against D’Arelli Pruzansky, P.A. (the “Firm”), Joseph D’Arelli, CPA, and Mitchell Pruzansky, CPA (collectively, the “Respondents”). Respondents consented to the Order pursuant to Offers of Settlement, accepted by the SEC, pursuant to which Respondents neither admitted nor denied the findings in the Order. During a PCAOB inspection in July 2015, the Firm was informed that it had failed to comply with the SEC’s partner rotation requirements because Mr. D’Arelli and Mr. Pruzansky performed quarterly reviews after being the lead audit partner for five consecutive audits, with respect to two issuer audit clients. In August 2015, the Firm reviewed all of its engagements and self-reported instances of such rotation issues regarding additional issuer audit clients. Respondents were ordered to cease and desist from committing or causing any violations and any future violations of Sections 10A(j) and 13(a) of the Securities Exchange Act of 1934 and Rules 10A-2 and 13a-13 thereunder and to pay the SEC, jointly and severally, a civil penalty of $50,000.

 

Other than the foregoing, no executive officer, member of the board of directors or control person of our Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

 

CONFLICTS OF INTEREST

 

We are subject to a number of conflicts of interest arising out of our relationship with WFI and its subsidiaries, including the following:

 

  WFI is our parent company and our sole shareholder. WFI is also the sole shareholder of Worthy Management, Worthy Peer Capital 1, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., and Worthy Community Bonds II, Inc. Accordingly, its executive officers and directors have fiduciary obligations to a number of entities;
     
  our executive officers and directors are also executive officers and directors of Worthy Peer Capital I, Inc., Worthy Peer Capital II, Inc., Worthy Community Bonds, Inc., Worthy Community Bonds II, Inc. and Worthy Management and they do not devote all of their time and efforts to our company; and
     
  the terms of the Management Services Agreement with Worthy Management were not negotiated on an arms-length basis and the amounts to be reimbursed thereunder will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement, will be determined by our executive officers and directors who are also executive officers and directors of Worthy Management notwithstanding that they are executive officers and directors of both our Company and Worthy Management.

 

There are no assurances that any conflicts which may arise will be resolved in our favor. In addition, as a bondholder you have no right to vote upon or receive notice of any corporate actions we may undertake which you might otherwise have if you owned equity in our company.

 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

Our directors and executive officers will not be separately compensated by us. As described earlier in this offering statement under “Management – Management Services Agreement with Worthy Management,” Under the terms of the Management Services Agreement, Worthy Management agreed to provide to the Company certain management services, personnel and office facilities, including all equipment and supplies, that are reasonable, necessary or useful for the day-to-day operations of the business of the Company, subject to such written direction provided by the Company to Worthy Management. Pursuant to the Management Services Agreement, the Company agreed to reimburse Worthy Management for the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement. There is no interest rate or maturity associated with the obligations to reimburse Worthy Management under the Management Services Agreement. The reimbursement amounts payable to Worthy Management by the Company will accrue until the Company can make reimbursement payments to Worthy Management from up to 5% of the proceeds of this offering and distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis. The reimbursement amount under the Management Services Agreement, will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses under the Management Services Agreement for the Company and will consist of both a to-be-determined portion of the annual salaries and employee benefits of our executive officers and the other personnel employed by Worthy Management based upon the amount of time they devote to us, as well as a pro-rata allocation of office expenses. We have not yet determined the amount of this monthly reimbursement amount as it will be based on the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement and as Worthy Management has not yet determined salary payment amounts or the benefits it’ll provide to our executive officers and the other personnel employed by Worthy Management. Our directors will not receive additional compensation for their Board services. We do not expect that this management sharing arrangement will change in the foreseeable future.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

On April 9, 2021, we entered into a Management Services Agreement (the “Management Services Agreement”) with Worthy Management, an affiliate. The terms of the Management Services Agreement with Worthy Management were not negotiated on an arms-length basis and the amounts to be reimbursed thereunder will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement.

 

Under the terms of the Management Services Agreement, Worthy Management agreed to provide to the Company certain management services, personnel and office facilities, including all equipment and supplies, that are reasonable, necessary or useful for the day-to-day operations of the business of the Company, subject to such written direction provided by the Company to Worthy Management. Pursuant to the Management Services Agreement, the Company agreed to reimburse Worthy Management for the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement. There is no interest rate or maturity associated with the obligations to reimburse Worthy Management under the Management Services Agreement. The reimbursement amounts payable to Worthy Management by the Company will accrue until the Company can make reimbursement payments to Worthy Management from up to 5% of the proceeds of this offering and distributions from Worthy Lending V, the Company’s operating subsidiary (generated from the income from the operations from Worthy Lending V), which reimbursement payments will be made in advance on a monthly basis.

 

The reimbursement amount under the Management Services Agreement, will be equal to the costs incurred by Worthy Management in paying for the staff and office expenses under the Management Services Agreement for the Company and will consist of both a to-be-determined portion of the annual salaries and employee benefits of our executive officers and the other personnel employed by Worthy Management based upon the amount of time they devote to us, as well as a pro-rata allocation of office expenses. We have not yet determined the amount of this monthly reimbursement amount as it will be based on the costs incurred by Worthy Management in paying for the staff and office expenses for the Company under the Management Services Agreement and as Worthy Management has not yet determined salary payment amounts or the benefits it will provide to our executive officers and the other personnel employed by Worthy Management.

 

There will be no fees under the Management Services Agreement.

 

On April 9, 2021, we issued 100 shares of our $0.001 per share par value common stock to WFI in exchange for $5,000. In April of 2021, WFI contributed $45,000 as additional paid-in capital. WFI is the sole shareholder of the Company’s common stock.

 

On April 9, 2021, we entered into a verbal agreement (not a written agreement) with WFI to pay a license fee to WFI in the amount of $10 per active user per year. The license fees paid by us to WFI are not used to offset the reimbursements under the Management Services Agreement. There are no other terms to such verbal agreement. In light of the fact that our agreement with WFI is a verbal contract (rather than a written contract), we and WFI are exposed to the following risks:

 

● the risk that we and WFI misunderstood an important term or terms of the contract, such as how much was to be paid or what services were to be performed;

● the risk that we and WFI will have a dispute regarding what was agreed to because we and WFI are only relying on memory; and

● the risk that a court will not enforce the contract because we and WFI may not be able to prove the existence of the contract or its terms.

 

If a dispute arises under our verbal agreement with WFI and a court is not willing to enforce the terms of such verbal agreement in our favor, this outcome could adversely affect our business, results of operations, financial condition, and future growth.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

At June 23, 2021, the Company had 100 shares of our common stock issued and outstanding which are held by WFI. The following table sets forth information regarding the beneficial ownership of WFI’s common stock by:

 

  each person known by us to be the beneficial owner of more than 5% of its common stock;
     
  each of its directors;
     
  each of its named executive officers; and
     
  WFI’s named executive officers and directors as a group.

 

As of June 23, 2021, there are 2,775,888 shares of WFI’s common stock issued and outstanding. Unless specified below, the business address of each of WFI’s stockholders is c/o One Boca Commerce Center, 551 NW 77th Street, Suite 212, Boca Raton, Florida 33487. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of WFI’s common stock outstanding on that date and all shares of its common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of WFI’s common stock owned by them, except to the extent that power may be shared with a spouse.

 

   Common Stock 
Name and Address of Beneficial Owner  Shares   % 
Sally Outlaw   1,073,196    38.7%
Alan Jacobs   544,742    19.6%
Jungkun (“Jang”) Centofanti (1)   112,532    3.9%
Joseph D’Arelli (2)   17,732    * 
Todd Lazenby (3)   20,000    * 
Dara Albright (3)   20,000    * 
Stefanie Crowe (3)   20,000    * 
All WFI officers and directors as a group (seven persons) (1)(2)(3)   1,808,202    65.1%
Pohlman Living Trust (4)   200,000    7.2%
Jack W. Richards and Susan Richards   380,712    13.7%

 

(1) Includes 70,932 shares issuable upon the exercise of vested stock options.
   
(2) Includes 17,732 shares issuable upon the exercise of vested stock options.
   
(3) Non-executive member of WFI’s Board of Directors.
   
(4) Dr. Randolph H. Pohlman holds voting and dispositive control over securities held of record by the trust.

 

*Equal to or less than 1%.

 

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DESCRIPTION OF THE WORTHY PROPERTY BONDS

 

Worthy Property Bonds

 

General. We may offer Worthy Property Bonds, with a total value of up to $75 million on a continuous basis, under this offering circular. The Worthy Property Bonds will be offered in increments of $10.00. We will not issue more than $75 million of Worthy Property Bonds pursuant to this offering circular in any 12-month period.

 

Maturity. The Worthy Property Bonds have no maturity date.

 

Interest. Compound interest shall accrue on the Outstanding Principal Balance at the fixed interest rate of 5% per annum from the date that the purchase funds have cleared; provided, however, if the bond holder agrees to waive the right to demand repayment by the Company of the Worthy Property Bonds for 12 months, the Company will pay an additional 1.00% of interest, increasing the interest rate to 6%, during such 12 month period on such Worthy Property Bonds. Interest shall be computed on the basis of a year consisting of 360 days, with interest credited daily to the payee’s account consisting of the same daily amount regardless of the actual number of days in such month. Upon credit of the interest to payee’s account, the interest shall be deemed paid in full. For clarification purposes, we will pay interest on interest (compounded interest) and credit such interest to bondholders’ Worthy accounts.

 

Repayment on Demand of Holder. Except as otherwise provided herein, the Worthy Property Bonds are subject to repayment at the demand of bond holders at any time. The bond holder has the right to cause the Company to repay the bond upon five (5) days’ notice and the outstanding principal balance together with the interest earned through the repurchase date will be credited to the bondholder’s account within five (5) business days; provided, however, if the bond holder requests a repayment of Worthy Property Bonds in the aggregate principal amount greater than $50,000, the Company may make such repayment to such bond holder within thirty (30) days of the request for such repayment.

 

Redemption by Company. Each Worthy Property Bond is redeemable by us at any time at par value plus any accrued but unpaid interest up to but not including the date of redemption. The Worthy Property Bonds are redeemable upon five (5) days’ notice by the Company to the bond holder and the outstanding principal balance together with the interest will be credited to the bond holder’s account within five (5) business days following the redemption date.

 

Security; Ranking; Sinking Fund. The Worthy Property Bonds will be general unsecured obligations, and will rank equally with all of our other unsecured debt unless such debt is senior to or subordinate to the Worthy Property Bonds by their terms. We may issue secured debt in our sole discretion without notice to or consent from the holders of Worthy Property Bonds. There is no sinking fund.

 

Fees. Worthy Property Bond investors are not charged a servicing fee for their investment, but you may be charged a transaction fee if your method of payment requires us to incur an expense. The transaction fee will be equal to the amount that the Company will be charged by the payment processor. Other financial intermediaries, however, if engaged by you, may charge you commissions or fees.

 

Form and Custody. Worthy Property Bonds will be issued by computer-generated program on our website and electronically signed by us in favor of the investor. The Worthy Property Bonds will be stored by us and will remain in our custody for ease of administration with a copy available in investor’s Bond account.

 

Transfer. The Worthy Property Bonds are transferable free of charge.

 

Conversion or Exchange Rights. The Worthy Property Bonds are not convertible or exchangeable into any other securities.

 

Events of Default. The following will be events of default under the Worthy Property Bonds:

 

  if we fail to pay interest when due and our failure continues for 90 days;
  if we fail to pay the principal, or premium, if any, when due whether by demand of a bond holder or by our redemption; and
  if we cease operations, file, or have an involuntary case filed against us, for bankruptcy, are insolvent or make a general assignment in favor of our creditors.

 

The occurrence of an event of default of Worthy Property Bonds may constitute an event of default under any bank credit agreements we may have in existence from time to time. In addition, the occurrence of certain events of default may constitute an event of default under certain of our other indebtedness outstanding from time to time.

 

No Personal Liability of Directors, Officers, Employees and Shareholders. No incorporator, shareholder, employee, agent, officer, director, affiliate or subsidiary of ours will have any liability for any obligations of ours due to the issuance of any Worthy Property Bonds.

 

Assets and Income from Operating Subsidiary. As Worthy Lending V is a wholly owned subsidiary of the Company, we expect that the loans and other assets of Worthy Lending V, and the returns from the operations of such loans and assets, will generally remain available to support and fund the payment obligations of the Company with respect to the Worthy Property Bonds. While there is no formal security agreement in place with respect to these loans and other assets within Worthy Lending V (and while any current and future creditors of Worthy Lending V may also have recourse to the assets of the entity), as the Company is the sole member of Worthy Lending V we expect that the Company will retain the right at any time to cause the distribution of available funds from Worthy Lending V up to the Company so that the Company may meet such payment obligations.

 

Governing Law.

 

Worthy Property Bonds and the Worthy Property Bond Investor Agreement will be governed and construed in accordance with the laws of the State of Florida.

 

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Arbitration.

 

Pursuant to the terms of the Worthy Property Bond Investor Agreement, the holders of Worthy Property Bonds and the Company will agree to (i) resolve disputes of the holders of Worthy Property Bonds through binding arbitration or small claims court, instead of through courts of general jurisdiction or through a class action and (ii) waive the right to a trial by jury and to participate in any class action, except in cases that involve personal injury.

 

Pursuant to the terms of the Worthy Property Bond Investor Agreement, if a holder of Worthy Property Bonds does not agree to the terms of the arbitration provision, the holder of Worthy Property Bonds may opt-out of the arbitration provision by sending an arbitration opt-out notice to the Company within thirty (30) days of the holder’s first electronic acceptance of the Worthy Property Bond Investor Agreement. If the opt-out notice is not received within thirty (30) days, the holder of Worthy Property Bonds will be deemed to have accepted all terms of the arbitration provision, including the class action and jury waiver. If the investor opts out of the arbitration provision, the investor has also opted out of the jury trial and class action waivers.

 

As arbitration provisions in commercial agreements have generally been respected by federal courts and state courts of Florida, we believe that the arbitration provision in the Worthy Property Bond Investor Agreement is enforceable under federal law and the laws of the State of Florida. Although holders of Worthy Property Bonds will be subject to the arbitration provisions of the Worthy Property Bond Investor Agreement, the arbitration provisions do not preclude holders of Worthy Property Bonds from pursuing claims under the Exchange Act and Securities Act in federal courts. THE ARBITRATION PROVISION OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE ARBITRATION PROVISION OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 

Jury Trial and Class Action Waivers.

 

The Worthy Property Bond Investor Agreement provides that, to the extent permitted by law, each party to the Worthy Property Bond Investor Agreement waives the right to a jury trial or class action of any claim they may have against us arising out of or relating to our Worthy Property Bonds or the Worthy Property Bond Investor Agreement. If we were to oppose a jury trial or class action demand based on such waiver, the court would determine whether the waiver was enforceable based upon the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial or class action. The bondholders of Worthy Property Bonds will be subject to these provisions of the Worthy Property Bond Investor Agreement to the extent permitted by applicable law. THE WAIVER OF THE RIGHT TO A JURY TRIAL AND CLASS ACTION CONTAINED IN THE WORTHY PROPERTY BOND INVESTOR AGREEMENT IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE JURY WAIVER AND CLASS ACTION WAIVER PROVISIONS OF THE WORTHY PROPERTY BOND INVESTOR AGREEMENT DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT. If the investor opts out of the arbitration provision, the investor has also opted out of the jury trial and class action waivers.

 

Exclusive Forum Provision

 

Section 7.4 of our Bylaws provides that “[u]nless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Act, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located in the county in which the principal office of the corporation in the State of Florida is established, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.”

 

This provision would not apply to suits brought to enforce a duty or liability created by the Securities Act, Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

 

This choice of forum provision may limit a bondholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, a court could find these provisions of our Bylaws to be inapplicable or unenforceable in respect of one or more of the specified types of actions or proceedings, which may require us to incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

 

Fee Shifting Provision

 

Section 7.4 of our Bylaws provides that “[i]f any action is brought by any party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action.”

 

In the event you initiate or assert a claims against us, in accordance with the dispute resolution provisions contained in our Bylaws, and you do not, in a judgment prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection with such claim, including, but not limited to, reasonable attorney’s fees and expenses and costs of appeal, if any.

 

THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY HOLDER OF WORTHY PROPERTY BONDS OF THE COMPANY’S COMPLIANCE WITH THE U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN THE BYLAWS DO NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT AND SECURITIES ACT.

 

The form of Worthy Property Bond is filed as an exhibit to the offering statement of which this offering circular forms a part. See “Where You Can Obtain More Information” appearing later in this offering statement.

 

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INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

We were organized under the laws of the State of Florida and are subject to the Florida Business Corporation Act, or the “FBCA.” Subject to the procedures and limitations stated therein Section 607.0831 of the FBCA provides that a director is not personally liable for monetary damages to the corporation or any person for any statement, vote, decision or failure to act, regarding corporate management or policy, by a director unless (a) the director breached or failed to perform his duties as a director and (b) the director’s breach of, or failure to perform, those duties constitutes: (i) a violation of criminal law, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful; (ii) a transaction from which the director derived an improper personal benefit, either directly or indirectly; (iii) a circumstance under which the liability provisions of Section 607.0834 of the FBCA, relating to a director’s liability for voting in favor of or assenting to an unlawful distribution, are applicable; (iv) in a proceeding by, or in the right of the corporation to procure a judgment in its favor or by or in the right of a shareholder, conscious disregard for the best interest of the corporation, or willful misconduct; or (v) in a proceeding by or in the right of someone other than the corporation or a shareholder, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton or willful disregard of human rights, safety or property.

 

Subject to the procedures and limitations stated therein, Section 607.0850(1) of the FBCA empowers a Florida corporation, such as us, to indemnify any person who was or is a party to any proceeding (other than any action by, or in the right of, the corporation), by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

Section 607.0850(2) of the FBCA also empowers a Florida corporation, such as us, to indemnify any person who was or is a party to any proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgment of the Board of Directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

 

Pursuant to our Articles of Incorporation, to the fullest extent permitted by the FBCA, the Company shall indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit or proceeding by reason of the fact that such person (i) is or was a director of the Company; (ii) is or was serving at the request of the Company as a director of another corporation, provided that such person is or was at the time a director of the Company or (ii) is or was serving at the request of the Company as an officer of another corporation, provided that such person is or was at the time a director of the Company or a director of such other corporation, serving at the request of the Company. Unless otherwise expressly prohibited by the FBCA, and except as otherwise provided in the previous sentence, the Board of Directors of the Company shall have the sole and exclusive discretion, on such terms and conditions as it shall determine, to indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact such person is or was an officer, employee or agent of the Company as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

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Our Bylaws provide the Company with the power to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation), by reason of the fact that he is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against liability incurred in connection with such proceeding, including any appeal thereof, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

 

Further, our Bylaws provide the Company with the power to indemnify any person, who was or is a party to any proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if such person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made under this subsection in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

 

Further, our Bylaws provide that to the extent that a director, officer, employee, or agent of the corporation has been successful on the merits or otherwise in defense of any proceeding referred to above or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses actually and reasonably incurred by him in connection therewith.

 

Further, our Bylaws provide that any indemnification provided by the Company, unless pursuant to a determination by a court, shall be made by the Company only as authorized in the specific case upon determination that such indemnification is proper, to be made by the Board of Directors of the Company, by independent legal counsel or by shareholder vote.

 

The indemnification provided pursuant to Section 607.0850 of the FBCA, our articles of incorporation and our Bylaws provide, are not exclusive, and the Company may, as applicable, provide additional indemnification.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

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PLAN OF DISTRIBUTION

 

We are offering up to $75 million of our Worthy Property Bonds pursuant to this offering circular. Worthy Property Bonds being offered hereby will only be offered through the Worthy Website at www.worthybonds.com or through the Worthy App which may be downloaded for free from the Apple Store or from Google Play. This offering circular will be furnished to prospective investors before or at the time of all written offers and will be available for viewing on our website, as well as on the SEC’s website at www.sec.gov. Set forth below is the procedure for subscribing to purchase Worthy Property Bonds:

 

Establishing a Worthy Property Bonds Account on the Worthy Website

 

The first step to being able to purchase Worthy Property Bonds is to set up an account, which we refer to as a “Worthy Property Bonds Account.” In order to set up a Worthy Property Bonds Account, you need to do the following:

 

  if you are an individual, you will need to establish a Worthy Property Bonds Account through the Worthy Website or App by registering and providing your name, email address, social security number, the type of account and other specified information;
  if you are subscribing for the Worthy Property Bonds as a corporation, limited liability company, partnership, or other entity, the entity will need to establish a Worthy Property Bonds Account through the Worthy Website by registering and providing the name of the organization, the type of organization, email address, tax identification number, type of account and other specified information; and
  in either case, you must agree to our terms of use and privacy policy which provide for the general terms and conditions of using the Worthy Website and other applicable terms and conditions.

 

By subscribing for Worthy Property Bonds, you will be consenting to receiving all notifications required by law or regulation or provided for by the Worthy Website electronically at your last electronic address you provided to us.

 

After you have successfully registered with the Worthy Website or App, you may view the Worthy Property Bond offering circular and related documents. Please note that you are not obligated to submit a subscription for any Worthy Property Bonds simply because you have registered on the Worthy Website.

 

If you have difficulty opening an account or otherwise using the Worthy Website, you may use the live help button on the website or the App to connect with a customer service representative. Customer service representatives will help you with technical issues related to your use of the Worthy Website. However, customer service representatives will not provide you with any investment advice, nor how much to invest in Worthy Property Bonds, or the merits of investing or not investing in Worthy Property Bonds.

 

Establishing an Account Using the Worthy App

 

Procedurally, Worthy App users register on the application via the worrthybonds.com website or via the mobile App, which may be downloaded for free from the Apple Store or from Google Play and simply link to their bank account. Whenever users want to buy a bond they click the “Buy Bonds” button to purchase. If they would like to purchase via their spare change round-ups they can also link a debit card or credit card to the App for this purpose. If the round-up feature is engaged, every time the user shops or completes any checking account transaction, the App automatically rounds up their purchase to the next dollar, tracks the spare change and then permits the user to use it to invest in the Worthy Property Bonds. The user’s linked bank account is monitored and the money is transferred via ACH once the round up amounts reach $10.00. Users can make one time or recurring purchases of Worthy Property Bonds.

 

Subscribing for Worthy Property Bonds

 

Once you have opened a Worthy Property Bond Account, in order for you to complete a subscription for Worthy Property Bonds, you must first provide funds. We will instruct you on how to do so. You may then submit purchase orders by:

 

  indicating the amount of Worthy Property Bonds that you wish to purchase;
  reviewing the applicable offering circular for Worthy Property Bonds, including the Form of Bond;
  submitting a subscription order by clicking the “Buy Bonds” button; and
  reviewing the subscription to ensure accuracy, checking the box to confirm accuracy and confirming the subscription by clicking the confirmation button.

 

You will not be able to subscribe for a Worthy Property Bond unless you have completed all of the above steps.

 

Once you submit a subscription to the Worthy Website, your subscription will constitute an offer to purchase Worthy Property Bonds. For purposes of the electronic order process at the Worthy Website, the time as maintained on the website will constitute the official time of a subscription.

 

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As part of these terms and conditions to subscribe to purchase Worthy Property Bonds, you will be required to certify to us that:

 

  you will have had the opportunity to view this offering circular and any offering circular supplement each time you purchase Worthy Property Bonds;
  if you are an individual investor, your subscription is submitted for and on behalf of your account;
  if you are an organization, your subscription has been submitted by an officer or agent who is authorized to bind the organization; and
  you had the opportunity to review the Worthy Property Bond Investor Agreement, meet the qualifications to subscribe for Worthy Property Bonds and agree to be legally bound by the terms and conditions of the agreement.

 

Your subscription and all other consents submitted through the Worthy Website are legal, valid and enforceable contracts. We are not providing any investment or tax advice to subscribers of Worthy Property Bonds. We are not a broker dealer or investment adviser. The Worthy Property Bonds may not be a suitable investment for you, even if you qualify to purchase Worthy Property Bonds. Moreover, even if you qualify to purchase Worthy Property Bonds and place a subscription, you may not receive an allocation of Worthy Property Bonds for any number of reasons.

 

Minimum and Maximum Investment Amount

 

The minimum investment amount per subscriber in this offering is $10. There is no maximum investment amount per subscriber in this offering.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer our Worthy Property Bonds on a best efforts basis. As there is no minimum offering amount, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

Worthy Property Bond Rewards Program

 

The Company has created the Worthy Property Bond Rewards Program (“Bond Rewards Program”) to provide (i) investors (each a “Referrer”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for referring a friend or family member to open an account on the Worthy Fintech Platform to join the Worthy community and (ii) new members of the Worthy community (each a “Referree”) who meet eligibility standards set forth herein the opportunity to receive Worthy Property Bonds as a thank you for opening an account on the Worthy Fintech Platform as a result of an eligible referral. Each eligible Referrer and eligible Referree will be entitled to receive an award of one Worthy Property Bond valued at $10.00 each (each a “Bond Reward”) per eligible referral, subject to a limitation of 50 Worthy Property Bonds per Referrer account and Referree account per calendar year. Bond Rewards will be fulfilled through Worthy Property Bonds issued under the offering statement of which this offering circular forms a part.

 

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Bond Rewards

 

A Bond Reward will be made to each an eligible Referrer and eligible Referree to receive one Worthy Property Bond valued at $10.00 each per eligible referral for which an eligible Referrer refers an eligible Referree as a result of which the Referree has opened a qualifying account using a unique referral link designated to the Referrer (the “Referral Offer”). The Referree would not be required to fund his or her account on the Worthy Fintech Platform in order for the Referrer and the Referree to each receive a Bond Reward. In other words, the Referree would not be required to purchase a Worthy Property Bond in order for the Referrer and the Referree to each receive a Bond Reward. The Worthy Property Bond will be awarded at the account level. We will generally process a Bond Reward for a Referral Offer and deposit the Worthy Property Bond issued pursuant to the Bond Reward in such Referrer’s account and Referree’s account within 15 days following the date the Referree opens a qualifying account with the unique referral link designated to the Referrer. Notwithstanding the foregoing, Bond Rewards are limited to 50 Worthy Property Bonds per Referrer account and per Referree account per calendar year.

 

There are no expenses charged to participants in connection with Bond Rewards under the Bond Rewards Program. All costs of administering the Bond Rewards Program will be paid by us. Our Worthy Property Bonds may not be available under the Bond Rewards Program in all states or jurisdictions. We are not making an offer to sell our Worthy Property Bonds in any jurisdiction where the offer or sale is not permitted.

 

This offering circular sets forth the terms of the Bond Rewards Program. We will determine any question of interpretation arising under the Bond Rewards Program, and any such determination will be final. Any action taken by us to effectuate the Bond Rewards Program in the good faith exercise of our judgment will be binding on all parties.

 

Any questions regarding the Bond Rewards Program should be referred to our customer care at support@worthy.us.

 

Eligibility

 

In order for you to receive a Bond Reward as a Referrer for referring a friend or family member to join the Worthy community or as a Referree for joining the Worthy community, such Referree must open an account on the Worthy Fintech Platform and must have used to open the Referree’s account the unique referral link that we assigned to the Referrer. The Referree would not be required to fund his or her account on the Worthy Fintech Platform in order for the Referrer and the Referree to receive a Bond Reward. In other words, the Referree would not be required to purchase a Worthy Property Bond in order for the Referrer and the Referree to each receive a Bond Reward. You must be a U.S. resident of majority age and you must meet the Applicable Restrictions set forth below.

 

Applicable Restrictions

 

The following types of Referrer and Referree accounts are excluded from eligibility to receive a Bond Reward: government accounts, employee accounts, other accounts designated by the Company as “special” accounts, VIP accounts, and dealer accounts. To determine if your account is eligible, you should check your account at the Worthy App or at www.worthybonds.com, or contact our customer service at support@worthy.us

 

The Bond Rewards Program is currently available only to U.S. residents (including residents of Puerto Rico), and you may only participate if you are of the age of majority for the state in which you reside. We may later allow foreign residents to join the Bond Rewards Program, which may depend upon your country of residence and other factors as we determine in our discretion. Bond Rewards are limited to 50 Worthy Property Bonds per Referrer account and per Referree account per calendar year.

 

If the Referrer or Referree requests the repayment of Worthy Property Bonds in the aggregate principal amount greater than $50,000, the Company may make such repayment to such Referrer or Referree within thirty (30) days of the request for such repayment.

 

Bond Rewards are not transferable.

 

Electronic Book-Entry of Worthy Property Bonds

 

Worthy Property Bonds in the Bond Rewards Program will be maintained in your name in book-entry form. Physical certificates are not available.

 

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State Law Exemption and Offerings to “Qualified Purchasers”

 

Our Worthy Property Bonds are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act of 1933, which we refer to as the “Securities Act.”). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state “Blue Sky” law review, subject to certain state filing requirements and anti-fraud provisions, to the extent that the Worthy Property Bonds offered hereby are offered and sold only to “qualified purchasers” or at a time when the Worthy Property Bonds are listed on a national securities exchange. “Qualified purchasers” include:

 

“accredited investors” under Rule 501(a) of Regulation D of the Securities Act; and
   
all other investors so long as their investment in Worthy Property Bonds does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).

 

Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

 

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Investment Amount Limitations

 

Generally, no sale may be made to you in this 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, you are encouraged to refer to www.investor.gov.

 

As a Tier 2, Regulation A offering, investors must comply with the 10% limitation to investment in the Offering. The only investor in this Offering exempt from this limitation is an accredited investor, an “Accredited Investor,” as defined under Rule 501 of Regulation D. If you meet one of the following tests you should qualify as an Accredited Investor:

 

(i) You are a natural person who has had individual income in excess of $200,000 in each of the two most recent years, or joint income with your spouse or spousal equivalent in excess of $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;
   
(ii) You are a natural person and your individual net worth, or joint net worth with your spouse or spousal equivalent, exceeds $1,000,000 at the time you purchase the Worthy Property Bonds (please see below on how to calculate your net worth);
   
(iii) You are a director, executive officer or general partner of the issuer or a manager or executive officer of the general partner of the issuer;
   
(iv) You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, a corporation, a Massachusetts or similar business trust or a partnership or limited liability company, not formed for the specific purpose of acquiring the Worthy Property Bonds, with total assets in excess of $5,000,000;
   
(v) You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Exchange Act, an investment advisor registered pursuant to the Investment Advisers Act of 1940 or registered pursuant to the laws of a state, an investment advisor relying on the exemption of registering with the SEC under the Investment Advisers Act of 1940, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940, or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958, or a Rural Business Investment Company as defined in the Consolidated Farm and Rural Development Act, or a private business development company as defined in the Investment Advisers Act of 1940;
   
(vi) You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;
   
(vii) You are a trust with total assets in excess of $5,000,000, your purchase of Worthy Property Bonds is directed by a person who either alone or with his purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the Worthy Property Bonds; or
   
(viii) You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
   
(ix) You are an entity, of a type not listed in the above paragraphs iv, v, vi, vii, or viii, not formed for the specific purpose of acquiring the Worthy Property Bonds, owning investments in excess of $5,000,000;
   
(x) You are a natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status;
   
(xi) You are a “family office,” as defined by the Investment Advisers Act of 1940, with assets under management in excess of $5,000,000, and is not formed for the specific purpose of acquiring the Worthy Property Bonds, and your prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; or
   
(xii) You are a “family client,” as defined under the Investment Advisers Act of 1940, of a family office meeting the requirements in the above paragraph xi, and your prospective investment in the issuer is directed by such family office pursuant to the above paragraph xi.

 

For the purposes of calculating your Net Worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Worthy Property Bonds.

 

In order to purchase Worthy Property Bonds and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our satisfaction, that he or she is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

 

Offering Period and Expiration Date

 

The termination of the offering will occur on the earlier of (i) the date that subscriptions for and rewards of the Worthy Property Bonds offered hereby equal $75,000,000 or (ii) an earlier date determined by the Company in its sole discretion. We reserve the right to terminate this offering for any reason at any time. The offering of Worthy Property Bonds for cash could terminate prior to the Bond Rewards Program offering if we have sold all of the Worthy Property Bonds but have not issued all of the Worthy Property Bonds in the Bond Rewards Program offering. The Bond Rewards Program offering could terminate prior to the offering of Worthy Property Bonds for cash if all of the Worthy Property Bonds offered in the Bond Rewards Program offering have been awarded but not all of the Worthy Property Bonds for cash have sold. If one of these offerings has closed but the other offering is ongoing, we will inform investors by filing a supplement to this offering circular with the SEC.

 

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Worthy Website Operation

 

Although the Worthy Website and App has been designed to handle numerous purchase orders and prospective investors, we cannot predict the response of the Worthy Website to any particular issuance of Worthy Property Bonds pursuant to this offering circular. You should be aware that if a large number of investors try to access the Worthy Website at the same time and submit their purchase orders simultaneously, there may be a delay in receiving and/or processing your purchase order. You should also be aware that general communications and internet delays or failures unrelated to the Worthy Website, as well as website capacity limits or failures may prevent purchase orders from being received on a timely basis by the Worthy Website. We cannot guarantee you that any of your submitted purchase orders will be received, processed and accepted during the offering process.

 

Orders will typically be processed by our payment processor within 4 to 5 business days following the order. You may not withdraw the amount of your purchase order, unless the purchase is withdrawn or cancelled. Once a purchase order is accepted and processed, it is irrevocable. Interest does not accrue until the purchase funds have cleared.

 

Prior to submitting a purchase order, you will be required to acknowledge receipt of the offering documents for the Worthy Property Bonds that you wish to purchase. In the case of an entity investor, the prospective investor will be required to make representations regarding the authority of the signatory to enter into the agreement and make representations on behalf of the entity.

 

The minimum purchase order that you may submit to purchase Worthy Property Bonds is $10, and subject to consideration there is no maximum purchase order that may be submitted, except for non-accredited investors, whose purchases will be subject to the following limits pursuant to SEC Rule 251(d)(2)(C):

 

  natural non-accredited persons may only invest the greater of 10% of their annual income or net worth; and
  non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.

 

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

 

For the purposes of calculating your Net Worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Worthy Property Bonds.

 

In order to purchase Worthy Property Bonds and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our satisfaction, that he or she is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

 

Tax and Legal Treatment

 

Worthy Property Bonds will receive interest income. At the end of the calendar year, investors with over $10 of realized interest will receive a form 1099-INT. These will need to be filed in accordance with the United States Tax Code. Investor’s tax situations will likely vary greatly and all tax and accounting questions should be directed towards a certified public accountant.

 

IRA

 

If an investor opens a new IRA account on the Worthy Fintech Platform and makes a minimum investment of $5,000, we will pay all of his or her third-party fees associated with opening the IRA account on the Worthy Fintech Platform through one of our integrated partners.

 

Auto-Invest Program

 

Following the user’s initial purchase of Worthy Property Bonds, they can elect to participate in our auto-invest program, or the “Auto-Invest Program,” which allows them to automatically invest in additional Worthy Property Bonds on a recurring basis (e.g., daily, weekly or monthly) subject to an amount and investment parameters that they designate.

 

If they elect to participate in the Auto-Invest Program, we will automatically place orders for Worthy Property Bonds that match the amount and parameters they designate. Investors may affirmatively elect to participate or cancel their participation in the Auto-Invest Program by selecting “on” or “off” in their Worthy accounts. As part of affirmatively electing to participate in the Auto-Invest Program by selecting “on”, the investor will choose the frequency of such investor’s recurring investments (e.g., daily, weekly or monthly) and the amount of such recurring investment. In addition, the investor will choose which bank account from which the funds would be drawn for purposes of the Auto-Invest Program. Upon affirmatively electing to participate in the Auto-Invest Program, the investor will be asked to agree to the terms and conditions of the Worthy Property Bond Investor Agreement. Prior to each “auto investment,” the investor will be asked to reconfirm the terms and conditions of the Worthy Property Bond Investor Agreement which they originally agreed to, such as that the investor continues to be either an accredited investor or in compliance with the 10% of net worth or annual income limitation on investment in this offering. If no reconfirmation is received by us from the investor prior to a scheduled “auto-investment,” the “auto-investment” shall not be executed. If a reconfirmation is received by us from the investor prior to a scheduled “auto-investment,” we will send a confirmatory email to the investor denoting the amount invested upon such “auto-investment.”

 

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Holders of Worthy Property Bonds will have access to current information regarding their Worthy Property Bonds by viewing their account on the Worthy Website or App. Users can review, adjust, cancel, pause, or restart the Auto-Invest Program at any time by making the appropriate selection within their account or by contacting us.

 

We intend to treat any sales of Worthy Property Bonds made pursuant to the Auto-Invest Program as sales chargeable against the aggregate total of offered securities pursuant to the offering circular and to include such sales when calculating the $75 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with SEC Rule 251(a).

 

Selling Restrictions

 

Notice to prospective investors in Canada

 

The offering of the Worthy Property Bonds in Canada is being made on a private placement basis in reliance on exemptions from the prospectus requirements under the securities laws of each applicable Canadian province and territory where the Worthy Property Bonds may be offered and sold, and therein may only be made with investors that are purchasing as principal and that qualify as both an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions and as a “permitted client” as such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligation. Any offer and sale of the Worthy Property Bonds in any province or territory of Canada may only be made through a dealer that is properly registered under the securities legislation of the applicable province or territory wherein the Worthy Property Bonds is offered and/or sold or, alternatively, by a dealer that qualifies under and is relying upon an exemption from the registration requirements therein.

 

Any resale of the Worthy Property Bonds by an investor resident in Canada must be made in accordance with applicable Canadian securities laws, which may require resales to be made in accordance with prospectus and registration requirements, statutory exemptions from the prospectus and registration requirements or under a discretionary exemption from the prospectus and registration requirements granted by the applicable Canadian securities regulatory authority. These resale restrictions may under certain circumstances apply to resales of the Worthy Property Bonds outside of Canada.

 

Upon receipt of this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

 

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

The following is a general summary of certain U.S. federal income tax considerations that may be relevant to the Program. Your participation in the Program will have certain consequences from a U.S. federal income tax standpoint. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury regulations promulgated thereunder, administrative pronouncements and judicial decisions, all as of the date hereof and all of which are subject to change, possibly with retroactive effect. Because the Program is unique, there are limited applicable legal precedents applicable to the income tax consequences of the Program, and we are not able to describe all of the material tax consequences with certainty. The following discussion is for general purposes only, is limited to U.S. federal income tax consequences only, and may not be applicable depending on your particular situation. The discussion addressed only to individuals who are U.S. citizens or residents for U.S. tax purposes, and who hold their Worthy Property Bonds as “capital assets” within meaning of the Code. You are urged to consult your own tax advisor with respect to the income and other tax consequences of the Program, including the tax consequences under state, local, estate, foreign and other tax laws and tax treaties and the possible effects of changes in U.S. or other tax laws.

 

If you receive Worthy Property Bonds under the Worthy Property Bond Rewards Program, upon receipt you will generally realize taxable income equal to the fair market value (calculated using the method described under the heading “Price of Worthy Property Bonds” in this offering circular) of the Worthy Property Bonds. We will report this amount to the IRS using Form 1099-MISC as applicable.

 

There can be no assurance IRS will agree with the foregoing tax treatment, and it is possible that the federal income tax consequences of the Program could differ from those described above.

 

Your participation in the Program may also be subject to information reporting and tax withholding.

 

Your participation in the Program may increase the complexity of your tax filings and may cause you to be ineligible to file Internal Revenue Service Form 1040-EZ, if you would otherwise be eligible to file such form. The U.S. federal income tax discussion set forth above is included for general information only and may not be applicable depending on your particular situation. You are urged to consult your own tax advisor with respect to the tax consequences of your participation in the Program, including the tax consequences under state, local, estate, foreign and other tax laws and tax treaties and the possible effects of changes in U.S. or other tax laws.

 

APPOINTMENT OF AUDITOR

 

On May 10, 2021, we engaged Salberg & Company, P.A., as our independent registered public accounting firm. Salberg & Company, P.A., audited our consolidated financial statements for the period from April 9, 2021 (inception) through April 30, 2021, which have been included in this offering circular. Prior to engaging Salberg & Company, P.A., as our independent registered public accounting firm, we did not have an independent registered public accounting firm to audit our consolidated financial statements.

 

LEGAL MATTERS

 

The validity of the securities offered by this offering circular will be passed upon for us by Anthony L.G., PLLC, 625 N. Flagler Drive, Ste, 600, West Palm Beach, Florida 33401.

 

EXPERTS

 

Our consolidated balance sheet as of April 30, 2021 and the related consolidated statements of operations, shareholder’s equity and cash flows for the period from April 9, 2021 (inception) through April 30, 2021 included in this offering circular have been audited by Salberg & Company, P.A., independent registered public accounting firm, as indicated in their report with respect thereto, and have been so included in reliance upon the report of such firm given on their authority as experts in accounting and auditing.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We have filed a Regulation A offering statement on Form 1-A with the SEC under the Securities Act with respect to the Worthy Property Bonds to be sold in this offering. This offering circular, which constitutes a part of the offering statement, does not contain all of the information set forth in the offering statement and exhibits and schedules to the offering statement. For further information with respect to our company and the Worthy Property Bonds to be sold in this offering, reference is made to the offering statement, including the exhibits and schedules to the offering statement. Statements contained in this offering circular as to the contents of any contract is an exhibit to the offering statement, each statement is qualified in all respects by the exhibit to which the reference relates. The offering statement, including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the offering statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov.

 

The offering statement is also available on the Worthy Website at www.worthybonds.com. After the completion of this Offering, you may access these materials at the foregoing website free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on the website is not a part of this offering circular and the inclusion of the website address in this offering circular is an inactive textual reference only.

 

Reporting Requirements under Tier II of Regulation A. Following this Tier II, Regulation A offering, we will be required to comply with certain ongoing disclosure requirements under Rule 257 of Regulation A. We will be required to file: an annual report with the SEC on Form 1-K; a semi-annual report with the SEC on Form 1-SA; current reports with the SEC on Form 1-U; and a notice under cover of Form 1-Z. The necessity to file current reports will be triggered by certain corporate events, similar to the ongoing reporting obligation faced by issuers under the Exchange Act, however the requirement to file a Form 1-U is expected to be triggered by significantly fewer corporate events than that of the Form 8-K. Such reports and other information will be available for inspection and copying at the public reference room and on the SEC’s website referred to above. Parts I & II of Form 1-Z will be filed by us if and when we decide to and are no longer obligated to file and provide annual reports pursuant to the requirements of Regulation A.

 

We will make annual filings on Form 1-K, which will be due by the end of July each year and will include audited financial statements for the previous fiscal year. We will make semi-annual filings on Form 1-SA, which will be due by December 31st each year, which will include unaudited financial statements for the six months ending September 30. We will also file a Form 1-U to announce important events such as the loss of a senior officer, a change in auditors or certain types of capital-raising. We will be required to keep making these reports unless we file a Form 1-Z to exit the reporting system, which we will only be able to do if we have less than 300 shareholders of record and have filed at least one Form 1-K.

 

We may supplement the information in this offering circular by filing a supplement with the SEC. You should read all the available information before investing.

 

45

 

 

WORTHY PROPERTY BONDS, INC.

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
   
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheet F-3
Consolidated Statement of Operations F-4
Consolidated Statement of Changes in Shareholder’s Equity F-5
Consolidated Statement of Cash Flows F-6
Notes to the Consolidated Financial Statements F-7

 

F-1

 

 

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholder and the Board of Directors of:

Worthy Property Bonds, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of Worthy Property Bonds, Inc. and Subsidiary (the “Company”) as of April 30, 2021, the related consolidated statements of operations, changes in shareholder’s equity, and cash flows for the period from April 9, 2021 (inception) through April 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2021, and the consolidated results of its operations and its cash flows for the period from April 9, 2021 (inception) through April 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, to the consolidated financial statements, the Company has not yet generated any revenue and has a limited operating history. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s Plan regarding these matters is also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 

/s/ Salberg & Company, P.A.

 

SALBERG & COMPANY, P.A.

We have served as the Company’s auditor since 2021.

Boca Raton, Florida

June 23, 2021

 

2295 NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431

Phone: (561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920

www.salbergco.com ● info@salbergco.com

Member National Association of Certified Valuation Analysts ● Registered with the PCAOB

Member CPAConnect with Affiliated Offices Worldwide Member AICPA Center for Audit Quality

 

F-2

 

 

WORTHY PROPERTY BONDS

Consolidated Balance Sheet

April 30, 2021

 

ASSETS     
      
Assets     
Cash  $50,000 
TOTAL ASSETS  $50,000 
      
LIABILITIES AND SHAREHOLDER’S EQUITY     
      
Liabilities     
Accounts Payable  $35,532 
Total Liabilities   35,532 
      
Commitments and Contingencies (note 7)   - 
      
Shareholder’s Equity     
Common Stock, par value $0.001, and 100 shares authorized, and 100 shares issued and outstanding   - 
Additional paid-in capital   50,000 
Accumulated deficit   (35,532)
Total Shareholder’s Equity   14,468 
      
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY  $50,000 

 

The accompanying notes are an integral part of these consolidated financial statements

 

F-3

 

 

WORTHY PROPERTY BONDS, INC.

Consolidated Statement of Operations

For the Period from April 9, 2021 (Inception) through April 30, 2021

 

Operating Revenue     
Total operating revenue  $- 
      
Operating expenses     
General and administrative expenses   35,532 
Total operating expenses   35,532 
      
Other Income (Expense)     
Total other income (expenses)   - 
      
Net Loss  $(35,532)
      
Net loss per common share  $(355.32)
Weighted average number of shares outstanding   100 

 

The accompanying notes are an integral part of these consolidated financial statements

 

F-4

 

 

WORTHY PROPERTY BONDS, INC.

Consolidated Statements of Changes in Shareholder’s Equity

For the Period from April 9, 2021 (Inception) through April 30, 2021

 

   Common Shares   Common Stock, Par   Additional Paid in Capital   Accumulated Deficit   Total 
                     
Balance at April 9, 2021 (Inception)   -   $-   $-   $-   $- 
                          
Common shares issued for cash   100    -    5,000    -    5,000 
                          
Capital contributions from parent   -    -    45,000    -    45,000 
                          
Net loss   -    -    -    (35,532)   (35,532)
                          
Balance at April 30, 2021   100   $-   $50,000   $(35,532)  $14,468 

 

The accompanying notes are an integral part of these consolidated financial statements

 

F-5

 

 

WORTHY PROPERTY BONDS, INC.

Consolidated Statement of Cash Flows

For the Period from April 9, 2021 (Inception) through April 30, 2021

 

Cash flows from operating activities:     
Net loss  $(35,532)
Adjustments to reconcile net loss to net cash (used in) operating activities:     
Changes in working capital items:     
Accounts payable   35,532 
      
Net cash used in operating activities   - 
      
Cash flows from investing activities:     
      
Net cash used in investing activities   - 
      
Cash flows from financing activities:     
Common shares issued for cash and capital contribution   50,000 
      
Net cash provided by financing activities   50,000 
      
Net change in cash   50,000 
      
Cash at beginning of period   - 
      
Cash at end of period  $50,000 
      
Supplemental Disclosures of Cash Flow Information:     
      
Cash paid for interest  $- 
Cash paid for taxes  $- 

 

The accompanying notes are an integral part of these consolidated financial statements

 

F-6

 

 

WORTHY PROPERTY BONDS, INC.

Notes to Consolidated Financial Statements

April 30, 2021

 

NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS

 

Worthy Property Bonds, Inc., a Florida corporation, (the “Company,” “WPB”, “we,” or “us”) was founded in April of 2021. Also, in April 2021, the Company organized Worthy Lending V, LLC, a Delaware limited liability company, (“WL V”) as a wholly owned subsidiary of Worthy Property Bonds, Inc. This early stage company will primarily loan or participate in real estate loans. We will offer our Worthy Property Bonds in $10.00 increments on a continuous basis directly through the Worthy Bonds website vis computer or the Worthy App, to fund our loans.

 

We are a wholly owned subsidiary of Worthy Financial, Inc. (“WFI”), or “Worthy Financial” which owns a mobile app (the “Worthy App”) that allows its users to round up their debit card and checking account linked credit card purchases and other checking account transactions and thereafter use the “round up” dollars in increments of $10.00 to purchase Worthy Bonds. The “users” may also use additional funds to purchase Worthy Bonds. WFI also owns the technology on the website. This technology is defined as the “Worthy Technology Platform.”

 

The Company’s year-end is March 31st.

 

NOTE 2. GOING CONCERN

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not yet generated any revenue and has no operating history. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. During 2021, the Company began to incur operating expenses, however, the Company is filing a Form 1-A Regulation A Offering Statement which allows the Company to raise funds.

 

No assurances can be given that the Company will achieve success, without seeking additional financing. There also can be no assurances that the Form 1-A will result in additional financing or that any additional financing if required, can be obtained, or obtained on reasonable terms acceptable to the Company. These consolidated financial statements do not include adjustments related to the recoverability and classifications of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include the operations of the Company and its wholly owned subsidiary, Worthy Lending V, LLC.

 

All intercompany accounts and transactions have been eliminated in consolidation.

 

Use of estimates

 

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US-GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the consolidated financial statements include, but are not limited to, estimates of the valuation allowance on deferred tax assets.

 

F-7

 

 

WORTHY PROPERTY BONDS, INC.

Notes to Consolidated Financial Statements

April 30, 2021

 

Cash and cash equivalents

 

Cash and cash equivalents include checking, savings, unrestricted deposits with investment-grade financial institutions, institutional money market funds, certificates of deposit and other short-term interest-bearing products. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at April 30, 2021.

  

Concentration of Credit Risk

 

The Company is subject to potential concentrations of credit risk in its cash and investments accounts. Non-interest-bearing deposits in financial institutions insured by the Federal Deposit Insurance Corporation (FDIC) were insured up to a maximum of $250,000 at April 30, 2021. At April 30, 2021, the aggregate balances were not in excess of the insurance.

 

COVID-19 Pandemic Impact

 

On March 11, 2020, the World Health Organization designated the outbreak of the novel strain of coronavirus known as COVID-19 as a global pandemic. Governments and businesses around the world have taken unprecedented actions to mitigate the spread of COVID-19, including, but not limited to, shelter-in-place orders, quarantines, significant restrictions on travel, as well as restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic impacts of the pandemic has introduced significant volatility in the financial markets. While the extent to which COVID-19 impacts the Company’s future results will depend on future developments, the pandemic and associated economic impacts could result in a material impact to the Company’s future financial condition, results of operations and cash flows.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist of cash and accounts payable. The carrying amount of these financial instruments approximate fair value due to the short-term nature of these instruments.

 

Fair Value Measurement

 

In accordance with ASC 820, Fair Value Measurement, we use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a nonrecurring basis, in periods subsequent to their initial measurement. The hierarchy requires us to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value.

 

The three tiers are defined as follows:

 

Level 1: Quoted prices in active markets or liabilities in active markets for identical assets or liabilities, accessible by us at the measurement date.

 

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

 

Level 3: Unobservable inputs for assets or liabilities for which there is little or no market data, which require us to develop our own assumptions. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flows, or similar techniques, which incorporate our own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation.

 

A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

 

F-8

 

 

WORTHY PROPERTY BONDS, INC.

Notes to Consolidated Financial Statements

April 30, 2021

 

Revenue Recognition

 

We will recognize revenue in accordance with the guidance in FASB ASC 942 “Financial Services – Depository Lending”.

 

We will generate revenue primarily through interest earned, loan origination fees and collateral management fees for monitoring the underlying collateral related to the loan.

 

For term loans, we will recognize interest income, loan fee income and collateral management fee income over the terms of the underlying loans. Loan fees and collateral management fees are reflected as loan fees in our statement of operations.

 

Loan origination fees will typically include due diligence, appraisal, and legal fees. Associated costs will primarily include costs directly related to evaluating the financial performance of the prospective borrower, preparing and processing loan documentation, employees’ compensation directly related to the loan and costs paid to third parties for legal and appraisal services. The fees and the costs will be netted as deferred revenue and amortized into revenue over the life of the loan.

 

We will also generate revenue through interest and dividends on investments and realized and unrealized gains on investments, which will all be included in other income (expense) in the statement of operations.

 

Allocation of expenses Incurred by Affiliate on Behalf of the Company

 

Costs incurred by our affiliate will be allocated to the Company for the purposes of preparing the consolidated financial statements based on a specific identification basis or, when specific identification is not practicable, a proportional cost allocation method which allocates expenses based upon the percentage of employee time expended on the Company’s business as compared to total employee time. The proportional use basis was adopted to allocate shared costs is in accordance with the guidance of SEC Staff Accounting Bulletin (“SAB”) Topic 1B, Allocation Of Expenses And Related Disclosure In Financial Statements Of Subsidiaries, Divisions Or Lesser Business Components Of Another Entity. Management has determined that the method of allocating costs to the Company is reasonable.

 

Management believes that the consolidated statements of operations include a reasonable allocation of costs and expenses incurred by the Company. However, such amounts may not be indicative of the actual level of costs and expenses that would have been incurred by the Company if it had operated as an independent company or of the costs and expenses expected to be incurred in the future.

 

Income taxes

 

Income taxes - The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws.

 

Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which they operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax- planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of Topic 740.

 

F-9

 

 

WORTHY PROPERTY BONDS, INC.

Notes to Consolidated Financial Statements

April 30, 2021

 

The Company is included with its parent company (Worthy Financial Inc.) consolidated tax return. The parent company consolidated tax returns for the years 2017, 2018, 2019 & 2020 remain open for audit by the IRS.

 

Basic Income (Loss) Per Share

 

Basic income (loss) per share is calculated by dividing the Company’s net income (loss) by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. The Company does not have any potentially dilutive debt or equity at April 30, 2021.

 

NOTE 4. RECENTLY ISSUED ACCOUNTING STANDARDS

 

Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements.

 

The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may be applicable to the Company, the Company has not identified any new standards that it believes merit further discussion, and the Company expects that none would have a significant impact on its consolidated financial statements.

 

NOTE 5. DUE TO AFFILIATE

 

On April 9, 2021 we entered into a Management Services Agreement (the “Management Services Agreement”) with Worthy Management, an affiliate. Worthy Management was established in October 2019 as part of the internal reorganization of the operations of our parent, WFI. Prior to this operational restructure, our executive officers and other administrative personnel were employed by either WFI or by our sister company Worthy Peer Capital, Inc. As a result, once the operational restructure was complete effective January 1, 2020, our executive officers and the other personnel which provide services to us are all employed by Worthy Management. These personnel also provide services to WFI, Worthy Peer, Worthy Peer II, and Worthy Community Bonds, including its subsidiaries.

 

The initial term of the Management Services Agreement will continue until December 31, 2024 and will automatically renew for successive one-year terms. The Management Services Agreement can be terminated at any time upon 30 days’ prior written notice from one party to the other.

 

The balance due is $0 at April 30, 2021.

 

NOTE 6. INCOME TAXES

 

For the period ended April 30, 2021, the income tax provision for current taxes were $0.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The majority of temporary differences that result in deferred tax assets and liabilities are the results of net operating loss carryforwards.

 

F-10

 

 

WORTHY PROPERTY BONDS, INC.

Notes to Consolidated Financial Statements

April 30, 2021

 

The components of the net deferred tax assets for the period ended April 30, 2021 are as follows:

 

  

Period ended

Apr 30, 2021

 
Net Operating Loss  $8,700 
Less: Valuation allowance   (8,700)
Net deferred tax asset  $- 

 

The net deferred tax assets have been fully offset by a valuation allowance at April 30, 2021. The increase in the valuation allowance was $8,700.

 

The table below summarizes the reconciliation of our income tax provision computed at the federal statutory rate of 21% for the period ended April 30, 2021 and the actual tax provisions for the period ended April 30, 2021.

 

   Apr 30, 2021 
     
Expected provision (benefit) at statutory rate   (21.0)%
State taxes   (3.6)%
Increase in valuation allowance   24.6%
Total provision (benefit) for income taxes   0.0%

 

At April 30, 2021 the Company had Federal net operating loss carry forwards of approximately $35,000. The net operating loss carry forward at April 30, 2021 can be carried forward indefinitely subject to annual usage limitations.

 

NOTE 7. COMMITMENTS AND CONTINGENCIES

 

Legal contingencies

From time to time, the Company may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. Management is not aware of any pending, threatened or asserted claims.

 

NOTE 8. EQUITY

 

The Company has authorized 100 shares of common stock. In April of 2021, the Company was founded with the issuance of 100 shares of our $0.001 per share par value common stock for $5,000 to WFI. In April of 2021, WFI contributed $45,000 as additional paid-in capital. WFI is the sole shareholder of the Company’s common stock.

 

NOTE 9. RELATED PARTIES

 

The Company has received capital contributions from its parent company, see note 8.

 

NOTE 10. SUBSEQUENT EVENTS

 

The Company has evaluated these consolidated financial statements for subsequent events through June 23, 2021, the date these consolidated financial statements were available to be issued. Management is not aware of any events that have occurred subsequent to the consolidated balance sheet date that would require adjustment to, or disclosure in the consolidated financial statements.

 

F-11

 

 

Worthy Property Bonds, Inc.

 

Best Efforts Offering of

$75,000,000 Maximum Offering Amount

of Worthy Property Bonds

 

OFFERING CIRCULAR

 

________________, 2021

 

   

 

 

PART III - EXHIBITS

 

Index to Exhibits

 

Exhibit No.   Exhibit Description
2.1*   Articles of Incorporation.
2.2*   Bylaws.
3.1*   Form of Worthy Property Bond.
4.1*   Form of Worthy Property Bond Investor Agreement (for cash).
4.2*   Form of Worthy Property Bond Subscription Agreement (for Bond Rewards for Eligible Referrals).
4.3*   Form of Worthy Property Bond Auto-Invest Program information.
6.1*   Management Services Agreement dated April 9, 2021, by and between Worthy Management, Inc. and Worthy Property Bonds II, Inc.
10.1*   Power of Attorney (as included on the signature page).
11.1*   Consent of Anthony L.G., PLLC (included in Exhibit 12.1).
11.2*   Consent of Salberg & Company, P.A.
12.1*   Opinion of Anthony L.G., PLLC.

 

* Filed herewith.

 

46

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the registrant has duly caused this Form 1-A to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton, State of Florida on June 23, 2021.

 

  Worthy Property Bonds, Inc.
     
  By: /s/ Sally Outlaw
    Sally Outlaw,
    Chief Executive Officer

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sally Outlaw as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for her and in her name, place and stead, in any and all capacities, to sign any and all amendments (including all pre-qualification and post-qualification amendments) to this Form 1-A offering statement and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as she might or could do in person, hereby ratifying and confirming all that each of said attorney-in-fact and agent or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of Regulation A, this Form 1-A has been signed by the following persons in the capacities indicated on June 23, 2021.

 

Name   Positions   Date
         
/s/ Sally Outlaw   Chief Executive Officer, President and director   June 23, 2021
Sally Outlaw   (principal executive officer)    
         
/s/ Alan Jacobs   Executive Vice President, Chief Operating   June 23, 2021
Alan Jacobs   Officer and director    
         
/s/ Joseph D’Arelli   Senior Vice President and Chief Financial Officer   June 23, 2021
Joseph D’Arelli   (principal financial and accounting officer)    
         
/s/ Jungkun (“Jang”) Centofanti   Senior Vice President, Chief Administrative   June 23, 2021
Jungkun (“Jang”) Centofanti   Officer and Secretary    

 

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EXHIBIT 2.1

 

ARTICLES OF INCORPORATION OF

WORTHY PROPERTY BONDS, INC.

 

The undersigned, a natural person competent to contract, does hereby make, subscribe and file these Articles of Incorporation for the purpose of organizing a corporation under the laws of the State of Florida.

 

ARTICLE I

CORPORATE NAME

 

The name of this Corporation shall be: Worthy Property Bonds, Inc.

 

ARTICLE II

PRINCIPAL OFFICE AND MAILING ADDRESS

 

The principal office and mailing address of the Corporation is 551 NW 77 Street, Suite 212, Boca Raton, Florida 33487.

 

ARTICLE III

NATURE OF CORPORATE BUSINESS AND POWERS

 

The general nature of the business to be transacted by this Corporation shall be to engage in any and all lawful business permitted under the laws of the United States and the State of Florida.

 

ARTICLE IV

CAPITAL STOCK

 

The maximum number of shares that this Corporation shall be authorized to issue and have outstanding at any one time shall be One Hundred (100) shares of Common Stock, par value $0.001 per share.

 

ARTICLE V

TERM OF EXISTENCE

 

This Corporation shall have perpetual existence.

 

ARTICLE VI

REGISTERED AGENT AND

INITIAL REGISTERED OFFICE IN FLORIDA

 

The Registered Agent and the street address of the initial Registered Office of this Corporation in the State of Florida shall be:

 

Alan Jacobs

551 NW 77 Street

Suite 212

Boca Raton, Florida 33487

 

ARTICLE VII

BOARD OF DIRECTORS

 

This corporation shall have two (2) Directors initially.

 

Sally Outlaw

Alan Jacobs

 

 

 

 

ARTICLE VIII

INCORPORATOR

 

The name address of the person signing these Articles of Incorporation as the Incorporator is Alan Jacobs, 551 NW 77 Street, Suite 212, Boca Raton, Florida 33487.

 

ARTICLE IX

INDEMNIFICATION

 

To the fullest extent permitted by the Florida Business Corporation Act, the Corporation shall indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit or proceeding by reason of the fact that such person (i) is or was a director of the Corporation; (ii) is or was serving at the request of the Corporation as a director of another corporation, provided that such person is or was at the time a director of the Corporation; or (ii) is or was serving at the request of the Corporation as an officer of another Corporation, provided that such person is or was at the time a director of the corporation or a director of such other corporation, serving at the request of the Corporation. Unless otherwise expressly prohibited by the Florida Business Corporation Act, and except as otherwise provided in the previous sentence, the Board of Directors of the Corporation shall have the sole and exclusive discretion, on such terms and conditions as it shall determine, to indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact such person is or was an officer, employee or agent of the Corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

 

ARTICLE X

AFFILIATED TRANSACTIONS

 

This Corporation expressly elects not to be governed by Section 607.0901 of the Florida Business Corporation Act, as amended from time to time, relating to affiliated transactions.

 

ARTICLE XI

CONTROL SHARE ACQUISITIONS

 

This Corporation expressly elects not to be governed by Section 607.0902 of the Florida Business Corporation Act, as amended from time to time, relating to control share acquisitions.

 

IN WITNESS WHEREOF, the undersigned Incorporator has executed the foregoing Articles of Incorporation on the 8th day of April 2021.

 

  /s/ Alan Jacobs
  Alan Jacobs, Incorporator

 

 

 

 

CERTIFICATE DESIGNATING REGISTERED AGENT AND OFFICE FOR SERVICE FOR PROCESS

 

Worthy Property Bonds, Inc., a corporation existing under the laws of the State of Florida with its principal office and mailing address at 551 NW 77 Street, Suite 212, Boca Raton, Florida 33487 has named ALAN JACOBS whose address is 551 NW 77 Street, Suite 212, Boca Raton, Florida 33487 as its agent to accept service of process within the State of Florida.

 

ACCEPTANCE:

 

Having been named to accept service of process for the above-named Corporation, at the place designated in this Certificate, I hereby accept the appointment as Registered Agent, and agree to comply with all applicable provisions of law. In addition, I hereby am familiar with and accept the duties and responsibilities as Registered Agent for said Corporation.

 

  /s/ Alan Jacobs
  Alan Jacobs

 

 

 

 

EXHIBIT 2.2

 

BYLAWS

OF

Worthy Property Bonds, Inc.

a Florida corporation

 

Adopted as of April 9, 2021

 

1. Offices. Worthy Property Bonds, Inc. (the “Corporation”) may have an office or offices, and keep the books and records of the Corporation, except as may otherwise be required by applicable law, at such other place or places, either within or without the State of Florida, as the Board may from time to time determine or the business of the Corporation may require.

 

2. Meetings of Stockholders.

 

2.1. Annual Meetings. The annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting shall be held at such time and date and place as the Board, by resolution, shall determine and as set forth in the notice of the meeting and shall be held at such place, either within or without the State of Florida. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day.

 

2.2. Deferred Meeting for Election of Directors, etc. If the annual meeting of stockholders for the election of directors and the transaction of other business is not held within the time specified in Section 2.1, the Board shall call a special meeting of stockholders for the election of directors and the transaction of other business as soon thereafter as convenient.

 

2.3. Other Special Meetings. A special meeting of stockholders (other than a special meeting for the election of directors), unless otherwise prescribed by statute, may only be called by the Board and may be called at any time by the Board. At any special meeting of stockholders, only such business may be transacted as is related to the purpose(s) of such meeting set forth in the notice thereof given pursuant to Section 2.5 or in any waiver of notice thereof given pursuant to Section 2.6.

 

2.4. Fixing Record Date. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a date as of the record date for any such determination of stockholders. Such date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting nor more than sixty (60) days prior to any other action. If no such record date is fixed:

 

(a) The record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if no notice is given or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

 

(b) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed;

 

(c) The record date for determining stockholders for any purpose other than those specified in Sections 2.4(a) and Section 2.4(b) shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

When a determination of stockholders entitled to notice of, or to vote at, any meeting of stockholders has been made as provided in this Section 2.4, such determination shall apply to any adjournment thereof, unless the Board fixes a new record date for the adjourned meeting.

 

2.5. Notice of Meetings of Stockholders; Location. Except as otherwise provided in Section 2.4 and Section 2.6, whenever under any provision of the Florida Business Corporation Act (as the same may be amended and supplemented from time to time, and including any successor provision thereto, the “FBCA”), the Articles of Incorporation of the Corporation (as the same may be amended, supplemented and/or restated from time to time, the “Articles”) or these Bylaws, stockholders are required or permitted to take any action at a meeting, written notice shall be given stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose(s) for which the meeting is called. Except as otherwise provided by any provision of the FBCA, a copy of the notice of any meeting shall be given, personally or by mail, not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to notice of, or to vote at, such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States Mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice required by this Section 2.5 has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken and, at the adjourned meeting, any business may be transacted that might have been transacted at the meeting originally called. The Board may designate the place of meeting for any meeting of Stockholders. If no designation is made by the Board, the place of meeting shall be the principal executive offices of the Corporation. The Board may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by the FBCA

 

 

 

 

2.6. Waivers of Notice. Whenever notice is required to be given to the stockholders under any provision of the FBCA, or the Articles or these Bylaws, a written waiver thereof, signed by a stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice.

 

2.7. Quorum of Stockholders; Adjournment; Postponement. The holders of a 50.1% of the voting power, present, in person or represented by proxy, shall be necessary and sufficient to constitute a quorum for the transaction of any business at such meeting, except where otherwise provided by any provision of the FBCA. When a quorum is once present to organize a meeting of stockholders, it is not broken by the subsequent withdrawal of any stockholders. The Chairman, or the holders of a majority of the shares of stock present in person or represented by proxy at any meeting of stockholders, including an adjournment meeting, whether or not a quorum is present, may adjourn such meeting to another time and place. Any previously scheduled meeting of stockholders may be postponed, and any previously scheduled special meeting of Stockholders may be canceled, by the Board upon public notice given prior to the time previously scheduled for such meeting of stockholders.

 

2.8. Voting; Proxies.

 

(a) Unless otherwise provided in the Articles, every stockholder of record shall be entitled at every meeting of stockholders to one vote for each share of capital stock standing in his name on the record of stockholders determined in accordance with Section 2.4. If the Articles provide for more or less than one vote for any share on any matter, every reference in these Bylaws or any provision of the FBCA, to a majority or other proportion of stock shall refer to such majority to other proportion of the votes of such stock. The provisions of the FBCA shall apply in determining whether any shares of capital stock may be voted and the persons, if any entitled to vote such shares, but the Corporation shall be protected in treating the persons in whose names shares of capital stock stand on the record of stockholders as owners thereof for all purposes.

 

(b) In any uncontested election of directors, each person receiving a majority of the votes cast shall be deemed elected. For purposes of this paragraph, a ‘majority of the votes cast’ shall mean that the number of votes cast ‘for’ a director must exceed the number of votes cast ‘against’ that director (with ‘abstentions’ and ‘broker non-votes’ not counted as a vote cast with respect to that director). In any contested election of directors, the persons receiving a plurality of the votes cast, up to the number of directors to be elected in such election, shall be deemed elected. The Board may, but need not, establish policies and procedures regarding the nomination, election and resignation of directors to the limits as permitted by the FBCA. All elections of directors shall be by written ballot unless otherwise provided in the Articles.

 

 

 

 

(c) As to each matter submitted to a vote of the stockholders (other than the election of directors), except as otherwise provided by law or by the Articles or by these Bylaws, such matter shall be decided by a majority of the votes cast on such matter.

 

2.9. Selection and Duties of Inspectors at Meeting of Stockholders. The Board, in advance of any meeting of stockholders, may appoint one or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at such meeting may and, on the request of any stockholder entitled to vote thereat shall, appoint one or more inspectors. In case any person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspector(s) shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and shall do such acts as are proper to conduct the election or vote with fairness to all stockholders. On the request of the person presiding at the meeting or any stockholder entitled to vote thereat, the inspector(s) shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. Any report or certificate made by the inspector(s) shall be prima facie evidence of the facts stated and of the vote as certified by him or them.

 

2.10. Organization. At every meeting of stockholders, the Chief Executive Officer or, in the absence of the Chief Executive Officer, the President or a Vice President, and in case more than one Vice President shall be present, that Vice President designated by the Board (or in the absence of any such designation, the most senior Vice President, based on age, present) shall act as chairman of the meeting. In case none of the officers above designated to act as chairman or secretary of the meeting, respectively, shall be present, a chairman or a secretary of the meeting, as the case may be, may be chosen by a majority of the voting power, which includes the voting power which is present in person or represented by proxy and entitled to vote at the meeting.

 

2.11. Order of Business. The order of business at all meetings of stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum is present may be changed by a majority of the votes cast at such meeting by the holders of shares of capital stock present, in person or represented by proxy and entitled to vote at the meeting.

 

 

 

 

2.12. Action Without Meeting. Unless otherwise provided by the Articles, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote if a consent in writing setting forth the action so taken is signed by the stockholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such action at a meeting, then that proportion of written consents is required. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed herein. An electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section 2.12 to the extent permitted by law. Any such consent shall be delivered in accordance with the FBCA. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing or electronic transmission and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date of such meeting had been the date that written consents signed by a sufficient number of stockholders or members to take the action were delivered to the Corporation as provided by law.

 

2.13. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing

 

3. Directors.

 

3.1. Number and Term. Except as provided by any provision of the FBCA, the number of directors shall be two or such number of persons as the majority of the full Board, by resolution, may from time to time determine. The directors shall, except for filling vacancies (whether resulting from an increase in the number of directors, resignations, removals or otherwise), be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor is elected and qualifies. Directors need not be stockholders. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director. The members of the Board shall elect a chairman of the Board (the “Chairman”) by a vote of a majority vote of all directors (which may include the vote of the person so elected).

 

3.2. Resignations. Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein and, if no time be specified, at the time of its receipt by the Chief Executive Officer or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

 

3.3. Vacancies. Except as set forth in Section 3.4, if the office of any director, member of a committee or other officer becomes vacant (whether resulting from an increase in the number of directors, resignations, removals or otherwise), the remaining directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.

 

 

 

 

3.4. Removal. Any director(s) may be removed either for or without cause at any time by the affirmative vote of the holders of two-thirds (2/3) of the voting power of the issued and outstanding stock entitled to vote, at a special meeting of the stockholders called for that purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote.

 

3.5. Increase or Decrease of Number. The number of directors may be increased or decreased only by the affirmative vote of a majority of the directors, though less than a quorum. Any newly created directorships may be filled in the same manner as a vacancy.

 

3.6. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board, except as otherwise provided by applicable law or by the Articles. If any such provision is made in the Articles, the powers and duties imposed upon the Board by applicable law shall be exercised or performed to such extent and by such person or persons as shall be provided in the Articles. The Board shall exercise all of the powers of the Corporation except such as are by law, or by the Articles of the Corporation or by these Bylaws, conferred upon or reserved to the stockholders.

 

3.7. Conference Call. Members of the Board or any committee designated by such Board may participate in a meeting of the Board or such committee by means of telephone conference or similar communication equipment by means of which all persons participating in the meeting can hear each other and participation pursuant to this section shall constitute presence at such meeting.

 

3.8. Committees. The Board may, by resolution(s) passed by a majority of the whole Board, designate one or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member or such committee or committees, the member or members thereof present at any such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these Bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, but no such committee shall have the power or authority in reference to amending the Articles, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending these Bylaws of the Corporation and, unless the resolution, these Bylaws or the Articles expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

 

3.9. Meetings. Meetings of the Board, regular or special, may be held at any place within or without the State of Florida.

 

(a) On the day when, and at the place where, the annual meeting of stockholders for the election of directors is held, and as soon as practicable thereafter, the Board may hold its annual meeting, without notice of such meeting, for the purposes or organization, election of officers and transaction of other business. The annual meeting of the Board may be held at any other time and place specified in a notice given as provided in this section for special meetings of the Board or in a waiver of notice thereof.

 

 

 

 

(b) Regular meetings of the directors may be held without notice at such place and time as shall be determined from time to time by resolution of the directors.

 

(c) Special meetings of the Board may be called by the Chief Executive Officer or by the Secretary on the written request of any two or more directors on at least ten (10) days’ notice to each director and shall be held at such place(s) as may be determined by the directors, or as shall be stated in the call of the meeting.

 

(d) Anything in these Bylaws or in any resolution adopted by the Board to the contrary notwithstanding, notice of any meeting of the Board need not be given to any director who submits a signed waiver of such notice, whether before or after such meeting, or who attends such meeting without protesting, prior thereto or at its commencement, the lack of notice to him.

 

3.10. Quorum. A majority of the directors in office from time to time shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained and no further notice thereof need be given, other than by announcement at the meeting which shall be so adjourned.

 

3.11. Compensation. Unless otherwise restricted by the Articles, the Board shall have the authority to fix the compensation of the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or paid a stated salary or paid other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed compensation for attending committee meetings.

 

3.12. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if a written consent thereto is signed by all members of the Board, or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.

 

3.13. Telephone Meeting. Any one or more members of the Board or any committee thereof may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting.

 

3.14. Annual Report. As soon as practicable after the close of each fiscal year, a report of the business and affairs of the Corporation to the shareholders shall be made under the direction of the Board, unless the Board determines, in its reasonable discretion, that such a report is not reasonably required.

 

 

 

 

4. Officers.

 

4.1. Officers. The Board may elect or appoint a Chief Executive Officer and such other officers as it may determine. The Board may designate a President and one or more Vice Presidents as Executive Vice Presidents and may use descriptive words or phrases to designate the standing, seniority or area of special competence of the Vice Presidents elected or appointed by it. Each officer shall hold his office until his successor is elected and qualified or until his earlier death, resignation or removal in the manner provided in Section 4.2. Any two or more offices may be held by the same person. The Board may require any officer to give a bond or other security for the faithful performance of his duties, in such amount and with such sureties as the Board may determine. All officers as between themselves and the Corporation shall have such authority and perform such duties in the management of the Corporation as may be provided in these Bylaws or as the Board may from time to time determine.

 

4.2. Removal of Officers. Any officer elected or appointed by the Board may be removed by the Board with or without cause. The removal of an officer without cause shall be without prejudice to his contract rights, if any. The election or appointment of an officer shall not of itself create contract rights.

 

4.3. Resignations. Any officer may resign at any time by notifying the Board, the Chief Executive Officer or the Secretary in writing. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any.

 

4.4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in these Bylaws for the regular election or appointment to such office.

 

4.5. Compensation. Salaries or other compensation of the officers may be fixed from time to time by the Board. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a director.

 

5. Contracts, Checks, Drafts, Bank Accounts, etc.

 

5.1. Execution of Contracts. The Board may authorize any officer, employee or agent, in the name and on behalf of the Corporation, to enter into any contract or execute and satisfy any instrument, and any such authority may be general or confined to specific instances, or otherwise limited.

 

5.2. Loans. The Chief Executive Officer or any other officer, employee or agent authorized by these Bylaws or by the Board may effect loans and advances at any time for the Corporation from any bank, trust company or other institutions or from any firm, corporation or individual and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidence of indebtedness of the Corporation and, when authorized by the Board to do so, may pledge and hypothecate or transfer any securities or the property of the Corporation as security for any such loans or advances. Such authority conferred by the Board may be general or confined to specific instances or otherwise limited.

 

 

 

 

5.3. Checks, Drafts, etc. All checks, drafts and other orders for the payment of money out of the funds of the Corporation and all notes or other evidence of indebtedness of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board.

 

5.4. Deposits. The funds of the Corporation not otherwise employed shall be deposited from time to time to the order of the Corporation in such banks, trust companies or other depositories as the Board may select or as may be selected by an officer, employee or agent of the Corporation to whom such power may from time to time be delegated by the Board.

 

6. Stocks and Dividends.

 

6.1. Certificates Representing Shares. The shares of the Corporation may be represented by certificates in such form (consistent with the provisions of the FBCA) as shall be approved by the Board or may be uncertificated, as determined by the Board. Any such certificates shall be signed by the Chief Executive Officer and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the seal of the Corporation or a facsimile thereof, if any. The signatures of the officers upon a certificate may be facsimiles, if any certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employees. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon any certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may, unless otherwise ordered by the Board, be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

 

6.2. Transfer of Shares. Transfers of shares of capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof or by his duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary or a transfer agent of the Corporation and on surrender of any certificate(s) representing such shares of capital stock properly endorsed for transfer and upon payment of all necessary transfer taxes. Every certificate exchanged, returned or surrendered to the Corporation shall be marked “Cancelled”, with the date of cancellation, by the Secretary or an Assistant Secretary or the transfer agent of the Corporation. A person in whose name shares of capital stock shall stand on the books of the Corporation shall be deemed the owner thereof to receive dividends, to vote as such owner and for all other purposes as respects the Corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until such transfer shall have been entered on the books of the Corporation by an entry showing from and to whom transferred.

 

6.3. Registered Stockholders and Addresses of Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of capital stock to receive dividends and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of capital stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law. Each stockholder shall designate to the Secretary or transfer agent of the Corporation an address at which notices of meetings and all other corporate notices may be given to such person, and, if any stockholder fails to designate such address, corporate notices may be given to such person by mail directed to such person at such person’s post office address, if any, as the same appears on the stock record books of the Corporation or at such person’s last known post office address or as otherwise provided by applicable law.

 

 

 

 

6.4. Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agents and registry offices or agents at such place(s) as may be determined from time to time by the Board.

 

6.5. Lost, Destroyed, Stolen and Mutilated Certificates. The holder of any shares shall immediately notify the Corporation of any loss, destruction, theft or mutilation of any certificate representing such shares and the Corporation may issue a new certificate to replace any certificate alleged to have been lost, destroyed, stolen or mutilated. The Board may, in its discretion, as a condition to the issue of any such new certificate, require the owner of the lost, destroyed, stolen or mutilated certificate, or his legal representatives, to make proof satisfactory to the Board of such loss, destruction, theft or mutilation and to advertise such fact in such manner as the Board may require, and to give the Corporation and its transfer agents and registrars, or such of them as the Board may require, a bond in such form, in such sums and with such surety or sureties as the Board may direct, to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against any of them on account of the continued existence of any such certificate so alleged to have been lost, destroyed, stolen or mutilated and against any expense in connection with such claim.

 

6.6. Regulations. The Board may make rules and regulations as it may deem expedient, not inconsistent with these Bylaws or with the Articles, concerning the issue, transfer and registration of certificates representing shares of its capital stock.

 

6.7. Restriction on Transfer of Stock. A written restriction on the transfer or registration of transfer of capital stock of the Corporation, if permitted by the provisions of the FBCA, and noted conspicuously on any certificate representing such capital stock, may be enforced against the holder of the restricted capital stock of any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously on any certificate representing such capital stock, a restriction, even though permitted by the provisions of the FBCA, as the same may be amended and supplements, shall be ineffective except against a person with actual knowledge of the restriction. A restriction on the transfer or registration of transfer of capital stock of the Corporation may be imposed either by the Articles or by an agreement among any number of stockholders or among such stockholders and the Corporation. No restriction so imposed shall be binding with respect to capital stock issued prior to the adoption of the restriction unless the holders of such capital stock are parties to an agreement or voted in favor of the restriction. Except to the extent that the corporation has obtained an opinion of counsel acceptable to the corporation that transfer restrictions are not required under applicable securities laws, or has otherwise satisfied itself that such transfer restrictions are not required, all certificates representing shares of the corporation shall bear a legend on the face of any certificate, or on the reverse of any certificate if a reference to the legend is contained on the face, which reads substantially as follows:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (B) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

 

 

 

 

6.8. Dividends, Surplus, etc. Subject to the provisions of the Articles and of law, the Board:

 

(a) may declare and pay dividends or make other distributions on the outstanding shares of capital stock in such amounts and at such time to times as, in its discretion, the conditions of the affairs of the Corporation shall render advisable;

 

(b) may use and apply, in its discretion, any of the surplus of the Corporation in purchasing or acquiring any shares of capital stock of the Corporation, or purchase warrants therefor, in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidence of indebtedness;

 

(c) may set aside from time to time out of such surplus or net profits such sum(s) as, in its discretion, it may think proper, as a reserve fund to meet contingencies, or for equalizing dividends or for the purpose of maintaining or increasing the property or business of the Corporation, or for any other purpose it may think conducive to the best interests of the Corporation.

 

7. Miscellaneous.

 

7.1. Seal. The Board shall have the power by resolution to adopt, make and use a corporate seal and to alter the form of such seal from time to time.

 

7.2. Fiscal Year. The fiscal year of the Corporation shall be determined, and may be changed, by resolution of the Board.

 

7.3. Books and Records. The Corporation shall: (1) Keep as permanent records minutes of all meetings of its stockholders and the Board, a record of all actions taken by the stockholders or the Board without a meeting, and a record of all actions taken by a committee of the Board exercising the authority of the Board on behalf of the Corporation; (2) Maintain appropriate accounting records; (3) Maintain a record of its stockholders, in a form that permits preparation of a list of the names and addresses of all stockholders, in alphabetical order by class of shares showing the number and class of shares held by each; provided, however, such record may be maintained by an agent of the Corporation; (4) Maintain its records in written form or in another form capable of conversion into written form within a reasonable time; and (5) Keep a copy of the following records at its principal office: (a) the Articles as currently in effect; (b) these Bylaws and all amendments thereto as currently in effect; (c) the minutes of all meetings of stockholders and records of all action taken by stockholders; (d) without a meeting, for the past three years; (e) the Corporation’s financial statements for the past three years; (f) all written communications to stockholders generally within the past three years; (g) a list of the names and business addresses of the current Directors and officers; and (h) the most recent annual report delivered to the Florida Secretary of State

 

 

 

 

7.4. Forum Selection; Attorney’s Fees. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) an action asserting a claim arising pursuant to any provision of the FBCA, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Florida, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. If any action is brought by any party against another party, relating to or arising out of these Bylaws, or the enforcement hereof, the prevailing party shall be entitled to recover from the other party reasonable attorneys’ fees, costs and expenses incurred in connection with the prosecution or defense of such action. For purposes of these Bylaws, the term “attorneys’ fees” or “attorneys’ fees and costs” shall mean the fees and expenses of counsel to the Corporation and any other parties asserting a claim as set forth in the initial paragraph of this section, which may include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or collection any judgment obtained in any such proceeding. The provisions of this Section 7.4 shall survive the entry of any judgment, and shall not merge, or be deemed to have merged, into any judgment.

 

7.5. Subject to Law and Articles of Incorporation. All powers, duties and responsibilities provided for in these Bylaws, whether or not explicitly so qualified, are qualified by the provisions of the Articles and applicable law.

 

7.6. Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used at any time unless otherwise restricted by the Board or a committee thereof.

 

7.7. Time Periods. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

 

7.8. Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

 

 

 

8. Indemnification; Insurance.

 

8.1. Indemnification in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 8.3 and Section 8.10 , the Corporation shall, to the fullest extent permitted by the FBCA and applicable Florida law as in effect at any time, indemnify, hold harmless and defend any person who: (i) was or is a director or officer of the Corporation or was or is a director or officer of a direct or indirect wholly owned subsidiary of the Corporation, and (ii) was or is a party or is threatened to be made a party to, or was or is otherwise directly involved in (including as a witness), any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person was or is a director or officer of the Corporation or any direct or indirect wholly owned subsidiary of the Corporation, or was or is serving at the request of the Corporation as a director, officer, employee, partner, member or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, whether the basis of such proceeding is alleged action in an official capacity or in any other capacity, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea or nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

 

8.2. Indemnification in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 8.3 and Section 8.10, the Corporation shall indemnify, hold harmless and defend any person who: (i) was or is a director or officer of the Corporation or was or is a director or officer of a direct or indirect wholly owned subsidiary of the Corporation, and (ii) was or is a party or is threatened to be made a party to, or was or is otherwise directly involved in (including as a witness), any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person was or is a director or officer of the Corporation or any direct or indirect wholly owned subsidiary of the Corporation, or was or is serving at the request of the Corporation as a director, officer, employee, partner, member or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, and whether the basis of such action, suit or proceeding is alleged action in an official capacity or in any other capacity, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Courts in the State of Florida or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court in the State of Florida or such other court shall deem proper.

 

 

 

 

8.3. Authorization of Indemnification. Any indemnification or defense under this Section 8 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination,: (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding set forth in Section 8.1 or Section 8.2 or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

 

8.4. Good Faith Defined. For purposes of any determination under Section 8.3, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on good faith reliance on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term “another enterprise” as used in this Section 8.4 shall mean any other corporation or any partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which such person was or is serving at the request of the Corporation as a director, officer, employee, partner, member or agent. The provisions of this Section 8.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 8.1 or Section 8.2, as the case may be.

 

8.5. Expenses Payable in Advance. Expenses, including attorney’s fees, incurred by a current or former director or officer in defending any action, suit or proceeding described in Section 8.1 or Section 8.2 shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Section 8.

 

 

 

 

8.6. Non-exclusivity of Indemnification and Advancement of Expenses. The indemnification, defense and advancement of expenses provided by or granted pursuant to this Section 8 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Articles, any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 8.1 or Section 8.2 shall be made to the fullest extent permitted by applicable law. The provisions of this Section 8 shall not be deemed to preclude the indemnification of, or advancement of expenses to, any person who is not specified in Section 8.1 or Section 8.2 but whom the Corporation has the power or obligation to indemnify under the provisions of the FBCA or otherwise.

 

8.7. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who was or is a director, officer, employee or agent of the Corporation, or a direct or indirect wholly owned subsidiary of the Corporation, or was or is serving at the request of the Corporation, as a director, officer, employee, partner, member or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power or the obligation to indemnify, hold harmless or defend such person against such liability under the provisions of this Section 8.

 

8.8. Certain Definitions. For purposes of this Section 8, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who was or is a director, officer, employee or agent of such constituent corporation, or was or is serving at the request of such constituent corporation as a director, officer, employee, partner, member or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Section 8 with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Section 8, references to “fines” shall include any excise taxes assessed on a person with respect of any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Section 8.

 

8.9. Survival of Indemnification and Advancement of Expenses. The indemnification, defense and advancement of expenses provided by, or granted pursuant to, this Section 8 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

 

 

 

8.10. Limitation on Indemnification. Notwithstanding anything contained in this Section 8 to the contrary, except for proceedings to enforce rights to indemnification and defense under this Section 8 (which shall be governed by Section 8.11(b)), the Corporation shall not be obligated under this Section 8 to indemnify, hold harmless or defend any director, officer, employee or agent in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board.

 

8.11. Contract Rights.

 

(a) The obligations of the Corporation under this Section 8 to indemnify, hold harmless and defend a person who was or is a director or officer of the Corporation or was or is a director or officer of a direct or indirect wholly-owned subsidiary of the Corporation, including the duty to advance expenses, shall be considered a contract between the Corporation and such person, and no modification or repeal of any provision of this Section 8 shall affect, to the detriment of such person, such obligations of the Corporation in connection with a claim based on any act or failure to act occurring before such modification or repeal.

 

(b) If a claim under Section 8.1, Section 8.2 or Section 8.5 is not paid in full by the Corporation within 90 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 45 days, the person making such claim may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. To the fullest extent permitted by applicable law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, such person shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by such person to enforce a right to indemnification hereunder (but not in a suit brought by such person to enforce a right to an advancement of expenses) it shall be a defense, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that such person has not met any applicable standard for indemnification set forth in the FBCA. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its Stockholders) to have made a determination prior to the commencement of such suit that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in the FBCA, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its Stockholders) that such person has not met such applicable standard of conduct, shall create a presumption that such person has not met the applicable standard of conduct or, in the case of such a suit brought by such person, be a defense to such suit.

 

8.12. Indemnification Agreements. Without limiting the generality of the foregoing, the Corporation shall have the express authority to enter into such agreements as the Board deems appropriate for the indemnification of present or future directors and officers of the Corporation in connection with their service to, or status with, the Corporation or any other corporation, entity or enterprise with whom such person is serving at the express written request of the Corporation.

 

9. Amendments. These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of the stockholders or at any special meeting thereof, if notice of the proposed alteration or repeal of Bylaw or Bylaws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the voting power of the capital stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board at any regular meeting of the Board, or at any special meeting of the Board or any written consent in lieu of a meeting of the Board.

 

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EXHIBIT 3.1

 

 

FORM OF WORTHY PROPERTY BOND

 

$[●] Dated: [̜●]

 

FOR VALUE RECEIVED, the undersigned, Worthy Property Bonds, Inc., a Florida corporation, (the “Maker”), PROMISES TO PAY to the order of [●] (together with its successors and assigns, the “Payee”) the principal sum of [●] ($[●]), together with interest at the rate specified below. This Worthy Property Bond (the “Bond”) is being issued pursuant to the terms of the Worthy Property Bond Investor Agreement of even date herewith by and between the Maker and the Payee.

 

1. Principal and Term. The Outstanding Principal Balance (as defined herein) shall be due and payable either upon the demand of the Payee or redemption by Maker as set forth in Section 2(c) hereof. The term “Outstanding Principal Balance” means, as of any date of determination, the principal amount of this Bond that remains unpaid.

 

2. Interest.