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Form 1-A POS My Racehorse CA LLC

September 24, 2021 3:09 PM EDT


  
    1-A POS
    
      LIVE
      
        
          0001744448
          XXXXXXXX
        
        024-10896
      
    
  
  
    
      My Racehorse CA LLC
      NV
      2016
      0001744448
      7948
      83-0848007
      0
      0
    
    
      250 W. FIRST ST., STE. 256
      CLAREMONT
      CA
      91711
      909-740-9175
      Michael Behrens
      Other
      0.00
      0.00
      2145668.00
      9713216.00
      11858884.00
      1155930.00
      2576218.00
      3732148.00
      8126736.00
      11858884.00
      1455916.00
      4109469.00
      2676696.00
      5330249.00
      0.00
      0.00
      IndigoSpire CPA Group, LLC
    
    
      See Part II for full listing
      222228
      000000N/A
      N/A
    
    
      none
      0
      000000N/A
      N/A
    
    
      none
      0
      000000N/A
      N/A
    
    
      true
    
    
      true
    
    
      Tier2
      Audited
      Other(describe)
      Series LLC Interests
      Y
      Y
      N
      Y
      N
      N
      110220
      37617
      9853370.00
      0.00
      0.00
      0.00
      9853370.00
      Dalmore Group, LLC
      98533.70
      IndigoSpire CPA Group, LLC
      0.00
      Procopio, Cory, Hargreaves & Savitch, LLP
      0.00
      136352
      9754836.30
      Estimated net proceeds do not reflect offering expenses because such expenses will be paid by the Manager.
    
    
      true
      AL
      AK
      AZ
      AR
      CA
      CO
      CT
      DE
      FL
      GA
      HI
      ID
      IL
      IN
      IA
      KS
      KY
      LA
      ME
      MD
      MA
      MI
      MN
      MS
      MO
      MT
      NE
      NV
      NH
      NJ
      NM
      NY
      NC
      ND
      OH
      OK
      OR
      PA
      RI
      SC
      SD
      TN
      TX
      UT
      VT
      VA
      WA
      WV
      WI
      WY
      DC
      PR
      A0
      A1
      A2
      A3
      A4
      A5
      A6
      A7
      A8
      A9
      B0
      Z4
    
    
      My Racehorse CA LLC
      See Additional Exhibit
      156284
      0
      11,249,166.00
    
    
      Issuer has relied on Rule 147A, promulgated under Section 28 of the Securities Act, for intrastate offerings in California, Rule 506(c) or Regulation A, respectively, for such offerings.
    
  



Table of Contents

 

EXPLANATORY NOTE

 

This is a post-qualification amendment to an offering statement on Form 1-A filed by My Racehorse CA LLC (the “Company”). The offering statement was originally filed by the Company on September 10, 2018, and has been amended by the Company on numerous occasions since that date. The offering statement, as amended by pre-qualification amendments, was qualified by the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2019. Since that date, certain post-qualification amendments to the offering statement have also been qualified by the SEC.

 

Different Series of the Company have already been offered by the Company under the offering statement, as amended and qualified. Each such Series of the Company will continue to be offered and sold by the Company following the filing of this post-qualification amendment until sold out, subject to the offering conditions contained in the offering statement, as qualified. The Series already qualified under the offering statement are as follows:

 

Series Name Horse Name (if different) Qualification Date:
Form 1-A
Series Palace Foal Ocean Magic 18 February 22, 2019
POS-AM #2
Series De Mystique ‘17 Dancing Destroyer June 6, 2019
POS-AM #3
Series Martita Sangrita 17 Carpe Vinum July 11, 2019
Series Daddy’s Joy July 11, 2019
Series Vertical Threat July 11, 2019
Series Shake it Up Baby July 11, 2019
Series Tizamagician July 11, 2019
POS-AM #4
Series Power Up Paynter July 25, 2019
Series Two Trail Sioux 17 Annahilate July 25, 2019
Series Wayne O July 25, 2019
POS-AM #5
Series Big Mel September 6, 2019
POS-AM #6
Series Amandrea October 11, 2019
Series Keertana 18 American Heiress October 11, 2019
Series Sunny 18 Solar Strike October 11, 2019
Series Lazy Daisy October 11, 2019
POS-AM #7
Series New York Claiming Package (1) (i)         Augusta Moon; and
(ii)        Hizaam
December 18, 2019
Series The Filly Four (2) (i)         Moonlight d’Oro;
(ii)        Joyful Addiction;
(iii)       Lady Valentine; and
(iv)       Shared Empire
December 18, 2019
POS-AM #8
Series Lane Way February 19, 2020
POS-AM #10
Series Mo Mischief May 13, 2020
Series Deep Cover May 13, 2020
Series Big Mel (Addtl. 9% Interest) May 13, 2020
Series Sunny 18 (Addtl. 9% Interest) Solar Strike May 13, 2020

 

 

 i 

 

 

POS-AM #11
Series Popular Demand June 5, 2020
POS-AM #12
Series Authentic June 26, 2020
Series Storm Shooter June 26, 2020
POS-AM #15
Series Thirteen Stripes August 7, 2020
Series Naismith August 7, 2020
Series NY Exacta (3)

(i)         Quick Conversation; and

(ii)        Psychedelic Shack

August 7, 2020
POS-AM #18
Series Apple Down Under 19 Howboutdemapples October 30, 2020
Series Just Louise 19 Forbidden Kingdom October 30, 2020
Series Lost Empire 19 Laforgia October 30, 2020
POS-AM #19
Series Man Among Men November 12, 2020
Series Frosted Oats November 12, 2020
Series Tapitry 19 Infinite Empire November 12, 2020
Series Classofsixtythree 19 Sixtythreecaliber November 12, 2020
Series Cayala 19 Provocateur November 12, 2020
Series Margaret Reay 19 A Mo Reay November 12, 2020
Series Awe Hush 19 Can’t Hush This November 12, 2020
Series Exonerated 19 Above Suspicion November 12, 2020
Series Speightstown Belle 19 Ancient Royalty November 12, 2020
Series Consecrate 19 Sacred Beauty November 12, 2020
Series Latte Da 19 Inalattetrouble November 12, 2020
Series Midnight Sweetie 19 Dolce Notte November 12, 2020
Series Ambleside Park 19 Lookwhogotlucky November 12, 2020
Series Athenian Beauty 19 Quantum Theory November 12, 2020
Series Future Stars Stable (4)

(i)         Man Among Men;

(ii)        Frosted Oats;

(iii)       Infinite Empire;

(iv)      Sixtythreecaliber;

(v)        Provocateur;

(vi)       A Mo Reay;

(vii)      Can’t Hush This;

(viii)     Above Suspicion;

(ix)       Ancient Royalty;

(x)        Sacred Beauty;

(xi)       Inalattetrouble;

(xii)      Dolce Notte;

(xiii)     Lookwhogotlucky; and

(xiv)     Quantum Theory

November 12, 2020
Series Collusion Illusion November 12, 2020

 

 

 

 ii 

 

POS-AM #23
Series Monomoy Girl April 14, 2021
Series Got Stormy April 14, 2021
Series Social Dilemma April 14, 2021
POS-AM #24 and #25  
Series Carrothers April 30, 2021
Series Going to Vegas April 30, 2021
Series Ari the Adventurer 19 Kanthari April 30, 2021
Series Wonder Upon a Star 19 Star Six Nine April 30, 2021
Series Echo Warrior 19 April 30, 2021
POS-AM #26
Series Silverpocketsfull 19 Iron Works May 10, 2021
Series Who'sbeeninmybed 19 Micro Share May 10, 2021
Series Into Summer 19 Malibu Mayhem May 10, 2021
Series Mrs Whistler May 10, 2021
Series Race Hunter 19 Chasing Time May 10, 2021
Series Co Cola 19 Search Engine May 10, 2021
Series Vow May 10, 2021
Series You Make Luvin Fun 19 Magical Ways May 10, 2021
Series Miss Sakamoto May 10, 2021
Series Courtisane 19 Tap the Gavel May 10, 2021
Series Grand Traverse Bay 19 Cornice Traverse May 10, 2021
POS-AM #27
Series Our Miss Jones 19 June 23, 2021
Series Margarita Friday 19 Straight No Chaser June 23, 2021
Series Queen Amira 19 Regal Rebel June 23, 2021
Series Salute to America June 23, 2021
Series Desire Street 19 June 23, 2021

 

(1) Series New York Claiming Package is comprised of two (2) horses, (i) a 2016 Filly named, Augusta Moon, and (ii) a 2015 Colt named, Hizaam. On December 22, 2019, Augusta Moon, one of the two Underlying Assets of Series New York Claiming Package, was claimed/purchased from a race for $35,000. See below for more information.

 

(2) Series The Filly Four is comprised of four (4) horses, (i) a 2018 Filly named, Moonlight d’Oro (formerly Venetian Sonata 18), (ii) a 2018 Filly named, Joyful Addiction (formerly My Sweet Addiction 18), (iii) a 2018 Filly named, Lady Valentine (formerly My Lady Lauren 18), and (iv) a 2018 Filly named, Shared Empire (formerly Sapucai 18).

 

(3) Series NY Exacta is comprised of two (2) horses, (i) a 2018 Filly named Quick Conversation, and (ii) a 2018 Colt named Psychedelic Shack.

 

(4) Series Future Stars Stable is comprised of fourteen (14) horses, (i) a 2019 Colt named, Man Among Men, (ii) a 2019 Filly named, Frosted Oats, (iii) a 2019 Filly named, Infinite Empire (formerly Tapitry 19), (iv) a 2019 Filly named, Sixtythreecaliber (formerly Classofsixtythree 19), (v) a 2019 Colt named, Provocateur (formerly Cayala 19), (vi) a 2019 Filly named, A Mo Reay (formerly Margaret Reay 19), (vii) a 2019 Colt named, Can’t Hush This (formerly Awe Hush 19), (viii) a 2019 Filly named, Above Suspicion (formerly Exonerated 19), (ix) a 2019 Colt named, Ancient Royalty (formerly Speightstown Belle 19), (x) a 2019 Filly named, Sacred Beauty (formerly Consecrate 19), (xi) a 2019 Filly named Inalattetrouble (formerly Latte Da 19), (xii) a 2019 Filly named, Dolce Notte (formerly Midnight Sweetie 19), (xiii) a 2019 Colt named, Lookwhogotlucky (formerly Ambleside Park 19), and (xiv) a 2019 Colt named, Quantum Theory (formerly Athenian Beauty 19).

 

The purpose of this post-qualification amendment is to amend, update and/or replace certain information contained in the Offering Circular and to add additional Series to the offering statement by means of this post-qualification amendment.

 

 

 

 

 iii 

 

 

Table of Contents

Post-Qualification Offering Circular Amendment No. 29

File No. 024-10896

 

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

 

PRELIMINARY OFFERING CIRCULAR

SUBJECT TO COMPLETION; DATED SEPTEMBER 24, 2021

 

MY RACEHORSE CA LLC

 

 

250 W. 1st Street, Suite 256

Claremont, CA 91711

(909) 740-9175

www.myracehorse.com

 

Series Membership Interests Overview

Newly Added (To be Qualified)

  Number of
Shares
Price to Public Underwriting
Discounts and
Commissions (1)(2)
Proceeds to
Issuer (3)
  Total Maximum        
Series Duke of Love Per Unit 1 $142.00 $1.42 $140.58
  Total Maximum 2,000 $284,000.00 $2,840.00 $281,160.00
           
Series War Safe Per Unit 1 $146.00 $1.46 $144.54
  Total Maximum 2,000 $292,000.00 $2,920.00 $289,080.00
           
Series Tufnel Per Unit 1 $62.00 $0.62 $61.38
  Total Maximum 5,200 $322,400.00 $3,224.00 $319,176.00
           
Series Classic Cut Per Unit 1 $51.00 $0.51 $50.49
  Total Maximum 10,000 $510,000.00 $5,100.00 $504,900.00
           
Series Essential Rose 20 Per Unit 1 $105.00 $1.05 $103.95
  Total Maximum 10,000 $1,050,000.00 $10,500.00 $1,039,500.00
           
Series Who Runs the World Per Unit 1 $104.00 $1.04 $102.96
  Total Maximum 5,100 $530,400.00 $5,304.00 $525,096.00
           
Series Balletic Per Unit 1 $80.00 $0.80 $79.20
  Total Maximum 10,000 $800,000.00 $8,000.00 $792,000.00
           
Series Song of Bernadette 20 Per Unit 1 $97.00 $0.97 $96.03
  Total Maximum 5,100 $494,700.00 $4,947.00 $489,753.00

 

 

 

 iv 

 

 

Series Membership Interests Overview
Active Offerings (Previously Qualified)
   

Number of

Shares

Price to Public

Underwriting

Discounts and

Commissions

(1)(2)

Proceeds to
Issuer (3)
Series Carrothers Per Unit 1 $101.00 $1.01 99.99
  Total Maximum 5,100 $515,100.00 $5,151.00 $509,949.00
           
Series Echo Warrior 19 Per Unit 1 $58.00 $0.58 $57.42
  Total Maximum 6,000 $348,000.00 $3,480.00 $344,520.00
           
Series Who'sbeeninmybed 19 Per Unit 1 $74.00 $0.74 $73.26
  Total Maximum 5,100 $377,400.00 $3,774.00 $373,626.00
           
Series Into Summer 19 Per Unit 1 $386.00 $3.86 $382.14
  Total Maximum 650 $250,900.00 $2,509.00 $248,391.00
           
Series Mrs Whistler Per Unit 1 $137.00 $1.37 $135.63
  Total Maximum 2,000 $274,000.00 $2,740.00 $271,260.00
           
Series Race Hunter 19 Per Unit 1 $52.00 $0.52 $51.48
  Total Maximum 10,000 $520,000.00 $5,200.00 $514,800.00
           
Series Vow Per Unit 1 $179.00 $1.79 $177.21
  Total Maximum 2,000 $358,000.00 $3,580.00 $354,420.00
           
Series You Make Luvin Fun 19 Per Unit 1 $75.00 $0.75 $74.25
  Total Maximum 6,000 $450,000.00 $4,500.00 $445,500.00
           
Series Miss Sakamoto Per Unit 1 $54.00 $0.54 $53.46
  Total Maximum 6,000 $324,000.00 $3,240.00 $320,760.00
           
Series Courtisane 19 Per Unit 1 $49.00 $0.49 $48.51
  Total Maximum 10,000 $490,000.00 $4,900.00 $485,100.00
           
Series Grand Traverse Bay 19 Per Unit 1 $447.00 $4.47 $442.53
  Total Maximum 750 $335,250.00 $3,352.50 $331,897.50
           
Series Our Miss Jones 19 Per Unit 1 $156.00 $1.56 $154.44
  Total Maximum 1,200 $187,200.00 $1,872.00 $185,328.00
           
Series Margarita Friday 19 Per Unit 1 $166.00 $1.66 $164.34
  Total Maximum 2,000 $332,000.00 $3,320.00 $328,680.00
           
Series Queen Amira 19 Per Unit 1 $165.00 $1.65 $163.35
  Total Maximum 2,000 $330,000.00 $3,300.00 $326,700.00
           
Series Salute to America Per Unit 1 $273.00 $2.73 $270.27
  Total Maximum 1,000 $273,000.00 $2,730.00 $270,270.00
           
Series Desire Street 19 Per Unit 1 $201.00 $2.01 $198.99
  Total Maximum 1,020 $205,020.00 $2,050.20 $202,969.80

 

 

 v 

 

 

Series Membership Interests Overview
Closed/Terminated Offerings (17)
   

Number of

Shares

Price to Public

Underwriting

Discounts and

Commissions

(1)(2)

Proceeds to
Issuer (3)
Series Vertical Threat (4) Per Unit 1 $210.00 $0.00 $210.00
  Total Maximum 537 $112,770.00 $0.00 $112,770.00
           
Series Amandrea (16) Per Unit 1 $295.00 $0.00 $295.00
  Total Maximum 550 $162,250.00 $0.00 $162,250.00
           
Series Keertana 18 Per Unit 1 $100.00 $0.00 $100.00
  Total Maximum 5,100 $510,000.00 $0.00 $510,000.00
           
Series Lazy Daisy Per Unit 1 $115.00 $0.00 $115.00
  Total Maximum 1,250 $143,750.00 $0.00 $143,750.00
           
Series The Filly Four (7) Per Unit 1 $180.00 $0.00 $180.00
  Total Maximum 8,000 $1,440,000.00 $0.00 $1,440,000.00
           
Series Popular Demand Per Unit 1 $244.00 $0.00 $244.00
  Total Maximum 1,020 $248,880.00 $0.00 $248,880.00
           
Series Authentic Per Unit 1 $206.00 $0.00 $206.00
  Total Maximum 12,500 $2,575,000.00 $0.00 $2,575,000.00
           
Series Storm Shooter Per Unit 1 $162.00 $0.00 $162.00
  Total Maximum 2,000 $324,000.00 $0.00 $324,000.00
           
Series Naismith Per Unit 1 $152.00 $0.00 $152.00
  Total Maximum 2,000 $304,000.00 $0.00 $304,000.00
           
Series NY Exacta (8) Per Unit 1 $228.00 $0.00 $228.00
  Total Maximum 2,000 $456,000.00 $0.00 $456,000.00
           
Series Palace Foal Per Unit 1 $120.00 $0.00 $120.00
  Total Maximum 510 $61,200.00 $0.00 $61,200.00
           
Series De Mystique '17 Per Unit 1 $140.00 $0.00 $140.00
  Total Maximum 250 $35,000.00 $0.00 $35,000.00
           
Series Martita Sangrita 17 (12) Per Unit 1 $320.00 $0.00 $320.00
  Total Maximum 576 $184,320.00 $0.00 $184,320.00

 

 

 

 vi 

 

 

           
Series Daddy's Joy Per Unit 1 $180.00 $0.00 $180.00
  Total Maximum 600 $108,000.00 $0.00 $108,000.00
           
Series Shake It Up Baby Per Unit 1 $130.00 $0.00 $130.00
  Total Maximum 250 $32,500.00 $0.00 $32,500.00
           
Series Tizamagician (13) Per Unit 1 $320.00 $0.00 $320.00
  Total Maximum 339 $108,480.00 $0.00 $108,480.00
           
Series Power Up Paynter Per Unit 1 $190.00 $0.00 $190.00
  Total Maximum 600 $114,000.00 $0.00 $114,000.00
           
Series Wayne O Per Unit 1 $95.00 $0.00 $95.00
  Total Maximum 6,000 $570,000.00 $0.00 $570,000.00
           
Series New York Claiming Package Per Unit 1 $140.00 $0.00 $140.00
  Total Maximum 510 $71,400.00 $0.00 $71,400.00
           
Series Lane Way (14) Per Unit 1 $90.00 $0.00 $90.00
  Total Maximum 6,000 $540,000.00 $0.00 $540,000.00
           
Series Big Mel (5) Per Unit 1 $121.00 $0.00 $121.00
  Total Maximum 6,000 $726,000.00 $0.00 $726,000.00
           
Series Two Trail Sioux 17 Per Unit 1 $300.00 $0.00 $300.00
  Total Maximum 450 $135,000.00 $0.00 $135,000.00
           
Series Sunny 18 (6) Per Unit 1 $65.00 $0.00 $65.00
  Total Maximum 6,000 $390,000.00 $0.00 $390,000.00
           
Series Mo Mischief Per Unit 1 $75.00 $0.00 $75.00
  Total Maximum 5,100 $382,500.00 $0.00 $382,500.00
           
Series Deep Cover (11) Per Unit 1 $220.00 $0.00 $220.00
  Total Maximum 800 $176,000.00 $0.00 $176,000.00
           
Series Thirteen Stripes Per Unit 1 $229.00 $0.00 $229.00
  Total Maximum 1,000 $229,000.00 $0.00 $229,000.00
           
Series Man Among Men Per Unit 1 $273.00 $2.73 $270.27
  Total Maximum 820 $223,860.00 $2,238.60 $221,621.40
           

 

 

 

 vii 

 

 

Series Frosted Oats Per Unit 1 $42.00 $0.42 $41.58
  Total Maximum 4,100 $172,200.00 $1,722.00 $170,478.00
           
Series Tapitry 19 Per Unit 1 $273.00 $2.73 $270.27
  Total Maximum 820 $223,860.00 $2,238.60 $221,621.40
           
Series Classofsixtythree 19 Per Unit 1 $193.00 $1.93 $191.07
  Total Maximum 1,000 $193,000.00 $1,930.00 $191,070.00
           
Series Margaret Reay 19 Per Unit 1 $301.00 $3.01 $297.99
  Total Maximum 820 $246,820.00 $2,468.20 $244,351.80
           
Series Awe Hush 19 Per Unit 1 $164.00 $1.64 $162.36
  Total Maximum 1800 $295,200.00 $2,952.00 $292,248.00
           
Series Exonerated 19 Per Unit 1 $169.00 $1.69 $167.31
  Total Maximum 820 $138,580.00 $1,385.80 $137,194.20
           
Series Speightstown Belle 19 Per Unit 1 $139.00 $1.39 $137.61
  Total Maximum 900 $125,100.00 $1,251.00 $123,849.00
           
Series Latte Da 19 Per Unit 1 $35.00 $0.35 $34.65
  Total Maximum 4,100 $143,500.00 $1,435.00 $142,065.00
           
Series Midnight Sweetie 19 Per Unit 1 $148.00 $1.48 $146.52
  Total Maximum 820 $121,360.00 $1,213.60 $120,146.40
           
Series Ambleside Park 19 Per Unit 1 $205.00 $2.05 $202.95
  Total Maximum 410 $84,050.00 $840.50 $83,209.50
           
Series Athenian Beauty 19 Per Unit 1 $47.00 $0.47 $46.53
  Total Maximum 1,800 $84,600.00 $846.00 $83,754.00
           
Series Apple Down Under 19 Per Unit 1 $173.00 $1.73 $171.27
  Total Maximum 600 $103,800.00 $1,038.00 $102,762.00
           
Series Motion Emotion Per Unit 1 $84.00 $0.84 $83.16
  Total Maximum 1,020 $85,680.00 $856.80 $84,823.20
           
Series Action Bundle (10) Per Unit 1 $31.00 $0.31 $30.69
  Total Maximum 10,000 $310,000.00 $3,100.00 $306,900.00
           
Series Just Louise 19 Per Unit 1 $229.00 $2.29 $226.71
  Total Maximum 1,020 $233,580.00 $2,335.80 $231,244.20

 

 

 

 viii 

 

 

           
Series Lost Empire 19 Per Unit 1 $35.00 $0.35 $34.65
  Total Maximum 10,200 $357,000.00 $3,570.00 $353,430.00
           
Series Cayala 19 Per Unit 1 $91.00 $0.91 $90.09
  Total Maximum 4,100 $373,100.00 $3,731.00 $369,369.00
           
Series Consecrate 19 Per Unit 1 $157.00 $1.57 $155.43
  Total Maximum 410 $64,370.00 $643.70 $63,726.30
           
Series Future Stars Stable (9) Per Unit 1 $50.00 $0.50 $49.50
  Total Maximum 10,000 $500,000.00 $5,000.00 $495,000.00
           
Series Collusion Illusion (15) Per Unit 1 $30.00 $0.30 $29.70
  Total Maximum 25,000 $750,000.00 $7,500.00 $742,500.00
           
Series Monomoy Girl Per Unit 1 $46.00 $0.46 $45.54
  Total Maximum 10,200 $469,200.00 $4,692.00 $464,508.00
           
Series Got Stormy Per Unit 1 $45.00 $0.45 $44.55
  Total Maximum 5,100 $229,500.00 $2,295.00 $227,205.00
           
Series Social Dilemma Per Unit 1 $167.00 $1.67 $165.33
  Total Maximum 510 $85,170.00 $851.70 $84,318.30
           
Series Going to Vegas Per Unit 1 $86.00 $0.86 $85.14
  Total Maximum 5,100 $438,600.00 $4,386.00 $434,214.00
           
Series Ari the Adventurer 19 Per Unit 1 $85.00 $0.85 $84.15
  Total Maximum 5,100 $433,500.00 $4,335.00 $429,165.00
           
Series Wonder Upon a Star 19 Per Unit 1 $37.00 $0.37 $36.63
  Total Maximum 10,000 $370,000.00 $3,700.00 $366,300
           
Series Silverpocketsfull 19 Per Unit 1 $89.00 $0.89 $88.11
  Total Maximum 5,100 $453,900.00 $4,539.00 $449,361.00
           
Series Co Cola 19 Per Unit 1 $106.00 $1.06 $104.94
  Total Maximum 5,100 $540,600.00 $5,406.00 $535,194.00

 

 

 

 

 

 ix 

 

 

  (1) The Company has engaged Dalmore Group, LLC (“Dalmore”), Member FINRA/SIPC, to act as the broker/dealer of record for all offerings and, thus, they will be entitled to a Brokerage Fee as reflected herein and described in greater detail under “Plan of Distribution and Subscription Procedure – Broker” and “– Fees and Expenses” and per the Broker-Dealer Agreement.
     
  (2) No underwriter has been engaged in connection with the Offering. The securities being offered hereby will only be offered by us and persons associated with us, in reliance on the exemption from registration contained in Rule 3a4-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend to distribute all offerings of membership interests in any series of the Company principally through the MyRacehorse™ Platform as described in greater detail under “Plan of Distribution and Subscription Procedure.”

 

  (3) The use of proceeds for each Series assumes a fully subscribed Series, including interests previously issued under prior offerings of the applicable Series Interests, if any.

 

  (4) The Company has authorized an offering of up to 600 series interests in Vertical Threat. The Company previously sold 63 series interests in Vertical Threat pursuant to an exemption based California intrastate offering permit (the “Prior Vertical Threat Sale”). These series interests were sold for $210 per series interest, the same price as in the Series Vertical Threat Offering. As a result, the Company is only offering a total of 537 Series Vertical Threat Interests in the Series Vertical Threat Offering under Regulation A.
     
  (5)

On December 30, 2019, the Company approved a forward split of the Series Membership Interests of Series Big Mel (the “Series Big Mel Interests”), at a ratio of 5-for-1 (the “Split”).  As a result of the foregoing, the total number of Series Big Mel Interests held by each member of Series Big Mel only will be converted automatically into the number of Series Big Mel Interests equal to (i) the number of issued and outstanding Series Big Mel Interests held by such member immediately prior to the Split, multiplied by (ii) 5. No fractional Series Big Mel Interests will be issued, and no cash or other consideration will be paid. The Series Big Mel Interests are held in electronic form with the Company’s transfer agent. Members do not have to take any action as the effect of the Split will be automatically reflected in each member’s online account. Immediately after the Split, each member’s percentage ownership interest in Series Big Mel will remain unchanged. The rights and privileges of the Series Big Mel members will be otherwise unaffected by the Split. As a result of the Split, the terms of the Series Big Mel Offering will be proportionally adjusted as follows: (i) the Total Maximum of Series Big Mel Interests offered will be increased to 5,100 and (ii) the price per Series Big Mel Interest will be decreased to $121. The overall value of Series Big Mel, including the aggregate offering amount of $617,100 and the corresponding use of proceeds will remain unchanged. The practical effect of the Split is to allow the Company to issue Series Big Mel Interests in smaller increments than originally contemplated without affecting any existing member’s percentage interests in Series Big Mel or the overall economics of the Series Big Mel Offering. See also the Company’s Form 1-U filed with the SEC on December 30, 2019.

 

On March 25, 2020, the Company acquired an additional 9% interest in Big Mel, taking its total interest to 60%. As such, the Company has added an additional 900 Series Big Mel Interests to the Offering Statement to be qualified on the same terms as previously sold such that 6,000 total Series Big Mel Interests are authorized in Series Big Mel.

 

On December 9, 2020, the Company purchased the remaining 40% ownership interest in Big Mel. As a result, Series Big Mel will now hold a 100% interest in Big Mel. In exchange, Series Big Mel now also has responsibility for 100% of the operating expenses associated with Big Mel. See also the Company’s Form 1-U filed with the SEC on December 11, 2020.

 

On August 5, 2021, Big Mel was retired from racing and will be re-trained as an off track thoroughbred horse. After making the applicable, pro rata distribution payment to members of Series Big Mel, net of any and all expenses, the Manager intends to terminate and wind up Series Big Mel because Series Big Mel would no longer have any assets or liabilities. See also the Company’s Form 1-U filed with the SEC on August 10, 2021.

 

 

 

 x 

 

 

     
  (6)

On March 25, 2020, the Company acquired an additional 9% interest in Solar Strike (Series Sunny 18), taking its total interest to 60%. As such, the Company has added an additional 900 Series Sunny 18 Interests to the Offering Statement to be qualified on the same terms as previously sold such that 6,000 Series Sunny 18 Interests are authorized in Series Sunny 18.

On July 27, 2020, the Company elected to geld Solar Strike due to health and safety concerns. Solar Strike still has the ability to race but will no longer be able to breed. In connection with the gelding, the Company and Spendthrift entered into an amendment to the Solar Strike Co-Ownership Agreement to clarify the right to geld and the effect of gelding on breeding rights and bonuses. See also the Company’s Form 1-U filed with the SEC on July 28, 2020.

 

On November 23, 2020, the Company purchased the remaining 40% ownership interest in Solar Strike, the 2018 Colt that is the Underlying Asset of Series Sunny 18. As a result, Series Sunny 18 will now hold a 100% interest in Solar Strike. In exchange, Series Sunny 18 now also has responsibility for 100% of the operating expenses associated with Solar Strike. See also the Company’s Form 1-U filed with the SEC on November 30, 2020.

 

On July 19, 2020, the Series Sunny 18 Offering was sold out and closed.

 

On July 20, 2021, Solar Strike was sold for nominal value to a qualified individual. After making the applicable, pro rata distribution payment to members of Series Sunny 18, net of any and all expenses, the Manager intends to terminate and wind up Series Sunny 18 because Series Sunny 18 would no longer have any assets or liabilities. See also the Company’s Form 1-U filed with the SEC on July 26, 2021.

 

  (7) Series The Filly Four is comprised of four (4) horses, (i) a 2018 Filly named, Venetian Sonata 18, (ii) a 2018 Filly named, My Sweet Addiction 18, (iii) a 2018 Filly named, My Lady Lauren 18, and (iv) a 2018 Filly named, Sapucai 18.
     
  (8) Series NY Exacta is comprised of two (2) horses, (i) a 2018 Filly named, Quick Conversation, and (ii) a 2018 Colt named, Psychedelic Shack
     
  (9)

Series Future Stars Stable is comprised of fourteen (14) horses, (i) a 2019 Colt named, Man Among Men, (ii) a 2019 Filly named, Frosted Oats, (iii) a 2019 Filly named, Infinite Empire (formerly Tapitry 19), (iv) a 2019 Filly named, Sixtythreecaliber (formerly Classofsixtythree 19), (v) a 2019 Colt named, Provocateur (formerly Cayala 19), (vi) a 2019 Filly named, A Mo Reay (formerly Margaret Reay 19), (vii) a 2019 Colt named, Can’t Hush This (formerly Awe Hush 19), (viii) a 2019 Filly named, Above Suspicion (formerly Exonerated 19), (ix) a 2019 Colt named, Ancient Royalty (formerly Speightstown Belle 19), (x) a 2019 Filly named, Sacred Beauty (formerly Consecrate 19), (xi) a 2019 Filly named Inalattetrouble (formerly Latte Da 19), (xii) a 2019 Filly named, Dolce Notte (formerly Midnight Sweetie 19), (xiii) a 2019 Colt named, Lookwhogotlucky (formerly Ambleside Park 19), and (xiv) a 2019 Colt named, Quantum Theory (formerly Athenian Beauty 19.

 

On December 18, 2020, the Company filed Post-Qualification Amendment No. 20 to its offering statement on Form 1-A with the SEC and disclosed that all of the Series Interests offered for Series Future Stars Stable were sold out as of November 21, 2020. However, certain investors that tried to purchase Series Interests of Series Future Stars Stable were not able to complete their transaction because of failed ACH payment attempts. As a result, the Company is reoffering only those remaining amounts of Series Interests in Series Future Stars Stable that were not sold.

 

On April 26, 2021, Ancient Royalty, one of the underlying assets of Series Future Stars Stable, died. The Company held mortality insurance on Ancient Royalty. See the Company’s Form 1-U filed with the SEC on April 30, 2021. Due to the value of mortality insurance and the large volume of other assets in Series Future Stars Stable, the Series Future Stars Stable Offering will remain active.

     
  (10) Series Action Bundle is comprised of three (3) horses: (i) a 2017 Filly named His Glory, (ii) a 2015 Filly named Altea, and (iii) a 2016 Filly named Bohemian Bourbon.
     
  (11) On April 2, 2021, the Company purchased the remaining 20% ownership interest in Deep Cover, the 2018 Colt that is the Underlying Asset of Series Deep Cover. As a result, Series Deep Cover will now hold a 100% interest in Deep Cover. In exchange, Series Deep Cover now also has responsibility for 100% of the operating expenses associated with Deep Cover as of March 28, 2021. See also the Company’s Form 1-U filed with the SEC on April 7, 2021.

 

 

 

 xi 

 

 

     
  (12) The Company has authorized an offering of up to 600 series interests in Carpe Vinum (f.k.a. Martita Sangrita 17). The Company previously sold 24 series interests in Carpe Vinum pursuant to an exemption based California intrastate offering permit (the “Prior Carpe Vinum Sale”). These series interests were sold for $320 per series interest, the same price as in the Series Martita Sangrita 17 Offering. As a result, the Company is only offering a total of 576 Series Martita Sangrita 17 Interests in the Series Martita Sangrita 17 Offering under Regulation A.
     
  (13)

The Company has authorized an offering of up to 600 series interests in Tizamagician. The Company previously sold 261 series interests in Tizamagician pursuant to an exemption based California intrastate offering permit (the “Prior Tizamagician Sale”). These series interests were sold for $320 per series interest, the same price as in the Series Tizamagician Offering. As a result, the Company is only offering a total of 339 Series Tizamagician Interests in the Series Tizamagician Offering under Regulation A.

 

     
  (14)

On March 9, 2021, the Company purchased the remaining 40% ownership interest in Lane Way, the 2017 Colt that is the Underlying Asset of Series Lane Way. As a result, Series Lane Way will now hold a 100% interest in Lane Way. In exchange, Series Lane Way now also has responsibility for 100% of the operating expenses associated with Lane Way. See also the Company’s Form 1-U filed with the SEC on March 15, 2021.

 

     
  (15) As of December 31, 2020, Series Interests in Series Collusion Illusion were fully subscribed. However, certain investors that tried to purchase Series Interests in Series Collusion Illusion were not able to complete their transaction either because of (a) failed ACH payment attempts, or (b) a cancellation/refund of such transaction. As a result, the Company is reoffering only those remaining amounts of Series Interests in Series Collusion Illusion that were not sold.

 

  (16)

On December 30, 2020, the Company purchased the remaining 45% ownership interest in Amandrea, the 2016 Filly that is the Underlying Asset of Series Amandrea, for $11,250. As a result, Series Amandrea will now hold a 100% interest in Amandrea. In exchange, Series Amandrea now also has responsibility for 100% of the operating expenses associated with Amandrea. See also the Company’s Form 1-U filed with the SEC on January 6, 2021.

 

On July 12, 2021, Amandrea was sold at public auction as a broodmare prospect for $7,000. After making the applicable, pro rata distribution payment to members of Series Amandrea, net of any and all expenses, the Manager intends to terminate and wind up Series Amandrea because Series Amandrea would no longer have any assets or liabilities. See also the Company’s Form 1-U filed with the SEC on July 16, 2021.

 

 

  (17) The following offerings were terminated/closed:

 

  On February 6, 2020, the Series Palace Foal Offering was terminated prior to any securities being offered.
  On September 6, 2019, the Series De Mystique ‘17 Offering was sold out and closed.
  On October 18, 2019, the Series Martita Sangrita 17 Offering was sold out and closed.
  On September 23, 2019, the Series Daddy’s Joy Offering was sold out and closed.
  On January 22, 2020, Shake it Up Baby died. The Company held mortality insurance on Shake it Up Baby. See the Company’s Form 1-U filed with the SEC on February 6, 2020.
  On September 9, 2019, the Series Tizamagician Offering was sold out and closed.
  On October 11, 2019, the Series Power Up Paynter Offering was sold out and closed.
  On October 26, 2019, the Series Wayne O Offering was sold out and closed.
  On or around November 30, 2020, Wayne O, the 2017 Colt that is the Underlying Asset of Series Wayne O, was gelded. See also the Company’s Form 1-U filed with the SEC on November 30, 2020.
  On December 22, 2019, Augusta Moon, one of the two Underlying Assets of Series New York Claiming Package, was claimed/purchased from a race for $35,000. The sale contains no other material terms and conditions. As a result of Augusta Moon being sold, the Company plans to issue a dividend of $65.93 per each Series New York Claiming Package Membership Interest which dividend represents such member’s pro rata share of the sale proceeds from the claim, the unused training reserve, unused insurance and the unrealized manager fee. See also the Company’s Form 1-U filed with the SEC on December 30, 2019. As a result of the claiming of Augusta Moon, the Series New York Claiming Package Offering was closed.

 

 

 

 xii 

 

 

  On May 25, 2020, the Series Lane Way Offering was sold out and closed.
  On June 1, 2020, the Series Big Mel Offering was sold out and closed.
  On July 9, 2020, Annahilate, the 2017 Colt that is the Underlying Asset for Series Two Trail Sioux 17, suffered a fracture to his lateral sesamoid in his front left limb after a workout. Although this injury is not life threatening, the nature of this injury is career ending. Because Annahilate will no longer be able to generate revenue since he will need to be retired from racing, the Series Two Trail Sioux 17 was closed. As a result, the Manager will terminate and wind up Series Two Trail Sioux 17 because Series Two Trail Sioux 17 would no longer have any assets or liabilities. See also the Company’s Form 1-U filed with the SEC on July 15, 2020.
 

On July 28, 2020, the Company elected to geld Solar Strike due to health and safety concerns. Solar Strike still has the ability to race and generate revenues but will no longer be able to breed. In connection with the gelding, the Company and Spendthrift entered into an amendment to the Solar Strike Co-Ownership Agreement to clarify the right to geld and the effect of gelding on breeding rights and bonuses. See also the Company’s Form 1-U filed with the SEC on July 28, 2020. As a result, the Series Sunny 18 offering was closed.

 

On July 20, 2021, Solar Strike was sold for nominal value to a qualified individual due to Solar Strike’s training history and having been gelded. After making the applicable, pro rata distribution payment to members of Series Sunny 18, net of any and all expenses, the Manager intends to terminate and wind up Series Sunny 18 because Series Sunny 18 would no longer have any assets or liabilities. See also the Company’s Form 1-U filed with the SEC on July 26, 2021.

  On September 18, 2020, the Series Vertical Threat Offering was sold out and closed.
  On September 18, 2020, the Series Amandrea Offering was sold out and closed.
  On September 18, 2020, the Series Keertana 18 Offering was sold out and closed.
  On September 18, 2020, the Series Lazy Daisy Offering was sold out and closed.
  On September 18, 2020, the Series The Filly Four Offering was sold out and closed.
  On September 18, 2020, the Series Mo Mischief Offering was sold out and closed.
  On September 18, 2020, the Series Deep Cover Offering was sold out and closed.
  On September 18, 2020, the Series Popular Demand Offering was sold out and closed.
  On September 18, 2020, the Series Authentic Offering was sold out and closed.
  On September 18, 2020, the Series Storm Shooter Offering was sold out and closed.
  On September 18, 2020, the Series Naismith Offering was sold out and closed.
  On September 18, 2020, the Series NY Exacta Offering was sold out and closed.
  On September 18, 2020, the Series Thirteen Stripes Offering was sold out and closed.
  On November 9, 2020, Authentic, the 2017 Colt that is the Underlying Asset for Series Authentic, was retired from racing and began his stud career. See also the Company’s Form 1-U filed with the SEC on November 12, 2020.
  On November 16, 2020, the Series Man Among Men Offering was sold out and closed.
  On November 17, 2020, the Series Frosted Oats Offering was sold out and closed.
  On November 16, 2020, the Series Tapitry 19 Offering was sold out and closed.
  On November 17, 2020, the Series Classofsixtythree 19 Offering was sold out and closed.
  On November 17, 2020, the Series Margaret Reay 19 Offering was sold out and closed.
  On November 17, 2020, the Series Awe Hush 19 Offering was sold out and closed.
  On November 17, 2020, the Series Exonerated 19 Offering was sold out and closed.
  On November 17, 2020, the Series Speightstown Belle 19 Offering was sold out and closed.
  On April 26, 2021, Ancient Royalty, the underlying asset of Series Speightstown Belle 19, died. The Company held mortality insurance on Ancient Royalty. See the Company’s Form 1-U filed with the SEC on April 30, 2021.
  On November 17, 2020, the Series Latte Da 19 Offering was sold out and closed.
  On November 17, 2020, the Series Midnight Sweetie 19 Offering was sold out and closed.
  On November 16, 2020, the Series Ambleside Park 19 Offering was sold out and closed.
  On November 16, 2020, the Series Athenian Beauty 19 Offering was sold out and closed.
  On January 16, 2021, the Series Apple Down Under 19 Offering was sold out and closed.
  On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 xiii 

 

 

  On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  On April 14, 2021, the Series Just Louise 19 Offering was sold out and closed.
  On May 6, 2021, the Series Lost Empire 19 Offering was sold out and closed.
  On May 11, 2021, the Series Future Stars Stable Offering was sold out and closed.
  On January 4, 2021, the Series Collusion Illusion Offering was sold out and closed.
  On June 2, 2021, the Series Monomoy Girl Offering was sold out and closed.
  On June 24, 2021, the Series Got Stormy Offering was sold out and closed.
  On June 24, 2021, the Series Social Dilemma Offering was sold out and closed.
  On July 18, 2021, the Series Going to Vegas Offering was sold out and closed.
  On May 21, 2021, the Series Ari the Adventurer 19 Offering was sold out and closed.
  On June 25, 2021, the Series Wonder Upon a Star 19 Offering was sold out and closed.
  On August 6, 2021, the Series Silverpocketsfull 19 Offering was sold out and closed.
  On November 18, 2020, the Series Cayala 19 Offering was sold out and closed.
  On November 17, 2020, the Series Consecrate 19 Offering was sold out and closed.
  On August 11, 2021, the Series Co Cola 19 Offering was sold out and closed.

 

My Racehorse CA LLC, a Nevada series limited liability company (“we,” “us,” “our,” “MRH” or the “Company”) is offering, on a best efforts basis, up to the amount of membership interests of each of the series of the Company (the “Maximum”) without any minimum target as set forth in the above table entitled “Series Membership Interests Overview.”

 

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

 

An Offering Circular, presented in Offering Circular format, was filed with the Securities and Exchange Commission (the “Commission”) with respect to the Series Palace Foal Offering and was qualified by the Commission on February 22, 2019 (the “Original Offering Circular”). This Post-Qualification Amendment No. 29 to the Original Offering Circular describes each individual Series set forth in the above table entitled “Series Membership Interests Overview.”

 

Series Interests are available for purchase exclusively through the MyRacehorse™ Platform and will be issued in book-entry electronic form only. StartEngine Secure LLC has been engaged as the Company’s SEC-registered transfer agent and registrar of the Series Interests pursuant to Section 17A(c) of the Exchange Act.

 

A purchaser of the Interests shall be deemed an “Investor” or “Interest Holder.” There will be separate closings with respect to each Offering. The Company will commence such offerings within two calendar days of qualification with the SEC as provided in Rule 251(d)(3)(i)(F). The Company may undertake one or more closings on a rolling basis with respect to each Offering (each, a “Closing”). After each Closing, funds tendered by Investors will be available to the Company. Because the Offering is being made on a best efforts basis and without a minimum offering amount, the Company may close the offering at any level of proceeds raised. Each such Offering shall be terminated on the earlier of (i) the date subscriptions for the Maximum Interests of such Series have been accepted, (ii) a date determined by the Manager in its sole discretion, or (iii) the date which is one year from the date this Offering Circular is qualified by the Commission which period may be extended by an additional six months by the Manager in its sole discretion.

 

No securities are being offered by existing security holders. Each Offering is being conducted under Regulation A (17 CFR 230.251 et. seq.) and the information contained herein is being presented in Offering Circular format. See “Plan of Distribution and Subscription Procedure” and “Description of Interests Offered” for additional information.

 

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

 

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

 

An investment in the Interests involves a high degree of risk. See the section titled, “Risk Factors”, herein for a description of some of the risks that should be considered before investing in the Interests.

 

 

 

 

 xiv 

 

 

TABLE OF CONTENTS

MY RACEHORSE CA LLC 

 

 

SECTION  
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 1
OFFERING SUMMARY 2
RISK FACTORS 12
POTENTIAL CONFLICTS OF INTEREST 22
DILUTION 23
USE OF PROCEEDS – SERIES CARROTHERS 24
USE OF PROCEEDS – SERIES ECHO WARRIOR 19 25
USE OF PROCEEDS – SERIES WHO’SBEENINMYBED 19 26
USE OF PROCEEDS – SERIES INTO SUMMER 19 28
USE OF PROCEEDS – SERIES MRS WHISTLER 29
USE OF PROCEEDS – SERIES RACE HUNTER 19 30
USE OF PROCEEDS – SERIES VOW 31
USE OF PROCEEDS – SERIES YOU MAKE LUVIN FUN 19 32
USE OF PROCEEDS – SERIES MISS SAKAMOTO 33
USE OF PROCEEDS – SERIES COURTISANE 19 34
USE OF PROCEEDS – SERIES GRAND TRAVERSE BAY 19 35
USE OF PROCEEDS – SERIES OUR MISS JONES 19 36
USE OF PROCEEDS – SERIES MARGARITA FRIDAY 19 37
USE OF PROCEEDS – SERIES QUEEN AMIRA 19 38
USE OF PROCEEDS – SERIES SALUTE TO AMERICA 39
USE OF PROCEEDS – SERIES DESIRE STREET 19 40
USE OF PROCEEDS – SERIES DUKE OF LOVE 41
USE OF PROCEEDS – SERIES WAR SAFE 42
USE OF PROCEEDS – SERIES TUFNEL 43
USE OF PROCEEDS – SERIES CLASSIC CUT 44
USE OF PROCEEDS – SERIES ESSENTIAL ROSE 20 45
USE OF PROCEEDS – SERIES WHO RUNS THE WORLD 46
USE OF PROCEEDS – SERIES BALLETIC 47
USE OF PROCEEDS – SERIES SONG OF BERNADETTE 20 48
DESCRIPTION OF CARROTHERS 49
DESCRIPTION OF ECHO WARRIOR 19 55
DESCRIPTION OF MICRO SHARE (F.K.A. WHO’SBEENINMYBED 19) 61
DESCRIPTION OF MALIBU MAYHEM (F.K.A. INTO SUMMER 19) 67
DESCRIPTION OF MRS WHISTLER 72
DESCRIPTION OF CHASING TIME (F.K.A. RACE HUNTER 19) 78
DESCRIPTION OF VOW 84
DESCRIPTION OF MAGICAL WAYS (F.K.A. YOU MAKE LUVIN FUN 19) 89
DESCRIPTION OF MISS SAKAMOTO 94
DESCRIPTION OF TAP THE GAVEL (F.K.A. COURTISANE 19) 100
DESCRIPTION OF CORNICE TRAVERSE (F.K.A. GRAND TRAVERSE BAY 19) 106
DESCRIPTION OF OUR MISS JONES 19 112
DESCRIPTION OF STRAIGHT NO CHASER (F.K.A. MARGARITA FRIDAY 19) 117
DESCRIPTION OF REGAL REBEL (F.K.A. QUEEN AMIRA 19) 122

 

 

 

 

 xv 

 

 

 

DESCRIPTION OF SALUTE TO AMERICA 128
DESCRIPTION OF DESIRE STREET 19 133
DESCRIPTION OF DUKE OF LOVE 138
DESCRIPTION OF WAR SAFE 144
DESCRIPTION OF TUFNEL 149
DESCRIPTION OF CLASSIC CUT 154
DESCRIPTION OF ESSENTIAL ROSE 20 159
DESCRIPTION OF WHO RUNS THE WORLD 165
DESCRIPTION OF BALLETIC 170
DESCRIPTION OF SONG OF BERNADETTE 20 175
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 180
PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE 208
DESCRIPTION OF THE BUSINESS 213
MANAGEMENT 221
COMPENSATION 223
PRINCIPAL INTEREST HOLDERS 224
DESCRIPTION OF INTERESTS OFFERED 227
MATERIAL UNITED STATES TAX CONSIDERATIONS 231
WHERE TO FIND ADDITIONAL INFORMATION 233
FINANCIAL STATEMENTS F-1
EXHIBIT INDEX III-1
     

 

 

 

 

 xvi 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

The information contained in this Offering Circular includes some statements that are not historical and that are considered “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding:

 

  our development plans for our business;
  our strategies and business outlook;
  the racing prospects for the respective Underlying Assets;
  potential distributions or dividends of race winnings and other revenue sources;
  anticipated development of the Company, the Manager and each Series of the Company;
  the overall growth of the horse racing industry;
  our compliance with regulatory matters (including the Investment Company Act, Investment Advisers Act and state securities regulations);
  the development of the MyRacehorse™ Platform (defined below); and
  various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations).

 

These forward-looking statements express the Manager’s expectations, hopes, beliefs, and intentions regarding the future. In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates”, “believes”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “might”, “plans”, “possible”, “potential”, “predicts”, “projects”, “seeks”, “should”, “will”, “would” and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

 

The forward-looking statements contained in this Offering Circular are based on current expectations and beliefs concerning future developments that are difficult to predict. Neither the Company nor the Manager can guarantee future performance, or that future developments affecting the Company, the Manager or the MyRacehorse™ Platform will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

 

All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties, along with others, are also described below under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the parties’ assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

 

 

 

 1 

 

 

OFFERING SUMMARY

 

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

 

The Company: The Company is My Racehorse CA LLC, a Nevada series limited liability company formed on December 27, 2016.
   
Underlying Asset(s) and Offering Per Series Interest: The Underlying Asset for each Series and the Offering Price per Interest for each respective Series is set forth in the description for such asset herein.

 

  The assets of all Series described below may collectively be referred to herein as the “Underlying Assets” and each, individually, as an “Underlying Asset.” It is not anticipated that any of the Series would own any assets other than said interest in such Underlying Asset, plus certain prepaid cash reserves for insurance and other administrative expenses pertaining to the Series and amounts earned from the monetization of such Underlying Asset.

 

Securities Offered: Investors will acquire membership interests in a Series of the Company, each of which is intended to be a separate series of the Company for purposes of assets and liabilities. It is intended that owners of interests in a Series will only have assets, liabilities, profits and losses pertaining to the specific Underlying Assets owned by that Series. For example, an owner of interests in Series Carrothers will only have an interest in the assets, liabilities, profits and losses pertaining to Series Carrothers and its related operations and not as it relates to Series Echo Warrior 19 or any other series. See the “Description of Interests Offered” section for further details. The Interests will be non-voting except with respect to certain matters set forth in the Amended and Restated Series Limited Liability Company Agreement of the Company (the “Operating Agreement”).  The purchase of membership interests in a Series of the Company is an investment only in that Series (and with respect to that Series’ Underlying Asset) and not an investment in the Company as a whole.
   
Investors: Each Investor must be a “qualified purchaser.” See “Plan of Distribution and Subscription Procedure – Investor Suitability Standards” for further details. The Manager may, in its sole discretion, decline to admit any prospective Investor, or accept only a portion of such Investor’s subscription, regardless of whether such person is a “qualified purchaser”.

 

Manager:

Experiential Squared, Inc., a Delaware corporation, will serve as the manager of the Company and of each Series (the “Manager”) pursuant to that certain Management Services Agreement (the “Management Agreement”). Experiential Squared, Inc., also owns and operates a mobile app-based investment platform called MyRacehorse™ (the MyRacehorse™ platform and any successor platform used by the Company for the offer and sale of interests, the “MyRacehorse™ Platform”), which is licensed to the Company pursuant to the terms of the Management Agreement, through which the Interests are sold.

 

The Manager and/or its affiliates may, from time to time, purchase Interests at their discretion on the same terms and conditions as the Investors. The Company, the Manager, its affiliates and/or third parties may also (1) acquire horses that are listed on MyRacehorse.com pursuant to a promissory note between the Series and lender or (2) have the Series acquire the horses upon close of the respective offering. In many instances, said lender will have a right, prior to completion of the Offering, to participate in pre-closing dividends from revenue generated by its interest in the Underlying Asset and the right to convert into the unsold portion of the offering prior to being fully funded.

 

 

 

 2 

 

 

   
Broker:

The Company has entered into an agreement with Dalmore Group, LLC (“Dalmore” or the “Broker”) a New York limited liability company and a broker-dealer which is registered with the Commission and is registered in each state where such Offering will be made prior to the launch of such Offering. Dalmore will act as the broker/dealer of record for each transaction and provide related services in connection with such Offering as described in the Broker-Dealer Agreement incorporated by reference as Exhibit 6.60.

 

Dalmore is a member of FINRA.

   
Minimum Interest purchase:

The minimum subscription by an Investor is 1 Interest in a Series. Notwithstanding the foregoing, the Manager has discretion to increase the minimum subscription by an Investor to greater than 1 Interest in a Series.

 

Purchase Price Consideration; Gift Cards:

The Purchase price for an Investor’s subscription will be payable in cash in United States Dollars at the time of subscription.

 

In addition, the Company sells gift cards for cash that are redeemable only on www.myracehorse.com for merchandise, race track experiences and also as consideration for the purchase of Interests.

 

The gift cards are valued at the cash value paid (e.g. if a purchaser pays $100 they get a gift card with a $100 value), are not redeemable for cash, (except as required by applicable law) have no expiration date and may be used solely on myracehorse.com. There are no discounts, differentiated pricing or other more favorable offering terms given or credited to investors that use gift cards in connection with the purchase of Interests.

 

To the extent even a $1 balance on a gift card remains, it can be used towards the purchase of Interests in combination with cash.

 

The recipient or user of a gift card will still need to qualify as a “qualified purchaser” to invest and will be subject to the same subscription process as investors that subscribe for cash. See “Investor Suitability Standards” and “Plan of Distribution and Subscription Procedure” for more information.

   
Offering size: There is no minimum offering amount for the sale of Interests in each Offering. The Maximum Interests offered per Series is set forth in the “Series Membership Interests Overview” table set forth above.

 

Offering Period: There will be a separate closing for each Offering. Each Offering is being conducted on a best efforts basis without any minimum target. The Company may undertake one or more closings on a rolling basis for each Offering. After each closing, funds tendered by Investors will be available to the Company. Because each Offering is being made on a best efforts basis and without a minimum offering amount, the Company may close each Offering at any level of proceeds raised. Each respective Offering shall be terminated on the earlier of (i) the date subscriptions for the Maximum Interests of such Series have been accepted, (ii) a date determined by the Manager in its sole discretion, or (iii) the date which is one year from the date this Offering Circular is qualified by the Commission which period may be extended by an additional six months by the Manager in its sole discretion.

 

 

 

 3 

 

 

Additional Investors: After the Closing of each Offering, no Member will be required to make additional capital contributions. If a Series’ funds are insufficient to meet the needs of the Series, the Manager may (a) advance funds and not seek reimbursement, (b) loan funds to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and be entitled to reimbursement of such amount from future revenues generated by such Series, and/or (c) cause additional Interests to be issued in order to cover such additional amounts.

 

  In the event that the Manager determines to issue additional Interests (as described in (c) above), the Manager shall notify the Members of the need for additional capital and the Members may be permitted, but not required, to make additional capital contributions to the Series on a pro-rata basis. In the event all Members do not make additional capital contributions, the Manager has discretion to sell additional Interests to third parties to meet the capital needs of such Series.

 

Use of proceeds:

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

 

(i) Brokerage Fee: A fee equal to 1.0% of the amount raised through this Offering (which excludes any Interests purchased by the Manager, its affiliates or the Horse Sellers) paid to Dalmore as compensation for brokerage services;

 

(ii) Due Diligence Fee: A fee equal to approximately 15.0% of the amount raised through this Offering, on average, paid to Manager as compensation for due diligence services in evaluating, investigation and discovering the Underlying Assets (fee is subject to change in sole discretion of Manager as disclosed in each Series Agreement);

 

(iii) Bloodstock Fee: A fee up to 5.0% of the cost of the Underlying Asset paid to the Manager, an affiliate of the Manager, or a third party service provider as compensation for bloodstock services for creating and facilitating breeding plans for the Underlying Asset, analyzing pedigrees to assess the Underlying Asset’s value, and purchasing and/or selling the Underlying Asset on behalf of the Company;

 

(iv) Asset Cost of the Underlying Asset: Actual cost of the Underlying Asset paid to the Horse Seller (which may have been paid off prior to such Offering through a loan to the Company), including any accrued interest under potential loans to the Company and through down-payments by the Manager and/or its affiliates to acquire an interest in the Underlying Asset prior to an Offering; and

 

(v) Offering Expenses: In general these costs include actual legal, accounting, underwriting, filing and compliance costs incurred by the Company in connection with an Offering of a series of Interests (and excludes ongoing costs described in Operating Expenses), as applicable, paid to legal advisors, printing and accounting firms, as the case may be.

 

In the case of the Offerings hereunder, the Manager has agreed to pay and not be reimbursed for Offering Expenses.

 

The Manager bears all expenses related to item (iv) above on behalf of a Series and may be reimbursed by a Series through the proceeds of a successful offering. In addition, the Manager or an affiliate may loan the Company or a Series the funds required to pay any costs identified in items (ii) and (iii), which will be reimbursed through the proceeds of a successful offering or refunded if an offering is aborted. Any loans made under item (iv), other than down-payments, accrue interest at the Applicable Federal Rate (as defined in the Internal Revenue Code). See “Use of Proceeds” and “Plan of Distribution and Subscription Procedure – Fees and Expenses” sections for further details.

 

 

 

 

 4 

 

 

Operating expenses: “Operating Expenses” are costs and expenses attributable to the activities of the Series (collectively, “Operating Expenses”), which may be as much as or greater than the actual cost of a Series’ interest in the applicable Underlying Asset, including:

 

  costs incurred in managing the Underlying Asset, including, but not limited to boarding, maintenance, training and transportation costs (the “Upkeep Fees”);

 

  costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Underlying Asset, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset (“Prepaid Expenses”), and, to the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after the acquisition of the Underlying Asset;

 

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

 

  any indemnification payments; and

 

  any and all insurance premiums or expenses in connection with the Underlying Asset, including mortality, loss of use, liability and/or medical insurance of the Underlying Asset to insure against the death, injury or third party liability of racehorse ownership (as described in “Description of the Business – Business of the Company”). The decision to purchase insurance on a horse is made on a horse-by-horse basis. THERE IS NO GUARANTEE THAT A HORSE YOU INVEST IN WILL BE INSURED.

 

  The Company has purchased mortality insurance for Carrothers, Echo Warrior 19, Micro Share (f.k.a. Who’sbeeninmybed 19), Malibu Mayhem (f.k.a Into Summer 19), Mrs Whistler, Chasing Time (f.k.a Race Hunter 19), Vow, Magical Ways (f.k.a. You Make Luvin Fun 19), Miss Sakamoto, Tap the Gavel (f.k.a. Courtisane 19), Cornice Traverse (f.k.a Grand Traverse Bay 19), Our Miss Jones 19, Straight No Chaser (f.k.a Margarita Friday 19), Regal Rebel (f.k.a. Queen Amira 19), Salute to America, Desire Street 19, Duke of Love, War Safe, Tufnel, Classic Cut, Essential Rose 20, Who Runs the World, Balletic, and Song of Bernadette 20.

 

 

For certain Offerings, the Manager has agreed to pay and not be reimbursed for Operating Expenses related to each Series incurred prior to Closing. In such instances, only Operating Expenses incurred post-Closing shall be the responsibility of a Series. See “Use of Proceeds” for each such Series for reference to inclusion of Prepaid Expenses in Operating Expenses for a Series-by-Series determination.

 

 

 

 

 

 5 

 

 

 

We anticipate that for a majority of the Offerings, we will allocate a sizable portion of such Offering to a cash reserve to be spent on Upkeep Fees which cover operating expenses related specifically to the training, upkeep and maintenance of the applicable Underlying Asset. However, if the Operating Expenses exceed the amount of revenues generated from the applicable Underlying Asset, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and be entitled to reimbursement of such amount from future revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”), and/or (c) cause additional Interests to be issued in order to cover such additional amount. In such cases, until a Series generates revenues from its interest in the applicable Underlying Asset, we expect a Series to, initially, deplete only the Upkeep Fees. We may incur Operating Expenses Reimbursement Obligations or the Manager pays such Operating Expenses incurred and will not seek reimbursement if Operating Expenses exceed revenues and Upkeep Fees. See discussion of “Description of the Business – Operating Expenses” for additional information.

 

From time to time, certain Offerings will not have an allocated upfront cash reserve for Upkeep Fees as part of such Offering proceeds. Instead, the Manager or an affiliate will, in connection with such Offering, incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from ongoing revenues generated by such Series. Notwithstanding the foregoing, in these types of Offerings, there will still exist a smaller pre-paid cash reserve for Prepaid Expenses and insurance, administrative and general Operating Expenses which is intended to cover three years of such projected Operating Expenses (excluding Upkeep Fees).

 

In addition, the Manager, in these types of Offerings, retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

Regardless of the type of Offering, an Interest Holder will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution, such Interest Holder will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the Operating Expenses Reimbursement Obligations.

   
Further issuance of Interests: A further issuance of Interests of a Series may be made in the event the Operating Expenses of that Series exceed the income generated from its interest in the Underlying Asset and cash reserves of that particular Series. This may occur if the Company does not take out sufficient amounts under an Operating Expenses Reimbursement Obligation to pay such excess Operating Expenses, or the Manager does not pay such amounts without seeking reimbursement.

 

 

 

 6 

 

 

Co-Ownership Agreements; Bonuses; Kickers:

The Company, through individual Series, intends to purchase interests in racehorses, but generally will not own 100% of such horse. The Series’ percentage ownership in a specific horse is determined on a series-by-series basis. This means that the Series will enter into an agreement with other owners of the Underlying Asset (“Co-Owners”) which will govern the rights of the Series vis-à-vis the other Co-Owners and the Underlying Asset (the “Co-Ownership Agreements”).

 

As an owner of a racehorse, the individual Series will receive a percentage of the purse winnings that is equal to its ownership percentage, as well as other revenue-generating events including, but not limited to claiming races (which may result in a sale of a racehorse held by a series), race Bonuses (as described below), sales of the racehorse, marketing or sponsorship activities and the sale of future breeding rights less expenses and liabilities (including “Kickers” if any as described below). Similarly, the individual Series will be responsible for the expenses of the racehorse at a rate equal to its ownership percentage. These expenses will often be payable directly by the Series. Copies of such Co-Ownership Agreements for each respective Series are attached as exhibits hereto and descriptions of such terms are included with each Series’ respective description herein.

 

Certain of the Series’ Co-Ownership Agreements may include bonuses related to winning of graded stakes races in the form of future stallion bonuses (“Future Stallion Bonuses”) or future broodmare bonuses (“Future Broodmare Bonuses, and together with Future Stallion Bonuses, “Bonuses”). Such Bonuses may be voided prior to being earned to the extent a decision is made by the Co-Owners to geld the Stallion in the discretion of the Manager or the Syndicate Manager (typically due to health and safety concerns or to better maximize its racing career prospects). These Bonuses will be distributable (less expenses, reserves, etc.) as in the same manner generic race winnings as described in “Distributable Cash” below.

 

 

In addition, certain Co-Ownership Agreements may be negotiated with the original Horse Seller for a payment to Horse Seller upon a horse winning certain races or awards (the “Kickers”). Kickers are contractual obligations of a Series to the original seller of a horse which could result in a payment obligation to the original horse seller upon the happening of certain events like Grade 1 race wins. They act as a “performance bonus” and are tied to certain revenue-generating events in the life of the Series. In the event that a co-ownership agreement contains a Kicker, the campaign page, which screenshots are included in each series description contained herein, will contain express descriptions of the Kicker, its terms and its impact on such Series.

 

Such Kickers are payable out of race winnings but are often offset but the upside associated with lifetime breeding rights which, although it may reduce the short-term Distributable Cash of a Series, can significantly increase the long-term value of a Series whether upon a sale of the Underlying Asset or the future revenue generated by lifetime breeding rights.

 

Each Kicker can be generally seen as a contingent liability of that Series that, when triggered, becomes a liability payable by that Series prior to any distributions to that Series’ members. This is the same case as it relates to any expenses of the Series or reserves needed to be maintained for the ongoing operations of such Series. As a result of such liability, Distributable Cash (as defined below) may be considerably less than stated race winnings.

 

In any event, a Series member will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution or at the time a Kicker payment is due, such Series member will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the payment of any Kickers.

 

 

 7 

 

 

   
Racing Leases:

As an alternative to the Co-Ownership structures discussed above, which include the purchase, sale and breeding rights associated with the full ownership of a horse, for certain Series, the Company, through individual Series, may enter into lease agreements or “racing leases” which will entitle the Series to the exclusive right to “all of the racing qualities of an ownership interest in the horse” including the operation of such horse during a set racing term (typically 1 year) in exchange for an upfront lease fee. The Series’ percentage lease interest in a specific horse is determined on a series-by-series basis. This means that the Series will enter into an agreement with other owners of the Underlying Asset (“Owners”) which will govern the rights of the Series during the lease term and the operation of the Underlying Asset (the “Lease Agreement”).

 

As the lessee of a racehorse, the individual Series will receive a percentage of the purse winnings that is equal to its lessee percentage, as well as other revenue-generating events as well as marketing and advertising related revenues. Similar to the Co-Ownership arrangements, the individual Series in the Lease Agreement will be responsible for the expenses of the racehorse at a rate equal to its lessee percentage. These expenses will often be payable directly by the Series. At the end of such lease term, however, the ownership rights in the horse revert back to the Owner along with the obligation to cover any future expenses associated with such horse.

 

In the event that the Owner intends to retire the horse and elects to terminate the Lease Agreement due to health, breeding or economic interest concerns, the pro rata portion of the lease fee remaining on the Series will be re-paid to the Series.

 

The Company’s intent with racing leases is to capture the value of the racing career of said horse without the complexities, time and expense associated with the purchase, sale or breeding of a horse outside of its useful racing life.

 

Copies of such Lease Agreements for each respective Series, and any amendments to such Lease Agreements, if applicable, are attached as exhibits hereto and descriptions of such additional terms are included with each Series’ respective description herein.

 

 

 

Distributable Cash:

“Distributable Cash” shall mean the net income (as determined under U.S. generally accepted accounting principles (“GAAP”)) generated by a Series plus any change in net working capital and depreciation and amortization (and any other non-cash Operating Expenses) for such Series and less any liabilities (including obligations to pay Kickers to Horse Sellers) related to its interest in the applicable Underlying Asset. The Manager may maintain Distributable Cash funds in a deposit account or an investment account for the benefit of each Series.

 

A Series will typically generate Distributable Cash from revenue-generating events of such Series. The frequency with which such event occurs, or the timing of when such revenue is actually distributed to Members, is dependent on the racing schedule of the Underlying Asset, cash reserves in such Series, ongoing contractual obligations of a Series, potential sales of the Underlying Asset, the terms of such Series’ Co-Ownership Agreement and other revenue-generating events which do not occur on a fixed or set time period (e.g. quarterly or monthly) but which will recur on an ongoing basis so long as revenue is generated.

 

 

 

 8 

 

 

Management Fee:

As compensation for the services provided by the Manager under the Management Agreement, the Manager will be paid an initial one-time 15% Due Diligence Fee from each Series and a subsequent fee of 10% of Gross Proceeds generated by each Series. “Gross Proceeds” is defined as the sum of all money generated by a Series, prior to any deductions that have been made or will be used for expenses. In the event that the Manager performs bloodstock services for an Underlying Asset, the Manager will also be paid up to 5.0% of the cost of the Underlying Asset for providing such services.

 

The Management Fee does not accumulate if no Gross Proceeds are generated. The Management Fee is due only upon each revenue-generating event of such Series. The frequency with which such event occurs is dependent on the racing schedule of the Underlying Asset, cash reserves in such Series, potential sales of the Underlying Asset, the terms of such Series’ Co-Ownership Agreement and other revenue-generating events which do not occur on a fixed or set time period (e.g. quarterly or monthly) but which will recur on an ongoing basis so long as revenue is generated.

 

Distribution Rights: The Manager has sole discretion in determining what distributions of Distributable Cash, if any, are made to Interest Holders of a Series. Any Distributable Cash generated by a Series from the utilization of the Underlying Asset shall be applied by that Series in the following order of priority (after payment of liabilities, including contractual obligations under Co-Ownership Agreements, if any):

 

  10% of the Gross Proceeds for that Series to the Manager as a Management Fee;

 

  5.0% of the cost of the Underlying Asset paid to the Manager, an affiliate of the Manager, or a third party service provider as compensation for providing bloodstock services for an Underlying Asset;

 

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

 

  thereafter, 100% (net of corporate income taxes applicable to a Series, if any) by way of distribution to the Interest Holders of that Series on a pro rata percentage basis.

 

 

 

 9 

 

 

 

As described above in “Operating Expenses” Operating Expenses Reimbursement Obligations are not payable prior to a distribution of Distributable Cash to Interest Holders of a Series. Instead, Operating Expenses Reimbursement Obligations are payable only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash.

 

Timing of Distributions:

The Manager may make periodic distributions of Distributable Cash remaining to Interest Holders of a Series subject to it having the right, in its sole discretion, to withhold distributions in order to meet anticipated costs and liabilities of a Series. The Manager may change the timing of potential distributions to a Series in its sole discretion.

 

FOR THE AVOIDANCE OF DOUBT, A RACE WIN BY A SERIES’ RACEHORSE WILL NOT RESULT IN AN IMMEDIATE DISTRIBUTION OF CASH TO INTEREST HOLDERS.

 

No Trading Market:

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

 

The Company estimates that each Series will exist for 4-6 years (the racing life cycle) and then the Underlying Asset will be sold, which will be the primary liquidity event other than Distributions on Gross Proceeds as discussed above. A sale of the Underlying Asset may occur at a lower value than when the Underlying Asset was first acquired or at a lower price than the aggregate of costs, fees and expenses used to purchase the Underlying Asset, including the repayment of the Operating Expenses Reimbursement Obligations described above.

 

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

 

Indemnification: To the fullest extent permitted by applicable law, subject to approval of each Series Manager, all officers, directors, shareholders, partners, members, employees, representatives or agents of the Manager or a Series Manager, or their respective affiliates, employees or agents (each, a “Covered Person”) shall be entitled to indemnification from such Series (and the Company generally) for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Series Manager, or such Series and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement and any Series Agreement, except that no Covered Person shall be entitled to be indemnified for any loss, damage or claim incurred by such Covered Person by reason of fraud, deceit, gross negligence, willful misconduct or a wrongful taking with respect to such acts or omissions; provided, however, that any indemnity under the Operating Agreement shall be provided out of and to the extent of the assets of the such Series only, and no other Covered Person or any other Series or the Company shall have any liability on account thereof.

 

 

 

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  To the fullest extent permitted by applicable law, subject to approval of a Series Manager, all expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by such Series prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by such Series of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in the Operating Agreement.

 

Transfers: The Manager may refuse a transfer by an Interest Holder of its Interest(s) if such transfer would result in (a) the assets of a Series being deemed “plan assets” for purposes of ERISA, (b) result in a change of U.S. federal income tax treatment of the Company and/or a Series, or (c) the Company, a Series or the Manager being subject to additional regulatory requirements. Furthermore, as the Interests are not registered under the Securities Act of 1933, as amended (the “Securities Act”), transfers of Interests may only be effected pursuant to exemptions under the Securities Act and permitted by applicable state securities laws and there is a right of first refusal on transfers of Interests. See “Description of Interests Offered – Limitations on Transferability” for more information.

 

Where to Buy; Transfer Agent: Series Interests will be available for purchase exclusively on the MyRacehorse™ Platform at myracehorse.com. These Series Interests will be issued in book-entry electronic form only. StartEngine Secure LLC is the SEC-registered transfer agent and registrar for the Series Interests.
   
Governing law: The Company and the Operating Agreement will be governed by Nevada law and any dispute in relation to the Company and the Operating Agreement is subject to the dispute resolution provisions set forth therein. If an Interest Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement, it would be required to do so in compliance with these dispute resolution provisions. Notwithstanding the foregoing, mandatory arbitration provisions set forth therein do not apply to claims made under the federal securities laws.

 

 

 

 

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RISK FACTORS

 

The Interests offered hereby are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose their entire investment. There can be no assurance that the Company’s investment objectives will be achieved or that a secondary market would ever develop for the Interests, whether via the MyRacehorse™ Platform, via third party registered broker-dealers or otherwise. The risks described in this section should not be considered an exhaustive list of the risks that prospective Investors should consider before investing in the Interests. Prospective Investors should obtain their own legal and tax advice prior to making an investment in the Interests and should be aware that an investment in the Interests may be exposed to other risks of an exceptional nature from time to time. The following considerations are among those that should be carefully evaluated before making an investment in the Interests.

 

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

 

An investment in our Interests is a speculative investment and, therefore, no assurance can be given that you will realize your investment objectives.

 

No assurance can be given that Investors will realize a return on their investments in us or that they will not lose their entire investment in our Interests. For this reason, each prospective subscriber for our Interests should carefully read this Offering Circular. All such persons or entities should consult with their legal and financial advisors prior to making an investment in the Interests.

 

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

 

A purchase of Interests in a Series does not constitute an investment in the Company, any other Series of the Company, or the Underlying Asset directly. This results in limited voting rights of the Investor, which are solely related to such Series. Investors will have voting rights only with respect to certain matters, primarily relating to the removal of the Manager for “cause.” The Manager thus retains significant control over the management of the Company and the Underlying Asset.  Furthermore, because the Interests in a Series do not constitute an investment in the Company as a whole, holders of the Interests in the Series will not receive any economic benefit from, or be subject to the liabilities of, the assets of any other Series. In addition, the economic interest of a holder in a Series will not be identical to owning a direct undivided interest in the applicable Underlying Asset because, among other things, a Series may be required to pay corporate taxes before distributions are made to the holders, and the Manager will receive a fee in respect of its management of the applicable Underlying Asset.

 

There is no public trading market for our securities.

 

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

 

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

 

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

 

 

 

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Lack of operating history.

 

The Company and each Series were recently formed, have generated nominal revenues and have limited operating history upon which prospective Investors may evaluate their performance. No guarantee can be given that the Company and any Series will achieve their investment objectives, the value of any Underlying Asset will increase or that any Underlying Asset will be successfully monetized.

 

Limited Investor appetite.

 

Due to the start-up nature of the Company, there can be no guarantee that the Company will reach its funding target from potential Investors with respect to any Series or future proposed Series. In the event the Company does not reach a funding target, it may not be able to achieve its investment objectives by acquiring additional interests in underlying assets through the issuance of further Series and monetizing them together with interests in such Underlying Assets to generate distributions for Investors. In addition, if the Company is unable to raise funding for additional Series, this may impact any Investors already holding interests as they will not see the benefits which arise from economies of scale following the acquisition by other Series of additional underlying assets and other monetization opportunities (e.g., Membership Experience Programs - hosting events with the race horses, winners circle access, race day privileges, etc.).

 

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

 

Few, if any, other companies crowd fund racehorse ownership interests or run a platform for crowd funding of interests in racehorses. The Company and the Interests may not gain market acceptance from potential Investors, potential Horse Sellers or service providers within the racehorse ownership/syndicate industry, including insurance companies, syndicate managers, training facilities or maintenance partners. This could result in an inability of the Manager to operate the Underlying Asset profitably. This could impact the issuance of further series of interests and additional underlying assets being acquired by the Company. This would further inhibit market acceptance of the Company and if the Company does not acquire any additional underlying assets, Investors would not receive any benefits which arise from economies of scale (such as reduction in offering costs as a large number of interests in underlying assets may be listed on subsequent offering circulars, group discounts on mortality insurance and/or other insurance policies, and the ability to monetize its interest in underlying assets through Membership Experience Programs, as described below, that would require the Company to own a substantial number of its interest in underlying assets).

 

Offering amount exceeds value of Underlying Asset.

 

The size of each Offering will exceed the purchase price of such Series’ interest in the applicable Underlying Asset as at the date of such Offering (as the proceeds of each Offering in excess of the purchase price of the applicable Underlying Asset will be used to pay fees, costs and expenses incurred in making each Offering, acquiring the interest in the applicable Underlying Asset, Due Diligence Fees and Operating Expenses). If the applicable Underlying Asset had to be sold and there has not been substantial appreciation of the applicable Underlying Asset prior to such sale, there may not be sufficient proceeds from the sale of the applicable Underlying Asset to repay Investors the amount of their initial investment (after first paying off any liabilities on the horse at the time of the sale including but not limited to any outstanding Operating Expenses Reimbursement Obligation or Kickers or other contractual obligations in Co-Ownership Agreements) or any additional profits in excess of this amount.

 

Excess Operating Expenses

 

Operating Expenses related to a particular Series incurred post-Closing shall be the responsibility of the Series. The Company maintains a reserve for estimated Operating Expenses for the Underlying Asset, which excludes UpKeep Fees.

 

The Manager or an affiliate will incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from ongoing revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”). Notwithstanding the foregoing, there will still exist a smaller pre-paid cash reserve for Prepaid Expenses and insurance, administrative and general Operating Expenses which is intended to cover three years of such projected Operating Expenses (excluding Upkeep Fees).

 

 

 

 13 

 

 

However, if the Operating Expenses of a particular Series exceed the amount of revenues generated from the interest in the Underlying Asset of such Series, the Manager retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

If additional Interests are issued in a particular Series, this would dilute the current value of the Interests held by existing Investors and the amount of any future distributions payable to such existing Investors.

  

In any event, an Interest Holder will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution, such Interest Holder will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the Operating Expenses Reimbursement Obligations.

 

Reliance on the Manager and its personnel.

 

The successful operation of the Company (and therefore, the success of the Interests) is in part dependent on the ability of the Manager to source, acquire and manage the Underlying Assets. As Experiential Squared, Inc. has only been in existence since June 2016 and is an early-stage company, it has no significant operating history within the horse racing sector, which evidences its ability to find, acquire, manage and utilize the Underlying Assets.

 

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

 

Furthermore, the success of the Company and the value of the Interests is dependent on there being critical mass from the market for the Interests and that the Company is able to acquire a number of underlying assets in multiple series of interests so that the Investors can benefit from economies of scale which arise from holding more than one Underlying Assets (e.g., a reduction in offering costs if a large number of Underlying Assets are listed on subsequent offering circulars at the same time). In the event that the Company is unable to source additional Underlying Assets due to, for example, competition for such Underlying Assets or lack of Underlying Assets available in the marketplace, then this could materially impact the success of the Company and its objectives of acquiring additional Underlying Assets through the issuance of further series of interests and monetizing them together with the Underlying Assets at the Membership Experience Programs to generate distributions for Investors.

 

Liability of investors between series of interests.

 

The Company is structured as a Nevada series limited liability company that issues a separate series of interests for each Underlying Asset. Each Series will merely be a separate series and not a separate legal entity. Under the Nevada Revised Statutes (the “NRS”), if certain conditions (as set forth in NRS Section 86.296(3)) are met, the liability of investors holding one series of interests is segregated from the liability of investors holding another series of interests and the assets of one series of interests are not available to satisfy the liabilities of other series of interests. Although this limitation of liability is recognized by the courts of Nevada, there is no guarantee that if challenged in the courts of another U.S. State or a foreign jurisdiction, such courts will uphold a similar interpretation of Nevada corporation law, and in the past certain jurisdictions have not honored such interpretation. If the Company’s series limited liability company structure is not respected, then Investors may have to share any liabilities of the Company with all investors and not just those who hold the same series of interests as them. Furthermore, while we intend to maintain separate and distinct records for each series of interests and account for them separately and otherwise meet the requirements of the NRS, it is possible a court could conclude that the methods used did not satisfy Section 86.296(3) of the NRS and thus potentially expose the assets of such Series to the liabilities of another Series. The consequence of this is that Investors may have to bear higher than anticipated expenses which would adversely affect the value of their Interests or the likelihood of any distributions being made by a particular Series to its Investors. In addition, we are not aware of any court case that has tested the limitations on inter-series liability provided by Section 86.296(3) in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of one series of interests should be applied to meet the liabilities of the other series of interests or the liabilities of the Company generally where the assets of such other series of interests or of the Company generally are insufficient to meet our liabilities.

 

 

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If any fees, costs and expenses of the Company are not allocable to a specific Series, they will be borne proportionately across all of the Series (which may include future Series and Interests yet to be issued). Although the Manager will allocate fees, costs and expenses acting reasonably and in accordance with its sole discretion, there may be situations where it is difficult to allocate fees, costs and expenses to a specific series of interests and therefore, there is a risk that a series of interests may bear a proportion of the fees, costs and expenses for a service or product for which another series of interests received a disproportionately high benefit.

  

Potential breach of the security measures of the MyRacehorse™ Platform.

 

The highly automated nature of the MyRacehorse™ Platform through which potential investors may acquire interests may make it an attractive target and potentially vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. The MyRacehorse™ Platform processes certain confidential information about investors, the Horse Sellers and the underlying assets. While we intend to take commercially reasonable measures to protect the confidential information and maintain appropriate cybersecurity, the security measures of the MyRacehorse™ Platform, the Company, the Manager or the Company’s service providers (including Dalmore) could be breached. Any accidental or willful security breaches or other unauthorized access to the MyRacehorse™ Platform could cause confidential information to be stolen and used for criminal purposes or have other harmful effects. Security breaches or unauthorized access to confidential information could also expose the Company to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity, or loss of the proprietary nature of the Manager’s and the Company’s trade secrets. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the MyRacehorse™ Platform software are exposed and exploited, the relationships between the Company, investors, users and the Horse Sellers could be severely damaged, and the Company or the Manager could incur significant liability or have their attention significantly diverted from utilization of the underlying assets, which could have a material negative impact on the value of interests or the potential for distributions to be made on the interests.

 

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, the Company, and other third-party service providers 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 investors, the Horse Sellers or service providers within the industry, including insurance companies, to lose confidence in the effectiveness of the secure nature of the MyRacehorse™ Platform. Any security breach, whether actual or perceived, would harm the reputation of the Company and the MyRacehorse™ Platform and the Company could lose investors and the Horse Sellers. This would impair the ability of the Company to achieve its objectives of acquiring additional underlying assets through the issuance of further series of interests and monetizing them together with the Underlying Asset at the Membership Experience Programs.

 

The novel coronavirus could have a material adverse impact on our business, results of operations, financial condition, cash flows or liquidity.

 

The outbreak of a novel coronavirus (which causes the disease now known as COVID-19), was first identified in December 2019 in Wuhan, China, and has since spread globally. Government efforts to contain the spread of the coronavirus through lockdowns of cities, business closures, restrictions on travel and emergency quarantines, among others, and responses by businesses and individuals to reduce the risk of exposure to infection, including reduced travel, cancellation of meetings and events, and implementation of work-at-home policies, among others, have caused significant disruptions to the global economy and normal business operations across a growing list of sectors and countries.  The foregoing are likely to adversely affect business confidence and consumer sentiments, and have been, and may continue to be, accompanied by significant volatility in financial and commodity markets.  The spread of the coronavirus, particularly if it develops into a worldwide health crisis, also may have broader macro-economic implications, including reduced levels of economic growth and possibly a global recession, the effects of which could be felt well beyond the time the spread of infection is contained.

 

In terms of the impact on sporting events, many countries have begun to impose emergency measures that ban large public gatherings.  A wide range of sports events around the world have been postponed or cancelled due to concerns over coronavirus contagion, including at the urging of clubs unwilling to play in stadiums without fans. As it relates to the horse racing industry, live racing has been able to operate in certain jurisdictions without fans, and in other jurisdictions has been restricted from holding races even without fans. Live racing is the only method of generating revenue for an active racehorse and, without racing, no revenue will be derived for a horse, despite the expenses to care for the horse continuing. Virtually all racing jurisdictions have continued to allow training, but this could change without notice impacting a horse’s ability to maintain their level of fitness and conditioning resulting in a compromised ability to return to the races upon restrictions being lifted relative to live racing.

 

 

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The coronavirus and the responses thereto could have a range of other effects on us.  For example, the implementation of business continuity plans in a fast moving public health emergency could have an adverse effect on our internal controls (potentially giving rise to significant deficiencies or material weaknesses) and also increase our vulnerability to information technology and other systems disruptions.

 

We currently are unable to predict the duration and severity of the spread of the coronavirus, and responses thereto, on our business and operations, and on our results of operations, financial condition, cash flow and liquidity, as these depend on rapidly evolving developments, which are highly uncertain and will be a function of factors beyond our control, such as the speed of contagion, the implementation of effective preventative and containment measures, the development of effective medical solutions, the timing and scope of governmental restrictions on public gatherings, mobility and other activities, financial and other market reactions to the foregoing, and reactions and responses of the populace both in affected regions and regions yet to be affected.  While we expect we will suffer adverse effects, the more severe the outbreak and the longer it lasts, the more likely it is that the effects on us and our business will be materially adverse.

 

Risks relating to the Offerings

 

We are offering our Interests pursuant to recent amendments to Regulation A promulgated pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our Interests less attractive to investors.

 

As a Tier 2 issuer, we will be subject to scaled disclosure and reporting requirements which may make an investment in our Interests less attractive to investors who are accustomed to enhanced disclosure and more frequent financial reporting. In addition, given the relative lack of regulatory precedent regarding the recent amendments to Regulation A, there is a significant amount of regulatory uncertainty in regards to how the Commission or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to. If our scaled disclosure and reporting requirements, or regulatory uncertainty regarding Regulation A, reduces the attractiveness of the Interests, we may be unable to raise the funds necessary to fund future offerings, which could impair our ability to develop a diversified portfolio of racehorses and create economies of scale, which may adversely affect the value of the Interests or the ability to make distributions to Investors.

 

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

 

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

 

Impact of non-compliance with regulations.

 

As of September 3, 2020, the Interests are being sold through Dalmore, which will act as the broker/dealer of record and is a registered broker/dealer under the Securities Exchange Act of 1934 (the “Exchange Act”) and Member FINRA/SIPC. Interests will be registered in each state where the Offering and sale of such Interests will occur prior to the launch of such Offering. In addition, if the Manager is required to register as a ‘broker-dealer’, there is a risk that any Series of Interests offered and sold while the Manager was not registered may be subject to a right of rescission, which may result in the early termination of the Series of Interests.

 

Furthermore, the Company is not registered and will not be registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the Manager is not registered and will not be registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), and thus the Interests do not have the benefit of the protections of the Investment Company Act or the Investment Advisers Act. The Company and the Manager have taken the position that the underlying assets are not “investment securities” within the meaning of the of the Investment Company Act or the Investment Advisers Act. Further, the Company, any Series, the Manager, and/or any of their respective affiliates intend that no Series will hold underlying assets in which the Manager has limited or no management control, so that it is not considered to be an investment company within the meaning of the Investment Company Act. These positions, however, are based upon applicable case law that is inherently subject to judgments and interpretation.  If the Company were to be required to register under the Investment Company Act or the Manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of each Series and the Manager may be forced to liquidate and wind up each Series or rescind the Offerings for any of the Series or the offering for any other series of interests.

 

 

 

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Possible Changes in Federal Tax Laws.

 

The Internal Revenue Code (the “Code”) is subject to change by Congress, and interpretations of the Code may be modified or affected by judicial decisions, by the Treasury Department through changes in regulations and by the Internal Revenue Service through its audit policy, announcements, and published and private rulings. Although significant changes to the tax laws historically have been given prospective application, no assurance can be given that any changes made in the tax law affecting the Company, a series, or an investment in any series of interest of the Company would be limited to prospective effect. Accordingly, the ultimate effect on an Investor’s tax situation may be governed by laws, regulations or interpretations of laws or regulations which have not yet been proposed, passed or made, as the case may be.

 

We have elected to delay compliance with certain new or revised financial accounting standards.

 

We have elected to delay compliance with the new revenue recognition accounting standard, ASC Topic 606 Revenue from Contracts with Customers, which took effect on January 1, 2018 until the date that a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) is required to comply with such new or revised accounting standard, if such standard also applies to companies that are not issuers. Management does not believe the provisions of ASC Topic 606 will have a material impact on our financial position or results of operations, but some investors may view this as a lack of access to certain information they may deem important.

 

Risks relating to the Horse Racing industry

 

There can be no assurances that the value of the racehorse (whether it is a Thoroughbred, Quarter Horse or Standardbred) which is owned by the Series will not decrease in the future which may have an adverse impact on the Company’s or an Individual Series’ activities and financial position.

 

The business of owning, training and racing horses is a high-risk venture. There is no assurance that any horse and therefore any interest in such horse acquired by the Series will be successful. Horses are subject to aging, illness, injury and disease which may result in permanent or temporary retirement from racing, restrictions in racing schedules, layups, and even natural death or euthanasia of the animal. There can be no assurances that the value of the interest in such Underlying Asset which may be acquired and owned by a Series, will not decrease in the future or that a Series will not subsequently incur losses on the racing careers or sale or other disposition of any or all of the horses which such Series may acquire. No combination of management ability, experience, knowledge, care or scientific approach can avoid the inherent possibilities of loss.

  

While the Company believes that there is a market for horse breeding, training and racing, such a market is highly volatile. The horse industry is dependent upon the present and future values of horses and of the Company’s and Series’ horse(s) in particular. The Company can provide no assurance that it will be successful in its proposed activity. The expenses incurred may result in operating losses for the Company and there is no assurance that the Company will generate profits or that any revenues generated will be sufficient to offset expenses incurred or would result in a profit to the Company. As a result, it is possible that Investors will lose all or a substantial part of their investment in the Company. Additionally, there is no assurance that there will be any cash available for distribution.

 

The valuation of racehorses is a highly speculative matter and the market for racehorses is extremely volatile. If the valuation of an individual Series' horse decreases the individual Series will still be responsible for the expenses of maintaining, training and racing the horse at lower level races or smaller venues which could negatively impact the revenues from the horse.

 

The valuation of horses (particularly racehorses) is a highly speculative matter and prices fluctuated widely, particularly in recent years. The success of the Company, and each an individual Series, is dependent upon the present and future values of racehorses generally, and of the Company's racehorses in particular, the racing industry in general, as well as the racing success of the Underlying Assets. Although the future value of horses generally cannot be predicted, it will be affected by general economic conditions such as inflation, employment, recessions, tariffs, unstable or adverse credit market conditions, other business conditions, the amount of money available for investment purposes, and the continued interest of investors and enthusiasts in the racehorse industry. In the past, there has been growing foreign investment in certain types of racehorses, and the continued ability of foreign investors to acquire horses is subject to change due to economic, political or regulatory conditions. The value of racehorses is also subject to federal income tax treatment of racing and related activities, the continuation or expansion of legalized gambling and the size of racing purses, all which cannot be predicted. The expense of maintaining, boarding, training and racing horses can be expected to increase during the term of a Series or the Company, regardless of what happens to the future market price of racehorses or the performance of the Company racehorses. Further, there is always a risk of liability for damages caused by the Underlying Assets to other persons or property.

 

 

 

 17 

 

 

The cost of racing is unpredictable and speculative and may negatively impact the Company’s and each individual Series’ ability to generate revenue.

 

Increases in operation costs, labor rates and other variable costs, such as costs of feed and grain and costs of transporting animals (all of which are subject to inflationary pressure and should be expected to increase), to an extent which cannot be matched by increases in revenue. The racehorse industry, like other industries, is subject to labor disputes, labor shortages, and government intervention, changes in laws, licensing or regulatory restrictions may adversely impact the availability of grooms, trainers, jockeys and other horse industry workers. Adverse weather and economic conditions may result in unforeseen circumstances including, without limitation, restrictions on attendance at a particular race or racetrack, ability to transport the horses, and increases in costs or decreases in revenues. Changes in government regulations, whether or not relating to the horse racing industry, may result in additional expenses or reduced revenue from operations.

 

If a horse is unsuccessful in racing, becomes sick or injured, the Underlying Asset’s value will be adversely affected which may have a negative impact of the Company's and such individual Series' valuation and its revenue. 

 

Horse racing is extremely speculative and expensive. In the event that a horse in which a Series has an interest was to be transported to various tracks and training centers throughout the United States, and thus exposed too many other horses in training, the risk of illness, injury or death increases significantly. A horse in which a Series has an interest must earn enough through racing to cover expenses of boarding and training. If a horse in which a Series has an interest is unsuccessful in racing, their value will be adversely affected. Furthermore, revenues from racing are dependent upon the size of the purses offered. The size of the purses depends in general on the extent of public interest in horse racing, and in particular on the relative quality of the specific horses in contention in any specific meeting or race. Although public interest has been strong in recent years, there is no assurance that public interest will remain constant, much less increase. Legalized gambling proliferating in many states threatens to curtail interest in horse racing as a means of recreation. In addition, there is no assurance that the horse in which a Series has an interest will be of such quality that they may compete in any races which offer purses of a size sufficient to cover such Series' expenses.

 

Horse racing could be subjected to restrictive regulation or banned entirely which could adversely affect the conduct of the Company's business.

 

The racing future of and/or market for the horses in which the Company and/or a Series' has an interest depends upon continuing governmental acceptance of horse racing as a form of legalized gambling. Although horse racing has a long history of acceptance in the United States and as a source of revenue, at any time, horse racing could be subjected to restrictive regulation or banned entirely. The value of the interest in an Underlying Asset would be substantially diminished by any such regulation or ban. Horse racing is regulated in various states and foreign countries by racing regulatory bodies which oversee the conduct of racing as well as the licensing of owners, trainers and others. Further, other forms of gambling are being approved throughout the United States and therefore no assurance can be provided that the legalization of other forms of gambling and competition from non-gambling sports and other activities will not adversely affect attendance and participation, and therefore the profitability of horse racing and sales. Lastly, our ownership structure is novel and may prepare us to seek regulatory approval to race in certain jurisdictions.

 

The Company may not purchase insurance on its horse which could require Company resources to be spent to cover any loses from the death or injury of a horse.

 

The decision to purchase insurance on a horse is made on a horse-by-horse basis. There is no guarantee that a horse you invest in will be insured. Mortality insurance provides coverage in many instances where a horse dies or must be humanely euthanized. Loss of use insurance covers yearlings and horses of racing age that have not yet been put into training. Loss of use insurance is intended to cover up to 60% of the horse’s fair market value or 60% of the insured value (whichever is less) if the horse is permanently incapable of racing due to an injury, illness or disease. Medical insurance covers possible risks of injury during racing or training. Liability insurance covers the risk that the horse in which the Company or a Series has an interest causes death, injury or damage to persons or property. Without insurance, an individual Series is responsible for any costs or depreciation in value related to the injury, illness, disability or death of the horse.  The death of a horse could mean the individual Series will be left with no asset. The payment of such liabilities may have a material adverse effect on our financial position. See Series descriptions as to whether insurance has or has not been purchased related to your Interests. All insurance coverages described above are subject to the individual terms, conditions and exclusions of the relevant insurance policies in place at the time.

  

 

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A decrease in average attendance per racing date coupled with increasing costs could jeopardize the continued existence of certain racetracks which could negatively impact the Company's operations.

 

A decrease in average attendance per racing date coupled with increasing costs could jeopardize the continued existence of certain racetracks which could impact the availability of race tracks available for horses in which the Company or a Series has an interest to race at and then negativity impact its operations.

 

Industry practices and structures have developed which may not be attributable solely to profit-maximizing, economic decision-making which may have an adverse impact on our Company's activities business. 

 

Because horse racing is a sport as well as a business, industry practices and structures have developed which not be attributable solely to profit-maximizing, economic decision-making. For instance, a particular bloodline could command substantial prices owing principally to the interest of a small group of individuals having particular goals unrelated to economics. A decline in this interest could be expected to adversely affect the value of the bloodline.

 

Series may only own a minority interest in Underlying Assets as a result it may not have sufficient control regarding the training or racing of the Underlying Asset.

 

A Series will not always own a majority interest in a particular horse. Therefore, despite its best efforts to build in oversight rights and major decision rights (such as the sale of an Underlying Asset) a Series and the Company may have minimal input with regard to the race selection and training of the horse(s). As a result, the Company and such Series may be dependent on the majority owners’ decisions as to when and where to race or show the horse and to its training regime. Additionally, there are situations in which a trainer or owner may have a conflict of interest which could negatively impact the ability of a horse to be placed in a particular race and given priority in workout times, jockeys or stabling.

 

Market shortages may impact the ability of the Series to generate revenue.

 

The Company, through its individual Series, will primarily engage in horse racing in the United States. The future success of these activities will depend upon the ability of the Manager to purchase an interest in high-quality horses through an individual Series. The future success of these activities also depends upon whether the horse is being handled by highly skilled trainers and ridden by highly skilled jockeys. Because horse racing is an intensely competitive activity and the Company will be competing with a number of persons who have substantially greater experience and financial resources than Company to purchase interests in the best racehorses, there can be no assurance that the Company will be successful in the endeavors of pursuing certain racehorses for any Series. Further, once purchased, because the Company may have only a minority interest in such horse, the Company will have limited input into the training, handling, and management of the horse and therefore can make no assurances as to the success of the investment.

  

The Company, via an individual Series, has no intention of paying dividend payments on a regular schedule as revenues are irregular, seasonal, and unpredictable.

 

The revenues, if any, of an individual Series may be highly irregular and seasonal. While the Manager will endeavor to sell horses or interests in horses for cash at the time of sale, there can be no assurance that other payment terms will not be required by the relevant market conditions. The consequent variance in the amount or the timing of the Company's dividends, if any, could pose particular risks for Investors who seek to transfer their Interests during the term of the Company.

 

Competitive interests and other factors can have unforeseen consequences.

 

The horseracing industry is highly competitive and speculative. Horseracing in the United States and in foreign countries draws competitors and participants from locations throughout the United States and overseas, who have been in the business of horseracing for many years and have substantially greater financial resources than Company. The Company will be competing in its racing and selling activities with such persons. Similarly, horse markets are international, and auctions are frequently internationally advertised. This can be favorable in that it increases the value of Underlying Assets but, by the same token, Company has little influence and may not be able to compete with such competitors in the acquisition of interests in horses. The Company will be competing in the purchase and sale of horses with most of the major horse breeders and dealers in the United States and foreign countries. Thus, prices at which the Company buys or sells its interests in the Underlying Assets may vary dramatically. Market factors, which are beyond the Company’s control, will greatly affect the profitability of the Company. Such factors include, but are not limited to, auction prices, private sales, foreign investors, federal income tax treatment of the racing industry and the size of racing purses. Further, the Company and the concept of crowdfunding in the racehorse industry is a new venture and thus the risk of unforeseen issues and problems is high.

 

 

 

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There is a lack of financial forecasts for the Company and for individual Series.

 

While the Company believes that there is a market for racehorse breeding, training and racing, such a market is highly volatile. The racehorse industry is dependent upon the present and future values of racehorses and of the horses in which the Company or a Series invested in particular. There can be no assurance that the Company will be successful in its proposed activity. The expenses incurred may result in operating losses for the Company and there is no assurance that the Company will generate profits or that any revenues generated will be sufficient to offset expenses incurred or would result in a profit to the Company. As a result, it is possible that the Investors will lose all or a substantial part of their investment in the Company. Additionally, there is no assurance that there will be any cash available for dividends. In addition, dividends, if any, may be less than their distributive share of taxable income and the Investors’ tax liability could require out-of-pocket expenditures by the Investors.

 

Lack of Diversification.

 

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

 

Risks Related to Ownership of our Interests

 

You will have only limited voting rights regarding our management and it will be difficult to remove our Manager, therefore, you will not have the ability to actively influence the day-to-day management of our business and affairs.

 

Our Manager has sole power and authority over the management of our Company and the individual Series. Furthermore, our Manager may only be removed for “Good Cause” meaning fraud, deceit, gross negligence, willful misconduct or a wrongful taking, bad faith, death, disability or disappearance, etc.

 

To remove the Manager for “Good Cause”, Members holding in excess of 75% of the percentage interests, must approve. Therefore, you will not have an active role in our Company’s management and it would likely be difficult to cause a change in our management. As a result, you will not have the ability to alter our management’s path if you feel they have erred.

  

Lack of voting rights.

 

The Manager has a unilateral ability to amend the Operating Agreement in certain circumstances without the consent of the Investors, and the Investors only have limited voting rights in respect of a Series. Investors will therefore be subject to any amendments the Manager makes (if any) to the Operating Agreement and also any decision it takes in respect of the Company and the applicable Series, which the Investors do not get a right to vote upon. Investors may not necessarily agree with such amendments or decisions and such amendments or decisions may not be in the best interests of all of the Investors as a whole but only a limited number.

 

Furthermore, the Manager can only be removed as manager of the Company and each Series in very limited circumstances. Investors would therefore not be able to remove the Manager merely because they did not agree, for example, with how the Manager was operating an underlying asset.

 

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

 

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

 

 

 

 20 

 

 

Funds from purchasers accompanying subscriptions for the Interests will not accrue interest prior to admission of the subscriber as an Investor in the Series, if it occurs, in respect of such subscriptions.

 

The funds paid by purchasers for the Interests will go into the Company’s general operating account and be allocated to the specific Series which is subject of the investment. Investors will not have the use of such funds or receive interest thereon pending the completion of said Offering. No subscriptions will be accepted and Interests sold unless valid subscriptions for such Offering are received and accepted prior to the termination of the Offering Period. If we terminate an Offering prior to accepting a subscriber’s subscription, funds will be returned, without interest or deduction, to the proposed Investor.

 

The Company’s Operating Agreement contains mandatory arbitration provisions that restrict your ability to bring claims against the company, except in instances of claims related to Federal and State securities laws.

 

Investors will be obligated to submit any claims against the Company to arbitration, except in instances of claims related to Federal and State securities laws.  Investors will be limited in the location, venue and circumstances under which a claim for damages can be brought against the Company or its officer, directors, managers or related parties. This limitation reduces the ability of Investors to dispute or fight against decisions made by the Company or its managers which may be viewed as having a negative impact on the value of your underlying investment.

 

 

 

 

 

 

 

 21 

 

 

POTENTIAL CONFLICTS OF INTEREST

 

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

 

Manager’s Fees and Compensation

 

None of the compensation set forth under "Compensation to Manager and Its Affiliates" was determined by arms' length negotiations. It is anticipated that the commissions and profits received by the Manager may be higher or lower depending upon market conditions.

 

This conflict of interest will exist in connection with Company management and Investors must rely upon the duties of the Manager of good faith and fair dealing to protect their interests, as qualified by the Operating Agreement.

 

The Manager has the right to retain the services of other firms, in addition to or in lieu of the Manager, to perform various services, asset management and other activities in connection with the business that is described in this Offering Circular.

 

The Company converted an advance from founders outstanding as of December 31, 2017 to equity in the Company to ease the cash flow burden to the Company. The Company also has borrowed $1,119,860 from the manager of the Company in order to acquire horse assets prior to establishing and issuing securities in the underlying series holding the horse assets for the fiscal year ended December 31, 2020. Because these are related party transactions, no guarantee can be made that the terms of the arrangements are at arm’s length.

 

Upkeep Fee Liabilities; Operating Expenses Reimbursement Obligations; Manager Loans

 

The Manager or an affiliate will incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash from ongoing revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”). Notwithstanding the foregoing, there will still exist a smaller pre-paid cash reserve for Prepaid Expenses and insurance, administrative and general Operating Expenses which is intended to cover three years of such projected Operating Expenses (excluding Upkeep Fees).

 

In addition, the Manager retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

An Interest Holder will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution, such Interest Holder will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the Operating Expenses Reimbursement Obligations.

  

Other Series or Businesses

 

The Manager may engage for its own account, or for the account of others, in other business ventures, similar to that of the Company or otherwise, and neither the Company nor any Investor shall be entitled to any interest therein.

 

The Company will not have independent management and it will rely on the Manager for the operation of the Company. The Manager will devote only so much time to the business of the Company as is reasonably required. The Manager will have conflicts of interest in allocating management time, services and functions between its existing business interests other than the Company and any future entities which it may organize as well as other business ventures in which it may be involved. The Manager believes it has sufficient staff available to be fully capable of discharging its responsibilities to all such entities.

 

 

 

 22 

 

 

The Manager, acting in the same capacities for other investors, companies, partnerships or entities, may result in competition with individual Series, including other Series. There are no restrictions on the Manager, or any of its affiliates, against operating other businesses in such competition with the Company. If the Manager or any of its affiliates did operate such a business that competed for clients with the Company, it could substantially impair the Company's financial results.

 

Manager Affiliation with Majority Owners

 

The Manager may independently determine to invest in syndicates that own majority interests in certain assets owned by individual Series. The Manager may derive compensation from its membership in these syndicates in addition to any compensation earned as a Manager of an individual Series.

 

An affiliate of Spendthrift Farm LLC is a Majority Stockholder in the Manager and Spendthrift is frequently a Horse Seller and Co-Owner in our Underlying Assets. Our interests in these transactions may be different from the interests of affiliates in these transactions.

 

On March 17, 2020, an affiliate of Spendthrift Farm, LLC, a Kentucky limited liability company (“Spendthrift”), became a majority stockholder in Experiential Squared, Inc., the Manager of the Company. Spendthrift is also a Horse Seller and Co-Owner with the Company in several of the Underlying Assets of existing Series and will continue to hold those positions in future Series. As such, the Company recognizes that there may be a heightened risk of conflicts of interest representing our interests in these transactions on the one hand and the interests of the Manager and its affiliates in preserving or furthering their respective relationships on the other hand and/or proper valuation of certain transactions (or the perception thereof). The Manager and the Company, in determining whether to approve or authorize a particular transaction with Spendthrift, will consider whether the transaction between the Company and Spendthrift is fair and reasonable to the Company and has terms and conditions no less favorable to us than those available from unaffiliated third parties.

 

Lack of Independent Legal Representation

 

The Members have not been separately represented by independent legal counsel in connection with the Company’s organization or in their dealings with the Manager. The Investors must rely on the good faith and integrity of the Manager to act in accordance with the terms and conditions of this Offering. The terms of the management of the business and the operating agreement have all been prepared by the Company. Therefore, the terms of these agreements have not been negotiated in an arms' length transaction, and there is no assurance that the Company could not have obtained more favorable terms from a third party for any of these agreements. PROSPECTIVE INVESTORS MUST RELY ON THEIR OWN LEGAL COUNSEL FOR LEGAL ADVICE IN CONNECTION WITH THIS INVESTMENT.

 

We do not have a conflicts of interest policy.

 

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

 

DILUTION

 

Dilution means a reduction in value, control or earnings of the Interests the Investor owns. There will be no dilution to any Investors associated with any Offering. However, from time to time, additional Series Interests may be issued in order to raise capital to cover the applicable Series’ ongoing operating expenses. See “Description of the Business – Operating Expenses” for further details.

 

 

 

 

 23 

 

 

USE OF PROCEEDS – SERIES CARROTHERS

 

We estimate that the gross proceeds of the Series Carrothers Offering will be $515,100.00 and assumes the full amount of the Series Carrothers Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $307,004.70 59.60%
Brokerage Fee (1) $5,151.00 1.0%
Due Diligence Fee $77,265.00 15.0%
Offering Expenses (None) (2) $0.00 0.0%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $125,679.30 24.40%
Total Fees and Expenses $208,095.30 40.40%
Total Proceeds $515,100.00 100.0%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Carrothers Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Carrothers will last through March 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-two months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 51% interest in Carrothers from the Horse Seller for a total cost of $307,004.70 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Carrothers Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Carrothers Interests are sold in connection with the Series Carrothers Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

  

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Carrothers, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

Carrothers has commenced racing. Thus, the Company anticipates that Carrothers may soon start generating revenue which should allow Series Carrothers to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Carrothers need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses as referenced above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 24 

 

 

USE OF PROCEEDS – SERIES ECHO WARRIOR 19

 

We estimate that the gross proceeds of the Series Echo Warrior 19 Offering will be $348,000.00 and assumes the full amount of the Series Echo Warrior 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $162,000.00 46.55%
Brokerage Fee (1) $3,480.00 1.000%
Due Diligence Fee $52,200.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $130,320.00 37.45%
Total Fees and Expenses $186,000.00 53.45%
Total Proceeds $348,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Echo Warrior 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Echo Warrior 19  will last through March 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 60% interest in Echo Warrior 19 from the Horse Seller for a total cost of $162,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Echo Warrior 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Echo Warrior 19 Interests are sold in connection with the Series Echo Warrior 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Echo Warrior 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Echo Warrior 19 includes reserves for Operating Expenses through March 2023. The Company anticipates that Echo Warrior 19 may begin racing and, thus, generating revenue in or about January 2022, which should allow Series Echo Warrior 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Echo Warrior 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, Echo Warrior 19 has reserves in place to cover such contingencies through March 2023.

 

Should Echo Warrior 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 25 

 

 

USE OF PROCEEDS – SERIES WHO’SBEENINMYBED 19

 

We estimate that the gross proceeds of the Series Who’sbeeninmybed 19 Offering will be $377,400.00 and assumes the full amount of the Series Who’sbeeninmybed 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $229,500.00 60.81%
Brokerage Fee (1) $3,774.00 1.000%
Due Diligence Fee $56,610.00 15.00%
Offering Expenses (None) (2) $0.00 0.0%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4)(5) $87,516.00 23.19%
Total Fees and Expenses $147,900.00 39.19%
Total Proceeds $377,400.00 100.0%

 

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Who’sbeeninmybed 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Who’sbeeninmybed 19 will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.
(5)

We do not intend to allocate an upfront cash reserve for Upkeep Fees as part of the Offering proceeds. Instead, the Manager or an affiliate will incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from future revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”). Notwithstanding the foregoing, there will still exist a smaller pre-paid cash reserve for insurance, administrative and general Operating Expenses which is intended to cover three years of projected Operating Expenses (excluding Upkeep Fees).

 

In addition, the Manager retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

The Company acquired the 51% interest in Micro Share (f.k.a. Who’sbeeninmybed 19) from the Horse Seller for a total cost of $229,500.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Who’sbeeninmybed 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Who’sbeeninmybed 19 Interests are sold in connection with the Series Who’sbeeninmybed 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

 

 

 26 

 

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Who’sbeeninmybed 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Micro Share includes reserves for administrative and insurance Operating Expenses through April 2023 but does not include reserves for Upkeep Fees. The Company anticipates that Micro Share may begin racing and, thus, generating revenue in or about September 2021. Until such time, the Manager or affiliates plan to incur liabilities related to Upkeep Fees on behalf of the Series and will be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from future revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”).

 

Should Micro Share need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 27 

 

 

USE OF PROCEEDS – SERIES INTO SUMMER 19

 

We estimate that the gross proceeds of the Series Into Summer 19 Offering will be $250,900.00 and assumes the full amount of the Series Into Summer 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $91,000.00 36.27%
Brokerage Fee (1) $2,509.00 1.000%
Due Diligence Fee $37,635.00 15.00%
Offering Expenses (None) (2) $0.00 0.0%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $119,756.00 47.73%
Total Fees and Expenses $159,900.00 63.73%
Total Proceeds $250,900.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Into Summer 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Into Summer 19  will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 65% interest in Malibu Mayhem (f.k.a. Into Summer 19) from the Horse Seller for a total cost of $91,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Into Summer 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Into Summer 19 Interests are sold in connection with the Series Into Summer 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Into Summer 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Malibu Mayhem includes reserves for Operating Expenses through April 2023. The Company anticipates that Malibu Mayhem may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Into Summer 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Malibu Mayhem need more time than anticipated in training or fails to generate sufficient revenues as expected, Malibu Mayhem has reserves in place to cover such contingencies through April 2023.

 

Should Malibu Mayhem need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 28 

 

 

USE OF PROCEEDS – SERIES MRS WHISTLER

 

We estimate that the gross proceeds of the Series Mrs Whistler Offering will be $274,000.00 and assumes the full amount of the Series Mrs Whistler Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $80,000.00 29.20%
Brokerage Fee (1) $2,740.00 1.000%
Due Diligence Fee $41,100.00 15.00%
Offering Expenses (None) (2) $0.00 0.0%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $150,160.00 54.80%
Total Fees and Expenses $194,000.00 70.80%
Total Proceeds $274,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Mrs Whistler Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Mrs Whistler will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Mrs Whistler from the Horse Seller for a total cost of $80,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Mrs Whistler Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Mrs Whistler Interests are sold in connection with the Series Mrs Whistler Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Mrs Whistler, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Mrs Whistler includes reserves for Operating Expenses through April 2023. The Company anticipates that Mrs Whistler may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Mrs Whistler to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Mrs Whistler need more time than anticipated in training or fails to generate sufficient revenues as expected, Mrs Whistler has reserves in place to cover such contingencies through April 2023.

 

Should Mrs Whistler need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 29 

 

 

USE OF PROCEEDS – SERIES RACE HUNTER 19

 

We estimate that the gross proceeds of the Series Race Hunter 19 Offering will be $520,000.00 and assumes the full amount of the Series Race Hunter 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $250,000.00 48.08%
Brokerage Fee (1) $5,200.00 1.000%
Due Diligence Fee $78,000.00 15.00%
Offering Expenses (None) (2) $0.00 0.0%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $186,800.00 35.92%
Total Fees and Expenses $270,000.00 51.92%
Total Proceeds $520,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Race Hunter 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Race Hunter 19 will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Chasing Time (f.k.a. Race Hunter 19) from the Horse Seller for a total cost of $250,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Race Hunter 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Race Hunter 19 Interests are sold in connection with the Series Race Hunter 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Race Hunter 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

 

The purchase price of Chasing Time includes reserves for Operating Expenses through April 2023. The Company anticipates that Chasing Time may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Race Hunter 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Chasing Time need more time than anticipated in training or fails to generate sufficient revenues as expected, Chasing Time has reserves in place to cover such contingencies through April 2023.

 

Should Chasing Time need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 30 

 

 

USE OF PROCEEDS – SERIES VOW

 

We estimate that the gross proceeds of the Series Vow Offering will be $358,000.00 and assumes the full amount of the Series Vow Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $140,000.00 39.11%
Brokerage Fee (1) $3,580.00 1.000%
Due Diligence Fee $53,700.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) 160,720.00 44.89%
Total Fees and Expenses $218,000.00 60.89%
Total Proceeds $358,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Vow Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Vow will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Vow from the Horse Seller for a total cost of $140,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Vow Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Vow Interests are sold in connection with the Series Vow Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Vow, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Vow includes reserves for Operating Expenses through April 2023. The Company anticipates that Vow may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Vow to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Vow need more time than anticipated in training or fails to generate sufficient revenues as expected, Vow has reserves in place to cover such contingencies through April 2023.

 

Should Vow need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 31 

 

 

USE OF PROCEEDS – SERIES YOU MAKE LUVIN FUN 19

 

We estimate that the gross proceeds of the Series You Make Luvin Fun 19 Offering will be $450,000.00 and assumes the full amount of the Series You Make Luvin Fun 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $240,000.00 53.33%
Brokerage Fee (1) $4,500.00 1.000%
Due Diligence Fee $67,500.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) 138,000.00 30.67%
Total Fees and Expenses $210,000.00 46.67%
Total Proceeds $450,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series You Make Luvin Fun 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series You Make Luvin Fun 19 will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 60% interest in Magical Ways (f.k.a. You Make Luvin Fun 19) from the Horse Seller for a total cost of $240,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series You Make Luvin Fun 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series You Make Luvin Fun 19 Interests are sold in connection with the Series You Make Luvin Fun 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series You Make Luvin Fun 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Magical Ways includes reserves for Operating Expenses through April 2023. The Company anticipates that Magical Ways may begin racing and, thus, generating revenue in or about September 2021, which should allow Series You Make Luvin’ Fun to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Magical Ways need more time than anticipated in training or fails to generate sufficient revenues as expected, Magical Ways has reserves in place to cover such contingencies through April 2023.

 

Should Magical Ways need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 32 

 

 

USE OF PROCEEDS – SERIES MISS SAKAMOTO

 

We estimate that the gross proceeds of the Series Miss Sakamoto Offering will be $324,000.00 and assumes the full amount of the Series Miss Sakamoto Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $150,000.00 46.30%
Brokerage Fee (1) $3,240.00 1.000%
Due Diligence Fee $48,600.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) 122,160.00 37.70%
Total Fees and Expenses $174,000.00 53.70%
Total Proceeds $324,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Miss Sakamoto Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Miss Sakamoto will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 60% interest in Miss Sakamoto from the Horse Seller for a total cost of $150,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Miss Sakamoto Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Miss Sakamoto Interests are sold in connection with the Series Miss Sakamoto Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Miss Sakamoto, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Miss Sakamoto includes reserves for Operating Expenses through April 2023. The Company anticipates that Miss Sakamoto may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Miss Sakamoto to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Miss Sakamoto need more time than anticipated in training or fails to generate sufficient revenues as expected, Miss Sakamoto has reserves in place to cover such contingencies through April 2023.

 

Should Miss Sakamoto need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 33 

 

 

USE OF PROCEEDS – SERIES COURTISANE 19

 

We estimate that the gross proceeds of the Series Courtisane 19 Offering will be $490,000.00 and assumes the full amount of the Series Courtisane 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $230,000.00 46.94%
Brokerage Fee (1) $4,900.00 1.000%
Due Diligence Fee $73,500.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $181,600.00 37.06%
Total Fees and Expenses $260,000.00 53.06%
Total Proceeds $490,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Courtisane 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Courtisane 19 will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Tap the Gavel (f.k.a. Courtisane 19) from the Horse Seller for a total cost of $230,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Courtisane 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Courtisane 19 Interests are sold in connection with the Series Courtisane 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Courtisane 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Tap the Gavel includes reserves for Operating Expenses through April 2023. The Company anticipates that Tap the Gavel may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Courtisane 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Tap the Gavel need more time than anticipated in training or fails to generate sufficient revenues as expected, Tap the Gavel has reserves in place to cover such contingencies through April 2023.

   

Should Tap the Gavel need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 34 

 

 

USE OF PROCEEDS – SERIES GRAND TRAVERSE BAY 19

 

We estimate that the gross proceeds of the Series Grand Traverse Bay 19 Offering will be $335,250.00 and assumes the full amount of the Series Grand Traverse Bay 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $150,000.00 44.74%
Brokerage Fee (1) $3,352.50 1.000%
Due Diligence Fee $50,287.50 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $131,610.00 39.26%
Total Fees and Expenses $185,250.00 55.26%
Total Proceeds $335,250.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series M Grand Traverse Bay 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Grand Traverse Bay 19 will last through April 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 75% interest in Cornice Traverse (f.k.a. Grand Traverse Bay 19) from the Horse Seller for a total cost of $150,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Grand Traverse Bay 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Grand Traverse Bay 19 Interests are sold in connection with the Series Grand Traverse Bay 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Grand Traverse Bay 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Cornice Traverse includes reserves for Operating Expenses through April 2023. The Company anticipates that Cornice Traverse may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Grand Traverse Bay 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Cornice Traverse need more time than anticipated in training or fails to generate sufficient revenues as expected, Cornice Traverse has reserves in place to cover such contingencies through April 2023.

 

Should Cornice Traverse need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 35 

 

 

USE OF PROCEEDS – SERIES OUR MISS JONES 19

 

We estimate that the gross proceeds of the Series Our Miss Jones 19 Offering will be $187,200.00 and assumes the full amount of the Series Our Miss Jones 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $60,000.00 32.05%
Brokerage Fee (1) $1,872.00 1.000%
Due Diligence Fee $28,080.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $97,248.00 51.95%
Total Fees and Expenses $127,200.00 67.95%
Total Proceeds $187,200.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Our Miss Jones 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Our Miss Jones 19 will last through May 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 60% interest in Our Miss Jones 19 from the Horse Seller for a total cost of $60,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Our Miss Jones 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Our Miss Jones 19 Interests are sold in connection with the Series Our Miss Jones 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Our Miss Jones 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Our Miss Jones 19 includes reserves for Operating Expenses through May 2023. The Company anticipates that Our Miss Jones 19 may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Our Miss Jones 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Our Miss Jones 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, Our Miss Jones 19 has reserves in place to cover such contingencies through May 2023.

 

Should Our Miss Jones 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 36 

 

 

USE OF PROCEEDS – SERIES MARGARITA FRIDAY 19

 

We estimate that the gross proceeds of the Series Margarita Friday 19 Offering will be $332,000.00 and assumes the full amount of the Series Margarita Friday Bay 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $110,000.00 33.13%
Brokerage Fee (1) $3,320.00 1.000%
Due Diligence Fee $49,800.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $168,880.00 50.87%
Total Fees and Expenses $222,000.00 66.87%
Total Proceeds $332,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Margarita Friday 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Margarita Friday 19 will last through May 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Straight No Chaser (f.k.a. Margarita Friday 19) from the Horse Seller for a total cost of $110,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Margarita Friday 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Margarita Friday 19 Interests are sold in connection with the Series Margarita Friday 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Margarita Friday 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Straight No Chaser includes reserves for Operating Expenses through May 2023. The Company anticipates that Straight No Chaser may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Margarita Friday 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Straight No Chaser need more time than anticipated in training or fails to generate sufficient revenues as expected, Straight No Chaser has reserves in place to cover such contingencies through May 2023.

 

Should Straight No Chaser need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

  

 

 37 

 

 

USE OF PROCEEDS – SERIES QUEEN AMIRA 19

 

We estimate that the gross proceeds of the Series Queen Amira 19 Offering will be $330,000.00 and assumes the full amount of the Series Queen Amira 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $120,000.00 36.36%
Brokerage Fee (1) $3,300.00 1.000%
Due Diligence Fee $49,500.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $157,200.00 47.64%
Total Fees and Expenses $210,000.00 63.64%
Total Proceeds $330,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Queen Amira 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Queen Amira 19 will last through May 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Regal Rebel (f.k.a. Queen Amira 19) from the Horse Seller for a total cost of $120,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Queen Amira 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Queen Amira 19 Interests are sold in connection with the Series Queen Amira 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Queen Amira 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Regal Rebel includes reserves for Operating Expenses through May 2023. The Company anticipates that Regal Rebel may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Queen Amira 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Regal Rebel need more time than anticipated in training or fails to generate sufficient revenues as expected, Regal Rebel has reserves in place to cover such contingencies through May 2023.

 

Should Regal Rebel need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 38 

 

 

USE OF PROCEEDS – SERIES SALUTE TO AMERICA

 

We estimate that the gross proceeds of the Series Salute to America Offering will be $273,000.00 and assumes the full amount of the Series Salute to America Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $80,000.00 29.30%
Brokerage Fee (1) $2,730.00 1.000%
Due Diligence Fee $40,950.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $149,320.00 54.70%
Total Fees and Expenses $193,000.00 70.70%
Total Proceeds $273,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Salute to America Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Salute to America will last through May 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Salute to America from the Horse Seller for a total cost of $80,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Salute to America Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Salute to America Interests are sold in connection with the Series Salute to America Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Salute to America, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Salute to America includes reserves for Operating Expenses through May 2023. The Company anticipates that Salute to America may begin racing and, thus, generating revenue in or about September 2021, which should allow Series Salute to America to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Salute to America need more time than anticipated in training or fails to generate sufficient revenues as expected, Salute to America has reserves in place to cover such contingencies through May 2023.

 

Should Salute to America need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 39 

 

 

USE OF PROCEEDS – SERIES DESIRE STREET 19

 

We estimate that the gross proceeds of the Series Desire Street 19 Offering will be $205,020.00 and assumes the full amount of the Series Desire Street 19 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $81,600.00 39.80%
Brokerage Fee (1) $2,050.20 1.000%
Due Diligence Fee $30,753.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $90,616.80 44.20%
Total Fees and Expenses $123,420.00 60.20%
Total Proceeds $205,020.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Desire Street 19 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Desire Street 19 will last through May 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 51% interest in Desire Street 19 from the Horse Seller for a total cost of $81,600.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Desire Street 19 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Desire Street 19 Interests are sold in connection with the Series Desire Street 19 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Desire Street 19, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Desire Street 19 includes reserves for Operating Expenses through May 2023. The Company anticipates that Desire Street 19 may begin racing and, thus, generating revenue in or about October 2021, which should allow Series Desire Street 19 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Desire Street 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, Desire Street 19 has reserves in place to cover such contingencies through May 2023.

 

Should Desire Street 19 need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 40 

 

 

USE OF PROCEEDS – SERIES DUKE OF LOVE

 

We estimate that the gross proceeds of the Series Duke of Love Offering will be $284,000.00 and assumes the full amount of the Series Duke of Love Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $85,000.00 29.93%
Brokerage Fee (1) $2,840.00 1.000%
Due Diligence Fee $42,600.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $153,560.00 54.07%
Total Fees and Expenses $199,000.00 70.07%
Total Proceeds $284,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Duke of Love Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Duke of Love will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Duke of Love from the Horse Seller for a total cost of $85,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Duke of Love Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Duke of Love Interests are sold in connection with the Series Duke of Love Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Duke of Love, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Duke of Love includes reserves for Operating Expenses through August 2023. The Company anticipates that Duke of Love may begin racing and, thus, generating revenue in or about October 2021, which should allow Series Duke of Love to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Duke of Love need more time than anticipated in training or fails to generate sufficient revenues as expected, Duke of Love has reserves in place to cover such contingencies through August 2023

 

Should Duke of Love need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 41 

 

 

USE OF PROCEEDS – SERIES WAR SAFE

 

We estimate that the gross proceeds of the Series War Safe Offering will be $292,000.00 and assumes the full amount of the Series War Safe Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $90,000.00 30.82%
Brokerage Fee (1) $2,920.00 1.000%
Due Diligence Fee $43,800.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $155,280.00 53.18%
Total Fees and Expenses $202,000.00 69.18%
Total Proceeds $292,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series War Safe Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series War Safe will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in War Safe from the Horse Seller for a total cost of $90,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series War Safe Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series War Safe Interests are sold in connection with the Series War Safe Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series War Safe, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

  

The purchase price of War Safe includes reserves for Operating Expenses through August 2023. The Company anticipates that War Safe may begin racing and, thus, generating revenue in or about December 2021, which should allow Series War Safe to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should War Safe need more time than anticipated in training or fails to generate sufficient revenues as expected, War Safe has reserves in place to cover such contingencies through August 2023.

 

Should War Safe need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 42 

 

 

USE OF PROCEEDS – SERIES TUFNEL

 

We estimate that the gross proceeds of the Series Tufnel Offering will be $322,400.00 and assumes the full amount of the Series Tufnel Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $156,000.00 48.39%
Brokerage Fee (1) $3,224.00 1.000%
Due Diligence Fee $48,360.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $114,816.00 35.61%
Total Fees and Expenses $166,400.00 51.61%
Total Proceeds $322,400.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Tufnel Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Tufnel will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 52% interest in Tufnel from the Horse Seller for a total cost of $156,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Tufnel Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Tufnel Interests are sold in connection with the Series Tufnel Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Tufnel, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Tufnel includes reserves for Operating Expenses through August 2023. The Company anticipates that Tufnel may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Tufnel to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Tufnel need more time than anticipated in training or fails to generate sufficient revenues as expected, Tufnel has reserves in place to cover such contingencies through August 2023.

 

Should Tufnel need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 43 

 

 

USE OF PROCEEDS – CLASSIC CUT

 

We estimate that the gross proceeds of the Series Classic Cut Offering will be $510,000.00 and assumes the full amount of the Series Classic Cut Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $240,000.00 47.06%
Brokerage Fee (1) $5,100.00 1.000%
Due Diligence Fee $76,500.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $188,400.00 36.94%
Total Fees and Expenses $270,000.00 52.94%
Total Proceeds $510,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Classic Cut Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Classic Cut will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Classic Cut from the Horse Seller for a total cost of $240,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Classic Cut Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Classic Cut Interests are sold in connection with the Series Classic Cut Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Classic Cut, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Classic Cut includes reserves for Operating Expenses through August 2023. The Company anticipates that Classic Cut may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Classic Cut to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Classic Cut need more time than anticipated in training or fails to generate sufficient revenues as expected, Classic Cut has reserves in place to cover such contingencies through August 2023.

 

Should Classic Cut need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 44 

 

 

USE OF PROCEEDS – SERIES ESSENTIAL ROSE 20

 

We estimate that the gross proceeds of the Series Essential Rose 20 Offering will be $1,050,000.00 and assumes the full amount of the Series Essential Rose 20 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $625,000.00 59.52%
Brokerage Fee (1) $10,500.00 1.000%
Due Diligence Fee $157,500.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $257,000.00 24.48%
Total Fees and Expenses $425,000.00 40.48%
Total Proceeds $1,050,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Essential Rose 20 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.  
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Essential Rose 20 will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Essential Rose 20 from the Horse Seller for a total cost of $625,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Essential Rose 20 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Essential Rose 20 Interests are sold in connection with the Series Essential Rose 20 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Essential Rose 20, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Essential Rose 20 includes reserves for Operating Expenses through August 2023. The Company anticipates that Essential Rose 20 may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Essential Rose 20 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Essential Rose 20 need more time than anticipated in training or fails to generate sufficient revenues as expected, Essential Rose 20 has reserves in place to cover such contingencies through August 2023.

 

Should Essential Rose 20 need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 45 

 

 

USE OF PROCEEDS – WHO RUNS THE WORLD

 

We estimate that the gross proceeds of the Series Who Runs the World Offering will be $530,400.00 and assumes the full amount of the Series Who Runs the World Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $306,000.00 57.69%
Brokerage Fee (1) $5,304.00 1.000%
Due Diligence Fee $79,560.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $139,536.00 26.31%
Total Fees and Expenses $224,400.00 42.31%
Total Proceeds $530,400.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Who Runs the World Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Who Runs the World will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 51% interest in Who Runs the World from the Horse Seller for a total cost of $306,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Who Runs the World Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Who Runs the World Interests are sold in connection with the Series Who Runs the World Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Who Runs the World, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Who Runs the World includes reserves for Operating Expenses through August 2023. The Company anticipates that Who Runs the World may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Who Runs the World to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Who Runs the World need more time than anticipated in training or fails to generate sufficient revenues as expected, Who Runs the World has reserves in place to cover such contingencies through August 2023.

 

Should Who Runs the World need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 46 

 

 

USE OF PROCEEDS – SERIES BALLETIC

 

We estimate that the gross proceeds of the Series Balletic Offering will be $800,000.00 and assumes the full amount of the Series Balletic Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $450,000.00 56.25%
Brokerage Fee (1) $8,000.00 1.000%
Due Diligence Fee $120,000.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $222,000.00 27.75%
Total Fees and Expenses $350,000.00 43.75%
Total Proceeds $800,000.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Balletic Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Balletic will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 100% interest in Balletic from the Horse Seller for a total cost of $450,000.00 (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Balletic Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Balletic Interests are sold in connection with the Series Balletic Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Balletic, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Balletic includes reserves for Operating Expenses through August 2023. The Company anticipates that Balletic may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Balletic to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Balletic need more time than anticipated in training or fails to generate sufficient revenues as expected, Balletic has reserves in place to cover such contingencies through August 2023.

 

Should Balletic need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 47 

 

 

USE OF PROCEEDS – SERIES SONG OF BERNADETTE 20

 

We estimate that the gross proceeds of the Series Song of Bernadette 20 Offering will be $494,700.00 and assumes the full amount of the Series Song of Bernadette 20 Offering is sold, and will be used as follows:

 

  Dollar Amount Percentage of
Gross Cash Proceeds
Uses    
Cash Portion of the Asset Cost $280,500.00 56.70%
Brokerage Fee (1) $4,947.00 1.000%
Due Diligence Fee $74,205.00 15.00%
Offering Expenses (None) (2) $0.00 0.00%
Operating Expenses (including Prepaid Expenses but Excluding Upkeep Fees) (3)(4) $135,048.00 27.30%
Total Fees and Expenses $214,200.00 43.30%
Total Proceeds $494,700.00 100.00%

_______________________

(1) Calculation of Brokerage Fee excludes proceeds from the sale of Interests to the Manager, its affiliates, or the Horse Seller, if any.
(2) Solely in connection with the offering of the Series Song of Bernadette 20 Interests, the Manager has assumed and will not be reimbursed for Offering Expenses.
(3) To the extent that Operating Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash. The Company estimates the Cash Reserves for Operating Expenses for Series Song of Bernadette 20 will last through August 2023.
(4) Operating Expenses may also include Prepaid Expenses which are costs incurred prior to the offering of the Underlying Asset, including, but not limited to costs associated with the initial acquisition of the Asset, twenty-four months of initial training expenses, vet checks, blood stock fees, etc. related to the pre-offering operation of the Underlying Asset. To the extent that Prepaid Expenses are lower than anticipated, any overage would be maintained in an operating account for future Operating Expenses and/or Distributable Cash which occur after acquisition of the Underlying Asset.

 

The Company acquired the 51% interest in Song of Bernadette 20 from the Horse Seller for a total cost of $280,500.00  (the “Asset Cost”) exclusive of agent fees and expenses as part of the auction.

 

The allocation of the net proceeds of the Series Song of Bernadette 20 Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the use of proceeds based on the factors set forth above. In the event that less than the Maximum Series Song of Bernadette 20 Interests are sold in connection with the Series Song of Bernadette 20 Offering, the Manager may pay, and not seek reimbursement for Offering Expenses and Upkeep Fees.

 

In the event that less than the “Cash Portion of the Asset Cost” of a series, including Series Song of Bernadette 20, is raised, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the series on the same terms and conditions as the Investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

The purchase price of Song of Bernadette 20 includes reserves for Operating Expenses through August 2023. The Company anticipates that Song of Bernadette may begin racing and, thus, generating revenue in or about September 2022, which should allow Series Song of Bernadette 20 to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should Song of Bernadette 20 need more time than anticipated in training or fails to generate sufficient revenues as expected, Song of Bernadette 20 has reserves in place to cover such contingencies through August 2023.

 

Should Song of Bernadette 20 need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover operating expenses or sell additional interests as described above. The Company may update racing start dates and reserve contingency timelines based on the circumstances of each race horse and, as such, actual timelines are subject to change.

 

 

 

 

 48 

 

 

DESCRIPTION OF CARROTHERS

 

Summary Overview

 

  Carrothers is a 2018 Colt of Mshawish (Sire) and Queenofperfection (Dam).
  Carrothers was foaled on February 28, 2018.  
  Carrothers has a limited track record under which to assess its performance.
  Current horse value set at $601,970.00 with the Company acquiring a 51% stake in Carrothers acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Carrothers, the Company will hold a 51% stake in Carrothers’ co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Carrothers related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 49 

 

 

Asset Description

 

 

 

 

 50 

 

 

 

 

 51 

 

 

 

 

 

 

 52 

 

 

 

 

 

 

 53 

 

 

 

 

 

 

 

 

 

 

 

 

 54 

 

DESCRIPTION OF ECHO WARRIOR 19

 

Summary Overview

 

  Echo Warrior 19 is a 2019 Colt of Flatter (Sire) and Echo Warrior (Dam).
  Echo Warrior 19 was foaled on May 25, 2019.  
  Echo Warrior 19 has a limited track record under which to assess its performance.
  Current horse value set at $270,000.00 with the Company acquiring a 60% stake in Echo Warrior 19 acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Echo Warrior 19, the Company will hold a 60% stake in Echo Warrior 19’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Echo Warrior 19 related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races.

 

 

 

 

 

 

 

 

 

 

 55 

 

 

Asset Description

 

 

 

 

 

 56 

 

 

 

 

 

 57 

 

 

 

 

 

 58 

 

 

 

 

 

 59 

 

 

 

 

 

 

 

 

 

 60 

 

DESCRIPTION OF MICRO SHARE

(F.K.A. WHO’SBEENINMYBED 19)

 

Summary Overview

 

  Micro Share is a 2019 Filly of Upstart (Sire) Who’sbeeninmybed (Dam).
  Micro Share was foaled on May 16, 2019.  
  Micro Share has a limited track record under which to assess its performance.
  Current horse value set at $450,000.00 with the Company acquiring a 51% stake in Micro Share acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Micro Share, the Company will hold a majority (51%) stake in Micro Share’s co-ownership group and the Manager will serve as the syndicate/co-ownership manager with all attendant control rights, including, but not limited to, the right to assign the racing manager, training schedule, breeding, and other major decision rights as it relates to Micro Share. The Co-ownership of the Underlying Asset will terminate on or before December 31, 2022, except as provided below. In the event the horse wins a "Grade 1" race, the co-owner will pay the Co-ownership a one-time $500,000 bonus within 30 days after the win is declared official, subject to certain additional rights and offsets as set forth in said agreement. In the event the horse wins a "Grade 2" race, the co-owner will pay the Co-ownership a one-time $250,000 bonus within 30 days after the win is declared official, subject to certain additional rights and offsets as set forth in said agreement. In the event the horse wins a "Grade 3" race, the co-owner will pay the Co-ownership a one-time $100,000 bonus within 30 days after the win is declared official, subject to certain additional rights and offsets as set forth in said agreement. Total bonus payments will be capped at Five Hundred Thousand and no/100 U.S. Dollars ($500,000). In addition, in the event of a “Grade 1” win, the Co-Ownership may be terminated at the time the Underlying Asset has completed racing during 2022, unless agreed to be extended beyond December 31, 2022, by the Co-owner and Company, and certain sale rights are triggered upon termination as further provided in said agreement. The effect of these provisions is to maximize the value of the horse as if it were to become a desirable broodmare prospect. We believe the value of a broodmare is significantly higher than the potential of a horse earning additional purse money and the associated risks of racing.

 

The above bonus will only serve as a nonrefundable advance on the expected increase in the horse’s value as a broodmare prospect and the Co-Owner shall be entitled to a credit equal to the bonus advanced from the co-ownership upon a final sale of the horse. The re-payment of the bonus paid by the Co-Owner will be first priority along with re-payment of training fee expenses incurred by the Co-Owner on behalf of the series before any distributions made to co-owners, including the series and its members.

 

Spendthrift is the co-owner for Micro Share. On March 17, 2020, an affiliate of Spendthrift became a majority stockholder in Experiential Squared, Inc., the Manager of the Company. Micro Share was originally acquired by Spendthrift and the Company at auction and the auction price (plus out of pocket expenses incurred) is the horse value upon which the Company's 51.0% stake was valued. In addition, each co-owner pays a proportionate share of co-ownership expenses for the mutual benefit of the co-owners. On occasion, such expenses may be payable to Spendthrift. 

 

 

 

 

 

 61 

 

 

Asset Description

 

 

 

 

 

 

 62 

 

 

 

 

 

 63 

 

 

 

 

 64 

 

 

 

 

 

 

 

 65 

 

 

 

 

 

 

 66 

 

 

DESCRIPTION OF MALIBU MAYHEM

(F.K.A. INTO SUMMER 19)

 

Summary Overview

 

  Malibu Mayhem is a 2019 Colt of Malibu Moon (Sire) and Into Summer (Dam).
  Malibu Mayhem was foaled on March 5, 2019.  
  Malibu Mayhem has a limited track record under which to assess its performance.
  Current horse value set at $140,000.00 with the Company acquiring a 65% stake in Malibu Mayhem acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Malibu Mayhem, the Company will hold a 65% stake in Malibu Mayhem’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Malibu Mayhem related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 67 

 

 

Asset Description

 

 

 

 

 

 68 

 

 

 

 

 

 69 

 

 

 

 

 

 

 70 

 

 

 

 

 

 

 

 71 

 

DESCRIPTION OF MRS WHISTLER

 

Summary Overview

 

  Mrs Whistler is a 2019 Filly of Tonalist (Sire) and Court Appeal (Dam).
  Mrs Whistler was foaled on February 21, 2019.  
  Mrs Whistler has a limited track record under which to assess its performance.
  Current horse value set at $80,000.00 with the Company acquiring a 100% stake in Mrs Whistler acquired via loan from the Manager.

  

 

 

 

 

 

 

 72 

 

 

Asset Description

 

 

 

 

 73 

 

 

 

 

 

 74 

 

 

 

 

 

 

 75 

 

 

 

 

 

 

 76 

 

 

 

 

 

 

 

 

 77 

 

 

DESCRIPTION OF CHASING TIME
(F.K.A. RACE HUNTER 19)

 

Summary Overview

 

  Chasing Time is a 2019 Colt of Not This Time (Sire) and Race Hunter (Dam).
  Chasing Time was foaled on March 23, 2019.  
  Chasing Time has a limited track record under which to assess its performance.
  Current horse value set at $250,000.00 with the Company acquiring a 100% stake in Chasing Time acquired via loan from the Manager.

  

 

 

 

 

 

 

 78 

 

 

Asset Description

 

 

 

 

 

 79 

 

 

 

 

 

 80 

 

 

 

 

 

 81 

 

 

 

 

 82 

 

 

 

 

 

 

 

 

 

 83 

 

DESCRIPTION OF VOW

 

Summary Overview

 

  Vow is a 2019 Filly of Union Rags (Sire) and Diamond Ring (Dam).
  Vow was foaled on March 3, 2019.  
  Vow has a limited track record under which to assess its performance.
  Current horse value set at $140,000.00 with the Company acquiring a 100% stake in Vow acquired via loan from the Manager.

  

 

 

 

 

 

 

 

 

 

 84 

 

 

Asset Description

 

 

 

 

 

 85 

 

 

 

 

 

 86 

 

 

 

 

 

 87 

 

 

 

 

 

 

 

 88 

 

DESCRIPTION OF MAGICAL WAYS

(F.K.A. YOU MAKE LUVIN FUN 19)

 

 

Summary Overview

 

  Magical Ways is a 2019 Colt of Maclean’s Music (Sire) and You Make Luvin Fun (Dam).
  Magical Ways was foaled on March 4, 2019.  
  Magical Ways has a limited track record under which to assess its performance.
  Current horse value set at $400,000.00 with the Company acquiring a 60% stake in Magical Ways acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Magical Ways, the Company will hold a 60% stake in Magical Ways’ co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Magical Ways related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 

 

 

 

 

 

 89 

 

Asset Description

 

 

 

 

 

 90 

 

 

 

 

 

 91 

 

 

 

 

 

 

 92 

 

 

 

 

 

 

 

 93 

 

DESCRIPTION OF MISS SAKAMOTO

 

Summary Overview

 

  Miss Sakamoto is a 2019 Filly of More Than Ready (Sire) and Wonder Brew (Dam).
  Miss Sakamoto was foaled on April 20, 2019.  
  Miss Sakamoto has a limited track record under which to assess its performance.
  Current horse value set at $250,000.00 with the Company acquiring a 60% stake in Miss Sakamoto acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Miss Sakamoto, the Company will hold a 60% stake in Miss Sakamoto’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Miss Sakamoto related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 94 

 

Asset Description

 

 

 

 

 

 95 

 

 

 

 

 

 96 

 

 

 

 

 

 97 

 

 

 

 

 

 98 

 

 

 

 

 

 

 

 

 

 

 

 99 

 

 

DESCRIPTION OF TAP THE GAVEL

(F.K.A. COURTISANE 19)

 

Summary Overview

 

  Tap the Gavel is a 2019 Colt of Tapit (Sire) and Courtisane (Dam).
  Tap the Gavel was foaled on March 17, 2019.    
  Tap the Gavel has a limited track record under which to assess its performance.
  Current horse value set at $230,000.00 with the Company acquiring a 100% stake in Tap the Gavel acquired via loan from the Manager.

 

 

 

 

 

 

 

 

 

 100 

 

 

Asset Description

 

 

 

 

 

 101 

 

 

 

 

 

 

 102 

 

 

 

 

 

 103 

 

 

 

 

 

 104 

 

 

 

 

 

 

 

 105 

 

 

DESCRIPTION OF CORNICE TRAVERSE

(F.K.A. GRAND TRAVERSE BAY 19)

 

Summary Overview

 

  Cornice Traverse is a 2019 Filly of Malibu Moon (Sire) and Grand Traverse Bay (Dam).
  Cornice Traverse was foaled on February 9, 2019.  
  Cornice Traverse has a limited track record under which to assess its performance.
  Current horse value set at $200,000.00 with the Company acquiring a 75% stake in Cornice Traverse acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Cornice Traverse, the Company will hold a 75% stake in Cornice Traverse‘s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Cornice Traverse related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 106 

 

 

Asset Description

 

 

 

 

 107 

 

 

 

 

 

 108 

 

 

 

 

 

 109 

 

 

 

 

 

 110 

 

 

 

 

 

 

 

 

 111 

 

 

DESCRIPTION OF OUR MISS JONES 19

 

Summary Overview

 

  Our Miss Jones 19 is a 2019 Filly of Laoban (Sire) and Our Miss Jones (Dam).
  Our Miss Jones 19 was foaled on April 20, 2019.  
  Our Miss Jones 19 has a limited track record under which to assess its performance.
  Current horse value set at $100,000.00 with the Company acquiring a 60% stake in Our Miss Jones 19 acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Our Miss Jones 19, the Company will hold a 60% stake in Our Miss Jones 19’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Our Miss Jones 19 related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 

 

 

 112 

 

 

Asset Description

 

 

 

 

 113 

 

 

 

 

 

 

 114 

 

  

 

 

 115 

 

 

 

 

 

 

 

 116 

 

DESCRIPTION OF STRAIGHT NO CHASER

(F.K.A. MARGARITA FRIDAY 19)

 

Summary Overview

 

  Straight No Chaser is a 2019 Colt of Speightster (Sire) and Margarita Friday (Dam).  
  Straight No Chaser was foaled on April 12, 2019.  
  Straight No Chaser has a limited track record under which to assess its performance.
  Current horse value set at $110,000.00 with the Company acquiring a 100% stake in Straight No Chaser acquired via loan from the Manager.

  

 

 

 

 

 

 

 117 

 

 

Asset Description

 

 

 

 

 

 118 

 

 

 

 

 

 

 

 119 

 

 

 

 

 120 

 

 


 

 

 

 

 121 

 

 

 

DESCRIPTION OF REGAL REBEL

(F.K.A. QUEEN AMIRA 19)

 

Summary Overview

 

  Regal Rebel is a 2019 Filly of Tiznow (Sire) and Queen Amira (Dam).
  Regal Rebel was foaled on April 20, 2019.  
  Regal Rebel has a limited track record under which to assess its performance.
  Current horse value set at $120,000.00 with the Company acquiring a 100% stake in Regal Rebel acquired via loan from the Manager.

  

 

 

 

 

 

 

 

 

 

 

 

 122 

 

 

 

Asset Description

 

 

 

 

 123 

 

 

 

 

 

 124 

 

 

 

 

 

 

 125 

 

 

 

 

 126 

 

 

 

 

 

 

 127 

 

 

DESCRIPTION OF SALUTE TO AMERICA

 

Summary Overview

 

  Salute to America is a 2019 Colt of American Freedom (Sire) and Salute to Summer (Dam).
  Salute to America was foaled on February 10, 2019.  
  Salute to America has a limited track record under which to assess its performance.
  Current horse value set at $80,000.00 with the Company acquiring a 100% stake in Salute to America acquired via loan from the Manager.

  

 

 

 

 

 

 

 

 

 

 128 

 

 

Asset Description

 

 

 

 

 129 

 

 

 

 

 

 

 130 

 

 

 

 

 

 131 

 

 

 


 

 

 

 132 

 

 

DESCRIPTION OF DESIRE STREET 19

 

Summary Overview

 

  Desire Street 19 is a 2019 Colt of Speightstown (Sire) and Desire Street (Dam).
  Desire Street 19 was foaled on February 20, 2019.  
  Desire Street 19 has a limited track record under which to assess its performance.
  Current horse value set at $160,000.00 with the Company acquiring a 51% stake in Desire Street 19 acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Desire Street 19, the Company will hold a 51% stake in Desire Street 19’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Desire Street 19 related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 

 

 

 

 

 

 133 

 

Asset Description

 

 

 

 

 

 134 

 

 

 

 

 

 

 135 

 

 

 

 

 136 

 

 

 

 

 

 

 

 

 137 

 

DESCRIPTION OF DUKE OF LOVE

 

Summary Overview

 

  Duke of Love is a 2019 Colt of Cupid (Sire) and Tell the Duchess (Dam).
  Duke of Love was foaled on March 12, 2019.  
  Duke of Love has a limited track record under which to assess its performance.
  Current horse value set at $85,000.00 with the Company acquiring a 100% stake in Duke of Love acquired via loan from the Manager.

  

 

 

 

 

 

 

 

 

 138 

 

 

Asset Description

 

 

 

 

 139 

 

 

 

 

 140 

 

 

 

 

 

 141 

 

 

 

 

 

 142 

 

 


 

 

 

 143 

 

 

DESCRIPTION OF WAR SAFE

 

Summary Overview

 

  War Safe is a 2019 Colt of Air Force Blue (Sire) and Safe Haven (Dam).
  War Safe was foaled on May 17, 2019.  
  War Safe has a limited track record under which to assess its performance.
  Current horse value set at $90,000.00 with the Company acquiring a 100% stake in War Safe acquired via loan from the Manager.

 

 

 

 

 

 

 144 

 

 

Asset Description

 

 

 145 

 

 

 

 

 146 

 

 

 

 

 147 

 

 


 

 

 

 148 

 

 

DESCRIPTION OF TUFNEL

 

Summary Overview

 

  Tufnel is a 2020 Colt of Into Mischief (Sire) and Count to Eleven (Dam).
  Tufnel was foaled on April 9, 2020.  
  Tufnel has a limited track record under which to assess its performance.
  Current horse value set at $300,000.00 with the Company acquiring a 52% stake in Tufnel acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Tufnel, the Company will hold a 52% stake in Tufnel’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Tufnel related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

Spendthrift is a co-owner of Tufnel. On March 17, 2020, an affiliate of Spendthrift became a majority stockholder in Experiential Squared, Inc., the Manager of the Company. Tufnel was originally acquired by the Company, Spendthrift, and Brad Cox Colts Group at auction and the auction price (plus out of pocket expenses incurred) is the horse value upon which the Company's 52.0% stake was valued. Each co-owner pays a proportionate share of co-ownership expenses for the mutual benefit of the co-owners. On occasion, such expenses may be payable to Spendthrift.

 

 

 

 

 

 

 

 

 149 

 

 

Asset Description

 

 

 

 

 150 

 

 

 

 

 

 151 

 

 

 

 

 

 152 

 

 

 

 

 

 153 

 

 

DESCRIPTION OF CLASSIC CUT

 

Summary Overview

 

  Classic Cut is a 2020 Colt of Empire Maker (Sire) and Bluejeans (Dam).  
  Classic Cut was foaled on February 20, 2020.    
  Classic Cut has a limited track record under which to assess its performance.
  Current horse value set at $240,000.00 with the Company acquiring a 100% stake in Classic Cut acquired via loan from the Manager.

  

 

 

 

 

 

 

 

 

 154 

 

 

Asset Description

 

 

 

 

 

 

 

 155 

 

 

 

 156 

 

 

 

 

 

 157 

 

 


 

 

 

 158 

 

 

DESCRIPTION OF ESSENTIAL ROSE 20

 

Summary Overview

 

  Essential Rose 20 is a 2020 Filly of Justify (Sire) and Essential Rose (Dam).
  Essential Rose 20 was foaled on March 4, 2020.  
  Essential Rose 20 has a limited track record under which to assess its performance.
  Current horse value set at $625,000.00 with the Company acquiring a 100% stake in Essential Rose 20 acquired via loan from the Manager.

 

 

 

 

 

 

 159 

 

  

Asset Description

 

 

 

 

 160 

 

 

 

 

 

 161 

 

 

 

 

 162 

 

 

 

 

 

 163 

 

 


 

 

 164 

 

 

DESCRIPTION OF WHO RUNS THE WORLD

 

Summary Overview

 

  Who Runs the World is a 2020 Filly of Quality Road (Sire) and Lucy N Ethel (Dam).
  Who Runs the World was foaled on January 19, 2020.  
  Who Runs the World has a limited track record under which to assess its performance.
  Current horse value set at $600,000.00 with the Company acquiring a 51% stake in Who Runs the World acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Who Runs the World, the Company will hold a 51% stake in Who Runs the World’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Who Runs the World related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

Spendthrift is the co-owner of Who Runs the World. On March 17, 2020, an affiliate of Spendthrift became a majority stockholder in Experiential Squared, Inc., the Manager of the Company. Who Runs the World was originally acquired by the Company and Spendthrift at auction and the auction price (plus out of pocket expenses incurred) is the horse value upon which the Company's 51.0% stake was valued. Each co-owner pays a proportionate share of co-ownership expenses for the mutual benefit of the co-owners. On occasion, such expenses may be payable to Spendthrift.

 

 

 

 

 165 

 

 

Asset Description

 

 

 

 166 

 

 

 

 

 

 167 

 

 

 

 

 

 168 

 

 

 

 

 

 

 169 

 

 

DESCRIPTION OF BALLETIC

 

Summary Overview

 

  Balletic is a 2020 Filly of Into Mischief (Sire) and Ricketyracketyruss (Dam).
  Balletic was foaled on February 3, 2020.  
  Balletic has a limited track record under which to assess its performance.
  Current horse value set at $450,000.00 with the Company acquiring a 100% stake in Balletic acquired via loan from the Manager.

  

 

 

 

 

 

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Asset Description

 

 

 

 

 171 

 

 

 

 

 172 

 

 

 

 

 

 173 

 

 

 

 

 174 

 

 

DESCRIPTION OF SONG OF BERNADETTE 20

 

Summary Overview

 

  Song of Bernadette 20 is a 2020 Colt of Quality Road (Sire) and Song of Bernadette (Dam).
  Song of Bernadette 20 was foaled on April 26, 2020.  
  Song of Bernadette 20 has a limited track record under which to assess its performance.
  Current horse value set at $550,000.00 with the Company acquiring a 51% stake in Song of Bernadette 20 acquired via loan from the Manager.

  

Co-Ownership Description

 

As set forth in the Equine Co-Ownership and Acquisition Agreement for Song of Bernadette 20, the Company will hold a 51% stake in Song of Bernadette 20’s co-ownership group. The Manager will serve as the syndicate/co-ownership manager and will have the right to assign the racing manager, training schedule, and other day-to-day rights. The co-owners (which, for the avoidance of doubt, are not the series members) will have voting rights as it relates to Song of Bernadette 20 related to selling the horse, breeding the horse, gelding the horse, marketing and sponsorships and racing in claiming races. 

 

 

 

 

 

 

 

 

 

 175 

 

 

Asset Description

 

 

 

 

 176 

 

 

 

 

 

 177 

 

 

 

 

 

 178 

 

 


 

 

 179 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

The Company was formed in the State of Nevada as a series limited liability company on December 27, 2016. Since our inception, we have been engaged primarily in acquiring a collection of racehorses (each, an “Underlying Asset”), with loans from officers of the Manager, and developing the financial, offering and other materials to begin fundraising. The Company, through individual series of ownership in a particular racehorse (all of the series of the Company offered in such racehorse(s) may collectively be referred to herein as the “Series”, and each, individually, as a “Series”; The interests of all Series in such racehorse(s) may collectively be referred to herein as the “Interests”, and each, individually, as an “Interest”), intends to purchase interests in thoroughbred horses, quarter horses, and Standardbred horses. By doing so, the Company’s goal is to democratize the ownership of such racehorses, and allow fans to experience the thrill, perks and benefits of racehorse ownership at a fraction of the historical cost. This includes everything from the behind the scenes engagements with the racehorse, the jockey and trainers as well as exclusive on-track experiences, and a portion of financial gains that the ownership in such racehorse creates such as if its breeding rights are sold, if it wins a “purse” at a racing event, if marketing or sponsorship ads are sold, or if it is claimed or sold at auction.

 

We are managed by Experiential Squared, Inc. (“Experiential” or the “Manager”), a Delaware corporation incorporated in 2016. Experiential owns and operates a mobile app-based crowd-funding platform called MyRacehorse™ (the MyRacehorse™ platform and any successor platform used by the Company for the offer and sale of series interests, the “MyRacehorse™ Platform”), which is licensed to the Company pursuant to the terms of that certain Management Services Agreement (the “Management Agreement”), through which investors may indirectly invest, through series of the Company’s interests, in fractional racehorse ownership interests that have been historically difficult to access for many market participants. Through the use of the MyRacehorse™ Platform, investors can browse and screen racehorses, make potential investments in such racehorses, and sign legal documents electronically. It is the intent of the Company and its Manager to maintain control and input into the initial due diligence and subsequent training, maintenance and upkeep of the racehorses.

 

We completed initial offerings of Interests as set forth in the table below under “Operating Results” and are in the process of launching subsequent offerings for other series. The information contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is in relation to the Company as a whole, which is made up of a number of separate series and Underlying Assets. The purchase of membership interests in a Series of the Company is an investment only in such Series and not an investment in the Company as a whole or any other Series.

 

As of December 31, 2020, officers of the Manager have loaned the Company a total of $1,119,860 (excluding accrued interest) in connection with the acquisition of these Underlying Assets.

 

See Note 4 to Audited Financial Statements as of December 31, 2020 – Advances from Manager and Note 7 - Related Party Transactions of the Notes to the Financial Statements for more information regarding the loans/advances from officers of the Manager or the Manager.

 

There is limited historical financial information about us upon which to base an evaluation of our performance. We are an emerging growth business with limited operating history, and we are considered to be a development stage company, since we are devoting substantially all of our efforts to establishing our business, and our planned principal operations have only recently commenced. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.

 

 

 

 

 180 

 

 

Operating Results – For the Years Ended December 31, 2020 and 2019

 

As of December 31, 2020, the following Series and related race horses have been created and are being offered pursuant to either (i) our California intrastate offering permit, (ii) Rule 506(c) of Regulation D, or (iii) the Offering Statement:

 

Name of Series Interests Offered (1) Interests Sold (1) Interests Remaining (1) Asset Cost/Interest (2) Operating Expense Reserve/Interest (2) Due Diligence Fee/Interest (2) Owed to Series (3) Owed to Experiential (4) Paid to Experiential (5) Price Per Interest (6) $ Sold (7) $ Offered (7) $ Remaining (7)
Action Bundle (8) 10000 0 10000 $4.50 $21.85 $4.65 $218,500.00 $45,000.00 $0.00 $31.00 $0.00 $310,000.00 $310,000.00
Amandrea 550 550 0 $210.00 $40.00 $45.00 $0.00 $0.00 $24,750.00 $295.00 $162,250.00 $162,250.00 $0.00
Ambleside Park 19 410 410 0 $115.00 $59.25 $30.75 $0.00 $0.00 $12,607.50 $205.00 $84,050.00 $84,050.00 $0.00
Amers 75 75 0 $82.00 $37.00 $21.00 $0.00 $0.00 $1,575.00 $140.00 $10,500.00 $10,500.00 $0.00
Apple Down Under 19 600 600 0 $100.00 $47.05 $25.95 $0.00 $0.00 $15,570.00 $173.00 $103,800.00 $103,800.00 $0.00
Athenian Beauty 19 1800 1800 0 $25.00 $14.95 $7.05 $0.00 $0.00 $12,690.00 $47.00 $84,600.00 $84,600.00 $0.00
Authentic 12500 12500 0 $151.54 $23.56 $30.90 $0.00 $0.00 $386,250.00 $206.00 $2,575,000.00 $2,575,000.00 $0.00
Awe Hush 19 1800 1800 0 $110.00 $29.40 $24.60 $0.00 $0.00 $44,280.00 $164.00 $295,200.00 $295,200.00 $0.00
Bella Chica 100 100 0 $250.00 $73.00 $57.00 $0.00 $0.00 $5,700.00 $380.00 $38,000.00 $38,000.00 $0.00
Big Mel 6000 6000 0 $89.00 $14.00 $18.15 $0.00 $0.00 $108,900.00 $121.00 $726,000.00 $726,000.00 $0.00
Bullion 25 25 0 $240.00 $0.00 $230.00 $0.00 $0.00 $5,750.00 $470.00 $11,750.00 $11,750.00 $0.00
Cairo Kiss 80 80 0 $347.50 $124.25 $83.25 $0.00 $0.00 $6,660.00 $555.00 $44,400.00 $44,400.00 $0.00
Cayala 19 4100 4095 5 $60.00 $17.35 $13.65 $86.75 $300.00 $55,896.50 $91.00 $372,645.00 $373,100.00 $455.00
Classofsixtythree 19 1000 1000 0 $125.00 $39.05 $28.95 $0.00 $0.00 $28,950.00 $193.00 $193,000.00 $193,000.00 $0.00
Collusion Illusion 25000 25000 0 $22.00 $3.50 $4.50 $0.00 $0.00 $112,500.00 $30.00 $750,000.00 $750,000.00 $0.00
Consecrate 19 410 408 2 $80.00 $53.45 $23.55 $106.90 $160.00 $9,608.40 $157.00 $64,056.00 $64,370.00 $314.00
Daddy’s Joy 600 600 0 $80.00 $73.00 $27.00 $0.00 $0.00 $16,200.00 $180.00 $108,000.00 $108,000.00 $0.00
De Mystique ‘17 250 250 0 $71.50 $47.50 $21.00 $0.00 $0.00 $5,250.00 $140.00 $35,000.00 $35,000.00 $0.00
Deep Cover 800 800 0 $100.00 $87.00 $33.00 $0.00 $0.00 $26,400.00 $220.00 $176,000.00 $176,000.00 $0.00
Escape Route 10 10 0 $4,240.00 $1,006.00 $1,049.20 $0.00 $0.00 $10,492.00 $6,295.20 $62,952.00 $62,952.00 $0.00
Exonerated 19 820 820 0 $105.00 $38.65 $25.35 $0.00 $0.00 $20,787.00 $169.00 $138,580.00 $138,580.00 $0.00
Frosted Oats 4100 4100 0 $25.00 $10.70 $6.30 $0.00 $0.00 $25,830.00 $42.00 $172,200.00 $172,200.00 $0.00
Future Stars Stable 10000 9889 111 $33.55 $8.95 $7.50 $993.45.00 $3,724.05 $74,167.50 $50.00 $494,450.00 $500,000.00 $5,550.00
Got Stormy 5100 0 5100 $24.51 $13.74 $6.75 $70,075.00 $125,000.00 $0.00 $45.00 $0.00 $229,500.00 $229,500.00
Just Louise 19 1020 1012 8 $150.00 $44.65 $34.35 $357.20 $120.00 $34,762.00 $229.00 $231,748.00 $233,580.00 $1,8320.00
Keertana 18 5100 5100 0 $72.00 $13.00 $15.00 $0.00 $0.00 $76,500.00 $100.00 $510,000.00 $510,000.00 $0.00
Kiana’s Love 200 200 0 $55.00 $47.00 $18.00 $0.00 $0.00 $3,600.00 $120.00 $24,000.00 $24,000.00 $0.00
Kichiro 200 200 0 $77.50 $33.00 $19.50 $0.00 $0.00 $3,900.00 $130.00 $26,000.00 $26,000.00 $0.00
Lane Way 6000 6000 0 $61.00 $15.50 $13.50 $0.00 $0.00 $81,000.00 $90.00 $540,000.00 $540,000.00 $0.00
Latte Da 19 4100 4100 0 $19.50 $10.25 $5.25 $0.00 $0.00 $21,525.00 $35.00 $143,500.00 $143,500.00 $0.00
Lazy Daisy 1250 1250 0 $90.00 $7.00 $18.00 $0.00 $0.00 $22,500.00 $115.00 $143,750.00 $143,750.00 $0.00
Lost Empire 19 10200 10124 76 $22.50 $7.25 $5.25 $551.00 $1,710.00 $53,151.00 $35.00 $354,340.00 $357,000.00 $2,660.00
Madarnas 50 50 0 $204.00 $93.00 $53.00 $0.00 $0.00 $2,650.00 $350.00 $17,500.00 $17,500.00 $0.00
Major Implications 20 20 0 $128.00 $67.00 $35.00 $0.00 $0.00 $700.00 $230.00 $4,600.00 $4,600.00 $0.00
Man Among Men 820 820 0 $180.00 $52.05 $40.95 $0.00 $0.00 $33,579.00 $273.00 $223,860.00 $223,860.00 $0.00
Margaret Reay 19 820 820 0 $200.00 $55.85 $45.15 $0.00 $0.00 $37,023.00 $301.00 $246,820.00 $246,820.00 $0.00
Martita Sangrita 17 600 600 0 $200.00 $72.00 $48.00 $0.00 $0.00 $28,800.00 $320.00 $192,000.00 $192,000.00 $0.00
Midnight Sweetie 19 820 820 0 $90.00 $35.80 $22.20 $0.00 $0.00 $18,204.00 $148.00 $121,360.00 $121,360.00 $0.00
Miss Puzzle 125 125 0 $109.84 $102.66 $37.50 $0.00 $0.00 $4,687.50 $250.00 $31,250.00 $31,250.00 $0.00
Mo Mischief 5100 5100 0 $50.00 $14.00 $11.00 $0.00 $0.00 $56,100.00 $75.00 $382,500.00 $382,500.00 $0.00
Monomoy Girl 10200 0 10200 $29.41 $9.69 $6.90 $98,820.00 $300,000.00 $0.00 $46.00 $0.00 $469,200.00 $469,200.00
Moonless Sky 200 200 0 $60.00 $33.50 $16.50 $0.00 $0.00 $3,300.00 $110.00 $22,000.00 $22,000.00 $0.00
Motion Emotion (9) 1020 0 1020 $24.51 $46.89 $12.60 $47,828.00 $25,000.00 $0.00 $84.00 $0.00 $85,680.00 $85,680.00
Naismith 2000 2000 0 $75.00 $54.20 $22.80 $0.00 $0.00 $45,600.00 $152.00 $304,000.00 $304,000.00 $0.00

 

 

 

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New York Claiming Package 510 510 0 $72.00 $54.00 $14.00 $0.00 $0.00 $7,140.00 $140.00 $71,400.00 $71,400.00 $0.00
Night of Idiots 80 80 0 $112.00 $100.00 $38.00 $0.00 $0.00 $3,040.00 $250.00 $20,000.00 $20,000.00 $0.00
Nileist 45 45 0 $260.00 $190.00 $80.00 $0.00 $0.00 $3,600.00 $530.00 $23,850.00 $23,850.00 $0.00
Noble of Goddess 300 300 0 $62.00 $31.00 $17.00 $0.00 $0.00 $5,100.00 $110.00 $33,000.00 $33,000.00 $0.00
NY Exacta 2000 2000 0 $107.50 $86.30 $34.20 $0.00 $0.00 $68,400.00 $228.00 $456,000.00 $456,000.00 $0.00
Palace Foal 510 0 510 $31.00 $71.00 $18.00 $36,210.00 $15,810.00 $0.00 $120.00 $0.00 $61,200.00 $61,200.00
Popular Demand 1020 1020 0 $145.00 $63.00 $36.00 $0.00 $0.00 $36,720.00 $244.00 $248,880.00 $248,880.00 $0.00
Power Up Paynter 600 600 0 $100.00 $61.00 $29.00 $0.00 $0.00 $17,400.00 $190.00 $114,000.00 $114,000.00 $0.00
Sauce on Side 125 125 0 $130.00 $74.00 $36.00 $0.00 $0.00 $4,500.00 $240.00 $30,000.00 $30,000.00 $0.00
Shake It Up Baby 250 250 0 $44.00 $66.50 $19.50 $0.00 $0.00 $4,875.00 $130.00 $32,500.00 $32,500.00 $0.00
Sigesmund 200 200 0 $50.00 $35.00 $15.00 $0.00 $0.00 $3,000.00 $100.00 $20,000.00 $20,000.00 $0.00
Social Dilemma 510 0 510 $49.02 $92.93 $25.05 $47,394.50 $25,000.00  $0.00 $167.00 $0.00  $85,170.00 $85,170.00
Soul Beam 65 65 0 $355.00 $163.50 $91.50 $0.00 $0.00 $5,947.50 $610.00 $39,650.00 $39,650.00 $0.00
Speightstown Belle 19 900 900 0 $85.00 $33.15 $20.85 $0.00 $0.00 $18,765.00 $139.00 $125,100.00 $125,100.00 $0.00
Squared Straight 150 150 0 $150.00 $79.50 $40.50 $0.00 $0.00 $6,075.00 $270.00 $40,500.00 $40,500.00 $0.00
Storm Shooter 2000 2000 0 $90.00 $48.00 $24.00 $0.00 $0.00 $48,000.00 $162.00 $324,000.00 $324,000.00 $0.00
Street Band 50 50 0 $918.00 $127.00 $185.00 $0.00 $0.00 $9,250.00 $1,230.00 $61,500.00 $61,500.00 $0.00
Sunny 18 6000 6000 0 $40.30 $14.69 $10.01 $0.00 $0.00 $60,060.00 $65.00 $390,000.00 $390,000.00 $0.00
Swiss Minister 50 50 0 $150.00 $88.00 $42.00 $0.00 $0.00 $2,100.00 $280.00 $14,000.00 $14,000.00 $0.00
Takeo Squared 100 100 0 $153.00 $76.00 $41.00 $0.00 $0.00 $4,100.00 $270.00 $27,000.00 $27,000.00 $0.00
Tapitry 19 820 820 0 $180.00 $52.05 $40.95 $0.00  $0.00 $33,579.00 $273.00 $223,860.00 $223,860.00 $0.00
Tavasco Road 80 80 0 $128.00 $67.00 $35.00 $0.00 $0.00 $2,800.00 $230.00 $18,400.00 $18,400.00 $0.00
The Filly Four 8000 8000 0 $105.00 $48.00 $27.00 $0.00 $0.00 $216,000.00 $180.00 $1,440,000.00 $1,440,000.00 $0.00
Thirteen Stripes 1000 1000 0 $100.00 $94.65 $34.35 $0.00 $0.00 $34,350.00 $229.00 $229,000.00 $229,000.00 $0.00
Tizamagician 600 600 0 $185.00 $87.00 $48.00 $0.00 $0.00 $28,800.00 $320.00 $192,000.00 $192,000.00 $0.00
Two Trail Sioux 17 450 450 0 $165.00 $90.00 $45.00 $0.00 $0.00 $20,250.00 $300.00 $135,000.00 $135,000.00 $0.00
Two Trial Sioux 17K 1 1 0 $24,750.00 $4,970.00 $0.00 $0.00 $0.00 $0.00 $29,720.00 $29,720.00 $29,720.00 $0.00
Utalknboutpractice 100 100 0 $165.00 $90.00 $45.00 $0.00 $0.00 $4,500.00 $300.00 $30,000.00 $30,000.00 $0.00
Vertical Threat 600 600 0 $100.00 $78.50 $31.50 $0.00 $0.00 $18,900.00 $210.00 $126,000.00 $126,000.00 $0.00
Wayne O 6000 6000 0 $75.00 $6.00 $14.00 $0.00 $0.00 $84,000.00 $95.00 $570,000.00 $570,000.00 $0.00
Yes This Time * 10 0 10 $10,000.00 $793.00 $2,159.00 $7,930.00 $100,000.00 $0.00 $12,952.00 $0.00 $129,520.00 $129,520.00
Zestful 100 100 0 $194.00 $78.00 $48.00 $0.00 $0.00 $4,800.00 $320.00 $32,000.00 $32,000.00 $0.00
Totals 169201 141649 27552       $528.852.80 $642,904.05 $2,294,447.35   $15,319,21.00 $16,700,102.00 $1,381,081.00

 _____________________

 

  * Denotes offerings commenced after 12/31/2020.
  (1) Denotes total membership interests offered, sold to date and remaining to be sold in each series.
  (2) Denotes the “Cash Portion of the Asset Cost”, “Cash Reserves for Operating Expenses”, and “Due Diligence Fee” per membership interest sold.
  (3) Denotes the amount of cash held in reserve attributable to such series after deduction of “Due Diligence Fee.”
  (4) Denotes the amount owed to the Manager for any loans extend on behalf of a series.
  (5) Denotes the amount of “Due Diligence Fee” or other “Management Fee” paid to Manager.
  (6) Price per membership interest of each series.
  (7) Denotes total dollar amount offered, sold to date and remaining to be sold in each series.
  (8) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (9) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 

 182 

 

As of December 31, 2019, the following Series and related race horses have been created and are being offered pursuant to either (i) our California intrastate offering permit, (ii) Rule 506(c) of Regulation D, or (iii) the Offering Statement:

 

Name of Horse   Interests Offered(1)   Interests Sold (1)   Interests Remaining (1)   Asset Cost/Interest (2)   Operating Expense Reserve/Interest (2)   Due Diligence Fee/Interest (2)   Owed to Series (3)   Owed to Experiential (4)   Paid to Experiential (5)   Price Per Interest (6)   $ Sold (7)   $ Offered (7)     $ Remaining (7)  
MRH Amandrea     550     425     125   $ 210.00   $ 40.00   $ 45.00   $ 5,000.00   $ 16,800.00   $ 19,125.00   $ 295.00   $ 125,375.00   $ 162,250.00     $ 36,875.00  
MRH Amers     75     75       $ 82.00   $ 37.00   $ 21.00   $ 0.00   $ 0.00   $ 1,575.00   $ 140.00   $ 10,500.00   $ 10,500.00     $ 0.00  
MRH Annahilate     450     300     150   $ 165.00   $ 90.00   $ 45.00   $ 13,500.00   $ 24,750.00   $ 13,500.00   $ 300.00   $ 90,000.00   $ 135,000.00     $ 45,000.00  
MRH Bella Chica     100     30     70   $ 250.00   $ 66.00   $ 64.00   $ 4,620.00   $ 17,500.00   $ 1,920.00   $ 380.00   $ 11,400.00   $ 38,000.00     $ 26,600.00  
MRH Big Mel     5,100     3,220     1,880   $ 89.00   $ 14.00   $ 18.00   $ 26,320.00   $ 167,320.00   $ 57,960.00   $ 121.00   $ 389,620.00   $ 617,100.00     $ 227,480.00  
MRH Bullion     25     25       $ 240.00   $ 0.00   $ 230.00   $ 0.00   $ 0.00   $ 5,750.00   $ 470.00   $ 11,750.00   $ 11,750.00     $ 0.00  
MRH Cairo Kiss     80     80       $ 347.50   $ 124.25   $ 83.25   $ 0.00   $ 0.00   $ 6,660.00   $ 555.00   $ 44,400.00   $ 44,400.00     $ 0.00  
MRH Carpe Vinum     600     600       $ 200.00   $ 72.00   $ 48.00   $ 0.00   $ 0.00   $ 28,800.00   $ 320.00   $ 192,000.00   $ 192,000.00     $ 0.00  
MRH Daddy's Joy     600     599     1   $ 80.00   $ 73.00   $ 27.00   $ 73.00   $ 80.00   $ 16,173.00   $ 180.00   $ 107,820.00   $ 108,000.00     $ 180.00  
MRH Dancing Destroyer     250     250       $ 72.00   $ 47.00   $ 21.00   $ 0.00   $ 0.00   $ 5,250.00   $ 140.00   $ 35,000.00   $ 35,000.00     $ 0.00  
Filly Four*     8,000     638     7,362   $ 105.00   $ 48.00   $ 27.00   $ 353,376.00   $ 773,010.00   $ 17,226.00   $ 180.00   $ 114,840.00   $ 1,440,000.00     $ 1,325,160.00  
MRH Keertana 18*     5,100     2,647     2,453   $ 72.00   $ 13.00   $ 15.00   $ 31,889.00   $ 176,616.00   $ 39,705.00   $ 100.00   $ 264,700.00   $ 510,000.00     $ 245,300.00  
MRH Kiana's Love     200     200       $ 55.00   $ 47.00   $ 18.00   $ 0.00   $ 0.00   $ 3,600.00   $ 120.00   $ 24,000.00   $ 24,000.00     $ 0.00  
MRH Kichiro     200     129     71   $ 81.00   $ 29.00   $ 20.00   $ 2,059.00   $ 5,751.00   $ 2,580.00   $ 130.00   $ 16,770.00   $ 26,000.00     $ 9,230.00  
MRH Madarnas     50     50     0   $ 204.00   $ 93.00   $ 53.00   $ 2,604.00   $ 4,488.00   $ 1,484.00   $ 350.00   $ 9,294.00   $ 17,500.00     $ 0.00  
MRH Lazy Daisy*     1,250     1,250       $ 90.00   $ 7.00   $ 18.00   $ 0.00   $ 0.00   $ 22,500.00   $ 115.00   $ 143,750.00   $ 143,750.00     $ 0.00  
MRH Major Implications     20     20       $ 128.00   $ 67.00   $ 35.00   $ 0.00   $ 0.00   $ 700.00   $ 230.00   $ 4,600.00   $ 4,600.00     $ 0.00  
MRH Miss Puzzle     125     125       $ 112.00   $ 100.00   $ 38.00   $ 0.00   $ 0.00   $ 4,750.00   $ 250.00   $ 31,250.00   $ 31,250.00     $ 0.00  
MRH Moonless Sky     200     200       $ 60.00   $ 33.50   $ 16.50   $ 0.00   $ 0.00   $ 3,300.00   $ 110.00   $ 22,000.00   $ 22,000.00     $ 0.00  
MRH Night of Idiots     80     62     18   $ 112.00   $ 100.00   $ 38.00   $ 1,800.00   $ 2,016.00   $ 2,356.00   $ 250.00   $ 15,500.00   $ 20,000.00     $ 4,500.00  
MRH Nileist     45     45       $ 260.00   $ 190.00   $ 80.00   $ 0.00   $ 0.00   $ 3,600.00   $ 530.00   $ 23,850.00   $ 23,850.00     $ 0.00  
MRH Noble Goddess     300     300       $ 62.00   $ 31.00   $ 17.00   $ 0.00   $ 0.00   $ 5,100.00   $ 110.00   $ 33,000.00   $ 33,000.00     $ 0.00  
NYC Claiming Package     510     510       $ 72.00   $ 54.00   $ 14.00   $ 0.00   $ 0.00   $ 7,140.00   $ 140.00   $ 71,400.00   $ 71,400.00     $ 0.00  
MRH Ocean Magic     510         510   $ 31.00   $ 71.00   $ 18.00   $ 36,210.00   $ 15,810.00   $ 0.00   $ 120.00   $ 0.00   $ 61,200.00     $ 61,200.00  
MRH Power Up Paynter      600     600       $ 100.00   $ 61.00   $ 29.00   $ 0.00   $ 0.00   $ 17,400.00   $ 190.00   $ 114,000.00   $ 114,000.00     $ 0.00  
MRH Sauce On Side     125     125       $ 130.00   $ 74.00   $ 36.00   $ 0.00   $ 0.00   $ 4,500.00   $ 240.00   $ 30,000.00   $ 30,000.00     $ 0.00  
MRH Shake It Up Baby     250     231     19   $ 44.00   $ 66.50   $ 19.50   $ 1,263.50   $ 836.00   $ 4,504.50   $ 130.00   $ 30,030.00   $ 32,500.00     $ 2,470.00  
MRH Sigesmund     200     61     139   $ 50.00   $ 35.00   $ 15.00   $ 4,865.00   $ 6,950.00   $ 915.00   $ 100.00   $ 6,100.00   $ 20,000.00     $ 13,900.00  
MRH Soul Beam     65     65       $ 355.00   $ 163.50   $ 91.50   $ 0.00   $ 0.00   $ 5,947.50   $ 610.00   $ 39,650.00   $ 39,650.00     $ 0.00  
MRH Squared Straight     150     150       $ 153.00   $ 76.00   $ 41.00   $ 0.00   $ 0.00   $ 6,150.00   $ 270.00   $ 40,500.00   $ 40,500.00     $ 0.00  
MRH Street Band     50     50       $ 918.00   $ 127.00   $ 185.00   $ 0.00   $ 0.00   $ 9,250.00   $ 1,230.00   $ 61,500.00   $ 61,500.00     $ 0.00  
MRH Sunny 18*     5,100     3,608     1,492   $ 41.00   $ 14.00   $ 10.00   $ 20,888.00   $ 61,172.00   $ 36,080.00   $ 65.00   $ 234,520.00   $ 331,500.00     $ 96,980.00  
MRH Swiss Minister     50     50       $ 150.00   $ 88.00   $ 42.00   $ 0.00   $ 0.00   $ 2,100.00   $ 280.00   $ 14,000.00   $ 14,000.00     $ 0.00  
MRH Takeo Squared     100     100       $ 153.00   $ 76.00   $ 41.00   $ 0.00   $ 0.00   $ 4,100.00   $ 270.00   $ 27,000.00   $ 27,000.00     $ 0.00  
MRH Tavasco Road     80     80       $ 128.00   $ 67.00   $ 35.00   $ 0.00   $ 0.00   $ 2,800.00   $ 230.00   $ 18,400.00   $ 18,400.00     $ 0.00  
MRH Tizamagician     600     600       $ 185.00   $ 87.00   $ 48.00   $ 0.00   $ 0.00   $ 28,800.00   $ 320.00   $ 192,000.00   $ 192,000.00     $ 0.00  
MRH Two Trail Sioux 17K     1     1       $ 24,750.00   $ 3,617.00   $ 1,493.00   $ 0.00   $ 0.00   $ 1,493.00   $ 29,860.00   $ 29,860.00   $ 29,860.00     $ 0.00  
MRH Utalknboutpractice     100     95     5   $ 165.00   $ 90.00   $ 45.00   $ 450.00   $ 825.00   $ 4,275.00   $ 300.00   $ 28,500.00   $ 30,000.00     $ 1,500.00  
MRH Vertical Threat     600     598     2   $ 100.00   $ 78.50   $ 31.50   $ 157.00   $ 200.00   $ 18,837.00   $ 210.00   $ 125,580.00   $ 126,000.00     $ 420.00  
MRH Wayne O     6,000     6,000       $ 75.00   $ 6.00   $ 14.00   $ 0.00   $ 0.00   $ 84,000.00   $ 95.00   $ 570,000.00   $ 570,000.00     $ 0.00  
MRH Zestful     100     100       $ 194.00   $ 78.00   $ 48.00   $ 0.00   $ 0.00   $ 4,800.00   $ 320.00   $ 32,000.00   $ 32,000.00     $ 0.00  

 _____________________

 

 

 

 183 

 

 

  * Denotes offerings commenced in fourth quarter of fiscal year 2019.
  (1) Denotes total membership interests offered, sold to date and remaining to be sold in each series.
  (2) Denotes the “Cash Portion of the Asset Cost”, “Cash Reserves for Operating Expenses”, and “Due Diligence Fee” per membership interest sold.
  (3) Denotes the amount of cash held in reserve attributable to such series after deduction of “Due Diligence Fee.”
  (4) Denotes the amount owed to the Manager for any loans extended on behalf of a series.
  (5) Denotes the amount of “Due Diligence Fee” or other “Management Fee” paid to Manager.
  (6) Price per membership interest of each series.
  (7) Denotes total dollar amount offered, sold to date and remaining to be sold in each series.

 

Revenues

 

Revenues are generated at the Series level. During the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company generated $1,455,916 and $263,655 in revenues, respectively. The increase in revenue is attributed to certain Series’ Underlying Asset winning horse race purse winnings. Some of the Company’s horses (as more particularly described in the Offering Statement under the “Use of Proceeds” section for each Underlying Asset) have begun racing, and thus, may begin to generate revenue.

 

During the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company incurred costs of revenue – horse expenses of $1,805,350 and $502,233 respectively. The increase in costs of revenue – horse expenses is attributed to the Company’s investment in new, additional Underlying Assets that are related to veterinary costs, transportation, jockey fees, etc. as directly related to the revenue-driving activities of such series of horses.

 

The revenues generated, and costs of revenue incurred, on a series-by-series basis as of December 31, 2020, and December 31, 2019 are as follows:

 

    Revenue     Cost of Revenues  
Series Name     31-Dec-20       31-Dec-19       31-Dec-20       31-Dec-19  
Series Action Bundle (1)   $ 500           $ (37,070 )      
Series Amandrea   $ 19,039     $ 1,650     $ (34,536 )   $ (12,092 )
Series Ambleside Park 19               $ (6,537 )      
Series Amers         $ 1,584           $ (2,881 )
Series Apple Down Under 19               $ (9,111 )      
Series Athenian Beauty 19               $ (8,768 )      
Series Authentic   $ 825,000           $ (300,002 )      
Series Awe Hush 19               $ (20,598 )      
Series Bella Chica   $ 17,252           $ (14,105 )   $ (12,620 )
Series Big Mel   $ 12,450           $ (40,867 )   $ (23,482 )
Series Bullion                        
Series Cairo Kiss   $ 180     $ 920     $ (5,183 )   $ (14,038 )
Series Cayala 19               $ (22,879 )      
Series Classofsixtythree 19               $ (11,755 )      
Series Collusion Illusion   $ 11,500           $ (48,960 )      
Series Consecrate 19               $ (6,166 )      
Series Daddy’s Joy   $ 22,488           $ (28,837 )   $ (20,411 )
Series De Mystique ‘17   $ 10,280     $ 11,385     $ (4,723 )   $ (15,131 )
Series Deep Cover               $ (33,184 )      
Series Escape Route   $ 30,300           $ (17,267 )      
Series Exonerated 19               $ (10,161 )      
Series Frosted Oats               $ (11,517 )      
Series Future Stars Stable               $ (30,394 )      
Series Got Stormy               $ (1,104 )      
Series Just Louise 19               $ (14,157 )      
Series Keertana 18               $ (27,649 )   $ (8,604 )
Series Kiana’s Love   $ 5,775     $ 8,516     $ (6,536 )   $ (11,952 )
Series Kichiro   $ 2,338     $ 70     $ (7,800 )   $ (6,446 )
Series Lane Way   $ 50,544           $ (81,400 )      
Series Latte Da 19               $ (9,955 )      
Series Lazy Daisy   $ 10,271     $ 2,500     $ (10,881 )   $ (9,233 )

 

 

 

 184 

 

 

Series Lost Empire 19               $ (19,955 )      
Series Madarnas                        
Series Major Implications         $ 2,714           $ (1,197 )
Series Man Among Men               $ (15,419 )      
Series Margaret Reay 19               $ (16,566 )      
Series Martita Sangrita 17   $ 35,879     $ 23,544     $ (57,080 )   $ (33,754 )
Series Midnight Sweetie 19               $ (9,232 )      
Series Miss Puzzle               $ (9,492 )   $ (1,555 )
Series Mo Mischief   $ 7,895           $ (42,824 )      
Series Monomoy Girl               $ (1,471 )      
Series Moonless Sky   $ 2,228     $ 1,936     $ (689 )   $ (7,671 )
Series Motion Emotion (2)               $ (2,070 )      
Series Naismith               $ (30,704 )      
Series New York Claiming Package   $ 15,106     $ 20,563     $ (5,132 )   $ (7,412 )
Series Night of Idiots   $ 3,960     $ 5,088     $ (6,141 )   $ (15,822 )
Series Nileist         $ 9,658           $ (24,935 )
Series Noble of Goddess   $ 218     $ 4,352     $ (4,740 )   $ (17,594 )
Series NY Exacta               $ (53,793 )      
Series Palace Foal                     $ (6,171 )
Series Popular Demand               $ (22,179 )      
Series Power Up Paynter   $ 47,895     $ 22,809     $ (49,448 )   $ (28,674 )
Series Sauce on Side         $ 6,023           $ (8,904 )
Series Shake It Up Baby   $ 325     $ 125     $ (3,988 )   $ (9,818 )
Series Sigesmund   $ 514           $ (8,358 )   $ (7,021 )
Series Social Dilemma               $ (1,275 )      
Series Soul Beam         $ 24,852           $ (21,006 )
Series Speightstown Belle 19               $ (10,361 )      
Series Squared Straight   $ 4,016     $ 1,041     $ (18,823 )   $ (12,217 )
Series Storm Shooter   $ 47,320           $ (64,157 )      
Series Street Band   $ 51,359     $ 41,305     $ (3,316 )   $ (14,858 )
Series Sunny 18               $ (38,038 )   $ (5,383 )
Series Swiss Minister         $ 5,749           $ (5,875 )
Series Takeo Squared         $ 4,684           $ (1,558 )
Series Tapitry 19               $ (15,373 )      
Series Tavasco Road         $ 1,695           $ (3,574 )
Series The Filly Four   $ 38,000           $ (202,319 )   $ (8,655 )
Series Thirteen Stripes               $ (31,310 )      
Series Tizamagician   $ 58,923     $ 27,602     $ (55,992 )   $ (31,620 )
Series Two Trail Sioux 17               $ (21,226 )   $ (16,943 )
Series Two Trial Sioux 17K               $ 60        
Utalknboutpractice   $ 10,200           $ (11,190 )   $ (7,985 )
Series Vertical Threat   $ 112,110           $ (77,095 )   $ (24,817 )
Series Wayne O   $ 2,051     $ 28,700     $ (32,080 )   $ (38,694 )
Series Yes This Time               $ (1,472 )      
Series Zestful         $ 4,590           $ (1,630 )
    $ 1,455,916     $ 263,655     $ (1,805,350 )   $ (502,233 )

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 185 

 

 

Operating Expenses

 

Since its formation in December 2016, the Company’s efforts have been focused on the development of the offering and marketing for fundraising. The Company commenced its planned principal operations in 2018. During the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company incurred $4,945,826 and $1,049,769, respectively, an increase of $3,896,057 related to general and administrative fees, management fees, depreciation, and loss on horse retirement. The increase was primarily driven by increased costs from the Company’s investment in new Underlying Assets.

 

Operating Expenses for the Company including all of the Series for the twelve-month periods ended December 31, 2020, and December 31, 2019, are as follows:

 

 

Total Operating Expense      
    31-Dec-20     31-Dec-19     Difference     Change  
General and Administrative   $ 237,678     $ 53,326     $ 184,352       78%  
Management Fees   $ 1,917,883     $ 460,455     $ 1,457,428       76%  
Depreciation   $ 2,676,696     $ 472,260     $ 2,204,436       82%  
Loss on Horse Retirement   $ 113,569     $ 63,728     $ 49,841       44%  
Total:   $ 4,945,826     $ 1,049,769     $ 3,896,057       79%  

 

Operating Expenses - Overview

 

During the twelve-month periods ended December 31, 2020, and December 31, 2019, at the close of the respective offerings for the Series listed in the table below, each individual Series became responsible for operating expenses. All operating expenses are incurred on the books by the Series. The operating expenses for each Series are as follows:

 

Series Name   31-Dec-20     31-Dec-19  
Series Action Bundle (1)   $ 4,400        
Series Amandrea   $ 47,845     $ 33,623  
Series Ambleside Park   $ 19,417        
Series Amers         $ 4,627  
Series Apple Down Under 19   $ 22,587        
Series Athenian Beauty 19   $ 19,298        
Series Authentic   $ 1,234,060        
Series Awe Hush 19   $ 65,563        
Series Bella Chica   $ 13,901     $ 13,066  
Series Big Mel   $ 224,846     $ 115,290  
Series Bullion   $ (333 )   $ 3,500  
Series Cairo Kiss   $ (3,040 )   $ 10,767  
Series Cayala 19   $ 82,785        
Series Classofsixtythree 19   $ 43,503        
Series Collusion Illusion   $ 146,741        
Series Consecrate   $ 15,105        
Series Daddy's Joy   $ 21,374     $ 28,339  
Series De Mystique 17   $ 18,185     $ 9,653  
Series Deep Cover   $ 49,904        
Series Escape Route   $ 13,545        
Series Exonerated 19   $ 37,264        
Series Frosted Oats   $ 43,653        

 

 

 

 186 

 

 

Series Future Stars Stable   $ 108,743        
Series Got Stormy   $ 9,673        
Series Just Louise   $ 53,030        
Series Keertana 18   $ 161,445     $ 71,593  
Series Kiana's Love   $ 6,755     $ 9,075  
Series Kichiro   $ 9,587     $ 7,955  
Series Lane Way   $ 209,752        
Series Latte Da   $ 26,646        
Series Lazy Daisy   $ 114,816     $ 36,750  
Series Lost Empire   $ 80,152        
Series Madarnas            
Series Major Implications         $ 2,361  
Series Man Among Men   $ 50,602        
Series Margaret Reay 19   $ 55,216        
Series Martita Sangrita 17   $ 49,530     $ 59,321  
Series Midnight Sweetie 19   $ 27,574        
Series Miss Puzzle   $ 7,494     $ 10,707  
Series Monomoy Girl   $ 22,374        
Series Motion Emotion (2)   $ 2,215        
Series Mo Mischief   $ 126,338        
Series Moonless Sky   $ (1,224 )   $ 5,500  
Series Naismith   $ 74,657        
Series New York Claiming Package   $ 24,803     $ 18,685  
Series Night of Idiots   $ (1,674 )   $ 4,717  
Series Nileist         $ 1,128  
Series Noble Goddess   $ 347     $ 9,829  
Series NY Exacta   $ 107,220        
Series Palace Foal   $ 3,902     $ 6,503  
Series Popular Demand   $ 75,462        
Series Power Up Paynter   $ 27,890     $ 32,848  
Series Sauce On Side         $ 13,333  
Series Shake It Up Baby   $ (2,180 )   $ 8,600  
Series Sigesmund   $ 9,907     $ 4,833  
Series Social Dilemma   $ 2,953        
Series Soul Beam         $ 18,988  
Series Speightstown Belle   $ 29,271        
Series Squared Straight   $ 11,325     $ 9,000  
Series Storm Shooter   $ 92,199        
Series Street Band   $ 48,731     $ 22,443  
Series Sunny 18   $ 95,630     $ 54,708  
Series Swiss Minister         $ 7,306  
Series Takeo Squared         $ 12,917  
Series Tapitry   $ 50,602        
Series Tavasco Road         $ 8,299  
Series The Filly Four   $ 703,495     $ 72,756  
Series Thirteen Stripes   $ 58,881        
Series Tizamagician   $ 49,504     $ 59,951  
Series Two Trail Sioux 17   $ 34,600     $ 31,500  
Series Two Trail Sioux 17K   $ 19,968     $ 6,700  
Series Utalknboutpractice   $ (1,743 )   $ 8,100  
Series Vertical Threat   $ 36,201     $ 33,670  
Series Wayne O   $ 152,555     $ 163,370  
Series Yes This Time            
Series Zestful         $ 17,460  
TOTAL   $ 4,945,826     $ 1,049,769  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 187 

 

 

Operating Expenses – General and Administrative

 

For the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company incurred general and administrative fees of $237,678 and $53,326, respectively, an increase of $184,352. This is due to an increase in the minimum annual General and Administrative expense that is incurred by each Series. In addition, many of the horses that incurred expenses in the prior period incurred a subsequent fee in the current period. The expense increases based on the size of the overall offering. These increases in offerings combined with larger offerings contributed to an overall increase in the general and administrative expense for the Company for the period ending December 31, 2020 relative to the prior period.

  

The general and administrative fees incurred on a series-by-series basis as of December 31, 2020, and December 31, 2019 are as follows:

 

Series Name   31-Dec-20     31-Dec-19  
Series Action Bundle (1)   $ 4,350        
Series Amandrea   $ 1,816     $ 1,500  
Series Ambleside Park 19   $ 2,400        
Series Amers         $ 375  
Series Apple Down Under 19   $ 2,400        
Series Athenian Beauty 19   $ 2,400        
Series Authentic   $ 12,180        
Series Awe Hush 19   $ 2,400        
Series Bella Chica   $ 1,788     $ 2,813  
Series Big Mel   $ 3,100     $ 1,500  
Series Bullion   $ (1,213 )   $ 1,500  
Series Cairo Kiss   $ 2,900     $ 1,500  
Series Cayala 19   $ 3,200        
Series Classofsixtythree 19   $ 2,400        
Series Collusion Illusion   $ 1,800        
Series Consecrate 19   $ 2,400        
Series Daddy’s Joy   $ 3,100     $ 1,500  
Series De Mystique ‘17   $ 1,725     $ 1,500  
Series Deep Cover   $ 2,500        
Series Escape Route            
Series Exonerated 19   $ 2,400        
Series Frosted Oats   $ 3,200        
Series Future Stars Stable   $ 3,200        
Series Got Stormy   $ 9,673        
Series Just Louise 19   $ 2,400        
Series Keertana 18   $ 3,100     $ 1,500  
Series Kiana's Love   $ 3,140     $ 1,500  
Series Kichiro   $ 3,100     $ 1,500  
Series Lane Way   $ 3,800        
Series Latte Da 19   $ 3,200        
Series Lazy Daisy   $ 4,100     $ 1,500  
Series Lost Empire 19   $ 3,200        
Series Madarnas            
Series Major Implications            
Series Man Among Men   $ 2,400        

 

 

 188 

 

 

 

Series Margaret Reay 19   $ 2,400        
Series Martita Sangrita 17   $ 3,100     $ 1,500  
Series Midnight Sweetie 19   $ 2,400        
Series Miss Puzzle   $ 3,100     $ 1,500  
Series Mo Mischief   $ 2,500        
Series Monomoy Girl   $ 22,374        
Series Moonless Sky   $ 1,718     $ 1,500  
Series Motion Emotion (2)   $ 2,215        
Series Naismith   $ 5,938        
Series New York Claiming Package   $ 1,693     $ 857  
Series Night of Idiots   $ 1,255     $ 1,500  
Series Nileist         $ 1,500  
Series Noble Goddess   $ 2,400     $ 1,500  
Series NY Exacta   $ 6,069        
Series Palace Foal            
Series Popular Demand   $ 5,800        
Series Power Up Paynter   $ 3,100     $ 1,500  
Series Sauce on Side            
Series Shake It Up Baby         $ 1,500  
Series Sigesmund   $ 3,100     $ 1,500  
Series Social Dilemma   $ 2,215        
Series Soul Beam         $ 125  
Series Speightstown Belle   $ 2,400        
Series Squared Straight   $ 3,900     $ 1,500  
Series Storm Shooter   $ 5,800        
Series Street Band   $ 12,426     $ 1,500  
Series Sunny 18   $ 3,140     $ 1,500  
Series Swiss Minister         $ 1,460  
Series Takeo Squared            
Series Tapitry 19   $ 2,400        
Series Tavasco Road            
Series The Filly Four   $ 7,602     $ 6,000  
Series Thirteen Stripes   $ 5,000        
Series Tizamagician   $ 3,100     $ 1,500  
Series Two Trail Sioux 17   $ 3,100     $ 1,500  
Series Two Trial Sioux 17K   $ 10,975     $ 1,200  
Series Utalknboutpractice   $ 2,450     $ 1,500  
Series Vertical Threat   $ 3,100     $ 1,500  
Series Wayne O   $ 2,350     $ 1,500  
Series Yes This Time            
Series Zestful            
TOTAL   $ 237,678     $ 53,326  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 189 

 

 

Operating Expenses – Management Fee

 

For the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company incurred Management Fee expenses of $1,917,883 and $460,455, respectively, an increase of $1,457,428. The increase is due primarily to the quantity and value of the overall offerings during the current period relative to the prior period. In addition, the increase in offerings combined with higher race earnings during the current period contributed to the increase from the prior period.

 

The Management Fee expenses on a series-by-series basis as of December 31, 2020, and December 31, 2019 are as follows:

 

      Management Fee  
Series Name     31-Dec-20       31-Dec-19  
Series Action Bundle (1)   $ 50        
Series Amandrea   $ 7,529     $ 19,290  
Series Ambleside Park 19   $ 12,608        
Series Amers         $ 420  
Series Apple Down Under 19   $ 15,570        
Series Athenian Beauty 19   $ 12,690        
Series Authentic   $ 468,750        
Series Awe Hush 19   $ 44,280        
Series Bella Chica   $ 3,780     $ 1,920  
Series Big Mel   $ 51,580     $ 58,565  
Series Bullion   $ (1,788 )      
Series Cairo Kiss            
Series Cayala 19   $ 55,897        
Series Classofsixtythree 19   $ 28,950        
Series Collusion Illusion   $ 113,400        
Series Consecrate 19   $ 9,608        
Series Daddy’s Joy   $ 2,276     $ 16,173  
Series De Mystique ‘17   $ 1,028     $ 6,347  
Series Deep Cover   $ 26,400        
Series Escape Route   $ 10,392        
Series Exonerated 19   $ 20,787        
Series Frosted Oats 19   $ 25,830        
Series Future Stars Stable   $ 74,168        
Series Got Stormy            
Series Just Louise 19   $ 34,762        
Series Keertana 18   $ 36,795     $ 39,705  
Series Kiana’s Love         $ 4,042  
Series Kichiro   $ 1,320     $ 2,580  
Series Lane Way   $ 86,054        
Series Latte Da 19   $ 21,525        
Series Lazy Daisy   $ 27     $ 22,750  
Series Lost Empire 19   $ 53,151        
Series Madarnas            
Series Major Implications            
Series Man Among Men   $ 33,579        
Series Margaret Reay 19   $ 37,023        
Series Martita Sangrita 17   $ 3,588     $ 31,154  

 

 


 190 

 

 

Series Midnight Sweetie 19   $ 18,204        
Series Miss Puzzle   $ (63 )   $ 4,750  
Series Mo Mischief   $ 56,889        
Series Monomoy Girl            
Series Moonless Sky            
Series Motion Emotion (2)            
Series Naismith   $ 45,600        
Series New York Claiming Package   $ 1,511     $ 4,192  
Series Night of Idiots   $ 684     $ 304  
Series Nileist         $ 320  
Series Noble of Goddess         $ 2,329  
Series NY Exacta   $ 68,400        
Series Palace Foal            
Series Popular Demand   $ 36,720        
Series Power Up Paynter   $ 4,790     $ 19,681  
Series Sauce on Side            
Series Shake It Up Baby   $ 403     $ 4,517  
Series Sigesmund   $ 2,085        
Series Social Dilemma            
Series Soul Beam         $ 275  
Series Speightstown Belle 19   $ 18,765        
Series Squared Straight   $ (75 )      
Series Storm Shooter   $ 52,732        
Series Street Band   $ 56     $ 12,192  
Series Sunny 18   $ 23,980     $ 36,080  
Series Swiss Minister         $ 966  
Series Takeo Squared            
Series Tapitry 19   $ 33,579        
Series Tavasco Road         $ 315  
Series The Filly Four   $ 202,574     $ 17,226  
Series Thirteen Stripes   $ 34,350        
Series Tizamagician   $ 5,892     $ 31,441  
Series Two Trail Sioux 17   $ 6,750     $ 13,500  
Series Two Trial Sioux 17K   $ 743        
Series Utalknboutpractice   $ 225     $ 2,610  
Series Vertical Threat   $ 11,274     $ 18,837  
Series Wayne O   $ 205     $ 86,870  
Series Yes This Time            
Series Zestful         $ 1,104  
Total   $ 1,917,883     $ 460,455  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 191 

 

 

Operating Expenses – Depreciation

 

For the twelve-month periods ended December 31, 2020, and December 31, 2019, the depreciation was $2,676,696 and $472,260, respectively, an increase of $2,204,436. The increase is due to both the quantity and the value of the overall assets increased from the period ending December 31, 2020. This is primarily attributed to the Company acquiring an increase in higher valued horses in the current period than in the previous period. The method of calculating depreciation remained unchanged during the current period.

 

The depreciation on a series-by-series basis as of December 31, 2020, and December 31, 2019 are as follows:

 

Series Name   31-Dec-20     31-Dec-19  
Series Action Bundle (1)   -     -  
Series Amandrea   $ 38,500     $ 12,833  
Series Ambleside Park 19   $ 4,409        
Series Amers         $ 1,372  
Series Apple Down Under 19   $ 4,617        
Series Athenian Beauty 19   $ 4,208        
Series Authentic   $ 753,129        
Series Awe Hush 19   $ 18,883        
Series Bella Chica   $ 8,333     $ 8,333  
Series Big Mel   $ 170,166     $ 55,225  
Series Bullion   $ 241     $ 2,000  
Series Cairo Kiss   $ 7,124     $ 9,267  
Series Cayala 19   $ 23,689        
Series Classofsixtythree 19   $ 12,153        
Series Collusion Illusion   $ 31,541        
Series Consecrate 19   $ 3,097        
Series Daddy’s Joy   $ 15,998     $ 10,666  
Series De Mystique ‘17   $ 5,191     $ 1,806  
Series Deep Cover   $ 21,004        
Series Escape Route   $ 3,153        
Series Exonerated 19   $ 14,077        
Series Frosted Oats   $ 14,623        
Series Future Stars Stable   $ 31,375        
Series Got Stormy            
Series Just Louise 19   $ 15,867        
Series Keertana 18   $ 121,550     $ 30,388  
Series Kiana's Love   $ 1,985     $ 3,533  
Series Kichiro   $ 5,167     $ 3,875  
Series Lane Way   $ 119,897        
Series Latte Da 19   $ 1,921        
Series Lazy Daisy   $ 34,949     $ 12,500  
Series Lost Empire 19   $ 23,800        
Series Madarnas            
Series Major Implications            
Series Man Among Men   $ 14,623        
Series Margaret Reay 19   $ 15,793        
Series Martita Sangrita 17   $ 42,842     $ 26,667  
Series Midnight Sweetie 19   $ 6,970        
Series Miss Puzzle   $ 4,457     $ 4,457  
Series Mo Mischief   $ 66,949        

 

 

 

 

 192 

 

 

Series Monomoy Girl   -     -  
Series Moonless Sky   $ 269     $ 4,000  
Series Motion Emotion (2)            
Series Naismith   $ 23,118        
Series New York Claiming Package   $ (14,792 )   $ 16,480  
Series Night of Idiots   $ 931     $ 2,913  
Series Nileist         $ 3,337  
Series Noble Goddess   $ 4,516     $ 6,000  
Series NY Exacta   $ 32,751        
Series Palace Foal   $ 3,902     $ 6,503  
Series Popular Demand   $ 32,942        
Series Power Up Paynter   $ 20,000     $ 11,667  
Series Sauce on Side         $ 1,801  
Series Shake It Up Baby   $ 217     $ 2,583  
Series Sigesmund   $ 2,880     $ 3,333  
Social Dilemma   $ 737        
Series Soul Beam         $ 4,632  
Series Speightstown Belle   $ 8,106        
Series Squared Straight   $ 7,500     $ 7,500  
Series Storm Shooter   $ 33,667        
Series Street Band   $ 12,875     $ 8,750  
Series Sunny 18   $ 68,510     $ 17,128  
Series Swiss Minister         $ 1,573  
Series Takeo Squared            
Series Tapitry 19   $ 14,623        
Series Tavasco Road         $ 275  
Series The Filly Four   $ 493,319     $ 49,530  
Series Thirteen Stripes   $ 19,531        
Series Tizamagician   $ 40,515     $ 27,010  
Series Two Trail Sioux 17   $ 24,750     $ 16,500  
Series Two Trial Sioux 17K   $ 8,250     $ 5,500  
Series Utalknboutpractice   $ 3,471     $ 3,990  
Series Vertical Threat   $ 21,827     $ 13,333  
Series Wayne O   $ 150,000     $ 75,000  
Series Yes This Time            
Series Zestful            
Total   $ 2,676,696     $ 472,260  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 

 193 

 

 

Operating Expenses – Loss on Horse Retirement

 

For the twelve-month periods ended December 31, 2020, and December 31, 2019, the loss on horse retirement was $113,569 and $63,728, respectively, an increase of $49,841. The increase is due to the timing and the change in remaining net asset value at the close out of the respective Series in the given period.

 

The loss on horse retirement on a series-by-series basis as of December 31, 2020, and December 31, 2019 are as follows:

 

      Loss on Horse  
Series Name     31-Dec-20       31-Dec-19  
Series Action Bundle (1)            
Series Amandrea            
Series Ambleside Park 19            
Series Amers         $ 2,460  
Series Apple Down Under 19            
Series Athenian Beauty 19            
Series Authentic            
Series Awe Hush            
Series Bella Chica            
Series Big Mel            
Series Bullion   $ 2,425        
Series Cairo Kiss   $ (13,065 )      
Series Cayala 19            
Series Classofsixtythree 19            
Series Collusion Illusion            
Series Consecrate 19            
Series Daddy’s Joy            
Series De Mystique ’17   $ 10,241        
Series Deep Cover            
Series Escape Route            
Series Exonerated 19            
Series Frosted Oats            
Series Future Stars Stable            
Series Got Stormy            
Series Just Louise 19            
Series Keertana 18            
Series Kiana’s Love   $ 1,630        
Series Kichiro            
Series Lane Way            
Series Lazy Daisy   $ 75,739        
Series Lost Empire 19            
Series Madarnas            
Series Major Implications         $ 2,361  
Series Man Among Men            
Series Margaret Reay 19            
Series Martita Sangrita 17            
Series Midnight Sweetie 19            
Series Miss Puzzle            
Series Mo Mischief            
Series Monomoy Girl            
Series Moonless Sky   $ (3,211 )      
Series Motion Emotion (2)            
Series Naismith            
Series New York Claiming Package   $ 36,392     $ (2,844 )
Series Night of Idiots   $ (4,544 )      

 

 

 

 194 

 

 

Series Nileist         $ (4,029 )
Series Noble of Goddess   $ (6,569 )      
Series NY Exacta            
Series Palace Foal            
Series Popular Demand            
Series Power Up Paynter            
Series Sauce on Side         $ 11,532  
Series Shake It Up Baby   $ (2,800 )      
Series Sigesmund   $ 1,843        
Series Social Dilemma            
Series Soul Beam         $ 13,957  
Series Speightstown Belle            
Series Squared Straight            
Series Street Band   $ 23,375        
Series Storm Shooter            
Series Sunny 18            
Series Swiss Minister         $ 3,307  
Series Takeo Squared         $ 12,917  
Series Tavasco Road         $ 7,706  
Series The Filly Four            
Series Thirteen Stripes            
Series Tizamagician            
Series Two Trail Sioux 17            
Series Two Trial Sioux 17K            
Series Utalknboutpractice   $ (7,887 )      
Series Vertical Threat            
Series Wayne O            
Series Yes This Time            
Series Zestful         $ 16,361  
TOTAL   $ 113,569     $ 63,728  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

As a result, the Company’s aggregate net loss across all series for the twelve-month periods ended December 31, 2020, and December 31, 2019 was $5,330,249 and $1,288,347, respectively.

 

 

 

 195 

 

 

Liquidity and Capital Resources – For the Years Ended December 31, 2020 and 2019

 

During the years ended December 31, 2020 and 2019, the Company has relied on advances from founders, raising capital to fund its operations and the issuance of securities under Regulation A offerings, as well as under an intrastate permit and Regulation D offering as sources of capital. The funds raised supported the repayment of manager’s loans (advanced to obtain Underlying Assets), accrue management fees and set aside cash held by the manager as horse reserve accounts to cover certain horse expenses. Additionally, the Company acquired one Underlying Asset through a loan from a strategic vendor partner.

 

Of the horses that were part of an offering as of December 31, 2020 that have not yet started racing and thus potential revenue-generating activities, the Company anticipates they will begin racing as follows:

 

Name of Series Target for Revenue Generation
Series Ambleside Park 19 Fall 2021
Series Apple Down Under 19 Summer 2021
Series Athenian Beauty 19 Fall 2021
Series Awe Hush Fall 2021
Series Cayala Fall 2021
Series ClassofSixtythree 19 Fall 2021
Series Consecrate 19 Fall 2021
Series Deep Cover Apr-21
Series Exonerated 19 Fall 2021
Series Frosted Oats Summer 2021
Series Got Stormy Feb-21
Series Just Louise 19 Fall 2021
Series Keertana 18 March 2021
Series Latte Da 19 Fall 2021
Series Lost Empire 19 Fall 2021
Series Man Among Men Fall 2021
Series Margaret Reay 19 Fall 2021
Series Midnight Sweetie 19 Fall 2021
Series Miss Puzzle Summer 2021
Series Monomoy Girl Feb-21
Series Motion Emotion Jan-21
Series Naismith Dec-20
Series NY Exacta Mar-21
Series Popular Demand Feb-21
Series Social Dilemma Jan-21
Series Sunny 18 Summer 2021
Series Tapitry 19 Fall 2021  
Series The Keeneland 14 Summer 2021
Series Yes This Time Jan-21

 

The Company anticipates such horses will begin racing and, thus, potentially generating revenue as early as the above dates, which should allow such Series to maintain an ongoing reserve for Operating Expenses without the need to raise additional capital. Should such Underlying Asset need more time than anticipated in training or fails to generate sufficient revenues as expected, the Manager may loan the Series money from time-to-time to cover its Operating Expenses. The Company has purchased insurance for such Underlying Assets.

 

 

 

 196 

 

 

The Company (if viewed as if it were a separate and distinct entity apart from its Series) will not have much, if any, need for cash reserves and, instead, each Series will have liquidity needs that are built into Operating Expense reserves and covered by future revenue-generating activities. Specifically, it is the intent of the Company to reserve Operating Expenses, including Upkeep Fees, at the outset of an offering sufficient to maintain the Underlying Asset without the need to raise additional capital for such Series. The Company intends to rely on revenue generated from such Underlying Asset to provide ongoing working capital needed to fund the Operating Expenses of each such Series thereafter. Further, in the event that a Series is not fully subscribed, or needs additional funding beyond the Operating Expense reserves, (i) the Manager and/or its affiliates may exercise their right to purchase interests in the Series on the same terms and conditions as the investors, (ii) if such Underlying Asset was originally acquired by the Company or an affiliate pursuant to a Profit Participation Convertible Promissory Note or similar instrument, such party may exercise its conversion rights, and/or (iii) the Series may obtain a loan from the Manager, affiliates or third parties to obtain sufficient working capital to operate the underlying asset.

 

During the next 12 months, the Company intends to fund its operations, including those of its Series with funding from a Regulation A offering campaign, loans from its manager and funds from revenue producing activities, if and when such can be realized. If the Company cannot secure additional short-term capital, it may cease operations. The financial statements and related notes thereto included in this Annual Report do not include any adjustments that might result from these uncertainties.

 

Horse Reserve Funds

 

During the twelve-month periods ended December 31, 2020, and December 31, 2019, the Company had a total of $1,470,649 and $446,900, respectively, in reserve funds held by the Manager for each series of an Underlying Asset as outlined below.

 

As of December 31, 2020, the Company’s positions of borrowings and amounts owed to it by the Manager are as follows:

 

Series Name   Horse reserve account owed to/(by) Series     (Horse acquisition loans owed to Manager)     Net amount owed to/(by) Series     Horse Reserves to Last Through
Series Action Bundle (1)   $ 177,942     $ (263,500 )   $ (85,558 )   12/31/2021
Series Amandrea   $ (14,655 )         $ (14,655 )  
Series Ambleside Park 19   $ 18,492           $ 18,492     9/30/2021
Series Amers                    
Series Apple Down Under 19   $ 21,094           $ 21,094     9/30/2021
Series Athenian Beauty 19   $ 21,480           $ 21,480     9/30/2021
Series Authentic   $ 94,478           $ 94,478     12/31/2021
Series Awe Hush 19   $ 34,803           $ 34,803     9/30/2021
Series Bella Chica   $ (6,856 )         $ (6,856 )   12/31/2021
Series Big Mel   $ (24,634 )         $ (24,634 )   12/31/2021
Series Bullion                    
Series Cairo Kiss                    
Series Cayala 19   $ 47,489     $ (387 )   $ 47,102     9/30/2023
Series Classofsixtythree 19   $ 28,334           $ 28,334     9/30/2021
Series Collusion Illusion   $ 41,901           $ 41,901     9/30/2023
Series Consecrate 19   $ 16,984     $ (267 )   $ 16,717     9/30/2023
Series Daddy's Joy   $ 8,589           $ 8,589     9/30/2021
Series De Mystique 17                    
Series Deep Cover   $ 33,227           $ 33,227     12/31/2021
Series Escape Route   $ 14,236           $ 14,236     3/31/2021
Series Exonerated 19   $ 22,315           $ 22,315     9/30/2021
Series Frosted Oats   $ 32,184           $ 32,184     9/30/2021
Series Future Stars Stable   $ 61,058     $ (4,718 )   $ 56,341     9/30/2023
Series Got Stormy   $ 60,871     $ (195,075 )   $ (134,204 )   11/30/2021
Series Just Louise 19   $ 31,289     $ (1,557 )   $ 29,732     9/30/2023
Series Keertana 18   $ 39,349           $ 39,349     9/30/2021
Series Kiana's Love                    
Series Kichiro   $ (9,991 )         $ (9,991 )  
Series Lane Way   $ 11,420           $ 11,420     12/31/2021
Series Latte Da 19   $ 32,232           $ 32,232     9/30/2021
Series Lazy Daisy   $ (15,159 )         $ (15,159 )  
Series Lost Empire 19   $ 53,259     $ (2,261 )   $ 50,998     9/30/2023
Series Madarnas                    

 

 197 

 

 

Series Major Implications                     9/30/2021
Series Man Among Men   $ 28,132           $ 28,132     9/30/2021
Series Margaret Reay 19   $ 30,038     $ (123 )   $ 29,915     9/30/2021
Series Martita Sangrita 17   $ (13,383 )         $ (13,383 )  
Series Midnight Sweetie 19   $ 21,011           $ 21,011     9/30/2021
Series Miss Puzzle   $ (3,343 )         $ (3,343 )  
Series Mo Mischief   $ 12,406           $ 12,406     9/30/2021
Series Monomoy Girl   $ 75,749     $ (398,820 )   $ (323,071 )   11/30/2021
Series Moonless Sky                    
Series Motion Emotion (2)   $ 42,996     $ (72,828 )   $ (29,832 )   12/31/2021
Series Naismith   $ 53,197           $ 53,197     9/30/2021
Series New York Claiming Package                    
Series Night of Idiots                    
Series Nileist                    
Series Noble Goddess                    
Series NY Exacta   $ 108,127           $ 108,127     9/30/2021
Series Palace Foal   $ (6,171 )         $ (6,171 )  
Series Popular Demand   $ 19,966           $ 19,966     9/30/2021
Series Power Up Paynter   $ (2,093 )         $ (2,093 )  
Series Sauce On Side                    
Series Shake It Up Baby                    
Series Sigesmund   $ (23,840 )         $ (23,840 )  
Series Social Dilemma   $ 43,357     $ (72,395 )   $ (29,038 )   11/30/2021
Series Soul Beam                    
Series Speightstown Belle   $ 21,743           $ 21,743     9/30/2021
Series Squared Straight   $ (24,040 )         $ (24,040 )  
Series Storm Shooter   $ 27,960           $ 27,960     9/30/2021
Series Street Band   $ 37,827           $ 37,827     1/31/2021
Series Sunny 18   $ 31,061           $ 31,061     9/30/2021
Series Swiss Minister                    
Series Takeo Squared                     -
Series Tapitry 19   $ 28,132           $ 28,132     9/30/2021
Series Tavasco Road                    
Series The Filly Four   $ 105,092           $ 105,092     9/30/2021
Series Thirteen Stripes   $ 50,475           $ 50,475     9/30/2021
Series Tizamagician   $ (8,864 )         $ (8,864 )  
Series Two Trail Sioux 17   $ (2,269 )         $ (2,269 )  
Series Two Trail Sioux 17K                    
Series Utalknboutpractice   $ 8,431           $ 8,431     9/30/2021
Series Vertical Threat   $ 3,541           $ 3,541     9/30/2021
Series Wayne O   $ (32,779 )         $ (32,779 )  
Series Yes This Time   $ 6,458     $ (107,930 )   $ (101,472 )   3/31/2021
Series Zestful                    
TOTAL   $ 1,470,649     $ (1,119,860 )   $ 350,789      

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

The cash reserves for Operating Expenses, including Upkeep Fees, for each Series are estimated to last through the time period set forth in the table above. The purchase price of such Underlying Assets typically includes such reserves for Operating Expenses through at least the time period set forth in the table above. In the Offerings, it is the intent of the Company to reserve Operating Expenses, including Upkeep Fees, at the outset of an offering sufficient to maintain the Underlying Asset without the need to raise additional capital for such series. The Company intends to rely on revenue generated from such Underlying Asset to provide ongoing working capital needed to fund the Operating Expenses of each such Series thereafter.

 

 

 

 198 

 

 

Series Interests

 

As of December 31, 2020, the Company received a total of $15,319,021 in exchange for series interests in various Underlying Assets (See our financial statements and “Note 6 – Members’ Equity/(Deficit)” for more detail):

 

Series Name   Units Offered     Units Tendered     Subscription Amount  
                   
Series Action Bundle (1)     10,000       0     $ 0  
Series Amandrea     550       550     $ 162,250  
Series Ambleside Park 19     410       410     $ 84,050  
Series Amers     75       75     $ 10,500  
Series Apple Down Under 19     600       600     $ 103,800  
Series Athenian Beauty 19     1,800       1,800     $ 84,600  
Series Authentic     12,500       12,500     $ 2,575,000  
Series Awe Hush 19     1,800       1,800     $ 295,200  
Series Bella Chica     100       100     $ 38,000  
Series Big Mel     6,000       6,000     $ 726,000  
Series Bullion     25       25     $ 11,750  
Series Cairo Kiss     80       80     $ 44,400  
Series Cayala 19     4,100       4,095     $ 372,645  
Series Classofsixtythree 19     1,000       1,000     $ 193,000  
Series Collusion Illusion     25,000       25,000     $ 750,000  
Series Consecrate 19     410       408     $ 64,056  
Series Daddy's Joy     600       600     $ 108,000  
Series De Mystique ‘17     250       250     $ 35,000  
Series Deep Cover     800       800     $ 176,000  
Series Escape Route     10       10     $ 62,952  
Series Exonerated 19     820       820     $ 138,580  
Series Frosted Oats     4,100       4,100     $ 172,200  
Series Future Stars Stable     10,000       9,889     $ 494,450  
Series Got Stormy     5,100       0     $ 0  
Series Just Louise 19     1,020       1,012     $ 231,748  
Series Keertana 18     5,100       5,100     $ 510,000  
Series Kiana's Love     200       200     $ 24,000  
Series Kichiro     200       200     $ 26,000  
Series Lane Way     6,000       6,000     $ 540,000  
Series Latte Da     4,100       4,100     $ 143,500  
Series Lazy Daisy     1,250       1,250     $ 143,750  
Series Lost Empire 19     10,200       10,124     $ 354,340  
Series Madarnas     50       50     $ 17,500  
Series Major Implications     20       20     $ 4,600  

 

 

 

 199 

 

 

Series Man Among Men     820       820     $ 223,860  
Series Margaret Reay     820       820     $ 246,820  
Series Martita Sangrita 17     600       600     $ 192,000  
Series Midnight Sweetie 19     820       820     $ 121,360  
Series Miss Puzzle     125       125     $ 31,250  
Series Mo Mischief     5,100       5,100     $ 382,500  
Series Monomoy Girl     10,200       0     $ 0  
Series Moonless Sky     200       200     $ 22,000  
Series Motion Emotion (2)     1,020       0     $ 0  
Series Naismith     2,000       2,000     $ 304,000  
Series New York Claiming Package     510       510     $ 71,400  
Series Night of Idiots     80       80     $ 20,000  
Series Nileist     45       45     $ 23,850  
Series Noble Goddess     300       300     $ 33,000  
Series NY Exacta     2,000       2,000     $ 456,000  
Series Palace Foal     510       0     $ 0  
Series Popular Demand     1,020       1,020     $ 248,880  
Series Power Up Paynter     600       600     $ 114,000  
Series Sauce On Side     125       125     $ 30,000  
Series Shake It Up Baby     250       250     $ 32,500  
Series Sigesmund     200       200     $ 20,000  
Series Social Dilemma     510       0     $ 0  
Series Soul Beam     65       65     $ 39,650  
Series Speightstown Belle     900       900     $ 125,100  
Series Squared Straight     150       150     $ 40,500  
Series Street Band     50       50     $ 61,500  
Series Storm Shooter     2,000       2,000     $ 324,000  
Series Sunny 18     6,000       6,000     $ 390,000  
Series Swiss Minister     50       50     $ 14,000  
Series Takeo Squared     100       100     $ 27,000  
Series Tapitry 19     820       820     $ 223,860  
Series Tavasco Road     80       80     $ 18,400  
Series The Filly Four     8,000       8,000     $ 1,440,000  
Series Thirteen Stripes     1,000       1,000     $ 229,000  
Series Tizamagician     600       600     $ 192,000  
Series Two Trail Sioux 17     450       450     $ 135,000  
Series Two Trail Sioux 17K     1       1     $ 29,720  
Series Utalknboutpractice     100       100     $ 30,000  
Series Vertical Threat     600       600     $ 126,000  
Series Wayne O     6,000       6,000     $ 570,000  
Series Yes This Time     10       0     $ 0  
Series Zestful     100       100     $ 32,000  
Total     169,201       141,649     $ 15,319,021  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 200 

 

 

Advances from Manager – For the Years Ended December 31, 2020 and 2019

 

To fund its organizational and start-up activities as well as to advance funds on behalf of a series to purchase horse assets, the Manager has covered the expenses and costs of the Company and its series thus far on a non-interest-bearing extension of revolving credit. The Company will evaluate when is best to repay the Manager depending on operations and fundraising ability. In general, the Company will repay the Manager for funds extended to acquire horse assets from the series subscription proceeds (less the applicable management fee), as they are received.

 

Additionally, the Manager maintains cash reserves on behalf of each of the series of the Company to cover expenses of the series’ operations.

  

In the table below, the Company outlines the positions of borrowings and amounts owed to it by the Manager as of December 31, 2020:

 

Series Name   Horse reserve account owed to/(by) Series     (Horse acquisition loans owed to Manager)     Net amount owed to/(by) Series  
Series Action Bundle (1)   $ 177,942     $ (263,500 )   $ (85,558 )
Series Amandrea   $ (14,655 )         $ (14,655 )
Series Ambleside Park 19   $ 18,492           $ 18,492  
Series Amers                  
Series Apple Down Under 19   $ 21,094           $ 21,094  
Series Athenian Beauty 19   $ 21,480           $ 21,480  
Series Authentic   $ 94,478           $ 94,478  
Series Awe Hush 19   $ 34,803           $ 34,803  
Series Bella Chica   $ (6,856 )         $ (6,856 )
Series Big Mel   $ (24,634 )         $ (24,634 )
Series Bullion                  
Series Cairo Kiss                  
Series Cayala 19   $ 47,489     $ (387 )   $ 47,102  
Series Classofsixtythree 19   $ 28,334           $ 28,334  
Series Collusion Illusion   $ 41,901           $ 41,901  
Series Consecrate 19   $ 16,984     $ (267 )   $ 16,717  
Series Daddy's Joy   $ 8,589           $ 8,589  
Series De Mystique 17                  
Series Deep Cover   $ 33,227           $ 33,227  
Series Escape Route   $ 14,236           $ 14,236  
Series Exonerated 19   $ 22,315           $ 22,315  
Series Frosted Oats   $ 32,184           $ 32,184  
Series Future Stars Stable   $ 61,058     $ (4,718 )   $ 56,341  
Series Got Stormy   $ 60,871     $ (195,075 )   $ (134,204 )
Series Just Louise 19   $ 31,289     $ (1,557 )   $ 29,732  
Series Keertana 18   $ 39,349           $ 39,349  
Series Kiana's Love                  
Series Kichiro   $ (9,991 )         $ (9,991 )
Series Lane Way   $ 11,420           $ 11,420  
Series Latte Da 19   $ 32,232           $ 32,232  
Series Lazy Daisy   $ (15,159 )         $ (15,159 )
Series Lost Empire 19   $ 53,259     $ (2,261 )   $ 50,998  
Series Madarnas                  
Series Major Implications                  

 

 


 201 

 

 

Series Man Among Men   $ 28,132           $ 28,132  
Series Margaret Reay 19   $ 30,038     $ (123 )   $ 29,915  
Series Martita Sangrita 17   $ (13,383 )         $ (13,383 )
Series Midnight Sweetie 19   $ 21,011           $ 21,011  
Series Miss Puzzle   $ (3,343 )         $ (3,343 )
Series Mo Mischief   $ 12,406           $ 12,406  
Series Monomoy Girl   $ 75,749     $ (398,820 )   $ (323,071 )
Series Moonless Sky                  
Series Motion Emotion (2)   $ 42,996     $ (72,828 )   $ (29,832 )
Series Naismith   $ 53,197           $ 53,197  
Series New York Claiming Package                  
Series Night of Idiots                  
Series Nileist                  
Series Noble Goddess                  
Series NY Exacta   $ 108,127           $ 108,127  
Series Palace Foal   $ (6,171 )         $ (6,171 )
Series Popular Demand   $ 19,966           $ 19,966  
Series Power Up Paynter   $ (2,093 )         $ (2,093 )
Series Sauce On Side                  
Series Shake It Up Baby                  
Series Sigesmund   $ (23,840 )         $ (23,840 )
Series Social Dilemma   $ 43,357     $ (72,395 )   $ (29,038 )
Series Soul Beam                  
Series Speightstown Belle   $ 21,743           $ 21,743  
Series Squared Straight   $ (24,040 )         $ (24,040 )
Series Storm Shooter   $ 27,960           $ 27,960  
Series Street Band   $ 37,827           $ 37,827  
Series Sunny 18   $ 31,061           $ 31,061  
Series Swiss Minister                  
Series Takeo Squared                  
Series Tapitry 19   $ 28,132           $ 28,132  
Series Tavasco Road                  
Series The Filly Four   $ 105,092           $ 105,092  
Series Thirteen Stripes   $ 50,475           $ 50,475  
Series Tizamagician   $ (8,864 )         $ (8,864 )
Series Two Trail Sioux 17   $ (2,269 )         $ (2,269 )
Series Two Trail Sioux 17K                  
Series Utalknboutpractice   $ 8,431           $ 8,431  
Series Vertical Threat   $ 3,541           $ 3,541  
Series Wayne O   $ (32,779 )         $ (32,779 )
Series Yes This Time   $ 6,458     $ (107,930 )   $ (101,472 )
Series Zestful                  
TOTAL   $ 1,470,649     $ (1,119,860 )   $ 350,789  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.

 

 

 202 

 

 

In the table below, the Company outlines the positions of borrowings and amounts owed to it by the Manager as of December 31, 2019:

 

Series Name  

Horse reserve account owed

to/(by) Series

   

(Horse acquisition loans owed

to Manager)

   

Net amount owed

to/(by) Series

 
MRH Filly Four   $ 286,526     $ (1,126,386 )   $ (839,860 )
MRH Amandrea     9,894       (31,250 )     (21,356 )
MRH Annahilate     22,057       (38,250 )     (16,193 )
MRH Bella Chica     (8,833 )     (22,120 )     (30,953 )
MRH Big Mel     2,277       (193,225 )     (190,948 )
MRH Bullion     (3,000 )           (3,000 )
MRH Cairo Kiss     (11,165 )           (11,165 )
MRH Carpe Vinum     16,784             16,784  
MRH Daddy's Joy     21,889       (153 )     21,736  
MRH Dancing Destroyer     3,990             3,990  
MRH Keertana 18     34,080       (208,505 )     (174,425 )
MRH Kiana's Love     449             449  
MRH Kichiro     (1,376 )     (7,810 )     (9,186 )
MRH Lazy Daisy     267             267  
MRH Miss Puzzle     9,715             9,715  
MRH Moonless Sky     (8,763 )           (8,763 )
MRH Night of Idiots     (5,761 )     (3,816 )     (9,577 )
MRH Noble Goddess     (6,798 )           (6,798 )
MRH Ocean Magic 18     (6,171 )           (6,171 )
MRH Power Up Paynter     14,272             14,272  
MRH Shake It Up Baby     5,420       (2,100 )     3,320  
MRH Sigesmund     (12,896 )     (11,815 )     (24,711 )
MRH Sunny 18     38,255       (78,090 )     (39,835 )
MRH Squared Straight     (4,633 )           (4,633 )
MRH Street Band     2,771             2,771  
MRH Tizamagician     12,926             12,926  
MRH Utalknboutpractice     471       (1,275 )     (804 )
MRH Vertical Threat     20,483       (57 )     20,426  
MRH Wayne O     2,017             2,017  
MRH New York Claiming     11,756             11,756  
TOTAL   $ 446,900     $ (1,724,852 )   $ (1,277,951 )

 

 

Related Party Transactions – For the Years Ended December 31, 2020 and 2019

 

The Company’s Manager has advanced funds to and holds cash reserves on behalf of various of the Company’s series funds. See Note 4, Note 5, and Note 7 to Financial Statements as of December 31, 2020 for further discussions. Additionally, the Manager maintains cash reserves on behalf of each of the series of the Company to cover expenses of the series’ operations.

 

 

 

 203 

 

 

In order to fund the Company’s activities as well as to advance funds on behalf of a Series in order to acquire an Underlying Asset prior to establishing and issuing securities in the Series for holding such Underlying Asset, the Company has borrowed a total of $14,143,676 as of December 31, 2020*, from the Manager in the form of profit participation convertible promissory notes as follows:

 

Series Name   Principal Borrowed
from Manager (3)
 
Series Action Bundle (1)   $ 263,500  
Series Amandrea   $ 137,500  
Series Ambleside Park 19   $ 71,443  
Series Amers   $ 8,925  
Series Apple Down Under 19   $ 88,230  
Series Athenian Beauty 19   $ 71,910  
Series Authentic   $ 2,188,750  
Series Awe Hush 19   $ 250,920  
Series Bella Chica   $ 32,300  
Series Big Mel   $ 617,100  
Series Bullion   $ 6,000  
Series Cairo Kiss   $ 37,760  
Series Cayala 19   $ 317,135  
Series Classofsixtythree 19   $ 164,050  
Series Collusion Illusion   $ 637,500  
Series Consecrate 19   $ 54,715  
Series Daddy's Joy   $ 91,800  
Series De Mystique ‘17   $ 30,228  
Series Deep Cover   $ 149,600  
Series Escape Route   $ 52,560  
Series Exonerated 19   $ 117,793  
Series Frosted Oats   $ 146,370  
Series Future Stars Stable   $ 425,000  
Series Got Stormy   $ 195,075  
Series Just Louise 19   $ 198,543  
Series Keertana 18   $ 433,500  
Series Kiana's Love   $ 20,400  
Series Kichiro   $ 22,000  
Series Lane Way   $ 459,000  
Series Latte Da 19   $ 121,975  
Series Lazy Daisy   $ 121,250  
Series Lost Empire 19   $ 303,450  
Series Madarnas   $ 14,850  
Series Major Implication   $ 3,900  
Series Man Among Men   $ 190,281  
Series Margaret Reay 19   $ 209,797  
Series Martita Sangrita 17   $ 163,200  
Series Midnight Sweetie 19   $ 103,156  
Series Miss Puzzle   $ 26,500  
Series Mo Mischief   $ 326,400  
Series Monomoy Girl   $ 398,820  
Series Moonless Sky   $ 18,700  

 

 

 

 

 204 

 

 

Series Motion Emotion (2)   $ 72,828  
Series Naismith   $ 258,400  
Series New York Claiming Package   $ 64,620  
Series Night of Idiots   $ 16,690  
Series Nileist   $ 20,250  
Series Noble Goddess   $ 28,300  
Series NY Exacta   $ 387,600  
Series Palace Foal**      
Series Popular Demand   $ 212,160  
Series Power Up Paynter   $ 96,600  
Series Sauce on the Side   $ 25,500  
Series Shake It Up Baby   $ 27,625  
Series Sigesmund   $ 17,000  
Series Social Dilemma   $ 72,395  
Series Soul Beam   $ 33,703  
Series Speightstown Belle 19   $ 106,335  
Series Squared Straight   $ 34,350  
Series Storm Shooter   $ 276,000  
Series StreetBand   $ 52,250  
Series Sunny 18   $ 329,940  
Series Swiss Minister   $ 11,900  
Series Takeo Squared   $ 22,900  
Series Tapitry 19   $ 190,281  
Series Tavasco Road   $ 15,600  
Series The Filly Four   $ 1,224,000  
Series Thirteen Stripes   $ 194,650  
Series Tizamagician   $ 163,200  
Series Two Trail Sioux 17   $ 114,750  
Series Two Trail Sioux 17K   $ 28,234  
Series Utalknboutpractice   $ 25,500  
Series Vertical Threat   $ 107,100  
Series Wayne O   $ 486,000  
Series Yes This Time   $ 107,930  
Series Zestful   $ 27,200  
TOTAL   $ 14,143,676  

_____________________

 

  (1) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.
  (2) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.
  (3) The Company converted an advance from founders outstanding as of December 31, 2017 to equity in the Company to ease the cash flow burden to the Company during 2018.

 

 

 

 205 

 

 

*As of December 31, 2020, the Company owes the following to related parties:

 

-$534,920.00 to Spendthrift in connection with Series The Filly Four.

 

-$1,865,134 to Spendthrift in connection with Series Authentic associated with the “kicker” balance due.

 

-$48,068 to Spendthrift in connection with the deferred training expenses across various series associated with yearling purchases in 2020, that will be payable at the conclusion of such Series.

 

-$75,000.00 to the Manager in connection with Series Authentic.

 

-$37,490.00 to the Manager in connection with deferred training expenses across various series associated with yearling purchases in 2020, that will be payable at the conclusion of such Series.

 

**The Company acquired the horse asset in Series Palace Foal via a $15,606 convertible profit participating loan from Michael Behrens, a principal of the Manager of the Company. The convertible profit participating loan bears a 2.38 percent per annum interest rate and is due either when Series Palace Foal is fully subscribed or converted into the unsold units of Series Palace Foal. During the time the convertible profit participating loan is outstanding, the underlying cash flow of Series Palace Foal series accrues to the loan holder.

 

Because these are related party transactions, no guarantee can be made that the terms of the arrangements are at arm’s length.

 

Trend information – For the Years Ended December 31, 2020 and 2019

 

The Company’s main focus over the next twelve months is to continue to launch subsequent Offerings of Series Interests. The table below shows the launched and closed Offerings for the year ended December 31,2020:

 

  # of Offerings Launched # of Offerings Closed
2020 35 9

 

(1) data represents number of Offerings for Series Interests of each state of offering process in the given period.

(2) offerings launched as of December 31, 2020 either through (i) a California intra state permit or (ii) Rule 506(c).

 

The Company plans to launch approximately 50 to 100 additional offerings in the next twelve months, as of the date of this filing, including offerings for increasingly higher value underlying assets. The Company will commence such offerings within two calendar days of qualification with the SEC as provided in Rule 251(d)(3)(i)(F).

 

1) Continue to grow the user base on the Platform by attracting more Investors into our ecosystem.

 

2) Enable the Company to reduce operating expenses for each series, as we negotiate better contracts for training, upkeep, insurance and other operating expenses with a larger collection of underlying assets.

  

3) Attract a larger community of Horse Sellers with high quality underlying assets to the Platform who may view us as a more efficient method of transacting than the traditional syndication processes.

  

 

 

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In addition to more offerings, we also intend to continue to develop Membership Experience Programs, which allow Investors to enjoy the collection of racehorses acquired and managed by the Company through events, race day visits and other programs. The initial testing of such Membership Experience Programs commenced in early 2019, and $244,408.80 have been generated by such programs at the date of this filing. We expect to develop additional Membership Experience Programs throughout the remainder of 2021 and beyond. We believe that expanding the Membership Experience Programs in 2021 and beyond will help us from a number of perspectives:

 

1) Serve as an additional avenue to attract users to the Platform and to engage the existing users and Investors.

 

2) Start to generate revenues for the series from the underlying assets used in the Membership Experience Programs, which we anticipate will enable the underlying assets to generate revenues for the series to cover, in whole or in part, the ongoing post-closing operating expenses.

 

We do not anticipate generating enough revenues in fiscal year 2021 from Membership Experience Programs, or otherwise, to cover all the operating expenses for any of the existing Series, or any other series of interests for which offerings closed in fiscal year 2021.

 

Outside of the trends mentioned above, we believe that the Company is also dependent on the general economic environment and investing climate, the horse racing industry at large (including ongoing concerns of horse safety), in particular in the United States. In addition, since we are reliant on our Manager to support the Company and the Series, we are dependent on the general fundraising environment and our Manager’s continued ability to raise capital.

 

Plan of Operations

 

As stated, the Company is in the business of acquiring interests in race horses. As the Company acquires the interests in the horses in the future, the Company will recognize its share of the horse earnings less any expenses paid for or incurred on behalf of a specific horse operation.

 

During the year ended December 31, 2020, series accrued race winnings totaling $1,455,916. In sum, the series incurred $1,805,350 of series specific expenses (stabling, transportation, insurance, veterinary, etc.). The Company has also accrued $1,917,883 of due diligence or management fees earned by the Manager.

  

Off-Balance Sheet Arrangements

 

As of December 31, 2020, we did not have any off-balance sheet arrangements.

 

 

 

 

 

 

 

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PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE

 

Plan of distribution

 

We are managed by Experiential Squared, Inc. (“Experiential” or the “Manager”), a Delaware corporation incorporated in 2016. Experiential owns and operates a mobile app-based crowd-funding investment platform called MyRacehorse™ (the MyRacehorse™ platform and any successor platform used by the Company for the offer and sale of interests, the “MyRacehorse™ Platform”), which is licensed to the Company via the Management Agreement, through which investors may indirectly invest, through series of the Company’s interests, in fractional racehorse ownership interests that have been historically difficult to access for many market participants. Through the use of the MyRacehorse™ Platform, investors can browse and screen the potential investments and sign legal documents electronically. We intend to distribute the Interests exclusively through the MyRacehorse™ Platform. Neither Experiential Squared, Inc. nor any other affiliated entity involved in the offer and sale of the Interests is a member firm of the Financial Industry Regulatory Authority, Inc., or FINRA, and no person associated with us will be deemed to be a broker solely by reason of his or her participation in the sale of the Interests. Notwithstanding the foregoing, we have engaged Dalmore, a member of FINRA/SIPC, as broker of record in connection with the offer and sale of the Interests. See “Broker” section below.

 

Each of the Offerings is being conducted under Regulation A under the Securities Act of 1933, as amended (the “Securities Act”) and therefore, only offered and sold to “qualified purchasers.” For further details on the suitability requirements an Investor must meet in order to participate in this Offering, see “Plan of Distribution and Subscription Procedure – Investor Suitability Standards”. As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain antifraud provisions, to the extent that our Interests are offered and sold only to “qualified purchasers” or at a time when our Interests are listed on a national securities exchange.

 

The initial offering price for each Series (the “Purchase Price”) was determined by the Manager and is equal to the aggregate of (i) the purchase price of the applicable Underlying Asset, (ii) the Due Diligence Fee, (iii) Offering Expenses, (iv) the bloodstock fee, if applicable, and (v) Operating Expenses (excluding Upkeep Fees), (in each case as described below).

 

Each Offering is being conducted on a best efforts basis without any minimum target. The Company may undertake one or more closings of each Offering on a rolling basis. After each such Closing, funds tendered by investors will be available to the Company. Because the Offerings are being made on a best efforts basis and without a minimum offering amount, the Company may close each Offering at any level of proceeds raised. Each Offering shall be terminated on the earlier of (i) the date subscriptions for the Maximum Interests have been accepted, (ii) a date determined by the Manager in its sole discretion, or (iii) the date which is one year from the date this Offering Circular is qualified by the Commission which period may be extended by an additional six months by the Manager in its sole discretion.

 

Those persons who want to invest in the Interests must consent electronically to a Subscription Agreement, which will contain representations, warranties, covenants, and conditions customary for private placement investments in limited liability companies, see “How to Subscribe” below for further details.  A copy of the form of Subscription Agreement is attached as Exhibit 4.1.

 

Each Series of Interests will be issued in book-entry form without physical stock certificates. StartEngine Secure LLC will serve as transfer agent to maintain stockholder information on a book-entry basis.

 

The Company will pay all of the expenses incurred in these Offerings that are not covered by the Brokerage Fee, Due Diligence Fee, the Offering Expenses or estimated Operating Expenses, including fees to legal counsel, but excluding fees for counsel or other advisors to the Investors and fees associated with the filing of periodic reports with the Commission and future blue sky filings with state securities departments, as applicable. Any Investor desiring to engage separate legal counsel or other professional advisors in connection with this Offering will be responsible for the fees and costs of such separate representation.

 

Investor Suitability Standards

 

The Interests are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in any of the interests of the Company (in connection with this Series or any other series offered under Regulation A) 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). 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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For an individual potential investor to be an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has:

 

1.                   an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase, excluding the value of the primary residence of such person and the mortgage on that primary residence (to the extent not underwater), but including the amount of debt that exceeds the value of that residence and including any increase in debt on that residence within the prior 60 days, other than as a result of the acquisition of that primary residence; or

 

2.                   earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year. 

 

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.

 

If you live outside the United States, it is your responsibility to fully observe the laws of any relevant territory or jurisdiction outside the United States in connection with any purchase, including obtaining required governmental or other consent and observing any other required legal or other formalities.

 

Our Manager and Dalmore, in its capacity of broker/dealer of record for these Offerings, will be permitted to make a determination that the subscribers of Interests in these Offerings are qualified purchasers in reliance on the information and representations provided by the subscriber regarding the subscriber’s financial situation. Before making any representation that your investment does not exceed applicable federal thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to http://www.investor.gov.

 

An investment in our Interests may involve significant risks. Only investors who can bear the economic risk of the investment for an indefinite period of time and the loss of their entire investment should invest in the Interests. See “Risk Factors.”

 

Minimum and Maximum Investment Amounts

 

The minimum subscription by an Investor in the Offerings is 1 Interest and the maximum subscription by any Investor in each Offering is set forth on the Cover Page hereto in tabular format.

 

Notwithstanding the foregoing, the Manager has discretion to increase the minimum subscription by an Investor to greater than 1 Interest in a Series.

 

Broker

 

Dalmore Group, LLC, a New York limited liability company (“Dalmore” or “Broker”), will manage the sale of the Interests as broker/dealer of record pursuant to a broker-dealer agreement, dated July 10, 2020 (the “Broker-Dealer Agreement”), and serve as broker of record for the Company’s Regulation A offerings, process transactions by subscribers to the Offering and provide investor qualification services (e.g. Know Your Customer (“KYC”) and Anti Money Laundering (“AML”) checks). Dalmore is a broker-dealer registered with the Commission and a member of FINRA/SIPC and is registered in each state where the Offering and sale of the Series of Interest will occur, prior to the launch of such Offering, but will not act as a finder or underwriter in connection with such Offering. Dalmore will receive a Brokerage Fee but will not purchase any Interests and, therefore, will not be eligible to receive any discounts, commissions or any underwriting or finder’s fees in connection with the Offering.

 

The Company will indemnify Dalmore, its affiliates and their representatives and agents harmless from any and all actual or direct losses, liabilities, judgments, arbitration awards, settlements, damages and costs (collectively, “Losses”), resulting from or arising out of any third party suits, actions, claims, demands or similar proceedings (collectively, “Proceedings”) to the extent they are based upon (i) a breach of the Broker-Dealer Agreement by the Company, (ii) the wrongful acts or omissions of the Company, or (iii) the Offering itself. Dalmore shall indemnify and hold the Company, the Company’s affiliates and Company’s representatives and agents harmless from any Losses resulting from or arising out of Proceedings to the extent they are based upon (i) a breach of the Broker-Dealer Agreement by Dalmore or (ii) the wrongful acts or omissions of Dalmore or (iii) its failure to comply with any applicable federal, state, or local laws, regulations, or codes in the performance of its obligations under the Broker-Dealer Agreement. The Broker-Dealer Agreement terminates 6 months after its effective date, but will renew automatically for successive renewal terms of six (6) months each unless any party provides notice to the other party of non-renewal at least forty-five (45) days prior to the expiration of the current term.

 

 

 

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If the Company defaults in performing the obligations under the Broker-Dealer Agreement, the Broker-Dealer Agreement may be terminated (i) upon forty-five (45) days written notice if the Company fails to perform or observe any material term, covenant or condition to be performed or observed by it under the Broker-Dealer Agreement and such failure continues to be unremedied, (ii) upon written notice, if any material representation or warranty made by either Dalmore or the Company proves to be incorrect at any time in any material respect, (iii) in order to comply with a legal requirement, if compliance cannot be timely achieved using commercially reasonable efforts, after providing as much notice as practicable, or (iv) upon thirty (30) days’ written notice if the Company or Dalmore commences a voluntary proceeding seeking liquidation, reorganization or other relief, or is adjudged bankrupt or insolvent or has entered against it a final and unappealable order for relief, under any bankruptcy, insolvency or other similar law, or either party executes and delivers a general assignment for the benefit of its creditors.

 

Fees and Expenses

 

Brokerage Fee

 

As compensation for providing certain broker-dealer services to the Company in connection with the Underlying Asset, including KYC, AML and other compliance background checks, Dalmore will receive a fee equal to 1.0% of the amount raised through this Offering (which, for clarification, excludes any Interests purchased by the Manager, its affiliates or the Horse Sellers) (the “Brokerage Fee”). Each Series will be responsible for paying its own Brokerage Fee to Dalmore in connection with the sale of Interests in such series. The Brokerage Fee will be payable immediately upon the closing of each offering from the proceeds thereof. In addition, the Company has paid Dalmore a $5,000 one-time set up fee for out-of-pocket expenses and has also paid a separate, one-time $20,000 consulting fee.

 

Due Diligence Fee

 

An initial fee equal to approximately 15.0% of the amount raised through this Offering, on average, paid to Manager as compensation for due diligence services in evaluating, investigation and discovering the Underlying Assets (fee is subject to change in sole discretion of Manager as disclosed in each Series Agreement).  

 

Offering Expenses

 

Each series of interests will generally be responsible for certain fees, costs and expenses incurred in connection with the offering of the interests associated with that series (the “Offering Expenses”). Offering Expenses consist of legal, accounting, underwriting, filing and compliance costs, as applicable, related to a specific offering (and excludes ongoing costs described in Operating Expenses). The Manager has agreed to pay and not be reimbursed for Offering Expenses incurred with respect to these Offerings.

 

Bloodstock Fee

 

A fee up to 5.0% of the cost of the Underlying Asset paid to the Manager, an affiliate of the Manager, or a third party service provider as compensation for bloodstock services for creating and facilitating breeding plans for the Underlying Asset, analyzing pedigrees to assess the Underlying Asset’s value, and purchasing and/or selling the Underlying Asset on behalf of the Company.

 

Operating Expenses

 

Each series of interests will be responsible for any and all fees, costs and expenses incurred in connection with the boarding, maintenance, training and transportation costs of the underlying asset (the “Upkeep Fees”) related to such series, costs incurred in preparing any reports and accounts of the Series, including any tax filings and any annual audit of the accounts of the Series (if applicable) or costs payable to any third party registrar or transfer agent and any reports to be filed with the Commission including periodic reports on Forms 1-K, 1-SA and 1-U, any indemnification payments, any and all insurance premiums or expenses in connection with the Underlying Asset, including mortality, liability and/or medical insurance of the Underlying Asset to insure against the death, injury or third party liability of racehorse ownership (decided on a horse-by-horse basis), etc.

 

 

 

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We anticipate that for a majority of the Offerings, we will allocate a sizable portion of such Offering to a cash reserve to be spent on Upkeep Fees of the applicable Underlying Asset. However, if the Operating Expenses exceed the amount of revenues generated from the applicable Underlying Asset, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and be entitled to reimbursement of such amount from future revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”), and/or (c) cause additional Interests to be issued in order to cover such additional amount. In such cases, until a Series generates revenues from its interest in the applicable Underlying Asset, we expect a Series to, initially, deplete only the Upkeep Fees. We may incur Operating Expenses Reimbursement Obligations or the Manager pays such Operating Expenses incurred and will not seek reimbursement if Operating Expenses exceed revenues and Upkeep Fees.

 

From time to time, certain Offerings will not have an allocated upfront cash reserve for Upkeep Fees as part of such Offering proceeds. Instead, the Manager or an affiliate will, in connection with such Offering, incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from ongoing revenues generated by such Series. Notwithstanding the foregoing, in these types of Offerings, there will still exist a smaller pre-paid cash reserve for Prepaid Expenses and insurance, administrative and general Operating Expenses which is intended to cover three years of such projected Operating Expenses (excluding Upkeep Fees). In addition, the Manager, in these types of Offerings, retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

Regardless of the type of Offering, an Interest Holder will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution, such Interest Holder will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the Operating Expenses Reimbursement Obligations.

 

Additional Information Regarding this Offering Circular

 

We have not authorized anyone to provide you with information other than as set forth in this Offering Circular. Except as otherwise indicated, all information contained in this Offering Circular is given as of the date of this Offering Circular.  Neither the delivery of this Offering Circular nor any sale made hereunder shall under any circumstances create any implication that there has been no change in our affairs since the date hereof.

 

From time to time, we may provide an “Offering Circular Supplement” that may add, update or change information contained in this Offering Circular.  Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular Supplement. The Offering Statement we filed with the Commission includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the Commission and any Offering Circular Supplement together with additional information contained in our annual reports, semiannual reports and other reports and information statements that we will file periodically with the Commission.

 

The Offering Statement and all supplements and reports that we have filed or will file in the future can be read on the Commission website at www.sec.gov or in the legal section for the applicable Underlying Asset on the MyRacehorse™ Platform. The contents of the MyRacehorse™ Platform (other than the Offering Statement, this Offering Circular and the Appendices and Exhibits thereto) are not incorporated by reference in or otherwise a part of this Offering Circular.

 

How to Subscribe

 

Potential Investors who are “qualified purchasers” may subscribe to purchase Interests. Any potential Investor wishing to acquire any Series Interests must:

 

1.       Carefully read this Offering Circular, and any current supplement, as well as any documents described in the Offering Circular and attached hereto or which you have requested. Consult with your tax, legal and financial advisors to determine whether an investment in any of the Interests is suitable for you. 

 

 

 

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2.       Review the Subscription Agreement (including the “Investor Qualification and Attestation” attached thereto) on the MyRacehorse™ Platform application and click “Agree” to consent to the completed Subscription Agreement using electronic signature. Except as otherwise required by law, subscriptions may not be withdrawn or cancelled by subscribers.  

 

3.       Once the completed Subscription Agreement is electronically signed, an integrated online payment provider will transfer funds in an amount equal to the purchase price for such Interests you have applied to subscribe for (as set out on the front page of your Subscription Agreement) to the Company.

 

4.       The Manager and Dalmore will review the subscription documentation completed and signed by you. You may be asked to provide additional information. The Manager and Dalmore will contact you directly if required. We reserve the right to reject any subscriptions, in whole or in part, for any or no reason, and to withdraw such Offering at any time prior to Closing.

 

5.       Once the review is complete, the Manager will inform you whether or not your application to subscribe for such Interests is approved or denied and if approved, the number of Interests you are entitled to subscribe for. If your subscription is rejected in whole or in part, then your subscription payments (being the entire amount if your application is rejected in whole or the payments associated with those subscriptions rejected in part) will be refunded promptly, without interest or deduction. The Manager accepts subscriptions on a first-come, first served basis subject to the right to reject or reduce subscriptions.

 

6.       If all or a part of your subscription in a particular Series is approved, then the number of Interests you are entitled to subscribe for will be issued to you in book-entry electronic form upon the Closing. StartEngine Secure LLC serves as transfer agent and registrar and will maintain Interest holder records.

 

By accepting the Subscription Agreement, you agree to be bound by the terms of the Subscription Agreement, the Amended and Restated Series Limited Liability Company Agreement of the Company (the “Operating Agreement”) and the applicable Series Agreement. The Company, the Manager, and Dalmore will rely on the information you provide in the Subscription Agreement, including the “Investor Qualification and Attestation” attached thereto and the supplemental information you provide in order for the Manager and Dalmore to verify your status as a “qualified purchaser”. If any information about your “qualified purchaser” status changes prior to you being issued Interests, please notify the Manager immediately using the contact details set out in the Subscription Agreement.

 

For further information on the subscription process, please contact the Manager using the contact details set out in the “Where to Find Additional Information” section.

 

 

 

 

 

 

 

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DESCRIPTION OF THE BUSINESS

 

Overview

 

The Company was formed in the state of Nevada as a series limited liability company on December 27, 2016. There is limited historical financial information about us upon which to base an evaluation of our performance. We are an emerging growth business with limited operating history. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in marketing costs, increases in administration expenditures associated with daily operations, increases in accounting and audit fees, and increases in legal fees related to filings and regulatory compliance.

 

MyRacehorse.com democratizes the ownership of racehorses (Thoroughbred, Quarter, and Standardbred horses) and allows fans to experience the thrill, perks and benefits of ownership at a fraction of the historical cost. This includes everything from the behind the scenes engagements with the horse, the jockey and trainers as well as exclusive on-track experiences and a portion of financial gains that the ownership creates.

 

Racehorse Ownership Interests

 

The Company, through individual Series, intends to purchase interests in thoroughbred horses, quarter horses, and Standardbred horses. The Series’ percentage ownership in a specific horse is determined on a series-by-series basis. In all Series, the Company and its Manager will maintain sufficient control and input into the initial due diligence and subsequent day-to-day operating decisions, including training, maintenance and upkeep of an Underlying Asset in order to add value to the Series. If a Series owns a minority interest in an Asset, the Company will require that such Series have a wide range of voting rights within the co-ownership syndicate (including major decision rights) and the ability to control disbursements of expenses as payments to third party trainers, service providers and maintenance crews in order to properly exercise control and add value to the Series.

 

As an owner of a racehorse, the individual Series will receive a percentage of the purse winnings that is equal to its ownership percentage, as well as other revenue-generating events including, but not limited to claiming races (which may result in a sale of a racehorse held by a series), sales of the racehorse, marketing or sponsorship activities and the sale of future breeding rights. Similarly, the individual Series will be responsible for the expenses of the racehorse at a rate equal to its ownership percentage. These expenses will often be payable directly by the Series pursuant to the rights of its partnership, syndicate or operating agreement (“Co-Ownership Agreements”) with other co-owners of an Underlying Asset. Copies of such Co-Ownership Agreements for each respective Series are attached as exhibits hereto and descriptions of such terms are included with each Series’ respective description herein.

 

The syndicate manager of the horse makes the final decisions on many day-to-day decisions relating to the horses. In most instances, the Manager will be such syndicate manager. In cases where it is not, the Manager and our personnel will maintain engaged daily on key operation decisions of such Series. The syndicate manager (with our input if we are not syndicate manager) decides on the trainer, racing schedule, housing and certain other operational decisions. Certain key decisions will also require input from the Series. The Manager intends for the Series to maintain a sufficient level of control over the Underlying Asset by (1) majority (50%+) ownership (which includes the ability to remove the syndicate manager), (2) heavy negotiation of the Underlying Asset’s Co-Ownership Agreement to include input on key operating decisions, discretion in payment of certain expenses and voting rights over important decisions regarding the management of the Underlying Asset, or (3) a combination of these controls.

 

When a Series becomes an owner of the horse, the Series’ members may be able to enjoy some of the benefits and privileges of owning a horse. This includes the ability to visit the horse at the trainer’s barns, visit the paddock before any race the horse is in, interact with the jockey before the race, and have your photo taken in the winner's circle if the horse wins a race. Some of these Membership Experience Programs are included with Series membership, while others may require additional payments by Investors and would be attributable as revenue to the Company. Since the Member is not a direct owner but an indirect owner of the horse they must be accompanied by someone that is licensed by the state's racing authority. There is no guarantee that a licensed person will be available to accompany a member upon request.

 

Racing Leases

 

As an alternative to the Co-Ownership structures discussed above, which include the purchase, sale and breeding rights associated with the full ownership of a horse, for certain Series, the Company, through individual Series, may enter into lease agreements or “racing leases” which will entitle the Series to the exclusive right to “all of the racing qualities of an ownership interest in the horse” including the operation of such horse during a set racing term (typically 1 year) in exchange for an upfront lease fee. The Series’ percentage lease interest in a specific horse is determined on a series-by-series basis. This means that the Series will enter into an agreement with other owners of the Underlying Asset (“Owners”) which will govern the rights of the Series during the lease term and the operation of the Underlying Asset (the “Lease Agreement”). As with Co-Ownership structures, the Company, directly or indirectly, is engaged daily on key operating decisions and has approval rights over a broad range of day-to-day operational matters that directly impact the value of the Lease Agreements for such Underlying Asset of a Series.

 

 

 

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As the lessee of a racehorse, the individual Series will receive a percentage of the purse winnings that is equal to its lessee percentage, as well as other revenue-generating events as well as marketing and advertising related revenues. Similar to the Co-Ownership arrangements, the individual Series in the Lease Agreement will be responsible for the expenses of the racehorse at a rate equal to its lessee percentage. These expenses will often be payable directly by the Series. At the end of such lease term, however, the ownership rights in the horse revert back to the Owner along with the obligation to cover any future expenses associated with such horse.

 

In the event that the Owner intends to retire the horse and elects to terminate the Lease Agreement due to health, breeding or economic interest concerns, the pro rata portion of the lease fee remaining on the Series will be re-paid to the Series.

 

The Company’s intent with racing leases is to capture the value of the racing career of said horse without the complexities, time and expense associated with the purchase, sale or breeding of a horse outside of its useful racing life.

 

Size of Thoroughbred Business

 

The US Gross Domestic Product for thoroughbred racing, breeding, and related activities contributes approximately $50 billion in direct economic impact to the U.S. economy. There are an estimated 40,000 thoroughbred races each year attracting 60 million spectators and bets of more than $13 billion at the tracks and at off-site locations.1

 

Currently, $115,000,000 billion is bet annually on horse races with the US representing about 8.5% of the total gaming market.2 The Kentucky Derby continues setting records; in 2021 the total handle was the highest in history, with just over $233 million handled, up 11.5% from the previous record.3 In 2015, Churchill Down set an attendance record with just over 170,000 people in attendance.4

 

$115 billion is bet annually on horse races worldwide and there are $800 million dollars a year in racehorse sales. Approximately, 8 million fans attend races each year watching over 42,500 active racehorses.5 The average sales price for a racehorse is about $65,000.6

 

____________________

 

1 American Horse Council Foundation. 2017 National Economic Impact Study. Retrieved at http://www.horsecouncil.org/economics.

2 International Federation of Horseracing Authorities. 2015 Annual Report. Retrieved at https://www.ifhaonline.org/resources/Annual_Report_2019.pdf.

3 https://www.courier-journal.com/story/sports/2021/05/03/kentucky-derby-2021-betting-up-85-percent-from-2020/4920468001/

4 https://www.kentuckyderby.com/horses/news/second-highest-attendance-in-track-history-as-167,227-fans-watch-undefeated-nyquist-win-the-142nd-kentucky-derby

5 The Jockey Club. Fact Book Index. Retrieved at http://www.jockeyclub.com/default.asp?section=FB&area=12.

6 The Jockey Club. Fact Book Index. Retrieved at http://www.jockeyclub.com/default.asp?section=FB&area=13.

 

 

 

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Plan of Operations

 

The Company, the Manager and/or its affiliates will either (1) acquire horses that are listed on MyRacehorse.com pursuant to a promissory note between the Series and lender or (2) have the Series acquire the horses upon close of the respective offering. In many instances, the lender will have a right, prior to completion of the Offering, to participate in pre-closing dividends from revenue generated by its interest in the Underlying Asset and the right to convert into the unsold portion of the offering prior to being fully funded. Copies of the respective “Profit Participation Convertible Promissory Note” for each such Series are attached as exhibits hereto.

 

An investment in a Series does not constitute ownership of a racehorse as regulated by the California Horse Racing Board. Other state regulations outside of California may impact how and when an Asset can be raced.

 

The Series will contract with Manager to provide “ownership privileges” and “ownership experiences” for Investors. Some ownership privileges are included as a member, including access to content that will vary based on majority ownership group, trainer, track, frequency of races, racing conditions, the health of the horse and other factors. Other “ownership privileges” provided by Manager will be available for purchase and can include on track events and race day privileges including paddock, backside and winners circle access.

 

For each horse acquired by each individual Series, the timeline for racing and expected cash flows may vary greatly. Different acquisitions will have different timelines depending on a variety of factors. In general, the Series will exist for 4-6 years (the racing life cycle) and then the Underlying Asset will be sold.

 

Claiming

 

The Company's Claiming activities (through individual Series) consist of identifying horse in claiming races that are more valuable, in the Company's opinion, then their respective claiming price. Some factors leading to a horse being more valuable than its claiming price include being poorly trained to date, running in the wrong type of races or having dropped in class. The Company believes most of the horses acquired in this manner will be owned by the Company for less than 12 months since they can be sold during any claiming race.

 

A claiming race is one in which all horses entered are eligible to be purchased by a licensed owner or indirectly through a trainer for the specified claiming price (see below for levels of claiming races). For example, in a $32,000 claiming race all the horses are for sale for the purchase price of $32,000 plus applicable taxes. The procedure for a claiming race is as follows: the trainer puts a claim in for the horse prior to the race. Immediately upon the start of the race the horse is considered sold to the new owner, however, the previous owner maintains any purse winnings from that race. If two or more owners/trainers put a claim in on a horse than a "shake" occurs to determine who has purchased the horse. A shake is when each claiming owner is assigned a number. Then a racing official draws a number at random and the owner with corresponding number has purchased the horse. Claiming races account for up to 80% of all thoroughbred races on a given day.

 

The intent behind claiming is to claim horses that are performing below their ability or have been mismanaged by the current owners or trainers thereby allowing the Series to move the horse up in class and make a profit on the horse being claimed for an amount higher than the Series paid.

 

Once a Series acquires a horse in its claiming division it may take up to 30 days before the horse may be able to race again. The factors relating to the length between races include the endurance and shape of the horse, the availability of races and the skill level of the other horses in the race. The Company, along with our trainer, uses these factors to decide on where and when to race the horse so we can put the horse in the best possible position to win. During this time the horse is usually ridden everyday as part of their training. Horses will jog or cantor most days. The horse will typically gallop every 7 days that it does not race; this is referred to as a work out. A work out consists of a timed run from 3 furlongs up to 5 furlongs (1 furlong equals 1/8 of a mile) and simulates a race for the horse.

 

 

 

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The Company expects the on-going monthly expenses directly associated to the horses in its claiming division to be approximately $50 to $125 per day for each horse. The fee depends on the trainer's fee and the amount of vet bills each horse requires.

 

Revenue from Claiming Division

 

The Series intend to generate revenue from its Claiming Division in two ways: (1) purse winnings and (2) sale of a horse. The Company expects that a horse will begin to generate revenue from purse winnings within 30 days from acquiring the horse. The Company further expects that it will continue to receive revenue from the horse every 30 days from additional purse winnings. The Series will also generate revenue if our horse is claimed by another stable. The Company expects that most horses in its claiming division will be claimed within 12 months from the date we acquired the horse.

 

Deciding on a Horse

 

When deciding on acquiring a horse, our team looks at a multitude of variables:

 

  Pedigree: The recorded ancestry of the horse.

 

  Pedigree Statistics: Win percentages and nicking statistics.

 

  Race history (if applicable): Historic results of past races the horse has competed in

 

  Race Replays (if applicable): Video of the historic races.

 

  Potential trainer: Statistics and trends of the potential trainer

 

  Valuation: The monetary worth set by the majority owner

 

  Horse Owner/Syndicate Manager: Historical statistics and reputation

 

  Purchase History: Publicly recorded title transfers of the horse

 

  User Reviews of Syndicate Managers, Trainers, Pedigree (if applicable): Feedback from user reviews

 

  Workout reports and videos: Via professional clockers and internal evaluation of video footage

 

  Bloodstock Agent Assessment (if applicable): Record and Reputation

 

  3rd party appraisals (If applicable): Independent bloodstock appraisal

 

  Veterinarian Assessments (if applicable): Independent assessment of health of horse

 

  Biometrics (if applicable): Assessment of biometric data against desired attributes

 

This initial diligence information is used to determine if the horse is one that will be added to the MyRacehorse™ Platform and then the same information is made available to the prospective investors to assist in their individual investment decisions.

 

Types of Races

 

Maiden - A race for Non-winners

Maiden Special Weight - For horses that have never won a race, but cannot be claimed

Claiming - Race in which horses entered are subject to purchase, or "claim", for the specified claiming price (typically the horses have won at least one claiming or maiden race)

Allowance - a race other than claiming for which the racing secretary drafts certain conditions to determine weights

Stakes - The highest level of racing

 

 

 

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Class Structure

 

Stakes

Grade 1 Stakes

Grade 2 Stakes

Grade 3 Stakes

Non-Graded Stakes

 

Classified Allowance

 

N4X - Non-winners of less than 4 races excluding claiming or Maiden (also referred to as "nonwinners of four races other than Maiden or claiming" or "4th level allowance")

N3X - Non-winners of less than 3 races excluding claiming or Maiden (also referred to as nonwinners of three races other than Maiden or claiming" or "3rd level allowance")

N2X - Non-winners of less than 2 races excluding claiming or Maiden (also referred to as nonwinners of two races other than Maiden or claiming" or "2nd level allowance")

N1X - Non-winners of less than 1 races excluding claiming or Maiden (also referred to as nonwinners of one race other than Maiden or claiming" or "1st level allowance")

 

Claiming

 

$100,000 - horses are entered but are subject to sale for the claiming price of $100,000

 

$80,000 - horses are entered but are subject to sale for the claiming price of $80,000

 

$62,500 - horses are entered but are subject to sale for the claiming price of $62,500

 

$50,000 - horses are entered but are subject to sale for the claiming price of $50,000

 

$40,000 - horses are entered but are subject to sale for the claiming price of $40,000

 

$32,000 - horses are entered but are subject to sale for the claiming price of $32,000

 

$25,000 - horses are entered but are subject to sale for the claiming price of $25,000

 

$20,000 - horses are entered but are subject to sale for the claiming price of $20,000

 

$16,000 - horses are entered but are subject to sale for the claiming price of $16,000

 

$12,500 - horses are entered but are subject to sale for the claiming price of $12,500

 

$8,000 - horses are entered but are subject to sale for the claiming price of $8,000

 

Maiden

 

Maiden Special Weight

$50,000 Maiden Claiming

$32,000 Maiden Claiming

$25,000 Maiden Claiming

 

 

 

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Competition

 

The Company is a very small player in the racehorse ownership business. While we consider bloodlines and the win-loss records of a particular horse's lineage as well as other factors, our success will depend in large measure on our ability to evaluate the potential of a horse. We will rely almost entirely on the Manager and its officers to evaluate a horse and to buy any horse we believe to be a good investment.

 

Government Regulation

 

Horse racing is regulated by the individual states. Most states’ main focus is on regulating the pari-mutuel wagering in horse racing. In California, horse racing is regulated by the California Horse Racing Board and governed by the Business and Professions Code of California.

 

Operating Expenses

 

“Operating Expenses” are costs and expenses attributable to the activities of the Series (collectively, “Operating Expenses”), which may be as much as or greater than the actual cost of the interest in the Underlying Asset, including:

 

  costs incurred in managing the Underlying Asset related to a Series, including, but not limited to boarding, maintenance, training and transportation costs (the “Upkeep Fees”); 

 

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

 

  any indemnification payments; and

 

  any and all insurance premiums or expenses in connection with the Underlying Asset, including mortality, loss of use, liability and/or medical insurance of an Underlying Asset to insure against the death, injury or third party liability of racehorse ownership (as described in “Description of the Business – Business of the Company”). The decision to purchase insurance on a horse is made on a horse-by-horse basis. There is no guarantee that a horse you invest in will be insured.

 

We anticipate that for a majority of the Offerings, we will allocate a sizable portion of such Offering to a cash reserve to be spent on Upkeep Fees of the applicable Underlying Asset. However, if the Operating Expenses exceed the amount of revenues generated from the applicable Underlying Asset, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and be entitled to reimbursement of such amount from future revenues generated by such Series (“Operating Expenses Reimbursement Obligation(s)”), and/or (c) cause additional Interests to be issued in order to cover such additional amount. In such cases, until a Series generates revenues from its interest in the applicable Underlying Asset, we expect a Series to, initially, deplete only the Upkeep Fees. We may incur Operating Expenses Reimbursement Obligations or the Manager pays such Operating Expenses incurred and will not seek reimbursement if Operating Expenses exceed revenues and Upkeep Fees.

 

From time to time, certain Offerings will not have an allocated upfront cash reserve for Upkeep Fees as part of such Offering proceeds. Instead, the Manager or an affiliate will, in connection with such Offering, incur liabilities related to Upkeep Fees on behalf of the Series and be entitled to reimbursement of such amount only upon a sale of the Underlying Asset or a dissolution or termination of such Series and not from Distributable Cash (as defined below) from ongoing revenues generated by such Series. Notwithstanding the foregoing, in these types of Offerings, there will still exist a smaller pre-paid cash reserve for Prepaid Expenses and insurance, administrative and general Operating Expenses which is intended to cover three years of such projected Operating Expenses (excluding Upkeep Fees).

 

In addition, the Manager, in these types of Offerings, retains discretion to also (a) loan the amount of the Operating Expenses to such Series, on which the Manager may impose a reasonable rate of interest, which shall not be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and/or (b) cause additional Interests to be issued in order to cover such additional amounts.

 

 

 

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Regardless of the type of Offering, an Interest Holder will be liable only to the extent of their agreed upon capital contributions and, if no such capital remains at dissolution, such Interest Holder will not be liable for the failure of a Series to repay its underlying debt or liabilities, including the Operating Expenses Reimbursement Obligations.

 

Indemnification of the Manager

 

To the fullest extent permitted by applicable law, subject to approval of each Series Manager, all officers, directors, shareholders, partners, members, employees, representatives or agents of the Manager or a Series Manager, or their respective affiliates, employees or agents (each, a “Covered Person”) shall be entitled to indemnification from such Series (and the Company generally) for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Series Manager, or such Series and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement and any Series Agreement, except that no Covered Person shall be entitled to be indemnified for any loss, damage or claim incurred by such Covered Person by reason of fraud, deceit, gross negligence, willful misconduct or a wrongful taking with respect to such acts or omissions; provided, however, that any indemnity under the Operating Agreement shall be provided out of and to the extent of the assets of the such Series only, and no other Covered Person or any other Series or the Company shall have any liability on account thereof.

 

To the fullest extent permitted by applicable law, subject to approval of a Series Manager, all expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by such Series prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by such Series of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in the Operating Agreement.

 

Description of the Management Agreement

 

Each Series will appoint the Manager to serve as Manager (the “Manager”) to manage its interest in the Underlying Asset pursuant to a management agreement (the “Management Agreement”).

 

The services provided by the Manager will include:

 

  Rendering management and administration services and support and other management support needed for Company’s and each Series’ operations;

 

  A license to the MyRacehorse™ Platform for the facilitation of the offerings of the Series Interests;

 

  Determining which Assets to select and purchase; and

 

  Determining the amount of the selling price of the Assets upon disposition thereof.

 

The term of the Management Agreement shall commence on the date executed and shall have a term of one (1) year unless earlier terminated as provided for therein. The term of the Management agreement shall be automatically extended for a series of additional one (1) year terms unless Company notifies the Manager in writing of its desire to terminate this Agreement at least sixty (60) days prior to the expiration of the current term.

 

Each Series will indemnify the Manager out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as Manager under the Management Agreement with respect to any act or omission that has not been determined by a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

 

A copy of the Management Agreement is attached hereto as Exhibit 6.1.

 

 

 

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Management Fee

 

As consideration for managing each Underlying Asset, the Manager will be paid a one-time Due Diligence Fee of approximately 15.0% of the offering proceeds and a Management Fee on an ongoing basis equal to 10% of Gross Proceeds generated by the Series.

 

Bloodstock Fee

 

In the event that the Manager performs bloodstock services for an Underlying Asset (i.e.: creating and facilitating breeding plans for the Underlying Asset, analyzing pedigrees to assess the Underlying Asset’s value, and purchasing and/or selling the Underlying Asset on behalf of the Company), the Manager will also be paid up to 5.0% of the cost of the Underlying Asset for providing such services.

 

Facilities

 

The Manager is located at 250 W. 1st Street, Suite 256, Claremont, CA 91711 and currently has a four year lease on its principal offices. The Manager presently has 8 employees, 10 independent contractors and 1 advisor. The Company does not have any employees.

 

Legal proceedings

 

None of the Company, any series, the Manager, or any director or executive officer of the Manager is presently subject to any material legal proceedings.

 

Allocation of expenses

 

To the extent relevant, Offering Expenses, Operating Expenses, revenue generated from interests in underlying assets and any indemnification payments made by the Company will be allocated amongst the various interests in accordance with the Manager’s sole discretion. The Manager intends to allocate items that are allocable to a specific series to be borne by, or distributed to (as applicable), the applicable series of interests. If, however, an item is not allocable to a specific series but to the Company in general, it will be allocated pro rata based on the value of interests in underlying assets (e.g., in respect of asset level insurance) or the number of interests, as reasonably determined by the Manager.

 

 

 

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MANAGEMENT

 

Manager

 

The Manager of the Company is Experiential Squared, Inc., a Delaware corporation formed on December 27, 2016.

 

The Company operates under the direction of the Manager, which is responsible for directing the operations of our business, directing our day-to-day affairs, and implementing our business strategy. The Manager and its officers and directors are not required to devote all of their time to our business and are only required to devote such time to our affairs as their duties require. The Manager is responsible for determining maintenance required in order to maintain or improve the asset’s quality, determining how to monetize a Series and other underlying assets at Membership Experience Programs in order to generate profits and evaluating potential sale offers, which may lead to the liquidation of a Series as the case may be.

 

The Company will follow guidelines adopted by the Manager and implement policies set forth in the Operating Agreement unless otherwise modified by the Manager. The Manager may establish further written policies and will monitor our administrative procedures, asset operations and performance to ensure that the policies are fulfilled. The Manager may change our objectives at any time without approval of our Interest Holders. The Manager itself has no track record and is relying on the track record of its individual officers, directors and advisors.

 

The Manager performs its duties and responsibilities pursuant to our Operating Agreement. We have agreed to limit the liability of the Manager and to indemnify the Manager against certain liabilities.

 

Responsibilities of the Manager

 

Under Nevada law, the fiduciary duties of a manager to the limited liability company and to its members are limited to that of good faith and fair dealing. The Operating Agreement for the Company has set forth standards by which the duties of the Manager are to be measured.

 

Among other things, the Operating Agreement recognizes that the Manager (directly or through affiliates) is permitted to conduct outside business activities that may conflict with the Company’s business. The Company's business operations and affairs will be managed entirely by the Manager, which may be subject to certain conflicts of interest. (See "CONFLICTS OF INTEREST.") In addition, the Manager may, if desired, submit any contract or act for approval or ratification of by the Members of the Company, and any contract or act approved or ratified by the affirmative vote of the Members holding a majority of percentage interests will not constitute a violation of the Manager’s duties to the Company or its Members.

 

The Members have not been separately represented by independent legal counsel in their dealings with the Manager. Members must rely on the good faith and integrity of the Manager to act in accordance with the terms and conditions of this Offering. The terms of establishment of the Company, its operations, and the operating agreement has been prepared by the Manager. Therefore, the terms and the Operating Agreement have not been negotiated in an arms' length transaction, and there is no assurance that the Company could not have obtained more favorable terms from a third party for any of these agreements. INVESTORS SHOULD CONSULT WITH THEIR OWN COUNSEL TO EVALUATE ANY AND ALL OF THESE AGREEMENTS AND RELATIONSHIPS.

 

The Manager must, on demand, give to any Member or his legal representative true and complete information concerning all Company affairs as required by law. Each Member or his legal representative has the right to inspect and copy the Company books and records upon reasonable request and in accordance with applicable law.

 

The Operating Agreement provides that the Manager shall have no liability to the Company for losses resulting from errors in judgment or other acts or omissions, as long as (i) the Manager determined, in good faith, that such action or inaction was in, or not opposed to, the best interests of the Company and (ii) such action or inaction did not constitute fraud, deceit, willful misconduct, gross negligence, or a wrongful taking. The Operating Agreement also provides that the Company shall indemnify the Manager against liability and related expenses (including reasonable attorneys' fees and costs) incurred in dealing with the Company, Members or third parties, so long as the standard described above is met. Therefore, Members may have a more limited right of action then they would have absent these provisions in the Operating Agreement. A successful indemnification of the Manager or any litigation that may arise in connection with the Manager's indemnification could deplete the assets of the Company. Members who believe that a breach of the Manager's duty has occurred should consult with their own counsel.

 

 

 

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Executive Officers and Directors of the Manager

 

The following individuals constitute the Board of Directors and executive management of the Manager:

 

Name Age Position

Term of Office

(Beginning)

Michael Behrens 45 Chief Executive Officer, Chief Financial Officer, Secretary, and Director Inception

 

Background of Officers and Directors of the Manager

 

The following is a brief summary of the background of each director and executive officer of the Manager:

 

Michael Behrens, Chief Executive Officer

 

Michael has served as a marketing executive for over 10 years on both the agency and client side. He has experience in both performance marketing and brand development for startups, established business and the Fortune 1000. In his career he has managed/influenced over 1 billion in advertising dollars. He most recently served as the CMO of Casper, a very successful online mattress start-up in NYC that has generated hundreds of millions of dollars in revenue since inception.

 

Advances from Manager

 

See “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Advances from Manager” section above for more information.

 

Related Party Transactions

 

See “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Related Party Transactions” section above for more information.

 

Conflicts of Interest

 

See “Conflicts of Interest” section above for more information.

 

 

 

 

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COMPENSATION

 

Compensation of Executive Officers

 

We do not currently have any employees nor do we currently intend to hire any employees who will be compensated directly by the Company. The chief executive officer of the Manager plus other employees of the Manager manage our day-to-day affairs, oversee the review, selection and recommendation of underlying assets, service acquired assets and monitor the performance of these assets to ensure that they are consistent with our business objectives. Each of these individuals receives compensation for his or her services, including services performed for us on behalf of the Manager, from Experiential Squared, Inc.  Although we will indirectly bear some of the costs of the compensation paid to these individuals, through fees we pay to the Manager, we do not intend to pay any compensation directly to these individuals.

 

Compensation of Manager

 

The Manager will receive reimbursement for costs incurred relating to this and other offerings (e.g., Offering Expenses and Operating Expenses) and, in its capacity as Manager, a Management Fee (including the Due Diligence Fees and 10% of Gross Proceeds). In the event that the Manager performs bloodstock services for an Underlying Asset, the Manager will also be paid up to 5.0% of the cost of the Underlying Asset for providing such services. Neither the Manager nor its affiliates will receive any selling commissions or dealer manager fees in connection with the offer and sale of the Interests.

 

The annual compensation of the Manager for Fiscal Year 2020 was as follows:

 

Name Capacities in which
compensation was
received (e.g., Chief
Executive Officer,
director, etc.)

Cash compensation

($)

Other compensation

($)

Total compensation

($)

Experiential Squared, Inc. Manager $1,917,883 $338,082 (1) $2,255,965

 

_____________________

(1) Compensation related to the Manager performing bloodstock services and general and administrative services in connection with the management for certain Underlying Assets of their respective Series in 2020.

 

In addition, should a series’ revenue exceed its ongoing Operating Expenses and various other potential financial obligations of the series, the Manager in its capacity as the Manager may receive a Management Fee as described in “Description of the Business – Management Fee.”

 

A more complete description of Management of the Company is included in “Description of the Business” and “Management”.

 

Except as set forth herein, we do not have any ongoing plan or arrangement for the compensation of executive officers and our Manager.

 

 

 

 

 

 

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PRINCIPAL INTEREST HOLDERS

 

The Company is managed by Experiential Squared, Inc. which is also the Company’s 100% owner. Experiential Squared, Inc., and/or its affiliates, have no intention of owning any of the Interests in the Series at Closing. However, Experiential Squared, Inc., and/or its affiliates, still reserve the right to participate in the Offering on the same terms and conditions as the Investors at their discretion and may opt to convert a Profit Participation Convertible Promissory Note into interests that remain unsold in this offering. The address of Experiential Squared, Inc. is 250 W. 1st Street, Suite 256, Claremont, CA 91711.

 

As of August 27, 2021, the securities of the Company are beneficially owned as follows:

 

Title of Class/Series   Name of Beneficial Owner(1)   Number of Interests Beneficially Owned (1)     Percentage of Interests Beneficially Owned  
Company(2)   Experiential Squared, Inc. (Manager)     N/A       100.0%  
Series Amers   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Bella Chica   Experiential Squared, Inc. (Manager)     70       70.0%  
Series Berengaria ‘17   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Bullion   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Cairo Kiss   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Country Whirl ‘17   Experiential Squared, Inc. (Manager)     4       4.00%  
Series Kiana’s Love   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Kichiro   Experiential Squared, Inc. (Manager)     71       35.50%  
Series Madarnas   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Major Implications   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Miss Puzzle 17   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Moonless Sky   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Night of Idiots   Experiential Squared, Inc. (Manager)     18       23.00%  
Series Nileist   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Noble Goddess   Experiential Squared, Inc. (Manager)     0       0.00%  
Sauce on Side   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Sigesmund   Experiential Squared, Inc. (Manager)     139       70.00%  
Series Soul Beam   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Street Band   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Swiss Minister   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Takeo Squared   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Tavasco Road   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Two Trail Sioux 17K   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Zestful   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Palace Foal   Michael Behrens (Affiliate of Manager)     510       100.00%  
Series De Mystique ‘17   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Martita Sangrita 17   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Daddy’s Joy   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Vertical Threat   Experiential Squared, Inc. (Manager)     2       0.30%  
Series Shake it Up Baby   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Tizamagician   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Power Up Paynter   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Two Trail Sioux 17   Experiential Squared, Inc. (Manager)     3       0.64%  
Series Wayne O   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Big Mel   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Amandrea   Experiential Squared, Inc. (Manager)     42       7.6%  
Series Keertana 18   Experiential Squared, Inc. (Manager)     8       0.16%  
Series Sunny 18   Experiential Squared, Inc. (Manager)     1       0.02%  

 

 

 

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Series Lazy Daisy   Experiential Squared, Inc. (Manager)     1       0.08%  
Series New York Claiming Package   Experiential Squared, Inc. (Manager)     0       0.00%  
Series The Filly Four   Experiential Squared, Inc. (Manager)     41       0.51%  
Series Lane Way   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Mo Mischief   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Deep Cover   Experiential Squared, Inc. (Manager)     2       0.25%  
Series Popular Demand   Experiential Squared, Inc. (Manager)     2       0.20%  
Series Authentic   Experiential Squared, Inc. (Manager)     63       0.50%  
Series Storm Shooter   Experiential Squared, Inc. (Manager)     2       0.10%  
Series Thirteen Stripes   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Naismith   Experiential Squared, Inc. (Manager)     6       0.30%  
Series NY Exacta   Experiential Squared, Inc. (Manager)     3       0.25%  
Series Apple Down Under 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Just Louise 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Lost Empire 19   Experiential Squared, Inc. (Manager)     23       0.23%  
Series Man Among Men   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Frosted Oats   Experiential Squared, Inc. (Manager)     4       0.10%  
Series Tapitry 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Classofsixtythree 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Cayala 19   Experiential Squared, Inc. (Manager)     5       0.15%  
Series Margaret Reay 19   Experiential Squared, Inc. (Manager)     1       0.12%  
Series Awe Hush 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Exonerated 19   Experiential Squared, Inc. (Manager)     1       0.12%  
Series Speightstown Belle 19   Experiential Squared, Inc. (Manager)     1       0.11%  
Series Consecrate 19   Experiential Squared, Inc. (Manager)     2       0.49%  
Series Latte Da 19   Experiential Squared, Inc. (Manager)     4       0.10%  
Series Midnight Sweetie 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Ambleside Park 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Athenian Beauty 19   Experiential Squared, Inc. (Manager)     0       0.00%  
Series Future Stars Stable   Experiential Squared, Inc. (Manager)     97       0.97%  
Series Collusion Illusion   Experiential Squared, Inc. (Manager)     5       0.02%  
Series Motion Emotion (3)   Experiential Squared, Inc. (Manager)     1,020       100.00%  
Series Monomoy Girl   Experiential Squared, Inc. (Manager)     120       1.18%  
Series Action Bundle (4)   Experiential Squared, Inc. (Manager)     10,000       100.00%  
Series Got Stormy   Experiential Squared, Inc. (Manager)     23       0.23%  
Series Social Dilemma   Experiential Squared, Inc. (Manager)     1       0.20%  
Series Carrothers   Experiential Squared, Inc. (Manager)     3,621       71.00%  
Series Going to Vegas   Experiential Squared, Inc. (Manager)     46       0.90%  
Series Ari the Adventurer 19   Experiential Squared, Inc. (Manager)     12       0.24%  
Series Wonder Upon a Star 19   Experiential Squared, Inc. (Manager)     11       0.11%  
Series Echo Warrior 19   Experiential Squared, Inc. (Manager)     2,399       39.98%  
Series Silverpocketsfull 19   Experiential Squared, Inc. (Manager)     0       0%  
Series Who’sbeeninmybed 19   Experiential Squared, Inc. (Manager)     12       0.24%  
Series Into Summer 19   Experiential Squared, Inc. (Manager)     178       27.38%  
Series Mrs Whistler   Experiential Squared, Inc. (Manager)     818       40.90%  
Series Race Hunter 19   Experiential Squared, Inc. (Manager)     2,771       27.71%  
Series Co Cola 19   Experiential Squared, Inc. (Manager)     1       0.02%  
Series Vow   Experiential Squared, Inc. (Manager)     1,574       78.70%  

 

 

 225 

 

 

 

Series You Make Luvin Fun 19   Experiential Squared, Inc. (Manager)     3,051       54.38%  
Series Miss Sakamoto   Experiential Squared, Inc. (Manager)     3,051       90.63%  
Series Courtisane 19   Experiential Squared, Inc. (Manager)     636       6.36%  
Series Grand Traverse Bay 19   Experiential Squared, Inc. (Manager)     90       12.00%  
Series Our Miss Jones 19   Experiential Squared, Inc. (Manager)     1,200       100%  
Series Margarita Friday 19   Experiential Squared, Inc. (Manager)     2,000       100%  
Series Queen Amira 19   Experiential Squared, Inc. (Manager)     240       23.50%  
Series Salute to America   Experiential Squared, Inc. (Manager)     100       10.00%  
Series Desire Street   Experiential Squared, Inc. (Manager)     1,020       10.00%  

______________

  (1) Experiential Squared, Inc. or an affiliate holds a promissory note which provides that, at its election, such beneficial owner may convert the outstanding balance of the note into the number of unsold Series Interests in the offering of such Series on the date of conversion. As such, such party is deemed to be the beneficial owner of such unsold Series Interests until such time as the Series is fully subscribed. Notwithstanding the foregoing, as to Series offerings closed on or prior to September 18, 2020, such holders listed above are direct Series Interest Holders as all such promissory notes have been converted in full prior to such date.
  (2) The purchase of membership interests in a Series of the Company is an investment only in that Series (and with respect to that Series’ Underlying Asset) and not an investment in the Company as a whole.
  (3) On April 2, 2021, the Series Motion Emotion Offering was terminated prior to any securities being offered.
  (4) On April 2, 2021, the Series Action Bundle Offering was terminated prior to any securities being offered.

 

 

 

 

 

 

 

 

 226 

 

 

DESCRIPTION OF INTERESTS OFFERED

 

The following is a summary of the principal terms of, and is qualified by reference to the Operating Agreement, attached hereto as Exhibit 2.2, the Series Agreements, attached hereto as exhibits as it relates to each specific Series, and the Subscription Agreement, attached hereto as Exhibit 4.1, relating to the purchase of the applicable Series of Interests. This summary is qualified in its entirety by reference to the detailed provisions of those agreements, which should be reviewed in their entirety by each prospective Investor. In the event that the provisions of this summary differ from the provisions of the Operating Agreement, Series Agreement or the Subscription Agreement (as applicable), the provisions of the Operating Agreement, Series Agreement or the Subscription Agreement (as applicable) shall apply. Capitalized terms used in this summary that are not defined herein shall have the meanings ascribed thereto in the Operating Agreement or Series Agreement.

  

Series Agreement

 

Each Series will have its own Series Agreement and a Subscription Agreement. The Series Agreement will include a description of the following investment details, among other things:

 

  Such Member classes as the Series Manager may determine to be necessary, appropriate, or advantageous for operation of the Series and meeting its business objectives.

 

  The Minimum and Maximum Dollar Amounts for each Series, if any, based on the amount of Capital Contributions needed to acquire, operate and improve the Asset.

 

  The Minimum Investment Amount required of an individual Investor by each Series.

 

  A tabular summary of the sources and uses of proceeds of the Capital Contributions raised by each Series.

 

  The important dates relative to acquisition of the Asset or Capital Contributions needed for each Series.

 

Rights and Liabilities of Members

 

The rights, duties and powers of Members are governed by the Operating Agreement and the discussion herein of such rights, duties and powers is qualified in its entirety by reference to such Agreement and Act. Members who become Members in a Series in the manner set forth herein will be responsible for the obligations of the Series and will be liable only to the extent of their agreed upon capital contributions. Members may be liable for any return of capital plus interest if necessary to discharge liabilities existing at the time of such return. Any cash distributed to Members may constitute, wholly or in part, return of capital.

 

Members will have very limited control over the management of the Company or the Series. Our Manager has sole power and authority over the management of our Company and the individual Series, subject only to certain rights of our Members and our membership as a whole, to vote on certain limited matters. Furthermore, our Manager may only be removed for “Good Cause”, meaning willful misfeasance, bad faith, gross negligence or reckless disregard by the Manager in the performance of its duties, the criminal conviction of a federal or state securities law or any other criminal wrong-doing. To remove the Manager for “Good Cause”, Members holding in excess of 75% of the percentage interests, or (ii) Members holding in excess of 75% of the outstanding percentage interests owned by disinterested Members must approve.

 

Therefore, you will not have an active role in our Company’s management and it will be difficult to cause a change in our management.

 

Interest Subscriptions

 

Interests in each Series will be sold for a set price per Interest. To purchase Interests in an individual Series, an Investor must deliver to the Company a Subscription Agreement in the form attached to this Offering Circular as Exhibit 4.1 by completing the online submission at MyRacehorse.com.

 

 

 

 227 

 

 

Rights, Powers and Duties of Manager

 

Subject to the right of the Members to vote on certain limited matters, the Manager will have sole control of the business operations of the Series. The Manager is not required to devote full time to Company and Series affairs but only such time as is required for the conduct of Company and Series business. The Manager acting alone has the power and authority to act for and bind the Company or an individual Series.

 

The Manager is granted the special power of attorney of each Member for the purpose of executing the documents which the Members have expressly agreed to execute and deliver or which are required to be executed, delivered and/or filed under applicable law.

 

Dividends/Distributions

 

The Manager will attempt to manage the individual Series so as to issue dividend payments, to the extent of available cash flow. Therefore, (i) 10% of Gross Proceeds shall be payable to the Manager as a Management Fee; (ii) in the event that the Manager performs bloodstock services for an Underlying Asset, the Manager will also be paid up to 5.0% of the cost of the Underlying Asset for providing such services; and then (iii) the remaining cash available for dividends shall be payable to the Members on a pro rata basis. This shall be calculated as 100% of the dividends available after payment of the Management Fee and bloodstock fee, if applicable, multiplied by a fraction with the fraction being the number of Interests held by the Member as the numerator and the total number of outstanding Interests as the denominator. The Manager shall determine the cash available for dividends after retention of reasonable working capital reserves and payment of liabilities.

 

Working capital may include pre-paid insurance and administrative expenses for a horse for up to 3 years. Working capital expenses may be as much as the cost of the interest in the Underlying Asset.

 

Meetings

 

The Manager may call a meeting of an individual Series. Unless the notice otherwise specifies, all meetings will be held at the office of the Company. Members have the rights to call meetings accorded to them under the Operating Agreement or the individual Series Agreement and applicable law.

 

Accounting and Reports

 

Right of Inspection; Provision of Records to Members

 

Each Member has the right, upon reasonable request, for purposes reasonably related to the interest of that person as a Member, to inspect and copy during normal business hours any of the records required to be maintained by the Manager under the Act.

 

The Manager will furnish to a Member a copy of any amendment to the articles of organization or operating agreement executed by the Manager pursuant to a power of attorney from the Member.

 

Members will be limited to the inspection of the books and records of the individual Series in which they are a Member.

 

Annual Report

 

At such time as the Company has more than thirty-five (35) Members, each of the following shall apply:

 

The Manager will cause an annual report to be sent to each of the Members not later than one hundred twenty (120) days after the close of the Fiscal Year. The report, which may be sent by electronic transmission, will contain a balance sheet as of the end of the Fiscal Year and an income statement and a statement of cash flows for the Fiscal Year.

 

 

 

 228 

 

 

Members representing at least five (5) percent of the percentage interests, or three or more Members, may make a written request to the Manager for an income statement of the Company for the initial three-month, six-month, or nine-month period of the then-current Fiscal Year ending more than 30 days prior to the date of the request, and a balance sheet of the Company as of the end of such period. The statement will be delivered or mailed to the Members within thirty (30) days thereafter.

 

The financial statements will be accompanied by the report, if any, of the independent accountants engaged by the Company or, if there is no report, the certificate of the Manager that the financial statements were prepared without audit from the books and records of the Company.

 

Tax Information

 

The Company will send or cause information to be sent in writing to each Member within ninety (90) days after the end of each taxable year the information necessary to complete federal and state income tax or information returns. Based on the Company’s intention to treat each Series as a corporation for tax purposes, the primary reporting Members should expect is through Form 1099.

 

Limited Voting Rights of Members

 

The affirmative vote of a Majority of Interests of all of the Members associated with a Series shall be required for the Company to merge or consolidate with or into, or convert into, another entity, but not to enter into a joint venture arrangement with another party or sell an Underlying Asset.

 

A Series Manager may be removed at any time, for Good Cause, by the decision of such Series Members owning more than seventy-five percent (75%) of the Percentage Interests in that Series.

 

Certain actions may require both a majority of all percentage interests in the Company and the consent of the Manager, as provided in such Series Agreement.

 

The disposition by the Company of all or substantially all of the Company’s assets includes the disposition of all or substantially all of the assets of all of the Company’s subsidiaries in a single transaction or series of transactions but expressly excludes a sale of the assets of any single Series that owns a single Asset, which may be made by the Manager without the consent of Members.

 

Withdrawal from a Series

 

Each Series expects to operate for approximately four (4) to six (6) years at which time the Underlying Asset of the Series will be retired. Thereafter, the Members shall receive a return of their capital, if available. The Members should not expect withdrawal prior to this time.

 

Dissolution and Winding-Up

 

The Series Manager may dissolve the Series at any time once the Series Assets have been sold. The dissolution may only be ordered by the Series Manager or the Company, not by an owner of Series Membership Interests or by any Member of the Series. Upon dissolution of a Series, all Members of that Series will participate in the Series’ liquidating distributions, in accordance with the distributions in effect during the term and thereafter in proportion to their relative capital accounts.

  

Upon the sale of an Underlying Asset or the dissolution or termination of the Series, the Manager or an affiliate may be entitled to a repayment of its Operating Expenses Reimbursement Obligation, if any, as repayment of liabilities incurred related to Upkeep Fees on behalf of the Series. This may result in the reduction of liquidating distributions to Members.

 

Limitations on Transferability

 

The Operating Agreement and Series Agreement place substantial limitations upon transferability of the Interests. Any transferee (including a donee) must be a person or entity which would have been qualified to purchase an Interest in this Offering and a transferee may not become a substituted Member without the consent of the Manager. A transferee who does not become a substituted Member will own an economic interest which entitles him or her only to the share of income or return of capital to which the transferor would be entitled. In addition, there are certain rights of first refusal on any transfer.

 

 

 

 229 

 

 

Term of the Company

 

The Manager intends to operate the Company on a perpetual basis until a dissolution event.

 

Dispute Resolution

 

The Company and the Operating Agreement will be governed by Nevada law and any dispute in relation to the Company and the Operating Agreement is subject to the dispute resolution provisions set forth therein. If an Interest Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement, it would be required to do so in compliance with these dispute resolution provisions. Notwithstanding the foregoing, mandatory arbitration provisions set forth therein do not apply to claims made under federal and state securities laws.

 

Listing

 

The Interests are not currently listed or quoted for trading on any national securities exchange or national quotation system.

 

Transfer Agent and Registrar

 

The company has appointed StartEngine Secure LLC as its SEC-registered transfer agent.

 

 

 

 

 

 

 230 

 

 

MATERIAL UNITED STATES TAX CONSIDERATIONS

 

The following is a summary of the material United States federal income tax consequences of the ownership and disposition of the Interests to United States holders, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in United States federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service (the “IRS”), with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

 

This summary also does not address the tax considerations arising under the laws of any United States state or local or any non-United States jurisdiction or under United States federal gift and estate tax laws. In addition, this discussion does not address tax considerations applicable to an Investor’s particular circumstances or to Investors that may be subject to special tax rules, including, without limitation:

 

  (i) banks, insurance companies or other financial institutions;

 

  (ii) persons subject to the alternative minimum tax;

 

  (iii) tax-exempt organizations;

 

  (iv) dealers in securities or currencies;

 

  (v) traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

 

  (vi) persons that own, or are deemed to own, more than five percent of our Interests (except to the extent specifically set forth below);

 

  (vii) certain former citizens or long-term residents of the United States;

 

  (viii) persons who hold our Interests as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;

 

  (ix) persons who do not hold our Interests as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or

 

  (x) persons deemed to sell our Interests under the constructive sale provisions of the Code.

 

You are urged to consult your tax advisor with respect to the application of the United States federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our Interests arising under the United States federal estate or gift tax rules or under the laws of any United States state or local or any foreign taxing jurisdiction or under any applicable tax treaty.

 

Definitions

 

U.S. Holder. A “U.S. Holder” includes a beneficial owner of the Interests that is, for U.S. federal income tax purposes, an individual citizen or resident of the United States.

 

Taxation of each Series of Interests as a “C” Corporation

 

The Company, although formed as a Nevada series limited liability company eligible for tax treatment as a “partnership,” has affirmatively elected for each Series of Interests to be taxed as a “C” corporation under Subchapter C of the Code for all federal and state tax purposes. Thus each Series of Interests will be taxed at regular corporate rates on its taxable income before making any distributions to Interest Holders as described below. The current Federal tax rate on corporations is 21%.

 

 

 

 231 

 

 

Taxation of Distributions to Investors

 

Distributions to U.S. Holders out of the Company’s current or accumulated earnings and profits will be taxable as dividends. A U.S. Holder who receives a distribution constituting “qualified dividend income” may be eligible for reduced federal income tax rates. U.S. Holders are urged to consult their tax advisors regarding the characterization of corporate distributions as “qualified dividend income”. Distributions in excess of the Company’s current and accumulated earnings and profits will not be taxable to a U.S. Holder to the extent that the distributions do not exceed the adjusted tax basis of the U.S. Holder’s Interests. Rather, such distributions will reduce the adjusted basis of such U.S. Holder’s Interests. Distributions in excess of current and accumulated earnings and profits that exceed the U.S. Holder’s adjusted basis in its Interests will be taxable as capital gain in the amount of such excess if the Interests are held as a capital asset. Investors should note that Section 1411 of the Code, added by the Health Care and Education Reconciliation Act of 2010, added a new 3.8% tax on certain investment income (the “3.8% NIIT”), effective for taxable years beginning after December 31, 2012. In general, in the case of an individual, this tax is equal to 3.8% of the lesser of (i) the taxpayer’s “net investment income” or (ii) the excess of the taxpayer’s adjusted gross income over the applicable threshold amount ($250,000 for taxpayers filing a joint return, $125,000 for married individuals filing separate returns and $200,000 for other taxpayers). In the case of an estate or trust, the 3.8% tax will be imposed on the lesser of (x) the undistributed net investment income of the estate or trust for the taxable year, or (y) the excess of the adjusted gross income of the estate or trust for such taxable year over a beginning dollar amount (currently $7,500 of the highest tax bracket for such year). U.S. Holders should note that for tax years beginning in 2013 and thereafter dividends will be included as investment income in the determination of “net investment income” under Section 1411(c) of the Code.

 

Taxation of Dispositions of Interests

 

Upon any taxable sale or other disposition of our Interests, a U.S. Holder will recognize gain or loss for federal income tax purposes on the disposition in an amount equal to the difference between the amount of cash and the fair market value of any property received on such disposition; and the U.S. Holder’s adjusted tax basis in the Interests. A U.S. Holder’s adjusted tax basis in the Interests generally equals his or her initial amount paid for the Interests and decreased by the amount of any distributions to the Investor in excess of the Company’s current or accumulated earnings and profits. In computing gain or loss, the proceeds that U.S. Holders receive will include the amount of any cash and the fair market value of any other property received for their Interests, and the amount of any actual or deemed relief from indebtedness encumbering their Interests. The gain or loss will be long-term capital gain or loss if the Interests are held for more than one year before disposition. Long-term capital gains of individuals, estates and trusts currently are taxed at a maximum rate of 20% (plus any applicable state income taxes) plus the 3.8% NIIT. The deductibility of capital losses may be subject to limitation and depends on the circumstances of a particular U.S. Holder; the effect of such limitation may be to defer or to eliminate any tax benefit that might otherwise be available from a loss on a disposition of the Interests. Capital losses are first deducted against capital gains, and, in the case of non-corporate taxpayers, any remaining such losses are deductible against salaries or other income from services or income from portfolio investments only to the extent of $3,000 per year.

 

Backup Withholding and Information Reporting

 

Generally, the Company must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report will be sent to you.

 

Payments of dividends or of proceeds on the disposition of the Interests made to you may be subject to additional information reporting and backup withholding at a current rate of 24% unless you establish an exemption. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a United States person.

 

Backup withholding is not an additional tax; rather, the United States income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

 

The preceding discussion of United States federal tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular United States federal, state and local and foreign tax consequences, if applicable, of purchasing, holding and disposing of our Interests, including the consequences of any proposed change in applicable laws.

 

 

 

 

 

 

 

 232 

 

 

WHERE TO FIND ADDITIONAL INFORMATION

 

The Manager will answer inquiries from potential Investors in the Offerings concerning any of the Series of Interests, the Company, the Manager and other matters relating to the offer and sale of the Interests under the Offering Circular and Offering Circular Supplements. The Company will afford the potential Investors in the Interests the opportunity to obtain any additional information to the extent the Company possesses such information or can acquire such information without unreasonable effort or expense that is necessary to verify the information in this Offering Circular.

 

All potential Investors in the Interests are entitled to review copies of any other agreements relating to the Series described in the Offering Circular and Offering Circular Supplements, if any. In the Subscription Agreement, you will represent that you are completely satisfied with the results of your pre-investment due diligence activities.

 

Any statement contained herein or in any document incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Offering Circular and Offering Circular Supplements to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or replaces such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of the Offering Circular and Offering Circular Supplements, except as so modified or superseded.

 

Requests and inquiries regarding the Offering Circular and Offering Circular Supplements should be directed to:

 

My Racehorse CA LLC

250 W. 1st Street, Suite 256

Claremont, CA 91711

E-Mail: [email protected]

Tel: 909-740-9175

Attention: Michael Behrens

 

We will provide requested information to the extent that we possess such information or can acquire it without unreasonable effort or expense.

 

 

 

 

 

 233 

 

 

Index to Financial Statements

 

Audited Financial Statements as of December 31, 2020 and 2019 and for the years then ended 

 

Independent Auditor’s Report F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Changes in Members’ Equity F-5
Statements of Cash Flows F-6
Notes to the Financial Statements F-7

 

 

 

 

 

 

 

 

 

 F-1 

 

 

 

INDEPENDENT AUDITOR’S REPORT

 

April 6, 2021

 

To:     Experiential Squared, Inc as manager of My Racehorse CA LLC

 

Re:        2020-2019 Financial Statement Audit

 

 

We have audited the accompanying financial statements of MY RACEHORSE CA, LLC (a series limited liability company organized in Nevada) (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, and the related statements of operations, changes in members’ equity, and cash flows for the calendar year periods ended December 31, 2020 and 2019, and the related notes to such financial statements.

 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of the Company’s financial statements 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 financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.

 

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations, changes in members’ equity and its cash flows for the calendar year periods thus ended in accordance with accounting principles generally accepted in the United States of America.

 

Sincerely,

 

IndigoSpire CPA Group

 

IndigoSpire CPA Group, LLC

Aurora, Colorado

April 6, 2021

 

 

 

 F-2 

 

 

MY RACEHORSE CA LLC

BALANCE SHEETS

See accompanying Independent Auditor’s Report

As of December 31, 2020 and 2019

 

   2020   2019 
         
ASSETS          
Current Assets:          
Cash and cash equivalents  $   $ 
Accounts receivable       3,770 
Horse reserve funds receivable from Manager (see Note 4)   1,470,649    446,900 
Prepaid expense   675,019    70,215 
Total Current Assets   2,145,668    520,885 
           
Non-Current Assets:          
Horse assets, net of accumulated depreciation (see Note 2)   9,713,216    2,990,695 
Total Non-Current Assets   9,713,216    2,990,695 
           
TOTAL ASSETS  $11,858,884   $3,511,580 
           
LIABILITIES AND MEMBERS' EQUITY          
Liabilities:          
Current Liabilities:          
Acquisition advances payable to Manager (see Note 4)  $1,119,860   $1,724,852 
Accrued Expense   9,301     
Interest payable   26,769    23 
Total Current Liabilities   1,155,93    1,724,875 
           
Long-term Liabilities:          
Long-term debt   2,576,218    15,606 
Total Long-term Liabilities   2,576,218    15,606 
           
Total Liabilities   3,732,148    1,740,481 
           
Members' Equity:          
Membership in My Racehorse CA, LLC   11,843    11,843 
Subscriptions in series, net of distributions (See Note 5)   14,902,854    3,216,968 
Accumulated deficit   (6,787,961)   (1,457,712)
Total Members' Equity   8,126,736    1,771,099 
           
TOTAL LIABILITIES AND MEMBERS' EQUITY  $11,858,884   $3,511,580 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

 

 

 

 F-3 

 

 

MY RACEHORSE CA LLC

STATEMENTS OF OPERATIONS

See accompanying Independent Auditor’s Report

For the years ended December 31, 2020 and 2019

 

   2020   2019 
         
Revenues  $1,455,913   $263,655 
Cost of revenues   (1,805,350)   (502,233)
Gross profit/(loss)   (349,437)   (238,578)
           
Operating Expenses          
Management charges   1,917,883    460,455 
General and administrative   237,678    53,326 
Sales and marketing        
Depreciation   2,676,696    472,260 
Total Operating Expenses   4,832,257    986,041 
           
Loss from operations   (5,181,694)   (1,224,619)
           
Other Income/(Expense):          
Gain/(loss) on disposition of horse   (113,569)   (63,728)
Interest expense        
Total Other Income   (113,569)   (63,728)
           
Provision for income taxes        
           
Net loss  $(5,330,249)  $(1,288,347)

 

 

 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

 

 F-4 

 

 

MY RACEHORSE CA LLC

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

See accompanying Independent Auditor’s Report

For the years ended December 31, 2020 and 2019

 



   Membership in
My Racehorse CA
LLC
   Subscriptions in
Series
   Accumulated
Deficit
   Total Members'
Equity
 
                 
Balance at January 1, 2019  $11,843   $339,577   $(169,365)  $(182,055)
                     
Subscriptions received in horse series       3,032,135        3,032,135 
Distributions from horse series       (154,744)       (154,744)
Net loss           (1,288,347)   (1,288,347)
Balance at December 31, 2019   11,843    3,216,968    (1,457,712)   1,771,099 
                     
Subscriptions received in horse series       11,924,496        11,924,496 
Distributions from horse series       (238,610)       (238,610)
Net loss           (5,330,249)   (5,330,249)
Balance at December 31, 2020  $11,843   $14,902,854   $(6,787,961)  $8,126,736 

 

 

 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

 

 

 F-5 

 

 

MY RACEHORSE CA LLC

STATEMENTS OF CASH FLOWS

See accompanying Independent Auditor’s Report

For the years ended December 31, 2020 and 2019

 

   2020   2019 
Cash Flows From Operating Activities          
Net Loss  $(5,330,249)  $(1,288,347)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   2,676,696    472,260 
Loss/(gain) on disposal of horse ownership   113,569    63,728 
Non-cash management fees   75,000     
Changes in operating assets and liabilities:          
Change in accounts receivables   3,770    (3,770)
Change in prepaid expense   (123,030)   (70,215)
Change in other assets   (481,774)    
Change in accrued expense   9,301      
Change in accrued interest payable   26,746     
Net Cash Used In Operating Activities   (3,029,971)   (826,344)
           
Cash Flows From Investing Activities          
Purchase of horse assets   (6,534,116)   (3,320,578)
Net Cash Used In Investing Activities   (6,534,116)   (3,320,578)
           
Cash Flows From Financing Activities          
Subscriptions received in horse series   11,924,496    3,032,135 
Distributions from horse series   (238,610)   (154,744)
Contribution by manager        
Horse revenues, net of expenses, applied to related party loans   (493,058)    
Proceeds of long-term notes        
Net increase in amount due to manager, net   (2,628,741)   1,269,531 
Net Cash Provided by Financing Activities   9,564,087    4,146,922 
           
Net Change In Cash        
           
Cash at Beginning of Period        
Cash at End of Period  $   $ 
           
Supplemental Disclosure of Cash Flow Information          
Cash paid for interest  $   $ 
Cash paid for income taxes  $   $ 
           
Supplemental Disclosure of Non-cash Activities          
Horses purchased by issuance of related party notes payable  $2,978,670   $ 
Non-cash management fees  $75,000   $ 

 

 

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

 

 

 F-6 

 

 

MY RACEHORSE CA LLC

NOTES TO THE FINANCIAL STATEMENTS

For the years ended December 31, 2020 and 2019

 

NOTE 1: NATURE OF OPERATIONS

 

My Racehorse CA LLC d/b/a MyRaceHorse.com (the “Company”) is an early-stage investment series limited liability company established by the manager, Experiential Squared, Inc. (the “Manager”), to invest in individual interests in thoroughbred, quarter and Standardbred horses through underlying Series LLCs. The Company democratizes the ownership of racehorses through a self-developed web-based platform and allows fans to experience racehorse ownership by owning portions of the Series with other like-minded fans. The Company is headquartered in Claremont, CA. The Company was formed in 2016.

 

Since inception, the Company has relied on advances from founders and raising capital to fund its operations. The Company will likely incur losses prior to generating positive working capital. However, the Company continues and will continue to receive funding of losses from its Manager. During the next 12 months, the Company intends to fund its operations with funding from a Regulation A securities campaign (see Note 10), capital contributions from the founder, and funds from revenue producing activities, if and when such can be realized. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP).

 

The Company adopted the calendar year as its basis of reporting.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash Equivalents and Concentration of Cash Balance

 

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account. As of December 31, 2020, the Company had no cash on hand.

 

Receivables and Credit Policy

 

Trade receivables from customers are uncollateralized customer obligations due under normal trade terms, primarily requiring payment before services are rendered. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice. The Company, by policy, routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited, and it has not experienced significant write-downs in its accounts receivable balances. As of December 31, 2020 and 2019, the Company had no allowances against its accounts receivable.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed as incurred. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the balance sheet accounts and the resultant gain or loss is reflected in income.

 

 

 

 F-7 

 

 

Depreciation is provided using the straight-line method, based on useful lives of the assets which range from three to five years. Horse assets are depreciated using the straight-line method over 36 months with no estimated salvage value. A horse is treated as placed in service upon its acquisition by the Company.

 

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.

 

As of December 31, 2020 and 2019, the Company has $13,171,287 and $3,584,304, respectively recorded, at cost, in horse assets.

 

As of December 31, 2020, property and equipment consisted of the following:

 

Series Name   Horse Asset plus Acquisition Costs    

Less:

Depreciation

through

December 31, 2020

    Total  
Closed- Series Amers   $ 6,000     $ (6,000 )   $  
Closed- Series Madarnas     10,000       (10,000 )      
Closed- Series Major Implications     2,500       (2,500 )      
Closed- Series Nileist     11,700       (11,700 )      
Closed- Series Sauce On Side     15,000       (15,000 )      
Closed- Series Soul Beam     23,075       (23,075 )      
Closed- Series Swiss Minister     7,500       (7,500 )      
Closed- Series Takeo Squared     15,000       (15,000 )      
Closed- Series Tavasco Road     10,000       (10,000 )      
Closed- Series Zestful     19,000       (19,000 )      
Series The Filly Four     1,426,452       (542,849 )     883,603  
Series Amandrea     115,500       (51,333 )     64,167  
Series Ambleside Park 19     47,150       (4,409 )     42,741  
Series Keertana 18     344,250       (151,938 )     192,313  
Series Two Trail Sioux 17     74,250       (41,250 )     33,000  
Series Apple Down Under 19     60,000       (4,617 )     55,383  
Series Athenian Beauty 19     45,000       (4,208 )     40,792  
Series Authentic     4,359,157       (753,129 )     3,606,028  
Series Awe Hush 19     198,000       (18,883 )     179,117  
Series Bella Chica     25,000       (16,667 )     8,333  
Series Big Mel     581,926       (225,390 )     356,536  
Series Cairo Kiss     27,800       (27,800 )      
Series Martita Sangrita 17     129,300       (69,508 )     59,792  
Series Cayala 19     246,000       (23,689 )     222,311  
Series Classofsixtythree 19     125,000       (12,153 )     112,847  
Series Collusion Illusion     550,000       (31,541 )     518,459  
Series Consecrate 19     32,800       (3,097 )     29,703  
Series Daddy's Joy     48,000       (26,664 )     21,336  
Series Deep Cover     80,000       (21,004 )     58,996  
Series Escape Route     42,400       (3,153 )     39,247  
Series Exonerated 19     86,100       (14,077 )     72,023  
Series Frosted Oats 19     102,500       (14,623 )     87,877  
Series Just Louise 19     153,000       (15,867 )     137,133  
Series Kichiro     15,500       (9,042 )     6,458  
Series Lost Empire 19     229,500       (23,800 )     205,700  
Series Lane Way     392,931       (119,897 )     273,034  

 

 

 F-8 

 

 

Series Latte Da 19     79,950       (1,921 )     78,029  
Series Lazy Daisy     123,188       (123,188 )      
Series Man Among Men 19     147,600       (14,623 )     132,977  
Series Margaret Rey 19     164,000       (15,793 )     148,207  
Series Midnight Sweetie 19     73,800       (6,970 )     66,830  
Series Miss Puzzle     13,730       (8,913 )     4,817  
Series Mo Mischief     255,000       (66,949 )     188,051  
Series Naismith     150,000       (23,118 )     126,882  
Series Noble Goddess     18,000       (18,000 )      
Series Palace Foul     15,606       (10,838 )     4,769  
Series Popular Demand     161,953       (32,942 )     129,011  
Series Power Up Paynter     60,000       (31,667 )     28,333  
Series Sigesmund     10,000       (10,000 )      
Series Sunny 18     244,340       (85,638 )     158,702  
Series Speightstown Belle 19     76,500       (8,106 )     68,394  
Series Squared Straight     22,500       (16,875 )     5,625  
Series Storm Shooter     180,000       (33,667 )     146,333  
Series Street Band     45,000       (45,000 )      
Series Tapitry 19     147,600       (14,623 )     132,977  
Series The Keeneland 14     335,500       (31,375 )     304,125  
Series Thirteen Stripes     100,000       (19,531 )     80,469  
Series Tizamagician     121,545       (67,525 )     54,020  
Series Two Trail Sioux 17K     24,750       (13,750 )     11,000  
Series Utalknboutpractice     11,970       (11,970 )      
Series Vertical Threat     64,650       (35,160 )     29,490  
Series Wayne O     450,000       (225,000 )     225,000  
Series Yes This Time     100,000             100,000  
Series NY Exacta     215,000       (32,751 )     182,249  
P- Series Bullion     6,000       (6,000 )      
P- Series De Mystique ‘17     17,238       (17,238 )      
P- Series Kiana's Love     10,600       (10,600 )      
P- Series Moonless Sky     12,000       (12,000 )      
P- Series Night of Idiots     8,740       (8,740 )      
P- Series Shake It Up Baby     11,000       (11,000 )      
P- Series New York Claiming     36,236       (36,236 )      
TOTAL   $ 13,171,287     $ (3,458,071 )   $ 9,713,216  

 

Depreciation totaled $2,676,696 and $472,260 for the years ended December 31, 2020 and 2019, respectively.

 

 

 

 F-9 

 

 

Fair Value of Financial Instruments

 

Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

 

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

 

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

 

The carrying amounts reported in the balance sheets approximate their fair value.

 

Revenue Recognition

 

ASC Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company’s contracts to provide goods to customers. Revenues are recognized when control of the promised goods are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied. No adjustments to revenue recognition were required from the adoption of ASC 606, which was adopted January 1, 2019 and applied to the periods presented using the full retrospective method. The Company generally recognizes revenues upon earning income from its horses.

 

Costs of Revenues

 

Costs of revenues include horse related expenses such as insurance, photography, stables and training, transportation and veterinary, depreciation, and gains/losses on horse disposals.

 

Advertising Expenses

 

The Company expenses advertising costs as they are incurred.

 

Income Taxes

 

The Company is a limited liability company. Accordingly, under the Internal Revenue Code (IRC), all taxable income or loss flows through to its members. Therefore, no provision for income tax has been recorded in the statements. Income from the Company is reported and taxed to the members on their individual tax returns. However, the Company has elected, in accordance with IRC, to treat each of the individual series as separate subchapter C corporations for tax purposes. No tax provision has been recorded for any series through the balance sheet date as each is in a taxable loss position and no future tax benefits can be reasonably anticipated.

 

 

 

 F-10 

 

 

The Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.

 

The Company may in the future become subject to federal, state and local income taxation though it has not been since its inception. The Company is not presently subject to any income tax audit in any taxing jurisdiction.

 

Reclassifications of Prior Year Balances

 

Certain balances from the December 31, 2019 statement of operations were reclassified to conform to current year presentation. There was no change in the Company’s net loss or net equity position from these reclassifications.

 

NOTE 3: GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits since inception, has sustained a net loss of $5,330,249 during the year ended December 31, 2020, and is dependent upon its manager for financing its operations.

 

The company’s financial performance is impacted by several key factors. The company’s acquisition strategy in 2020 included the purchase of 17 yearlings which as of the date of filing are unraced. Expenses such as training and care, veterinary, and depreciation are incurred from the date of acquisition, however; series revenues will not commence until the horses begin racing sometime during their two-year-old season.

 

Additionally, as horses continue to mature the series will have increased opportunity to generate greater revenue to offset their ongoing expenses.

 

The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is further strengthened by funding secured in 2020.

 

NOTE 4: ADVANCES FROM MANAGER

 

To fund its organizational and start-up activities as well as to advance funds on behalf of a series to purchase horse assets, the Manager has covered the expenses and costs of the Company and its series thus far on an interest-bearing revolving line of credit. The manager is entitled to 2.38% interest on the outstanding balance as well as profit participation on the unsold shares. To date the manager has waived and interest due from the series. The Company will evaluate when is best to repay the Manager depending on operations and fundraising ability. In general, the Company will repay the Manager for funds extended to acquire horse assets from the series subscription proceeds (less the applicable management fee), as they are received. Additionally, the Manager maintains cash reserves on behalf of each of the series of the Company to cover expenses of the series’ operations.

 

 

 

 F-11 

 

 

In the table below, the Company outlines the positions of borrowings and amounts owed to it by the Manager:

 

Series Name  

Horse reserve

account owed

to/(by) Series

   

(Horse

acquisition

loans owed to

Manager)

   

Net amount

owed to/(by)

Series

 
Series Action Bundle   $ 177,942     $ (263,500 )   $ (85,558 )
Series The Filly Four     105,092             105,092  
Series Got Stormy     60,871       (195,075 )     (134,204 )
Series Monomoy Girl     75,749       (398,820 )     (323,071 )
Series Motion Emotion     42,996       (72,828 )     (29,832 )
Series Amandrea     (14,655 )           (14,655 )
Series Ambleside Park 19     18,492             18,492  
Series Keertana 18     39,349             39,349  
Series Two Trail Sioux 17     (2,269 )           (2,269 )
Series Apple Down Under 19     21,094             21,094  
Series Athenian Beauty 19     21,480             21,480  
Series Authentic     94,478             94,478  
Series Awe Hush 19     34,803             34,803  
Series Bella Chica     (6,856 )           (6,856 )
Series Big Mel     (24,634 )           (24,634 )
Series Martita Sangrita 17     (13,383 )           (13,383 )
Series Cayala 19     47,489       (387 )     47,102  
Series Classofsixtythree 19     28,334             28,334  
Series Collusion Illusion     41,901             41,901  
Series Consecrate 19     16,984       (266 )     16,718  
Series Daddy's Joy     8,589             8,589  
Series Deep Cover     33,227             33,227  
Series Escape Route     14,236             14,236  
Series Exonerated 19     22,315             22,315  
Series Frosted Oats 19     32,184             32,184  
Series Just Louise 19     31,289       (1,557 )     29,732  
Series Kichiro     (9,991 )           (9,991 )
Series Lost Empire 19     53,259       (2,261 )     50,998  
Series Lane Way     11,420             11,420  
Series Latte Da 19     32,232             32,232  
Series Lazy Daisy     (15,159 )           (15,159 )
Series Man Among Men 19     28,132             28,132  
Series Margaret Rey 19     30,038       (123 )     29,915  
Series Midnight Sweetie 19     21,011             21,011  
Series Miss Puzzle     (3,343 )           (3,343 )
Series Mo Mischief     12,406             12,406  
Series Naismith     53,197             53,197  
Series Palace Foal     (6,171 )           (6,171 )
Series Popular Demand     19,966             19,966  
Series Power Up Paynter     (2,093 )           (2,093 )
Series Sigesmund     (23,840 )           (23,840 )
Series Sunny 18     31,061             31,061  
Series Speightstown Belle 19     21,743             21,743  
Series Squared Straight     (24,040 )           (24,040 )

 

 

 

 

 F-12 

 

 

Series Storm Shooter     27,960             27,960  
Series Street Band     37,827             37,827  
Series Tapitry 19     28,132             28,132  
Series The Keeneland 14     61,058       (4,718 )     56,340  
Series Thirteen Stripes     50,475             50,475  
Series Tizamagician     (8,864 )           (8,864 )
Series Utalknboutpractice     8,431             8,431  
Series Vertical Threat     3,541             3,541  
Series Wayne O     (32,779 )           (32,779 )
Series Yes This Time     6,458       (107,930 )     (101,472 )
Series Exacta     108,127             108,127  
Series Social Dilemma     43,357       (72,395 )     (29,038 )
TOTAL   $ 1,470,649     $ (1,119,860 )   $ 350,789  

 

NOTE 5: LOANS PAYABLE – RELATED PARTY

 

The Company acquired the horse asset in Series Palace Foal via a $15,606 convertible profit participating loan from Michael Behrens, a principal of the Manager of the Company. The convertible profit participating loan bears a 2.38 percent per annum interest rate and is due either when Series Palace Foal is fully subscribed or converted into the unsold units of Series Palace Foal. During the time the convertible profit participating loan is outstanding, the underlying cash flow of Series Palace Foal accrues to the loan holder.

 

In 2020, with the purchase of the Series Authentic horse asset the Company agreed to pay purchase bonuses (kickers) upon the achievement of certain milestones.  Kickers of $2,443,750 were earned in 2020 and were recognized as a loan payable obligation to the co-owner Spendthrift Farm LLC, a related party, and capitalized as additional horse asset purchase costs.  The loan is to be repaid out of the underlying horse income, net of expenses incurred by the co-owner resulting from the horse’s breeding career.  The loan bears interest at 1.65%.  The net horse income applied against this loan in 2020 was $586,859 and interest expense of $8,243 was recorded against this loan in 2020.  As of December 31, 2020, the outstanding balance of the loan was $1,865,134.


The Company’s manager was entitled to certain unpaid management fees related to the Series Authentic horse, which totaled $75,000 in 2020 and remained outstanding to the Manager in such amount as of December 31, 2020.


In conjunction with the purchase of the Filly Four series, a portion of the horse purchase price amounting to $534,920 was deferred to be paid out to the co-owner Spendthrift Farm LLC, a related party, from future income from the residual value resulting from the sale of the horse(s).  $534,920 remains due and payable on this loan as of December 31, 2020.


The Company’s manager and another related party, Spendthrift Farm LLC paid certain training costs on behalf of the Company during 2020.  As of December 31, 2020, $85,558 remaining outstanding on these agreements. The note will be repaid at the close of the series from the residual value upon the sale of the horse.   

 

NOTE 6: MEMBERS’ EQUITY

 

Series Subscriptions

The Company has received membership subscriptions for the following LLC series as of December 31, 2020.

 

 

 

 F-13 

 

 

Series Name   Units Offered     Units Tendered     Subscription Amount  
Closed- Series Amers     75       75     $ 10,500  
Closed- Series Madarnas     50       50     $ 17,500  
Closed- Series Major Implications     20       20     $ 4,600  
Closed- Series Nileist     45       45     $ 23,850  
Closed- Series Sauce On Side     125       125     $ 30,000  
Closed- Series Soul Beam     65       65     $ 39,650  
Closed- Series Swiss Minister     50       50     $ 14,000  
Closed- Series Takeo Squared     100       100     $ 27,000  
Closed- Series Tavasco Road     80       80     $ 18,400  
Closed- Series Zestful     100       100     $ 32,000  
Series Action Bundle     10,000           $  
Series The Filly Four     8,000       8,000     $ 1,440,000  
Series Got Stormy     5,100           $  
Series Monomoy Girl     10,200           $  
Series Motion Emotion     1,020           $  
Series Amandrea     550       550     $ 162,250  
Series Ambleside Park 19     410       410     $ 84,050  
Series Keertana 18     5,100       5,100     $ 510,000  
Series Two Trail Sioux 17     450       450     $ 135,000  
Series Apple Down Under 19     600       600     $ 103,800  
Series Athenian Beauty 19     1,800       1,800     $ 84,600  
Series Authentic     12,500       12,500     $ 2,575,000  
Series Awe Hush 19     1,800       1,800     $ 295,200  
Series Bella Chica     100       100     $ 38,000  
Series Big Mel     6,000       6,000     $ 726,000  
Series Cairo Kiss     80       80     $ 44,400  
Series Martita Sangrita 17     600       600     $ 192,000  
Series Cayala 19     4,100       4,095     $ 372,645  
Series Classofsixtythree 19     1,000       1,000     $ 193,000  
Series Collusion Illusion     25,000       25,000     $ 750,000  
Series Consecrate 19     410       408     $ 64,056  
Series Daddy's Joy     600       600     $ 108,000  
Series Deep Cover     800       800     $ 176,000  
Series Escape Route     10       10     $ 62,952  
Series Exonerated 19     820       820     $ 138,580  
Series Frosted Oats 19     4,100       4,100     $ 172,200  
Series Just Louise 19     1,020       1,012     $ 231,748  
Series Kichiro     200       200     $ 26,000  
Series Lane Way     6,000       6,000     $ 540,000  
Series Latte Da 19     4,100       4,100     $ 143,500  
Series Lazy Daisy     1,250       1,250     $ 143,750  
Series Lost Empire (Laforgia)     10,200       10,124     $ 354,340  
Series Man Among Men 19     820       820     $ 223,860  
Series Margaret Rey 19     820       820     $ 246,820  
Series Midnight Sweetie 19     820       820     $ 121,360  
Series Miss Puzzle     125       125     $ 31,250  
Series Mo Mischief     5,100       5,100     $ 382,500  
Series Naismith     2,000       2,000     $ 304,000  
Series Noble Goddess     300       300     $ 33,000  
Series Palace Foal     510           $  

 

 

 F-14 

 

 

Series Popular Demand     1,020       1,020     $ 248,880  
Series Power Up Paynter     600       600     $ 114,000  
Series Sigesmund     200       200     $ 20,000  
Series Sunny 18     6,000       6,000     $ 390,000  
Series Speightstown Belle 19     900       900     $ 125,100  
Series Squared Straight     150       150     $ 40,500  
Series Storm Shooter     2,000       2,000     $ 324,000  
Series Street Band     50       50     $ 61,500  
Series Tapitry 19     820       820     $ 223,860  
Series The Keeneland 14     10,000       9,889     $ 494,450  
Series Thirteen Stripes     1,000       1,000     $ 229,000  
Series Tizamagician     600       600     $ 192,000  
Series Two Trail Sioux 17K     1       1     $ 29,720  
Series Utalknboutpractice     100       100     $ 30,000  
Series Vertical Threat     600       600     $ 126,000  
Series Wayne O     6,000       6,000     $ 570,000  
Series Yes This Time     10           $  
Series NY Exacta     2,000       2,000     $ 456,000  
P- Series Bullion     25       25     $ 11,750  
P- Series De Mystique ‘17     250       250     $ 35,000  
P- Series Kiana's Love     200       200     $ 24,000  
P- Series Moonless Sky     200       200     $ 22,000  
P- Series Night of Idiots     80       80     $ 20,000  
P- Series Shake It Up Baby     250       250     $ 32,500  
P- Series New York Claiming     510       510     $ 71,400  
Series Social Dilemma     510           $  
TOTAL     169,201       141,851     $ 15,319,022  
Distributions to Date                   $ (416,168 )
Total Subscriptions                   $ 14,902,854  

 

The members of each of the Company’s series have certain rights with respect to the membership series they are subscribed to. Each series generally holds a single horse asset. A series member is entitled to their pro rata share of the net profits derived from the horse asset held in that series after deduction of expense allocations and direct expenses attributable to the underlying horse asset, based on their percentage of the total outstanding membership interests in that series.

 

The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the Company, and no member of the Company is obligated personally for any such debt, obligation, or liability.

 

NOTE 7: RELATED PARTY TRANSACTIONS

 

The Company’s Manager has advanced funds to and holds cash reserves on behalf of various of the Company’s series funds. See Note 4 for further discussions.

 

The Company has various loans outstanding with related parties, as described in Note 5.

 

Because these are related party transactions, no guarantee can be made that the terms of the arrangements are at arm’s length.

 

 

 

 F-15 

 

 

NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

NOTE 9: COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS

 

Legal Matters

 

Company is not currently involved with and does not know of any pending or threatening litigation against the Company or its member.

 

Long-Term Debt

 

The Company acquired the horse asset in Series Palace Foal via a $15,606 convertible profit participating loan from Michael Behrens, a principal of the Manager of the Company. The convertible profit participating loan bears a 2.38 percent per annum interest rate is due either when Series Palace Foal is fully subscribed or converted into the unsold units of Series Palace Foal. During the time the convertible profit participating loan is outstanding, the underlying cash flow of Series Palace Foal accrues to the loan holder.

 

NOTE 10: SUBSEQUENT EVENTS

 

Anticipated Crowdfunded Offering

 

The Company is planning to continue to raise capital through the issuance of securities exempt from registration under Regulation A in 2021.

 

Management’s Evaluation

 

Management has evaluated subsequent events through April 6, 2021, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements.

 

 

 

 

 

 

 

 F-16 

 

 

EXHIBIT INDEX 

  

 

Exhibit 2.1 Articles of Organization (1)
Exhibit 2.2 Amended and Restated Series Limited Liability Company Agreement (2)
Exhibit 3.51 Series Agreement for Carrothers (4)
Exhibit 3.55 Series Agreement for Echo Warrior 19 (4)
Exhibit 3.57 Series Agreement for Micro Share (f.k.a. Who’sbeeninmybed 19) (5)
Exhibit 3.58 Series Agreement for Malibu Mayhem (f.k.a. Into Summer 19) (5)
Exhibit 3.59 Series Agreement for Mrs Whistler (5)
Exhibit 3.60 Series Agreement for Chasing Time (f.k.a. Race Hunter 19) (5)
Exhibit 3.62 Series Agreement for Vow (5)
Exhibit 3.63 Series Agreement for Magical Ways (f.k.a. You Make Luvin Fun 19) (5)
Exhibit 3.64 Series Agreement for Miss Sakamoto (5)
Exhibit 3.65 Series Agreement for Tap the Gavel (f.k.a. Courtisane 19) (5)
Exhibit 3.66 Series Agreement for Cornice Traverse (f.k.a. Grand Traverse Bay 19) (5)
Exhibit 3.67 Series Agreement for Our Miss Jones 19 (6)
Exhibit 3.68 Series Agreement for Straight No Chaser (f.k.a. Margarita Friday 19)(6)
Exhibit 3.69 Series Agreement for Regal Rebel (f.k.a. Queen Amira 19) (6)
Exhibit 3.70 Series Agreement for Salute to America (6)
Exhibit 3.71 Series Agreement for Desire Street 19 (6)
Exhibit 3.72 Series Agreement for Duke of Love (7)
Exhibit 3.73 Series Agreement for War Safe (7)
Exhibit 3.74 Series Agreement for Tufnel (7)
Exhibit 3.75 Series Agreement for Classic Cut (7)
Exhibit 3.76 Series Agreement for Essential Rose 20 (7)
Exhibit 3.77 Series Agreement for Who Runs the World (7)
Exhibit 3.78 Series Agreement for Balletic (7)
Exhibit 3.79 Series Agreement for Song of Bernadette 20 (7)
Exhibit 4.1 Form of Subscription Agreement (1)

Exhibit 6.1

Management Services Agreement by and between My Racehorse CA LLC and Experiential Squared, Inc. (1)
Exhibit 6.60 Broker-Dealer Agreement by and between My Racehorse CA LLC and Dalmore Group, LLC(3)
Exhibit 6.113 Equine Co-Ownership and Acquisition Agreement for Carrothers (4)
Exhibit 6.114 Profit Participation Convertible Promissory Note for Carrothers (4)
Exhibit 6.120 Equine Co-Ownership and Acquisition Agreement for Echo Warrior 19 (4)
Exhibit 6.121 Profit Participation Convertible Promissory Note for Echo Warrior 19 (4)
Exhibit 6.124 Equine Co-Ownership and Acquisition Agreement for Micro Share (f.k.a. Who'sbeeninmybed 19) (5)
Exhibit 6.125 Profit Participation Convertible Promissory Note for Micro Share (f.k.a. Who'sbeeninmybed 19) (5)
Exhibit 6.126 Equine Co-Ownership and Acquisition Agreement for Malibu Mayhem (f.k.a. Into Summer 19) (5)
Exhibit 6.127 Profit Participation Convertible Promissory Note for Malibu Mayhem (f.k.a. Into Summer 19) (5)
Exhibit 6.128 Profit Participation Convertible Promissory Note for Mrs Whistler (5)
Exhibit 6.129 Profit Participation Convertible Promissory Note for Chasing Time (f.k.a. Race Hunter 19) (5)
Exhibit 6.132 Profit Participation Convertible Promissory Note for Vow (5)
Exhibit 6.133 Equine Co-Ownership and Acquisition Agreement for Magical Ways (f.k.a You Make Luvin Fun 19) (5)
Exhibit 6.134 Profit Participation Convertible Promissory Note for Magical Ways (f.k.a. You Make Luvin Fun 19) (5)
Exhibit 6.135 Equine Co-Ownership and Acquisition Agreement for Miss Sakamoto (5)
Exhibit 6.136 Profit Participation Convertible Promissory Note for Miss Sakamoto (5)
Exhibit 6.137 Profit Participation Convertible Promissory Note for Tap the Gavel (f.k.a. Courtisane 19) (5)
Exhibit 6.138 Equine Co-Ownership and Acquisition Agreement for Cornice Traverse (f.k.a. Grand Traverse Bay 19)(5)
Exhibit 6.139 Profit Participation Convertible Promissory Note for Cornice Traverse (f.k.a. Grand Traverse Bay 19) (5)
Exhibit 6.140 Equine Co-Ownership and Acquisition Agreement for Our Miss Jones 19 (6)
Exhibit 6.141 Profit Participation Convertible Promissory Note for Our Miss Jones 19 (6)
Exhibit 6.142 Profit Participation Convertible Promissory Note for Straight No Chaser (f.k.a. Margarita Friday 19) (6 )

 

 

 III-1 

 

 

 

Exhibit 6.143 Profit Participation Convertible Promissory Note for Regal Rebel (f.k.a. Queen Amira 19) (6)
Exhibit 6.144 Profit Participation Convertible Promissory Note for Salute to America(6)
Exhibit 6.145 Equine Co-Ownership and Acquisition Agreement for Desire Street 19 (6 )
Exhibit 6.146 Profit Participation Convertible Promissory Note for Desire Street 19 (6)
Exhibit 6.147 Profit Participation Convertible Promissory Note for Duke of Love (7)
Exhibit 6.148 Profit Participation Convertible Promissory Note for War Safe (7)
Exhibit 6.149 Profit Participation Convertible Promissory Note for Tufnel (7)
Exhibit 6.150 Equine Co-Ownership and Acquisition Agreement for Tufnel (7)
Exhibit 6.151 Profit Participation Convertible Promissory Note for Classic Cut (7)
Exhibit 6.152 Profit Participation Convertible Promissory Note for Essential Rose 20 (7)
Exhibit 6.153 Profit Participation Convertible Promissory Note for Who Runs the World (7)
Exhibit 6.154 Equine Co-Ownership and Acquisition Agreement for Who Runs the World (7)
Exhibit 6.155 Profit Participation Convertible Promissory Note for Balletic (7)
Exhibit 6.156 Profit Participation Convertible Promissory Note for Song of Bernadette 20 (7)
Exhibit 6.157 Equine Co-Ownership and Acquisition Agreement for Song of Bernadette 20 (7)
Exhibit 11.1 Consent of IndigoSpire CPA Group, LLC *
Exhibit 12.1 Opinion of Procopio, Cory, Hargreaves & Savitch LLP *
Additional Exhibits Additional Exhibits – Part I, Item 6 *

 _______________________

* Filed herewith.
(1) Filed with the Company’s Form 1-A dated September 10, 2018 and incorporated by reference herein.
(2) Filed with the Company’s Amendment No. 1 to Form 1-A dated November 20, 2018 and incorporated by reference herein.
(3) Filed with the Company’s Post Qualification Amendment No. 13 to Form 1-A dated July 15, 2020 and incorporated by reference herein.
(4) Filed with the Company’s Post Qualification Amendment No. 24 to Form 1-A dated April 20, 2021 and incorporated by reference herein.
(5) Filed with the Company’s Post Qualification Amendment No. 24 to Form 1-A dated April 30, 2021 and incorporated by reference herein.
(6) Filed with the Company’s Post Qualification Amendment No. 27 to Form 1-A dated June 14, 2021 and incorporated by reference herein
(7) Filed with the Company’s Post Qualification Amendment No. 28 to Form 1-A dated September 3, 2021 and incorporated by reference herein.

 

 

 

 

 

 III-2 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Claremont, State of California, on September 24, 2021.

 

  MY RACEHORSE CA LLC
   
  By: Experiential Squared, Inc., its Manager
   
  By: /s/ Michael Behrens
  Name: Michael Behrens
  Title: Chief Executive Officer

 

 

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature Title Date
     

/s/ Michael Behrens                      

Name: Michael Behrens

Chief Executive Officer, Chief Financial Officer and Secretary of Experiential Squared, Inc. (Principal Executive Officer and Principal Financial Officer)

 

September 24, 2021

MY RACEHORSE CA LLC

 

By: /s/ Michael Behrens

Name: Michael Behrens

Title: Chief Executive Officer

Manager September 24, 2021

 

 

 

Exhibit 11.1

 

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

 

September 24, 2021

 

 

 

To: Experiential Squared, Inc. as manager of My Racehorse CA, LLC

 

 

 

We hereby consent to the inclusion in the Offering Circular filed under Regulation A tier 2 on Form 1-A of our reports dated April 6, 2021, with respect to the balance sheets of My Racehorse CA, LLC as of December 31, 2020 and 2019 and the related statements of operations, member's equity/deficit, and cash flows for the calendar year periods of 2020 and 2019 and the related notes to the financial statements.

 

https:||www.sec.gov|Archives|edgar|data|1744448|000168316821002497|image_006.jpg

 

 

/s/ IndigoSpire CPA Group

 

IndigoSpire CPA Group, LLC

Exhibit 12.1

 

 

PROCOPIO

12544 High Bluff Drive

Suite 400

San Diego, CA 92130

T. 858.720.6300

F. 619.235.0398

 

www.procopio.com

 

September 24, 2021

 

My Racehorse CA LLC

250 W. 1st Street, Suite 256

Claremont, California 91711

 

Re:     Post-Qualification Amendment No. 29 to Offering Statement on Form 1-A

 

Ladies and Gentlemen:

 

We have acted as special counsel to MyRacehorse CA LLC, a Nevada series limited liability company (the “Company”) in connection with the filing of an Offering Statement on Form 1-A as amended by the Post-Qualification Offering Circular Amendment No. 29 (the “Offering Statement”) pursuant to 17 CFR Part 230.251 et. seq. (“Regulation A”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Offering Statement relates to the proposed issuance and sale by the Company (the “Offering”) of:

 

(i)up to 5,100 of the Company’s Series Carrothers Interests;
(ii)up to 6,000 of the Company’s Series Echo Warrior 19 Interests;
(iii)up to 5,100 of the Company’s Series Who'sbeeninmybed 19 Interests;
(iv)up to 650 of the Company’s Series Into Summer 19 Interests;
(v)up to 2,000 of the Company’s Series Mrs Whistler Interests;
(vi)up to 10,000 of the Company’s Series Race Hunter 19 Interests;
(vii)up to 2,000 of the Company’s Series Vow Interests;
(viii)up to 6,000 of the Company’s Series You Make Luvin Fun 19 Interests;
(ix)up to 6,000 of the Company’s Series Miss Sakamoto Interests;
(x)up to 10,000 of the Company’s Series Courtisane 19 Interests;
(xi)up to 750 of the Company’s Series Grand Traverse Bay 19 Interests;
(xii)up to 1,200 of the Company’s Series Our Miss Jones 19 Interests;
(xiii)up to 2,000 of the Company’s Series Margarita Friday 19 Interests;
(xiv)up to 2,000 of the Company’s Series Queen Amira 19 Interests;
(xv)up to 1,000 of the Company’s Series Salute to America Interests;
(xvi)up to 1,020 of the Company’s Series Desire Street 19 Interests;
(xvii)up to 2,000 of the Company’s Series Duke of Love Interests;
(xviii)up to 2,000 of the Company’s Series War Safe Interests;
(xix)up to 5,200 of the Company’s Series Tufnel Interests;

(xx)up to 10,000 of the Company’s Series Classic Cut Interests;
(xxi)up to 10,000 of the Company’s Series Essential Rose 20 Interests;
(xxii)up to 5,100 of the Company’s Series Who Runs the World Interests;
(xxiii)up to 10,000 of the Company’s Series Balletic Interests; and
(xxiv)up to 5,100 of the Company’s Series Song of Bernadette 20 Interests

 

 

 

 

 1 

 

 

The foregoing are collectively referred to herein as the “Interests”, in each case as defined in the Amended and Restated Operating Agreement of the Company, dated as of September 4, 2018 (the “Operating Agreement”), and the Series Agreements for Series Carrothers, Series Echo Warrior 19, Series Who'sbeeninmybed 19, Series Into Summer 19, Series Mrs Whistler, Series Race Hunter 19, Series Vow, Series You Make Luvin Fun 19, Series Miss Sakamoto, Series Courtisane 19, Series Grand Traverse Bay 19, Series Our Miss Jones 19, Series Margarita Friday 19, Series Queen Amira 19, Series Salute to America, Series Desire Street 19, Series Duke of Love, Series War Safe, Series Tufnel, Series Classic Cut, Series Essential Rose 20, Series Who Runs the World, Series Balletic, and Series Song of Bernadette 20 attached thereto (the “Series Agreements”). We understand that the Interests will be sold as described in the Offering Statement and pursuant to a Subscription Agreement, substantially in the form filed as an exhibit to the Offering Statement, to be entered into by and between the Company and each of the purchasers of the Interests (each, a “Subscription Agreement” and collectively the “Subscription Agreements”).

 

In connection with the Offering, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Articles of Organization of the Company, (ii) the Operating Agreement, (iii) the Series Agreements, (iv) corporate proceedings, including the resolutions of the manager of the Company, with respect to the Offering, and (v) such other documents, instruments and records as we have deemed necessary to enable us to render the opinions contained herein. We have also relied upon certificates and other assurances of officers of the manager of the Company and others as to certain factual matters without having independently verified such factual matters. We have also reviewed the Offering Statement and form of Subscription Agreement as filed with the Securities and Exchange Commission (the “Commission”). In our examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity with the originals of all documents submitted to us as copies, the authenticity of the originals of such documents, the completeness of all records and other information made available to us by the Company on which we have relied, the genuineness of all signatures, and the legal capacity of all signatories who are natural persons.

 

We have assumed that (i) the statements of the Company contained in the Offering Statement are true and correct as to all factual matters stated therein, (ii) the Offering Statement will be and remain qualified under the Securities Act, and (iii) the Company will receive the required consideration for the issuance of such Interests at or prior to the issuance thereof. We have relied upon certificates of, and information received from, the Company and/or representatives of the Company when relevant facts were not otherwise independently established. We also have relied on information obtained from public officials and other sources believed by us to be reliable as to other questions of fact. We have made no independent investigation of the facts stated in such certificates or as to any information received from the Company, representatives of the Company and/or public officials and do not opine as to the accuracy of such factual matters.

 

Members of our firm involved in the preparation of this opinion are licensed to practice law in the State of California and we do not purport to be experts on, or to express any opinion herein concerning, the laws of any jurisdiction other than the laws of the State of California, the federal law of the United States, and Chapter 86 of the Nevada Revised Statutes (the “Nevada Act”). We assume no obligation to update or supplement our opinion to reflect any facts or circumstances that may hereafter come to our attention or changes in law that may hereafter occur.

 

Our opinions below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium, usury, fraudulent conveyance or similar laws affecting the rights of creditors generally, and (ii) by general equitable principles and public policy considerations, whether such principles and considerations are considered in a proceeding at law or at equity. We are opining only as to the matters expressly set forth herein and we express no opinion as to any matter not expressly opined on herein.

 

Based upon and subject to the foregoing, and the other qualifications and limitations contained herein, we are of the opinion that:

 

The Interests have been authorized by all necessary series limited liability company action of the Company and, when issued and sold in accordance with the terms set forth in the Operating Agreement, applicable Series Agreements and applicable Subscription Agreements against payment therefor in the manner contemplated in the Offering Statement, will be validly issued and non-assessable.

 

We hereby consent to the filing of this opinion as Exhibit 12.1 to the Offering Statement and to the reference to our firm under the caption “Legal Matters” in the offering circular constituting a part of the Offering Statement. In giving such consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

 

Very truly yours,

 

/s/ Procopio, Cory, Hargreaves & Savitch LLP

 

PROCOPIO, CORY, HARGREAVES & SAVITCH LLP

 

 

 

 2 

 

 

Exhibit 16.1

 

 

 

(b)(1): Title of securities issued. Series: Ambleside Park 19; Apple Down Under 19; Ari the Adventurer 19; Athenian Beauty 19; Authentic; Awe Hush 19; Carrothers; Cayala 19; Classofsixtythree 19; Collusion Illusion; Consecrate 19; Courtisane 19; Desire Street 19; Echo Warrior 19; Exonerated 19; Frosted Oats; Future Stars Stable; Going to Vegas; Got Stormy, Grand Traverse Bay, Into Summer 19; Just Louise 19; Latte Da 19; Lost Empire 19; Man Among Men; Margaret Reay 19; Midnight Sweetie 19; Miss Sakamoto; Monomoy Girl; Mrs Whistler; Naismith; NY Exacta; Queen Amira 19; Race Hunter 19; Series Salute to America; Silverpocketsfull 19; Speightstown Belle 19; Social Dilemma; Tapitry 19; Vow; Who’sbeeninmybed 19; Wonder Upon a Star 19; You Make Luvin’ Fun 19



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