COLORADO SMALL BUSINESS OPPORTUNITY ZONE FUND 1 LLC... · COLORADO SMALL BUSINESS OPPORTUNITY ZONE...

COLORADO

SMALL BUSINESS OPPORTUNITY ZONE FUND 1 LLC

COLORADO CENTER FOR INNOVATION IN

COMMUNITY CAPITAL LLC

COLORADO SMALL BUSINESS OPPORTUNITY ZONE FUND 1 LLC

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INSTRUCTIONS

Prior to reading this document, you should have been informed that this Offering is restricted to

(1) individuals who may invest capital gains, and (2) individuals who are ‘accredited investors’.

The investment is a 10-year term. Early withdrawal from the investment may result in a loss of some or all potential tax benefits. This investment is a ‘security’ whose sale is regulated by the government. It is highly recommended that you read this entire document. You should pay special attention to all warnings and the Risk Factors. This document is called an Offering Memorandum. It contains all the information that the Colorado Small Business Opportunity Zone Fund 1 LLC believes that you should need to decide whether to invest. If you should have any questions regarding making an investment that are not answered by this document, please email Karl Dakin at [email protected] and submit your question. If we cannot answer your questions to your satisfaction, please do not invest. If you choose to invest, you may purchase a minimum of 1 Unit at a price of $2,500 each. You may only purchase by transfer of cash from your bank account to a bank account that we have established solely for this purpose. We are unable to take credit card payments.

mailto:[email protected]


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WARNING

THESE SECURITIES ARE OFFERED PURSUANT TO REGUATION D WITHIN A 506C ACCREDITED INVESTOR PLACEMENT. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY GOVERNMENT AGENCY, NOR HAS ANY GOVERNMENT AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS ARE ENCOURAGED TO ASK QUESTIONS AND SEEK ADDITIONAL INFORMATION FROM THE ISSUER OF THESE SECURITIES.

CAPITAL GAINS REQUIREMENT

TO PURCHASE THESE SECURITIES, THE PROSPECTIVE INVESTOR MAY ONLY INVEST QUALIFIED CAPITAL GAINS AS DEFINED BY THE INTERNAL REVENUE SERVICE.

ACCREDITED INVESTOR REQUIREMENT

TO PURCHASE THESE SECURITIES, THE PROSPECTIVE INVESTOR MUST BE AN ‘ACCREDITED INVESTOR’ AS DEFINED BY UNITED STATES SECURITIES LAWS.


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EQUITY INVESTMENT


TOTAL OFFERING - $600,000 – 24%

INDIVIDUAL FINANCIAL SUPPORT Minimum - $2,500 - 1 Unit - .1%

Maximum - $600,000 – 240 Units – 24%

2019

c/o Center for Innovation in Capital LLC 1281 E. Magnolia, Unit D-373

Fort Collins, CO 80524


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TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................................................1

FORWARD LOOKING STATEMENTS .....................................................................................................3

OPPORTUNITY ...................................................................................................................................4

OPPORTUNITY ZONES ........................................................................................................................5

FUND .................................................................................................................................................6

CENTER ..............................................................................................................................................7

FUND MANAGEMENT ........................................................................................................................8

CENTER SUPPORT OF COLORADO SMALL BUSINESSES ....................................................................... 10

Campaign Management ............................................................................................................... 10

Capital Matching .......................................................................................................................... 10

Skills Training ............................................................................................................................... 10

Costs Advancement ...................................................................................................................... 11

MARKETING AND PROMOTION ........................................................................................................ 12

SMALL BUSINESS SELECTION ............................................................................................................ 13

INVESTMENT IN CENTER................................................................................................................... 14

USE OF PROCEEDS ............................................................................................................................ 15

RISK FACTORS .................................................................................................................................. 16

CASH FLOW PROJECTION ................................................................................................................. 18

SCHEDULE A – CASH FLOW PROJECTION ......................................................................................... A-1


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EXECUTIVE SUMMARY Name: Colorado Small Business Opportunity Zone Fund 1 LLC (the “Fund)

Purpose: The Fund is a single purpose, dedicated Opportunity Zone Fund. It will invest 100% of proceeds from this Offering into the Colorado Center for Innovation in Community Capital LLC (the “Center”). The Center will provide support to selected small Qualified Opportunity Zone Businesses in raising capital (the ‘Capital Campaigns”).

Capital Campaign Support The Center will provide capital campaign management, capital matching

and skills training and the Center will advance the costs of a Capital Campaign.

Capital Campaigns Small business Capital Campaigns may be directed toward gifts, grants,

strategic alliances, joint ventures, loans, sale of securities, licenses, sale of assets or products and services. The goal of each Capital Campaign shall be no less than $500,000 and no more than $5,000,000.

Eligibility Any Colorado small business may apply for support from the Center that

meets the criteria of Qualified Opportunity Zone Business and has substantial business operations within the State of Colorado.

Payments to Center: Upon completion of a successful Capital Campaign, the small business

shall pay the Center a fee of $60,000 and grant the Center an equity interest of equal value.

Total Offering: $600,000 – 240 Units – 24% Minimum/ Maximum 1 Unit - $2,500 - .1% Individual Investment: 240 Units - $600,000 - $24% Equity Interest: Investors in the Fund will receive an equity ownership position. Distributions: 100% of ordinary income earned by the Center will be distributed to

Investors at the time that it is received. Distributions by the Center from sale of equity interests in Colorado

small businesses will be completed at the end of the 10-year term. Investors will receive 100% of distributions until Investors have received

distributions equal to their investment. Thereafter, Investors will receive 75% of all distributions until they have been paid additional distributions equal to their investment. After that, Investors will receive distributions proportionately to their ownership position in the Center.


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Risks: Investors may realize little or no profits if an insufficient number of the Colorado small businesses supported by the Center fail to complete their Capital Campaigns.

Management: The Center will be managed by Karl Dakin and Ron Stites. Address: The Center will be located within an Opportunity Zone.


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FORWARD LOOKING STATEMENTS

WARNING

ALL FORWARD-LOOKING STATEMENTS IN THIS OFFERING MEMORANDUM INVOLVE RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE FUND. ALL STATEMENTS CONTAINED IN THIS OFFERING MEMORANDUM THAT ARE NOT CLEARLY IN THE PAST AND HISTORICAL ARE FORWARD-LOOKING. THE WORDS ‘ANTICIPATE’, ‘BELIEVE’, ‘EXPECT’, ‘ESTIMATE’, ‘FORECAST’, ‘PROJECT’ AND SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE INCLUDED, FOR EXAMPLE, IN DISCUSSIONS ON MARKET ACCEPTANCE AND PROJECTED SALES. RISKS AND UNCERTAINTIES MAY CAUSE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE GREATLY DIFFERENT FROM ANY FORWARD-LOOKING STATEMENTS. WHEN READING THIS OFFERING MEMORANDUM, EACH OCCASION WHERE YOU SEE A FORWARD-LOOKING STATEMENT, CONSIDER THE IMPACT UPON YOUR INVESTMENT IF THE FORWARD-LOOKING STATEMENT DOES NOT OCCUR OR THE OUTCOME IS GREATER OR LESS THAN STATED.


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OPPORTUNITY Access to capital is a long-recognized challenge to small businesses. The availability of Opportunity Zone tax incentives makes investment in small businesses more attractive so that they may compete for funding from individuals and businesses with capital gains. However, most small businesses lack the time, knowledge and money to design, stage and conduct a successful Capital Campaign. The restrictions upon Opportunity Zone investing increases the complexity and difficulty of completing a successful Capital Campaign. The Center represents a new approach to enabling Colorado small businesses to raise money by providing services in support of conducting Capital Campaigns. On average, each $50,000 invested in the Center will enable a Colorado small business to raise $500,000 to $5 million resulting in the start and/or growth of that business. In addition, money raised through the Capital Campaigns of each small business will generate economic activity within the Opportunity Zone where they are located through creation of new jobs and local purchasing. During the 10-year term of this Investment, it is anticipated that the Center will support over 200 Colorado small businesses in conducting Capital Campaigns. The goal of the Center is to support Capital Campaigns raising a minimum of $100,000,000. Each Colorado small business client will pay the Center a cash fee of $60,000 and equity in the Colorado small business of $60,000. During the 10-year term of this Investment, the Center may earn $12,000,000 in fees and $12,000,000 in equity ownership in the Colorado small businesses that it has supported. In addition, during the 10-year term of this Investment, the Center will provide continuing consulting to each Colorado small business through an annual Capital Checkup for a fee of $2,500. At the end of the 10 years, the Center will begin selling off those ownership interests in Colorado small businesses. The Center will require each Colorado small business to create a sinking fund to establish a minimum cash buyback price of $120,000 for the equity held by the Center in the Colorado small business. The Center will hold a secured interest in the sinking fund. The Center will sell the ownership interests at the higher of market price or the sinking fund price. Sales will continue each year for 10 years. The Center may arrange a second offering at the end of 10 years that will sell the ownership interests and create an immediate cash exit for Investors.


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OPPORTUNITY ZONES The Fund is a Qualified Opportunity Zone Fund set up to help Colorado small businesses within one of the 126 areas designated as Opportunity Zones within Colorado. A Qualified Opportunity Zone Fund is an investment vehicle, certified by the U.S. Treasury Department, organized for the purpose of investing in a qualified Opportunity Zone Property or Business. An Opportunity Zone is a geographic area designation created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax benefits. The objective of the Opportunity Zone legislation is to provide tax incentives for investors while raising the standard of living for the residents within the Opportunity Zones by generating economic growth. Depending upon the length of time that an Investor remains invested in a Qualified Opportunity Zone Funds, an Investor may receive benefits as follows:

• A deferral of capital gains taxes until 2026 until taxes must be paid on capital gains

• A reduction in the amount of capital gains taxes by 15%

• A waiver of taxes on any capital gain made on the investment into the Fund


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FUND The name of the Fund is Colorado Small Business Opportunity Zone Fund 1 LLC. The Fund has been established as a limited liability company under the laws of the State of Colorado and the Fund has elected to be taxed as a partnership and pass through profits and losses to its owners. The Fund will invest all money received through this Offering into the Center.

The Fund is managed by the Center for Innovation in Capital LLC.

INVESTORS

FUND

CENTER

FOUNDERS AND TEAM


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CENTER The name of the Center is the Colorado Center for Innovation in Community Capital LLC. The Center has been established as a limited liability company under the laws of the State of Colorado and the Center has elected to be taxed as a partnership and pass through profits and losses to its owners. The Center will be managed by Karl Dakin and Ron Stites. At the end of the 10-year Opportunity Zone term, the Center will sell off all equity positions it holds in each of the supported Colorado small businesses and distribute to the Fund its share of cash. Center will be owned by its founders and management team as well as the Investors in this Offering. The Center will be owned by Karl Dakin, Ron Stites, selected partners, Campaign Managers, members of the Advisory Board and Investors. Presently, Karl Dakin and Ron Stites are the sole owners of the Center. 250 Units have been reserved to be issued later. 240 Units will be sold through this Offering representing 24% of all ownership.

The Fund and the Center will be co-located at a site within an Opportunity Zone within the Denver

Metro area.


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FUND MANAGEMENT The Center will be led by a Board of Managers. Currently, Ron Stites and Karl Dakin are the members of the Board. Day to day operations of the Center will also be led by Ron Stites and Karl Dakin.

Ron Stites, Founder and Board Manager

Ron Stites is serial entrepreneur in high-tech companies. Ron has a BS Degree in Chemistry from the University of Kansas and an MBA in Finance and Accounting from Regis University in Denver. He has taught business courses at the university level in accounting, marketing and marketing research. He holds five patents in chemical processes and has launched multiple start-ups and business expansions. He managed large technical operations (over 100 scientists, engineers and support staff) and national sales forces for technical service firms with multiple offices across the US.

His forte is integrating technical knowhow, business intelligence, finance, operations and sales into successful business operations. He is especially adept at evaluating new technologies for business potential and designing appropriate development programs – including technical and business risk evaluation, ensuring market alignment, identifying effective marketing channels and creating sales strategies and organizations that work. He has sold technical services to industry and government with annual sales budgets up to $55 million per year. He understands many different types of sales and marketing environments ranging from large government proposals to strategic industrial partners to high volume consumer products. Interestingly, Ron is a very down to earth guy. He began his chemistry career as a bench Analytical Chemist in an Environmental Laboratory. He has built and managed several laboratories doing such diverse areas as hazardous waste testing, radiological testing, petroleum testing, catalyst testing and pilot plant studies. He earned his MBA while working full-time. He rose through the ranks of various organizations serving in many management, business development and executive roles. He eventually became Vice President of Commercial Markets for the largest Environmental Laboratory group in the US. Since leaving that company his focus has been shifting toward industrial scientific applications and small business capitalization. He has served as the Director of Research and similar positions in several technology-driven companies – including several start-ups. His patents and patent applications are in a wide range of scientific and engineering areas including biomass gasification, chemical catalysis, carbon sequestration, extracting high-value products from oil shale, renewable camp stove fuels and the electrochemical aging of wine. He has written extensively and given seminars on R&D Management, Analytical Techniques, Design of Experiments, Business Management and Data Science. He has been active in independent consulting since 1996. In 2017 he was elected to the Board of Directors of National Oil Shale Association (NOSA), where he advocates for environmentally responsible development of oil shale for non-fuel applications.


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Ron is also an accomplished lecturer and instructor. He developed and conducted industrial courses on Project Management and Chemical Hazard Awareness for laboratories and engineering firms. He was as a Dale Carnegie Sales Advantage Trainer. And finally, he has developed and presented on-line and in classroom courses at a university level in General Business, Marketing, Marketing Research and Computer Information Services for Colorado Christian University and Missouri Baptist University. He has also been an invited speaker on many technical topics including the International Design Expert Users Meeting in Vienna, Austria for Stat-Ease, Inc., a data science software company.

Karl Dakin, Founder and Board Manager

Mr. Dakin is an entrepreneur, a leader of business startup projects and an advisor on innovation commercialization with expertise on raising early stage money. With 40 years of experience in technology commercialization, he is a popular speaker/educator and small business advocate. He splits his time between coaching organizations in raising capital, leading technology startup businesses and sharing his knowledge on entrepreneurship, growth strategies and early stage capital. He is currently supporting Opportunity Zone businesses and community projects, indoor agriculture and hemp opportunities. Mr. Dakin is a licensed attorney in the State of Colorado. Upon commencing

his career in 1979, he practiced law with different firms in areas of business formation, contracts, intellectual property and transactions where he focused on technology licensing. In 1994, he received a Phase 1 Small Business Innovation Research (SBIR) award from the U.S. Department of Commerce about commercialization of federal innovations by small businesses. Mr. Dakin was certified as New Product Development Professional by the Product Development Management Association.

He owns and operates Dakin Capital LLC where he provides services as a capital coach. Mr. Dakin is the host of Opportunity Zones Meetup where practitioners share information on Opportunity Zone Funds and projects. He is a principal in NZ Development LLC, Invest New Mexico.us, Harvest House Farms, and G&D Indoor Hops LLC. Mr. Dakin is currently an Adjunct Faculty with the University of Denver. He held the Sullivan Chair in Free Enterprise at Regis University and has taught graduate and undergraduate at the University of Colorado, the University of Phoenix and Metropolitan State College on entrepreneurship, technology commercialization, intellectual property management and seed capital funding. Mr. Dakin designed and prototyped the Universal Entrepreneur Education System that received the Education Innovation of the Year Award at the DaVinci Institute’s 8th Annual Inventor Showcase. Mr. Dakin is presently a member of the Economic Development Council of Colorado, on the Board of Editors for the Journal on Technology Transfer and Entrepreneurship published by Bentham Science Publishers and a Senior Fellow, DaVinci Institute. He holds a Juris Doctor degree from the Washburn University School of Law and a Bachelor of Business Administration from Washburn University School of Business in Topeka, Kansas.


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CENTER SUPPORT OF COLORADO SMALL BUSINESSES The Center will support the Capital Campaigns of selected Colorado small businesses through four primary activities:

• Campaign Management

• Capital Matching

• Skills Training

• Advancement of Campaign Expenses

Campaign Management Each Colorado small business will be assigned a Campaign Manager. The Campaign Manager will guide the small business and coordinate contractors through the activities of designing, staging and conducting a Capital Campaign:

• Assessment of Capital Needs

• Identification of Capital Sources

• Profiling of Capital Sources

• Development of a Capital Strategy

• Development of Capital Offerings

• Development of a Campaign Plan

• Development of Communications

• Establishment of Communication Channels

• Conduct of Capital Campaign

Capital Matching The Center will engage the Center for Innovation in Capital LLC to match Colorado small businesses with all sources of capital that may become part of a capital stack. $50,000 of the $600,000 raised through this Offering will be paid to the Center for Innovation LLC as a pre-payment for these services. In exchange for the pre-payment, the Center will earn a royalty of 12.5% of revenue from sales of Capital Matching services to third parties for a period of 5 years.

Skills Training The Center will engage the Center for Innovation in Capital LLC to provide Colorado small businesses needed skills in raising capital. Each selected Colorado small business will receive training on the following topics:

• Assessment of Capital Requirements

• Setting Capital Goals


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• Identification of Capital Sources

• Profiling Investor Candidates

• Development of a Capital Strategy

• Structuring Capital Offerings

• Development of a Capital Campaign Plan

• Managing a Capital Campaign

• Development of Communications

• Development of Communication Channels $50,000 of the $600,000 raised through this Offering will be paid to the Center for Innovation LLC as a pre-payment for these services. In exchange for the pre-payment, the Center will earn a royalty of 12.5% of revenue from providing skills training to third parties for a period of 5 years.

Costs Advancement The Center will advance the costs for each selected Colorado small business to conduct a Capital Campaign including all approved contractors, products and services. Common expenses of a funding campaign include:

• Education

• Coaching

• Campaign planning

• Marketing

• Public relations

• Communications

• Licenses for software

• Web development

• Printing and production of materials

• Platform fees

• Payment processing fees

• Legal

• Regulatory filing fees

• Accounting


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MARKETING AND PROMOTION The Center will make Colorado small businesses aware of its services through several programs and communications channels. Announcement of the Center will be distributed to public media including television, radio, Internet and newspapers. The Center will develop and distribute materials through:

• State of Colorado Office of Economic Development and International Trade

• Small Business Development Centers

• Regional economic development associations

• Municipal economic development centers

• Professional associations (legal, accounting, marketing, engineering)

• Economic Development Council of Colorado

• Colorado Lending Source, Accion and Colorado Enterprise Fund

• Banks

• Venture funds, angel investor groups and other investment groups and associations

• Business incubators, accelerators and co-working spaces

• Entrepreneur educational programs and events The Center may conduct one or more competitions. Each successful Capital Campaign will be promoted and used as a showcase of the Center’s services.


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SMALL BUSINESS SELECTION The Center will establish a system for selecting Colorado small businesses that will receive its support. At a minimum, each small business must:

• Conduct primary operations in within an Opportunity Zone located within the State of Colorado

• Meet the definition of a Qualified Opportunity Business set by the Internal Revenue Service

• Be able to complete a successful Capital Campaign that raises a minimum of $500,000

• Be able to sustain operations for the 10-year term of the Opportunity Zone investment

Small businesses will come from all industries within the State of Colorado:

• Advanced Manufacturing

• Agriculture and Food

• Aerospace

• Capital and Finance

• Creative Industries

• Defense and Homeland Security

• Bioscience

• Electronics

• Energy and Natural Resources

• Healthcare

• Hospitality

• Infrastructure Engineering

• Mining

• Services

• Technology and Information

• Transportation and Logistics It is anticipated that small businesses will use money raised through their Capital Campaigns to offer a wide variety of products and services that may address a wide variety of community issues within the State of Colorado:

• Energy

• Food

• Healthcare

• Housing

• Education

• Arts

• Historic Preservation

• Jobs Creation / Economic Development

• Environment

• Support of Veterans

• Youth Funds

Small businesses may be selected through competitions. As conceived, an issue may be selected as the topic of the competition where small businesses will be invited to compete.


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INVESTMENT IN CENTER

This Offering provides for a total maximum investment of $600,000 if fully completed. 120 Units are available for purchase at a price of $2,500 each. The minimum individual investment is 1 Unit at a price of $2,500 representing one tenth of one percent (.1%) total ownership in the Center. The maximum individual investment is 240 Units at a total price of $600,000 representing twenty-four percent (24%) total ownership in the Center. Concurrently with this Offering, the Center will be raising money through a private offering to residents of the State of Colorado. Units will be sold at the same price as in this Offering. However, investors in the private offering will not be limited to rollover of capital gains or be an accredited investor. Units sold through the private offering will reduce the number of Units available for sale through this Offering. A maximum of 240 Units may be sold through this Offering and through the private placement offering. During the 10-year term of this investment, it is anticipated that the Center will sell part or all the ownership interests it holds from investing in each Colorado small business. Proceeds received from these sales will be rolled over into supporting capital campaigns of new Colorado small businesses within 12 months. This Offering may be withdrawn at any time by the Fund without prior notice.


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USE OF PROCEEDS All the proceeds of this Offering will be deployed through investment into the Center where funding will be used in provision of Capital Campaign support services and for prepayment to the Center for Innovation in Capital LLC for capital source matching and skills training.

$ % $ %

Total Proceeds 50,000$ 100.00% 600,000$ 100.00%

Less Offering Expenses

Commissions and Finders Fees -$ 0.00% -$ 0.00%

Legal and Accounting -$ 0.00% -$ 0.00%

Copying and Advertising -$ 0.00% -$ 0.00%

Capital Campaign -$ 0.00% 0.00%

Other -$ 0.00% 0.00%

Total -$ 0.00% -$ 0.00%

Net Proceeds from Offering 50,000$ 100.00% 600,000$ 100.00%

Use of Net Proceeds

Support Capital Campaigns 50,000$ 100.00% 500,000$ 83.33%

Prepay Capital Matching 0.00% 50,000$ 8.33%

Prepay Skills Training 0.00% 50,000$ 8.33%

Total 50,000$ 100.00% 600,000$ 100.00%

IF MINIMUM AMOUNT IF MAXIMUM AMOUNT


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RISK FACTORS WARNING: AN INVESTMENT IN THIS OFFERING IS SPECULATIVE AND IT IS POSSIBLE THAT THE INVESTOR MAY LOSE ALL OF THEIR INVESTMENT. THE RISK FACTORS DESCRIBED HERE APPLY TO THE FUND. EACH SMALL BUSINESS SUPPORTED BY THE CENTER HAS ITS OWN RISK FACTORS. THEREFORE, THE MAJORITY OF RISKS OF INDIVIDUAL OPPORTUNITIES IS NOT KNOWN AT THIS TIME AND INVESTORS MUST LOOK TO THE EXPERIENCE OF MANAGEMENT IN THE SELECTION AND SUPPORT OF SMALL BUSINESSES IN ORDER TO ASSESS THE RISK OF INVESTING IN THE FUND.

1. Small Businesses May Fail to Successfully Complete a Capital Campaign. The Fund is dependent upon 80% of the small business supported by the Center achieving success in completing their Capital Campaigns. If any small business is unsuccessful in completing its Capital Campaign, it may be unable to pay the fees owed to the Center. In addition, the small business may not be able to grow resulting in the equity interest granted to the Center having no value. If a significant number of small businesses fail to succeed in successfully completing their Capital Campaigns, the Fund may receive distributions that are insufficient to repay their Investors the capital that they have invested or to generate a rate of return to investors.

2. Opportunity Zone Legislation and Regulations. The Fund has been designed to take advantage of federal tax laws creating incentives to invest in Opportunity Zones. The legislation is new and regulations are still in development. The Internal Revenue Services may adopt regulations or interpret the law in a manner that adversely impacts the Fund.

3. The Economy. The economy can weigh heavily upon small businesses supported by the Center. In the event of an economic recession, small businesses may be unable to raise capital from any source.

4. Force Majeure. Operation of any small business contemplates the that natural or other disasters may cause significant interruptions. Losses from a disaster may not be insurable and if a disaster should negatively impact the Fund or the Center or the small businesses that it supports, the Fund will experience losses that negatively impacts Investors.

5. Lack of Liquidity. There is no established market for ownership in the Fund. An Investor seeking to sell their ownership in the Fund may have great difficulty in finding a buyer and may find no buyers.

6. Limited Transferability of Securities. The Investor should be fully aware of the long-term nature

of his or her investment in the Fund. The Units may be transferred only if certain requirements are satisfied. The Investor has represented to the Fund that it is acquiring the Units for his or her own investment only and without a view to their immediate resale or distribution. The Investor should consider any investment as ‘illiquid’ and one that cannot be readily converted into cash. Accordingly, investors in the Fund must bear the economic risk inherent in the investment for the 10-year term of the investment.


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7. Reliance on Others. The Fund is relying upon the Center, its staff and contractors in providing services to the small businesses. Relationships with third-party service providers may involve special risks associated with the possibility that a third-party service providers may (i) have economic or business interests or goals that are inconsistent or contradictory with those of the Center, including engagements with entities that compete with the Center’s interests (ii) take actions contrary to the instructions or requests of the Center or contrary to the Center’s policies or objectives, (iii) be unable or unwilling to fulfill its obligations under the agreement with the Center, (iv) impermissibly use Center’s assets, (v) improperly manage sub-contractors and others engaged by the third-party service and management providers, or (vi) experience financial difficulties. The occurrence of such problems could have a material adverse effect on the business and prospects of the Fund.

8. Risk of Litigation. If the Fund or the Center is subjected to lawsuits by government entities or private parties, then expenses or liabilities arising from any such suit would be borne by the Fund or the Center. While the Center will seek to obtain a general liability insurance policy covering its activities, such insurance may not cover all costs and expenses related to litigation.

9. Income Taxes Imposed on Investors. It is anticipated that any distributions made to Investors

above the amount of their investment will be taxed. The tax circumstances of each Investor may vary and they should check with their personal tax advisor to determine how they may be taxed.

10. Voting Rights. Investors will hold non-voting ownership in the Fund and will have no authority to participate in the management of the Fund.

11. No Operating History. The Fund is a newly formed. Therefore, a prospective Investor has no

prior performance of the Fund upon which they may rely in assessing the future performance of the Fund.


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CASH FLOW PROJECTION THE FUND HAS CREATED A CASH FLOW PROJECTION TO AID AN INVESTOR IN UNDERSTANDING THIS OFFERING. IN THE CREATION OF THE CASH FLOW PROJECTION, CERTAIN ASSUMPTIONS HAVE BEEN MADE WITH REGARD TO FUTURE EVENTS AND OUTCOMES. THESE ASSUMPTIONS ARE NOT GUARANTEES OR ANY KIND OF CONTRACTUAL PROMISE BY THE FUND TO INVESTORS. THE FUTURE IS UNCERTAIN THE PERFORMANCE OF THE FUND IS UNKNOWN. AN INVESTOR SHOULD REVIEW THESE ASSUMPTIONS AND CONSIDER THE IMPACT ON THEIR INVESTMENT IF ONE, SOME OR ALL OF THE ASSUMPTIONS SHOULD NOT OCCUR. To achieve the outcome reflected in the projected cash flow, it is assumed:

• The Center will successfully raise its maximum capital goal of $600,000 through this Offering and the concurrent offering of the Colorado Small Business Opportunity Zone Fund 1 LLC;

• The Center will provide support services to selected Colorado small businesses in conducting their Capital Campaigns

• During the 10-year term of the investment, the Center will support up to 200 Colorado small businesses at an average cost of $50,000 each;

• Each Colorado small business will pay the Center a fee of $60,000 in cash and $60,000 in equity;

• During the 10-year term, the Center will generate over $12,000,000 million in services revenue and $12,000,000 in equity;

• The Center will begin selling off equity positions in Colorado small businesses upon fulfillment of the 10-year term and will complete sale of all equity positions by the end of 2039.

• The value of the equity positions will be no less than $24 million

• The Center will distribute Investors’ share of ordinary income to Investors each year;

• The Center will make no distributions of capital gains to Investors until the end of the 10-year term;

• The Center will make preferred distributions to Investors: o The Center will only make distributions to Investors until the amount of the distributions

equals 100% of their investment ($600,000); o Thereafter, the Center will allocate 75% of distributions to Investors until distributions

equal an additional 100% of their investment ($600,000); o Thereafter, the Center will allocate distributions to Investors proportionately to their

ownership in the Center (collectively 24%). If the equity position of the Center in each supported Colorado small business falls in value or the Colorado small business fails during the 10-year term of the investment, the return to Investors will be reduced or possibly the Investors may lose part or all their investment. If the Center successfully attains its goals, it will pay out to Investors:

• a return of investment of $600,000 within 3 years

• distributions of $1,616,509 within the first 10 years representing a return of investment and a ROI of 169% with an annualized ROI of 16.94%.


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• Distributions of $9,126,853 within the first 20 years representing a return of investment and an ROI of 1421% with an annualized ROI of 71%.


A-1

SCHEDULE A – CASH FLOW PROJECTION Cash Flow Projection – First 10 Years

COLORADO CENTER FOR INNOVATION IN COMMUNITY CAPITAL LLC

CASH FLOW PROJECTION

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Cash Inflow

Investment 600,000$ 600,000$

Revenue -$

Support Services -$ 864,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 12,528,000$

Capital Checkups -$ -$ 36,000$ 90,000$ 144,000$ 198,000$ 252,000$ 306,000$ 360,000$ 414,000$ 468,000$ 2,268,000$

Royalties -$ 17,708$ 60,417$ 141,146$ 297,396$ 302,083$ -$ -$ -$ -$ -$ 818,750$

Equity Sales -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Net Cash Inflow 600,000$ 881,708$ 1,392,417$ 1,527,146$ 1,737,396$ 1,796,083$ 1,548,000$ 1,602,000$ 1,656,000$ 1,710,000$ 1,764,000$ 16,214,750$

Cash Outflow

Personnel 16,760$ 103,940$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 1,025,740$

Dedicated Personnel 15,000$ 616,000$ 724,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 7,355,000$

Other Campaign Costs 5,500$ 121,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 1,314,500$

Systems 100,000$ -$ -$ -$ 100,000$

Operations 28,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 1,720,200$

Net Cash Outflow 165,460$ 1,010,140$ 1,125,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 11,515,440$

Distributions

Investors -$ -$ 260,055$ 505,554$ 340,850$ 83,578$ 87,178$ 100,138$ 113,098$ 126,058$ 1,616,509$ 169% 16.94%

Team -$ -$ 59,062$ 354,890$ 264,662$ 276,062$ 317,102$ 358,142$ 399,182$ 2,029,102$

-$ -$ 260,055$ 564,616$ 695,740$ 348,240$ 363,240$ 417,240$ 471,240$ 525,240$ 525,240$ 3,645,611$

Net Cash Flow after Distributions 434,540$ (128,432)$ 6,602$ (189,230)$ (110,104)$ 296,083$ 33,000$ 33,000$ 33,000$ 33,000$ 87,000$

Cumulative Cash Flow 434,540$ 306,108$ 312,710$ 123,480$ 13,376$ 309,459$ 342,459$ 375,459$ 408,459$ 441,459$ 528,459$


A-2

Cash Flow Projection – Second 10 Years

2030 2031 2032 2033 2034 2035 2036 2037 2038 2039

600,000$

-$

1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 1,296,000$ 25,488,000$

468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 468,000$ 6,948,000$

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 818,750$

1,398,983$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 2,797,967$ 26,580,684$

3,162,983$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 4,561,967$ 60,435,434$

100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 100,560$ 2,031,340$

750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 750,000$ 14,855,000$

132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 132,000$ 2,634,500$

100,000$

169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 169,200$ 3,412,200$

1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 1,151,760$ 23,033,040$

448,854$ 784,610$ 784,610$ 784,610$ 784,610$ 784,610$ 784,610$ 784,610$ 784,610$ 784,610$ 9,126,853$ 1421% 71%

1,421,370$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 2,484,597$ 25,811,845$

1,870,224$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 3,269,207$ 34,938,698$

140,999$ 141,000$ 141,000$ 141,000$ 141,000$ 141,000$ 141,000$ 141,000$ 141,000$ 141,000$

669,458$ 810,458$ 951,458$ 1,092,458$ 1,233,457$ 1,374,457$ 1,515,457$ 1,656,457$ 1,797,457$ 1,938,456$

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