PART II AND III

As filed with the Securities and Exchange Commission on August 26, 2020.

PART II – INFORMATION REQUIRED IN OFFERING CIRCULAR

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.  These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified.  This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state.  We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

SUBJECT TO COMPLETION, DATED AUGUST 26, 2020

 OFFERING CIRCULAR

 

 CNote Notes

MAXIMUM OFFERING: $47,166,890

 CNote Group, Inc., a Delaware corporation (CNote, the Company, us or we), operates an online platform that allows investors to buy the Company’s CNote Notes as described below. In turn, we use investors’ capital to provide loans to CDFIs, which, as used in this offering circular, means organizations certified by the U.S. Department of the Treasury’s CDFI Fund as Community Development Financial Institutions (“CDFIs”). CDFIs directly provide loans to under-served population segments, such as women- and minority-owned businesses. Our CNote Notes pay interest at a current rate of 2.75% per annum, compounded monthly. Management may change the interest rate from time-to-time. Interest rate changes are at the sole discretion of CNote. However, any change in interest rates will only apply to CNote Notes issued on or after such change and do not apply to CNote Notes issued prior to any such change. Interest rate changes are at the sole discretion of CNote. An investor may withdraw up to 10% of the investor’s principal and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice, but subject to available proceeds from the loans we make to the CDFIs and the Company’s discretion to limit withdrawal requests. Management also retains discretion to allow investors to withdraw additional amounts, subject to the availability of additional funds.

CNote will offer and sell, on a continuous basis, its CNote Notes (or the Securities) described in this offering circular.  The CNote Notes will: be issued in periodic closings once minimum investments are committed to the Company; represent full and unconditional obligations of the Company; require a minimum investment per investor of $1.00; have a 30-month term; not be transferable to a third party without our express permission; and will bear the specified interest rate. This offering circular describes the general terms that apply to the CNote Notes and the manner in which they may be offered. The Company intends to use the proceeds of this offering exclusively to fund loans to CDFIs.

Investors should be prepared to hold their CNote Notes to maturity. With available funds, interest on the Notes will be payable on a monthly or compounded basis. Without availability of additional funds, investors may not receive any interest until the maturity date. CNote Notes are the general obligations of the Company and their repayment is not dependent or contingent upon our receipt of proceeds from any CDFI loan. We reserve the right to assign our obligations under the CNote Notes without first obtaining investor consent.

For more information on the CNote Notes being offered, please see the section entitled “Notes Being Offered” beginning on page 26 of this offering circular.  We are offering up to $47,166,890 of CNote Notes pursuant to this offering circular.

We are offering CNote Notes in $0.01 increments, with a minimum investment per investor of $1.00, on a continuous basis directly through our CNote website located at https://mycnote.com. We may terminate this offering at any time in our sole discretion. At the present time, we do not anticipate using any underwriters to offer the CNote Notes. We may, however, engage registered investment advisers or broker-dealers to offer CNote Notes on their platforms.

We were incorporated in Delaware in April 2016, and our principal address is 2323 Broadway, Oakland, CA 94612. Our phone number is (800) 449-6275 .

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

	Price to the Public	Underwriting discount and commissions	Proceeds to issuer	Proceeds to other person	Total number of securities issued		Total proceeds to the issuer
CNote Notes (prices per Note)	$0.01	$0	$0.01	$0		47,166,890	$	47,166,890

IMPORTANT NOTICES TO INVESTORS

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 SELLING LITERATURE.  THESE SECURITIES ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth.  Different rules apply to accredited investors and non-natural persons.  Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A.  For general information on investing, we encourage you to refer to www.investor.gov.

This offering circular follows the offering circular disclosure format.

The date of this offering circular is August 26, 2020.

TABLE OF CONTENTS

OFFERING CIRCULAR SUMMARY	1
RISK FACTORS	9
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	15
USE OF PROCEEDS	16
ABOUT THE COMPANY	16
DESCRIPTION OF PROPERTY	22
THE CNOTE PLATFORM	22
NOTES BEING OFFERED	25
PLAN OF DISTRIBUTION	26
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
MANAGEMENT	30
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS	31
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS	32
LEGAL MATTERS	33
EXPERTS	33
FINANCIAL STATEMENT AND NOTES TO FINANCIALS	F-1

OFFERING CIRCULAR SUMMARY

This summary highlights information contained in this offering circular and does not contain all of the information that you should consider in making your investment decision.  Before investing in our securities, you should carefully read this entire offering circular, including our consolidated financial statements and the related notes thereto and the information in “Risk Factors” beginning on page 9 of this offering circular and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 28 of this offering circular.  The financial information provided in this offering circular is for the fiscal years ended December 31, 2018 and 2019. On the basis of that time period, our auditors opined that certain conditions including expected future losses have raised doubt about the Company’s ability to continue as a going concern.

Unless the context otherwise requires, we use the terms “CNote,” “Company,” “we,” “us” and “our” in this offering circular to refer to CNote Group, Inc.

Who We Are

 We are an early-stage financial technology company providing investors the opportunity to acquire CNote Notes through an online platform: www.mycnote.com. We use all of the proceeds from this offering to provide loans to Community Development Financial Institutions (“CDFIs”), which organizations are approved by the CDFI Fund and which, in turn, directly provide loans to population segments under served by traditional banks and lenders, such as women- and minority-owned businesses. As of June 30, 2020, we have made loans to CDFIs in the aggregate principal amount of $32.0 million and have received a total of approximately $8.5 million in payments. CDFIs have been in existence for over 25 years and originated from the Riegle Community Development and Regulatory Improvement Act of 1994. Over the last two and a half decades, CDFIs have grown to become an approximately $185 billion industry with participation from nearly every major bank in the United States. Despite these traditional sources of funding, the demand for loans made by CDFIs continues to grow faster than available traditional sources of funding, leading many CDFIs to seek new sources of diversified capital. CDFIs have grown in stature recently as a key source of local small business funding, including rural, low-to-moderate income and minority-owned businesses, garnering a special allocation of lending capital in the Paycheck Protection Program and Health Care Enhancement Act of 2020.

CNote’s goal is to provide a new source of debt financing to CDFIs – namely, loans provided from the capital raised from individual and institutional investors via our online platform. Our CNote Notes pay interest at a current rate of 2.75% per annum, compounded monthly. Management may change the interest rate from time-to-time, provided that any subsequent change in the interest rates will be applied to all CNote Notes outstanding at the time of the modification. Interest rate changes are at the sole discretion of CNote. An investor may withdraw up to 10% of the investor’s principal and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice, but subject to available proceeds from the loans we make to the CDFIs and the Company’s discretion to limit withdrawal requests. Management retains discretion to allow investors to withdraw additional amounts, subject to the availability of additional funds.

The Company intends to use the proceeds of this offering exclusively to fund loans to CDFIs. However, management retains discretion to use proceeds for other purposes, including the expenses of this offering, operating expenses, or other corporate expenses.

 CDFI Overview

In order to receive certification by the U.S. Department of the Treasury, CDFIs, which are typically non-profit community lenders, must demonstrate a strong commitment to financial performance and community impact.  Based on a 2018 report by the Opportunity Finance Network (OFN), the national association for CDFIs, there are over 1,100 CDFIs with total assets over $185 billion, including loans to borrowers such as schools, community centers, affordable housing and minority and women-owned businesses. According to the survey, 174 CDFIs who participated in the survey created over 1.5M jobs in the United States since their beginnings.

CDFIs currently receive the majority of their capital from large financial institutions and foundations. OFN reports that less than 5% of all funding for CDFIs come from individual investors, and of that amount, the bulk comes from accredited investors. In view of these dynamics, and the estimated shortfall of over $600 million facing the CDFI industry as a whole, CNote believes there is an opportunity for individual investors to support these community lenders. By investing in CNote Notes, investors will help support the CDFIs’ mission to provide responsible capital to a variety of borrowers, promoting community development and social impact.

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Our Solution

CNote has created a technology-driven platform that allows the Company to aggregate investor capital to make loans to CDFIs.  As of June 30, 2020, we have made loans to 13 CDFIs. In addition, we are in discussions with five additional potential CDFIs regarding possible lending relationships. Before we enter into a lending relationship with a potential CDFI, we conduct diligence and review its organizational structure and financial stability, historic track record, leadership and community impact.

Our website allows investors to commit to purchase CNote Notes upon completion of the registration process. We issue CNote Notes in a series of Closings, which occur within 24 hours or as soon as reasonably practicable, with no discretion to extend or delay, after the Company has obtained commitments from investors to purchase an aggregate of at least $50,000 (the “Closing Threshold”) in principal of CNote Notes. If the Company desires to change the Closing Threshold, it will file a request with the Securities and Exchange Commission (the “SEC”) through a post-effective amendment of the offering statement to which this offering circular forms a part. We refer to the date on which a Closing occurs as the “Closing Date.” Once an investor completes the registration process and commits to purchase CNote Notes, an investor is deemed to have committed to invest at the next Closing. Until a Closing Threshold is reached, an investor may modify the amount such investor will invest by changing the amount of CNote Notes the investor elects to purchase. Once the Closing Threshold is reached, investors receive notice that a Closing will occur within the next 24 hours. On the Closing Date, funds will be drawn from the investor’s bank account, and the investor will be issued CNote Notes. Interest begins accruing on the sixth (6th) business day following the investor’s Closing Date (the “Accrual Date”). CNote Notes are issued to the investor on the Accrual Date and held on our platform in electronic form. CNote Notes can be viewed under the “Documents” tab in the investor’s account dashboard by entering login-credentials.

Periodically, depending on the availability of, and demand for, capital, we use the aggregated investor capital to make loans to our CDFI borrowers. We pass along part of the interest we earn from these loans to the CNote Note investors, who may choose whether to receive interest on their CNote Notes each month, or to have this interest compounded on a monthly basis. An investor electing to have interest compounded on a monthly basis may receive that interest upon making early withdrawals pursuant to the terms described below under “—The Offering—Investor Withdrawals” or else at maturity of the CNote Notes. The proceeds of the loans we make to CDFIs are used, along with their other sources of financing, to lend to segments traditionally under-served by major financial institutions. Currently, the majority of the loans made by our CDFI borrowers go to minority- and women-owned businesses, affordable housing, communities facilities such as early child care centers and rehab facilities among others. Although CNote is not involved in the CDFIs’ vetting procedures, we monitor their lending activities, including any required reports to the U.S. Department of the Treasury on the borrowers to which they extend loans.

Currently, CNote’s loans to CDFIs have two layers of support which are expected to enhance the CDFIs’ ability to repay our loans.  First, most of our loans are made to CDFIs with loan products that are affiliated with, or participate in, federal and state programs, that offer guarantees and/or loan loss reserve support for repayment. Second, CNote’s loans CDFIs are full recourse to the CDFIs and not reliant on proceeds from the loans each CDFI makes.

CNote Notes allow investors to make quarterly withdrawals of up to 10% of the investor’s principal and accrued, but unpaid, interest, generally upon 30 days’ notice, but subject to available proceeds from the loans we make to the CDFIs and the Company’s discretion to limit withdrawal requests. Management retains discretion to allow additional liquidity beyond the quarterly 10% cap, subject to available funds. CNote intends to use all of the proceeds of this offering to make loans to CDFIs.

Investors should be prepared to hold their CNote Notes to maturity. With available funds, CNote pays interest on the CNote Notes on a monthly or compounded basis. Without availability of additional funds, investors may not receive any interest until the maturity date. CNote Notes are the general obligations of the Company, regardless of payments received from any specific CDFI, and we reserve the right to assign our obligations under the CNote Notes without first obtaining investor consent.

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 CNote’s goal is to address two important, current issues:

1) CDFIs are actively seeking new sources of capital. The CDFI industry continues to experience double digit growth and yet does not have the capital it needs to fund all of the quality projects the industry aims to serve, including schools, centers and minority-run businesses. This results in a large, year over year gap, in funding, estimated at over $600 million in a 2014 CDFI Fund report. The OFN predicts that loans made by CDFIs will continue to experience a 15% year-over-year growth rate. The need for capital by CDFIs is augmented by social-economic consequences of the COVID-19 related disruption of the economy and slowdown in lending by traditional financial institutions. Fair access to capital is continued to be an issue in many vulnerable communities around the country and CDFIs are on the frontlines to ensure equal opportunities to all.

2) At the same time, investors are increasingly looking to align their money with their values. Numerous sources, including the Wall Street Journal, have reported that women and millennials are very interested in investing in organizations that are aligned with their values.

We use technology, data analytics, and a proprietary liquidity algorithm to match investors’ funds with the funding needs of the CDFIs. In the course of determining whether to enter into a lending relationship with CDFI borrowers, CNote conducts three levels of diligence on every potential CDFI borrower, including the following:

1) Peer Review - AERIS is the national rating agency for the CDFI industry. AERIS prepares in-depth reports on CDFIs’ financial performance and are relied upon by major banks and government entities. CNote is reviewing AERIS generated data on CDFIs when available. CNote is also working with OFN, the national association for CDFIs, to assess potential CDFI borrowers. This review is important as OFN maintains the deepest base of knowledge of CDFI trends, challenges and performance over the last two decades.   

2) CNote Review - CNote conducts its own assessment of each potential CDFI borrower’s historical financial performance and social impact. This process includes, among other things, a review of financial and portfolio performance, audited financial statements, lending and operational policies, composition of the team and the board and strategic plan and interviews with the leadership team, board members and clients of potential CDFI borrowers.

3) Third-Party Review – CNote will engage a third-party social finance committee, with expertise in the CDFI industry, and with no ties, financial or otherwise, either to us or to the potential CDFI borrower, to provide tertiary, third-party assessments of potential CDFI borrowers, including geo-specific and product-specific risks to be identified.

The overall due diligence process typically takes between two to four weeks to complete.

 CNote Platform

We currently operate an online platform, where investors can manage their accounts and purchase CNote Notes. The CNote Notes, as more fully described in this offering circular, are general obligations of the Company, regardless of payments received from any specific CDFI borrower.  CNote will provide investors information on CDFI borrowers we have made loans to in the past and details on the types of projects they fund and their social impact, which may include stories from prior specific borrowers. However, we will not be directly connecting investors to CDFIs or to their borrowers.

Prospective CNote Notes investors will create a username and password, and indicate agreement to our terms and conditions and privacy policy.

The following features are available to participants in the CNote Notes program through our platform:

● Available Online Directly from Us.   You must purchase CNote Notes directly from us through our platform.

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● No Purchase Fees Charged.   We will not charge you any commission or fees to purchase CNote Notes through our platform. However, if you engage any financial intermediaries to manage your account or investments, these intermediaries may charge you commissions or fees.

● Invest as Little as $1.   You will be able to build ownership over time by making purchases as low as $1.

● Flexible, Secure Payment Options.   You may purchase CNote Notes with funds electronically withdrawn from your checking or savings account using our platform.

● Manage Your Portfolio Online.   You can view your investments, returns, and transaction history online, as well as receive tax information and other portfolio reports. Once you are registered, you may also make additional investments in CNote Notes, or withdrawals from your account, by logging into your existing account, visiting the Account Overview page, and either electing to increase the amount you have invested by purchasing additional CNote Notes, or electing to withdraw from your existing balance.

 Proceeds from the CNote Notes in this offering will be used to make loans to CDFIs. However, CNote Notes are not dependent upon any particular loan and remain, at all times, the general obligations of CNote regardless of payments received from any specific CDFI. Funds from the CNote Notes contemplated in this offering may be aggregated with funds from our disbursement account along with other funds from institutional and accredited investors to collectively fund the loans to CDFIs.  Final decisions on use of proceeds allocations will be made by management on a loan-by-loan basis.

In order to provide investors with insight into the social objectives and impact of our CDFI borrowers, CNote will provide information and insight on historical loans made and projects funded, and may also provide metrics such as percentage of businesses supported by our CDFI borrowers that are, for example, women-owned. These stories and metrics are for informational purposes only, and we do not make any representations about, or solicit contributions to, a particular loan to a particular CDFI. The Company does not provide information about its current lending opportunities and investors do not have the ability to direct their investments in CNote Notes to a loan to a particular CDFI, or to a particular borrower. Past performance is not indicative of future results.

 Strategic Relationships

 We attract CDFI borrowers as well as investors from our outreach efforts, and through strategic relationships.  From time to time, we have pursued strategic relationships to enhance the visibility of our platform and services, and to encourage potential lending relationships through referrals. These efforts include engagement with membership organizations, corporate entities, and others who refer potential members to us. Potential investors who learn about CNote through these and other avenues must register on our website to make investments in CNote Notes. Current and future relationships may not require an investor to complete the entire registration and investment process on our website, but any such partnered platforms would be registered investment advisers or broker-dealers. Similarly, our partners’ APIs may allow prospective investors to accelerate the registration process by pre-populating basic biographic information.

 Competitive Strengths

We believe we benefit from the following competitive strengths compared to other alternatives:

 We are part of a fast-growing impact investment industry. The Global Impact Investing Network estimates the impact investment industry to be worth over $700 billion in the United States, which has continued to grow each year. Currently available impact investment products are subject to two central limitations:

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1) They are reserved for accredited investors only. Over 90% of all impact investment products are offered solely to accredited investors. This is despite evidence that has identified strong interest – according to different surveys, 80-90% of women and 80-95% of millennials surveyed – would prefer their investments to align with their values.

2) The majority of available impact options do not offer a competitive return. As a result, would-be investors are required to evaluate the trade-off between earning an acceptable return and making a positive social impact.

 We offer competitive returns to investors seeking a medium-term fixed income alternative. Currently, there is a limited number of options available to investors seeking fixed income solutions in the impact space. CNote expects to attract these investors by offering competitive returns and greater visibility into created impact compared to other investment products.

We have an advisory board of focused industry leaders.  Our advisory board members have extensive and diverse experience in a variety of fields, including CDFIs, financial technology, and entrepreneurship. We hope to leverage their insight and relationships to hone and develop our products and strategies.

Strategy

 We will pursue the following strategies:

Continue to attract top talent.  To grow our business, we need to attract experienced professionals in technology, credit and risk assessment, marketing, and finance to implement exceptional risk assessment and management tools in our underwriting process. We plan to supplement key roles as we ramp up our operations by using consultants and advisers.

Conduct due diligence, and routinely monitor CDFI borrowers.  CNote has built a proprietary technology to complement a hands-on approach to underwriting and monitoring our CDFI borrowers to ensure consistent performance quality.

We have developed a three-part diligence process, which we use to evaluate potential CDFI borrowers with the goal of partnering with innovative and financially strong CDFIs across the country.

Additionally, once we have made loans to CDFIs, we ensure that they continue to meet their performance standards. We monitor our CDFI borrowers through a routine quarterly compliance review supported by ad-hoc check-ins during unprecedented times like the COVID-19 related shutdown. The CDFI borrowers should be in a good status according to the underwriting risk matrix before receiving any additional loans from CNote.

Scale our business to become a national leader in our sector.   We are focused on growing our national footprint and are testing business development and marketing efforts in multiple channels.  Increased awareness of our products and services will enable us to scale our lending capacity and attract both new investors and potential CDFI borrowers to our platform.

Continue investing in the technology and database build out. We believe the technology and the data is the key to unlocking more capital into underserved communities around the country. We continue improving the clients’ experience to initiate and manage their investments in CNote Notes, enhancing the engagement with our CDFI borrowers to bring more efficiency into the underwriting and monitoring process and building our the database of needs and opportunities in at-risk communities for faster deployment of capital.

 Risks Affecting Us

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

● We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

● We have a history of operating losses and may not achieve consistent profitability in the future.

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● We operate in a highly regulated industry, and our business may be negatively impacted by changes in the regulatory environment.

● Our business may be negatively impacted by worsening economic conditions and fluctuations in the credit market.

● CDFIs may be negatively impacted by political or administrative actions, which could include decreased federal or state support for CDFIs or rollback of supportive policies.

● We depend on third party service providers for essential functions of our operations, including our payment processing, and the loss of any of these service providers or any disruption in their provided services could materially affect our operations

● Holders of CNote Notes are exposed to the credit risk of the Company.

● There is no public market for CNote Notes and none is expected to develop, and investors should be prepared to hold their CNote Notes through the term of their maturity.

Our Company

We were incorporated in Delaware in April 2016 and began operations in April 2016.  Our principal address is 2323 Broadway, Oakland, CA 94612.  Our phone number is (800) 449-6275. As of June 30, 2020, we have seven full-time and one part-time employees and also rely on outside consultants for various technical and business functions. Our website is https://mycnote.com.  Except for this offering circular and our other public filings with the SEC pursuant to the requirements of SEC Regulation A, information found on, or accessible through, our website is not a part of, and is not incorporated into, this offering circular, and you should not consider it part of this offering circular.  For more information, please see our filings on www.sec.gov.

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The Offering

Securities offered by us CNote Notes	CNote Notes The CNote Notes will: ●     require a minimum investment per investor of $1.00; ●     represent a full and unconditional obligation of the Company; ●     be issued on a periodic basis once the closing threshold is committed, on the date designated as a Closing Date, with CNote having no discretion to change the Closing Threshold absent requalification by the SEC of the offering statement of which this offering circular forms a part; ●     beginning on the sixth business day after issuance, bear interest at the current rate fixed at 2.75%, compounded monthly and payable at maturity, unless the investor elects to receive interest on a monthly basis; ●     bear interest at fixed rates. The interest rate with respect to any series of CNote Notes will be disclosed to investors prior to purchase. Subsequent changes in interest rates will be applied to all CNote Notes outstanding at the time of the modification; ●     permit an investor to withdraw up to 10% of the investor’s principal, and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice. See "Investor Withdrawals" below; ●     have a term of 30 months and will be callable, redeemable, and prepayable at any time by the Company for an amount equal to the principal amount of the note plus accrued and unpaid interest through the repurchase date; ●     not be payment dependent on any underlying CDFI loan or loans issued on our online investment platform; and ●     not be transferable to a third party without our express permission. Investors should be prepared to hold their CNote Notes to maturity. The Company retains the discretion to limit withdrawal requests prior to maturity depending on available funds from loans to our CDFI borrowers and other cash available to the Company. Thus, investors may not receive any interest until the maturity date. CNote Notes are the general obligations of the Company and we reserve the right to assign our obligations under the CNote Notes without first obtaining investor consent.
Principal amount of CNote Notes	We will not issue securities hereby having gross proceeds in excess of $47,166,890. The securities we offer hereby will be offered on a continuous basis.
Regulation A Tier	Tier 2
CNote Notes Purchasers	The CNote Notes are being offered to both “accredited investors” as defined under Rule 501 of the Securities Act of 1933, as amended, and non-accredited investors.  Pursuant to Rule 251(d)(2)(C), non-accredited investors who are natural persons may only invest the greater of 10% of their annual income or net worth.  Non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.
Manner of offering	See section titled “Plan of Distribution” beginning on page 26 of this offering circular.

How to invest Visit https://mycnote.com and click the “Get Started” link on the home page to register and create an account. In some cases, APIs used by our partners may allow you to accelerate the application process by pre-populating basic biographical information.

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Investor Withdrawals	Each quarter, investors may elect to withdraw up to 10% of their principal and accrued, but unpaid, interest, generally upon 30 days’ notice and subject to available funds from loans to our CDFI borrowers and other cash available to the Company. Management retains discretion to allow additional withdrawals, subject to available funds. Investors should nevertheless be able and prepared to hold their CNote Notes for the full length of their terms.
Use of proceeds	If we realize $47,166,890 of gross proceeds from the sale of CNote Notes under this offering circular, we estimate our net proceeds, after deducting estimated commissions and expenses, will be approximately $47,166,890. Our offering expenses, which we estimate at approximately $20,000, as well as operating expenses and other corporate expenses, will be paid out of cash flow from operations and other capital raised. We intend to use all the proceeds from this offering to fund loans to CDFIs. See “Use of Proceeds” on page 16 of this offering circular.
Risk factors	See the section titled “Risk Factors” beginning on page 9 of this offering circular for a discussion of factors that you should read and consider before investing in our Securities.

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RISK FACTORS

Investing in our CNote Notes is speculative and involves a high degree of risk. Before deciding whether to invest, you should consider carefully the risks and uncertainties described below, our consolidated financial statements and related notes, and all of the other information in this offering circular. If any of the following risks actually occurs, our business, financial condition, results of operations, and prospects could be adversely affected. As a result, the value of our securities could decline, and you could lose part or all of your investment.

Risks Related to Our Industry

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

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

The initiation of a proceeding relating to one or more allegations or findings of any violation of such laws could result in modifications in our methods of doing business that could impair our ability to collect payments on our loans or to acquire additional loans or could result in the requirement that we pay damages and/or cancel the balance or other amounts owing under loans associated with such violation. We cannot assure you that such claims will not be asserted against us in the future. To the extent it is determined that the loans we make to CDFIs were not originated in accordance with all applicable laws, we may be obligated to repurchase any portion of the loan we had sold to a third party. We may not have adequate resources to make such repurchases.

Worsening economic conditions or a changing political climate may result in decreased demand for our loans, cause the CDFIs’ default rates to increase, and adversely affect our operating results.

Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant tightening of credit markets, historically have created a difficult environment for companies in the lending industry. Many factors, including factors that are beyond our control, may have a detrimental impact on our operating performance. These factors include general economic conditions, the political climate, unemployment levels, and interest rates, as well as events such as natural disasters, acts of war, terrorism, and catastrophes. The small business borrowers the CDFIs serve may be more sensitive to these macroeconomic factors.

Domestic policy decisions could affect the economic or legal situations of CDFIs, and their borrowers. For instance, the national CDFI Fund, which provides funding and support dollars to CDFIs, may be reduced or eliminated. Similarly, regulations promulgated under the Community Reinvestment Act, if altered or repealed, could materially affect CDFIs, and their access to capital.  Losing access to state or federal funding could make it more likely that CDFI borrower would default on their obligations to us in the event they are unable to collect on the loans they make to borrowers, who may be more sensitive to macroeconomic factors.

Other industry players may begin or increase lending to CDFIs.

Although we believe our online investment platform presents a new opportunity for CDFIs to access debt financing, others are not precluded from entering, and competing in, this arena. We face potential competition from a variety of sources, including newly-formed companies or existing lenders. Competition in the financial technology sector is intense, and we may be unable to compete against other players in the financial technology sector (such as Lending Club, Funding Circle, and Prosper), commercial banks (such as Bank of America and Wells Fargo), and community banks and credit unions. Our competitors, especially banks, have substantially more resources than we do and spend millions of dollars on marketing. If we are unable to attract partners, or repeat partners, our results of operations will be adversely affected.

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

Competition for highly skilled personnel, especially engineering and data analytics personnel, is extremely intense, and we could face difficulty identifying and hiring qualified individuals in many areas of our business. We may not be able to hire and retain such personnel at compensation levels consistent with our compensation and salary structure. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In particular, candidates making employment decisions, specifically in high-technology industries, often consider the value of any equity they may receive in connection with their employment. Any significant volatility in the value, or the perceived market value, of our stock after any offering may adversely affect our ability to attract or retain highly skilled technical, financial, marketing, or other personnel.

In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements and the quality of our services and our ability to serve our customers could diminish, resulting in a material adverse effect on our business.

Risks Related to Our Company

We are an early-stage startup with a history of net losses, and we may never become profitable.

In our fiscal year ended December 31, 2019, we had a net loss of approximately $1.16 million. We do not expect to be profitable for the foreseeable future. If we are unable to obtain or maintain profitability, we will not be able to attract new investors, compete, or maintain operations.

We have a limited operating history in a rapidly evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We have a limited operating history in an evolving industry that may not develop as expected. Assessing our business and future prospects is challenging in light of the risks and difficulties we may encounter. These risks and difficulties include our ability to:

● increase the number and total volume of loans and other products we extend to our partners;

● increase the number of the CDFIs to which we make loans;

● improve the terms on which we lend to the CDFIs as our business becomes more efficient;

● increase the effectiveness of our business to business marketing and lead generation through referral sources;

● successfully develop and deploy new products;

● favorably compete with other companies that are currently in, or may in the future enter, the business of lending money to CDFIs;

● successfully navigate economic conditions and fluctuations in the credit market;

● effectively manage the growth of our business; and

● successfully expand our business into adjacent markets.

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

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We rely on capital to grow our business.

As our business scales and loan volume increases, we will require increasing amounts of capital to build our operations. We have to carefully manage capital as we are not yet profitable. Our inability to attract sufficient capital at all or on favorable terms will impact our ability to grow and remain in business.

If we are unable to raise substantial funds, our results of operations could be adversely affected.

This offering is being made on a “best efforts” basis, meaning we are only required to use our best efforts to sell the CNote Notes and there is no third-party firm commitment or obligation to purchase any of the CNote Notes. As a result, we cannot assure of the amount of proceeds that will be raised in this offering. If we are unable to raise substantial funds in this offering, we will make fewer loans, resulting in less diversification in terms of the number of loans made and the geographic regions in which the CDFIs are located. In such event, our results of operations would be more adversely impacted by the failure of one CDFI to make its debt service payments than if we were able to make a greater number of loans.

We face potential competition from future CDFI lenders, and if we do not compete effectively, our operating results could be adversely affected.

When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or credit terms prevalent in that market, which could adversely affect our market share or ability to explore new market opportunities.

 Our pricing and credit terms could deteriorate if we act to meet these competitive challenges. Further, to the extent that the fees we pay to our strategic partners and borrower referral sources are not competitive with those paid by our competitors, whether on new loans or renewals or both, these partners and sources may choose to direct their business elsewhere. Those competitive pressures could also result in us reducing our interest rates or being more flexible on the terms we provide to CDFIs. All of the foregoing could adversely affect our business, results of operations, financial condition, and future growth.

The CNote Notes are unsecured obligations of the Company.

 If we are unable to make payments required by the terms of the CNote Notes, you will have an unsecured claim against us. CNote Notes are, therefore, subject to non-payment by the Company in the event of our bankruptcy or insolvency. In an insolvency proceeding, there can be no assurances that you will recover any remaining funds. Moreover, your claim may be subordinate to that of our senior secured creditors, if any, to the extent of the value of their security interests. In the event the Company does not have sufficient capital available to repay the outstanding CNote Notes, holders of CNote Notes would be general unsecured creditors of the Company and would rank equally with other unsecured creditors of the Company. Any payments made to the Company’s unsecured creditors would be made pro rata among all such other unsecured creditors, including the Holders of the CNote Notes after all senior secured creditors.

Our risk management efforts may not be effective.

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

Our allowance for loan losses will be determined based upon both objective and subjective factors and may not be adequate to absorb loan losses.

We have established a loan loss reserve of approximately 2% of our assets under management, which may not be adequate to address losses should a CDFI borrower, irrespective of its full resource obligation, be unable to pay back an investor’s principal and or interest per the agreement.

We are responsible to pay on CNote Notes, regardless of loan losses. As a result, we face the risk that, if our CDFI borrowers fail to repay their loans in full, any such failure could lead us to incur losses directly, as well as indirectly in that investors on our loan platform might be less willing to continue investing in our loans. Actual losses are difficult to forecast, especially if such losses stem from factors beyond our historical experience.

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We depend on our reputation to attract interest from CDFIs and purchasers of the CNote Notes.

We depend heavily on our relationships and our reputation to attract potential CDFIs, many of whom we reach either through different CDFI coalitions or by word of mouth. If for any reason our reputation suffers, we may face difficulties attracting CDFI borrowers, which could in turn affect our ability to make loans and return capital to investors.

If our reputation suffers, we will also face difficulty in attracting additional investors in the CNote Notes. Additionally, to the extent that potential investors view our products as similar to, or interchangeable with, other alternative investment platforms or marketplace lenders (such as Lending Club, Funding Circle or Prosper), we may struggle to attract individual investors.

At this stage, many of our loans will be unsecured obligations of the CDFIs.

At this stage, many of our loans to the CDFIs are unsecured obligations. This means that, for those loans, we will not be able to foreclose on any assets of the CDFIs in the event of their default. This may limit our recourse in the event of a default. If the CDFIs are unable to realize on any collateral securing the loans that they make if a default occurs, their ability to repay CNote and, consequently our ability to repay the CNote Notes, may be adversely impacted.

We currently rely on existing CDFIs to identify, underwrite and service quality borrowers in their respective borrower segments.

Although we conduct due diligence on potential CDFIs borrowers, and continue to monitor their operations once we make loans to these CDFIs, we are nevertheless dependent on the CDFIs’ ability to identify, underwrite and service borrowers in their respective segments. We cannot control their operations once loans are made. Though the loans we make to the CDFIs are full recourse to the CDFI, and while it has historically rarely happened, it is possible that a CDFI could become insolvent, shut down, or otherwise cease their operations. In these events, our ability to collect on our CDFI loans and, in turn to pay our CNote Note investors, could be compromised.

The COVID-19 outbreak may adversely affect our operating results.

On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID-19, and actions taken to mitigate it, have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, COVID-19 may have a negative impact on the ability of the Company to attract new CDFIs. At this time, we are unable to predict the extent or nature of these impacts to our future financial condition and results of operations.

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

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

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

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 We rely on third-party service providers to deliver many of our services. Any disruption in services from these service providers, including any disruption of service at their data centers, could interrupt or delay our ability to deliver our service to the holders of the CNote Notes and the CDFIs.

 We currently use third-party service providers, such as Dwolla, to handle many components of our operations. These service providers may themselves rely on third-party data center hosting facilities. The continuous availability of our service depends on the operations of these service providers, on data facilities, on a variety of network service providers, on third-party vendors, and on data center operations staff. In addition, we depend on the ability of our third-party providers to protect the facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. If there are any lapses of service or damage to the facilities, we could experience lengthy interruptions in our service as well as delays and additional expenses in arranging new service providers and services. Even with current disaster recovery arrangements, our business could be harmed.

Design and mechanical errors or failure to follow operations protocols and procedures could cause our systems to fail, resulting in interruptions in our platform. Any such interruptions or delays, whether as a result of third-party error, our own error, natural disasters, or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase. Also, in the event of damage or interruption, our future insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue and subject us to liability, which could materially adversely affect our business.

As we rely heavily on our servers, computer and communications systems and the Internet to conduct our business and provide high-quality customer service, any such disruptions could negatively impact our ability to run our business and cause lengthy delays in providing needed services which could adversely affect our business, results of operation and financial condition.

We are reliant on the efforts of our management team.

We rely on our management team and need additional key personnel to grow our business, and the loss of key employees or inability to hire key personnel could harm our business. We believe our success has depended, and continues to depend, on the efforts and talents of our executives and employees.

All of our employees are at-will and can leave us at any time.

Our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. In addition, the loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all. Our executive officers and other employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business could be materially and adversely affected.

We have a small number of employees, each of whom is important to our success.

We have only seven full-time and one part-time employees. Each of them plays a significant role in our success. Our team covers the following functional duties: engineering and programming, sales and marketing, finance and credit, legal and regulatory, and administration and operations. The loss of any of our employees could have a material adverse impact on our operations. Additionally, because each employee plays such a critical role in a company of this size, any instances of human error or exercises of poor business judgment could negatively impact our company.

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We do not currently have a backup, outside servicing firm to service partner payments.

We currently service all of our loans and although we are evaluating a contract with a potential partner, do not have a backup outside servicer at this time. Loan servicing is an increasingly regulated industry, with various federal and state laws governing the collection of consumer and small business loans, and none of our employees currently devote all of their time to our loans as their time is divided among many responsibilities. Although we are in the process of evaluating potential options, we currently do not have a ready backup servicer in the event that we are suspended from servicing, or are suddenly unable to service our loans. Our failure to comply with applicable regulations, or our inability to service loans, would adversely affect our operations.

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

Compliance with Regulation A could be costly and requires legal and accounting expertise. Because the new rules implementing Title IV of the Jumpstart Our Business Startups Act of 2012 took effect in June 2015, we have limited experience complying with the new provisions of Regulation A or making the public filings required by the rule. Besides qualifying this Form 1-A, we must file an annual report on Form 1-K, a semiannual report on Form 1-SA, and current reports on Form 1-U.

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

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements, our activities may be restricted, and this offering may be invalidated.

We do not believe that at any time we will be deemed to be an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), as we do not intend on trading or selling securities and thus believe we are exempt pursuant to Section 3(b)(1) of the 1940 Act.  However, if at any time we are deemed an “investment company” we may be subject to certain restrictions on our operations and the issuance of CNote Notes, and may have imposed upon us certain burdensome requirements, including registration as an investment company, adoption of a specific form of corporate structure, and reporting, recordkeeping, voting, proxy, compliance policies and procedures, as well as additional disclosure requirements. Additionally, as Regulation A is not available to companies that are investment companies registered under, or required to be registered under, the 1940 Act, in the event that we were deemed to be an investment company, the offering, and the CNote Notes sold pursuant to this offering, may be invalidated.

Our Terms of Use require holders of the CNote Notes to submit any dispute to binding arbitration.

Our Terms of Use (available at https://www.mycnote.com/TOS), and by extension the CNote Notes, provide that any dispute arising under the CNote Notes must be submitted to binding arbitration. As a result, you may not be able to pursue litigation for any such disputes in state or federal courts against us or our directors or officers, and any awards or remedies determined by the arbitrators may not be appealed. In addition, arbitration rules generally limit discovery, which could impede your ability to bring or sustain claims, and the ability to collect attorneys’ fees or other damages may be limited in the arbitration, which may discourage attorneys from agreeing to represent parties wishing to commence such a proceeding.

Risks Related to CNote Notes

Holders of CNote Notes are exposed to the credit risk of the Company.

CNote Notes are our full and unconditional obligations. If we are unable to make payments required by the terms of the CNote Notes, you will have an unsecured claim against us. CNote Notes are therefore subject to non-payment by the Company in the event of our bankruptcy or insolvency. In an insolvency proceeding, there can be no assurances that you will recover any remaining funds. Moreover, your claim may be subordinate to that of our senior secured creditors to the extent of the value of their security interests.  Holders of CNote Notes would be ranked equally with other unsecured creditors of the Company and payments, if any, would be made pro rata with all such other unsecured creditors of the Company before any class of equity holder but after all senior secured creditors.

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 Holders of CNote Notes are exposed to the credit risk of the CDFI borrowers.

We make loans to CDFIs, which in turn make loans in the communities underserved by traditional financial institutions. Although our operations seek to diversify exposure by investing in a variety of CDFIs, if the CDFIs are unable to collect on their loans and are unable to make payments required by the terms of our loans to them, we may be unable to make payments required by the terms of the CNote Notes. As described above, you would then have an unsecured claim against us.

We currently have made loans to a limited number of CDFIs.

We currently have made loans to 13 CDFIs. Thus, our loans are concentrated in a limited number of borrowers, and the holders of the CNote Notes are subject to risks resulting from this lack of diversification. Any single CDFI’s negative performance could have an adverse affect on our performance. There can be no assurance that we will be able to identify or attract a greater number of CDFI borrowers to enhance the diversification.

 There has been no public market for CNote Notes, and none is expected to develop.

CNote Notes are newly issued securities. Although under Regulation A the securities are not restricted, CNote Notes are currently not liquid securities. No public market has developed nor is expected to develop for CNote Notes, and we do not intend to list CNote Notes on a national securities exchange or interdealer quotational system. You should be prepared to hold your CNote Notes through their maturity dates as CNote Notes currently are not liquid investments, nor do we anticipate that they will be a liquid investment at any time in the foreseeable future.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This offering circular contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us.  The forward-looking statements are contained principally in “Offering Circular Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Description of Business.”  Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, competitive position, business environment, and potential growth opportunities.  Forward-looking statements include all statements that are not historical facts.  In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.  Those risks include those described in “Risk Factors” and elsewhere in this offering circular.  Given these uncertainties, you should not place undue reliance on any forward-looking statements in this offering circular.  Also, forward-looking statements represent our beliefs and assumptions only as of the date of this offering circular.  You should read this offering circular and the documents that we have filed as exhibits to the Form 1-A of which this offering circular is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Any forward-looking statement made by us in this offering circular speaks only as of the date on which it is made.  Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.  All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

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USE OF PROCEEDS

 If we realize an aggregate of $47,166,890 from the sale of CNote Notes under this offering circular, we estimate our net proceeds, after deducting estimated commissions and expenses, will be approximately $47,166,890. Our offering expenses, which we estimate at approximately $20,000, as well as operating expenses and other corporate expenses, will be paid out of cash flow from operations and other capital raised. We intend to use all of the proceeds from this offering to fund loans to CDFIs.  See “Risk Factors — Risks Related to Our Company.”

ABOUT THE COMPANY

Who We Are

We are an early-stage financial technology company providing investors the opportunity to acquire CNote Notes through an online platform: www.mycnote.com. We use all of investors’ capital to provide loans to Community Development Financial Institutions (“CDFIs”), which organizations are approved by the CDFI Fund and which, in turn, directly provide loans to population segments under served by traditional banks and lenders, such as women- and minority-owned businesses. As of June 30, 2020, we have made loans to 13 CDFIs in the aggregate principal amount of $32.0 million and have received a total of approximately $8.5 million in payments. CDFIs have been in existence for over 25 years and originated from the Riegle Community Development and Regulatory Improvement Act of 1994. Over the last two and a half decades, CDFIs have grown to become an approximately $185 billion industry with participation from nearly every major bank in the United States. Despite these traditional sources of funding, the demand for loans made by CDFIs continues to grow faster than available traditional sources of funding, leading many CDFIs to seek new sources of diversified capital. CDFIs have grown in stature recently as a key source of local small business funding, including rural, low-to-moderate income and minority-owned businesses, garnering a special allocation of lending capital in the Paycheck Protection Program and Health Care Enhancement Act of 2020.

CNote’s goal is to provide a new source of debt financing to CDFIs – namely, loans provided from the capital raised from individual and institutional investors via our online platform. Our CNote Notes pay interest at a current rate of 2.75% per annum, compounded monthly. Management may change the interest rate from time-to-time, provided that any subsequent change in the interest rates will be applied to all CNote Notes outstanding at the time of the modification. Interest rate changes are at the sole discretion of CNote. An investor may withdraw up to 10% of the investor’s principal and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice, but subject to available proceeds from the loans we make to the CDFIs and the Company’s discretion to limit withdrawal requests. Management retains discretion to allow investors to withdraw additional amounts, subject to the availability of additional funds.

The Company intends to use the proceeds of this offering exclusively to fund loans to CDFIs. However, management retains discretion to use proceeds for other purposes, including the expenses of this offering, operating expenses, or other corporate expenses.

CDFI Overview

In order to receive certification by the U.S. Department of the Treasury, CDFIs, which are typically non-profit community lenders, must demonstrate a strong commitment to financial performance and community impact.  Based on a 2018 report by the Opportunity Finance Network (OFN), the national association for CDFIs, there are over 1,100 CDFIs with total assets over $185 billion, including loans to borrowers such as schools, community centers, affordable housing and minority and women-owned businesses. According to the survey, 174 CDFIs who participated in the survey created over 1.5M jobs in the United States since their beginnings.

CDFIs currently receive the majority of their capital from large financial institutions and foundations. OFN reports that less than 5% of all funding for CDFIs come from individual investors, and of that amount, the bulk comes from accredited investors. In view of these dynamics, and an estimated shortfall of over $600 million facing the CDFI industry as a whole, CNote believes there is an opportunity for individual investors to support these community lenders. By investing in CNote Notes, investors will help support the CDFIs’ mission to provide responsible capital to a variety of borrowers, promoting community development and social impact.

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Our Solution

 CNote has created a technology-driven platform that allows the Company to aggregate investor capital to make loans to CDFIs.  As of June 30, 2020, we have made loans to 13 CDFIs. In addition, we are in discussions with five additional potential CDFI borrowers regarding possible lending relationships. Before we enter into a lending relationship with a CDFI, we conduct diligence and review its organizational structure and financial stability, historic track record, leadership and community impact.

Our website allows investors to commit to purchase CNote Notes upon completion of the registration process. We issue CNote Notes in a series of Closings, which occur within 24 hours or as soon as reasonably practicable, with no discretion to extend or delay, after the Company has obtained commitments from investors to purchase an aggregate of at least $50,000 (the “Closing Threshold”) in principal of CNote Notes. If the Company desires to change the Closing Threshold, it will file a request with the Securities and Exchange Commission (the “SEC”) through a post-effective amendment of the offering statement to which this offering circular forms a part. We refer to the date on which a Closing occurs as the “Closing Date.” Once an investor completes the registration process and commits to purchase CNote Notes, an investor is deemed to have committed to invest at the next Closing. Until a Closing Threshold is reached, an investor may modify the amount such investor will invest by changing the amount of CNote Notes the investor elects to purchase. Once the Closing Threshold is reached, investors receive notice that a Closing will occur within the next 24 hours. On the Closing Date, funds will be drawn from the investor’s bank account, and the investor will be issued CNote Notes. Interest begins accruing on the sixth (6th) business day following the investor’s Closing Date (the “Accrual Date”). CNote Notes are issued to the investor on the Accrual Date and held on our platform in electronic form. CNote Notes can be viewed under the “Documents” tab in the investor’s account dashboard by entering login-credentials.

Periodically, depending on the availability of, and demand for, capital, we use the aggregated investor capital to make loans to our CDFI borrowers. We pass along part of the interest we earn from these loans to the CNote Note investors, who may choose whether to receive interest on their CNote Notes each month, or to have this interest compounded on a monthly basis. An investor electing to have interest compounded on a monthly basis may receive that interest upon making early withdrawals pursuant to the terms described below under “—The Offering—Investor Withdrawals” or else at maturity of the CNote Notes. The proceeds of the loans we make to CDFIs are used, along with their other sources of financing, to lend to segments traditionally under-served by major financial institutions. Currently, the majority of the loans made by our CDFI borrowers go to minority- and women-owned businesses, affordable housing, communities facilities such as early child care centers and rehab facilities among others. Although CNote is not involved in the CDFIs’ vetting procedures, we monitor their lending activities, including any required reports to the U.S. Department of the Treasury on the borrowers to which they extend loans.

Currently, CNote’s loans to CDFIs have two layers of support which are expected to enhance the CDFIs’ ability to repay our loans.  First, most of our loans are made to CDFIs with loan products that are affiliated with, or participate in, federal and state programs, that offer guarantees and/or loan loss reserve support for repayment. Second, CNote’s loans CDFIs are full recourse to the CDFIs and not reliant on proceeds from the loans each CDFI makes.

CNote Notes allow investors to make quarterly withdrawals of up to 10% of the investor’s principal and accrued, but unpaid, interest, generally upon 30 days’ notice, but subject to available proceeds from the loans we make to the CDFIs and the Company’s discretion to limit withdrawal requests. Management retains discretion to allow additional liquidity beyond the quarterly 10% cap, subject to available funds. CNote intends to use all of the proceeds of this offering to make loans to CDFIs.

Investors should be prepared to hold their CNote Notes to maturity. With available funds, CNote pays interest on the CNote Notes on a monthly or compounded basis. Without availability of additional funds, investors may not receive any interest until the maturity date. CNote Notes are the general obligations of the Company, regardless of payments received from any specific CDFI, and we reserve the right to assign our obligations under the CNote Notes without first obtaining investor consent.

CNote’s goal is to address two important, current issues:

1) CDFIs are actively seeking new sources of capital. The CDFI industry continues to experience double digit growth and yet does not have the capital it needs to fund all of the quality projects the industry aims to serve, including schools, centers and minority-run businesses. This results in a large, year over year gap, in funding, estimated at over $600 million in a 2014 CDFI Fund report. The OFN predicts that loans made by CDFIs will continue to experience a 15% year-over-year growth rate. The need for capital by CDFIs is augmented by social-economic consequences of the COVID-19 related disruption of the economy and slowdown in lending by traditional financial institutions. Fair access to capital is continued to be an issue in many vulnerable communities around the country and CDFIs are on the frontlines to ensure equal opportunities to all.

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2) At the same time, investors are increasingly looking to align their money with their values. Numerous sources, including the Wall Street Journal, have reported that women and millennials are very interested in investing in organizations that are aligned with their values.

We use technology, data analytics, and a proprietary liquidity algorithm to match investors’ funds with the funding needs of the CDFIs. In the course of determining whether to enter into a lending relationship with CDFI borrowers, CNote conducts three levels of diligence on every potential CDFI borrower, including the following:

1) Peer Review - AERIS is the national rating agency for the CDFI industry. AERIS prepares in-depth reports on CDFIs’ financial performance and are relied upon by major banks and government entities. CNote is reviewing AERIS generated data on CDFIs when available. CNote is also working with OFN, the national association for CDFIs, to assess potential CDFI borrowers. This review is important as OFN maintains the deepest base of knowledge of CDFI trends, challenges and performance over the last two decades.

2) CNote Review - CNote conducts its own assessment of each potential CDFI borrower’s historical financial performance and social impact. This process includes, among other things, a review of financial and portfolio performance, audited financial statements, lending and operational policies, composition of the team and the board and strategic plan and interviews with the leadership team, board members and clients of potential CDFI borrowers.

3) Third-Party Review – CNote will engage a third-party social finance committee, with expertise in the CDFI industry, and with no ties, financial or otherwise, either to us or to the potential CDFI borrower, to provide tertiary, third-party assessments of potential CDFI borrowers, including geo-specific and product-specific risks to be identified.

The overall due diligence process typically takes between two to four weeks to complete.

CNote Platform

 We currently operate an online platform, where investors can manage their accounts and purchase CNote Notes. The CNote Notes, as more fully described in this offering circular, are general obligations of the Company, regardless of payments received from any specific CDFI borrower.  CNote will provide investors information on CDFI borrowers we have made loans to in the past and details on the types of projects they fund and their social impact, which may include stories from prior specific borrowers. However, we will not be directly connecting investors to CDFIs or to their borrowers.

Prospective CNote Notes investors will create a username and password, and indicate agreement to our terms and conditions and privacy policy.

The following features are available to participants in the CNote Notes program through our platform:

● Available Online Directly from Us.   You must purchase CNote Notes directly from us through our platform.

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● No Purchase Fees Charged.   We will not charge you any commission or fees to purchase CNote Notes through our platform. However, if you engage any financial intermediaries to manage your account or investments, these intermediaries may charge you commissions or fees.

● Invest as Little as $1.   You will be able to build ownership over time by making purchases as low as $1.

● Flexible, Secure Payment Options.   You may purchase CNote Notes with funds electronically withdrawn from your checking or savings account using our platform.

● Manage Your Portfolio Online.   You can view your investments, returns, and transaction history online, as well as receive tax information and other portfolio reports. Once you are registered, you may also make additional investments in CNote Notes, or withdrawals from your account, by logging into your existing account, visiting the Account Overview page, and either electing to increase the amount you have invested by purchasing additional CNote Notes, or electing to withdraw from your existing balance.

 Proceeds from the CNote Notes in this offering will be used to make loans to CDFIs. However, CNote Notes are not dependent upon any particular loan and remain at all times the general obligations of CNote regardless of payments received from any specific CDFI. Funds from the CNote Notes contemplated in this offering may be aggregated with funds from our disbursement account along with other funds from institutional and accredited investors to collectively fund the loans to CDFIs.  Final decisions on use of proceeds allocations will be made by management on a loan-by-loan basis.

In order to provide investors with insight into the social objectives and impact of our CDFI borrowers, CNote will provide information and insight on historical loans made and projects funded, and may also provide metrics such as percentage of businesses supported by our CDFI borrowers that are, for example, women-owned. These stories and metrics are for informational purposes only, and we do not make any representations about, or solicit contributions to, a particular loan to a particular CDFI. The Company does not provide information about its current lending opportunities and investors do not have the ability to direct their investments in CNote Notes to a loan to a particular CDFI, or to a particular borrower. Past performance is not indicative of future results.

Our Business

Under our business model, we generate revenue by keeping the difference between the interest rate we charge our CDFI borrowers and the interest distributed to investors. The interest rates we charge our CDFI borrowers and the interest rates of the CNote Notes are reviewed by management, in view of a variety of macroeconomic and market conditions, including the federal interest rate environment, fluctuations in the cost of capital averages for CDFIs, and the economics facing the Company. We also consider the competitiveness of CNote Notes as compared to rates offered by other investment products.

Our credit policy targets potential CDFI borrowers with high creditworthiness and stable financial situation. In order to borrow from CNote, potential CDFI borrowers must display characteristics indicative of a healthy loan portfolio and a durable financial situation.  We review financial and portfolio variables like repayment rates, loan delinquencies, loan loss reserves, credit enhancements and guarantees, team and board composition, lending and operational policies among others. Additionally, our CDFI borrowers are required to provide audited financials and impact data about their operational and lending activities.

The loans we make to CDFI borrowers are full recourse to the CDFI borrowers and are not reliant on proceeds from the loans each CDFI makes. The loans to CDFI borrowers are not amortizing. CDFI borrowers make payments through electronic bank payments. We are currently legally authorized to lend in 46 states plus the District of Columbia as a non-bank commercial lender.

Technology & Relationships

CNote believes it is uniquely poised to grow in the CDFI industry, given its industry expertise, relationships, technology and go to market strategy.

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Although CDFIs have been in existence for over 25 years, CDFIs have largely operated as a business-to-business industry. There are over one thousand CDFIs across the country of varying sizes, geographic make-ups and product lines. The CDFI Fund reports that CDFIs’ assets total over $185 billion. Though their specific areas of focus vary, all CDFIs share a primary mission of providing fair and responsible capital to segments under-served by traditional financial institutions, such as women- or minority-owned businesses, as well as community facilities and affordable housing. Each year, CDFIs must be re-certified by the CDFI Fund, which helps ensure they continue serving the communities they intend and maintain strong financial performance.

While individual CDFIs have tried to reach individual investors, few have done so successfully. The majority of CDFIs, many of whom are non-profits, do not have the marketing, legal or technology budgets and expertise to effectively address individual investors. Due to these barriers among others, according to the OFN, the membership association of CDFIs, less than 5% of CDFIs’ funding comes from individual investors.

CNote is excited to change this dynamic through technology and outreach. We currently have 13 CDFIs to which we make loans; we expect to have more than 20 CDFI lending relationships by the end of 2020. By continuing to forge relationships with key CDFIs, and the national CDFI industry, CNote is developing a scalable technology solution that will enable CDFIs to access capital from individual and institutional investors.

In addition to connecting CDFIs with new sources of impact aligned capital, CNote provides the industry as a whole with increased visibility. In turn, this will help CDFI borrowers to enhance their operational capacity as well as expand their recognition with partners and borrowers.

Our Process

CNote relies on its proprietary technology to aggregate investors’ contribution amounts and allocate the capital among different CDFI borrowers. The internal algorithm will ensure that investors’ capital is properly spread out across CDFI borrowers, including by geography and industry focus, to match CDFIs’ funding needs and optimize for liquidity, impact, return and diversification for investors. In turn, our CDFI borrowers lend to a variety of small businesses, community facilities and affordable housing projects, frequently spread across geographic areas and in varying amounts of principal, which further diversifies the risk of default under our loans.

At present, we have lending relationships with 13 CDFIs and are in the process of entering into lending relationships with five additional CDFIs. As we expand our footprint, this diversification will help ensure that we have sufficient funds to repay our investors, as repayment of the CNote Notes to our investors is not tied to any particular loan being repaid but rather comes from our aggregated pool. Increasing the number of loans to our CDFI borrowers will increase both the diversification of our loans and our ability to repay our investors. In the event that multiple CDFI borrowers were to default on their obligations, the Company would support the repayment of outstanding CNote Notes using working capital or equity.

In the event the Company would not have enough capital available to support the repayment of outstanding CNote Notes, all outstanding CNote Notes will be general unsecured obligations of the Company and would rank equally in priority with other unsecured creditors.

Currently, CNote does not let individual investors select the CDFI to which we will loan the proceeds of the purchase of the CNote Notes. We do not allow this because there is no standard set of information available to investors to adequately assess the risk of investing in a particular CDFI. Our three-part diligence process presents a critical value proposition for the investors, allowing them access to information regarding CDFIs that are otherwise difficult to find or assess.

CNote works with both individual investors and institutional investors such as Donor Advised Fund and Family Offices, whose aggregate capital is then loaned to our CDFI borrowers.

CDFIs

We will only enter into a lending relationship with a potential CDFI borrower after satisfactory completion of our due diligence review. Prospective CDFI borrowers must provide us with relevant data about their organization’s financial health (including audited financial statements), organizational capacity, business volume and projected growth, product line, loan portfolio performance, credit enhancements, and social impact. We use this data to underwrite a CDFI borrower and fund loans to it through the CNote Platform. CNote evaluates capital demand from CDFI borrowers on a continuous basis. Our management team continuously monitors the operational and lending activities of our CDFI borrowers, including the health of their loan portfolios, to ensure against any increased risks.

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Application Process

Potential CDFI borrowers may express interest in entering into a lending relationship by contacting CNote. We also are connected to potential CDFI borrowers through OFN, the national membership organization for CDFIs, and by word of mouth among members of the CDFI industry. CNote lends to qualified CDFI borrowers who pass our business, credit and impact qualifications and are approved through our underwriting process. Borrowers provide a variety of information including audited financial statements, impact report and loan portfolio status.  Our diligence process typically takes two to four weeks.

Underwriting Process

Currently, we offer CDFI borrowers term loans of different maturity and varied amounts defined during underwriting process.

Specifically, we provide simple, balloon payment, fixed-term loans only to qualified CDFI borrowers. We do not provide loans directly to the small businesses and projects which CDFI borrowers support. In order to qualify, potential CDFI borrowers must be approved through our proprietary underwriting process, which analyzes their creditworthiness, financial health and impact data. CNote conducts three stages of due diligence on prospective CDFI borrowers, which include internal due diligence following industry best practices, reviewing opinions from AERIS, the rating agency that specializes in CDFIs and/or the opinion of OFN, the national membership association of CDFIs, and a third-party review by stakeholders, with expertise in the CDFI industry, and with no ties, financial or otherwise, either to us or to the potential CDFI borrower, to provide tertiary, third-party assessments, including geo-specific and product-specific risks to be identified.

Based on the results of our analysis, we are able to determine the terms of the loan to be made to a CDFI borrower, including the principal amount, interest rate, and term. CNote’s assessment of the CDFI’s creditworthiness, the size of the CDFI, its products line-up, general economic environment and competition for capital are principal factors, among others, that are considered in the determination of the amount, interest rate and term of the loan we make to the CDFI. Our loans are typically made to CDFI borrowers in the form of a master promissory note, which allows them to make multiple requests for advances. If a CDFI borrower makes a request for an additional loan amount, we will re-evaluate the CDFI borrower in accordance with our underwriting process. In addition, we conduct reviews on at least a quarterly basis. If the results of our analyses differ, a CDFI borrower may receive different financial terms on subsequent draw downs.

Currently, we do not require the loans we make to CDFI borrowers to have any minimum principal amount, and, while there is no set maximum loan amount either, we consider CDFI borrowers’ loan demands in light of the actual and anticipated demands of other CDFI borrowers, as well as our goal of diversifying our loans across a variety of CDFI borrowers.

We service the loans we make to CDFI borrowers in-house, using the platform we developed.

Risk Characteristics of Receivables

● We extend loans to CDFI borrowers, which in turn make loans to small businesses, community facilities, affordable housing and other projects in under-served communities around the country. Small businesses are more sensitive to macro-economic factors, and a weakening economy will hamper the ability for a small business to meet obligations of their loans. Although our operations seek to diversify exposure by lending to a variety of CDFI borrowers, if our CDFI borrowers are unable to collect on their loans to their borrowers, our CDFIs may be unable to make payments required by the terms of our loans to them.

● At this stage, many of our loans are unsecured obligations of our CDFI borrowers. This means that, for those loans, we will not be able to foreclose on any assets of the CDFIs in the event of their default. This may limit our recourse in the event of a default. If the CDFIs are unable to realize on any collateral securing the loans that they make if a default occurs, their ability to repay CNote and, consequently our ability to repay the CNote Notes, may be adversely impacted.

● We do not currently have, or provide, third-party insurance on our loan products.

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Portfolio Information

 As of June 30, 2020, we have originated loans in the aggregate principal amount of $32.0 million, to 13 CDFI borrowers, of which the principal amount of $26.9 million is currently outstanding.

DESCRIPTION OF PROPERTY

We lease office space at a coworking facility in Oakland, CA on a month-to-month basis. If necessary, we believe we can find alternative office space without difficulty near our current location.

THE CNOTE PLATFORM

CNote Note investors are provided with electronic notes directly from the Company.  All CNote Notes earn an annual interest rate designated when the CNote Notes are initially purchased. Management retains the right to change the interest rate paid on CNote Notes issued in the future. Any increase in interest rates will not apply to previously-issued CNote Notes. These loans are callable at any time by us. That is, we may repurchase the asset from the CNote Note investor at the par value of outstanding principal plus the interest accrued through the repurchase date.

CNote Notes are held on our platform in electronic form and are not listed on any securities exchange.  Selling of CNote Notes to third parties is prohibited unless expressly permitted by us.  CNote Notes can be viewed and are accessible by accessing the “Your Account” page on our website when the investor enters his or her login credentials.

Loan Servicing

CNote has built a platform to manage investor servicing and loan servicing in-house. Investors can access and manage their accounts online at www.mycnote.com by entering their credentials.

Fees

Non-accredited investors can purchase CNote Notes via the Company’s online portal. CNote non-accredited investors will not be charged a servicing fee for their investments, but may be charged a transaction fee if their method of deposit requires us to incur an expense.

Use of Proceeds

 We intend to use all proceeds of this offering to fund loans to CDFIs through the CNote platform.  However, management retains discretion to use proceeds for other purposes, including the expenses of this offering. See “Use of Proceeds.”

 Establishing an Account

The first step to being able to purchase CNote Notes under our platform is for you to set up an account (a “CNote Account”).  Our process requires you to share your personal details and an email address to register a CNote Account. In some cases, APIs used by our partners may allow you to accelerate the application process by pre-populating basic information, but regardless, in order to set up a CNote Account all prospective investors must also complete the following steps:

● if you are an individual, you will need to establish a CNote Account through our platform by registering and providing your name, email address, Social Security Number, and other specified information;

● if you are an organization, you will establish a CNote Account through our platform by registering and providing the name of the organization, the type of organization, email address, tax identification number, and other specified information; and

● in either case, you must agree to our terms of use, privacy policy, and subscription agreement, which provide for the general terms and conditions of using our platform and purchasing the CNote Notes and other applicable terms and conditions.

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● You will connect and verify a bank account which will be used as a funding source to purchase CNote Notes

As part of these terms and conditions and by registering to purchase CNote Notes, you will be required to certify to us, among other things, that: 

● you will have had the opportunity to download and view this offering circular and any offering circular supplement through our platform each time you purchase CNote Notes;

● if you are an individual investor, your purchase order is submitted for and on behalf of your account;

● if you are an organization, your purchase order has been submitted by an officer or agent who is authorized to bind the organization;

● you are making your own investment decision by choosing to invest in the CNote Notes;

● you may withdraw up to 10% of your principal and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice and subject to available funds from loans to our CDFI borrowers and other cash available to the Company;

● we are not providing you any investment advice nor are we acting as or registered as a broker, dealer, investment adviser or other fiduciary; and

● your purchase order and all other consents submitted through our platform are legal, valid and enforceable contracts.

You must agree to receive all notifications required by law or regulation or provided for by our platform electronically at your last electronic address you provided to us.

 After you have successfully registered with our platform, you will receive a confirmation of your successful registration. Please note that you are not obligated to submit a purchase order for any CNote Notes simply because you have registered on our platform. The CNote Notes may not be a suitable investment for you, even if you qualify to purchase CNote Notes.

If you have difficulty opening an account or otherwise using our platform, you may call a number listed on our website to speak with one of our customer service representatives or email at support@mycnote.com.  Customer service representatives will help you with technical and technology issues related to your use of our platform.  However, customer service representatives will not provide you with any investment advice, nor will they provide you with any information as to the CNote Notes, how much to invest in CNote Notes, or the merits of investing or not investing in CNote Notes.

How to Purchase CNote Notes

You may submit purchase orders by:

● indicating the amount of CNote Notes that you wish to purchase;

● reviewing the applicable offering circular for CNote Notes;

● submitting a purchase order by clicking the confirmation button.

 You will not be able to purchase a CNote Note unless you have completed all of the above steps. Once you have created an account and submitted your first purchase order, investing in additional CNote Notes is easy; simply log into your existing CNote Account and complete the steps above to make an additional purchase.

Currently, the minimum purchase order that you may submit for any particular offering of CNote Notes is $1.00, and there is no maximum purchase order that may be submitted, except for non-accredited investors, whose purchases will be subject to the following limits pursuant to SEC Rule 251(d)(2)(C):

● natural non-accredited persons may only invest the greater of 10% of their annual income or net worth; and

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● non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.

We issue CNote Notes in a series of Closings, which occur within 24 hours or as soon as reasonably practicable, with no discretion to extend or delay, after the Company has obtained commitments from investors to purchase an aggregate of at least $50,000 (the “Closing Threshold”) in principal of CNote Notes. If the Company desires to change the Closing Threshold, it will file a request with the Securities and Exchange Commission (the “SEC”) through a post-effective amendment of the offering statement to which this offering circular forms a part. We refer to the date on which a Closing occurs as the “Closing Date.” Once an investor completes the registration process and commits to purchase CNote Notes, an investor is deemed to have committed to invest at the next Closing. Until a Closing Threshold is reached, an investor may modify the amount such investor will invest by changing the amount of CNote Notes the investor elects to purchase. Once the Closing Threshold is reached, investors receive notice that a Closing will occur within the next 24 hours. On the Closing Date, funds will be drawn from the investor’s bank account, and the investor will be issued CNote Notes. Interest begins accruing on the sixth (6th) business day following the investor’s Closing Date (the “Accrual Date”). CNote Notes are issued to the investor on the Accrual Date and held on our platform in electronic form. CNote Notes can be viewed under the “Documents” tab in the investor’s account dashboard by entering login-credentials.

Auto-Invest Program

Once deployed, you can elect to participate in our auto-invest program, which allows you to automatically invest in additional CNote Notes on a recurring basis (monthly or twice a month). When selecting to participate in our auto-invest program, you will choose the frequency of recurring investments (monthly or twice a month) and the amount of such recurring investments.

CNote intends to treat any sales of CNote Notes made pursuant to the auto-invest program as sales chargeable against the aggregate total of offered securities pursuant to this offering circular and to include such sales when calculating the $50 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with SEC Rule 251(a).

Investors can cancel their participation in the auto-invest program any time from their CNote account dashboard.

 Platform Operation

Although our platform has been subjected to testing to confirm its functionality and ability to handle numerous purchase orders and prospective investors, we cannot predict the response of our platform to any particular issuance of CNote Notes pursuant to this offering circular.  You should be aware that if a large number of investors try to access our platform at the same time and submit their purchase orders simultaneously, there may be a delay in receiving and/or processing your purchase order.  You should also be aware that general communications and internet delays or failures unrelated to our platform, as well as platform capacity limits or failures may prevent purchase orders from being received on a timely basis by our platform. We cannot guarantee you that any of your submitted purchase orders will be received, processed and accepted during the offering process.  Once a purchase order is accepted and processed, it is irrevocable.  See “The CNote Platform—Structure of Investor Accounts and Treatment of Your Balances” for more information.

Structure of Investor Accounts and Treatment of Your Balances

We will maintain records for you detailing your balance of CNote Notes, interest earned, funds available for withdrawal and historical transactions available for your review on your CNote account dashboard. 

We work with Dwolla, a payment processing API, to facilitate transfers from, and to, investors’ funding sources and our CDFI borrowers. Dwolla processes payments using the ACH network. 

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Our process consists of the following steps:

· Determine the aggregate amount of funds committed by our investors;

· Using our proprietary algorithms, we identify how the funds will be allocated among our CDFI borrowers;

· Once we have determined our commitments to our CDFI borrowers, we disburse funds to them from either our Silicon Valley Bank account or Dwolla virtual wallet in the name of CNote (FBO account in the name of CNote at Veridian Credit Union).

Tax and Legal Treatment

CNote Notes will receive interest income.  At the end of the calendar year, investors with over $10 of realized interest will receive a form 1099-INT.  These will need to be filed, and the interest earned on CNote Notes will need to be declared, in accordance with the United States Tax Code.  Investors’ tax situations will likely vary greatly and all tax and accounting questions should be directed towards a certified public accountant. CNote does not provide investment, accounting, tax or legal advice to CNote Notes investors and encourages investors to seek out advice from their professional advisers to fully understand their particular tax situations.

We are regulated state-by-state as a nonbank, commercial lender. Most states do not require us to obtain licenses for our commercial lending activities, as currently structured. We are currently legally authorized to lend in 46 states plus the District of Columbia as a non-bank commercial lender. As a lender we are generally subject to the lending laws of our home state of California and possibly the home state of the borrower.  We maintain a dialogue with regulators in states in which we operate and strive to run our business within the bounds of the law and the principles of fairness and goodwill.

NOTES BEING OFFERED

Following is a summary of the terms of the CNote Notes which will be offered on the CNote website.

General.   We are offering up to $47,166,890 of CNote Notes pursuant to this offering circular.

The CNote Notes will:

● require a minimum investment per investor of $1.00;

● represent a full and unconditional obligation of the Company;

● be issued on a periodic basis once the closing threshold is committed, on the date designated as a Closing Date, with CNote having no discretion to change the Closing Threshold absent requalification by the SEC of the offering statement of which this offering circular forms a part;

● beginning on the sixth business day after issuance, bear interest at the current rate of 2.75% per annum, compounded monthly and payable at maturity, or, at an investor's election, the interest may be paid out on a monthly basis;

● bear interest at fixed rates. The interest rate with respect to any series of CNote Notes will be disclosed to investors prior to purchase. Subsequent changes in interest rates will be applied to all CNote Notes outstanding at the time of the modifiction;

● permit an investor to withdraw up to 10% of the investor’s principal and accrued, but unpaid, interest each quarter, generally upon 30 days’ notice;

● have a term of 30 months and will be callable, redeemable, and pre-payable at any time by the Company for an amount equal to the principal amount of the note and accrued and unpaid interest through the repurchase date;

● not be payment-dependent on any underlying loan issued on our online investment platform; and

● not be transferrable to a third party without our express permission.

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Investors should be prepared to hold their CNote Notes to maturity. The Company retains the discretion to limit withdrawal requests prior to maturity depending on available funds from loans to our CDFI borrowers and other cash available to the Company. Thus, investors may not receive any interest until the maturity date. CNote Notes are the general obligations of the Company and we reserve the right to assign our obligations under the CNote Notes without first obtaining investor consent.

Ranking.   The CNote Notes will be our general unsecured obligations, and will rank equally with all of our other unsecured debt unless such debt is senior to or subordinate to the CNote Notes by its terms.

Form and Custody.   CNote Notes will be issued by a computer-generated program on our website and electronically signed by the Company in favor of the investor.  The CNote Notes will be stored by the Company and will remain in the Company’s custody for ease of administration.  Except during periodic system maintenance, investors may view their CNote Notes through their online dashboard.

Prepayment.   CNote Notes will be callable, redeemable, and prepayable at any time by the Company at par value plus any accrued but unpaid interest.

Conversion or Exchange Rights.   We do not expect the CNote Notes to be convertible or exchangeable into any other securities.

Events of Default.   The following will be events of default under the CNote Notes:

● if we fail to pay interest when due and our failure continues for 90 days and the time for payment has not been extended or deferred;

● if we fail to pay the principal, or premium, if any, when due whether by maturity or otherwise; and

● if we cease operations, file, or have an involuntary case filed against us, for bankruptcy, are insolvent or make a general assignment in favor of our creditors.

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

Governing Law.   CNote Notes will be governed and construed in accordance with the laws of the State of California.

No Personal Liability of Directors, Officers, Employees and Stockholders.   No incorporator, stockholder, employee, agent, officer, director or subsidiary of ours will have any liability for any obligations of ours due to the issuance of any CNote Notes.

PLAN OF DISTRIBUTION

Subscribing for CNote Notes

We are offering up to $47,166,890 of CNote Notes pursuant to this offering circular.  CNote Notes being offered hereby will be only be offered through the CNote website at https://mycnote.com and in some circumstances, through management-approved third party platform partners, which partners will be registered investment advisers or broker-dealers and may, by virtue of this relationship, be deemed to be underwriters. This offering circular will be furnished to prospective investors via electronic PDF format before or at the time of all written offers and will be available for viewing and download on the CNote website, on approved partner sites, as well as on the SEC’s website at www.sec.gov.

In order to subscribe to purchase CNote Notes, a prospective investor must agree create an account on our website, provide the requested personal information and link to a bank account, and must agree to the terms of our promissory note, terms of use, and privacy policy.

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State Law Exemption and Offerings to “Qualified Purchasers”

Our CNote Notes are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act of 1933).  As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state “Blue Sky” law review, subject to certain state filing requirements and anti-fraud provisions, to the extent that our CNote Notes offered hereby are offered and sold only to “qualified purchasers” or at a time when our CNote Notes are listed on a national securities exchange.  “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our CNote Notes does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).  Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

Physical Notes Will Not be Issued

We will not issue CNote Notes in physical or paper form.  Instead, our CNote Notes will be recorded and maintained on our membership register.

Advertising, Sales and other Promotional Materials

In addition to this offering circular, subject to limitations imposed by applicable securities laws, we expect to use additional advertising, sales and other promotional materials in connection with this offering to better understand possible demand for the CNote Note product.  These “test-the-waters” materials may include information relating to our Company, this offering, the past performance of our loan transactions, articles and publications concerning CDFI and community lending, or public advertisements and audio-visual materials, in each case only as authorized by us.  All such materials will contain disclaimers required by, and be disseminated in a fashion permitted by, Regulation A.  Although these materials will not contain information in conflict with the information provided by this offering circular and will be prepared with a view to presenting a balanced discussion of risk and reward with respect to our Notes, these materials will not give a complete understanding of this offering, us or our Notes and are not to be considered part of this offering circular.  This offering is made only by means of this offering circular and prospective investors must read and rely on the information provided in this offering circular in connection with their decision to invest in our Notes.  To be clear, all investors will be furnished with a copy of a current offering circular before or at the time of all written offers.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this offering circular.  Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.  You should review the “Risk Factors” section of this offering circular for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

The Company operates an online platform that makes loans to CDFIs dispersed across the United States who in turn make loans to underserved communities. As of December 31, 2019, the Company has approximately $18,399,000 outstanding in loans and interest with CDFIs. The Company generates revenue by retaining the difference between the interest earned on the CDFI loans versus the interest paid to its investors/noteholders.

Operating Results

 Revenues represent interest earned from loans to CDFIs.

Cost of revenues consists of (A) interest paid (and payable) to noteholders, (B) direct costs to support the Company’s online platform, and (C) estimated loan loss reserves.

Operating expenses represent the cost for platform development, sales and marketing (travel, advertising and collateral) and general and administrative expenses (office, professional fees and insurance). Since its inception, the Company has focused on developing the online platform, setting up the legal framework for the product and establishing industry partnerships.

 Revenues

 During the fiscal year ended December 31, 2019, the Company generated $539,900 in revenue compared to $275,139 reported in the fiscal year ended December 31, 2018. The increase is a result of the higher loan origination.

In the fiscal year ended December 31, 2019, the cost associated with revenues increased to $781,422 from $646,162 in the fiscal year ended December 31, 2018. The increase is primarily explained by an increase in loan originations.

Operating Expenses

 For the fiscal year ended December 31, 2019, we had operating expenses of $878,604 compared to $476,339 in the fiscal year ended December 31, 2018. The largest line items of operating expenses were payroll and payroll taxes, marketing expenses, legal and other professional services, and amortization expense.

Liquidity and Capital Resources

Sources of Liquidity

 To date, the Company has funded operations primarily through Simple Agreements for Future Equity (“SAFEs”) agreements, convertible promissory notes (“convertible notes”) and has funded its lending activities through investments in notes payable by accredited and non-accredited investors.

 Equity and Convertible Debt Financing

 As of December 31, 2019, the Company has raised $1,619,500 by selling SAFEs, which will convert to preferred stock as part of a qualified equity financing, if and when such an event occurs. SAFEs do not have maturity dates, nor do they accrue interest.

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 It’s expected that the SAFEs will convert into preferred stock in the future at a price to be determined relative to the valuation caps set by the Company on the SAFEs, or, in the event the Company were to undergo a change of control or initial public offering prior to a qualified equity financing, the SAFEs may convert into either Common Stock or a right to receive payment, at the election of the holders.

 As of December 31, 2019, the Company has raised $1,100,600 by selling convertible notes. Subsequent to December 31, 2019, the Company has raised an additional $625,000 in convertible notes. The convertible notes have a maturity date of two (2) years and an interest of four (4) percent per annum.

 In the event of a qualified equity financing, the convertible notes will convert into equity securities issued in the Qualified Financing at a conversion price as set in the convertible note agreement. In the event the Company were to undergo a change of control prior to qualified financing, the holders of the convertible notes will receive cash payments in the amount set in the convertible note agreement.

The capital raised has been used to develop and maintain the Company’s platform, to fund legal expenses, for marketing and advertising, for expanding operations, and for other general corporate purposes.

Operating and Capital Expenditure Requirements

 The Company expects these existing funds, together with the recurring operating revenue, to be sufficient to meet anticipated near-term cash operating expenses and capital expenditure requirements. If those funds are insufficient to satisfy liquidity requirements, the Company intends to seek additional equity or debt financing. The sale of equity may result in dilution to our stockholders and those securities may have rights senior to those of our common shares. If the Company raises additional funds through the issuance of debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior to shares of our Common Stock. The Company may require additional capital beyond currently anticipated amounts and additional capital may not be available on reasonable terms, or at all.

Trends and Key Factors Affecting Our Performance

Investment in Long-Term Growth.

 The core elements of the Company’s growth strategy include acquiring new customers, broadening distribution capabilities through strategic partnerships, extending customer lifetime value, enhancing data and analytical capabilities, and expanding product offerings. The Company plans to continue to invest significant resources to accomplish these goals, and the Company anticipates that its operating expenses will continue to increase for the foreseeable future, particularly sales and marketing and technology expenses. These investments are intended to contribute to long-term growth, but they may affect near-term profitability.

 Originations.

 The Company’s future growth will continue to depend, in part, on attracting additional investors while entering into lending relationships with more CDFI borrowers. The Company plans to increase its sales and marketing spending and seek to attract these investors. We expect to rely on strategic distribution partners, affinity networks and conference and speaking events for investor growth.

 The Company expects CDFI borrowers’ need for borrowings to increase in the future. The extent to which the Company can satisfy that increased demand for debt financing will be an important factor in its continued revenue growth. Building relationships with the membership industry network and CDFI coalitions proved to be a stable source of referrals to CDFI borrowers, and we expect this trend to continue.

Summary of Critical Accounting Policies

 This management’s discussion and analysis of the Company’s financial condition and results of operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, the Company bases estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company’s significant accounting policies are fully described in Note 2 to the consolidated financial statements appearing elsewhere in this offering circular. The Company believes those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements.

29

MANAGEMENT

Name	Age	Position	Term of Office
Executive Officers/Directors:
Catherine Berman	45	President, Chief Executive Officer, Co-founder, Director	Since June 17, 2016
Yuliya Tarasava	37	Chief Operating Officer, Co-Founder, Treasurer, Secretary, Director	Since April 22, 2016
Significant Employees:
John "Michael" Ivancie, Jr.	37	VP of Marketing	Since October 2, 2017
Danielle Burns	44	VP of Business Development	Since July 8, 2019
Robert Shaw	33	Principal Engineer	Since April 8, 2019
Gasper Magallanes	36	Director of Due Diligence	Since June 1, 2020
Stacy Zielinski	41	Director of Community Development	Since February 3, 2020

Catherine Berman

Ms. Berman co-founded CNote and has served as our President and Chief Executive Officer and a member of our Board of Directors since June 2016. Before launching CNote, Ms. Berman served as Managing Director of Charles Schwab, one of America’s leading financial services businesses. At Schwab, Ms. Berman led a strategy division focusing on the future of financial services. Prior to Schwab, Ms. Berman maintained a host of management positions including Senior Vice President of Astia (venture capital), Strategy & Operations Manager at Deloitte Consulting, LLP (management consulting) and Vice President of Evins Communications, LLC. Her international work experience spans from India to Israel with extensive work in Central and South America. Her last startup, Global Brigades, grew into a multi-million dollar firm in less than four years and is now the world’s largest student development firm. Ms. Berman graduated magna cum laude from Boston University and received her MBA from the University of Oxford where she founded the Oxford Women in Business Network.

Yuliya Tarasava

 Ms. Tarasava co-founded CNote and has served as our Chief Operating Officer, Treasurer, Secretary and a member of our Board of Directors since the Company’s inception. Ms. Tarasava began her career conducting intensive quantitative research on new market opportunities and designing investment solutions across asset classes for AMG Funds—a $75 billion asset firm providing access to boutique investment strategies. Ms. Tarasava then went on to Summit Rock Advisors, a $10 billion OCIO firm, where she developed and implemented the firm’s proprietary analytics and risk management framework. Most recently, she worked with a high-growth financial services company in Kenya where she led both product development and scale strategy efforts working directly with the company’s chief executive officer. Her prior experience also includes creating an investment education portal in Russia and providing pro-bono consulting for non-profits and startups around the world. Ms. Tarasava graduated magna cum laude from Belarusian State University and received her MS in Finance from Fairfield University.

John "Michael" Ivancie, Jr.

 Mr. Ivancie is CNote’s VP of Marketing. Prior to CNote, Mike worked as a Staff Attorney at the Department of Homeland Security, which he left to start a niche law practice. After spending three years growing and marketing his practice, he transitioned to a full-time career in marketing. Mike holds a BA in Criminology with a minor in Management from UC Irvine. He received his JD from the University of Arizona in 2009, and he is a licensed California attorney. He is currently an MBA candidate at UC Berkeley's Haas School of Business.

Danielle Burns

 Ms. Burns is CNote’s VP of Business Development. Prior to joining CNote, Danielle worked for First Affirmative Financial Network in a variety of roles. She most recently served as Vice President of Sales and Marketing on a team responsible for the growth and profitability of the firm’s distribution channels. Danielle began her financial services career in 1994 with Wachovia Corporation where she worked for both Wachovia Bank and Wachovia Securities. Danielle serves on the board of Green America, a not-for-profit membership organization, whose mission is to harness economic power to create a socially just and environmentally sustainable society. Additionally, Danielle serves on the SRI Conference & Community Advisory Board. Danielle is a certified trainer for Walking on the Glass Floor which promotes Diversity and Inclusion for Women in Leadership. Danielle holds an MBA with an emphasis in marketing and the AIF® designation.

30

Robert Shaw

Mr. Shaw is a software engineer with over 10 years of experience building technology, leading projects from idea to launch, and improving engineering teams. Before CNote, Rob ran product engineering at Secureware, a security focused blockchain startup. Prior to Secureware, he was a product manager and engineer at a small design and software engineering consulting firm focused on building solutions for a variety of different businesses. Rob started his career at Aprimo where he worked directly with large teams at Fortune 100 companies building out complex customizations and enterprise integrations. Rob holds a BS in Computer Science from Purdue University.

Gasper Magallanes

Mr. Magallanes is an experienced financial executive with over a decade of diligence, modeling and financial analysis experience. He maintains deep community finance, operational governance and financial audit experience with expertise on mission-based lending organizations. Gasper has experience growing and managing diverse teams, driving strategic efforts. For the past 11 years, he has worked for EdTec, a boutique fractional CFO advisory services firm, where he worked on various underwriting/lending programs with CDFIs among his clients, addressing multi-factored financial stress tests within complex modeling environments. He is a graduate of Stanford University with an academic background in Finance, Management Science and Engineering.

Stacy Zielinski

Ms. Zielinski brings over a decade of experience and deep knowledge of CDFI finance and operations to her role at CNote. She started her career in the community development space developing and managing the technical assistance program for loan clients and overseeing all aspects of business services. She later transitioned into underwriting and led the integration of the SBA Community Advantage Program into WWBIC’s lending program. At Milwaukee Economic Development Corporation (MEDC), Stacy took over the SBA Community Advantage Lending program and maintained her focus on loan origination and underwriting across different lending products. Before joining CNote, Stacy had her own consultancy practice helping CDFIs to align their finance and operations with the industry best practices. Stacy holds an MBA from Alverno College, a BA from Marquette University and brings over a decade of small business experience as owner/operator in the retail and hospitality industries.

 Family Relationships

None.

Conflicts of Interest

We do not believe that we are a party to any transactions that contain or give rise to a conflict of interest between any of our directors, officers and major stockholders on the one hand, and CNote on the other hand.  Several of our employees have invested through our platform in the amounts up to $10,000, but we do not believe these small investments present a conflict of interest.

Involvement in Certain Legal Proceedings

Except for routine collections suits against borrowers from time to time, we are not presently a party to any litigation.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company has two directors who also serve as executive officers. Their compensation for the 2019 fiscal year was as follows:

Executive Officers	Position	Cash Compensation	Other Compensation	Total Compensation
Catherine Berman	President, Chief Executive Officer, Co-Founder, Director	$96,000	$0	$96,000
Yuliya Tarasava	Chief Operating Officer, Co-Founder, Treasurer, Secretary, Director	$96,000	$0	$96,000

31

Executive compensation is set annually, based on several factors including company and individual leadership, performance compensation of competitor peer group, and other factors.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS

Name and address of beneficial owner(1)	Amount and nature of beneficial ownership as of December 31, 2019	Amount and nature of beneficial ownership acquirable as of December 31, 2019	Percent of class(6)
Catherine Berman	2,887,500 shares of common stock(2)	3,025,000 shares of common stock(4)	50.4%
Yuliya Tarasava	2,475,000 shares of common stock(3)	2,587,500 shares of common stock(5)	43.1%
All executive officers and directors as a group (2 persons)	5,362,500 shares of common stock	5,612,500 shares of common stock	93.5%

________________________

(1) Unless otherwise noted, the address of each executive officer and director is CNote Group, Inc., 2323 Broadway, Oakland, CA 94612.

(2) Does not reflect the unvested balance of a grant of an aggregate 3,300,000 shares of common stock, of which 87.5% (or 2,887,500 shares) vested on December 17, 2019 and which will continue to vest in equal monthly installments of 1/48^th of such grant thereafter.

(3) Does not reflect the unvested balance of a grant of an aggregate 2,700,000 shares of common stock, of which 91.67% (or 2,475,000 shares) vested on December 22, 2019 and which will continue to vest in equal monthly installments of 1/48th of such grant thereafter.

(4) Reflects vesting of two monthly installments of 68,750 shares of common stock (or 137,500 shares total) through February 28, 2020.

(5) Reflects vesting of two monthly installments of 56,250 shares of common stock (or 112,250 shares total) through February 28, 2020.

(6) Calculated on basis of beneficial ownership acquirable as of December 31, 2019.

32

LEGAL MATTERS

Certain legal matters regarding the securities being offered by this offering circular have been passed upon for us by Winston & Strawn, LLP, Chicago, Illinois.

EXPERTS

Our audited financial statements as of and for the years ended December 31, 2019 and 2018 have been audited by dbbmckennon. Such financial statements are included herein in reliance upon such report given on the authority of such firm as experts in accounting and auditing.  

33

CNOTE GROUP, INC.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

Table of Contents

	Pages
Independent Auditors’ Report	F-2
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Stockholders’ Deficit	F-6
Consolidated Statements of Cash Flows	F-7
Notes to the Consolidated Financial Statements	F-8

F-1

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders

CNote Group, Inc.

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of CNote Group, Inc. and subsidiary (collectively, the “Company”) which comprise the consolidated balance sheets as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders' deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of CNote Group, Inc. as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

F-2

Emphasis of Matter Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, certain conditions including the Company not generating significant revenue from principal operations, viability of the Company’s business model, and projected continued losses raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

/s/ dbbmckennon

Newport Beach, CA

April 29, 2020

F-3

CNOTE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

	2019			2018
Assets
Current assets:
Cash	$	1,360,834		$	435,209
Short-term investments		500,000			-
Accrued interest receivable		448,526			230,412
Accounts receivable and prepaid expenses		4,845			-
Current portion of loans receivable		9,049,777			5,577,242
Total current assets		11,363,982			6,242,863
Software, net		83,731			178,571
Loans receivable, net of loan loss reserve		8,542,183			5,875,857
Total assets	$	19,989,896		$	12,297,291
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	25,037		$	26,070
Interest payable		431,467			227,687
Deferred revenue		900,000			-
Current portion of notes payable, net		10,039,158			5,679,630
Current portion of notes payable - related parties		-			25,000
Current portion of convertible notes		420,000			-
Convertible note - related party		100,000			-
Total current liabilities		11,915,662			5,958,387
Notes payable, net		8,423,845			6,046,427
Notes payable - related parties		26,665			-
Convertible notes		580,660			-
Convertible note - related party		-			100,000
Contingent obligations to issue future equity - SAFE		1,619,500			1,619,500
Total liabilities		22,566,332			13,724,314
Commitments and contingencies (Note 5)		-			-
Stockholders' Deficit:
Common stock; par value of $0.00001 per share;   10,000,000 shares authorized.   6,018,750 and 6,000,000 shares issued and outstanding as of   December 31, 2019 and 2018, respectively		60			60
Additional paid in capital		17,492			3,984
Accumulated deficit		(2,593,988	)		(1,431,067	)
Total stockholders' deficit		(2,576,436	)		(1,427,023	)
Total liabilities and stockholders' deficit	$	19,989,896		$	12,297,291

See accompanying notes to the consolidated financial statements.

F-4

CNOTE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019			2018
Revenues - Interest Income	$	539,900		$	275,139
Cost of revenues - Interest expense and other		781,422			646,162
Gross loss		(241,522	)		(371,023	)
Operating Expenses:
General and administrative		258,015			179,157
Sales and marketing		348,872			170,390
Research and development		231,195			126,792
Total operating expenses		838,082			476,339
Operating loss		(1,079,604	)		(847,362	)
Other expense:
Interest expense		82,517			42,000
Loss before provision for income taxes		(1,162,121	)		(889,362	)
Provision for income taxes		800			800
Net loss	$	(1,162,921	)	$	(890,162	)
Weighted average common shares outstanding - basic and diluted		6,013,408			6,000,000
Basic and diluted net loss per share	$	(0.19	)	$	(0.15	)

See accompanying notes to the consolidated financial statements.

F-5

CNOTE GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	Common Stock				Additional					Total
	Shares		Amount		Paid in Capital		Accumulated Deficit			Stockholders' Deficit
December 31, 2017		6,000,000		60		-		(540,905	)		(540,845	)
Stock-based Compensation		-		-		3,984		-			3,984
Net Loss		-		-		-		(890,162	)		(890,162	)
December 31, 2018		6,000,000		60		3,984		(1,431,067	)		(1,427,023	)
Exercise of Warrants to Purchase Common Stock		18,750		-		750		-			750
Stock-based Compensation		-		-		12,758		-			12,758
Net Loss		-		-		-		(1,162,921	)		(1,162,921	)
December 31, 2019		6,018,750	$	60	$	17,492	$	(2,593,988	)	$	(2,576,436	)

See accompanying notes to the consolidated financial statements.

F-6

CNOTE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,162,921	)	$	(890,162	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		94,840			42,236
Amortization of offering costs		41,995			42,000
Stock-based compensation		12,758			3,984
Provision for loan losses		4,800			218,006
Changes in operating assets and liabilities:
Accrued interest receivable		(218,114	)		(187,765	)
Accounts receivable and prepaid expenses		(4,845	)		-
Accounts payable and accrued liabilities		(1,033	)		9,067
Deferred revenues		900,000			-
Interest payable		203,780			185,666
Net cash used in operating activities		(128,740	)		(576,968	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net lendings under loans receivable		(6,143,661	)		(7,266,834	)
Net investment in short-term investments		(500,000	)		-
Software development costs		-			(57,855	)
Net cash used in investing activities		(6,643,661	)		(7,324,689	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable		6,694,951			7,222,090
Net borrowings on notes payable to related parties		1,665			-
Exercise of warrants to purchase common stock		750			-
Issuance of convertible note - related party		-			100,000
Issuance of convertible notes		1,000,660			-
Issuance of Simple Agreements for Future Equity ("SAFEs")		-			604,500
Net cash provided by financing activities		7,698,026			7,926,590
Increase in cash and cash equivalents		925,625			24,933
Cash and cash equivalents, beginning of year		435,209			410,276
Cash and cash equivalents, end of year	$	1,360,834		$	435,209
Supplemental disclosures of cash flow information:
Cash paid for interest	$	259,132		$	15,197
Cash paid for income taxes	$	800		$	800

See accompanying notes to the consolidated financial statements.

F-7

CNOTE GROUP, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF OPERATIONS

CNote Group, Inc. was incorporated on April 22, 2016 (“Inception”) in the State of Delaware. The Company’s headquarters are located in Oakland, California. The consolidated financial statements of CNote Group, Inc. (which may be referred to as "CNote", the "Company," "we," "us," or "our") are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Through its online platform, CNote provides an opportunity for individuals and institutions to invest their money by lending it to CNote, which in turn, lends funds to Community Development Financial Institutions (“CDFIs”) dispersed across the United States. CDFIs are banks, credit unions, loan funds, microloan funds or venture capital providers that focus on providing loans to businesses in economically underdeveloped cities and neighborhoods in the United States and, as such, become qualified as a CDFI by the United States Treasury. Once qualified, CDFIs are eligible to be partially funded by the United States Treasury through the CDFI Fund established in 1994.

The Company intends to offer investors higher rates of return on their investments than is available to them through more traditional lower risk investment vehicles such as cash alternatives and fixed income. The Company also intends to earn revenues by earning higher rates of return on its loans to CDFIs than the rates it must pay its clients. The difference, or spread, between the rates CNote earns from its borrowers and the rates it pays to its lenders will constitute the primary component of the Company’s gross profits, before other direct costs of revenues such as web site costs and customer support costs, and operating expenses.

In December 2018, the Company formed a wholly-owned subsidiary CNote Lending, LLC, for the purpose of holding a California Finance Lenders license pursuant to the California Financing Law and to make loans to CDFIs. CNote Lending, LLC has received its California Finance Lenders license in January 2020. To date, the subsidiary has no operations.

The Company is still in the very early stages of developing its business. Accordingly, risks associated with startup, early-stage companies apply to the Company. Such risks include, but are not limited to, the need to raise additional funding, the need to generate additional revenues, the need to develop ongoing relationships with additional lenders and borrowers, the need to hire skilled employees, the need to comply with regulatory requirements, and the need to achieve profitability and sustainability.

Management Plans and Going Concern

The accompanying consolidated 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.

To date, the Company has not generated significant revenues from principal operations and has not yet proved the viability of its business model. Because losses will continue until such time that profitable operations can be achieved, the Company is reliant on financing to support operations. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the consolidated financial statements are issued.

During the next 12 months, the Company intends to fund its operations through the sale of equity and/or debt securities to third parties and related parties, as well as through increased operating revenues. If the Company cannot raise additional short-term capital, it may consume all of its cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the Company or increase revenues and margins sufficiently to sustain operations. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of planned operations, which could harm the business, financial condition and operating results. The consolidated financial statements do not include any adjustments that might result from these uncertainties.

F-8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Significant estimates include but are not limited to the valuation of SAFEs and convertible promissory notes, loan loss reserves, and the valuation allowance related to deferred tax assets. It is reasonably possible that changes in estimates will occur in the near term.

Cash and Cash Equivalents

The Company maintains its cash with major financial institutions located in the United States of America which it believes to be creditworthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000.  At times, the Company may maintain balances in excess of the federally insured limits.

Cash equivalents include all highly liquid debt instruments purchased with an original maturity of three months or less.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2019 and 2018. The respective carrying value of all financial instruments approximated their fair values. These financial instruments include SAFEs, convertible promissory notes (“convertible notes”), loans receivable and notes payable and interest receivable and payable.

The SAFEs are considered a level 3 liability as there are no observable direct or indirect inputs. Based on management’s estimates as of December 31, 2019 and 2018, the fair value of these instruments is considered to be the carrying value. Management’s estimates are based on the short duration of the outstanding SAFEs and the fact that market circumstances have not changed materially since the instruments were originated. Accordingly, there has been no change in valuation during the periods presented.

F-9

Loans Receivable and Related Notes Payable

Management expects that the terms of the Company’s loans receivable and the notes payable used to fund the loans receivable typically will be 30 months or 60 months based on the current operating structure. In the normal course of business, the Company expects to hold such instruments to maturity. However, provisions within the terms of such instruments having 30 month terms allow for liquidity on demand of 10% per quarter. Accordingly, should the need arise, 40% of such loans receivable and related notes payable can be due on demand within one year, and therefore the Company has classified its loans receivable and notes payable with 30 month terms, as available for sale with the due on demand portion considered short-term.

Short Term Investments and Related Notes Payable

Management expects that the terms of the Company’s short term investments, in the form of certificates of deposit, and notes payable used to fund these investments, will typically be three months based on the current operating structure. In the normal course of business, the Company expects to hold such instruments to maturity. The Company has classified the portion of its notes payable used to fund short term investments as current liabilities.

Deferred Offering Costs

The Company accounts for offering costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be netted against the debt offering proceeds upon the completion of an offering or to expense if the offering is not completed. As of December 31, 2017, $104,995 offering costs were incurred related to the Company’s Regulation A offering. As of December 31, 2017, all deferred offering costs were recorded as a discount to notes payable from the Regulation A offering and are being amortized over 30 months, which is the life of the initial notes payable under the offering. As of December 31, 2019 and 2018, $94,495 and $52,500, respectively, of the debt discount has been amortized and recorded as interest expense in the accompanying statements of operations. As of December 31, 2019, $10,500 remains to be amortized over the next three months on a straight-line basis.

Internal Use Software

The Company has incurred software development costs to develop software programs to be used solely to meet its internal needs and cloud-based applications used to deliver services. In accordance with ASC 350-40, Internal-Use Software, the Company has capitalized development costs related to these software applications. The Company begins amortization of these costs once the preliminary project stage is complete and it is probable that the project will be completed, the software will be used to perform the function intended, and the value will be recoverable. Reengineering costs, minor modifications and enhancements that do not significantly improve the overall functionality of the software are expensed as incurred. The Company is amortizing the initial release of the software based on the in-service date over 36 months on a straight-line basis. No software development costs for not yet released programs and applications met the criteria for capitalization in 2019. Amortization of capitalized software development costs recorded to expense was $94,840 and $42,236 for the years ended December 31, 2019 and 2018, respectively. Accumulated amortization as of December 31, 2019 and 2018 was $147,635 and $52,795, respectively.

Simple Agreements for Future Equity (“SAFEs”)

The Company has issued several Simple Agreements for Future Equity (“SAFEs”) in exchange for cash financing. These funds have been classified as long-term liabilities. (See Note 4.)

The Company has accounted for its SAFE investments as liability derivatives under the FASB’s ASC section 815-40 and ASC section 815-10. If any changes in the fair value of the SAFEs occur, the Company will record such changes through earnings, under the guidance prescribed by ASC 825-10. As of December 31, 2019 and 2018, the fair values of the SAFEs are equal to their face amounts that are the amounts of initial investment, as evidenced by the SAFE amounts being transacted in arm’s length transactions with unrelated parties.

F-10

Convertible Promissory Notes (“convertible notes”)

Thc Company has issued several Convertible Promissory Notes (“convertible notes”). These notes are recorded as short-term or long-term liabilities according to their stated maturity dates. (See Note 4.)

The Company reviews the terms of convertible debt and equity instruments it issues to determine whether there are derivative financial instruments, including an embedded conversion option that is required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where a host instrument contains more than one embedded derivative instrument, including a conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to the convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company has determined that the terms of the convertible notes do not require bifurcation as discussed above. The Company determined that these notes may contain a beneficial conversion feature contingent upon a future event due to the discounted conversion provisions. Following FASB ASC 470-20, the Company determined the intrinsic value of the conversion features on these convertible notes based on the issuance date fair value of the Company’s stock and the discounted conversion features. In accordance with FASB ASC 470-20, a contingent beneficial conversion feature in an instrument that becomes convertible only upon the occurrence of a future event outside the control of the holder is not recognized in earnings until the contingency is resolved. Therefore, these beneficial conversion features were not recorded as note discounts at the issuance dates of the notes, but rather will be recognized upon the occurrence of the contingent event. (See Note 4.) The convertible notes are recorded at their face value, which is equivalent to the proceeds received for issuance.

Stock Options and Warrants

The Company has issued stock options and warrants to employees and to key advisors as compensation for services performed. The Company has accounted for these awards under ASC section 718 and Accounting Standards Update (“ASU”) 2018-07. The options and warrants and the services received were recorded at the fair value of the options and warrants at their grant dates, using an established options pricing model. (See Note 8.)

Revenue Recognition and Cost of Revenues

CNote uses the money it borrows from individuals and institutions to loan money to CDFIs. The Company earns interest on its loans to CDFIs, which are currently the primary source of its revenues. All such loans to CDFIs are governed by signed contracts between the Company and the CDFI borrowers. Interest income is recorded based on the terms of the master promissory agreement with each CDFI. The interest is accrued monthly. If ninety (90) days pass without the interest being paid in accordance with normal disbursement practices per the agreement, then the Company will cease recording revenue until such time that the interest is collected.

CNote borrows money from individuals and institutions through the Company’s online platform. The Company must pay interest on the borrowings to its lenders. All such loans are governed by signed contracts between the Company and individual lenders. The interest, which accrues according to the agreements governing terms of the loans from individual lenders, constitutes the major portion of the Company’s direct cost of revenues. Other direct costs of revenues include costs of operating the online platform, provision for loan loss reserves and amortization of development costs of internal use software.

F-11

Loan Loss Reserve

The Company recognizes the risk of loan losses by establishing a reserve of two (2) percent for potential losses to all new loans extended to CDFIs. During 2018, the reserve rate was three (3) percent. The amount of the loan loss reserve was determined based on industry norms and trends, adjusted for characteristics unique to the Company’s business model.

Reversals to the loan loss reserve will happen only when the loans mature. If no loss has occurred on a particular loan, the loss reserve will be reversed and recognized as other income at maturity of the loan. On the other hand, if any loan becomes completely unrecoverable, the entire amount of the loan will be written off, with a charge to bad debt expense, when and if facts and circumstances indicate that such a write off is necessary.

Research and Development

The Company incurs research and development costs during the process of researching and developing new technologies and future online offerings. Such costs are expensed as incurred.

Advertising

The Company expenses the cost of advertising and promotions as incurred. Advertising costs expensed were $13,552 and $23,897 for the years ended December 31, 2019 and 2018, respectively.

Income Taxes

The Company applies ASC section 740. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. At December 31, 2019 and 2018, the Company has established a full reserve against all deferred tax assets.

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position is recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based on its technical merit.

Loss per Common and Common Equivalent Share

The computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year. The computation of diluted earnings per common share excludes Common Stock equivalents for the periods ended December 31, 2019 and 2018 as they are anti-dilutive. The Common Stock equivalents excluded from diluted earnings per share total 808,224 and 431,250 share equivalents as of December 31, 2019 and 2018, respectively.

Concentration of Credit Risk

During the early stages of the Company’s development, it is to be expected that the Company will extend loans to a relatively low number of CDFIs. For example, as of December 31, 2019, CNote has extended loans to eleven CDFIs. When the Company extends loans to a low number of borrowers, this results in a concentration of credit risk, wherein each CDFI borrower represents a relatively high risk, as compared with the relatively low risk that each individual borrower would constitute if the Company had loans outstanding with many CDFI borrowers.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of CNote Group, Inc., and its wholly-owned subsidiary, CNote Lending, LLC. All intercompany accounts and transactions have been eliminated in consolidation.

F-12

Recent Accounting Pronouncements

ASU 2016-13, as amended by ASU 2019-10, changes the accounting for credit losses measurement on loans and debt securities. For loans and held-to-maturity securities, the Update requires a current expected credit loss (”CECL”) measurement to estimate the allowance for credit losses for the remaining estimated life of the financial asset. The CECL measurement must be developed using historical experience, current conditions, and reasonable and supportable forecasts. The standard will also expand disclosure requirements. Adoption of the new standards is required for the Company effective January 1, 2023. Early adoption is permitted. The Company does not expect the adoption of this standard to materially affect the Company’s consolidated financial statements.

The Financial Accounting Standards Board issues Accounting Standards Updates to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

NOTE 3 – LOANS RECEIVABLE AND INTEREST RECEIVABLE

Loans receivable represent the principal amounts of outstanding loans the Company has made to CDFIs, less loan loss reserves as described below. Interest receivable represents the outstanding interest due from CDFI borrowers.

As of December 31, 2019, the Company has outstanding loans and interest receivable from eleven CDFI borrowers totaling approximately $18,399,000. Under terms of the respective master promissory notes, the loans earn interest at rates ranging from 3.0% to 4.5% per annum. The loans mature in 30 to 60 months and may be prepaid by the borrower at any time without penalty. For loans with 30 month terms, the Company has the option to request repayment of 10% of the original loan amount on a quarterly basis. These requests are based on the requests of note payable holders disclosed in Note 4. As a result, the Company has accounted for these loans, totalling approximately $16,626,000, as available for sale, and has classified 40% of the loan balance with 13 to 30 months remaining term as a current asset on its consolidated balance sheet.

During the year ended December 31, 2019, the Company was repaid approximately $4,017,000 on the principal of loans receivables which were used to repay notes payable.

As of December 31, 2018, the Company had outstanding loans and interest receivable from seven CDFI borrowers totaling approximately $12,038,000. During the year ended December 31, 2018, the Company was repaid approximately $1,091,000 on the principal of loans receivables which were used to repay notes payable.

The Company has recorded a provision for loan losses, as described in Note 2. The loan loss reserve, which has been netted against the long-term portion of loans receivable, totaled $359,020 and $354,221 as of December 31, 2019 and 2018, respectively.

NOTE 4 – NOTES PAYABLE, INTEREST PAYABLE AND LONG-TERM LIABILITIES

Notes Payable

Notes payable represent the principal amounts of outstanding borrowings from individual and institutional clients. Interest payable represents the outstanding interest the Company owes to the note holders. Notes payable from clients are not a source of financing for the Company’s operations; rather, they are used to fund CDFI loans receivable (Note 3).

F-13

As of December 31, 2019, notes payable totaled $18,500,168. Notes mature in 30 to 60 months and earn interest at the rate of 2.75-4.00% per annum although the interest rate may be higher in the event a note holder provides stipulated new referral business to the Company. Additionally, the interest rate may be adjusted to the extent rates earned from loans to CDFIs vary in the future. Notes with original 30-month maturities issued under Regulation D may be rolled over for additional 30-month terms at the option of the holder. Certain notes provide the holder an option to call 10% of the original note balance each quarter. As a result, the Company has accounted for these notes, totalling approximately $16,675,000, as available for sale, and has classified 40% of such notes payable with contractual maturities of 13-30 months as a current liability on its accompanying consolidated balance sheets. As of December 31, 2019, a total of $26,665 of notes are due to related parties subject to the same terms.

As of December 31, 2018, notes payable totaled $11,803,552, of which $25,000 was due to related parties.

As of December 31, 2019, notes payable mature as follows:

Year Ending December 31,
2020	$	5,281,817
2021		6,427,610
2022		5,465,741
2023		-
2024		1,325,000
	$	18,500,168

SAFEs

As of December 31, 2019, the Company has raised $1,619,500 via the issuance of SAFEs.

Under the SAFEs, the funds contributed by the investors will convert to shares of preferred stock in a priced preferred stock financing round, at a conversion price per share equal to the lesser of:

a.       the price per share of the newly issued preferred stock multiplied by the Discount Rate; or

b.       the Valuation Cap, as defined by the various agreements and described below, divided by the number of shares and potential shares of Common Stock, on a fully diluted basis, outstanding immediately prior to the preferred stock financing.

The SAFE terms vary (discount rate varies from 0% to 20%), and the Valuation Cap varies from $4,000,000 to $8,000,000). While the SAFEs remain outstanding, each SAFE holder will have the option of receiving his or her cash investment amount returned or receiving the number of shares of Common Stock purchased with his or her SAFE investment amount at the same price at which other shares of Common Stock are sold in a change of control.

If the Company dissolves or ceases operations, the SAFE holders, as a class, will have a preferential right to receive cash, up to the amount of their original investments, to the extent such funds are available to be paid, unless a SAFE holder notifies that the Company that he or she elects to receive shares of Common Stock purchased with his or her SAFE investment amount. Cash payments to SAFE investors in this situation would hold a preferential position to payments to the holders of Common Stock.

For one particular SAFE, if the SAFE has not been converted to shares of Preferred Stock after four years, that SAFE holder shall have the option of converting his SAFE investment to shares of Common Stock by purchasing the number of shares of Common Stock with his SAFE investment amount at a price equal to the Valuation Cap divided by the number of shares of stock and potential shares of stock, on a fully diluted basis, outstanding immediately prior to the conversion.

As of December 31, 2019, there has not been any priced round of preferred stock financing that would trigger a conversion of the SAFE funds to preferred stock. The SAFEs are marked-to-market each reporting period as described in Note 2. As of December 31, 2019 and 2018, management has determined that the carrying value is considered the fair value.

F-14

Convertible Notes

As of December 31, 2019, the Company has raised $1,100,660 via the issuance of convertible notes. As of December 31, 2019 and 2018, one note in the amount of $100,000 was held by a related party. The notes bear interest at a rate of four percent per annum. As of December 31, 2019, convertible notes payable mature as follows, and are presented as short-term or long-term liabilities according to their maturities:

Year Ending December 31,
2020	$	520,000
2021		580,660
	$	1,100,660

These notes contain both optional and automatic conversion features. Automatic conversion can be triggered upon a Qualified Financing, defined as a transaction or series of transactions in which the Company sells shares of equity securities to investors resulting in not less than $1,000,000 in proceeds to the Company, excluding the effects of the conversion of Convertible Instruments as defined in the convertible notes. Upon such event, the then outstanding principal amount and interest amount of the convertible note and shall convert into Equity Securities sold in the Qualified Financing at a conversion price equal to the lesser of (i) the cash price paid per share for Equity Securities by the Investors in the Qualified Financing (excluding any discount in connection with the conversion of any Convertible Instruments) multiplied by the Conversion Rate as defined in the convertible note, and (ii) the per share price equal to the quotient resulting from dividing the Valuation Cap as defined in the convertible note by the number of Fully Diluted Shares as defined in the convertible note.

If the Company issues and sells Equity Securities in an event that does not qualify as a Qualified Financing, then upon the election of the Majority Holders of the convertible notes, the outstanding principal and interest of the convertible notes shall convert under the terms described above.

If a Change of Control as defined by the terms of the convertible notes occurs while the convertible notes are outstanding, the Company shall repay the Holder from the proceeds of the Change of Control according to the terms of the convertible notes.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is not currently involved with and does not know of any pending or threatening litigation against the Company or any of its officers.

NOTE 6 – INCOME TAXES

The following table presents the current and deferred tax provision for federal and state income taxes for the years ended December 31, 2019, and 2018:

	2019			2018
Current tax provision
Federal	$	-		$	-
State		800			800
Total	$	800		$	800
Deferred tax provision (benefit)
Federal	$	(241,000	)	$	(196,000	)
State		(101,000	)		(82,000	)
Valuation allowance		342,000			278,000
Total		-			-
Total provision for income taxes	$	800		$	800

F-15

In assessing the potential realization of these deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2019 and 2018, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized, and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

The components of our deferred tax assets (liabilities) for federal and state income taxes consisted of the following as of December 31, 2019 and 2018:

	2019			2018
Deferred tax asset attributable to:
Net operating loss carryover	$	662,000		$	329,000
Temporary differences		106,000			97,000
Valuation allowance		(768,000	)		(426,000	)
Net deferred tax asset	$	-		$	-

The valuation allowance for deferred tax assets increased to $768,000 and $426,000 during the years ended December 31, 2019 and 2018, respectively.

Based on federal tax returns filed, or to be filed, through December 31, 2019, the Company has available approximately $2,220,000 in U.S. tax net operating loss carryforwards, pursuant to the Tax Reform Act of 1986, which assesses the utilization of a Company’s net operating loss carryforwards resulting from retaining continuity of its business operations and changes within its ownership structure. Net operating loss carryforwards start to expire in 2036 or 20 years for federal income and state tax reporting purposes.

The Company is subject to tax in the United States (“U.S.”) and files tax returns in the U.S. Federal jurisdiction and California state jurisdiction. The Company is subject to U.S. Federal, state and local income tax examinations by tax authorities starting in 2016. The Company currently is not under examination by any tax authority.

NOTE 7 – RELATED PARTY TRANSACTIONS

As of December 31, 2019, $26,665 of the individual notes payable are due to Company’s two co-founders and two close relatives of one of the co-founders, and $100,000 of convertible notes payable are due to a close relative of a key member of management. (See Note 4.)

NOTE 8 – STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue 10,000,000 shares of Common Stock, each having a par value of $0.00001. Upon Inception, and shortly after Inception, 6,000,000 shares of Common Stock were issued to the Company’s two co-founders. As of December 31, 2019, 6,018,750 shares of common stock are issued and outstanding, 6,000,000 of which are held by the Company’s two co-founders who remain active in the daily operations of the Company. As of December 31, 2018, 6,000,000 shares of Common Stock are issued and outstanding, all of which were held by the Company’s two co-founders.

Stock Options

In 2018, the Company’s Board of Directors adopted the CNote Group, Inc. 2018 Equity Incentive Plan (the “2018 Equity Incentive Plan”). The 2018 Equity Incentive Plan provides for the grant of equity awards to employees, and consultants, including stock options, stock appreciation rights and other stock or cash-based awards. Up to 1,500,000 shares of our Common Stock may be issued pursuant to awards granted under the 2018 Equity Incentive Plan. The 2018 Equity Incentive Plan is administered by our Board of Directors, has no fixed expiration date, and may be amended, suspended, or terminated by the Board at any time.

F-16

In 2019, the Company granted 395,724 stock options to an advisor. The granted options had an exercise price of $0.07, expire in ten years from the date of the grant, and vest over a nineteen-month period. The stock options were valued at a grant date fair value of $19,786 using the Black-Scholes pricing model as indicated below:

Expected life	5.5 years
Risk-free interest rate		1.6%
Expected volatility		89.2%
Annual dividend yield		0%

In 2018, the Company granted 412,500 stock options under the 2018 Equity Incentive Plan to various advisors and employees. The granted options had an exercise price of $0.04, expire in ten years from the date of the grant, and ranged from 100% immediate vesting to vesting over a four-year period.

The stock options were valued at a total grant date fair value of $8,250 using the Black-Scholes pricing model as indicated below:

	December 31, 2018
Expected life (range)		5.0-5.8 years
Risk-free interest rate (range)		2.8-2.9%
Expected volatility		56.8%
Annual dividend yield		0%

The expected term of employee stock options is calculated using the simplified method which takes into consideration the contractual life and vesting terms of the options.

The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company's employee stock options.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public companies’ common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s Common Stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company's history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its Common Stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

Management estimated the fair value of Common Stock by looking at a market approach which takes into consideration the value of development to date and subscriber base.

Stock Purchase Warrants

In 2018, the Company granted to an advisor a Common Stock Purchase Warrant for the purchase of 18,750 shares at a purchase price of $0.04 per share. The term of the warrant was ten years. The warrant was valued at a total grant date fair value of $375 using the Black-Scholes pricing model as indicated below.

	December 31, 2018
Expected life (years)		5.0
Risk-free interest rate		2.9%
Expected volatility		56.8%
Annual dividend yield		0%

F-17

The expected term, risk-free interest rate, expected volatility, and dividend yield assumptions used in pricing the warrants granted were derived as described above for options granted. The warrant was exercised in 2019.

Share-Based Awards Available for Grant

A summary of share-based awards available for grant under the Company’s 2018 Equity Incentive Plan for the years ended December 31, 2019 and 2018 was as follows:

	Shares Available for Grant
Authorized at inception of plan		1,500,000
Options granted 2018		(412,500	)
Balance at December 31, 2018		1,087,500
Options granted 2019		-
Balance at December 31, 2019		1,087,500

Stock Option Activity and Related Share-Based Compensation Expense

A summary of stock option activity for the year ended December 31, 2019 was as follows:

	Options Outstanding
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in Years)
Balance at December 31, 2018		412,500	$	0.04		9.5
Granted		395,724		0.07		10.0
Exercised		-		-		-
Canceled or expired		-		-		-
Balance at December 31, 2019		808,224	$	0.05		9.0

At December 31, 2019, options for the purchase of 491,877 shares at a weighted average price of $0.05 per share were vested and exercisable.

Expense for the issuance of stock options and warrants for the years ended December 31, 2019 and 2018 was $12,758 and $3,984, respectively.

The Company will recognize the remaining value of the options through 2021 as follows:

2020	$	7,608
2021		4,061
	$	11,669

The Company recognizes stock option forfeitures as they occur, as there is insufficient historical data to accurately determine future forfeiture rates.

F-18

NOTE 9 – SUBSEQUENT EVENTS

Subsequent to December 31, 2019, the Company issued several additional convertible notes in exchange for $600,000 of cash financing. Thus, the total amount of cash financing from convertible note investors totals $1,700,660 through the date of these consolidated financial statements. The new convertible notes have terms similar to the convertible notes issued prior to December 31, 2019 as disclosed in Note 4.

Effective April 29, 2020, the Company has granted incentive stock options for the purchase of 46,498 shares of Common Stock at a purchase price of $0.07 per share. These options will vest over a four-year period and will expire in ten years.

Effective April 29, 2020, the Company has issued to an investor a Common Stock Purchase Warrant for the purchase of 75,000 shares at a purchase price of $0.01 per share. The term of the warrant is eight years.

On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID-19, and actions taken to mitigate it, have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, COVID-19 may have a negative impact on the ability of the Company to attract new clients. At this time, we are unable to predict the extent or nature of these impacts to our future financial condition and results of operations.

Subsequent to December 31, 2019, the Company obtained a loan through the Small Business Administration’s Paycheck Protection Program in the amount of $106,000. The loan has a two-year maturity and bears interest at a rate of 1% per annum.

The Company has evaluated subsequent events that occurred after December 31, 2019 through April 29, 2020, the issuance date of these consolidated financial statements. There have been no other events or transactions during this time which would have a material effect on these consolidated financial statements, other than those disclosed.

F-19

PART III — EXHIBITS

  Index to Exhibits

Exhibit Number	Description
2.1	Certificate of Incorporation.
2.2	Bylaws.
3.1	Form of CNote Note.
4.1	Form of Subscription Agreement.
10.1	Power of Attorney (located on the Signature Page to this Offering Statement).
11.1	Consent of Independent Auditors.
11.2	Consent of Winston & Strawn LLP (contained in Exhibit 12.1).
12.1	Opinion of Winston & Strawn LLP.
15.1	Form of Master Promissory Note.
15.2	Terms of Use.

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 Oakland, State of California, on the 26 day of August, 2020.

CNOTE GROUP, INC.
By:  /s/ Catherine Berman
Name:	Catherine Berman
Title:	President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Catherine Berman and Yuliya Tarasava as his or her true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Offering Statement and any and all amendments to this Offering Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and generally to do all such things in his or her name and behalf in his or her capacity as officer and/or director to enable the Company to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Offering Statement has been signed by the following persons, in the capacities, and on the dates indicated.

Name and Signature	Title	Date
/s/ Catherine Berman	President, Chief Executive Officer	August 26, 2020
Catherine Berman	and Director, and
	Principal Executive Officer
/s/ Yuliya Tarasava	Chief Operating Officer,	August 26, 2020
Yuliya Tarasava	Treasurer, Principal Financial and Accounting Officer, Secretary and Director

EX1A-2A CHARTER

Exhibit 1A-2.1

FIRST: SECOND: THIRD: FOURTH: FIFTH: SIXTH: SEVENTH: EIGHTH: DocuSign Envelope to 840BB270-CF25-ATD1-9D54-2OF6C6B5BC29 §Z{§,,",§ ‘]f"§”,j,‘,§ DN|§lB|l at Cnrpnnmnr l.I!l|\'!|1<| Ui:5ZI'\ll)4'I”IlIlt FILED 01:52 rim more SR 2016289509 - Fl.|¢\|mhcr 6l)’1JJ’4 CERTIFICATE OF INCORPORATION OF CNOTE GROUP, INC. The name of this corporation shall be: CNote Group, Inc. (the “Corporation”). Its registered office in the State of Delaware is to be located at: I201 Orange Street, Suite 600, in the City of Wilmington, County of New Castle, 19801, and its registered agent at such address is: Agents and Corporations, Inc. The purpose or purposes of the Corporation shall be: To carry on any and all business and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware (“DGCL”). The total number of shares of stock which the Corporation is authorized to issue is: 10,000,000 shares of Common Stock, par value $0.00001 per share. The name and mailing address of the sole incorporator is as follows: m MAILING ADDRESS Yuliya Tarasava 1340 Morton St., Alameda, CA 94501 In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation. Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL or any other law of the State of Delaware is amended after approval by the stockholders of this Article EIGHT to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended. Any repeal or modification of the foregoing provisions ofthis Article EIGHT by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of DocuSign Envelope ID. 840BB270 NINTH: TENTH: ELEVENTH: ~CF2B~47D1-9D54~20F6C6B5BC29 any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification. To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General DGCL permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the DGCL. Any amendment, repeal or modification of the foregoing provisions of this Article NINTH shall not adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification. The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and to add or insert other provisions authorized by the laws of the State of Delaware at the time in force, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article TENTH. Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court ofequitable jurisdiction within the State ofDelaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 ofthe Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation, The remainder of this page is intentionally left blank 2 DoeuSign Envelope ID: 840BB270-CF28-4701~9D54~20F6C6B5BC29 IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbcforc named, has executed, signed, and acknowledged (his Certificate of Incorporation. no:-|s|w»¢ by: Efufiqn 'i‘am$a>M ACTQETDB H1-543*" . Yuliya Tarasava lncorporator 4/21/2016 Date 3

EX1A-2B BYLAWS

Exhibit 1A-2.2

DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D CNOTE GROUP, INC. CERTIFICATE OF SECRETARY I HEREBY CERTIFY THAT: I am the duly elected and acting Secretary of CNOTE GROUP, INC., a Delaware corporation (the “C0ggoration”); and Attached hereto is a complete and accurate copy of the Bylaws of the Corporation as duly _ 5/2 9/2016 _ adopted by the Sole Incorporator of the Corporation on , and said Bylaws are presently in effect. _ 5/2 9 /2016 IN WITNEss WHEREOF, I have hereunto subscribed my name on . DocuS|gned by‘ E{|/ilitlnt Twasm AC79E7DB147543A YULIYA TARASAVA Secretary DocuSign Envelope ID: B7BB216B-7E10-4494-85EA~9B7660412A8D BYLAWS of CNOTE GROUP, INC DocuSign Envelope ID: B7BB21BB-7E10-4494-85EA»9B7660412A8D TABLE OF CONTENTS 1. STOCKHOLDERS .................................................................... .. 2. DIRECTORS .......................................................................... ... 3. OFFICERS........... 4. CAPITAL STOCK ................................................................... .. 5. INDEMNIFICATION ................................................................ .. 6. MISCELLANEOUS PROvIsIONs ............................................. ... ....................... ..7 ....................... ..8 ..................... ..14 Bylaws ofCNo\c Group, Inc DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D Bylaws of CNote Group, Inc. (the “Corporation”) 1. STOCKHOLDERS (a) Annual Meeting. The annual meeting of stockholders shall be held for the election of directors each year at such place, date and time as shall be designated by the Board of Directors. Any other proper business may be transacted at the annual meeting. If no date for the annual meeting is established or said meeting is not held on the date established as provided above, a special meeting in lieu thereof may be held or there may be action by written consent of the stockholders on matters to be voted on at the annual meeting, and such special meeting or Written consent shall have for the purposes of these Bylaws or otherwise all the force and effect of an annual meeting. (b) Special Meetings. Special meetings of stockholders may be called by the Chief Executive Officer, if one is elected, a President, or by the Board of Directors, but such special meetings may not be called by any other person or persons. The call for the meeting shall state the place, date, hour and purposes of the meeting. Only the purposes specified in the notice of special meeting shall be considered or dealt with at such special meeting. (c) Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a notice stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present and vote at such meeting, and, in the case of a special meeting, the purpose or purposes of the meeting, shall be given by the Secretary (or other person authorized by these Bylaws or by law) not less than ten (10) nor more than sixty (60) days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the Certificate of Incorporation or under these Bylaws is entitled to such notice. If mailed, notice is given when deposited in the mail, postage prepaid, directed to such stockholder at such stockholder’s address as it appears in the records of the Corporation. Without limiting the manner by which notice otherwise may be effectively given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (the “DGCL”). If a meeting is adjoumed to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjoumment is taken, except that if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjoumed meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (d) Quorum. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting, present in person or represented by proxy, shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. The stockholders Bylaws of CNote Group, Inc. Page 1 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D present at a duly constituted meeting may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to reduce the voting shares below a quorum. (e) Voting and Proxies. Except as otherwise provided by the Certificate of Incorporation or by law, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by either written proxy or by a transmission permitted by Section 2l2(c) of the DGCL, but no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or is irrevocable and coupled with an interest. Proxies shall be filed with the Secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies shall entitle the persons authorized thereby to vote at any adjournment of such meeting. (f) Action at Meeting. When a quorum is present, any matter before the meeting shall be decided by vote of the holders of a majority of the shares of stock voting on such matter except where a larger vote is required by law, by the Certificate of Incorporation or by these Bylaws. Any election of directors by stockholders shall be determined by a plurality of the votes cast, except where a larger vote is required by law, by the Certificate of Incorporation or by these Bylaws. The Corporation shall not directly or indirectly vote any share of its own stock; provided, however, that the Corporation may vote shares which it holds in a fiduciary capacity to the extent permitted by laW. (g) Presiding Officer. Meetings of stockholders shall be presided over by the Chairman of the Board, if one is elected, or in his or her absence, the Vice Chairman of the Board, if one is elected, or if neither is elected or in their absence, a President. The Board of Directors shall have the authority to appoint a temporary presiding officer to serve at any meeting of the stockholders if the Chairman of the Board, the Vice Chairman of the Board or a President is unable to do so for any reason. (h) Conduct of Meetings. The Board of Directors may adopt by resolution such mles and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the presiding officer of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (m) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the presiding officer of the meeting, meetings of Bylaws of CNote Group, Inc. Page 2 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. (i) Action without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required or permitted by law to be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that Would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office, by hand or by certified mail, return receipt requested, or to the Corporation's principal place of business or to the officer of the Corporation having custody of the minute book. Every written consent shall bear the date of signature and no written consent shall be effective unless, within sixty (60) days of the earliest dated consent delivered pursuant to these Bylaws, written consents signed by a sufficient number of stockholders entitled to take action are delivered to the Corporation in the manner set forth in these Bylaws. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. (i) Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (IO) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section l(j) shall require the Corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting in the manner provided by law. The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. 2. DIRECTORS (a) Powers. The business of the Corporation shall be managed by or under the direction of a Board of Directors who may exercise all the powers of the Corporation except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. (b) Number and Qualification. Unless otherwise provided in the Certificate of Incorporation or in these Bylaws, the number of directors which shall constitute the whole Board shall be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders. (c) Vacancies; Reduction of Board. A majority of the directors then in office, although less than a quorum, or a sole remaining Director, may fill vacancies in the Board of Directors occurring for any reason and newly created directorships resulting from any increase Bylaws of CNote Group, Inc. Page 3 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D in the authorized number of directors. In lieu of filling any vacancy, the Board of Directors may reduce the number of directors. (d) Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws, directors shall hold office until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon notice given in Writing or by electronic transmission to the Corporation. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. (e) Removal. To the extent permitted by law, a director may be removed from office with or without cause by vote of the holders of majority of the shares of stock entitled to vote in the election of directors. (f) Meetings. Regular meetings of the Board of Directors may be held without notice at such time, date and place as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called, orally or in writing, by the Chief Executive Officer, if one is elected, the President, or by two or more Directors, designating the time, date and place thereof. Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting. (g) Notice of Meetings. Notice of the time, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary, or Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the officer or one of the directors calling the meeting. Notice shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communications, sent to such director’s business or home address at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to such director’s business or home address at least forty- eight (48) hours in advance of the meeting. (h) Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business. Less than a quorum may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice. (i) Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, unless otherwise provided in the following sentence, a majority of the directors present may take any action on behalf of the Board of Directors, unless a larger number is required by law, by the Certificate of Incorporation or by these Bylaws. So long as there are two (2) or fewer Directors, any action to be taken by the Board of Directors shall require the approval of all Directors. (i) Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and the writing or writings or Bylaws of CNote Group, Inc. Page 4 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. (k) Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, establish one or more committees, each committee to consist of one or more directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these Bylaws. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but in the absence of such rules its business shall be conducted so far as possible in the same manner as is provided in these Bylaws for the Board of Directors. All members of such committees shall hold their committee offices at the pleasure of the Board of Directors, and the Board may abolish any committee at any time. 3. OFFICERS (a) Enumeration. The officers of the Corporation shall consist of one or more Presidents (who, if there is more than one, shall be referred to as C0—Presidents), a Treasurer, a Secretary, and such other officers, including, without limitation, a Chief Executive Officer, a Chief Technology Officer, and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board. (b) Election. The Presidents, Treasurer and Secretary shall be elected annually by the Board of Directors at their first meeting following the annual meeting of stockholders. Other officers may be chosen by the Board of Directors at such meeting or at any other meeting. (c) Qualification. No officer need be a stockholder or Director. Any two or more offices may be held by the same person. Any officer may be required by the Board of Bylaws of CNote Group, Inc. Page 5 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D Directors to give bond for the faithful performance of such officer’s duties in such amount and with such sureties as the Board of Directors may determine. (d) Tenure. Except as otherwise provided by the Certificate of Incorporation or by these Bylaws, each of the officers of the Corporation shall hold office until the first meeting of the Board of Directors following the next annual meeting of stockholders and until such officer’s successor is elected and qualified or until such officer’s earlier resignation or removal. Any officer may resign by delivering his or her written resignation to the Corporation, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. (e) Removal. The Board of Directors may remove any officer with or without cause by a vote of a majority of the directors then in office. (f) Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors. (g) Chairman of the Board and Vice Chairman. Unless otherwise provided by the Board of Directors, the Chairman of the Board of Directors, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate. Unless otherwise provided by the Board of Directors, in the absence of the Chairman of the Board, the Vice Chairman of the Board, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of Directors. The Vice Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate. (h) Chief Executive Officer. The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate. (i) Presidents. The Presidents shall, subject to the direction of the Board of Directors, each have general supervision and control of the Corporation’s business and any action that would typically be taken by a President may be taken by any Co-President. If there is no Chairman of the Board or Vice Chairman of the Board, a President shall preside, when present, at all meetings of stockholders and the Board of Directors. The Presidents shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate. (i) Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation, except as the Board of Directors may otherwise provide. The Treasurer shall have such other powers and shall perform such duties as the Board of Directors may from time to time designate. Bylaws of CNote Group, Inc. Page 6 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors may from time to time designate. (k) Secretary and Assistant Secretaries. The Secretary shall record the proceedings of all meetings of the stockholders and the Board of Directors (including committees of the Board) in books kept for that purpose. In the absence of the Secretary from any such meeting an Assistant Secretary, or if such person is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation) and shall have such other duties and powers as may be designated from time to time by the Board of Directors. Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors may from time to time designate. (1) Other Powers and Duties. Subject to these Bylaws, each officer of the Corporation shall have in addition to the duties and powers specifically set forth in these Bylaws, such duties and powers as are customarily incident to such officer’s office, and such duties and powers as may be designated from time to time by the Board of Directors. 4. CAPITAL STOCK (a) Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by a President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Such signatures may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. The Corporation shall be permitted to issue ctional shares. (b) Transfers. Subject to any restrictions on transfer, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require. (c) Record Holders. Except as may otherwise be required by law, by the Certificate of Incorporation or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any Bylaws of CNote Group, Inc. Page 7

DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws. It shall be the duty of each stockholder to notify the Corporation of such stockholder’s post office address. (d) Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not precede the date on which it is established, and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, more than ten (10) days after the date on which the record date for stockholder consent without a meeting is established, nor more than sixty (60) days prior to any other action. In such case only stockholders of record on such record date shall be so entitled notwithstanding any transfer of stock on the books of the Corporation after the record date. If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (ii) the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in this state, to its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded, and (m) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (e) Lost Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. 5. INDEMNIFICATION (a) Definitions. For purposes of this Section 5: (i) “Corporate Status” describes the status of a person who is serving or has served (A) as a Director of the Corporation, (B) as an Officer of the Corporation, (C) as a Non-Officer Employee of the Corporation, or (D) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, Bylaws of CNote Group, Inc. Page 8 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D trust, employee benefit plan, foundation, association, organization or other legal entity for which such person is or was serving at the request of the Corporation. For purposes of this Section 5(a)(i), a Director, Officer or Non-Officer Employee of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, “Corporate Status” shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation; (ii) “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation; (m) “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding; (iv) “Expenses” means all reasonable attorneys fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a Witness in, settling or otherwise participating in, a Proceeding; (v) “Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement; (vi) “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer; (vii) “Officer” means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation; (viii) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and (ix) “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, Bylaws of CNote Group, Inc. Page 9 DocuSign Env elope ID: B7BB21BB-7E10-4494-85EA-9B7660412A8D joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity. (b) Indemnification of Directors and Officers. Subject to the operation of Section 5(d) of these Bylaws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to the extent authorized in subsections (i) through (iv) of this Section 5(b); provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its Directors and Officers. (i) Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Direct0r’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. (ii) Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made under this Section 5(b)(ii) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper. (m) Survival of Rights. The rights of indemnification provided by this Section 5(b) shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. (iv) Actions by Directors or Officers. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection Bylaws of CNote Group, Inc. Page 10 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D with a Proceeding initiated by such Director or Officer only if such Proceeding (including any parts of such Proceeding not initiated by such Director or Officer) was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Officer’s or Director’s rights to indemnification or, in the case of Directors, advancement of Expenses under these Bylaws in accordance with the provisions set forth herein. (c) Indemnification of Non-Officer Employees. Subject to the operation of Section 5(d) of these Bylaws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 5(c) shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation. (d) Determination. Unless ordered by a court, no indemnification shall be provided pursuant to this Section 5 to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (i) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (ii) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (m) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Corporation. (e) Advancement of Expenses to Directors Prior to Fina] Disposition. (i) The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within thirty (30) days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding the foregoing, the Corporation shall Bylaws of CNote Group, Inc. Page 11 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding not initiated by such Director) was (A) authorized by the Board of Directors of the Corporation, or (B) brought to enforce such Director’s rights to indemnification or advancement of Expenses under these Bylaws. (ii) If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Section 5 shall not be a defense to an action brought by a Director for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation. (m) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL. (f) Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition. (i) The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses. (ii) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL. (g) Contractual Nature of Rights. Bylaws of CNote Group, Inc. Page 12 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D (i) Subject to Section Article I - 5(h) below, the provisions of this Section 5 shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Section 5 is in effect, in consideration of such person’s past or current and any future performance of services for the Corporation. Neither amendment, repeal or modification of any provision of this Section 5 nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Section 5 shall eliminate or reduce any right conferred by this Section 5 in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in question, regardless of when or if any proceeding with respect to such act or omission is commenced. The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Section 5 shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person. (ii) If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty (60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Section 5 shall not be a defense to an action brought by a Director or Officer for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation. (m) In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL. (h) Non-Exclusivity of Rights. The rights to indemnification and advancement of Expenses set forth in this Section 5 shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise. The corporation is specifically authorized to enter into individual contracts with any or all of its Directors, Officers, or Non-Officer Employees respecting indemnification and advances, to the fullest extent not prohibited by the DGCL or any other applicable law. In the event that the Corporation enters into any such contracts, the terms of that contract shall govern the terms and conditions of the indemnification and advancement of expenses of any Director, Officer, or Non-Officer Employee.‘ (i) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any Bylaws of CNote Group, Inc. Page 13 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D character asserted against or incurred by the Corporation or any such Director, Officer or Non- Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Section 5. (j) Other Indemnification. The Corporation’s obligation, if any, to indemnify or provide advancement of Expenses to any person under this Section 5 as a result of such person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the “Primary Indemnitor”). Any indemnification or advancement of Expenses under this Section 5 owed by the Corporation as a result of a person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies. 6. MISCELLANEOUS PROVISIONS (a) Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall end on December 31 of each year. (b) Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation. (c) Execution of Instruments. Subject to any limitations which may be set forth in a resolution of the Board of Directors, all deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by, a President, or by any other officer, employee or agent of the Corporation as the Board of Directors may authorize. (d) Voting of Securities. Unless the Board of Directors otherwise provides, a President, any Vice President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by this Corporation. (e) Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation. (I) Corporate Records. The original or attested copies of the Certificate of Incorporation, Bylaws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock and transfer records, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept at the principal office of the Corporation, at the office of its counsel, or at an office of its transfer agent. Bylaws of CNote Group, Inc. Page 14 DocuSign Envelope ID: B7BB216B-7E10-4494-85EA-9B7660412A8D (g) Certificate of Incorporation. All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time. (h) Amendments. These Bylaws may be altered, amended or repealed, and new Bylaws may be adopted, by the stockholders or by the Board of Directors; provided, that (a) the Board of Directors may not alter, amend or repeal any provision of these Bylaws which by law, by the Certificate of Incorporation or by these Bylaws requires action by the stockholders and (b) any alteration, amendment or repeal of these Bylaws by the Board of Directors and any new Bylaw adopted by the Board of Directors may be altered, amended or repealed by the stockholders. (i) Waiver of Notice. Whenever notice is required to be given under any provision of these Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting needs to be specified in any written waiver or any waiver by electronic transmission. 5/29/2016 Adopted on Bylaws of CNote Group, Inc. Page 15

EX1A-3 HLDRS RTS

Exhibit 1A-3.1

CNOTE NOTE

PRINCIPAL: $                                                                               

EFFECTIVE DATE:                                                                       

SERIES :                                                                           

Borrower: CNote Group, Inc., a Delaware corporation (the “Borrower” or “CNote”)

Lender: The investor listed on the signature page hereto (the “Lender”)

1. Promise of Payment.

FOR VALUE RECEIVED, the Borrower hereby promises to pay to the Lender in U.S. dollars an amount equal to the principal sum shown above (the “Principal”) and the Interest (as defined in Section 2), as set forth below and subject to the conditions and limitations on payment described below (according to the Payment Schedule (as defined below)).

The Borrower shall be entitled to use the Principal to make loans time to time to its Community Development Financial Institution partners (each, a “CDFI Loan” and, collectively, the “CDFI Loans”). Notwithstanding anything to the contrary contained herein, the Amount Owed (as defined below) on this Note shall be payable by the Borrower and the Lender shall have recourse to any other assets of the Borrower in order to secure repayment. This Note shall be designated to be part of a Series of Notes issued by the Borrower on the date hereof (the “Closing Date”).

2. Interest.

Beginning with                                 the date six (6) business days after the Closing Date (the “Accrual Date”), this Note shall bear interest according to the terms of this Section 2 (the “Interest”).

(a) Unless otherwise adjusted pursuant to Section 2(b), the rate of  Interest shall be two-and-three-quarters percent (2.75%) per annum (the “Interest Rate”).

(b) The Interest Rate shall be a value that is one-quarter percent (0.25%) higher than the value in Section 2(a) per annum and applied on a one-time, prospective, basis if, within twelve (12) months after the Closing Date, the Lender refers three (3) individuals to CNote, provided that such individuals are not existing lenders on the CNote platform and that such individuals open and fund a CNote account with at least one thousand dollars ($1,000).

(c) Any unpaid Interest (together with the Principal, the “Amount Owed”) shall be compounded monthly, unless the lender specifically requests that interest be paid monthly which request shall require at least a calendar month’s prior notice to the Borrower.

3. Payment of Principal and Accrued Interest.

(a) Unless prepaid pursuant to Section 4, accelerated pursuant to Section 5, or earlier withdrawn pursuant to Section 6, the Amount Owed, subject to the adjustment described in Section 1, shall be due and payable to the Lender according to the following schedule (the “Payment Schedule”):

(i)          The Lender may elect to receive the Interest on a monthly basis, in which case the Interest shall be due every successive calendar month after the Accrual Day until the Principal is paid in full, and the Principal shall be due thirty (30) months after the Accrual Date (the “Maturity Date”).

(ii)          If the Lender does not make the election described in Section 3(a)(i), the Amount Owed shall be due on the Maturity date.

There shall be no penalty for payment by the Borrower after the Maturity Date, but Interest shall continue to accrue until payment of the Note is complete.

(b) All U.S. dollar amounts used in or resulting from the calculation of the Amount Owed shall be rounded to the nearest cent (with one-half cent being rounded upward).

4. Prepayment.

The Borrower shall have the right, in its sole discretion, at any time and from time to time, to prepay the Amount Owed, in whole or in part, without the need to provide advance notice. There shall be no premium or penalty for prepayment pursuant to this Section 4 of the Amount Owed.

5. Acceleration of Note.

The Lender may declare this Note immediately due and payable upon the occurrence of any of the following events: the insolvency of the Borrower, he commission of any act of bankruptcy by the Borrower, the execution by the Borrower of a general assignment for the benefit of creditors, the filing by or against the Borrower of any petition in bankruptcy or any petition for relief under bankruptcy laws for the relief of debtors and the continuation of such petition without dismissal of a period of thirty (30) days or more, or the appointment of a receiver or trustee to take possession of any property or assets of the Borrower.

6. Withdrawal of Amount Owed by the Lender.

At any time prior to repayment of the Amount Owed, including prior to the Maturity Date, provided that sufficient funds are available to the Company, the Lender may withdraw up to ten percent (10%) of the Amount Owed in each fiscal quarter according to the terms of this Section 6 (each, a “Withdrawal Request”), subject to the terms of this Section 6 below.

(a)  A Withdrawal Request for any given fiscal quarter must be submitted at least thirty (30) calendar days prior to the last day of the fiscal quarter, either via the Lender’s CNote account page available at www.mycnote.com or by email to support@mycnote.com. Any Withdrawal Request submitted less than thirty (30) calendar days prior to the last day of the fiscal quarter shall be applied to the following quarter.  The Withdrawal Request must clearly identify the Lender and the withdrawal amount.

(b)  The Borrower shall honor any Withdrawal Request timely submitted pursuant to Section 6(a) by transferring the requested amount to the bank account designated by the Lender no later than ten (10) business days after the end of the fiscal quarter.

(c)  For the avoidance of doubt, it is agreed that fiscal quarters shall end on March 31, June 30, September 30, and December 31 of that respective year.

(d)  Withdrawal Requests are subject to the receipt of available funds from CDFI Loans and other available cash to the Company.  Withdrawal Requests are subject to reduction on a pro rata basis among all requested withdrawals from the Series of which this Note forms a part.

7. Compliance with Securities Laws.

The Lender represents and warrants to the Borrower that the Lender: (i) has sufficient knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of its investment in this Note; (ii) is able to protect its interests and fend for itself in the transaction contemplated by this Note; (iii) has the ability to bear the economic risks of its investment; and (iv) is acquiring this Note for the Lender’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same.

8. Dispute Resolution.

The parties hereto agree to resolve any dispute related to or arising out of this Note according to the dispute resolution procedures set forth in sections 16 (“Binding Arbitration”), 17 (“Class Action Waiver”), and 18 (“Exceptions to Arbitration”) of the CNote Terms of Use available at www.mycnote.com (the “CNote Terms”), which terms are incorporated by reference herein.

9. Governing Law; Venue.

This Note shall be governed by the laws of the State of California, without regard to conflict of law provisions. In the event that the dispute resolution procedures in Section 8 are found not to apply to a given claim, any judicial proceeding will be brought in the state courts of San Francisco County, California. Both parties hereto consent to venue and personal jurisdiction there.

10. Miscellaneous.

This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither parties hereto may assign its rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other party, except that the Borrower may assign this Note in its entirety, without consent of the Lender, to its parent, subsidiary, or affiliate or in connection with a merger, acquisition, corporate reorganization, or sale of all or substantially all of its assets. This Note and the CNote Terms set forth the entire agreement and understanding of the parties hereto relating to the relationship between the Lender and the Borrower and supersedes all prior or contemporaneous discussions, understandings, and agreements, whether oral or written, between the parties hereto relating to the subject matter of this Note. No terms in this Note may be changed except by an amendment or separate agreement executed in writing by an authorized representative of both parties hereto. Failure by either party hereto to enforce its rights under this Note shall not be deemed to constitute a waiver of its rights to enforce the same or any other provision under this Note. No waiver shall be effective unless made in writing and signed by an authorized representative of the waiving parties hereto. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note, and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

[Remainder of the page intentionally left blank; signature page follows.]

THE PARTIES HERETO HAVE READ AND UNDERSTOOD THE TERMS OF THIS NOTE AND AGREE TO THEM AS OF THE DATE WRITTEN ABOVE.

THE BORROWER:   CNote Group, Inc.     By: _________________________   Name: Yuliya Tarasava   Title: Secretary THE LENDER:   Name: _______________________     _____________________________ (Signature)   Name of Authorized Representative (if an Entity):   _____________________________   Address: _____________________________ _____________________________

EX1A-4 SUBS AGMT

Exhibit 1A-4.1

SUBSCRIPTION AGREEMENT

CNote Group, Inc.

2323 Broadway

Oakland, CA 94612

Attention: Yuliya Tarasava,

Chief Operating Officer

Ladies and Gentlemen:

The undersigned investor (“Investor”) hereby tenders this Subscription Agreement (the “Agreement”) in connection with such Investor’s purchase, in accordance with the terms hereof, of a promissory note or notes in substantially the form attached hereto as Exhibit A(the “Notes”) from CNote Group, Inc., a Delaware corporation (the “Company”). Investor understands that the Company is offering (the “Offering”) for sale up to $50,000,000 in aggregate principal amount of Notes and that the Offering is being made under Regulation A of the Securities Act of 1933, as amended (the “Securities Act”) with a Securities and Exchange Commission File Number 024-10686, and related Offering Circular, dated as of August 29, 2017 (the “Offering Circular”).

1.              Subscription. Subject to the terms and conditions hereof, Investor hereby irrevocably subscribes for Notes in the amount set forth on the signature page hereto, which is payable as described in Section 2. Investor acknowledges that the Notes will be subject to restrictions on transfer as set forth in this Agreement, the Notes, the Securities Act, and any other documentation requested by the Company. The Notes are substantially in the form of Exhibit A attached hereto and hereby incorporated by reference. The Notes will be issued in a series of closings (each, a “Closing”) and the closing date for the issuance of Notes of a series shall be the day on which the Company has obtained subscriptions from investors, including the Investor, that in the aggregate exceed the amount of $50,000 (the "Closing Date"). Interest begins accruing from the day which is six (6) business days following the investor's Closing Date.

2.              Acceptance of Subscription and Issuance of Notes. The Company shall have the sole right, at its sole and absolute discretion, to accept or reject this subscription, in whole or in part, for any reason.

(a)          Investor will not be deemed to have purchased any Notes unless and until such time as all of the following conditions have occurred: (A) this Agreement and such other documentation as may be requested by the Company has been duly and validly executed by Investor, delivered to the Company and accepted by the Company and (B) the purchase price for the Notes has been delivered pursuant to instructions provided by the Company.

(b)          Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to issue any of the Notes to any person who is a resident of a jurisdiction in which the issuance of Notes to him, her or it would constitute a violation of the securities, “blue sky” or other similar laws of such jurisdiction (collectively referred to as the “State Securities Laws”). Investor agrees to pay to the Company the aggregate purchase price for the Notes in the amount set forth on the signature page attached hereto by (i) check payable to the Company, (ii) bank or wire transfer in readily available funds in accordance with the Company’s instructions, (iii) cancellation of indebtedness of the Company or (iv) any combination of the foregoing.

3.              Representations, Warranties and Covenants of Investor. Investor hereby represents and warrants to the Company and each other person that subscribes for the Notes as follows, which representations and warranties shall survive the applicable closing:

(a)          Investor is electing to purchase an amount of Notes that is not greater than 10% of the greater of Investor’s (i) annual income or net worth if Investor is a natural person, or (ii) revenue or net assets of Investor’s most recently completed fiscal year if Investor is a non-natural person;

(b)          Investor will not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber (each a “Transfer”) the Notes unless (i) the Company consents in writing to any such Transfer, and (ii) any buyer, transferee, pledgee, donee or assignee, respectively, shall agree in writing to be bound by the terms hereof prior to any such Transfer. Any such recipient of the Notes is referred to herein as a “Transferee”, and the Transferee shall be entitled to the benefits of this Agreement and to enforce this Agreement against the Company as if the Transferee were Investor;

(c)          Investor acknowledges that there is no public market for the Notes, that no market may ever develop for them, and that they have not been approved or disapproved by the Securities and Exchange Commission or any governmental agency;

(d)          Investor recognizes that (i) an investment in the Notes involves a high degree of risk and (ii) no assurance or guarantee has or can be given that an investor in the Company will receive a return of his, her or its capital or realize a profit on such investor’s investment;

(e)          Investor has not relied on any information or representations with respect to the Company or the Offering, other than as expressly set forth the Offering Circular;

(f)           Investor has determined that he, she or it can afford to bear the risk of the investment in the Notes, including loss of the entire investment in the Company and he, she or it will not experience personal hardship if such a loss occurs; and

(g)          Investor is purchasing the Notes solely for his, her or its own account for investment, not for the account of any other person, and not with a view to, or for, any resale, distribution or other transfer thereof.

4.              Representations and Warranties of the Company. The Company hereby represents and warrants to Investor that:

(a)          Organization, Good Standing and Qualification. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to do so would have a material adverse effect on its business or properties.

(b)          Authorization. All requisite action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of the Notes and the performance of all obligations of the Company hereunder and thereunder has been taken or will be taken prior to the Closing, and this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws or court decisions of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws or court decisions relating to the availability of specific performance, injunctive relief, or other equitable remedies or to equitable principles of general applicability.

(c)          Valid Issuance. The Note, when issued in accordance with the provisions thereof, will not violate any preemptive rights or rights of first refusal and will be free of any liens or encumbrances.

(d)          Exempt Offering. The offer, sale and issuance of the Notes are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and from the registration and qualification requirements of all applicable State Securities Laws.

(e)          Approvals. All consents, approvals, orders or authorizations of, or registrations, qualifications, designations, declarations or filings with, any governmental authority or any other person, required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale and issuance of the Notes, and the consummation of any other transaction contemplated hereby, shall have been obtained.

5.              Brokers. Investor has not entered into any agreement to pay any broker’s or finder’s fee to any person with respect to this Agreement or the transactions contemplated hereby.

6.              Survival. All representations, warranties and covenants contained in this Agreement shall survive the acceptance of the subscription by the Company and the consummation of the subscription.

7.              Waiver, Amendment. Neither this Agreement nor any provisions hereof shall be amended or waived except either (a) with the written consent of the Company and the holders of a majority of the principal amount of Notes then outstanding or (b) in a writing by the party or parties against whom such amendment or waiver is sought to be enforced.

8.              Successors and Assigns. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.

9.              Governing Law. This Agreement is to be construed in accordance with and governed by the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties.

10.            Entire Agreement. This Agreement and the Notes constitute the entire agreement between the parties regarding the subject matter contained herein and supersedes all prior or contemporaneous agreements, representations and understandings of the parties.

11.            Counterparts. This Agreement may be executed in two or more facsimiles and/or counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[signature page follows]

IN WITNESS WHEREOF, Investor has executed this Subscription Agreement this ___ day of ___________, 2020.

IF AN INDIVIDUAL:
Signature of Investor	Address of Investor:
Print Name
State of Residency
IF AN ENTITY:
Signature of Authorized Representative	Address of Entity:
Print Name
Entity Name
State of Principal Place of Business

CONSIDERATION TO BE DELIVERED: 

Dollar amount of Notes subscribed for: 

$

SUBSCRIPTION ACKNOWLEDGED AND ACCEPTED:

CNOTE GROUP, INC.  

By:

Name:

Title:

Exhibit A

CNOTE NOTE

PRINCIPAL: $                                                                               

EFFECTIVE DATE:                                                                       

SERIES :                                                              

Borrower: CNote Group, Inc., a Delaware corporation (the “Borrower” or “CNote”)

Lender: The investor listed on the signature page hereto (the “Lender”)

1. Promise of Payment.

FOR VALUE RECEIVED, the Borrower hereby promises to pay to the Lender in U.S. dollars an amount equal to the principal sum shown above (the “Principal”) and the Interest (as defined in Section 2), as set forth below and subject to the conditions and limitations on payment described below (according to the Payment Schedule (as defined below)).

The Borrower shall be entitled to use the Principal to make loans time to time to its Community Development Financial Institution partners (each, a “CDFI Loan” and, collectively, the “CDFI Loans”). Notwithstanding anything to the contrary contained herein, the Amount Owed (as defined below) on this Note shall be payable by the Borrower and the Lender shall have recourse to any other assets of the Borrower in order to secure repayment. This Note shall be designated to be part of a Series of Notes issued by the Borrower on the date hereof (the “Closing Date”).

2. Interest.

Beginning with the date six (6) business days after the Closing Date (the “Accrual Date”), this Note shall bear interest according to the terms of this Section 2 (the “Interest”).

(a) Unless otherwise adjusted pursuant to Section 2(b), the rate of  Interest shall be two-and-three-quarters percent (2.75%) per annum (the “Interest Rate”).

(b) The Interest Rate shall be a value that is one-quarter percent (0.25%) higher than the value in Section 2(a) per annum and applied on a one-time, prospective, basis if, within twelve (12) months after the Closing Date, the Lender refers three (3) individuals to CNote, provided that such individuals are not existing lenders on the CNote platform and that such individuals open and fund a CNote account with at least one thousand dollars ($1,000).

(c) Any unpaid Interest (together with the Principal, the “Amount Owed”) shall be compounded monthly, unless the lender specifically requests that interest be paid monthly which request shall require at least a calendar month’s prior notice to the Borrower.

3. Payment of Principal and Accrued Interest.

(a) Unless prepaid pursuant to Section 4, accelerated pursuant to Section 5, or earlier withdrawn pursuant to Section 6, the Amount Owed, subject to the adjustment described in Section 1, shall be due and payable to the Lender according to the following schedule (the “Payment Schedule”):

(i)          The Lender may elect to receive the Interest on a monthly basis, in which case the Interest shall be due every successive calendar month after the Accrual Day until the Principal is paid in full, and the Principal shall be due thirty (30) months after the Accrual Date (the “Maturity Date”).

(ii)          If the Lender does not make the election described in Section 3(a)(i), the Amount Owed shall be due on the Maturity date.

There shall be no penalty for payment by the Borrower after the Maturity Date, but Interest shall continue to accrue until payment of the Note is complete.

(b) All U.S. dollar amounts used in or resulting from the calculation of the Amount Owed shall be rounded to the nearest cent (with one-half cent being rounded upward).

4. Prepayment.

The Borrower shall have the right, in its sole discretion, at any time and from time to time, to prepay the Amount Owed, in whole or in part, without the need to provide advance notice. There shall be no premium or penalty for prepayment pursuant to this Section 4 of the Amount Owed.

5. Acceleration of Note.

The Lender may declare this Note immediately due and payable upon the occurrence of any of the following events: the insolvency of the Borrower, he commission of any act of bankruptcy by the Borrower, the execution by the Borrower of a general assignment for the benefit of creditors, the filing by or against the Borrower of any petition in bankruptcy or any petition for relief under bankruptcy laws for the relief of debtors and the continuation of such petition without dismissal of a period of thirty (30) days or more, or the appointment of a receiver or trustee to take possession of any property or assets of the Borrower.

6. Withdrawal of Amount Owed by the Lender.

At any time prior to repayment of the Amount Owed, including prior to the Maturity Date, provided that sufficient funds are available to the Company, the Lender may withdraw up to ten percent (10%) of the Amount Owed in each fiscal quarter according to the terms of this Section 6 (each, a “Withdrawal Request”), subject to the terms of this Section 6 below.

(a)  A Withdrawal Request for any given fiscal quarter must be submitted at least thirty (30) calendar days prior to the last day of the fiscal quarter, either via the Lender’s CNote account page available at www.mycnote.com or by email to support@mycnote.com. Any Withdrawal Request submitted less than thirty (30) calendar days prior to the last day of the fiscal quarter shall be applied to the following quarter.  The Withdrawal Request must clearly identify the Lender and the withdrawal amount.

(b)  The Borrower shall honor any Withdrawal Request timely submitted pursuant to Section 6(a) by transferring the requested amount to the bank account designated by the Lender no later than ten (10) business days after the end of the fiscal quarter.

(c)  For the avoidance of doubt, it is agreed that fiscal quarters shall end on March 31, June 30, September 30, and December 31 of that respective year.

(d)  Withdrawal Requests are subject to the receipt of available funds from CDFI Loans and other available cash to the Company.  Withdrawal Requests are subject to reduction on a pro rata basis among all requested withdrawals from the Series of which this Note forms a part.

7. Compliance with Securities Laws.

The Lender represents and warrants to the Borrower that the Lender: (i) has sufficient knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of its investment in this Note; (ii) is able to protect its interests and fend for itself in the transaction contemplated by this Note; (iii) has the ability to bear the economic risks of its investment; and (iv) is acquiring this Note for the Lender’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same.

8. Dispute Resolution.

The parties hereto agree to resolve any dispute related to or arising out of this Note according to the dispute resolution procedures set forth in sections 16 (“Binding Arbitration”), 17 (“Class Action Waiver”), and 18 (“Exceptions to Arbitration”) of the CNote Terms of Use available at www.mycnote.com (the “CNote Terms”), which terms are incorporated by reference herein.

9. Governing Law; Venue.

This Note shall be governed by the laws of the State of California, without regard to conflict of law provisions. In the event that the dispute resolution procedures in Section 8 are found not to apply to a given claim, any judicial proceeding will be brought in the state courts of San Francisco County, California. Both parties hereto consent to venue and personal jurisdiction there.

10. Miscellaneous.

This Note shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither parties hereto may assign its rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other party, except that the Borrower may assign this Note in its entirety, without consent of the Lender, to its parent, subsidiary, or affiliate or in connection with a merger, acquisition, corporate reorganization, or sale of all or substantially all of its assets. This Note and the CNote Terms set forth the entire agreement and understanding of the parties hereto relating to the relationship between the Lender and the Borrower and supersedes all prior or contemporaneous discussions, understandings, and agreements, whether oral or written, between the parties hereto relating to the subject matter of this Note. No terms in this Note may be changed except by an amendment or separate agreement executed in writing by an authorized representative of both parties hereto. Failure by either party hereto to enforce its rights under this Note shall not be deemed to constitute a waiver of its rights to enforce the same or any other provision under this Note. No waiver shall be effective unless made in writing and signed by an authorized representative of the waiving parties hereto. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note, and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

[Remainder of the page intentionally left blank; signature page follows.]

THE PARTIES HERETO HAVE READ AND UNDERSTOOD THE TERMS OF THIS NOTE AND AGREE TO THEM AS OF THE DATE WRITTEN ABOVE.

THE BORROWER:   CNote Group, Inc.     By: _________________________   Name: Yuliya Tarasava   Title: Secretary THE LENDER:   Name: _______________________     _____________________________ (Signature)   Name of Authorized Representative (if an Entity):   _____________________________   Address: _____________________________ _____________________________

EX1A-11 CONSENT

EXHIBIT 11.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use, in this Offering Statement on Form 1-A, of our independent auditors’ report dated April 29, 2020, with respect to our audits of the consolidated financial statements of CNote Group, Inc. and subsidiary as of and for the years ended December 31, 2019 and 2018, which includes an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern. We also consent to the reference to us in the “Experts” section of the Registration Statement.

/s/ dbbmckennon

Newport Beach, California

August 26, 2020

EX1A-12 OPN CNSL

 

Exhibit 12.1

August 26, 2020

CNote Group, Inc.

2323 Broadway

Oakland, California 94612

Re: Offering Statement on Form 1-A

Ladies and Gentlemen:

We have acted as counsel to CNote Group, Inc., a Delaware corporation (the “Company”), in connection with its filing of an offering statement on Form 1-A (the “Offering Statement”), filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Offering Statement relates to the proposed issuance and sale on a continuous basis by the Company of up to $50,000,000 in aggregate principal amount of CNote Notes (the “Notes”) pursuant to Rule 251(d)(3)(i)(F) under the Securities Act, as set forth in the Offering Statement.

In connection with the filing of the Offering Statement, we have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion, including the Offering Statement and the form of Notes. We have relied, without independent verification, on certificates of public officials and, as to matters of fact material to the opinion set forth below, on certificates of officers of the Company. For purposes of this opinion, we have also assumed: (i) the authenticity of original documents and the genuineness of all signatures; (ii) the conformity to the originals of all documents submitted to us as copies; (iii) the legal capacity of all natural persons; (iv) that the Offering Statement and any amendments thereto (including post-effective amendments) will have become qualified under the Securities Act; (v) that, to the extent required, an appropriate offering circular supplement will have been filed with the Commission with respect to the Notes offered thereby; (vi) that all Notes will be issued and sold in compliance with applicable Federal and state securities laws and in the manner stated in the Offering Statement and the applicable offering circular supplement, if any; and (vii) that the issuance and sale of the Notes by the Company will not, in each case, violate or result in a default under or breach (a) any agreement or instrument binding upon the Company, (b) any law, rule or regulation to which the Company is subject, (c) any applicable requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, or (d) any consent, approval, license, authorization or validation of, or filing, recording or registration with any governmental authority. To the extent the Company’s obligations depend on the enforceability of any agreement against the other parties to such agreement, we have assumed that such agreement is enforceable against such other parties.

Our opinion herein is expressed solely with respect to the Delaware General Corporation Law (the “DGCL”) and the laws of the State of New York. We express no opinion as to whether the laws of any jurisdiction are applicable to the subject matter hereof. The opinions expressed herein that are based on the laws of the State of New York are limited to the laws generally applicable in transactions of the type covered by the Offering Statement. 

CNote Group, Inc.

August 26, 2020

Page 2

Our opinion as to enforceability is limited by:

(a)       applicable bankruptcy, receivership, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer, preference or other similar laws affecting the enforcement of the rights and remedies of creditors, secured parties and parties to executory contracts generally; and such duties and standards as are or may be imposed on creditors, including, without limitation, good faith, materiality, reasonableness, and fair dealing under any applicable law or judicial decision;

(b)       rights to indemnification and contribution which may be limited by applicable law or equitable principles; and

(c)        general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, the effect of judicial discretion and possible unavailability of specific performance, injunctive relief or other equitable relief, and limitations on rights of acceleration regardless of whether such enforceability is considered in a proceeding in equity or at law.

Based on the foregoing, and subject to the qualifications herein stated, we are of the opinion that the Notes have been duly authorized, and, upon issuance and delivery against payment therefor in accordance with a subscription agreement, the Notes will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.

We hereby consent to the filing of this opinion as an exhibit to the Offering Statement and to the use of our name wherever it appears in the Offering Statement. In giving such consent, we do not believe that we are “experts” within the meaning of such term as used in the Securities Act or the rules and regulations of the Commission issued thereunder with respect to any part of the Offering Statement, including this opinion as an exhibit or otherwise.

This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

Very truly yours,

/s/ Winston & Strawn LLP

Winston & Strawn LLP

EX1A-15 ADD EXHB

Exhibit 1A-15.1

THIS MASTER PROMISSORY NOTE (THE “NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS. THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED, SOLD, RESOLD, OFFERED FOR SALE OR RESALE, PLEDGED, OR HYPOTHECATED (COLLECTIVELY, “TRANSFERRED” OR, A “TRANSFER”) IN THE ABSENCE OF A REGISTRATION OR QUALIFICATION WITH RESPECT TO THIS NOTE UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

MASTER PROMISSORY NOTE

Effective Date:                            

The Borrower: ___________________________________ (the “Borrower”)

The Lender: CNote Group, Inc., a Delaware corporation (the “Lender”)

Reference is made herein to that certain Loan Agreement executed by and between the Borrower and the Lender on the date hereof (the “Loan Agreement”), the terms and conditions of which are incorporated by reference herein.

1. Promise of Payment.

FOR VALUE RECEIVED, the Borrower hereby promises to pay to the Lender in U.S. dollars the aggregate principal amount (the “Principal”) of such loans (each, a “Loan”) made to the Borrower from time to time, as reflected in Schedule A hereto, and the Interest (as defined in Section 2) pursuant to the terms and conditions set forth in this Note and the Loan Agreement. By accepting the principal amount of each Loan, the Borrower agrees that such Loan shall be governed by the terms of this Note and the Loan Agreement.

2. Interest.

Each Loan shall bear interest (the “Interest”) according to the terms of this Section 2.

(a)       Unless otherwise modified pursuant to Section 2(b), each Loan shall begin to accrue Interest at specified on Schedule A hereto (the “Interest Rate”) on the Issue Date specified therein (the “Issue Date”) until the entire amount owed under this Note is repaid in full.

(b)       Upon the sooner to occur of (i) the six (6) month anniversary of the Effective Date, or (ii) an increase in the Federal Discount Rate, the parties hereto agree to renegotiate in good faith the Interest Rate on the Loans to reflect changes in the circumstances of the parties and general macroeconomic conditions.

(c)       The Interest shall be calculated on the basis of a 360-day year and the actual number of days elapsed.

Promissory Note

CNote Group, Inc.

Page 1

(d)       The Interest shall be compounded monthly on the last day of each calendar month and, together with the Principal, shall be payable to Lender as set forth in Section 4.

3. Maturity Date.

The term of each loan is 30 months. The maturity date of each Loan shall be the corresponding Maturity Date for such Loan specified on Schedule A hereto (the “Maturity Date”); provided, however, that the Maturity Date of each Loan may be extended by such amount of time as the Lender and the Borrower mutually agree in writing, in which case this Note shall continue on the same terms until such date.

4. Payment of Interest and Principal.

With respect to each Loan:

(a)       Unless earlier prepaid pursuant to Section 5, accelerated pursuant to Section 6, or withdrawn pursuant to Section 7, any accrued but unpaid Interest shall be due and payable to the Lender according to the following schedule:

(i)       Each calendar month, the Lender may elect to receive a portion of the accrued but unpaid Interest for that calendar month in accordance with the terms of this Section 4(a)(i) by providing written notice to the Borrower indicating the amount of Interest with respect to which the Lender so elects. Such notice shall be provided to the Borrower no later than three (3) business days prior to the end of each calendar month. In the event that the Lender provides notice to the Borrower pursuant to this Section 4(a)(i), the amount of Interest indicated on the Lender’s notice shall be paid to the Lender no later than three (3) business days following such calendar month. For example, if the Lender provides notice to the Borrower on November 24, 2017 that the Lender elects to receive a portion of the Interest for the month of November, 2017, the Borrower shall pay the amount indicated on the Lender’s notice by no later than December 5, 2017. As used in this Note, the term “business day” shall mean Monday through Friday, excluding United States bank holidays.

(ii)     Any accrued but unpaid Interest with respect to which the Lender has not made an election pursuant to Section 4(a)(i) shall be due and payable to the Lender on the Maturity Date of such Loan.

(b)       Unless earlier prepaid pursuant to Section 5, accelerated pursuant to Section 6, or withdrawn pursuant to Section 7, the Principal of each Loan shall be due and payable to the Lender on the Maturity Date of such Loan.

(c)       If any payment of Principal or Interest due under this Note is not paid within fifteen (15) days from the date such payment becomes due, the Borrower shall pay, in addition to any other sums due under this Note (and without limiting the holder's other remedies on account thereof, including, without limitation, the right to accelerate the maturity hereof), then and thereafter, until such delinquency is cured, interest on such delinquency at a rate equal to ten percent (10%) per annum.

All U.S. dollar amounts used in or resulting from the calculation of the outstanding Principal and accrued but unpaid Interest (the “Amount Owed”) shall be rounded to the nearest cent (with one-half cent being rounded upward).

Promissory Note

CNote Group, Inc.

Page 2

5. Prepayment.

The Borrower may not, without the prior written consent of the Lender, prepay this Note or any Loan made hereunder before the Maturity Date.

6. Acceleration of Note.

The Lender shall have the right, at its option, to declare the full Amount Owed hereunder immediately due and payable upon the occurrence of any Event of Default (as defined in the Loan Agreement).

7. Withdrawal of Amount Owed By The Lender.

(a)       At any time prior to repayment of the Amount Owed in full, including prior to the Maturity Date of each Loan, in each fiscal quarter, the Lender may make a request, according to the terms of this Section 7, to withdraw (each, a “Withdrawal Request”) up to an amount equal to ten percent (10%) of the aggregate Principal of this Note plus any accrued but unpaid Interest (such accrued but unpaid Interest to be calculated as of the date of the Withdrawal Request). If the Lender specifies in any Withdrawal Request the Loan(s) to which the Withdrawal Request shall apply and the amount to be withdrawn from each such Loan, the Borrower shall honor the Lender’s request.

(b)      A Withdrawal Request for any given fiscal quarter must be submitted to the Borrower at least twenty-five (25) calendar days prior to the last day of the fiscal quarter. Any Withdrawal Request submitted less than twenty-five (25) calendar days prior to the last day of the fiscal quarter shall be applied to the following quarter.

(c)       The Borrower shall honor any Withdrawal Request timely submitted pursuant to Section 7(a) by transferring the requested amount to the bank account designated by the Lender no later than three (3) business days after the end of the fiscal quarter.

(d)       For the avoidance of doubt, it is agreed that fiscal quarters shall end on March 31, June 30, September 30, and December 31 of that respective year.

8. Full-Recourse Obligation.

This Note, including the Principal and any Interest, is a full-recourse obligation of the Borrower. Except in the event of fraud, intentional misconduct or conviction of any crime involving moral turpitude, no recourse shall be had directly or indirectly for payment of the Amount Owed or for any claim based thereon against any past, present, or future director, officer, or stockholder of the Borrower, all such liability being expressly waived and released by the acceptance of delivery hereof.

9. Senior-Recourse Obligation.

Note represents a senior unsecured obligation of the Borrower.

[Remainder of this page intentionally left blank; signature page follows.]

Promissory Note

CNote Group, Inc.

Page 3

THE BORROWER HAS EXECUTED THIS MASTER PROMISSORY NOTE AS OF THE DATE FIRST WRITTEN ABOVE.

THE BORROWER:

________________________

By: _________________________

Name: _______________________

Title: __________________

Address:

____________________

____________________

Promissory Note

CNote Group, Inc.

Page 4

SCHEDULE A

Schedule of Loans

As of                                 

Loan
Number Issue Date Principal
Amount Interest
Rate Maturity Date Lender
Signature Borrower
Signature

Promissory Note

CNote Group, Inc.

Page 5

EX1A-15 ADD EXHB

Exhibit 1A-15.1

Terms of Use Last modified: September 27, 2017 CNote Group, Inc. (“Company” or “CNote”) offers the mycnote.com website (the “Website”) and these Terms of Use (“Terms”) govern your access and use of the Website and all services available through the Website (collectively, the“Services”). Any information that you supply to Company will be governed by these Terms and the Website Privacy Policy, as they may be updated from time to time by Company. You agree to abide by the rules and policies established from time to time by Company. By using the Website and the Services, you attest that you are at least 18 years old. Please read these Terms carefully. These Terms govern your access to and use of the Services. By using the Website, you signify your assent to these Terms. Changes may be made to these Terms from time to time. Your continued use of the Website will be deemed acceptance to any amended or updated terms. If you do not agree to any of these Terms, please do not use the Website. Company reserves the right to change, update or cease to offer the Website or any part thereof at any time. No Investment Advice or Solicitation CNote is not an investment firm and does not provide investment advice. Any information contained on the Website or the Services is for information purposes only, and does not constitute investment, financial, legal, tax or other advice. You agree that all decisions you make on investment matters are your full responsibility, and you agree to consult with your own financial advisors prior to making any investment decisions. You agree to accept full responsibility for any investment you make. Company, its Website and Services are not a substitute for the advice or services of a financial advisor. You understand that purchase of investment securities through the Services involves risk of loss. To understand the risks associated with investing through the Services, please visit our Offering Circular filed with the Securities Exchange Commission. WITHOUT LIMITING ANYTHING IN THESE TERMS, COMPANY MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO ANY INVESTMENTS, SECURITIES OR THE PERFORMANCE THEREOF. Except as otherwise expressly noted, no information or communication contained on the Website or the Services shall constitute an offer to buy or sell or a solicitation of an offer to buy or sell investments, securities or any other financial instruments. Further, the information contained on the Website does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any state or jurisdiction in which such an offer or solicitation is not authorized or permitted, or to any person to whom it is unlawful to make such offer or solicitation. Not a Deposit Account You represent that you understand and acknowledge that CNote is not a bank or depository institution. Any investment securities available through the Services are not depository bank accounts, and therefore are not insured by the Federal Deposit Insurance Corporation or by any other governmental agency. Account Registration When you complete the registration process, you create an account and become a registered user of the Website. Your account allows you to participate in the Services, subject to the Terms and the Company Privacy Policy. Company reserves the right to refuse to allow a user to register or use the Services for any reason, at Company’s sole discretion. To register, you must enter your email address and select a password. The email address must be an actual address that belongs exclusively to you. You may not use an email address that is used by someone else, and the email address cannot be indecent, or otherwise offensive, or be used in any way that violates the Terms. You may not provide false information during the registration process. Maintaining account security is very important. Company takes commercially reasonable steps to keep the Website secure, however security is not guaranteed. Security also depends on you. You should not reveal your password to anyone. Your account is at risk if you let someone use it inappropriately and your account is subject to termination if you or anyone using your account violates the Terms. The information you provide may be visible to Company and its employees and contractors who have a need to know such information in order to provide the Services. You agree to immediately notify Company of any unauthorized use of your account or password. You are fully and solely responsible for the security of your computer system and all activity on your account, even if such activities were not committed by you. Company will not be liable for any losses or damage arising from unauthorized use of your account or password, and you agree to indemnify and hold Company harmless for any improper or illegal use of your account. This includes illegal or improper use by someone to whom you have given permission to use your account. We do not police for, and cannot guarantee that we will learn of or prevent, any inappropriate use of the Services. Termination of Account You agree that Company may for any reason, in its sole discretion and without notice, terminate your account, and remove from the Services any content associated with your account. Grounds for such termination may include, but are not limited to (i) extended periods of inactivity, (ii) violation of these Terms, (iii) fraudulent, harassing or abusive behavior, (iv) behavior that is harmful to other users, third parties, or the business interests of Company or (v) infringement of third party intellectual property rights. If Company believes, in its sole discretion, that a violation of these Terms or any illegal or inappropriate behavior has occurred, Company may take any corrective action deemed appropriate. Company will fully cooperate with any law enforcement authorities or court order requesting or directing Company to disclose the identity of anyone believed to have violated these Terms or to have engaged in illegal behavior in the use of the Services. If there are no funds in your account, you may terminate your account at any time by emailing support@mycnote.com. Any suspension, termination, or cancellation shall not affect your obligations to Company under these Terms (including but not limited to ownership, intellectual property, indemnification, and limitation of liability), which by their sense and context are intended to survive such suspension, termination, or cancellation. Intellectual Property & Content Company owns the Website and the Services, including all worldwide intellectual property rights in the Website and the Services, and the copyrights, trademarks, service marks, and logos contained therein. Company hereby grants you a limited, revocable, personal, worldwide, royalty-free, nonexclusive, nonsublicensable and non- assignable license to use the Website and the Services solely for your personal use. Except as expressly permitted herein, you may not copy, further develop, reproduce, republish, modify, alter, download, post, broadcast, transmit or otherwise use the Website or the Services. You will not remove, alter or conceal any copyright, trademark, service mark or other proprietary rights notices incorporated in the Website or the Services, except as Company may expressly permit. Should you provide Company with comments or suggestions for the modification, correction, improvement or enhancement of the Website or the Services then, subject to the terms and conditions of these Terms, you hereby grant Company a non-exclusive, irrevocable, worldwide, royalty-free license, including the right to sublicense, to use and disclose such comments and suggestions in any manner Company chooses and to display, perform, copy, have copied, make, have made, use, sell, offer to sell, and otherwise dispose of Company’s and its sublicensees’ products and content embodying such comments or suggestions in any manner and via any media Company chooses, but without reference to the source of such comments or suggestions. You understand and acknowledge that you are not entitled to any compensation, whether financial or otherwise, for such comments or suggestions. In order to use certain parts of the Website, you may be asked to supply certain personal information. All personal information that you provide must be accurate, complete, and kept current. Third-Party Service Provider We have partnered with Dwolla, Inc. (“Dwolla”), a financial services software company, to allow you to transfer funds into your account. By creating an account on the Website and initiating bank transfers or withdraws, you agree to and accept Dwolla’s Terms of Service and Privacy Policy (available at https://www.dwolla.com/legal) (the “Dwolla Terms”) which are incorporated herein by reference. CNote gives no warranties and makes no claims about Dwolla’s services. CNote is not responsible for the acts or omissions of Dwolla in providing services to you. When you sign up for an account on the Website, you will also be prompted to sign up for a Dwolla “white label” account. You are responsible for complying with Dwolla Terms when using your Dwolla account. IT IS YOUR RESPONSIBILITY TO READ AND UNDERSTAND THE DWOLLA TERMS AS IT CONTAINS TERMS AND CONDITIONS RELATING TO YOUR DWOLLA ACCOUNT INCLUDING BUT NOT LIMITED TO YOUR RIGHTS, LIMITATIONS, REVERSAL AND OTHER LIABILITIES, LIMITATION OF LIABILITY AND BINDING ARBITRATIONS PROVISIONS. You authorize CNote to share your personal information with Dwolla to open and support your Dwolla account as further detailed in our Privacy Policy and Dwolla’s Privacy Policy. It is your responsibility to make sure the information you provide to us is accurate and complete. You understand that you will access and manage your Dwolla account through our application, and Dwolla account notifications will be sent by us, not Dwolla. Additionally, you authorize CNote, as your agent, on behalf of CNote, Dwolla, and Dwolla’s partners, to view, edit and create transactions on your behalf to debit or credit your Dwolla Account and attached bank account(s). Any funds held in the Dwolla account are held by Dwolla's financial institution partners as set out in the Dwolla Terms. We will provide customer support for your Dwolla account activity, and can be reached at support@mycnote.com. Dwolla allows CNote to check the balance in your bank account(s) to verify whether you have sufficient funds to initiate a transfer (a “Balance Check”). By using the Services, you authorize CNote to perform a Balance Check. If you wish to withdraw authorization for Balance Checks, please contact support@mycnote.com. You agree to indemnify CNote for any losses we incur based on your failure to provide accurate, truthful, or complete information to Dwolla, or to use the Website or the Dwolla platform for any unauthorized or illegal purposes. Further, you agree to indemnify CNote for any Reversal Fee (as defined in the Dwolla Terms) assessed against CNote due to insufficient funds in your bank account(s) or due to any reason within your control. Limitations on Use of the Services You agree that you will not use the Services in any manner that: Posts, stores, transmits, offers, or solicits anything that contains the following, or that you know contains links to the following or to locations that in turn contain links to the following: (a) Material that Company determines to be offensive; (b) Material that is defamatory, harassing or threatening; (c) Pornography; (d) Any virus, worm, Trojan horse, or other harmful or disruptive component; (e) Anything that encourages conduct that would be considered dangerous, a criminal offense, give rise to civil liability, violate any law or regulation or is otherwise inappropriate; or (f) Restricts or inhibits use of the Website; (g) Uses any account or password without prior permission; (g) Obtains or solicits another person’s password or other personal information under false pretenses; Impersonates another user or otherwise misrepresents yourself in any manner, whether to another user, to us, or otherwise; (h) Violates the legal rights of others, including defaming, abuse, stalking or threatening users; (i) Infringes (or results in the infringement of) Company’s or any third party’s intellectual property rights, moral rights, or other rights; (j) Is (or you reasonably believe to be illegal, fraudulent, or unauthorized, or in furtherance of any illegal, counterfeiting, fraudulent, pirating, unauthorized, or violent activity, or that involves (or you reasonably believe to involve) any stolen, illegal, counterfeit, fraudulent, pirated, or unauthorized material; (k) Does not comply with all applicable laws, rules, or regulations, including obtaining all necessary permits, licenses, registrations, etc. In the case of any proposed or actual transaction, “applicable” refers to both your own location and to location(s) of all other parties to the transaction; or would cause Company to be in violation of any law, ordinance, rule, regulation or treaty, or to infringe any right of any third party; (l) Publishes falsehoods or misrepresentations that may damage Company or any third party; (m) Manipulates identifiers, forges headers or other data in order to disguise the origin of content transmitted through the Website or to manipulate your presence on the Services; (n) Disrupts, interferes or harms the Website, servers or networks; or (o) Imposes an unreasonably or disproportionately large load on Company’s infrastructure. Use Restrictions The software and technology underlying the Website is the property of Company, and you may not connect to or use the Website in any way that is not expressly permitted by these Terms. Specifically, you may not do or attempt to do any of the following: (a) Attempt to decipher, decompile, disassemble, or reverse-engineer any of the software used to provide the Services (including without limitation, for the purpose of obtaining unauthorized access to the Website) without Company’s prior written authorization, including framing or mirroring any part of the Website; (b) Circumvent, disable, or otherwise interfere with security-related features of the Services, the Website, or features that prevent or restrict use or copying of any content; (c) Use the Website or Services in connection with any commercial endeavors in any manner, except for the purposes specifically set forth in these Terms; (d) Sell, resell or otherwise monetize any content to any third party, except as specifically set forth in these Terms; (e) Use any robot, spider, site search or retrieval application, or any other manual or automatic device or process to retrieve, index, data-mine, or in any way reproduce or circumvent the navigational structure or presentation of the Website; (f) Harvest, collect or mine information about other users of the Website; (g) Create a database by systematically downloading and storing all or any of the content on the Website; (h) Remove, obscure, make illegible or alter any proprietary notices or labels or other indications of Company’s rights in the Website; (i) Use or access another user’s account or password without permission; or (j) Use the Website or Services in any manner not permitted by these Terms. Report Abuse If you believe any Website users violate these Terms, please contact us at support@mycnote.com. Solicitation or Offering; No Advice Except as otherwise expressly noted, the Website and the content contained thereon do not constitute an offer to buy or sell or a solicitation of an offer to buy or sell investments, loans, securities, partnership interests, commodities or any other financial instruments; nor do they constitute, and they may not be used for or in connection with, an offer or solicitation by anyone in any state or jurisdiction in which such an offer or solicitation is not authorized or permitted, or to any person to whom it is unlawful to make such offer or solicitation. Company makes no representation or warranty, express or implied, regarding the advisability of investing in anything offered through the Website. The past performance of any investment is not a guide to future performance. WITHOUT LIMITING ANYTHING IN THE TERMS OF SERVICE, COMPANY MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO ANY FUND, ANY INVESTMENTS, SECURITIES, PARTNERSHIP INTERESTS, LOANS OR THE PERFORMANCE THEREOF. The Website content and the views expressed in the content do not necessarily reflect the views of Company as a whole, its directors, officers, employees, shareholders or any part or member thereof or of any third party. No content or information on the Website constitutes, or should be construed as, investment, tax, legal, financial or any other advice. Forward-Looking Statements Certain statements in the Website and the content may constitute “forward-looking” statements that involve known and unknown risks, uncertainties and other factors that may cause actual returns of investment to be materially different from any future returns or values expressed or implied by such forward-looking statements. Forward-looking statements typically include words such as “may,” “will,” “expect,” “believe,” “plan,” “expect,” “anticipate,” “intend” and other similar terminology. These statements reflect current expectations regarding future events and speak only as of the date of being posted to the Website. Forwardlooking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or returns, and will not necessarily be accurate indications of whether or not such returns will be achieved. Given these uncertainties and risks, users of the Website, including any person who may or has invested in any offering made by or on behalf of Company or its subsidiaries or affiliates, are cautioned not to place undue reliance on such forwardlooking statements. A variety of factors could cause the actual results and developments of any investment to differ significantly from the results and developments forecasted and implied. Although forwardlooking statements contained in the Website, if any, are based upon what Company and its advisors believe are reasonable assumptions, Company cannot assure you that actual results, returns or events will be consistent with these forward-looking statements. Forward-looking statements are made as of the date of being posted to the Website, and Company and its subsidiaries and affiliates assume no obligation, and expressly disclaim any obligation, to update or revise forward-looking statements contained in or incorporated by reference into the Website or the content or any information supplemental thereto to reflect new information, future events or circumstances or otherwise. Disclaimer Your use of any aspect of the Website is at your own risk. Company makes no representations or warranties whatsoever in respect of the Website or Services. Neither Company nor any of its affiliates or their respective owners, officers, directors, employees, contractors or agents will be liable for any direct, incidental, consequential, indirect, punitive, exemplary, special or other damages, whether under any contract, tort (including negligence), strict liability, or other theory, and regardless of whether it has been advised of the possibility of such claim or damage, arising in connection with the Website or Services. Warranties; Disclaimer WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY STATED IN THESE TERMS, YOU UNDERSTAND AND AGREE THAT YOUR USE OF THE WEBSITE IS AT YOUR SOLE RISK AND THAT THE WEBSITE IS PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, COMPANY EXPRESSLY DISCLAIMS ALL WARRANTIES AND CONDITIONS INCLUDING, WITHOUT LIMITATION, WARRANTIES AND CONDITIONS OF SATISFACTORY QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND THOSE ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. COMPANY MAKES NO WARRANTY AS TO THE ACCURACY, COMPLETENESS OR RELIABILITY OF ANY MATERIALS, INFORMATION OR DATA AVAILABLE THROUGH THE WEBSITE. COMPANY DOES NOT REPRESENT OR WARRANT THAT (a) YOU WILL BE ABLE TO ACCESS OR USE THE WEBSITE AT THE TIMES OR LOCATIONS OF YOUR CHOOSING; (b) THAT OPERATION OF THE WEBISTE WILL BE UNINTERRUPTED, TIMELY, SECURE OR ERROR-FREE; (c) YOUR USE OF THE WEBSITE WILL MEET YOUR REQUIREMENTS; (d) DEFECTS IN THE OPERATION OF THE WEBSITE WILL BE CORRECTED; OR (e) THE WEBSITE IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF CERTAIN WARRANTIES OR THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, SO THE LIMITATIONS HEREIN MAY NOT APPLY TO YOU. YOU ACKNOWLEDGE AND AGREE THAT ANY MATERIAL DOWNLOADED OR OTHERWISE OBTAINED THROUGH THE WEBSITE IS AT YOUR OWN RISK AND THAT YOU WILL BE SOLELY RESPONSIBLE FOR ANY DAMAGE TO YOUR COMPUTER, MOBILE PHONE OR OTHER DEVICE OR ANY LOSS OF DATA RESULTING FROM DOWNLOADING OR OBTAINING SUCH MATERIAL. WITHOUT LIMITING THE FOREGOING, COMPANY SHALL HAVE NO LIABILITY FOR: (a) ANY ADVERSE EFFECT TO YOUR COMPUTER, DEVICE, OR OTHER SOFTWARE AS A RESULT OF YOUR USE OF THE WEBSITE, OR AS A RESULT OF ANY CONTENT AVAILABLE THROUGH THE WEBSITE; (b) YOUR USE OF (OR INABILITY TO USE) THE WEBSITE OR ANY COMPONENT THEREOF; (c) ANY MATERIAL AVAILABLE (OR INTENDED TO BE AVAILABLE) ON OR BY MEANS OF THE WEBSITE OR INFORMATION OR ADVICE RECEIVED BY MEANS OF THE WEBSITE; (d) ANY ERROR OR OMISSION OF COMPANY, OR ANY ACT OR OMISSION OF ANY THIRD PARTY; (e) ANY ERROR, DELAY, INTERRUPTION, OPERATIONAL PROBLEM, UNAVAILABILITY, OR FAILURE IN THE WEBSITE OR ANY COMPONENT THEREOF, OR ANY DIRECTLY OR INDIRECTLY RELATED EQUIPMENT, SYSTEM, PROGRAMMING, OR NETWORK (INCLUDING THE INTERNET); (f) ANY BREACH OF SECURITY INVOLVING THE WEBSITE OR YOUR ACCOUNT; (g) ANY VIRUSES OR OTHER CODE OR COMPONENT THAT MAY AFFECT YOUR COMPUTER SYSTEM, MOBILE DEVICE OR OTHER PROPERTY AS A RESULT OF YOUR USE OF THE WEBSITE; (h) ANY INJURIES TO PERSON OR PROPERTY SUFFERED BY YOU IN THE CREATION OF SUBMISSIONS OF CONTENT. Indemnification You agree to indemnify, defend, and hold harmless Company, its parent, affiliates, subsidiaries and the respective owners, employees, directors, officers, subcontractors and agents of each, from and against any and all claims, damages, or costs or expenses (including reasonable attorneys’ fees) that arise directly or indirectly from: (a) breach of these Terms by you or anyone using your computer, device, or password; (b) any claim, loss or damage experienced from your use or attempted use of (or inability to use) the Website; (c) your violation of any law, ordinance, rule, regulation or treaty; (d) your infringement of any right of any third party, including without limitation the infringement by any content of any third party intellectual property right or moral right; (e) your violation of any applicable law, regulation, rule or third party intellectual property right or moral right; (f) any content that you downloaded from the Website or modified; and (g) any other matter for which you are responsible hereunder or under law. You agree that your use of the Website shall be in compliance with all applicable laws, regulations and guidelines. Limitation of Liability To the greatest extent allowable under applicable law, in no event shall Company be liable to you or any third party for any damages, including but not limited to general, incidental, consequential, indirect, direct, special or punitive damages, arising out of or relating to the Website. Export Restrictions You may not access, download, use or export the Website or Services in violation of United States export laws or regulations or in violation of any other applicable laws or regulations. You agree to comply with all export laws and restrictions and regulations of any United States or foreign agency or authority and to assume sole responsibility for obtaining licenses to export or re-export as may be required. Miscellaneous These Terms shall be governed by the laws of the State of California, exclusive of its choice of law rules. Your conduct may also be subject to other local, state, and national laws. Subject to the binding arbitration provision below, any action to be brought in connection with these Terms or the Services shall be brought exclusively in the state and federal courts located in San Francisco, California and you irrevocably consent to their jurisdiction. In any action to enforce this Agreement, the prevailing party will be entitled to costs and attorneys’ fees. Any cause of action against Company must be brought within one (1) year of the date such cause of action arose. In the event that any provision of these Terms is held to be unenforceable, such provision shall be replaced with an enforceable provision which most closely achieves the effect of the original provision, and the remaining terms of these Terms shall remain in full force and effect. Nothing in this Agreement creates any agency, employment, joint venture, or partnership relationship between you and Company or enables you to act on behalf of Company. Except as may be expressly stated in these Terms, these Terms constitute the entire agreement between Company and you pertaining to the subject matter hereof, and any and all other agreements existing between us relating thereto are hereby canceled. Nothing contained in these terms shall be construed to limit the actions or remedies available to Company with respect to any prohibited activity or conduct. Non-enforcement of any term of these Terms does not constitute consent or waiver, and Company reserves the right to enforce such term at its sole discretion. No waiver of any breach or default hereunder shall be deemed to be a waiver of any preceding or subsequent breach or default. Company may assign its rights under these terms to any third party. Binding Arbitration You and Company agree that, except as provided below, all disputes, controversies and claims related to these Terms (each a “Claim”), shall be finally and exclusively resolved by binding arbitration, which may be initiated by either party by sending a written notice requesting arbitration to the other party. Any election to arbitrate by one party shall be final and binding on the other. The arbitration will be conducted under the Streamlined Arbitration Rules and Procedures of JAMS that are in effect at the time the arbitration is initiated (the “JAMS Rules”) and under the terms set forth in these Terms. In the event of a conflict between the terms set forth herein and the JAMS Rules, the terms herein will control and prevail. The determination of whether a Claim is subject to arbitration shall be governed by the Federal Arbitration Act. Except as otherwise provided in these Terms, (a) you and Company may litigate in court to compel arbitration, stay proceedings pending arbitration, or confirm, modify, vacate or enter judgment on the award entered by the arbitrator; and (b) the arbitrator’s decision shall be final, binding on all parties and enforceable in any court that has jurisdiction, provided that any award may be challenged if the arbitrator fails to follow applicable law. The arbitration will be conducted in San Francisco, California. Class Action Waiver You and Company agree that any arbitration shall be limited to the Claim between Company and you individually. YOU AND COMPANY AGREE THAT (a) THERE YOU WAIVE ANY RIGHT OR AUTHORITY FOR ANY DISPUTE TO BE ARBITRATED ON A CLASS-ACTION BASIS OR TO UTILIZE CLASS ACTION PROCEDURES; (b) YOU WAIVE RIGHT OR AUTHORITY FOR ANY DISPUTE TO BE BROUGHT IN A PURPORTED REPRESENTATIVE CAPACITY OR AS A PRIVATE ATTORNEY GENERAL; AND (c) NO ARBITRATION SHALL BE JOINED WITH ANY OTHER ARBITRATION. Exceptions to Arbitration You and Company agree that the following Claims are not subject to the above provisions concerning negotiations and binding arbitration: (a) any Claim seeking to enforce or protect, or concerning the validity of, any of your or Company’s intellectual property rights; (b) any Claim related to, or arising from, allegations of theft, piracy, invasion of privacy or unauthorized use; and (c) any claim for equitable relief. In addition to the foregoing, either party may assert an individual action in small claims court for Claims that are within the scope of such court’s jurisdiction in lieu of arbitration. Recipient By (signature): ____________________________ Date: ___________________________ Name: __________________________ Address: __________________________ __________________________