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.
FORM 1-A
Regulation A Offering Statement
Part II – Offering Circular
Amendment No. 4
iCross
Premier LLC
28-07 Jackson Avenue, 5F
Long Island City, New York 11101
(212) 889-5000
www.icrossfund.com
February 21, 2022
This Offering Circular Follows the Form 1-A
Disclosure Format
iCross Premier LLC is a limited liability company
organized under the laws of Delaware, which we refer to as the “Company.” The Company is offering to sell to the public
up to $75,000,000 of its promissory notes, which we refer to as the “Notes.” The minimum initial investment is $500.
There is no minimum offering size, and we will begin to deploy the proceeds of the Offering as they are received.
The Company will sell two kinds of Notes:
a “Quarterly Note” bearing interest at 3.1% per year; and a “Semi-Annual Note” bearing interest
at 3.35% per year. Neither the Quarterly Notes nor the Semi-Annual Notes have fixed maturity dates, nor will the Company pay interest
currently. Instead, Investors may ask the Company to redeem all or a portion of their Notes, subject to limitations. For more information,
see “Securities Being Offered.”
The Notes are being offered and sold at face
value. For example, for $500 you can buy a $500 Quarterly Note or a $500 Semi-Annual Note.
We are offering $37,500,000 of Quarterly Notes
and $37,500,000 of Semi-Annual Notes.
We are selling these securities directly to the
public through the website, www.icrossfund.com, and the app, iCrossFS, which we refer to together as the “Platform.”
Currently, we are not using a placement agent or a broker and we are not paying commissions to anyone.
| | |
Price to Public | | |
Underwriting Discounts And Commissions | |
Proceeds to Issuer | | |
Proceeds to Other Persons |
| Each Note | |
$ | 500 | | |
Zero | |
$ | 500 | | |
Zero |
| Total | |
$ | 75,000,000 | | |
Zero | |
$ | 75,000,000 | | |
Zero |
We refer to the offering of Notes pursuant to
this Offering Circular as the “Offering.” The Offering will begin as soon as our Offering Statement is “qualified”
by the U.S. Securities and Exchange Commission (“SEC”) and will end on the sooner of (i) a date determined by the Company,
(ii) the second anniversary of qualification.
The purchase of these securities involves a high
degree of risk. Before investing, you should read this whole Offering Circular, including “Risks
of Investing.”
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
DOES NOT PASS JUDGEMENT UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERM OF THE OFFERING. NOR DOES IT PASS
JUDGEMENT UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT
TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES
OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.
GENERALLY, IF YOU ARE A NON-ACCREDITED INVESTOR
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. FOR MORE INFORMATION, SEE THE “Limits on How
Much Non-Accredited Investors Can Invest” SECTION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS OFFERING
CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NORTH AMERICAN SECURITIES ADMINISTRATORS
ASSOCIATION UNIFORM LEGEND:
YOU SHOULD MAKE YOUR OWN DECISION AS TO WHETHER
THIS OFFERING MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. NO FEDERAL OR STATE SECURITIES COMMISSION HAS APPROVED, DISAPPROVED,
ENDORSED, OR RECOMMENDED THIS OFFERING. NO INDEPENDENT PERSON HAS CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THIS DISCLOSURE, NOR WHETHER
IT IS COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS ILLEGAL.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY BY CONTRACT AND THERE WILL BE NO READY MARKET FOR RESALE. YOU COULD BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Contents
EXECUTIVE SUMMARY
Our Business
The Company will engage in the business of originating,
acquiring, investing in, holding, and disposing of mortgages on real estate, as well as buying, investing in, holding, and disposing of
other interests in real estate. We refer to the loans we make as “Underlying Loans” and to the borrowers as “Borrowers.”
Our principal investment strategy is to lend money
to developers building or developing commercial real estate projects, including residential, office space, retail, and industrial projects.
Our typical Underlying Loan will have a maturity of between 12 and 36 months.
We will also invest in short-term assets to provide
liquidity for investors.
The Offering
The Company is offering to investors two kinds
of promissory notes: a “Quarterly Note” bearing interest at 3.1% per year; and a “Semi-Annual Note”
bearing interest at 3.35% per year.
Neither the Quarterly Notes nor the Semi-Annual
Notes have fixed maturity dates. Instead, Investors may ask the Company to redeem all or a portion of their Notes. The Quarterly Notes
may be redeemed on a quarterly basis, on the last day of any calendar quarter, and the Semi-Annual Notes may be redeemed on a semiannual
basis, provided that the holder of the Note gives at least seven days’ notice. The Company’s obligation to fund redemptions
are subject to limitations, however. First, the Company will not be required to (i) borrow money, (ii) raise additional capital, (iii)
sell assets, or (iv) take any actions that would, in the Company’s discretion, be harmful to the Company or to Investors. Second,
the Company will not be required to redeem on any redemption date Notes representing more than 10% of all the Notes issued and outstanding.
The Notes will be secured by pledge of the Underlying
Loans and any and all collateral securing the Underlying Loans, such as a mortgage of real estate or a personal guaranty of a Borrower
or its principal, which pledge will be held and administered by a Trust established by the Company for that purpose. It is expected that
the collateral security interests held by the Trust will be junior in priority (i.e., subordinate) to the security interests granted
to other lenders to the Company.
RISKS OF INVESTING
THE PURCHASE OF NOTES IS SPECULATIVE AND INVOLVES
SIGNIFICANT RISK, INCLUDING THE RISK THAT YOU COULD LOSE ALL YOUR MONEY. THE PURCHASE OF NOTES IS SUITABLE ONLY FOR INVESTORS WHO FULLY
UNDERSTAND AND ARE CAPABLE OF BEARING THE RISKS.
SOME OF THE RISKS ARE DESCRIBED BELOW. THE ORDER
IN WHICH THESE RISKS ARE DISCUSSED IS NOT INTENDED TO SUGGEST THAT SOME RISKS ARE MORE IMPORTANT THAN OTHERS.
You
Might Lose Some or All of Your Money:
The Company believes that Investors will get all their money back plus interest. However, our ability to make distributions depends on
a number of factors, most beyond our control, including those listed in this section. It is possible that you will lose some or all of
your money.
Risks
from COVID-19: As of the date of this Offering Statement, the world and American economies are just beginning to recover from
the sharpest and most severe slowdown since the Great Depression, caused by the COVID-19 pandemic. The economic downturn could affect
real estate assets in a number of ways, both positively and negatively. We believe the pandemic will create opportunities as well as risks,
but neither we nor anyone else knows for certain what the real estate landscape will look like one, two, or three years from now.
Risks
of Real Estate Industry: All or almost all of the assets of the Company will involve real estate, and real estate can
be risky and unpredictable. For example, many experienced, informed people lost money when the real estate market declined in 2007-8.
Time has shown that the real estate market goes down without warning, sometimes resulting in significant losses. Some of the risks of
investing in real estate include changing laws, including environmental laws; floods, fires, and other acts of God, some of which can
be uninsurable; changes in national or local economic conditions; changes in government policies, including changes in interest rates
established by the Federal Reserve; and international crises. In the event of a downturn in the real estate market, the value of the Company’s
assets would decline, and along with it our ability to repay Notes.
Repayment
of Notes Is Not Guaranteed: The Company believes that its assets will be sufficient to repay all of the Notes in accordance
with their payment schedules. When you buy a Note from the Company, however, it is not like buying a certificate of deposit from a bank.
A certificate of deposit is guaranteed by the Federal government through the FDIC. Repayment of the Notes will not be guaranteed by anyone
other than the Company.
Your
Note Might Not be Repaid: The Notes will not have fixed maturity dates. Instead, Investors will have the right to ask the Company
to redeem their Notes at designated intervals. But the right to redemption is subject to limits. For one thing, the Company will not be
required to redeem more than 10% of all the outstanding Notes on any given redemption date. In addition, in seeking to accommodate the
Investor’s request, the Company will not be required (i) to borrow money, (ii) to raise additional capital, (iii) to sell assets,
such as Underlying Loans, or (iv) to take any actions that would, in the Company’s discretion, be harmful to the Company or its
Investors.
Repayment
Depends on Value of the Underlying Real Estate Assets, Which Could Decline: The Company’s ability to repay the Notes
depends ultimately on the value of the real estate assets securing the Underlying Loans. The value of those assets will definitely fluctuate
and could decline significantly. Factors that could cause the value of the collateral to decline include, but are not limited to:
| ● | Global and national economic conditions; |
| ● | Wars and other international or national crises; |
| ● | Changes in interest rates or government policies, including tax policies; |
| ● | Environmental contamination or liabilities; |
| ● | The inability of borrowers to repay loans (in the case of assets in the nature of debt); |
| ● | Changes in local market conditions; |
| ● | Competition for tenants (in the case of rental properties); |
| ● | Fires, floods, and other casualties; |
| ● | Undisclosed defects in property; and |
| ● | Incomplete or inaccurate due diligence. |
Real
Estate Is an Illiquid Investment: Most or all of our assets will be real estate or secured directly or indirectly by real estate.
Real estate is much harder to sell than, say, a publicly-traded stock. As a result, we might not be able to sell assets at the times or
at the prices we need to sell them to make payments on the Notes.
Our
Underwriting Standards are More Lenient than Conventional Lenders: The Company will sometimes lend money in situations where
a bank or other financial institution would not lend. That means that our loan portfolio will carry more risk than the portfolio of a
bank or other institutional lender.
Lack
of Liquidity of Company: To make payments with respect to the Notes, the Company will need liquidity in its own assets. The
Company believes it can achieve such liquidity by acquiring the correct mix of assets to match the Notes, by borrowing against its assets,
and by timed sales of assets. However, there is no assurance that this will be the case. If the Company experiences a liquidity crunch
it may be unable to make payments with respect to the Notes and/or may be required to liquidate assets in an untimely manner.
Effect
of Changing Conditions: There are many causes or factors that could adversely affect the ability of a Borrower to make
payments with respect to the Underlying Loan, including changes in general economic conditions, changes in conditions within a given neighborhood,
poor health, governmental regulation, competition, political and diplomatic events and trends, the outbreak of war or terrorist acts,
changes in tax laws, and other factors. The Company cannot control any of these.
Our
Models for Estimating the Value of Collateral Might be Wrong: Real estate valuation and appraisal is an inherently subjective
process. The economic models we use to estimate the value of collateral could be deficient or incomplete.
Inability
to Foreclose on Collateral: Some Underlying Loans will be secured by a mortgage on real estate. Other Underlying Loans
will be secured by a security interest in the ownership interests of the limited liability company or other entity that owns real estate.
The Company believes that all the security interests it obtains as collateral will be enforceable. However, a change in the law or the
application of the law could render some of our security interests unenforceable.
Risk
Associated with Lack of Minimum Offering Amount: The Offering has no minimum amount. That means the Company will begin
deploying the capital raised from Investors from the first dollar, without waiting until we have raised any minimum amount. The Manager
has committed to paying the costs of the Offering as well as the first six months of the Company’s operating expenses. Nevertheless,
if the Company raises too little capital we might not have enough money to pay Investors interest or principal.
Subordination
to Senior Debt: Some of our Underlying Loans will be secured by first positions in real estate or other collateral,
but most will be in second or third position, subordinate to banks or other more senior lenders. Typically, in the event of a bankruptcy
or foreclosure the Company would not be entitled to receive any payment until the senior lenders were paid in full. As a result, the Company
will be most exposed to a drop in the value of the real estate.
Risks
of Balloon Loans: Many of our Underlying Loans will be interest-only, providing for relatively small monthly payments
with a large “balloon” payment of principal due at the end of the term. Borrowers may be unable to repay such balloon payments
out of their own funds and will be compelled to refinance or sell their property. Fluctuations in real estate values, interest rates and
the unavailability of mortgage funds could adversely affect the ability of borrowers to refinance their loans at maturity or successfully
sell the property for enough money to pay off the Underlying Loan.
Risks
of Construction Loans: We might originate or buy loans incurred to fund the building or renovation of real estate. Construction
carries its own risks, with delays and cost overruns all too common. This is particularly true for projects since the onset of the COVID-19
pandemic, which has caused significant disruptions to supply chains, reduced the number of workers who can actively work on the project
due social distancing rules, and has sometimes caused state and local governments to order total or partial shutdowns of new or existing
construction projects. Further, the value of our collateral might depend on successful completion of one or more real estate construction
projects.
Environmental
Risks: Even where we conduct environmental studies of the real estate we take as collateral, these studies do not guarantee
that all environmental hazards will be discovered. Under Federal and State laws, moreover, a current or previous owner or operator of
real estate may be required to remediate any hazardous conditions without regard to whether the owner knew about or caused the contamination.
Similarly, the owner of real estate may be subject to common law claims by third parties based on damages and costs resulting from environmental
contamination. The cost of investigating and remediating environmental contamination can be substantial, even catastrophic, and could
impair the ability of a Borrower to repay the Underlying Loan.
Risks
Associated with Bankruptcy Laws: If a Borrower files for bankruptcy protection, an automatic stay of all proceedings
will be granted. This stay may prevent the Company from foreclosing on collateral unless relief from the stay can be obtained from the
bankruptcy court, and there is no guarantee that any such relief will be obtained. Significant legal fees and costs may be incurred in
attempting to obtain such relief. In such event, the Company will be unable to promptly exercise its foreclosure remedy and realize any
proceeds from a property sale. In addition, bankruptcy courts have broad powers to permit a sale of a debtor’s assets free of liens,
to compel creditors to accept amounts that are less than the balance due under the loan, and to permit the borrower to repay the loan
over a term which may be substantially longer than the original term of the loan. All of these factors may reduce the Company’s
recovery and ultimately the amount paid to Investors.
Risks
Associated with Foreclosure Laws and Proceedings: The Company will often hold a mortgage on real estate to secure Underlying
Loans and, upon a default by the Borrower, would have the right to foreclose on the property. However, foreclosure is neither quick nor
easy:
| ● | Foreclosure laws and methods vary from state to state and may affect our ability to foreclose on the underlying
real estate in the event a Borrower defaults under its Underlying Loan. For example, many states require long processing periods or a
court decree before a mortgaged property may be sold or otherwise foreclosed upon. Since the onset of COVID-19, some state and local governments
have also ordered complete or partial moratoriums on foreclosures or evictions of residential and/or commercial properties, some of which
may continue indefinitely. |
| ● | The borrower’s “right of redemption” during foreclosure proceedings can deter the sale
of the collateral. |
| ● | If the Company does not hold a first mortgage, its rights will generally be subordinate to those of the
senior lender(s). |
| ● | The rights of junior or senior secured parties in the same property can create procedural hurdles and
delays. |
| ● | The Company might not be able to pursue deficiency judgments after it forecloses. |
| ● | State and Federal laws might prevent us from pursuing any actions. |
Risks
of Competition: The Company will face extensive competition from other lenders, including banks, insurance companies, savings
and loan associations, mortgage bankers and brokers, pension funds, real estate investment trusts, private individuals, and other entities
with objectives similar to ours. Some of our competitors might have substantially more experience than we do, a substantially broader
network to identify and close on transactions, and substantially greater resources.
Incomplete
Due Diligence: The Company will perform “due diligence” on each asset it acquires, meaning it will seek out and
review information about the property and the Borrower. However, due diligence is as much an art as a science. As a practical matter,
it is simply impossible to review all of the information about a given real estate asset or Borrower and there is no assurance that all
of the information the Company will review will be accurate or complete in all respects. For example, sometimes important information
is hidden or simply unavailable, or a third party might have an incentive to conceal information or provide inaccurate information. The
Company cannot verify all the information it receives independently. Moreover, because of the speed that is often required to close these
transactions, there might be less time than we need for thorough due diligence. This is particularly true if any of our due diligence
efforts require any in-person services, such as site inspections, surveys, or environmental testing, as labor shortages in certain industries
and restrictions on travel as a result of COVID-19 may cause additional delays. It is also possible that the Company will reach inaccurate
conclusions about the information it reviews.
Incomplete
or False Information from Third Parties: We will rely on information from third parties in our underwriting and due diligence
process. We will try to verify some of this information, using practices typical in the industry, but as a practical matter, we cannot
verify the majority of it, and some third-party information may be incomplete, inaccurate, or intentionally false.
Interest
Rate Ceilings under State Law: Subject to exceptions that vary from state to state, many or all states limit the rate or amount
of interest that can be charged on some loans, often referred to as “usury” laws. These laws could limit the amount of interest
we charge to Borrowers and we could be subject to penalties if we exceeded the allowable rates.
Transactions
with Affiliates: The Company might engage in transactions with affiliates. For example, the Company might pay fees to affiliates
and buy assets from and/or sell assets to affiliates. Although the Manager intends to conduct any such transactions on the same terms
that would be used between unrelated parties, the terms will be established in the sole discretion of the Manager, rather than through
arm’s-length negotiation.
The
Company’s Liabilities Could Exceed the Value of its Assets: Depending on a number of factors, including fluctuations
in real estate values, the volume of Notes sold to Investors, and the amount of the Company’s other borrowings, it is possible that
the Company’s liabilities could exceed the value of its assets. In this case Investors would likely lose some or all of their investment.
Our
Origination Fee Might Increase Loan Amount: The Company will typically charge origination, underwriting and/or other fees of
approximately 1% to 5% of each Underlying Loan. The Borrower might borrow the origination fee from us and add it to the principal amount.
For example, if the Underlying Loan was going to be for $100,000 and we charged a $4,000 origination fee, the Borrower might borrow $104,000.
By increasing the amount of the loan, we decrease the security.
We
Rely on the Skill of Borrowers: When the Company lends money to an Underlying Borrower for a real estate project, we depend
on the Underlying Borrower to develop the project responsibility, thereby preserving or (we hope) adding to the value of the underlying
real estate, which is our collateral. An incompetent or dishonest Underlying Borrower could damage the value of the real estate and thereby
our ability to have our loan repaid.
Interest
Reserves Might Increase Loan Amount: We might decide to require a Borrower to establish a reserve to be advanced to pay interest
on the Underlying Loan until the underlying real estate asset is sold or begins to generate income (e.g., from rent), which often
will be added to the maximum principal amount of the loan. By increasing the amount of the mortgage loan, we decrease the security for
the mortgage loan.
Interest
Reserves for the Notes Could Reduce the Company’s Income: The Company might decide to establish a cash reserve to cover
the Company’s obligation to make the required interest payments to Investors under the Notes. While such an interest reserve would
help to secure the Company’s obligation to pay interest on the Notes, the funds held in the reserve would not be available for the
Company’s business of making loans to borrowers.
The
Security Interest of Investors Will Be Subordinate to Rights of Lenders: While Investors will hold a security interest in certain
collateral, their security interest will be subordinate to the security interests granted to the Company’s other lenders, like banks.
This means that the other lenders will be entitled to be paid in full before anything is paid to Investors.
The
Company is a Startup Business: The Company is a brand new business. Although we believe we will be very successful eventually,
as of the date of this Disclosure Document we have no profits, no revenues, and no assets. Like any new business, we face challenges on
a number of fronts, including:
| ● | Developing a reputation and brand identity |
| ● | Attracting, retaining, and motivating qualified executives and personnel |
| ● | Implementing business systems, including technology systems |
| ● | Raising capital in the form of debt and/or equity financing |
| ● | Responding effectively to the offerings of existing and future competitors |
| ● | Managing growth and expansion |
| ● | Implementing adequate accounting and financial systems and controls |
There is no assurance that we will be successful
on any of these fronts.
No
Track Record: Because the Company is brand new, we have no operating history or track record that prospective Investors can
rely on or evaluate.
No
Right to Vote or Participate in Management: Buying a Note makes you a creditor of the Company, not an owner. You will not have
the right to vote or participate in the management of the Company in any way. Investors must be willing to rely on the ability and judgment
of our management team.
Reliance
on Management Team: We are a very small company, with only a handful of key personnel. If any of our key personnel were to
die, become seriously ill, or leave the Company, it could damage our prospects and our ability to repay the Notes.
The
Company Has No Credit Rating from Moody’s or Standard & Poor’s: Credit rating agencies, notably Moody’s
and Standard & Poor’s, assign credit ratings to debt issuers. These ratings are intended to help investors gauge the ability
of the issuer to repay the loan. The Company has not been rated by either Moody’s or Standard & Poor’s and could not be
rated because of its size. Consequently, Investors have no objective measure by which to judge the creditworthiness of the Company.
Unspecified
Assets: As of the date of this Disclosure Document, the Company doesn’t own any assets. That makes it harder for prospective
Investors to evaluate their investment decision.
Lack
of Cash to Pay Tax Liability: We intend to treat the Notes as having “original issue discount” for Federal income
tax purposes. As a result, an investor holding a Note will generally be required to accrue (and pay tax on) interest income even if the
Company fails to pay the interest, leaving the investor out-of-pocket by the amount of the tax.
Uninsured
Losses: The Company will carry insurance against certain risks identified by management in its business judgment. However,
the Company might not carry enough insurance for these risks and might decide not to carry insurance for other risks. Further, some risks
cannot be insured, or cannot be insured at affordable premiums. Therefore, it is possible that the Company could incur an uninsured loss.
No
Market for the Notes; Limits on Transferability: There are at least four obstacles to selling or otherwise transferring your
Note:
| ● | There will be no public market for your Note, meaning you could have a hard time finding a buyer. |
| ● | Under the Note Indenture, the Note may not be transferred without our consent. |
| ● | If we do consent to the sale of the Note, we have a first right of refusal to buy it. Our first right
of refusal could make the Note more difficult to sell. |
Taking all that into account, you should assume
you won’t be able to sell your Note.
Incomplete
Offering Information: The Notes are being offered pursuant to Regulation A issued by the SEC. Regulation A does not require
us to provide you with all the information that would be required in some other kinds of securities offerings, such as a registered public
offering of securities. Although we have tried to provide the information we believe is necessary for you to make an informed decision,
and we are ready to answer any questions you might have, it is possible that you would make a different decision if you had more information.
No
Protection from Banking Laws: The Company is not subject to the banking regulations of any state or federal regulatory agency.
For example, we are not subject to periodic examinations by regulators. Consequently, our underwriting decisions and processes are not
subject to review by any governmental agency.
Regulation
of Lenders by Federal Government: In some circumstances lenders can be subject to regulation at the Federal level. Federal
laws that can apply to lenders include the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Fair Housing Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Electronic Fund Transfer Act, and
the Home Mortgage Disclosure Act. The Company believes its activities as a “hard money lender” for commercial loans are not
subject to any of these laws. If the Company is wrong and violates any Federal laws, we could be liable for fines, penalties, or damages,
or an Underlying Loan could be rendered unenforceable. In addition, the cost of complying with any of these laws could have a material
adverse effect on our business.
Regulation
of Lenders by State Governments: In some circumstances lenders can be subject to regulation at the State Federal level. We
intend to operate only in states like New York where “hard money” real estate lenders are not required to be registered. However,
we will still be subject to other regulations, including limits on the interest rates we can charge and the measures we can take to collect
delinquent loans. Complying with government regulation can be expensive, and if we fail to comply we could be liable for fines, penalties,
or damages, or an Underlying Loan could be rendered unenforceable.
Lender
Liability: In some situations, lenders have been found liable for misconduct in dealings with borrowers, making the lender
liable for damages and possibly rendering the loan unenforceable. We intend to conduct our business in a manner that does not give rise
to “lender liability,” but there is no guarantee we would prevail in any legal proceeding asserting such liability.
Potential
Liability for Misuse or Disclosure of Personal Information: The Company will store personal certain information of its Borrowers
and Investors. If the Company were to misuse or disclose such information, intentionally or unintentionally – for example, as a
result of a data breach – the Company could be subject to lawsuits and other damages.
Lack
of Ongoing Information: While we will provide you with periodic statements concerning the Company’s assets and liabilities,
we probably will not provide all of the information that would be required of a public reporting company.
Reduction
in Your Subscription: If we receive subscriptions from qualified Investors for more than the total amount we are trying to
raise in this Offering, we have the right to either (i) reject some of the subscriptions, (ii) reduce subscriptions, or (iii) both. Thus,
you might end up with a smaller Note than you wanted to purchase.
No
Independent Trustee for Note Indenture: When a large company issues notes to the public, the notes are typically governed by
a note indenture issued in the name of an independent indenture trustee. No such independent trustee will be designated with respect to
the Note Indenture.
Trust
Indenture Act of 1939 Not Incorporated in Note Indenture: The Trust Indenture Act of 1939 (the “TIA”)
generally governs publicly registered debt instruments like the Notes. Where applicable, the TIA generally requires: (i) the use of a
trust indenture; (ii) the appointment of an independent trustee to act on behalf of the holders of the debt instruments; (iii) the approval
of the terms of the indenture by the SEC; and (iv) the inclusion of certain terms and conditions, including terms and conditions that
prohibit certain transactions between the issuer of the debt instruments and the independent trustee. The Company is issuing the Notes
in reliance on an exemption from the TIA. Hence, the provisions of the TIA are not applicable to, and are not incorporated into, the Note
Indenture.
The
Note Indenture Limits Your Rights: The Note Indenture limits your rights in some important respects. For example:
| ● | Upon a default by the Company, you will not be permitted to sue the Company on your own. Instead, any
actions against the Company will be made only by a single representative. You will be deemed to have granted a power of attorney to the
representative to pursue your claims, even if you did not vote for that particular representative. |
| ● | Even after an Event of Default, you will not necessarily be allowed to accelerate payment of your Note. |
| ● | Disputes under the Notes or the Note Indenture will be governed by Delaware law and handled in Delaware
or Federal courts located in or most geographically convenient to Wilmington, Delaware. |
| ● | In any legal action arising under the Note Indenture, you would not be entitled to a jury trial. |
NOTE: The Note Indenture does not apply
to claims arising under the Federal securities laws.
The
Investment Agreement Limits Your Rights: The Investment Agreement will limit your rights in several important ways if you believe
you have claims against us arising from the purchase of your Note:
| ● | You would not be entitled to a jury trial. However, this limitation does not apply to claims arising under
the Federal securities laws. |
| ● | You would not be entitled to recover any lost profits or special, consequential, or punitive damages.
However, this limitation does not apply to claims arising under the Federal securities laws. |
| ● | Any claims would be handled in the Federal or State courts located in Wilmington, Delaware. However, this
limitation does not apply to claims arising under the Federal securities laws. |
Notes
May be Modified Without Your Consent: The terms of the Notes and the Note Indenture may be modified by the Company with the
approval of only 25% of the holders of the Notes, measured by the outstanding principal amounts and including Notes held by affiliates
of the Company.
Risk
of Treatment as Investment Company: The Company believes it will not be treated as an “investment company” within
the meaning of the Investment Company Act of 1940 (the “ICA”) for the reasons set forth in “Investment
Company Act Limitations.” If the Company were treated as an investment company it would have a very significant negative
effect on our business. Among other things:
| ● | The Company would be subject
to onerous regulation, which could limit the manner in which the Company conducts its business. |
| ● | The cost of complying with these
regulations would be very high. |
| ● | As an investment company, the
Company would be prohibited from raising capital using Regulation A. |
| ● | If it were determined that the
Company had been an investment company without registering as such under the ICA: |
| ○ | The
Company could be subject to fines and penalties. |
| ○ | Every contract the Company had
entered into while non-compliance could be rendered unenforceable. |
| ○ | If
the Company had raised capital using Regulation A while an investment company, the offering
would violate section 5 of the Securities Act with the result, among others, that every investor
would be entitled to rescission, i.e., to get his, her, or its money back. With its
capital tied up in loans, the Company likely would not have enough money to give investors
their money back on short notice, possibly leading to a bankruptcy. |
Conflicts
of Interest: Our interests could conflict with your interests in a number of important ways, including these:
| ● | It is in your interest for the Company to retain all of its profits, so the Company has plenty of money
to repay the Notes. In contrast, the owner(s) of the Company will want the Company to distribute a portion of its profits. |
| ● | Your interests might be better served if our management team devoted its full attention to maximizing
the value of the Company’s assets. Instead, our team will be engaged in a variety of other business ventures. |
| ● | The Company might buy assets from, and sell assets to, Affiliates. There is no assurance that these related-party
transactions will be fair to the Company. |
| ● | The lawyer who prepared the Note, the Note Indenture, this Disclosure Document and the other documents
related to your purchase of the Notes represents us, not you. You must hire your own lawyer (at your own cost) if you want your interests
to be represented. |
Breaches
of Security: It is possible that our systems would be “hacked,” leading to the theft or disclosure of confidential
information you have provided to us. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and
generally are not recognized until they are launched against a target, we and our vendors may be unable to anticipate these techniques
or to implement adequate preventative measures.
The
Track Record of Our Principals Does Not Guaranty Success: The principals of the Company and the Manager have been involved
in the real estate industry for approximately 25 years. See “Past Performance – Our
Track Record.” However, past performance is never a guaranty of future results, and the success of our principals in other
real estate projects does not guaranty that the Company will be successful.
We
Might Own Only a Small Number of Assets: If the Company raises less than the full $75,000,000 it is trying to raise in this
Offering, we will not be able to make as many Underlying Loans. The fewer the Underlying Loans, the less diversified will be Company’s
portfolio and, according to portfolio theory, the greater the risk.
Risk
of Failure to Comply with Securities Laws: The current Offering relies on an exemption under Regulation A of the Securities
and Exchange Commission. The Company has relied on the advice of securities lawyers and believe the Company qualifies for the exemption.
If the Company did not qualify, it could be liable to penalties imposed by the federal government and state regulators, as well as to
lawsuits from Investors.
Corporate
Governance Risk: As a non-listed company conducting an exempt offering pursuant to Regulation A, the Company is not subject
to a number of corporate governance requirements that an issuer conducting a registered offering or listed on a national stock exchange
would be. For example, the Company does not have (i) a board of directors of which a majority consists of “independent” directors
under the listing standards of a national stock exchange, (ii) an audit committee composed entirely of independent directors and a written
audit committee charter meeting a national stock exchange’s requirements, (iii) a nominating/corporate governance committee composed entirely
of independent directors and a written nominating/corporate governance committee charter meeting a national stock exchange’s requirements,
(iv) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements
of a national stock exchange, and (v) independent audits of the Company’s internal controls.
The
Company is an “Emerging Growth Company” Under the JOBS Act: Today, the Company qualifies as an “emerging
growth company” under the JOBS Act of 2012. If the Company were to become a public company (e.g., following a registered
offering of its securities) and continued to qualify as an emerging growth company, it would be able to take advantage of certain exemptions
from the reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”) and exemptions from
certain investor protection measures under the Sarbanes Oxley Act of 2002. Using these exemptions could benefit the Company by reducing
compliance costs but could also mean that Investors receive less information and fewer protections than they would otherwise. However,
these exemptions – and the status of the Company as an “emerging growth company” in the first place – will not
be relevant unless and until the Company becomes a public reporting company.
The Company has elected to delay complying with
any new or revised financial accounting standard until the date that a company that is not an “issuer” (as defined under section
2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such new or revised accounting standard, if such standard also applies
to companies that are not issuers. As a result, owners of Class A Investor Shares might not receive the same disclosures as if the Company
had not made this election.
The
Foregoing Are Not Necessarily The Only Risks Of Investing
Please Consult With Your Professional Advisors
OUR COMPANY AND BUSINESS
The Company is a Delaware limited liability company.
The principal office of the Company is:
28-07 Jackson Avenue, 5F
Long Island City, New York 11101
As of the date of this Offering Circular, the
Company owns no assets. Using the proceeds from the sale of the Notes, as well as the proceeds from other loans, the Company intends to
invest in two asset classes:
| ● | We
expect at least 90% of our investment portfolio, by value, to consist of Underlying Loans,
i.e., loans secured by mortgages on real estate. |
| ● | We
expect the balance of our investment portfolio to consist of short-term investments, including
U.S. Treasury bills. |
Our Loans
Our principal investment strategy is to lend
money to developers building or developing commercial real estate projects, including residential, office space, retail, and industrial
projects (“Borrowers”). Our typical loan (each, an “Underlying Loan”) will have a maturity of between
12 and 36 months. The Company will not make loans against owner-occupied residential properties.
Sometimes, our Underlying Loan will represent
the most senior debt in the real estate project. More often, we will occupy the second or third position behind a bank or other institutional
lender. Our Underlying Loans will often fall in the category of “mezzanine debt.”
Management
The business and affairs of the Company will be
directed by iCross Holdings LLC, which we refer to as the “Manager.” The Company itself has no employees, relying wholly
on employees of the Manager. The principal executive officers of the Manager are:
| Lily Guo |
President |
| Meiqing Zhang |
Executive Vice President |
| John McInerney |
Executive Vice President |
The Manager will exercise complete control of
the Company. For example, the Manager will select and approve each Underlying Loan, negotiate the terms of the contracts for each Underlying
Loan, decide whether to borrow money and, if so, how much, perform due diligence on Underlying Loans, decide whether and when to sell
Underlying Loans, decide how much capital to raise through the sale of Class A Investor Shares, and decide how and whether to raise capital
through other means.
For more information see “Our
Management Team.”
Underwriting
Guidelines and Due Diligence Strategy
Our underwriting focuses primarily on the following
factors:
| 1) | Collateral. What is the underlying collateral, how marketable is the collateral, and will its value
protect us fully if the borrower were to default and we need to foreclose? |
| 2) | Capacity. Does the Borrower appear to have the ability to handle the repayment of the debt and
a viable exit strategy to pay us off at or before the loan’s maturity date? |
| 3) | Market. What is the overall health of the market? Is the population growing or declining? Is job
growth increasing or decreasing? What are the core and fundamental industries and how does the future look for such industries? Is the
market diversified enough through size and composition to maintain stability through cyclical patterns? |
| 4) | Neighborhood. What is the heath and stability at the neighborhood level? We use software to judge
the health of census tracts, schools, violent crime rates, unemployment levels and other demographic data. |
Different Underlying Loans require different considerations,
and a combination of factors are always considered.
States Where
We Do Business
Currently, we make loans in New York only. We
might expand to other states in the future, but most likely only in states that do not regulate “hard money lenders.”
Loan-to-Value
Ratio
We pay close attention to the “loan-to-value”
ratio, or “LTV,” when we evaluate a loan. The LTV means the ratio of the amount of the Underlying Loan to the value
of the real estate securing the Underlying Loan. For example, if the amount of the Underlying Loan is $65,000 and the value of the real
estate is $100,000, the LTV is 65%. By limiting the LTV, we try to give ourselves a “cushion” in the event the Borrower defaults
and we are required to foreclose and sell the mortgaged property.
For some Underlying Loans, we calculate the LTV
based on the value of the property as of the date of the loan. For others, we calculate the LTV based on the value of the property as
of a future date. For example, if we are making a loan to finance new construction, or to rehabilitate a property, we calculate the LTV
based on the value of the property after construction or rehabilitation. The Underlying Loan owned by the Company will typically have
an LTV of less than 70%, but we may exceed that threshold on occasion if the investment returns warrant the risk – for example,
if the collateral is an especially desirable, well-located, and marketable property; if the borrower has a very high net worth; or if
there is other valuable collateral in addition to the property.
How We Set Interest
Rates
We set interest rates for Underlying Loans based
on our review of the prevailing market conditions. For the most part, that means determining what interest rates Borrowers can obtain
from other lenders, including banks.
Our Collateral
Each of our Underlying Loans will be secured by
an interest in real estate. Some of our Underlying Loans will be secured by a traditional mortgage on real estate. Other Underlying Loans
will be secured by an interest in the limited liability company or limited partnership that owns the real estate, as is customary in the
New York commercial real estate industry.
Valuations of
Properties
For our business to be successful, we need to
be able to accurately assess the value of real estate. Determining the value of real estate can never be an exact science, but we try
very hard to make the process as objective as possible. Among other things:
| ● | We inspect the property, or have it inspected by third parties. |
| ● | We use a variety of sources to determine value, including automated valuation models, direct-sourced sales
comparables, data-sourced sales comparables, full appraisals, desktop appraisals, drive-by appraisals, and other means. |
| ● | We use appraisal management companies, which review appraisals for quality control. |
How We Evaluate
Borrowers
We pay close attention to the qualifications of
our Borrowers, focusing on qualitative and quantitative metrics to make the process as objective as possible. Among other things:
| ● | We usually obtain credit and background checks. |
| ● | We try to verify the liquidity and financial health of proposed Borrowers. |
| ● | We review previous projects of proposed Borrowers. |
Short-Term Investments
To provide additional liquidity for Investors,
the Company will invest a portion of its portfolio in short-term assets like U.S. Treasury bills and money market funds. Assets of this
kind will have a yield close to zero but are relatively stable and safe.
Leverage
We might borrow money to make Underlying Loans,
supplementing the capital we raise from the sale of Notes. In addition, we expect to obtain a line of credit that can be drawn on demand,
providing additional liquidity for redemption requests from investors.
Among other possible lenders, the Company expects
to borrow money from Elite United LLC, an affiliate of our Manager, which is also in the business of lending money secured by real estate.
Any loans from Elite United LLC will bear interest at the LIBOR rate plus 425 basis points and be payable on demand.
In most cases, the Company will be required to
pledge assets to the lender. The security interest of the lenders will be superior to the security interest held by Investors.
Liquidity
The Company will seek to provide as much liquidity
as possible, so that it can accommodate requests for redemption from Investors. We will use three primary tools:
| ● | Mix of Maturity Dates for Underlying Loans: We will arrange for Underlying Loans to have different
maturity dates. That way, Underlying Loans will be maturing (coming due) on a regular basis. |
| ● | Investment in Liquid Assets: A portion of the Company’s assets will be invested in short-term
instruments like U.S. Treasury bills. |
| ● | Borrowing: The Company will open lines of credit with lenders, including affiliates, providing
liquidity when needed. |
Our Revenue
and Expenses
Revenue
The Company’s revenues
will consist primarily of the payments the Company receives from Borrowers in fees (e.g., origination fees) and as payment of principal
and interest on the Underlying Loans.
Expenses
Our principal expenses will
consist of:
| ● | Interest payment on the Notes. |
| ● | Due diligence and documentation expenses in making the Underlying Loans, such as legal fees, appraisal
expenses, records searches regarding the Borrower or the property securing an Underlying Loan. |
The Notes are debt instruments,
not equity instruments like common stock. This means that Investors have the right to receive interest but do not have the right to share
in the profits of the Company. After the Company pays all its expenses, including interest to Investors, any profits remaining will belong
to the Company and its equity owners.
Offices and
Employees
The Company itself will not have offices or employees.
Instead, the Manager will provide all services required to operate the Company, as well as the office space and equipment necessary to
provide such services.
Factors Most
Likely to Affect Our Business
The ability of the Company to
conduct its business successfully depends on three critical factors:
| ● | Opportunity for Underlying Loans: The Company can make money and deploy the capital raised from
Investors only if there are attractive opportunities to make Underlying Loans. Should the real estate market slow down, these opportunities
could become scarce. |
| ● | Interest Rates: If interest rates were to increase significantly – for example, caused by
inflation – the market would likely slow. |
| ● | Overall Economic Activity: As long as the U.S economy remains robust, we believe the Company and
its Investors will prosper. Should the economy slow significantly, our business would probably be damaged. |
How the Platform
Works
Our Platform consists of a website, located at
www.icrossfund.com, and the app, iCrossFS, which can be downloaded from the Apple Store or the Google Store.
The Platform allows Investors to create accounts,
review the offering materials, including this Offering Circular, and purchase Notes.
Our Corporate
Structure
The Company is a wholly-owned subsidiary of the
Manager, iCross Holdings, LLC.
PAST PERFORMANCE
Over the last six years, three affiliates of our
Manager – iCross Fund 4 LLC, iCross 5 LLC, and iCross Fund A LLC – have borrowed approximately $180M from investors and loaned
the money to real estate developers. We refer to each of these affiliates as a “Program.”
Each of the Programs is similar to the Company
in the following respects:
| ● | They all involve raising money from investors; |
| ● | They all involve lending money to real estate developers; and |
| ● | Each Programs has investment objectives that are similar to the investment objectives of the Company. |
Further, none of the Programs:
| ● | Has been registered under the
Securities Act; |
| ● | Has been required to report under
section 15(d) of the Exchange Act; |
| ● | Has had a class of equity securities
registered under section 12(g) of the Securities Exchange Act; or |
| ● | Has, or has had, 300 or more security holders. |
Prospective investors should bear in mind that
prior performance does not guaranty future results. The fact that a prior Program has been successful (or unsuccessful)
does not mean the Company will experience the same results.
There have been no major adverse business developments
or conditions experienced by any Program that would be material to purchasers of the Company’s Notes.
The following table summarizes the results of
the Programs through June 30, 2021. All figures are unaudited and are presented on a federal income tax basis.
| | |
iCross Fund A LLC | | |
iCross 5 LLC | | |
iCross Fund 4 LLC | |
| First Date Raised Capital | |
| 01/21/2020 | | |
| 04/01/2019 | | |
| 09/05/2015 | |
| Last Date Raised Capital | |
| Ongoing | | |
| 03/01/2021 | | |
| 03/07/2019 | |
| Amount Raised from Investors | |
$ | 7,160,917 | | |
$ | 68,400,000 | | |
$ | 101,260,000 | |
| Principal Repaid to Investors | |
$ | 970,051 | | |
$ | 28,400,000 | | |
$ | 101,260,000 | |
| Interest Paid to Investors | |
| 204,926 | | |
| 4,283,800 | | |
| 8,076,562 | |
| Average Interest Paid to Investors (Weighted Average Based on Principal Loaned) | |
| 2.86 | % | |
| 7.05 | % | |
| 7.82 | % |
| Amount Outstanding to Investors | |
$ | 6,190,917 | | |
$ | 40,000,000 | | |
$ | 0 | |
| Amount Borrowed (Other Than from Investors) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Amount Loaned to Borrowers | |
$ | 5,000,000 | | |
$ | 68,400,000 | | |
$ | 101,260,000 | |
| Amount Repaid by Borrowers | |
$ | 0 | | |
$ | 28,400,000 | | |
$ | 101,260,000 | |
| Amount Outstanding from Borrowers | |
$ | 5,000,000 | | |
$ | 40,000,000 | | |
$ | 0 | |
| Loans to Borrowers Written Off | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Loans Prepaid | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Delinquencies | |
| None | | |
| None | | |
| None | |
SECURITIES BEING OFFERED:
THE NOTES
General Terms
When you purchase a Note, you are lending money
to the Company at the specified interest rate.
The Company is offering two kinds of Notes: a
Quarterly Note and a Semi-Annual Note. The Quarterly Notes bear interest at 3.1% per year and the Semi-Annual Notes bear interest at 3.35%
per year.
The Notes do not have fixed maturity dates or
payment terms. Instead, Investors have the right to ask the Company to redeem (buy back) all or a portion of their Notes, as set forth
below.
Redemption Option
Each Note may be redeemed, in whole or in part,
at the option of the holder, providing Investors with an element of liquidity. We refer to this as the “Redemption Option.”
In general, the Redemption Option is as follows:
| ● | An Investor may request to have the Company redeem all or a portion of the Investor’s Note. |
| ● | The Company will use reasonable commercial efforts to accommodate the Investor’s request on the
next redemption date that is at least seven days after the Investor’s request (the end of a calendar quarter for Quarterly Notes
and semi-annually for Semi-Annual Notes). |
| ● | In seeking to accommodate the Investor’s request, the Company will not be required (i) to borrow
money, (ii) to raise additional capital, (iii) to sell assets, such as Underlying Loans, or (iv) to take any actions that would, in the
Company’s discretion, be harmful to the Company or its Investors. |
| ● | Requests will be considered in the order they are received. |
| ● | In no event will the Company be required to redeem more than 10% of all the Notes issued and outstanding
on any redemption date. |
Security –
Pledge of Collateral to Trust
Typically, each Underlying Loan will be evidenced
by a promissory note and secured by a mortgage, deed of trust, security agreement, or legal title to real estate. In some cases, the Company
might also obtain a personal guaranty from the Borrower (if the Borrower is an individual) or from a principal of the Borrower (if the
Borrower is an entity).
To secure the Company’s obligations to Investors,
the Company will pledge the notes and all such collateral and guaranties of the Underlying Loans (the “Collateral”)
to a trust created for this purpose – iCross Security Trust Premier DST – which we refer to as the “Trust.”
Should anything happen to the Company – for example, should it be dissolved – then the trustee of the Trust would have the
right (and the obligation) to enforce payment of the Underlying Loan using the pledged Collateral. The trustee would be chosen by Investors
holding a majority of the outstanding Notes, measured by the outstanding principal amount, at that time.
EXAMPLE: The Company loans $600,000
to Developer X, secured by a personal guaranty of the principal and a second mortgage on real estate. The Company will pledge both the
personal guaranty and the mortgage to the Trust. If the Company defaults, the trustee would have the right to enforce the Underlying Loan
to Developer X using the Collateral, for the benefit of Investors.
Senior Debt
As discussed in “The
Company and its Business,” the Company expects to borrow money, both to invest in Underlying Loans and to provide liquidity
for Investors. Whenever the Company borrows money, we will be required to pledge to the lender the same collateral pledged to the Trust
for the benefit of Investors. The interest of the lender in the collateral will always be superior to the interest of the Trust (and thus
superior to the interest of our Investors). Hence, in the event of a default our lenders would be paid first, before Investors.
Limits on Transfers
An Investor may not transfer a Note without the
Company’s consent. If the Company consents to a transfer, the Investor must first offer the Note to the Company, i.e., give
the Company a first right of refusal.
Defaults
The Company will be deemed in default if:
| ● | The Company fails to pay to an Investor any amount due and such failure continues for 30 days after notice; |
| ● | The Company becomes subject to a bankruptcy proceeding; |
| ● | The Company is in default with respect to any of its other debt obligations, i.e., debt obligations
other than the Notes; |
| ● | The Company becomes unable to pay its debts as they become due; |
| ● | The Company breaches any of its obligations and such breach remains uncured for 90 days after notice. |
Upon the occurrence of a default by the Company,
no Investor will be permitted to bring individual claims against the Company. Instead, all claims will be brought by a single representative.
In general, the representative will be appointed by Investors holding a majority of the Notes, measured by the amount then outstanding.
If the Investors fail to appoint a representative, then a representative will be appointed by the Company, provided that such representative
may not be employed by or affiliated with the Company. The reasonable fees and expenses of the representative will be paid by the Company.
The representative will, upon default, be designated
as the sole trustee of the Trust. Acting on behalf of the Investors, the representative may take action against the Company permitted
by law. However, without the consent of Investors holding a majority of the Notes, measured by the amount then
outstanding, the representative may not accelerate the payment of outstanding principal.
NOTE: The foregoing discussion of defaults does
not apply to claims arising under the Federal securities laws.
Prepayment
The Company is allowed to prepay any Note at any
time, in whole or in part without any prepayment penalty. Although the Company would probably allocate any prepayment proportionately
among all Notes, or among all Notes of the same series or having the same maturity date, it is not obligated to do so.
Limitations
on Distributions to Equity Owners
To protect Investors, the Company is subject to
limitations regarding distributions to its equity owners:
| ● | Before making any distribution to its equity owners, the Company must obtain from its asset manager a
certification that in the opinion of such asset manager the remaining assets of the Company (i.e., the assets remaining following
such distribution) will be sufficient to make all scheduled payments with respect to the Notes issued and outstanding at the time of such
distribution. |
| ● | The Company may not make any distributions to its equity owners after an Event of Default has occurred,
either (i) while such Event of Default remains in effect, or (ii) for a period of three months following the termination of the Event
of Default. |
| ● | Before making any distribution to its equity owners, the Company must obtain from each equity owner a
binding written covenant that if an Event of Default occurs within six (6) months following the date of any distribution, the equity owner
shall return to the Company the entire amount received by such equity owner. |
Amendments
Without the consent of Investors, the Company
may amend the Notes to correct typographical errors, to make changes with no material impact on Investors, or to make changes that clearly
benefit Investors (e.g., providing for more or greater rights on default, or eliminating restrictions on transferability).
With the affirmative consent of Investors holding
at least 25% of the outstanding Notes, measured by principal amount and including Notes held by affiliates of the Company, the Company
may amend any provisions of the Notes, including the Redemption Option, but no such amendment could change the maturity date or interest
rate of an outstanding Note.
Electronic Payments
and Delivery
All payments with respect to Notes will be made
as Automated Clearing House (ACH) or Society for Worldwide Interbank Financial Telecommunications (SWIFT) deposits into an account designated
by the Investor.
All of our communications with Investors, including
but not limited to all tax forms, will be via electronic delivery, e.g., by email or through the Platform or another electronic
portal.
LIMIT ON AMOUNT A NON-ACCREDITED
INVESTOR CAN INVEST
As long as an Investor is at least 18 years old,
they can invest in this Offering. But if the Investor not an “accredited” investor, the amount they can invest is limited
by law.
Under 17 CFR §230.501, a regulation issued
by the Securities and Exchange Commission, the term “accredited investor” includes:
| ● | A natural person who has individual net worth, or joint net worth with the person’s spouse or spousal
equivalent, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person; |
| ● | A natural person with income exceeding $200,000 in each of the two most recent years or joint income with
a spouse or spousal equivalent exceeding $300,000 for those years and a reasonable expectation of the same income level in the current
year; |
| ● | A natural person who holds any of the following licenses from the Financial Industry Regulatory Authority
(FINRA): a General Securities Representative license (Series 7), a Private Securities Offerings Representative license (Series 82), or
a Licensed Investment Adviser Representative license (Series 65); |
| ● | A natural person who is a “knowledgeable employee” of the issuer, if the issuer would be an
“investment company” within the meaning of the Investment Company Act of 1940 (the “ICA”) but for section
3(c)(1) or section 3(c)(7) of the ICA; |
| ● | An investment adviser registered under the Investment Advisers Act of 1940 (the “Advisers Act”)
or the laws of any state; |
| ● | Investment advisers described in section 203(l) (venture capital fund advisers) or section 203(m) (exempt
reporting advisers) of the Advisers Act; |
| ● | A trust with assets in excess of $5 million, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person; |
| ● | A business in which all the equity owners are accredited investors; |
| ● | An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank,
insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; |
| ● | A bank, insurance company, registered investment company, business development company, small business
investment company, or rural business development company; |
| ● | A charitable organization, corporation, limited liability company, or partnership, not formed for the
specific purpose of acquiring the securities offered, with total assets exceeding $5 million; |
| ● | A “family office,” as defined in rule 202(a)(11)(G)-1 under the Advisers Act, if the family
office (i) has assets under management in excess of $5,000,000, (ii) was not formed for the specific purpose of acquiring the securities
offered, and (iii) is directed by a person who has such knowledge and experience in financial and business matters that such family office
is capable of evaluating the merits and risks of the prospective investment; |
| ● | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Advisers Act, of a family
office meeting the requirements above, whose investment in the issuer is directed by such family office; |
| ● | Entities, including Indian tribes, governmental bodies, funds, and entities organized under the laws of
foreign countries, that were not formed to invest in the securities offered and own investment assets in excess of $5 million; or |
| ● | A director, executive officer, or general partner of the company selling the securities, or any director,
executive officer, or general partner of a general partner of that issuer.”] |
If the Investor falls within any of those categories,
then the Investor can invest any amount permitted on the Platform. If the Investor does not fall within any of those categories, then
the most they can invest in this Offering is the greater of:
| ● | 10% of their annual income; or |
These limits are imposed by law, not by the Company.
The Company will determine whether an Investor
is accredited when he, she, or it creates an account on the Platform.
INVESTMENT COMPANY ACT
LIMITATIONS
A company that is treated as an “investment
company” under the Investment Company Act of 1940 is subject to stringent and onerous regulation, like a mutual fund. Being an
investment company isn’t illegal but is very expensive. Further, if the Company were an investment company but not registered as
such, every contract it has entered into could be unenforceable.
We believe the Company will not be treated as
an investment company, for two principal reasons. First, we believe the mortgage loans originated and held by the Company will not be
“securities” within the meaning of the ICA. Second, even if the mortgages are securities, we believe the Company will qualify
for the exemption under section 3(c)(5)(C) of the ICA.
Definition
of Investment Company
An investment company is an issuer that:
| ● | Holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting, or trading in securities; |
| ● | Is engaged or proposes to engage in the business of issuing face-amount certificates of the installment
type, or has been engaged in such business and has any such certificate outstanding; or |
| ● | Is
engaged or proposes to engage in the business of investing, reinvesting, owning, holding,
or trading in securities, and owns or proposes to acquire investment securities having a
value exceeding 40% of the value of such issuer’s total assets (exclusive of Government
securities and cash items) on an unconsolidated basis (the “40% Test”). |
Thus, a company that does not deal in securities
is not an investment company.
The ICA defines “security” broadly:
[A]ny note, stock, treasury stock, security
future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate
of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege
on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign
currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
Inadvertent
Investment Companies
Under the 40% Test, a company that does not
generally deal in securities can become an investment company inadvertently. For example, suppose the Company raises capital in the Offering
and does not immediately lend the money to Borrowers. If the Company invested the yet-to-be deployed capital in securities, other than
Government securities and cash items, it could become an investment company inadvertently, with all the potential negative consequences.
Mortgage
Loans as Securities
Each Underlying Loan made by the Company will
be evidenced by a promissory “note.” Hence, each such Underlying Loan could be a security under the language of the statute.
However, not all promissory notes are securities.
In Reves v. Ernst & Young, the Supreme Court distinguished between promissory notes that are securities for purposes of the
Securities Act from those that are not. The Court posed four questions:
| 1) | Is the purpose of the debt transaction to raise money for the general use of a business enterprise or
to finance substantial investments and is the purchaser motivated primarily by the profit the notes are expected to generate for the business? |
| 2) | Does the issuer’s plan of distribution seek to establish some form of common trading in the notes, either
for speculative or investment purposes? |
| 3) | Is there a reasonable public expectation that the instruments should be treated as “securities”? |
| 4) | Is there some mitigating factor such as the existence of another regulatory scheme that sufficiently protects
investors, thereby rendering strict application of securities laws unnecessary? |
The Reves case was decided under the
Securities Act and, while the definition of “security” in that statute is the same as the definition in the ICA, the SEC
takes the position that a promissory note that is not treated as a security under the Securities Act can still be treated as a security
under the ICA. For example, see Harrell Int'l. Inc., SEC No-Action Letter, 1989 WL 246259 (May 24, 1989).
Nevertheless, we believe the loans the Company
makes to Borrowers should not be treated as securities for purposes of the ICA, for three reasons. First, Borrowers use the proceeds of
the loans in the ordinary course of their real estate development businesses. Second, the loans are secured by a first mortgage on commercial
real estate. Third, the Company is in the business of making these loans, not as an investment but as its sole source of revenue.
Section 3(c)(5)(C)
Exemption
Under section 3(c)(5)(C) of the ICA, an entity
that is “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and
interests in real estate” will not be treated as an investment company.
The SEC has taken the position that an issuer
qualifies for the section 3(c)(5)(C) exemption if the following three conditions are satisfied:
| 1) | At least 55% of its assets consist of “mortgages and other liens on and interests in real estate.”
We refer to these as “Qualifying Interests.” |
| 2) | At least an additional 25% of its assets consist of “real estate-type interests” (subject
to proportionate reduction if greater than 55% of the issuer’s assets are Qualifying Interests). |
| 3) | Not more than 20% of the issuer’s assets consist of other “miscellaneous investments.” |
The SEC has also taken the position that fee interests
in real estate, and mortgage loans that are “fully secured by real property” constitute Qualifying Interests.
Finally, the SEC has taken the position that a
mortgage loan will be treated as “fully secured by real property” where the following two conditions are satisfied:
| 1) | 100% of the fair market value of the loan was secured by real estate at the time the issuer acquired the
loan. We refer to this as the “Date of Purchase Test.” |
| 2) | 100% of the principal amount of the loan was secured by real estate at the time of origination. We refer
to this as the “Date of Origination Test.” |
For a discussion of the SEC’s staff’s
view of section 3(c)(5)(C), see (NAB Asset Corp., SEC No-Action Letter, 1991 WL 176787 (June 20, 1991)).
Application
to the Company
The Company’s
Business Strategy
The Company’s principal investment strategy
is to lend money to real estate developers building or developing commercial real estate projects. These projects might include multifamily
rental projects (i.e., apartment buildings), condominium projects, office space, retail space, industrial projects (e.g.,
warehouses), and land development. The Company will not lend money against owner-occupied residential properties.
Our typical Underlying Loan will have a maturity
of between 12 and 36 months. For each Underlying Loan we will receive, among other security, a promissory note and a mortgage on the
real estate.
As a real estate lender, the Company will,
as a matter of course, take steps to ensure that all of its Underlying Loans are fully secured, meaning that the value of the underlying
real estate is greater than the amount of the Underlying Loan. The Company expects that the ratio of the principal amount of its Underlying
Loans to the value of the underlying real estate (the loan-to-value-ratio) will not exceed 70% except in unusual circumstances. The Company
also expects that at least 90% of its assets will consist of fully-secured loans at all times.
Mortgage Loans as
Securities
If the Underlying Loans are not treated as
securities for purposes of the ICA, as the Company believes to be the case, then the Company will not be treated as an investment company.
Section 3(c)(5)(C)
Exemption
Section 8.5 of the Company’s Limited
Liability Agreement provides as follows:
8.5 Investment
Company Act. The Manager shall undertake, with the advice of counsel, to ensure that the Company always qualifies for one or
more exemptions from the Investment Company Act of 1940. Without limiting the preceding sentence, the Manager shall undertake to
ensure that (i) at least fifty-five percent (55%) of the Company’s assets consist of secured mortgages and other liens on and
interests in real estate, (ii) at least an additional twenty-five percent (25%) of its assets consist of interests related to real
estate (reduced if more than 55% of the Company’s assets consist of secured mortgages and other liens on and interests in real
estate), and (iii) no more than twenty percent (20%) of its assets consist of miscellaneous investments. For these purposes, a
mortgage on real estate shall be deemed “secured” if (x) one hundred percent (100%) of the fair market value of the loan
was secured by real estate at the time the Company acquired the loan, in the case of mortgages purchased by the Company; and (y) one
hundred percent (100%) of the principal amount of the loan was secured by real estate at the time of origination, in the case of
mortgages originated by the Company.
Under the SEC guidance described above, an
issuer satisfying those conditions qualifies for the exemption under section 3(c)(5)(C). The Company expects to exceed those requirements,
investing approximately 90% of its assets in fully-secured mortgage loans. Hence, the Company should qualify for the exemption.
Inadvertent Investment
Companies
The Company intends to keep careful track
of how it invests capital, to avoid becoming an investment company inadvertently under the 40% Test.
SALE AND DISTRIBUTION OF SECURITIES
The Company is offering to sell up to $75,000,000
of Notes (Quarterly Notes and Semi-Annual Notes) to the public.
The Offering will begin as soon as our Offering
Statement is “qualified” by the SEC and will end on the sooner of (i) a date determined by the Company, or (ii) the second
anniversary of qualification.
Only the Company is offering securities in this
Offering. None of our existing officers, directors, or stockholders is offering or selling any securities.
The Company is not using an underwriter or broker
to sell the Notes and is not paying commissions. Notes will be offered and sold only through the Platform.
The Company licenses the Platform from the Manager
pursuant to a royalty-free Hosting Agreement, which is attached as Exhibit 1A-6E.
The Platform consists of a website, located at
www.icrossfund.com, and the app, iCrossFS, which can be downloaded from the Apple Store or the Google Store. The Platform allows Investors
to create accounts, review the offering materials, including this Offering Circular, and purchase Notes. If you have questions about using
the Platform, please contact us at cs@icrossfund.com or (917) 769-9945.
The Company reserves the right to reject any subscription
to purchase Notes in this Offering in whole or in part and for any reason (or no reason). If the Company rejects an investment, it will
return all the Investor’s money without interest or deduction.
After the Offering has been “qualified”
by the Securities and Exchange Commission, the Manager intends to advertise the Offering using the Platform and through other means, including
public advertisements, social media and audio-visual materials, in each case, only as we authorize and in compliance with 17 CFR §251(d)(1)(iii),
which provides that any written offers must be accompanied with or preceded by the most recent offering circular filed with the SEC. Although
these materials will not contain information that conflicts with the information in this Offering Circular and will be prepared with a
view to presenting a balanced discussion of risk and reward with respect to the Notes, the advertising materials will not give a complete
understanding of this Offering, the Company, or the Notes, and are not to be considered part of this Offering Circular. The 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 Notes.
HOW TO INVEST
To buy Notes, go to the Platform and follow the
instructions. You will be asked for certain information about yourself, including:
| ● | Your social security number (for tax reporting purposes) |
| ● | Whether you are an “accredited investor” |
| ● | If you are not an accredited investor, your income and net worth |
You will also be asked to sign an Investment Agreement,
a copy of which is attached as Exhibit 1A-4A.
The minimum investment is $500. You will pay for
your Notes using one of the options described on the Platform.
The information you submit, including your signed
Investment Agreement, is called your “subscription.” The Manager will review your subscription and decide whether to accept
it. The Manager has the right to accept or reject subscriptions in our sole discretion, for any reason or for no reason.
Once the Manager has accepted your subscription,
you will be notified by email and the investment process will be complete. The Manager will also notify you by email if it does not accept
your subscription, although it might not explain why.
You will not be issued a paper Note. The Notes
will be issued in electronic form only.
Anyone can buy Notes. The Manager does not intend
to limit investment to people with a certain income level or net worth, although there are limits on how much non-accredited investors
may invest in this Offering. For more information, please refer to “Limit On Amount a Non-Accredited
Investor Can Invest.”
USE OF PROCEEDS
The Manager expects the Offering itself to cost
about $50,000, including legal and accounting fees – principally the cost of preparing this Offering Circular, having the Offering
“qualified” by the SEC, and filing notices with states where our investors live, as required by state law. Otherwise, all
of the proceeds of the Offering, no matter how much we raise, will be used to as working capital and to make or acquire Underlying Loans.
We might acquire or make Underlying Loans using
the Manager’s capital before we have raised enough capital from Investors. In that case we will replace the Manager’s capital
with capital from Investors as soon as we raise it. To the extent the Manager or its affiliates invest capital, they will do so on the
same terms as other Investors.
The Company is not paying commissions to underwriters,
brokers, or anybody else for selling or distributing the Notes. Because we are not paying any commissions, more of your money can go to
work for you. In some cases, retirement custodians, investment advisers, and other intermediaries will offer to invest on behalf of their
clients. In such cases, the custodian, adviser or intermediary will be paid a fee from their client’s invested funds. In such cases,
the client (rather than the Company) is paying those fees.
INFORMATION RIGHTS
Within 120 days after the end of each fiscal year
of the Company, the Manager will provide Investors with (i) a statement showing in reasonable detail the computation of the distributions
made by the Company, and (ii) audited financial statements of the Company.
In addition, each year the Company will provide
Investors with a detailed statement showing:
| ● | Any fees paid to the Manager and its affiliates; and |
| ● | Any transactions between the Company and the Manager or its affiliates. |
In each case, the detailed statement will describe
the services performed and the amount of compensation paid.
As a “Tier 2” issuer under Regulation
A, the Company will also be required to provide investors with additional information on an ongoing basis, including annual audited financial
statements, annual reports filed on SEC Form 1-K, semiannual reports filed on SEC Form 1-SA, special financial reports filed on SEC Form
1-K, and current reports on SEC Form 1-U. If, however, our Class A Investor Shares are held “of record” by fewer than 300
persons, these reporting obligations could be terminated.
U.S. FEDERAL INCOME TAXES
The following summarizes some of the Federal income
tax consequences of purchasing a Note.
This summary is based on the Internal Revenue
Code (the “Code”), regulations issued by the Internal Revenue Service (“Regulations”), and administrative
rulings and court decisions, all as they exist today. The tax laws, and therefore the Federal income tax consequences of acquiring a Note,
could change in the future.
This is only a summary, applicable to a generic
investor. Your personal situation could differ. For example, this summary does not address the tax consequences if you are (i) a tax-exempt
organization, (ii) subject to the alternative minimum tax, (iii) a partnership, or (iv) a foreign citizen. We encourage you to consult
with your own tax advisor before investing.
Original Issue
Discount
We intend to treat the Notes as having original
issue discount (“OID”) for Federal income tax purposes unless there is a change or clarification in the law, by regulation
or otherwise, that would require a different treatment.
You will generally be required to accrue OID as
ordinary interest income, regardless of your regular method of tax accounting. That means, in general, that even if you are an individual
who uses the cash method of accounting, you will be required to include an amount of OID in taxable income as interest even if you have
not received the actual payment under the Note.
OID on a Note will equal the excess of the Note’s
“stated redemption price at maturity” over its “issue price.” The stated redemption price at maturity of a Note
includes all payments of principal and stated interest on the Note under the payment schedule of the Note. The issue price of a Note will
generally equal the principal amount of a Note.
The amount of OID includible in income for a taxable
year is the sum of the “daily portions” of OID with respect to the Note for each day during the taxable year in which the
holder held the Note. The daily portion of OID is determined by allocating to each day of any accrual period within a taxable year a pro
rata portion of an amount equal to the product of such Note’s adjusted issue price at the beginning of the accrual period and
its yield to maturity (properly adjusted for the length of the period). We intend to use 30-day accrual periods. The adjusted issue price
of a Note at the beginning of any accrual period should be its issue price, increased by the aggregate amount of OID previously accrued
with respect to the Note, and decreased by any payments of principal and interest previously made on the Note. A Note’s yield to
maturity should be the discount rate that, when used to compute the present value of all payments of principal and interest to be made
on the Note under the payment schedule of the Note, produces an amount equal to the issue price of such Note.
If a Note is paid in accordance with its payment
schedule, the amount of OID includible in income is anticipated to be based on the stated interest rate of the Note. As a result, you
will generally be required to include an amount of OID in income that is equal to the amount of stated interest paid on the Note.
Cash payments of interest and principal under
the payment schedule on the Notes will not be separately included in income, but rather will be treated first as payments of previously
accrued but unpaid OID and then as payments of principal.
Sale or Other
Taxable Disposition of Notes
Upon the sale or other taxable disposition of
a Note, you generally will recognize gain or loss equal to the difference, if any, between the amount realized upon the sale, retirement
or other taxable disposition and your adjusted tax basis in the Note. In general, your adjusted tax basis in the Note will equal your
cost for the Note, increased by any OID and market discount previously included in gross income by you, as discussed below, and reduced
by any payments previously received by you in respect of the Note.
Your gain or loss on the taxable disposition of
the Note generally will be long-term capital gain or loss if the Note has been held for more than one year and short-term otherwise. The
deductibility of capital losses is subject to limitations.
Nonpayment
In the event the Company fails to make a payment
on your Note, you generally must continue to accrue OID. If collection on a Note becomes doubtful, you may be able to stop accruing OID
on the Note. You should consult your own tax advisor regarding the accrual and inclusion of OID in income when collection on a Note becomes
doubtful.
Losses as a
Result of Worthlessness
If your Note becomes wholly worthless, if you
are an individual, and you did not acquire the Note as part of your trade or business, you should generally be entitled to deduct your
loss on the Note as a short-term capital loss in the taxable year the Note becomes wholly worthless. The portion of your loss attributable
to accrued but unpaid OID may be deductible as an ordinary loss, although such treatment is not entirely free from doubt. Under Section
166 of the Code, if you are a corporation, or if you are an individual and you acquired your Notes as part of a trade or business, you
should generally be entitled to deduct any loss sustained during the taxable year on account of a Note becoming wholly or partially worthless
as an ordinary loss. You should consult your own tax advisor regarding the character and timing of losses attributable to Notes that become
worthless in whole or in part.
Backup Withholding
and Reporting
We will be required to report information to the
IRS on certain payments on a Note, including interest. In addition, we will be required to withhold tax from our payments to you under
some circumstances. Any amounts withheld will be allowed as a refund or a credit against your Federal income tax liability provided the
required information is furnished to the IRS on a timely basis.
Other Taxes
The foregoing summary involves only Federal income
taxes. Depending on where you live and your own circumstances, other taxes could apply to your ownership of a Note, including but not
limited to State income taxes, State and Federal gift taxes, State and local personal property taxes, and Federal and State inheritance
taxes.
MANAGEMENT DISCUSSION
Operating Results
The Company was organized under the Delaware Limited
Liability Company Act on April 15, 2021. As of the date of this Offering Circular, we have not yet begun operations other than those associated
with general start-up and organizational matters. As of the date of this Offering Circular, the Company has no revenues or cash flows.
The Company is obligated to reimburse the Manager
for expenses the Manager incurs in connection with the Offering, before the Offering Circular is qualified by the SEC. We currently estimate
that those expenses will be approximately $50,000.
We intend to use the proceeds of this Offering
to make and acquire Underlying Loans, and to invest in short-term investments.
Apart from our efforts to raise money from the
sale of Notes in this Offering, we are not aware of any trends or any demands, commitments, events, or uncertainties that will result
in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
Liquidity and
Capital Resources
The Manager has agreed to contribute enough
money to the Company to pay for all the costs of the Offering (which we currently estimate to be $75,000) and well as to pay all the
Company’s operating expenses for the first six (6) months of operations (which we currently estimate to be $250,000, up to a maximum
total of $500,000. The Manager’s obligation does not include capital required to make Underlying Loans, although the Manager may
make capital contributions or loans for that purpose as well, in its discretion.
Otherwise, the Company has no immediately
available sources of liquidity other than the proceeds of the Offering and capital contributions or loans Manager could (but is not required
to) make. At the same time, the Company currently has no capital commitments. The Company intends to make capital commitments only when
and if it has adequate capital.
Trends
The Company is not aware of any trends, uncertainties,
demands, commitments, or events that are reasonably likely to have a material effect on our net sales or revenues, income from continuing
operations, profitability, liquidity, or capital resources. We caution, however, that any of the items listed in “Risks
of Investing,” including but not limited to the risks presented by the COVID-19 pandemic, could have a material adverse effect.
OUR MANAGEMENT TEAM
Names, Ages,
Etc. *
Name | |
Position | |
| Age | | |
| Term
of Office | | |
Approximate Hours
Per Week If Not Full
Time |
| Lily Guo | |
President | |
| | | |
| Indefinite | | |
Full Time |
| Meiqing Zhang | |
Executive Vice President | |
| | | |
| Indefinite | | |
Full Time |
| John McInerney | |
Executive Vice President | |
| | | |
| Indefinite | | |
Full Time |
| * | The Company itself has no officers or employees. The individuals listed above are the Executive
Officers of iCross Holdings LLC, the Manager of the Company. |
Family Relationships
There are no family relationships among the Executive
Officers and significant employees of the Company.
Ownership of
Related Entities
iCross Holdings LLC, the Manager of the Company,
is owned by Lily Guo.
iCross Holdings LLC has already and may in the
future create other affiliated companies to engage in lending activities. iCross Fund A LLC, owned by the Manager, is currently engaged
in an offering of notes identical to the Notes, which offering is being conducted under Regulation D and Regulation S.
Business Experience
Lily Guo, President
Ms. Lily Guo graduated from
University of Petroleum in Beijing in 1995. She then worked for China Construction Bank for two years before she came to the United States
to pursue her MBA degree at Arizona State University.
After receiving her MBA degree,
Ms. Guo worked for United Technologies Corporation in Connecticut for three years at the UTC corporate purchasing department. She was
also engaged in import and export business through her own company, Rolland Industries Inc., which was later sold to a third party.
Ms.
Guo has been engaged in the real estate business in the Metropolitan New York area for the past few years as a licensed real estate
agent and investor. She possesses a strong finance, marketing and real estate background.
Meiqing Zhang, Executive Vice President
Ms. Zhang has over 17 years
of experience in credit and market risk management for commercial loan underwriting and portfolio management. She has been responsible
for credit risk, credit review, underwriting and monitoring of Commercial & Industrial loans and Commercial Real Estate loans.
Prior to joining iCross Fund,
she worked at various financial institutions including Capital One, RBS America, KPMG Consulting and PricewaterhouseCoopers.
Ms. Zhang is a Certified Financial
Analyst (CFA). She earned an MBA from Georgetown University.
John McInerney, Executive
Vice President
Mr. McInerney has worked in
the industry of real estate financing and development for over 40 years. He has long and deep experience in commercial real estate lending,
mortgage banking and investment, and real estate development including land entitlement, design/build and construction management in greater
New York areas. He has established substantial relationships with market participants within the real estate investment industry. He joined
[iCross Holdings LLC] in 2012 as a consultant and became Managing Director in 2017.
Mr. McInerney has been responsible
for identifying new investment opportunities, reviewing due diligence studies and approving investment deals. He earned an MBA from Saint
John’s University.
Legal Proceedings
Within the last five years, no Manager or Executive
Officer, or Significant Employee of the Company has been convicted of, or pleaded guilty or no contest to, any criminal matter, excluding
traffic violations and other minor offenses.
Within the last five years, no Manager, Executive
Officer, or Significant Employee of the Company, no partnership of which an Executive Officer or Significant Employee was a general partner,
and no corporation or other business association of which an Executive Officer or Significant Employee was an executive officer, has been
a debtor in bankruptcy or any similar proceedings.
COMPENSATION OF MANAGEMENT
Currently, the Manager serves without compensation
– that is, the Manager is not entitled to receive any fees from the Company. However, the Manager is currently the sole owner of
the Company and as such will be entitled to any profits earned by the Company.
It is possible that the Manager would charge the
Company fees in the future. For example:
| ● | The Manager might charge the Company fees to establish an identifiable stream of revenue for itself, e.g.,
to obtain loans. |
| ● | The Manager might charge the Company fees because of anticipated tax benefits. |
| ● | The Manager might charge the Company fees if another equity owner is admitted to the Company. |
Any such fees would be (i) fair to the Company,
(ii) comparable to the fees that would be charged by an unrelated party, and (iii) promptly disclosed to Investors.
There is currently no agreement regarding fees
that could be paid to the Manager.
As the manager and sole equity owner of the Company,
the Manager has the discretion to initiate payment of fees.
The Manager (and possibly its affiliates) might
purchase Notes. If so, they will be entitled to the same treatment as other Investors.
TRANSACTIONS WITH RELATED
PARTIES
As of the date of this Offering Circular, we expect
the Company to enter into two transactions with related parties:
| ● | The Platform is owned by the Manager. The Company licenses the Platform from the Manager pursuant to the
Hosting Agreement. The Company will use the Platform to offer Notes and also to provide a personal “dashboard” for each Investor. |
| ● | The Company expects to borrow money from affiliates. |
By “related party” we mean:
| ● | Any Manager, Executive Officer, or Significant Employee of the Company or the Manager; |
| ● | Any person who has been nominated as a Manager of the Company or the Manager; |
| ● | Any person who owns more than 10% of the voting power of the Company or the Manager; and |
| ● | An immediate family member of any of the foregoing. |
FINANCIAL STATEMENTS
iCross
Premier LLC
Delaware
Limited Liability Company
Financial
Statements and Independent Auditor’s Report
December 31, 2021
ICROSS
PREMIER, LLC
TABLE
OF CONTENTS
YIN
LU CPA, P.C.
To
the Member
iCross Premier LLC
Dover, Delaware
INDEPENDENT
AUDITOR’S REPORT
Report
on the Financial Statements
We
have audited the accompanying balance sheet of iCross Premier, LLC (the “Company”) as of December 31, 2021, and the related
notes to the financial statement.
Management’s
Responsibility for the Financial Statement
Management
is responsible for the preparation and fair presentation of this financial statement 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 the financial statement that is free from material misstatement, whether due to fraud or error.
Auditor’s
Responsibility
Our
responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free from material misstatements.
An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statement,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In
our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position of iCross Premier
LLC as of December 31, 2021, in accordance with accounting principles generally accepted in the United States of America.
Emphasis
of Matter Regarding Going Concern
The
accompanying financial statement has been prepared assuming that the Company will continue as a going concern. As described in Note 3
to the financial statement, the Company has not yet commenced planned principal operations and has not generated revenues or profits
since inception. These factors, among others, 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 3. The financial statement does not include any adjustments
that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Yin
Lu CPA PC
39-15
Main ST, STE 301
Flushing,
NY 11354
February
11, 2022
ICROSS
PREMIER LLC
Balance
Sheet
As
of December 31, 2021
| | |
| Dec 31, 21 | |
| ASSETS | |
| 0.00 | |
| | |
| | |
| LIABILITIES & EQUITY | |
| 0.00 | |
ICROSS
PREMIER LLC
Profit
& Loss
April
15 through December 31, 2021
| | |
Apr 15 -
Dec 31, 21 | |
| Net Income | |
| 0.00 | |
ICROSS
PREMIER LLC
Statement
of Cash Flows
April
15 through December 31, 2021
| | |
Apr 15 -
Dec 31, 21 | |
| Cash at end of period | |
| 0.00 | |
| iCross
Premier LLC |
| NOTES TO FINANCIAL
STATEMENTS |
| As of December
31, 2021 |
NOTE
1: NATURE OF OPERATIONS
iCross
Premier LLC (the “Company”) is a limited liability company organized April 15, 2021 under the laws of Delaware. The Company
was formed to offer debt for investor.
As
of December 31, 2021, the Company has not commenced planned principal operations nor generated revenue. The Company’s activities
since inception have consisted of formation activities and preparations to raise capital. Once the Company commences its planned principal
operations, it will incur significant additional expenses. The Company is dependent upon additional capital resources for the commencement
of its planned principal operations and is subject to significant risks and uncertainties; including failing to secure funding to operationalize
the Company’s planned operations or failing to profitably operate the business.
NOTE
2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America
(GAAP).
Use
of Estimates
The
preparation of the balance sheet in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the balance sheet and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
Equivalents and Concentration of Cash Balance
The
Company considers all highly liquid securities with an original maturity of less than three months to be cash equivalents. The Company’s
cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits.
Deferred
Offering Costs
The
Company complies with the requirements of FASB ASC 340-10-S99-1 with regards to offering costs. Prior to the completion of an offering,
offering costs are capitalized. The deferred offering costs are charged to stockholders’ equity upon the completion of an offering
or to expense if the offering is not completed.
| iCross
Premier LLC |
| NOTES TO FINANCIAL
STATEMENTS |
| As of December
31, 2021 |
Fair
Value of Financial Instruments
Financial
Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs
to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent
sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3
measurement). The three levels of the fair value hierarchy are as follows:
Level
1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access
at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded
instruments and listed equities.
Level
2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
(e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities
in markets that are not active).
Level
3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined
using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.
The
carrying amounts reported in the balance sheets approximate their fair value. Stock Subscription Receivable
The
Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription
receivable as an asset on a balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements
at a reporting date in satisfaction of the requirements under FASB ASC 505-10-45-2, the stock subscription receivable is reclassified
as a contra account to stockholders’ equity (deficit) on the balance sheet.
Revenue
Recognition
The
Company recognizes revenue when: (1) persuasive evidence exists of an arrangement with the customer reflecting the terms and conditions
under which products or services will be provided;
(2)
delivery has occurred or services have been provided; (3) the fee is fixed or determinable; and
(4)
collection is reasonably assured. No revenue has been earned or recognized as of December 31, 2021.
Organizational
Costs
In
accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 720, organizational costs, including
accounting fees, legal fees, and costs of incorporation, are expensed as incurred.
Income
Taxes
The
Company is a limited liability company. Accordingly, under the Internal Revenue Code, all taxable income or loss flows through to its
members. Therefore, no provision for income tax has been recorded in the statements. Income from the Company is reported and taxed to
the members on their individual tax returns.
| iCross
Premier LLC |
| NOTES TO FINANCIAL
STATEMENTS |
| As of December
31, 2021 |
The
Company complies with FASB ASC 740 for accounting for uncertainty in income taxes recognized in a company’s financial statements,
which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more- likely-than-not to be
sustained upon examination by taxing authorities. FASB ASC 740 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that
there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes
that its income tax positions would be sustained on audit and does not anticipate any adjustments that would result in a material change
to its financial position.
The
Company may in the future become subject to federal, state and local income taxation though it has not been since its inception. The
Company is not presently subject to any income tax audit in any taxing jurisdiction.
Net
Earnings or Loss per Unit
Net
earnings or loss per unit is computed by dividing net income or loss by the weighted-average number of units outstanding during the period,
excluding units subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per unit. Diluted net
earnings or loss per unit reflect the actual weighted average of units issued and outstanding during the period, adjusted for potentially
dilutive securities outstanding. Potentially dilutive items are excluded from the computation of the diluted net earnings or loss per
unit if their inclusion would be anti-dilutive. As no potentially dilutive items exist and no membership units are outstanding as of
December 31, 2021, the Company has not presented basic net loss per unit or diluted net loss per unit.
NOTE
3: GOING CONCERN
The
accompanying balance sheet has been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is a business that has not commenced planned principal operations, plans
to incur significant costs in pursuit of its capital financing plans, and has not generated any revenues as of December 31, 2021. The
Company’s ability to continue as a going concern in the next twelve months is dependent upon its ability to obtain capital financing
from investors sufficient to meet current and future obligations and deploy such capital to produce profitable operating results. No
assurance can be given that the Company will be successful in these efforts. These factors, among others, raise substantial doubt about
the ability of the Company to continue as a going concern for a reasonable period of time. The balance sheet does not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
NOTE
4: MEMBERS’ EQUITY
No
capital has been contributed to the Company as of December 31, 2021. The fund is wholly owned by Lily Guo, its single managing member,
a related party.
| iCross
Premier LLC |
| NOTES TO FINANCIAL
STATEMENTS |
| As of December
31, 2021 |
The
debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, are solely the debts, obligations,
and liabilities of the Company, and no member of the Company is obligated personally for any such debt, obligation, or liability.
NOTE
5: RECENT ACCOUNTING PRONOUNCEMENTS
In
May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (Topic 606). This ASU supersedes the
previous revenue recognition requirements in ASC Topic 605—Revenue Recognition and most industry-specific guidance throughout the
ASC. The core principle within this ASU is to recognize revenues when promised goods or services are transferred to customers in an amount
that reflects the consideration expected to be received for those goods or services. In August 2015, the FASB issued ASU 2015-14, "Revenue
from Contracts with Customers", which deferred the effective date for ASU 2014-09 by one year to fiscal years beginning after December
15, 2017, while providing the option to early adopt for fiscal years beginning after December 15, 2016. Transition methods under ASU
2014-09 must be through either (i) retrospective application to each prior reporting period presented, or (ii) retrospective application
with a cumulative effect adjustment at the date of initial application. We are continuing to evaluate the impact of this new standard
on our financial reporting and disclosures, including but not limited to a review of accounting policies, internal controls and processes.
We expect to complete our evaluation in the second half of 2017 and intend to adopt the new standard effective January 1, 2018.
In
February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842). This ASU requires a lessee to recognize a right-of-use
asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning
after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are continuing to evaluate
the impact of this new standard on our financial reporting and disclosures.
In
August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows" (Topic 230). This ASU is intended to reduce diversity in
practice in how certain transactions are classified in the statement of cash flows. This ASU is effective for financial statements issued
for fiscal years beginning after December 15, 2017. We do not believe the adoption of ASU 2016-15 will have a material impact on our
financial position, results of operations or cash flows.
Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
balance sheet. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
NOTE
6: SUBSEQUENT EVENTS
Management
has evaluated all subsequent events through December 31, 2021, the date the financial statements were available to be issued. There are
no material events requiring disclosure or adjustment to the financial statements.
GLOSSARY OF DEFINED TERMS
| 40% Test |
The test described in section 3(a)(1)(C) of the ICA. |
| |
|
| Act |
The Securities Act of 1933. |
| |
|
| Borrower |
An entity that borrows money from the Company to fund a real estate project. |
| |
|
| Code |
The Internal Revenue Code of 1986, as amended (i.e., the Federal tax code). |
| |
|
| Company |
iCross Premier LLC, a Delaware limited liability company, which is offering to sell Notes in this Offering. |
| |
|
| Exchange Act |
The Securities Exchange Act of 1934. |
| |
|
| ICA |
The Investment Company Act of 1940. |
| |
|
| Investment Agreement |
The legal contract governing the purchase of a Note by an Investor. |
| |
|
| Investor |
A person who purchases a Note. |
| |
|
| LTV |
Loan to value ratio; i.e., the principal amount of the loan divided by the value of the real property or other collateral securing the loan. |
| |
|
| Manager |
The manager of the Company, which is iCross Holdings LLC, a New York limited liability company. |
| |
|
| Note |
A promissory note issued by the Company pursuant to this Offering Circular. |
| |
|
| Offering |
The offering of Notes to the public pursuant to this Offering Circular. |
| |
|
| Offering Circular |
The Offering Circular you are reading right now, which includes information about the Company and the Offering. |
| |
|
| OID |
Original issue discount; i.e., a portion of the payments made on a debt instrument that is treated as interest and taxed as ordinary income under the Code and Regulations. |
| |
|
| Platform |
The website, www.icrossfund.com, and the app, iCrossFS. |
| |
|
| Redemption Option |
The right of an Investor to request that the Company redeem all or a portion of a Note held by such Investor. |
| |
|
| Regulations |
Regulations issued under the Code by the Internal Revenue Service. |
| |
|
| SEC |
The U.S. Securities and Exchange Commission. |
| |
|
| Securities Act |
The Securities Act of 1933. |
| |
|
| Underlying Loan |
A loan made by the Company to a Borrower. |
FORM 1-A
Regulation A Offering Statement
Part III – Exhibits
iCross
Premier LLC
28-07 Jackson Avenue, 5F
Long Island City, New York 11101
212-889-5000
www.icrossfund.com
February 21, 2022
The following Exhibits are filed as part of this
Offering Statement:
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 Long Island City, New
York on February 21, 2022.
| |
iCross Premier LLC |
| |
|
|
| |
By: |
iCross Holdings LLC |
| |
|
As Manager |
| |
|
|
| |
By |
Lily
Guo |
| |
|
Lily Guo, Manager and President |
This Offering Statement has been signed by the
following persons in the capacities and on the dates indicated.
| Lily
Guo |
|
| Lily Guo, Manager and President |
|
| February 21, 2022 |
|
| |
|
| Meiqing
Zhang |
|
| Meiqing Zhang, Manager and Executive Vice President |
|
| February 21, 2022 |
| |
|
| John
McInerney |
|
| John McInerney, Manager and |
|
| Executive Vice President |
|
| February 21, 2022 |
|
Page | 36
