PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
Purchase of Units
1.1 On the basis of the representations and warranties, and subject to the terms and conditions
set forth herein, the undersigned (hereinafter referred to as the “Subscriber”) hereby irrevocably
subscribes for and agrees to purchase _________ limited liability unit(s) (hereinafter referred to as
“Unit” or “Units”) offered by Company, an Idaho Company (hereinafter referred to as the “Company”),
at a price of One Thousand Dollars ($1,000.00) per Unit, and further sets forth statements upon which
Company may rely to determine the suitability of the Subscriber to purchase the Shares.
1.2 The minimum subscription is ten (10) units, or Ten Thousand Dollars ($10,000), unless the
Company, in its sole discretion, elects to accept subscriptions for fewer Units. The Units, when issued,
will be fully paid and non-assessable voting shares.
1.3 On the basis of the representations and warranties and subject to the terms and conditions set
forth herein, the Company hereby irrevocably agrees to sell the Units to the Subscriber.
1.4 Unless otherwise specifically stated, any reference to “Securities” shall mean the Units. Unless
otherwise defined herein, capitalized terms used herein have the respective meanings assigned to
them in the Confidential Private Placement Memorandum, dated as of April 22, 2010, as may be
further updated, amended or supplemented after the date hereof in connection with this offering of
Units by the Company (hereinafter referred to as the “Memorandum”).
2.0 The Subscriber understands that the purchase price for the Securities is payable in full upon
subscription to COMPANY. Interest will not be earned on subscriptions.
2.1 The Subscriber acknowledges and agrees that this Subscription Agreement, the subscription
Proceeds, and any other documents delivered in connection herewith, will be held on behalf of the
Company. In the event that this Subscription Agreement is not accepted by the Company, for
whatever reason(s), which the Company expressly reserves the right to do, within thirty (30) days of
the delivery of an executed Subscription Agreement by the Subscriber, this Subscription Agreement,
the Subscription Proceeds, without interest thereon, and any other documents delivered in connection
herewith, will be returned to the Subscriber at the address of the Subscriber, as set forth in this
3.0 Documents Required from Subscriber
The Subscriber must complete, sign and return to the Company an executed copy of this Subscription
Agreement, and any other documents delivered in connection herewith, within seven (7) days of
execution of the document. If the Subscription Agreement has not been completed, signed and
returned to the Company within the allotted seven (7) days, the Subscription Agreement shall be
considered null and void.
4.0 Representations, Understandings, Warranties and Covenants of Subscriber
4.1 The Subscriber hereby makes the following representations, warranties and agreements, and
confirms the following understandings:
4.1.1 Federal and State Exemptions
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(a) The Securities have not been registered under the Securities Act of 1933, as
amended (the “Act”), and are being sold pursuant to the exemption provided
by Regulation “D” of the United States Securities and Exchange Commission
(hereinafter referred to as “Regulation D”) Rule 506 promulgated hereunder;
(b) The Securities have not been registered or qualified under the applicable state
securities laws of any jurisdiction, and that the Securities are being offered
and sold pursuant to applicable exemptions therefrom.
The Subscriber is purchasing the Securities for its own account and not with a view to
resell or distribute the Securities, except in full compliance with all applicable U.S.
federal and state securities laws.
4.1.3 Risk Factors
(a) The Subscriber has evaluated the risks of its investment in the Company,
including those risks particularly described in the Memorandum under the
Section thereof entitled, “RISK FACTORS.” In evaluating such investment, the
Subscriber has been provided with a reasonable opportunity to consult with its
own investment and/or legal advisor(s).
(b) The Subscriber has received a copy of Company,
Memorandum, has reviewed it carefully, and has had an opportunity to
question representatives of the Company and to obtain such additional
information concerning the Company, as it has requested. Subscriber is not
purchasing the Securities as the result, directly or indirectly, of any form of
general solicitation or general advertising, including any advertisement,
article, notice or other communication published in any newspaper, magazine
or similar media or broadcast over television or radio.
(c) The Subscriber has such knowledge and experience in financial and business
matters that Subscriber is capable of evaluating the merits and the risks of the
acquisition of the Securities and, by reason of Subscriber's financial and
business experience (either alone or together with any purchaser
representative), Subscriber has the capacity to protect Subscriber's interest in
connection with the acquisition of the Securities.
4.1.4 Accredited Investor
Subscriber [PLEASE INITIAL THE APPROPRIATE SPACE] is ____is not _____an
“Accredited Investor,” as such term is defined in Rule 501 promulgated under the
Act. If Subscriber is an Accredited Investor, please initial and complete all of the
spaces in this Paragraph 4.1.7 appropriate to Subscriber’s facts:
(a) ___ Subscriber is a natural person who is subscribing on behalf of himself
or herself (or on behalf of a revocable trust of which subscriber is the
grantor), whose net worth, or joint net worth with his or her spouse,
exceeds One Million Dollars ($1,000,000).
(b) ___ Subscriber is a natural person who is subscribing on behalf of himself
or herself (or on behalf of a revocable trust of which subscriber is the grantor),
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whose individual income exceeded Two Hundred Thousand Dollars
($200,000), or whose income, together with that of his or her spouse
exceeded Three Hundred Thousand Dollars ($300,000); in either case, in
each of the two most recent years; and who reasonably expects such income
to exceed Two Hundred Thousand Dollars ($200,000) in the case of individual
income or Three Hundred Thousand Dollars ($300,000) in the case of joint
income in the current year.
(c) ___ Subscriber is an Employee Benefit Plan within the Employee
Retirement Income Security Act of 1974 (“ERISA”)
[PLEASE INITIAL THE SPACE APPROPRIATE TO SUBSCRIBER’S
(1) ____ where the investment decision is being made by a Plan
Fiduciary, as defined in Section 3(21) of the ERISA, which is
(i) ____ a bank,
(ii) ____ a savings and loan association,
(iii) ____ an insurance company or
(iv) ____ a registered investment advisor; or
(2) ____ where the investment decision is made by a Plan Fiduciary
who is not among those listed in clause (c)(1) above, but the plan
has total assets in excess of Five Million Dollars ($5,000,000); or
(d) ___ Subscriber is a Self-directed Employee Benefit Plan, where the
investment decisions are made solely by persons that are “Accredited
Investors”, and the investments are made only on behalf of those
persons, in which case the Subscriber has set forth below the name of
each such person, and each such person completed and signed a
supplemental copy of this Subscription Agreement (indicating therein that
it is such a supplement and not intended to constitute a separate
[PLEASE SET FORTH EACH NAME IN THE SPACE PROVIDED].
(e) ___ Subscriber is an Irrevocable Trust, which has total assets in excess
of Five Million Dollars ($5,000,000), which was not formed for the specific
purpose of acquiring the Securities, and whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D, by
reason of the business or financial experience of such person or by reason of
the business or financial experience of the Purchaser Representative of such
Trust, who is unaffiliated with and who is not, directly or indirectly,
compensated by the Company or its affiliates. If a Purchaser Representative is
used, that person must sign the Certificate of Purchaser Representative, which
is attached as an Addendum to this Subscription Agreement.
(f) ___ Subscriber is
(1) _____a bank as defined in Section 3(a)(2) of the Act, whether acting
in its individual or fiduciary capacity, or
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(2) _____a savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act, whether acting in its individual or
(g) ___ Subscriber is a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
(h) ___ Subscriber is an insurance company as defined in Section
2(a)(13) of the Act.
(i) ___ Subscriber is an investment company registered under the
Investment Company Act of 1940.
(j) ___ Subscriber is a business development company, as defined in
Section 2(a) (48) of the Investment Company Act of 1940.
(k) ___ Subscriber is a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958.
(l) ____ Subscriber is a private business development company,
which meets the definition in Section 202(a) (22) of the Investment
Advisers Act of 1940.
(m) ___ Subscriber is a plan established and maintained by a state, its
political subdivisions or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees, which
plan has total assets in excess of Five Million Dollars($5,000,000).
(n) ___ Subscriber is an organization described in Section 501(c) (3)
of the Internal Revenue Code of 1986, as amended, a corporation,
an Idaho or similar business trust or a partnership, which has
assets in excess of Five Million Dollars ($5,000,000) and which
was not organized for the purpose of investing in the Securities, or
is a non-USA organization whose beneficial ownership interests
do not include citizens or permanent residents of the USA.
(o) ___ Subscriber is a director or executive officer of the Company.
(p) ___ Subscriber is an entity in which all the equity owners are
“Accredited Investors,” in which case the Subscriber has set forth
below the name of each such person, and each such person has
completed and signed a supplemental copy of this Subscription
Agreement (indicating therein that it is such a supplement and not
intended to constitute a separate subscription)
[PLEASE SET FORTH EACH NAME IN THE SPACE PROVIDED]
(q) ___ Subscriber is an Individual Retirement Account (IRA), and the
participant (i.e., the equity owner of the account) is an “Accredited
Investor”; in which case, the Subscriber has set forth below the name
of such participant, and such person has completed and signed a
supplemental copy of this Subscription Agreement (indicating therein
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that it is such a supplement and not intended to constitute a separate
[PLEASE SET FORTH NAME IN THE SPACE PROVIDED]
(r) Subscriber has previously made the following types of investments:
[PLEASE INITIAL THE APPROPRIATE SPACES]:
_____ Listed Stocks
_____ OTC Stocks
_____ Mutual Funds
_____ Public Direct Investments (limited partnership or limited liability
_____ Private Direct Investments (limited partnership or limited
_____ Venture Capital or other Early-Stage Investments
4.1.5 Foundation, Endowment Fund or Employee Benefit Plan
If Subscriber is a foundation or endowment fund or an employee benefit plan
governed by ERISA, such person’s investment has been duly approved by all persons
whose approval is required and is not prohibited or restricted by any provisions of
the governing - or any related - instrument of - or pertaining to - such
foundation, plan or endowment, and such foundation, plan or endowment has
consulted its counsel and other advisors with respect to its investment.
4.1.6 U. S. Person
Subscriber [PLEASE INITIAL] is ___ a U.S. Person, as defined in this Section; if
Subscriber is a U.S. Person, Subscriber agrees to notify the COMPANY within sixty
(60) days of the date it ceases to be a U.S. Person. U.S. Person means:
(a) any natural person resident in the United States;
(b) any partnership or corporation organized or incorporated under the laws
of the United States;
(c) any estate of which any executor or administrator is a U.S. Person;
(d) any trust of which any trustee is a U.S. Person;
(e) any agency or branch of a foreign entity located in the United States;
(f) any non-discretionary account or similar account held by a dealer or other
fiduciary for the benefit or account of a U.S. Person;
(g) any discretionary account or similar account held by a dealer or other
fiduciary organized, incorporated, or (if individual) resident in the
United States; and
(h) Any partnership or corporation if:
5|Page - CONFIDENTIAL
(1) organized or incorporated under the laws of any foreign
(2) formed by a U.S. Person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or
incorporated and owned, by accredited investors who are not
natural persons, estates or trusts.
Notwithstanding the foregoing definition of “U.S. Person”;
(a) Any discretionary account or similar account (other than an estate or trust)
held for the benefit or account of a non-U.S. Person by a dealer or other
professional fiduciary organized, incorporated, or (if individual)
resident in the United States shall not be deemed a U.S. Person.
(b) Any estate of which any professional fiduciary acting as executor or
administrator is a U.S. Person shall not be deemed a U.S. Person if:
(1) an executor or administrator of the estate who is not a U.S.
Person has sole or shared investment discretion with respect to
the assets of the estate; and
(2) the estate is governed by foreign law.
(c) Any trust of which any professional fiduciary acting as trustee is a U.S.
Person shall not be deemed a U.S. Person if a trustee who is not a U.S.
Person has sole or shared investment discretion with respect to the trust
assets, and no beneficiary of the trust (and no settler if the trust is
revocable) is a U.S. Person.
(d) Any employee benefit plan established and administered in accordance
with the law of a country other than the United States, and customary
practices and documentation of such country shall not be deemed a U.S.
(e) Any agency or branch of a U.S. Person located outside the United States
shall not be deemed a U.S. Person if:
(1) the agency or branch operates for valid business reasons; and
(2) the agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(f) The International Monetary Fund, the International Bank for Reconstruction
and Development Bank, the Asian Development Bank, the Africa Development
Bank, the United Nations and their agencies, affiliates and pension plans,
and any other similar international organizations, their agencies, affiliates and
4.1.7 Subscriber's Economic Risks/Acknowledgements & Waivers
(a) Subscriber has ascertained by independent financial advice that the
proposed investment is suitable and that Subscriber is financially able to
bear the economic risk of the investment, including the total loss
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(b) Subscriber has no need for any liquidity in its investment and is able to
bear the economic risk of its investment for an indefinite period of time.
Subscriber has been advised and is aware that there is currently no
public market for the Securities and that no public market for the
Securities can be assured or promised.
(c) Subscriber has relied solely upon the Memorandum and independent
investigations made by it or its representatives with respect to the
Securities subscribed for herein.
Subscriber agrees not to transfer or assign its subscription hereunder or any interest
4.1.9 Execution Rights
If executing this Subscription Agreement in a representative or fiduciary capacity,
the undersigned has full power and authority to execute and deliver this
Subscription Agreement on behalf of its principal for whom the undersigned is
executing this Subscription Agreement, and such principal has the full right and
power to perform pursuant to this Subscription Agreement and to acquire the
This subscription constitutes an irrevocable offer to purchase the Shares for thirty
(30) calendar days, unless sooner accepted or rejected by the Company in its
discretion. If rejected by the Company for any reason, a full refund, without
deduction or interest, will be made to Subscriber by Company and its directors,
officers and agents will have no further liability to the prospective Subscriber.
4.1.11 Tax Consequences
There can be no assurance as to the federal or state tax consequences of an
investment in the Shares.
4.1.12 Confidentiality and Non-disclosure
The information contained in the Memorandum is confidential and nonpublic, and
all such information shall be kept in confidence by the Subscriber and shall not
be used by the Subscriber to the Subscriber's personal benefit (other than in
connection with the subscription for the Shares) or disclosed to any third party for
any reason; provided, that this obligation shall not apply to any such information
(i) is part of the public knowledge or literature and readily accessible at the
(ii) becomes part of the public knowledge or literature and readily accessible
by publication (except as a result of a breach of these provisions); or
(iii) is received from third parties (except third parties who disclose such
information in violation of any confidentiality agreements including,
without limitation, any Subscription Agreement they may have with the
7|Page - CONFIDENTIAL
Neither this Subscription Agreement, nor any provisions hereof, shall be waived,
modified, changed, discharged, terminated, revoked, or canceled except by an
instrument in writing signed by the party against whom any change, discharge, or
termination is sought.
4.1.14 Exercise of Rights
Failure of the Company to exercise any right or remedy under this Subscription
Agreement or any other agreement between the Company and the Subscriber, or
otherwise, or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.
4.1.15 No Regulatory Endorsement
Subscriber understands that no Federal or state agency has recommended or
endorsed the purchase of the Securities or passed upon the adequacy or accuracy of
the information set forth in the Memorandum (including the Exhibits thereto).
Subscriber agrees not to compete with the Company for a period of five (5) years from
the date of execution of this Subscription Agreement.
For purpose of this covenant to not compete, “competition” is defined as setting up in
business as a direct competitor to the Company in any location, worldwide.
5. Legending of Subject Securities
The Subscriber hereby acknowledges that upon the issuance thereof, and until such time as the same
is no longer required under the applicable securities laws and regulations, the Certificates representing
any of the securities will be legends in substantially the following form:
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO THEIR DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE SECURITIES UNDER THE ACT, OR THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED”;
6. Governing Law
This Subscription Agreement shall be enforced, governed and construed in all respects in accordance
with the laws of the State of Idaho, as such laws are applied by Idaho courts to agreements entered
into and to be performed in Idaho, and shall be binding upon the Subscriber, the Subscriber's heirs,
estate, legal representatives, successors and assigns and shall inure to the benefit of the Company
and its successors and assigns.
Subscriber warrants the truth and accuracy of all of Subscriber’s representations, warranties and
agreements, and the truth and accuracy of all of the information provided by Subscriber and included
in this Subscription Agreement, and agrees to indemnify and defend the Company and its directors
8|Page - CONFIDENTIAL
and officers and hold them harmless from and against any and all liability, damage, cost or expense
incurred on account of or arising out of any breach of or inaccuracy in Subscriber’s representations,
warranties or agreements herein, including any action, suit or proceeding based on a claim that any of
such representations, warranties or agreements were inaccurate or misleading or otherwise cause for
obtaining damages or redress from the Company or any of its directors or officers under the Act or
any applicable state securities laws of any jurisdiction.
The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber
(including any fees and disbursements of any special counsel retained by the Subscriber) relating to
the purchase of the Securities shall be borne by the Subscriber.
This Subscription Agreement, including without limitation the representations, warranties and
covenants contained herein, shall survive and continue in full force and effect and be binding upon the
parties hereto notwithstanding the completion of the purchase of the Securities by the Subscriber
This Subscription Agreement is not transferable, nor is it assignable.
The invalidity or unenforceability of any particular provision of this Subscription Agreement shall not
affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.
12. Entire Agreement
Except as expressly provided in this Subscription Agreement and in the agreements, instruments and
other documents contemplated or provided for herein, this Subscription Agreement contains the entire
agreement between the parties with respect to the sale of the Securities; and there are no other
terms, conditions, representations or warranties; whether expressed, implied, oral or written; by
statute or common law; by the Company or by anyone else.
All notices and other communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication. Notices to the parties
to this Subscription Agreement shall be directed to the following:
As to The Company: As to Subscriber:
Carolyn Harrison, Partner ___________________________
The Harrison Group, LLC ___________________________
2147 South Riverbirch Place ___________________________
Eagle, Idaho 83616 ___________________________
208.939.9646 (telephone) ___________________________
208.939.3746 (facsimile) ___________________________
208.520.0903 (cell) ___________________________
14. Counterparts and Electronic Means
This Subscription Agreement may be executed in any number of counterparts, each of which, when so
executed and delivered, shall constitute an original and all of which together shall constitute one
9|Page - CONFIDENTIAL
instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or
other means of electronic communication capable of producing a printed copy will be deemed to be
execution and delivery of this Agreement as of the date hereinafter set forth.
15. Unit Subscription:
Dollar Amount: $____________ Number of Units: _____________
Please initial one of the following, as it pertains Subscriber:
___ INDIVIDUAL OWNERSHIP (one signature)
___ JOINT TENANT WITH RIGHT OF SURVIVORSHIP (two signatures)
___ COMMUNITY PROPERTY (two signatures)
___ TENANTS IN COMMON (two signatures)
___ CUSTODIAN UNDER UNIFORM GIFT TO MINORS ACT
___ OTHER [PLEASE SPECIFY]____________________________________________
16. Registration of Units
The Subscriber hereby directs the Company to cause the Unit(s) to be registered on the books of the
Company as follows:
(Subscriber Social Security, Employer I.D., or other Taxpayer I.D. Number)
17. Delivery Instructions
The Subscriber hereby directs the Company to deliver the Unit Certificate(s) to (if different from #16):
IN WITNESS WHEREOF, the Subscriber has duly executed this Subscription Agreement as of the
date of acceptance by the Company.
(Name of Partnership, Corporation, Trust, or
Other Non-individual Entity, if applicable)
(Subscriber Name – Please Type or Print)
(Subscriber Signature, plus Title or Capacity of Signing Party,
if Subscriber is a Partnership, Corporation, Trust or
other Non-individual Entity.
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ACCEPTANCE OF SUBSCRIPTION:
The Subscription Agreement between _____________________________________, Subscriber, and
COMPANY, is hereby accepted.
Company, Vice President
Dated: ____________________________________, 20__
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ADDENDUM I TO SUBSCRIPTION AGREEMENT
CERTIFICATE OF PURCHASER REPRESENTATIVE
I hereby certify that I have acted as the Purchaser Representative of _________________________,
Subscriber, in connection with Subscriber’s investment in Securities of Company, an Idaho company
(hereinafter referred to as “Company”), and the statements made with respect to me in the
Subscription Agreement executed in connection therewith by said person are true and correct.
The following is a description of the business investment experience, education and other basis of my
background, which gave me such knowledge and experience in business and financial matters that I
am capable of evaluating the merits and risks of an investment in the Securities.
The following sets forth any material relationship between me or my affiliates and the Company and
its affiliates that now exist, is mutually understood to be contemplated, or that has, at any time during
the previous two (2) years, existed and sets forth any compensation received, or to be received, as a
result of such relationship.
The undersigned is not an affiliate, director, officer, or other employee of the Company, or beneficial
owner of ten percent (10%) or more of any class of its equity securities or of ten percent (10%) or
more of the equity of the Company.
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ADDENDUM II TO SUBSCRIPTION AGREEMENT
PRIVATE PLACEMENT MEMORANDUM
Copy No. ________
PRIVATE PLACEMENT MEMORANDUM
(an Idaho State Limited Liability Company)
280 Units Available
Class ―A‖ Membership Interest Units,
Representing Twenty-eight Percent (28%)
Securities Exchange Commission Regulation
Rules 504, 505 and 506
April 9, 2010
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PRIVATE PLACEMENT MEMORANDUM
TABLE OF CONTENTS
Summary Offering Term Sheet 2
Risk Factors/Disclaimer/Confidentiality 3
The Company 4
Use of Proceeds 15
Analysis of Company’s Projected Financial Condition 16
Contact Information 18
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OFFERING TERM SHEET
The following summarizes the principal terms of a proposed Units offering by Company, an Idaho
limited liability company (the ―Company‖) and investment by potential investors (―Investors‖)
Investors: ―Accredited‖ investors as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended.
Price Per Share: One Thousand Dollars ($1,000) per unit (the ―Purchase Price).
Offer: The Company is offering a minimum of ten (10) units, representing
Ten Thousand Dollars ($10,000) and up to one percent (1%) of the
Company ownership at a fully-diluted, post-money basis.
The Company is offering a maximum of One Hundred (100) units,
representing One Hundred Thousand Dollars ($100,000) and up to
ten percent (10%) of the Company ownership on a fully-diluted
Pre-Money Valuation: The Purchase Price is based on a fully-diluted pre-money valuation
of up to One Million Dollars ($1,000,000) and a fully-diluted post-
money valuation of up to Two Million Dollars ($2,000,000).
Protective Provisions: The Company will not engage in certain acts without the written
consent of the holders of at least a sixty-six percent (66%) share
of the Unit holders either directly or by amendment, merger,
consolidation, or otherwise, including: (i) liquidate the Company;
(ii) amend the Limited Liability Company Operating Agreement in a
manner adverse to the Unit holders; or (iii) issue any other security
having rights, or privileges senior to or on parity with the Units.
Management and The Company will deliver to Investors (i) annual financial
Information Rights: statements, (ii) an annual operating budget; and (iii) once the
Company has begun receiving royalty payments, quarterly financial
Right to Participate All Investors shall have a pro rata right to participate in
subsequent Pro Rata in Future Rounds: issuances of equity
securities of the Company, subject to certain exceptions.
Right of First Refusal: The Company shall have the first right of refusal with respect to any
Units of the Company proposed to be sold by holders of Units. The
Investor(s) shall have the second right of refusal with respect to any
Units of the Company proposed to be sold by holders of Units.
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THE SHARES OFFERED HEREBY ARE HIGHLY SPECULATIVE, AND AN INVESTMENT IN SHARES INVOLVES
A HIGH DEGREE OF RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION FROM THE OFFERING PRICE.
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
―SECURITIES ACT‖), OR APPLICABLE STATE SECURITIES LAWS, AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENT OF THESE LAWS. THE SHARES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE REGULATORY AUTHORITY, NOR HAS THE COMMISSION OR ANY STATE REGULATORY
AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR
ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL. THE SHARES MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
No person has been authorized to give any information or to make any representations in
connection with the offer made by this Private Placement Memorandum, nor has any person been authorized
to give any information or make any representations other than those contained in this Private Placement
Memorandum, and if given or made, such information or representations must not be relied upon. This
Private Placement Memorandum does not constitute an offer to sell or solicitation of an offer to buy in any
jurisdiction in which such offer or solicitation would be unlawful or to any person to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Private Placement Memorandum, nor any sale
made hereunder, shall, under any circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof.
This Private Placement Memorandum is submitted on a confidential basis for use by a limited
number of recipients solely in consideration of the purchase of the Shares described herein in a private
placement. The acceptance of this Private Placement Memorandum constitutes an agreement on the part of
the recipient hereof and the recipient’s representatives to maintain the confidentiality of the information
contained herein. This Private Placement Memorandum may not be reproduced in whole or in part. The use
of this private Placement Memorandum for any purpose, other than an investment in the Shares described
herein, is not authorized and is prohibited.
THE DATE OF THIS PRIVATE PLACEMENT MEMORANDUM IS ________________________, 2010.
16 | P a g e - C O N F I D E N T I A L
Electrical connectors, in their simplest form, join two or more conductors in a continuous, electrically-conductive path.
When selecting an appropriate means of electrical connection, the selection should be based on sound technical
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criteria: safety, reliability, and cost. The Product positively addresses all three criteria and has the potential to
dramatically change—forever—traditional electrical connector paradigms.
Reminiscent of Bill Hewlett and Dave Packard’s collaboration on HP’s first
product in a Palo Alto, California, garage in 1939, in the summer of 2007,
Company invented The Product in his garage. With a design concept
similar to the Chinese finger trap, this revolutionary invention contains an
electrically-conductive spiral that is able to ―grip‖ stripped wires, cables and other
elongated elements and securely connect them—thus eliminating time-consuming,
unreliable—and expensive—crimping, soldering and wrapping that is prevalent with
the current electrical connector.
Knowing that one of the most important determinable pieces of information when a customer chooses a connector is
its ability to create as many contacting points as possible—in as little time as possible—the spiral connection made
by The Product, during preliminary pull-testing, created—and maintained—a virtually 100% connection between the
two surfaces being connected—and was connected at rapid speed. The benefits to this invention will be the ability to
market—and easily sell—this product in the marketplace, with the following attributes:
no taping, no crimping, no soldering or welding necessary—conductive parts are already insulated;
one piece—no assembly/disassembly/reassembly;
economical—labor costs are greatly reduced, since electricians do not now need to be trained on how to
crimp—or how to weld crimps;
increased long-term performance over the intended life of the connection;
resistance to vibration, water, oil, and pressure;
increased mechanical integrity;
protection from oxidation and galvanic corrosion;
retention of force between the mating surfaces over wide operating temperature variations;
low contact resistance and high insulation value; and
unambiguous preservation of the orientation of the connected circuits.
Crimping and taping time and material costs are exorbitant—but necessary—when striving to secure a solid
connection utilizing the connectors in the marketplace today. These time-and-material costs are depicted in the
Crimper Equipment Crimper Equipment Cost
Kline Tools Crimper (six-, eight-, four-gauge) $ 160.00
3M Ratchet-Type Reduction Gear Crimper (ten-gauge) $ 194.00
Thomas & Betts Crimper $ 685.00
Burndy Hydraulic Crimper (six- to 001-gauge) $ 1,500.00
Technical data received from: Ron Rinehart, Manager . Consolidated Electrical Distributors . Northwest Division . 208.733.1033
17 | P a g e - C O N F I D E N T I A L
Electrical Connector Average Melni/Polaris Crimping Time Taping Time Total Cost per
Wholesale Labor Cost per and Material and Material Connection
Price Connection Cost per Cost per (Time and Materials)
The Product $10.00/unit $ .13 $ 0.00 $ 0.00 $ 10.13
Polaris Connector $11.50/unit $ 2.00 $ 0.00 $ 0.00 $ 13.50
3M #6 Butt Splice Connector $ 3.00/unit $ 10.50 $ 19.72 $ 33.22
FCI Burndy Connector $ 3.00/unit $ 10.50 $ 19.72 $ 33.22
Thomas & Betts (T&B) $ 3.00/unit $ 10.50 $ 19.72 $ 33.22
Company, was incorporated as a limited liability company in the State of Idaho on _________________. The
Company boasts a ―bootstrapped‖, no-debt, corporate philosophy; a domestic United States and foreign PCT patent-
pending invention; excellent relationships with some of the largest and most respected electrical connector leaders in
the world; a skilled team in place; and a solid, growing market within which to launch its product. Governance, capital
structure, and protective provisions are established through the Company’s Operating Agreement
The Company’s objective is to help its customers build their businesses with a product that is reliable, safe, cost-
efficient and user-friendly. From heavy industry to homes, when the client ―connects‖ with The Product, he will be
using cost-effective, quality, reliable—and safe—products that will deliver the performance and the competitive edge
needed in today’s relentlessly evolving economy. Continuous product and process innovation, superior customer
service, and long-term industry partnerships are the primary goal of Company.
Breakthrough technology The Team has developed a ―disruptive‖ technology
whose unique design will fill a performance-
improvement role in the marketplace that the current
technologies are not now able to fill.
Successful preliminary results lead to strong Preliminary testing of an eight-gauge wire
commercialization pathway. connection ran an industrial electric motor for three
days with no appreciable thermal heat generated.
ANSI C119.4 current cycle and mechanical tests, as
well as pullout tests according to ASTM conductor
standards, slated to be performed during the first
quarter of 2010.
Sound market opportunities The U.S. market for wire connectors is approximately
$1.68B; the worldwide market is projected to be
Intellectual Property First Action Allowance by USPTO; all 27 claims
allowed; patent will issue.
Excellent return on investment. With key technical, legal, business development, and
sales/marketing support, investors are able to
leverage a modest amount of investment of USD97K
into revenues of approximately USD2.5M by FY2015.
Market Segments – by Revenue/Region
The post-recessionary outlook for electrical connectors shows a 9.5%/year growth rate in the United States from
2009-2013. The total U.S. domestic market, according to the U. S. Census Bureau, is approximately $1.68B, of
which The Product is representative in $751M of the overall market. The worldwide market for current-carrying wire
connectors is slated to be approximately $50B by 2010, with a 7% compound average growth rate. Of that amount,
the market specifically attributable to The Product is approximately $23B.
18 | P a g e - C O N F I D E N T I A L
The market for current-carrying wire connectors for electrical circuitry has moved from a national and regional market
to a global market having three dominant segments: North America, Europe, and Asia-Pacific. This globalization has
created a greater demand for harmonized national standards on components with quality conformance assessment
and has supported the trend towards international standards.
U.S. MARKET FOR ELECTRICAL CONNECTORS
NAICS Product Description No. of 2006/Quantity 2006/Value 2007/Quantity 2007/Value
3359319 All wire connectors, 48 33,959M $1,549M 33,987M 1,682M
including used under
3359319102 Pressure connectors with 19 1,048M $262M 1,094M $296M
pressure applied by cone,
screw, or mechanical
3359319104 Compression connectors, 21 2,848M $215M 3,008M $242M
uninsulated terminals &
splicers, tool installed
3359319106 Pre-insulated terminals & 18 1,026M $190M 1,234M $213M
splicers, tool installed
3359319108 Banded or strip terminals & 8 1,408M $56M 1,377M $64M
splicers, machine installed
3359319113 Other wire connectors, 26 27,630M $826M 27,273M $867M
including solder type,
pigtail & blade or pin type
U.S. Census Bureau’s 2007 Economic Census Data
The market for current-carrying wire connectors for electrical circuitry has moved from a national and regional market
to a global market having three dominant segments: North America, China, and Western Europe. This globalization
has created a greater demand for harmonized national standards on components with quality conformance
assessment and has supported the trend towards international standards.
The worldwide market for current-carrying wire connectors is slated to be approximately $49.9B by FY2010, with a
7% compound average growth rate. Of that amount, the worldwide funding specifically attributable to The Product is
slated to be approximately $23B.
WORLDWIDE MARKET FOR CURRENT-CARRYING ELECTRICAL CONNECTORS
REGION 2010 (Est.) Five-Year 2010 % Share
North America, including U.S. $11,217 3.8% 22.5%
China 10,768 16.8% 21.6%
Western Europe 9,725 3.1% 19.5%
Japan 7,378 4.4% 14.8%
Asia Pacific 6,082 7.4% 12.2%
***ROW 3,013 12.0% 6.1%
**CEE 1,669 11.9% 3.3%
TOTAL: $49,852 7.0% 100.0%
$Millions Icon Group International, Inc.,
*CAGR – Compound Average Growth Rate ―Total Worldwide Market for Current-Carrying Wire Connectors‖. 2007.
**CEE – Central and Eastern Europe
***ROW – Rest of World
Market Segments (by industry):
19 | P a g e - C O N F I D E N T I A L
Automotive Medical Equipment
Computer and Communications Consumer Equipment
Telecom/Datacom Equipment Military/Aerospace Equipment
Automotive – increased electronic content in each vehicle has been a market driver for connectors; projections show
4.8% connector growth, resulting in higher connector market volume.
AUTOMOTIVE ELECTRICAL CONNECTOR MARKET
REGION 2006 2007 PERCENT
North America $2,324.7 $2,234.0 -3.9%
Europe $3,237.2 $3,609.4 11.5%
Japan $2,133.1 $2,198.4 3.1%
China $495.1 $532.8 7.6%
Asia Pacific $857.1 $881.0 2.8%
ROW $574.1 $626.6 9.1%
TOTAL: $9,621.4 $10,082.2 4.8%
Computer and Communications – Market demand for products that offer greater functionality and faster processing
speed, while consuming less space, has been the mantra driving the electronics industry for many years. Satisfying
these objectives have resulted in remarkable improvements in performance and packaging density, but have also
created new challenges in managing increasing levels of power, as well as resultant heat. The need for efficient
power distribution in this environment is having a significant impact on the design and application of connectors for
next generation equipment.
Telecom/Datacom – Connector usage in the wireless, wireline carrier, enterprise and cable/MSO network sectors of
the world telecom equipment market is being impacted by market consolidation and competition among service
providers that drives capital investment (CAPEX)
Industrial – As the world’s fourth largest connector market, behind Automotive, Computer & Peripherals and
Telecom/Datacom, the industrial market is large enough to attract global connector manufacturers. Additionally, the
industrial connector market is so diverse, it offers opportunities for niche layers and specialized connector
Medical – While the growing medical electronics sector represents a comparatively small portion of the total market
for connectors, the five-year CAGR rate of 10.5% outpaces the total connector market growth forecast of 9.0%
Consumer Electrical – 10.3% market growth. Driven by strong demand for digital audio, video and home information
products, consumer electrical and electronics equipment, U.S. sales are projected to reach approximately $227.6
billion by 2014 with a five-year compound annual growth rate (CAGR) of 4.3% and $517.2 billion, worldwide, with a
five-year worldwide CAGR of 5.1%
Military/Aerospace –6.7% market growth. With a military budget that is approximately equal to the sum of all the rest
of the nations in the world, the United States is by far the largest single market for military connectors. However, the
fastest growing defense budget is that of China. With economic growth bolstering the overall economy, China is busy
adding to its military capabilities. The world military market for connectors continues to grow with the most significant
change coming from the growing use of non-mil spec connectors in a market that was once virtually off limits to
commercial suppliers. Today, mil spec connectors can no longer meet the technology requirements of the military. It
is the consensus of the military, major platform integrators and weapon system OEMs, that no new mil spec
connectors will be developed. The military is now forced to look to the commercial connector sector to meet all new
military connector needs.
MILITARY ELECTRICAL CONNECTOR MARKET
20 | P a g e - C O N F I D E N T I A L
REGION 2003 2004 2005 2009 *CAGR
North America $1,039.1 $1,207.2 $1,261.2 $1,629.3 6.2%
Europe $554.4 $648.6 $695.6 $944.9 7.8%
Japan $178.2 $211.6 $224.7 $286.5 6.2%
China $30.0 $36.8 $41.1 $60.8 10.6%
Asia Pacific $100.3 $121.4 $129.7 $168.7 6.8%
**ROW $86.1 $103.6 $109.6 $130.0 4.6%
TOTAL: $1,988.1 $2,329.2 $2,461.9 $3,220.3 6.7%
* CAGR – Compound Average Growth Rate
** ROW – Rest of World
Solid Margins –
Data generated from a Reuters Independent Research Valuation document indicated five-year average electrical
connector industry gross margins of 20.48%--a good indication of the financial health of the industry from FY2004-
FY2009 and a strong indicator that the Company will be able to pay its operating and other expenses and adequately
build for the future.
Competitors in the electrical connector market, together with their corresponding electrical connector market share,
Potential Licensees - Since the ―go-to-market‖ strategy for The Company Marketing and Sales Team is to pursue
licensing opportunities, worldwide, The Team views the above ―competitors‖ as potential licensees:
3M – through its Electrical Markets Division, 3M Company provides electrical connectors in virtually every
market segment; e.g., retail consumer, professional contractor, utility company, and/or military. Other market players
participate in certain segments, but this 3M Division is the most horizontally positioned incumbent. Its products
include electrical and electronic specialty insulating tapes; power cable splices and terminations, including cold- and
heat-shrink technologies; connectors; electrical wire connectors, terminals and tools; wire marking products,
underground and underwater electrical system products, and electrical diagnostic and detection products.
Amphenol Corporation holds a strong position in the overall market and pursues a more niche-focused
strategy, mostly offering precision connectors found in computers and aerospace electronics.
21 | P a g e - C O N F I D E N T I A L
Molex Incorporated markets to automotive and computing market segments, as does Methode Electronics.
Thomas & Betts Corporation has a strong presence in the utility and industrial markets. It focuses on
industrial and commercial grade connectors, including a wide selection of underground, overhead and substation
Hubbell Incorporated is a strong competitor and reaches across commercial, residential, marine,
healthcare, and the harsh and hazardous condition market segments.
Actuant Corporation may be the most relevant of the other market competitors. Its Gardner Bender
Division has a strong presence in the consumer and contractor market segments. It has a number of other segment-
specific electrical brand businesses, as listed in the ―Player Snapshots‖ chart of the Business Plan. Actuant reports
its North American and European electrical market shares at sixty-five percent (65%) and thirty-one percent (31%),
The Team met with the Gardner Bender Division of Actuant Corporation in November of 2008; an offer to license the
technology was submitted by Gardner Bender, which offer was declined by The Team.
Primary Players - The following synopsis of the above-mentioned primary players in the U.S. electrical connector
marketplace reflects the solidity of the potential licensees’ financial performance in FY2009 (a downturn market): an
average of $5.7B in FY2009 total sales and $1.6B in the Electrical Sales Divisions for all six companies—making
these companies financially-solid potential licensees to whom to license the technology.
22 | P a g e - C O N F I D E N T I A L
INDUSTRY LEADERS—A SNAPSHOT
COMPANY LEADERSHIP MARKETS PERFORMANCE11
Fiscal Year-End Date: 31 December 2009
3M Company George W. Buckley, Electrical construction, Total Sales: $23,123M
Electrical Markets Division CEO/COB/President industrial maintenance, Electro & Communications Sales: $1,930M
Sales Growth: -8.49%
3M Austin Center (also Director of Archer Daniels utility, and industrial power
Midland Company, The Black & Last Reported Employees: 75,000
Building A130-04-N-36 businesses; also sells Net Income: $3,193M
Decker Corporation; Trustee,
6801 River Place Boulevard electrical and electronic Net Profit Margin: 14.03%
University of St. Thomas)
Austin, TX 78726-9000 devices produced by original
DUNS: 006173082 equipment manufacturers.
NYSE: MMM Offers 120 different splices
and 1,213 terminals.
Amphenol Corporation Richard Adam Norwitt Aerospace, military, Total Sales: $2,820.07M
258 Hall Avenue CEO/President industrial, automotive, Interconnect Products Sales: $2,566.58M
Sales Growth: -12.87%
Wallingford, CT 06492 Martin H. Loeffler, Exec. COB communications, and
Last Reported Employees: 32,000
DUNS: 177220647 commercial backplane and Net Income: $317.83M
NYSE: APH connectors Net Profit Margin: 11.60%
Including under “Amphenol Sine
Molex Incorporated Fred A. Krehbiel, Co-COB Computing & automotive Total Sales: $2,581.84M
2222 Wellington Court John H. Krehbiel, Jr., Co-COB Electronic Connector Sales: $1,789.14M
Sales Growth: -22.43%
Lisle, IL 60532-1682 Liam G. McCarthy, Pres./COO
Last Reported Employees: 25,240
DUNS: 005246673 Net Income: -$321.19M
NASDAQ: MOLX Net Profit Margin: -12.44%
Thomas & Betts Dominic J. Pileggi, Commercial Total Sales: $1,898.70M
Corporation CEO/COB/President communications, industrial Electrical Sales: $1,554.33M
Sales Growth: -23.25%
8155 T&B Boulevard (also CEO/COB The Lamson & and utilities
Sessions Co., and Director, The Last Reported Employees: 10,000
Memphis, TN 38125 Net Income: $107.91M
DUNS: 002154433 Net Profit Margin: 5.68%
Hubbell, Incorporated Timothy H. Powers, Commercial, residential, Total Sales: $2,355.60M
584 Derby Milford Rd. CEO/COB/President marine, healthcare, and Electrical Sales: $1,650.10M
Sales Growth: -12.90%
Orange, CT 06477 (also Director, Mead Westvaco harsh & hazardous
Corporation) Last Reported Employees: 11,500
DUNS: 001181858 conditions Net Income: $222.7M
NYSE: HUB.B Net Profit Margin: 7.70%
Crimpers & Terminals Division:
Anderson Electrical Products
Actuant Corporation Robert C. Arzbaecher, Wholesale & consumer retail Total Sales: $1,239.8M
13000 West Silver Spring Dr. CEO/COB/President Electrical Sales: $364.16M
Sales Growth: -23.15%
Butler, WI 53007 (also Director, CF Industries
Last Reported Employees: 5,900
DUNS: 006582779 Holdings, Inc.) Net Income: $13.72M
NYSE: ATU Net Profit Margin: 1.93%
Constitute electrical business
including: Acme Electric,
Enerpac, Gardner Bender,
Ancor, Dresco, Guest, Kupp,
Marinco, BH Electronics, BEP
From the above information, coupled with a very positive personal meeting with both 3M Company and Actuant
Corporation, The Marketing and Sales Team has been able to better make decisions as it pertains to the licensing
sales channel activities—planned to commence during the third quarter of FY2010.
The Team’s go-to-market strategy involves leveraging its commercialization team’s strong licensing expertise to
effectively introduce The Product into the market—at the appropriate time—with the appropriate licensee.
Go-to-market questions have been addressed:
Introduction Timing – From economic outlook reports, global growth will resume in 2010, driven largely by
the world’s emerging economies. The Team’s slated launch of The Product in the second half of FY2010
will be at a time when the U.S. domestic and worldwide emerging and developing economies are
increasingly fueling global growth.
23 | P a g e - C O N F I D E N T I A L
Targeted Licensee – As previously mentioned, the primary licensee has been identified by research and test
Action Plan – Introduction of the Product has been developed by the Team’s viable marketing mix and the
creation of a respective marketing budget.
It is proposed that the IP assets of the technology be licensed to one of the aforementioned potential licensees, rather
than another revenue-generation strategy—for the following reasons:
Better manufacturing capacity, wider distribution outlets, greater local knowledge and management
expertise of licensee(s);
In field of research and product development, more efficient for licensor to license out new product(s) rather
than take up production themselves;
By granting licensee(s) right to market and distribute product, licensor can penetrate markets it could not
otherwise hope to serve;
Provides a means for the licensor to gain rights in improvements, know-how and related products that will be
developed by licensee(s) during term of license;
Competitor can be turned into a licensee;
License may be essential if a product sells best only when it is incorporated in, or sold for use with, another
product; or if a number of IP assets, for example, patents owned by different businesses; are required
simultaneously for efficient manufacturing or servicing of a product;
Allows licensor to retain ownership of IP, and, at the same time, to receive royalty income from it, in addition
to the income from its own exploitation of it in products that it sells.
A synopsis of The Team follows, with a more detailed description of the team members in the Business Plan’s
__________Company is the President/CEO and a founding member of the Company. __________ has
developed and implemented one of the fastest-growing commercial and residential computer services firms
in the Northwest United States, and is, therefore, adept at running successful operations.
Joe Buffa acts as the Company’s Licensing Attorney and oversees the legal aspects of the licensing
activities for the Company. With over 30 years of being engaged in the business of starting up new ventures
and cofounding several start-up companies, Mr. Buffa’s combined start-up and legal experience are
invaluable to the effort.
Carolyn Harrison is the Marketing Executive for the team. With over 36 years of marketing, public relations,
business development and sales experience in diverse fields, Ms. Harrison brings a self-
motivated/managed, detail-oriented foundation to the team.
Tom Harrison is the Team’s Licensing Executive and directs the licensing activities of the team. Mr.
Harrison has been responsible for licensing over 400 technologies and helped create nine spinout
Kirt Johnson is one of the Company's two Senior Technical Advisor and as such, brings crucial programming
and industrial electrical oversight to the effort.
Justin Metcalf, Owner and President of L & K Metco Electric, is another Senior Technical Advisor on The
Team. In his capacity as owner of an electrical service company, Mr. Metcalf is adept at not only performing
electrical wiring services for his customers, he is also familiar with the intricacies, challenges, and risks of
running a successful business.
24 | P a g e - C O N F I D E N T I A L
Barbara Pedersen is the Team’s Patent Agent and writes and prosecutes U. S. patent applications and PCT
International applications, as well as advises the Team regarding patent strategy and layering of patent
protection. With a technical background as a Process Development Engineer, as well as a U. S. Patent and
Trademark Office agent registration, Ms. Pedersen brings a sound base from which to direct the Team’s
intellectual property strategy.
Ken Pedersen directs the patent process by obtaining and enforcing intellectual property rights on behalf of
The Innovation Group Team. As a Chemical Engineer, as well as many years of corporate patent
experience, Mr. Pedersen’s supervision of the effort’s patent, trademark and copyright processes make him
an invaluable asset to the patenting process.
Glenn Shell is the team’s Project Management Manager. With more than 38 years of project management
experience, Mr. Shell brings the project scope, scheduling, and budgeting experience needed to implement
the project criteria required to positively manage the future Product development activities for the effort.
Mel Weyerman, President/CEO of Micro Molding, Inc. in Nampa, Idaho, is the team’s manufacturing and
plastic injection molding contact. Mr. Weyerman has a wealth of experience in mold making, as well as the
customization of various tool and die components. Most recently Mr. Weyerman has worked at Micron in
the formulation of the Company’s toll and die shop for its computer production facilities.
Intellectual Property Protection
The Company Patent and Trademark Team is comprised of two of the most well respected patent agents and patent
attorneys in the State of Idaho: Barbara and Ken Pedersen. On April 5, 2010, the United States Patent and
Trademark Office notified the Pedersens that all 27 claims had been allowed and that the patent would issue—in an
unprecedented thirteen (13) months from February 23, 2009, the date on which the Patent Application was filed with
the USPTO until April 5, 2010.
Additionally, in September, 2009, a very positive PCT Search Report and Written Opinion of the International
Searching Authority, in which the PCT Searcher recognized and reported that…
―…all current claims are novel and inventive…‖
Young Uk Hong, Authorized Officer
Korean Intellectual Property Office
139 Seonsa-ro, Seo-gu, Daejeon 3020701
Republic of Korea
Company, has assembled a skilled, qualified, and well-trained Licensing Team to license the technology:
overall effort coordination by the president and owner of an existing successful—and growing—company.
two of the nation’s most experienced patent and licensing attorneys;
a Licensing Executive who has been responsible for licensing over 400 technologies;
solid technical support from two well-known and reputable users of electrical connectors;
a manufacturing lead who has extensive experience in mold making and the tool and die industry;
a Marketing Executive with over 39 years of market research, marketing, sales and licensing experience.
Because of the disruptive nature of the technology, the sound—and rebounding—market structure, the well-qualified
Management, Sales and Marketing, and Technical Teams, as well as the technology’s intellectual property security,
Company, feels any investor who invests in The Product, will enjoy a sizable return on his or her investment.
25 | P a g e - C O N F I D E N T I A L
THE COMPANY PORTION
PRIVATE PLACEMENT MEMORANDUM
―My name is Ron Rinehart. I am Manager of Consolidated Electrical Distributors (CED) of Twin Falls, Idaho. I also manage the CED Profit
Center in Jerome, Idaho. I have been in the electrical industry since 1971. I have worked as a panel builder, an apprentice electrician, and a
Over the past 30+ years, I have seen literally dozens of so-called, ―new‖ devices for terminating wire. Some have made a successful impact
in the market, and others have come and gone. I believe Company’s wire termination invention is truly revolutionary. I have been asked,
many times, for a wire termination that does not require purchase and use of an expensive crimp tool to make a wire termination. Even with
the use of a proper tool, crimp terminations can fail, especially if installed by an untrained—or undertrained—person. Mark’s invention
would be virtually ―tool-less‖ and could easily replace many different existing wire terminations and could be properly installed without
I am eagerly awaiting production of this wire terminal and would be willing to stock and support promotion and sale of the end-product to
our electrical contractor, OEM and industrial customers.‖
Ron Rinehart, Manager
CED – Twin Falls, Idaho
CED – Jerome, Idaho
―I have looked at, and understand, the application of Company’s invention, and I think it is by far the best design I have ever seen. The
surface area of the conductor is contacted in a manner that is far superior to a crimp connection, thereby eliminating the heat problem from
a bad crimp.‖
Steven Westphal, Licensed Journeyman Electrician
State of Idaho – ELE J 4971 – Issued 01.11.80
Electrical Contractor – ELE C 13609 – Issued 04.20.92
Public Works Contractor – PW C 11079 – Issued 04.05.93
―I have been in the electrical distribution industry for over 26 years. Over the years, I have seen… many different gadgets that have been
invented by electricians…this terminal connector, I think, is revolutionary. I, as an electrical distributor, feel this product…will change
forever the way manufacturers look at the way they make their terminals.‖ I would also be one of the first to stock and promote this product
in the field.‖
Garret K. Karl, Manager
Columbia Electric Supply
―I graduated from Great Basin College in Electrical Technology in 1998. Since then, I have worked as an industrial electrician and controls
technician in the mining and food processing industries. I have had the opportunity to work around motors and electrical connections from
1 HP to 6000 HP and voltages of up to 24kV. During my experience in the field, I have seen numerous connection failures in many different
applications. I have seen and understand the theory of operation of the invention that Company is proposing, and I believe this invention
will change the industry standard for electrical connections.
His design is perfect. The area of the conductor that makes contact with the connector, and any other conductors that are included in the
connection, far surpasses that of any connector that I have ever seen on the market, greatly reducing heat in the connection. And, a by-
product of this design is that by the design itself, human error is virtually eliminated, and good connections can be made—every time. I
can’t stress enough how important I think it is to the industry that you take the time to see how this invention works.
You will not be disappointed.‖
Idaho Electrical License #J16115
26 | P a g e - C O N F I D E N T I A L
THE COMPANY PORTION
PRIVATE PLACEMENT MEMORANDUM
Consolidated Electrical Distributors, Inc., Northwest Division; Ron Rinehart, Manager, firstname.lastname@example.org and
L&K Metco Electric; Justin, Metcalf, Owner/President, email@example.com
Technology Law Group, Market Spot Report: Electrical Connectors (December 2008). UTechnology Law Group, Market Spot Report:
Electrical Connectors. Dec. 3, 2008.
Icon Group International, Inc., Total Worldwide Market for Current-Carrying Wire Connectors. 2007.
Bishop & Associates, Electronic Connectors—a Global Market Perspective. 2009.
U.S. Census Bureau, Manufacturing 7 Construction Division, Current Industrial Reports No. MA335K, Wiring Devices and Supplies, 2007
Annual Report, Table 2: Quantity and Value of Shipments of Wiring Devices and Supplies: 2007 and 2006 (June 2008), available at
http://www.census.gov/cir/www/335/ma335k/ma335k07.xls (visited Nov. 20, 2008).
3M, Press Release – 3M Completes Acquisition of Innovative Paper Technologies and Power LLC (May 2, 2007),
(visited Nov. 24, 2008).
3M, Press Release (Jan. 3, 2008) http://www.designtaxi.com/news.jsp?id=8464&monthview=1&month=3&year=2008
(visited Nov. 24, 2008).
Thomas & Betts, Thomas & Betts, http://www.tnb.com/ps/pubint/index.cgi?a=m_util (visited Nov. 23, 2008).
Hoover’s, Hubbell incorporated – Profile (Nov. 23, 2008).
Hoover’s, Actuant Corporation Information & Related Industry Information (Nov. 23, 2008); Actuant, Actuant Electrical,
http://www.actuant.com/actuant/menu?path=businesses&page-electrical.html (visited Nov. 23, 2008).
Dow Jones Factiva, (Jan. 18, 2010)
27 | P a g e - C O N F I D E N T I A L
USE OF PROCEEDS
Capital Needs and Funds Utilization
Early-Stage Funds Required
An infusion of early-stage financing in the total amount of approximately $169K is required in order to produce a
product for testing; to then test the product; solidify the international patenting requirements; and commence the
marketing and sales activities. A brief synopsis of these requirements follows:
Product Stage/Milestone Timeline
Stage I – Product Scale-Up Second Quarter, 2010 $ 30,700
Production of ―testable‖ units
Stage II – Product Testing Second/Third Quarter, 2010 26,000
Field and UL testing
Stage III – Marketing/Sales; International Patenting Third Quarter, 2010 112,400
TOTAL: $ 169,100
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ANALYSIS OF COMPANY’S
PROJECTED FINANCIAL CONDITION
The Marketing and Sales Team projects solid, sustainable royalties from the licensing effort. Certain assumptions
have been made by the Team relative to market numbers, as well as a bottom-up forecast tied to royalty revenues
derived from specific target companies.
Preliminary market research was commenced in FY2009 and reflects approximately 30 prospective licensees in the
domestic United States. Plans call for license negotiations to commence during the third quarter of FY2010 with 3M
Company, the connector market leader, as well as other potential Licensees. A preliminary meeting with 3M in their
Electro and Communications Division in Austin, Texas, in May, 2009, indicate 3M is interested in discussing licensing
the technology—once product development and testing have occurred.
Acting upon 3M’s request, The Sales and Marketing and Technical Teams are pursuing funding for product scale-up
and testing, as well as marketing and sales and intellectual property protection funding.
Itemized below are the basic assumptions relative to the market for electrical connectors, the market that is
applicable to The Product; the projected price point and manufacturing costs for the product; as well as license terms
and conditions, revenue calculations, and definitions:
Licensing Sales Channel
License technology to potential Licensee
Manufacturing cost - One Dollar Five Cents ($1.05)/unit
Price point - Ten Dollars ($10)/unit
Negotiations with potential Licensee commence - August, 2010
License signed with potential Licensee - November, 2010
First product shipped - February, 2011
Ten total products into marketplace - FY2012
Recommended license terms and conditions/revenue calculations/definitions:
o Pre-Issued Patent
Upfront fee - $100K
Royalty rate – Five percent (5%) of net sales
o ―Net sales‖ mean the total amounts invoiced to purchasers for the Licensed Product sold, leased, or
otherwise made available by Licensor, less deductions of regular trade and quantity discounts and/or
any allowances and credits because of returns and/or price adjustments for Licensed Products
Market – Domestic - $1.682B
Source: U. S. Census Bureau
Market – Worldwide - $50B
Source: Icon Group International, Inc.
Western Europe 19.5%
Asia Pacific 12.2%
Forty-four percent (44% ) of market applicable to market in which the Connector will compete;
Source: U. S. Census Bureau
Six and six-tenths percent (6.6%) per-year growth rate
Source: ―Eighty Years of U.S. Economic Growth – 1929-2009‖; Mean: 6.6%; source: Hooper Cornell, PLLC
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Portion of market size for specific gauge connectors:
Twenty-two AWG 10%
Source: Lee Herron, Vice President/Worldwide Sales/Marketing, BURNDY, LLC
Source: Justin Metcalf, Owner/President, L&K Metco Electric Company
Introduce first five (5) products in 2011 and second five (5) in 2012
Initial Market share five percent (5%) growing to ten percent (10%) in second year
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Total Revenues $100,000 $619,925 $1,676,278 $2,164,914 $2,307,798 $2,460,113 $2,622,480 $2,795,564 $2,980,071
Total Selling Expense 62,500 0 0 0 0 0 0 0 0
Total G&A Expense 44,500 177,200 177,200 203,200 203,200 203,200 203,200 203,200 203,200
Net Income $(7,000) $442,725 $1,499,078 $1,961,714 $2,104,598 $2,256,913 $2,419,280 $2,592,364 $2,766,871
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Compan y Contact/Principal Offices
President/CEO: Company, President/CEO
Company Name: Company
The Company is represented in this stock transaction by The Harrison Group, LLC.
Representatives: Tom or Carolyn Harrison, Partners
The Harrison Group, LLC
Location: 2147 South Riverbirch Place
Eagle, Idaho, 83616
The Harrison Group, LLC, is not, and does not claim to be, a law firm, nor an accounting or financial institution, and
does not profess to attain, nor render, certified legal and/or financial advice to its clients, customers, associates, or
any Party who is a part of any transaction involving The Harrison Group, LLC. The Harrison Group, LLC,
recommends any Party requiring legal and/or financial advice attain the services of an attorney and/or an accountant
or other certified financial advisor.
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