Integrity Holdings Group is a Real Estate Investment Company involved in sourcing and executing on value add commercial opportunities.
GENERAL RISK CONSIDERATIONS
This investment is speculative and involves high risk
The Units being offered should be considered a speculative investment that involves a high degree of risk. Therefore, you should thoroughly consider all of the risk factors discussed herein. You should understand that there is a possibility that you could lose your Capital Contribution. You should not invest in the Fund if you are in any way dependent upon the funds you may be using to acquire Units.
This Memorandum includes forward-looking statements
This Memorandum includes many forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:
Although we may attempt to supplement this Memorandum from time to time with new information with respect to our progress, we may not update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Memorandum might not occur.
You should rely only on the information contained in this Memorandum. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, do not rely on it.
We are not making an offer to sell these Units in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this Memorandum is accurate as of the date on the front cover. Our business or financial condition, the results from our operations and prospects may have materially changed subsequent to that date.
The Fund will be subject to inherent conflicts of interest
As explained elsewhere in this Memorandum, the Fund’s Class B Member(s) receives Ten Percent (10.0%) of distributions in the event the Fund realizes revenue or other monetization of assets in excess of the Preferred Return. Thus, there may be an inherent tendency for the Manager to cause the Fund to take disproportionate risks with the Fund’s capital in order to achieve higher overall returns. Prospective investors should consider these factors in addition to and/or in conjunction with all of the other risk factors detailed below and elsewhere in this Memorandum. (See “Certain Relationships and Conflicts of Interest”).
The Fund has minimal initial capitalization
The Fund has received minimal initial capital from the Class B Member(s). To become further capitalized, and in order to fully implement our business objectives, we will rely primarily upon the proceeds of this Offering. Because of the manner of capitalization, the Fund will not have sufficient assets beyond any physical assets, if any at all, to pay the Preferred Members distributions equaling the stated Preferred Return (which is a benchmark and is not guaranteed) on their Capital Contribution. If one or more of our assets are unable to be liquidated or do not generate sufficient cash flow, we may not be able to pay distributions at or near the Preferred Return to our Preferred Members or otherwise fulfill our obligations, or even return the capital to the investor at the winding up and dissolution of the Fund.
GENERAL RISKS ASSOCIATED WITH THE FUND’S BUSINESS PLAN
The purchase of Units involves various risks. Prospective purchasers should consider the following factors before making a decision to acquire Units.
Risks of Unspecified Real estate Assets
We do not have any binding commitments to purchase any particular real estate properties. Persons who purchase Units will not have an opportunity to evaluate any of our assets or underlying property in which the proceeds of the Offering may be invested or the terms of any such assets. We are not required to obtain an independent appraisal in connection with any acquisition. Purchasers of Units must depend solely upon the ability of the Fund’s management with respect to the selection of assets, and the determination of the price and other terms upon which they will be made. In selecting such assets, we may have conflicts of interest. See “Certain Relationships and Conflicts of Interest.” Substantial delays may occur between the time a person purchases a Unit and the time the funds are invested by the Fund, which could reduce the benefits, if any, to be received from an investment in Units. Any such delays may result in delays in distributions, and the investors returns may not vest until such funds are actually invested in assets by the Fund.
Potential Risks of Real Estate Ownership
In the event we are required to foreclose and take title to real property underlying any particular real estate asset, we will then become subject to the risks generally incident to the ownership of real property including changes in national and local economic conditions, changes in the investment climate for real estate investments, changes in the demand for or supply of competing properties, changes in local market conditions and neighborhood characteristics, the availability and cost of mortgage funds, the obligation to meet fixed and maturing obligations (if any), unanticipated holding costs, the availability and cost of necessary utilities and services, changes in real estate tax rates and other operating expenses, changes in governmental rules and fiscal policies, changes in zoning and other land use regulations, environmental controls, acts of God (which may result in uninsured losses) and other factors beyond the control of the Fund. In recent years, the presence of hazardous substances or toxic waste has adversely impacted real estate values in affected areas of the country. The Fund may become subject to risks inherent in the ownership of real property, such as occupancy, operating expenses and rental schedules, which in tum may be adversely affected by general and local economic conditions, the supply of and demand for properties of the type in which the Fund has invested, the financial condition of tenants and sellers of properties, zoning laws, federal and local rent controls and real property tax rates. Certain expenditures associated with real estate equity investments are fixed (principally mortgage payments, if any, real estate taxes and maintenance costs) and are not necessarily decreased by events adversely affecting the Fund’s income from such investments. The Fund’s ability to meet its obligations will depend on factors such as these and no assurance of profitable operation can be given.
Lack of Diversification; Sale of assets
Because the business of the Fund is anticipated to involve the investment in a limited number of multi-family real estate assets, the purchase of Units has additional risks from economic or other problems, the effects of which could be absorbed or compensated for in an investment program that contained a larger number of such assets. If the Offering is completed at less than the maximum number of Units that can be sold, the opportunity for diversification will be further reduced. The profitability of the Fund will be dependent upon the ultimate sale of our assets. Conditions in the real estate market, including overbuilding of residential, commercial, and industrial real estate, have adversely affected the value of and ability to sell real estate backed assets. In addition, financial market conditions during recent years have significantly affected the availability, value and cost of real estate loans, at times making real estate financing difficult or costly to obtain. The continuation of these conditions in the future may adversely affect the ability of the Fund to liquidate assets when a sale is determined to be in the best interest of the Fund, and may affect the terms of such sale. Because we cannot predict these and other conditions that may exist at the time that assets are sold, there can be no assurance that we will be able to sell acquired assets on favorable terms or at profitable discounts to the cost of acquisition.
Working Capital
We intend to sell, exchange or otherwise dispose of acquired real estate assets and/or underlying properties when we determine such action to be in the best interests of the Fund. The Fund is not required to maintain any minimum level of permanent working capital reserves. To the extent that expenses increase or unanticipated expenses arise and accumulated reserves are insufficient to meet such expenses, the Fund would be required to obtain additional funds through borrowing, if available. Due to the limited capitalization of the Fund prior to this Offering and the fact that we are a limited liability company, there would be limited resources to pursue in the event that we are unable to honor our financial commitments. The ability of the Fund to repay any indebtedness incurred in connection with our activities, or subsequent refinancing, will depend upon the sale, refinancing or other disposition of acquired assets prior to the date such amounts become due. There can be no assurance that any such sale or refinancing can be accomplished at a time or on such terms and conditions as will permit the Fund to make any distributions to the investor.
Risks of Joint Ventures
Some of the Fund’s assets may be in the form of joint venture partnerships between the Fund (as either a general or limited partner or as a member of an LLC) and the seller, the Manager, Affiliates of the Manager, third-party developers, or real estate investors. Investment in entities that own assets may involve risks not otherwise present. These include risks associated with the possibility that the Fund’s co-venturer in an asset might become bankrupt, that such co venturer may at any time have economic or business interests or goals that are inconsistent with those of the Fund, or that such co-venturer may be in a position to take action contrary to the instructions or the requests of the Fund or contrary to the Fund’s policies or objectives. The Fund may relinquish control of a joint venture and the Fund may receive a disproportionate share of profits from a joint venture. Actions by a co-venturer might have the result of subjecting assets owned by the joint venture to liabilities in excess of those contemplated by the terms of the joint venture or might have other adverse consequences for the Fund.
Uninsured Losses
The Fund may not obtain insurance on all assets it acquires; provided, however, that the Fund as a general practice affirmatively obtains insurance on its underlying assets. Should a disaster or economic crisis occur to or cause the destruction or devaluation of any of our assets, the Fund could lose a portion of our invested capital and possible interest or other income from those assets. Loss of interest or other income could require us to seek additional capital to meet Fund expenses in which case our ability to pay the Preferred Return or other obligations may be materially and adversely affected which could consequently result in a partial or complete loss of the investment.
Environmental and Regulatory Matters
The value of our assets may be adversely affected by legislative, regulatory, administrative and enforcement actions at the local, state and national levels in the areas, among others, of environmental controls. In addition to possible increasingly restrictive zoning regulations and related land use controls, such restrictions may relate to air and water quality standards, noise pollution and indirect environmental impacts such as increased motor vehicle activity.
Capital Expenditures; Costs of Construction
The Manager may determine that it is in the best interests of the Fund to make Capital Expenditures. There can be no assurance that the Fund will be able to sell such assets, or that it will be able to realize sales proceeds sufficient for its purposes. Accordingly, in such event, if the Manager determines to make Capital Expenditures, it may be necessary to incur indebtedness in order to finance such Capital Expenditures. There can be no assurance that the Fund would be able to achieve sufficient capital from such sources.
Costs of construction can vary greatly from week to week and thus the Fund has a limited ability to forecast costs with true precision. Any variance may affect the return or may wipe out any and all returns expected by the Fund, or it may reduce the ability of the borrower of the Fund to repay the Fund from proceeds upon sale of the underlying real estate asset(s).
No History of Fund Operations
The Fund has only recently been formed and has no history of operations.
Reliance on Management
The Manager will have the right to make all decisions with respect to the management and operation of the business and affairs of the Fund. Although the Manager and its Affiliates have direct and substantial experience in managing partnerships and/or limited liability companies, including those investing in distressed real estate assets, there can be no assurance that this will translate into successful management of the Fund. See “Fund Management”. Under our Limited Liability Company Agreement, the Preferred Members will have no right or power to take part in the management of the Fund. Accordingly, no Person should purchase Units unless such Person is willing to entrust all aspects of the management of the Fund to the Manager. See “Fund Management”.
Bankruptcy
In the event that a borrower obligated under one or more of our distressed or non-performing real estate assets seeks bankruptcy protection under Chapters 7, 11 or 13 of Title 11 of the United States Code in United States Bankruptcy Court, no assurance can be given that we will be able to obtain clear title or lift the automatic stay applicable in connection with associated bankruptcy proceedings.
Purchase Money Obligations
Upon the sale of our assets, the Fund may take as partial payment purchase money obligations in the form of a note and deed of trust, a note and mortgage or an agreement of sale or other form of security instrument. To that extent, the distribution of the sales proceeds to the Preferred Members may be delayed until the maturity of such obligations. The Fund also would be subject to the risk that the purchaser may default in the payment or satisfaction of any such obligation to the Fund. In addition, the Members may be required to report taxable gain on the disposition of our assets without receiving Fund Distributions to satisfy any tax liabilities. See “Tax Risks”.
No Market for Units
The transfer of Units will be subject to certain limitations. Moreover, it is not anticipated that any public market for Units will develop, and the transfer of Units may result in adverse tax consequences for the transferor. Consequently, holders of Units may not be able to liquidate their investment in the Fund in the event of emergency or for any other reason, and Units may not be readily accepted as collateral for a loan. The purchase of Units, therefore, should be considered only as a long term investment.
Return of Distributions
A Preferred Member will be liable to the Fund and to its creditors for and to the extent of any distribution made to such Preferred Member if, after giving effect to such distribution, the remaining assets of the Fund are not sufficient to pay its outstanding liabilities (other than liabilities to the Members on account of their interests in the Fund).
Timing of Sale of Assets
The Manager intends to sell, exchange or otherwise dispose of our assets when the Manager, in its sole discretion, determines such action to be in the best interests of the Fund. The Manager and Preferred Members may experience a conflict of interest as to the optimum time to sell a particular asset. For example, it may, in certain instances, be in the best interest of the Manager to retain a performing real estate asset while the retention of such asset at that time may not be in the best interests, in the opinion of some, of the Fund or Preferred Members.
Exclusion from Management and Indemnification
The Manager will have sole authority for the management of the Fund. Preferred Members (investors) will have no right to participate in the Manager’s decisions or in the management of our assets. The Preferred Members are permitted to grant consent only in a limited number of circumstances. While the Manager is accountable to the Fund as a fiduciary and is obligated to exercise duties of due care, loyalty and full disclosure in handling Fund affairs, it is entitled to certain limitations of liability and to indemnity by the Fund against liabilities not attributable to its fraud, gross negligence or willful misconduct, or other breach of fiduciary duty. Such indemnity and limitation of liability may limit rights which Preferred Members would otherwise have to seek redress against the Manager. The law governing limited liability companies is a developing area and investors who have questions concerning the duties of the Manager should consult their legal counsel. See our Limited Liability Company Agreement attached as an Exhibit hereto.
Risks of Dissolution
The Manager has the right to dissolve the Fund at any time. If our assets were sold, distributions would be made to the Preferred Members in accordance with our Limited Liability Company Agreement. There can be no assurance that the Fund will not be dissolved at a time when dissolution would be adverse to the best interest of any given Preferred Member, either from a financial or tax standpoint.
Income Tax Risks and ERISA Risks to Preferred Members
The following is a brief summary of what we believe are the most significant tax risks involved in an investment by the Preferred Members in the Units. Numerous changes in the tax law have increased the tax risk and uncertainty associated with investments in limited liability companies. An unfavorable outcome with respect to any tax risk factor may have an adverse effect on an investment in the Units. The tax considerations involved in an investment in the Fund that should be significant to the Preferred Members are discussed under “Tax Risks” and ” ERISA Aspects of the Offering.” Each prospective investor is strongly urged to review the material and to discuss with his tax advisors the tax consequences to them of an investment in the Units.
RISKS ASSOCIATED WITH THE FUND AND THIS OFFERING
This Offering is not registered under federal or state securities laws
This Offering has not been registered under the Securities Act of 1933, as amended, nor registered under the securities laws of any state or jurisdiction. We do not intend to register this Offering at any time in the future. Thus, you will not enjoy any benefits that may have been derived from registration and corresponding review by regulatory officials. You must make your own decision as to investing in our Fund with the knowledge that regulatory officials have not commented on the adequacy of the disclosures contained in this Memorandum or on the fairness of the terms of this Offering. The Manager is relying upon an exemption from any SEC registration and relies upon the representations of each investor to ensure compliance with the SEC exemption so relied upon.
We lack an operating history
The Fund lacks an operating history. As a result, we are subject to all the risks and uncertainties which are characteristic of a new business enterprise, including the substantial problems, expenses and other difficulties typically encountered in the course of establishing a business, organizing operations and procedures, and engaging and training new personnel. The likelihood of our success must be considered in light of these potential problems, expenses, complications, and delays.
We cannot forecast or predict the outcome of our activities
We are dependent upon proceeds of this Offering to fund our operations. There is no information at this time upon which to base an assumption that our plans will materialize or prove successful. There can be no assurance that our planned endeavors will result in any operational revenues or profits in the future – especially if our assets prove to be commercially unprofitable. This, coupled with our limited operating history, makes prediction of our future operating results difficult, if not impossible. Because of these reasons, you should be aware that your entire Capital Contribution is at risk.
We are substantially dependent upon third parties
Although the Fund’s management (See “Key Personnel and Consultants”) have experience in buying and selling real estate and investing in distressed real estate assets, in carrying out our business plan we will be substantially dependent upon third parties retained by the Fund including, but not limited to, hedge fund Managers, realtors, mortgage bankers, surveyors, appraisers, analysts, investment advisors, accountants, money Managers, attorneys, risk Managers, statisticians, computer technicians, bankers, servicers, third party Broker Price Opinion (BPO) evaluation companies, consultants, etc. We may also enlist the services of other professionals if deemed in the best interest of the Fund. The death or continuing disability of any of these persons may have a materially adverse effect upon our ability to conduct business.
Transferability of Units you purchase will be restricted
Units offered by way of this Memorandum have not been registered with the SEC or any government’s securities authority and will be restricted and therefore cannot be resold unless they are also registered or unless an exemption from registration is available. Therefore, you should be prepared to hold the Units for at least one (1) year and perhaps even an indefinite period of time.
There is no liquidity associated with the Units
The Units will not be listed on any national securities exchange or included for quotation through an inter-dealer quotation system of a registered national securities association. The Units constitute a new issue of securities with no established trading market. Furthermore, it is not anticipated that there will be any regular secondary market following the completion of the Offering of the Units. Therefore, an investment in the Units should be considered non-liquid. In addition, no assurance can be given that the initial offering price for the Units will continue for any period of time.
We arbitrarily determined the price of the Unit and Minimum Offering Amount
The price per Unit bears no relationship to our assets, prospects, net worth, or any recognized criteria of value and should not be considered to be an indication of the actual value of the Unit or the corresponding membership interest in the Fund.
We may require future capital to continue our operations
This Memorandum sets forth our best estimates of the capital we need to pursue our initial objectives. However, this amount may prove to be inadequate. We may, therefore, permit or request significant additional Capital Contributions from either Preferred Members on a pro rata basis, the Manager, new investors on terms different from those set forth in this Offering, or from other sources. This may or may not have dilutive effect upon respective percentages of Membership Interest in the Fund.
All financial forecasts are subject to limitations
If any financial forecasts are utilized by the Fund in connection with this Offering, they have been prepared solely by the Fund’s management. Such forecasts, if any, have not been compiled or reviewed by independent accountants, and, accordingly, no opinion or other form of assurance is expressed. Because such projections are based on a number of assumptions and are subject to significant uncertainties and contingencies, many of which are beyond the control of the Fund, there can be no assurance that such projections, if any, will be realized as actual results may vary significantly from the results included. Such projections, if any, should not be regarded as a representation that the projections will be achieved, nor should the projections be relied upon in purchasing the Units offered hereby and are qualified in their entirety by the content of this Memorandum.
OTHER POSSIBLE RISKS
The foregoing represents the Fund’s best attempt to identify the various risks the Fund’ s capital may be exposed to. It does not purport to be complete and may not adequately cover all activities in which we may be engaged nor all the risks we will be subject to, either directly or indirectly, as a result of pursuing our objectives. You are encouraged and entitled to ask questions of and receive answers from the Fund’s management as to assess the merits and risks of investing in the Fund’s Units.
RISKS RELATING TO THE PATRIOT ACT, MONEY LAUNDERING, AND TERRORISM PREVENTION
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of2001 (the “Patriot Act”), signed into law on and effective as of October 26, 2001, requires “financial institutions”, a term that includes banks, broker dealers and investment companies, establish and maintain compliance programs to guard against money laundering activities. The Patriot Act requires the Secretary of the U.S. Treasury (the “Treasury”) to prescribe regulations in connection with anti-money laundering policies of financial institutions. The Federal Reserve Board, the Treasury, and the SEC are currently studying what types of investment vehicles should be required to adopt anti-money laundering procedures, and it is unclear at this time whether such procedures will apply to the Fund. It is possible that there could be promulgated legislation or regulations that would require the Fund or other service providers to the Fund, in connection with the establishment of anti-money laundering procedures, to share information with governmental authorities with respect to purchasers of Fund Units. Such legislation and/or regulations could require the Fund to implement additional restrictions on the transfer of Units. The Fund reserves the right to request such information as may be necessary to verify the identity of Preferred Members and the source of the payment of subscription monies, or as may be necessary to comply with any customer identification programs required by the Financial Crimes Enforcement Network and/or the SEC, or as may be required under any anti-money laundering legislation and regulation of the United States. In the event of delay or failure by any Unit holder to produce any information required for verification purposes, an application for or transfer of Units and the subscription monies relating thereto may be refused.
TAX RISKS
The following is a brief summary of what we believe are the most significant tax risks involved in an investment by the Preferred Members in the Units. Numerous changes in the tax law have increased the tax risk and uncertainty associated with investments in limited liability companies. An unfavorable outcome with respect to any tax risk factor may have an adverse effect on an investment in the Units. THEREFORE, NONE OF THE FOLLOWING SHOULD BE CONSIDERED TAX ADVICE FROM THE FUND, ITS MANAGEMENT, COUNSEL, ACCOUNTANTS, AFFILIATES, ETC. YOU ARE EXPECTED TO CONSULT WITH YOUR OWN PERSONAL TAX ADVISOR BEFORE MAKING A DECISION TO SUBSCRIBE FOR UNITS.
We have not obtained a tax opinion
We have not obtained an opinion of counsel as to the tax treatment of certain material federal tax issues potentially affecting the Fund or the Preferred Members. Moreover, any such opinion, if we obtained one, would not be binding upon the Internal Revenue Service (“IRS”), and the IRS could challenge our position on such issues. Also, rulings on such a challenge by the IRS, if made, could have a negative effect on the tax results of ownership of the Fund’s Units.
Tax audits are possible
The IRS has announced, and for several years has implemented, a policy which attempts to locate and select for audit the information returns of partnerships having tax loss benefits. Although we do not believe the Fund is the type that would be subject to such greater IRS scrutiny, the federal income tax information return of the Fund will still be subject to audit. If the Fund’ s information return is audited, such audit may cause corresponding adjustments to, and may increase the probability of an audit of, a Preferred Member’s federal income tax return. If such audits occur, no assurance can be given that adjustments in the tax treatment of certain items of deduction or credit will not be made, or that certain items of deduction or credit will not be disallowed. Any such adjustments could increase the probability of audits of a Preferred Member’s personal return, which, in tum, could result in adjustments of any items of income, gain, loss, deduction, or credit included in your personal return, regardless of whether or not those items relate to the Fund.
Tax laws are subject to change
Tax laws are continually being introduced, changed, or amended, and there is no assurance that the tax treatment presently potentially available with respect to the Fund’s proposed activities will not be modified in the future by legislative, judicial, or administrative action. Proposals having an adverse tax impact on our activities could be adopted by Congress at any time, and such proposals could have a severe economic impact on us.
Passive Activity Rules
Any Fund losses will be treated as losses generated in a passive activity. Losses from passive activities generally may only be deducted against income from the same or other passive activities.
Tax Liabilities in Excess of Cash Distributions
Each Fund Member will be required to pay federal and state income taxes at his individual rate on his allocable share of the Fund’s taxable income. No assurance can be given that cash will be available for distribution or will be distributed at any specific time. Gene rally, the allocation of revenue is likely to be disproportionate to distributions to the Members. Therefore, distributions may be insufficient to pay income taxes with respect to allocations in a particular fiscal year. Accordingly, there is a risk that the Members will incur tax liabilities resulting from an investment in the Fund without receiving cash from the Fund in an amount sufficient to pay for any part of that liability.
Reduction in Tax Basis
Cash distributions by the Fund to a Preferred Member will result in taxable gain to the Preferred Member to the extent those distributions exceed the Preferred Member’s basis for his Unit. Initially, a Preferred Member’s basis for his Unit will be the amount of his cash contributions to the Fund increased by the portion of any Fund indebtedness for which that Member may bear the burden of economic loss.
Unrelated Business Taxable Income
Organizations generally exempt from federal income taxation (including qualified pension, profit-sharing and stock-bonus plans, Keogh plans and individual retirement accounts (IRAs)) may be taxable on their allocable share of Fund income to the extent such income constitutes ” unrelated business taxable income” (“UBTI”). Real estate rental income and gain on the sale of real property is generally not included in UBTI. However, a portion of the rental income from real property and gain upon sale of such real property may be treated as UBTI if the property is subject to “acquisition indebtedness.” Such portion is approximately equal to the ratio of the acquisition indebtedness to the aggregate basis of the property. Tax exempt entities, other than IRAs, may qualify for an exception that would allow them to avoid the recognition of UBTI if the Fund meets certain disproportionate allocation rules; however, it is unclear whether the Fund satisfies these rules, and therefore all tax-exempt entities may be required to recognize UBTI by reason of their investment in the Fund. The receipt of UBTI by a charitable remainder trust results in taxation of all trust income for the taxable year, and therefore this is not a suitable investment for a charitable remainder trust.
Risk of Characterization
The IRS could characterize a particular investment to be or consist of property held primarily for sale to customers in the ordinary course of business of the Fund. Under such characterization, any gain recognized by the Fund on the sale of the investment would be ordinary income and any loss on such sale would be ordinary loss.
Factual Determinations
The determination of the correct amount of certain deductions and their availability and timing to the Fund depend on factual determinations to be made by the Fund. Counsel for the Fund has specifically declined to give an opinion on such matters. Although the Fund will exercise its best judgment regarding the facts when preparing the Fund’s information return, the IRS may assert that the Fund’ s judgment of the facts is not correct, which could result in the disallowance or deferral of deductions in whole or part. Such adjustments could result in the assessment of additional tax liability to the Members.
Changes in the Tax Law
Significant changes have been made in the Code in recent years. The Treasury Department’s position regarding many of those changes remains unclear pending publication of interpretive and legislative regulations, some of which may not be forthcoming for some time. Additionally, the Code is subject to change by Congress, and existing interpretations of the Code may be reversed, modified or otherwise affected by judicial decisions, by the Treasury Department through changes in its regulations, and by the IRS through its audit policy, announcements and published and private rulings. No assurance can be given that any changes in the tax law will be given only prospective application to the Fund or its Members.
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF THE RISKS AND OTHER FACTORS INVOLVED IN THIS OFFERING. PROSPECTIVE PREFERRED MEMBERS SHOULD CONSULT WITH THEIR OWN LEGAL AND/OR FINANCIAL ADVISORS IN ADDITION TO READING THIS ENTIRE MEMORANDUM BEFORE DECIDING TO INVEST IN THE FUND’S UNITS.