A Letter from Matt Smith, Chairman of Royalty Flow
November 27, 2017
Dear Potential Shareholder,
Welcome to the IPO of Royalty Flow, an exciting new company designed to acquire royalty generating catalogs of music and other types of media… and provide investors a chance to participate in the accelerating growth streaming has brought to the music industry.
Our first acquisition is a portion of the FBT producer royalties from Eminem’s recording catalog from 1999-2013. (FBT stands for Funky Bass Team, which is the name of Jeff and Mark Bass' production company.)
Imagine your investment benefiting every time someone streams an Eminem song, downloads an album, or buys a CD of his music within that timeframe. And even though Eminem didn’t release any new music in 2016, the catalog’s revenue grew 43% last year.
That's the thing... royalties from intellectual property are one of the most interesting income investments around. You buy or create an asset once and then get paid every time it's used.
For reasons I’ll explain in a moment, we believe this catalog is set up to benefit greatly from the macro trends in the music industry.
The Beginning of a Bull Market in Music?
I’m not sure if you’re one of Spotify’s 60 million paid subscribers or one of Apple Music’s 30 million subscribers… but if you are, you’ve witnessed the beginning of the music industry’s transformation. Frankly, we believe that the music industry is in the early stages of a bull market that hasn’t been seen since the invention of CDs.
And that’s not just us talking our book, Goldman Sachs believes that paid streaming revenue will grow by 833% by 2030.
And we expect that the Eminem catalog will benefit from the growth of streaming. In fact, Eminem is the 12th most streamed artist in 2017 to date. So far this year:
- Eminem has sold more songs than the Beatles.
- Eminem has had more streams than Beyonce and Adele.
- And he’s sold more albums than Led Zeppelin, Prince, and The Rolling Stones.
Please read this letter carefully… because I’ve outlined the details on how you can participate in this historic event.
What is Royalty Flow and How Can You Benefit?
We’ve created a new company called Royalty Flow that plans to acquire royalty interests in world-class media assets. We’re using Regulation A+ of the JOBS Act to raise capital for this purpose, so that any investor can participate in this initial public offering.
This is a unique opportunity for investors to earn dividends from one of the most iconic assets in the world.
As operators of the online exchange for music royalties, we believe that these assets, with a strong track record of royalty income, are undervalued right now—and present an opportunity for investors like you.
And of course, I’ll tell you all about the first asset that Royalty Flow will buy.
Let's start there…
Why Are We So Excited about the Eminem Catalog?
The first acquisition that Royalty Flow will make is a passive interest in the FBT producer royalties from Eminem's body of work between 1999 and 2013. Royalty Flow’s parent company, Royalty Exchange, already executed an option to acquire the catalog, and will transfer ownership once the IPO process is complete.
For us, the opportunity to acquire a piece of an iconic artist's catalog is an opportunity too good to pass up.
The total revenue earned by this catalog grew 43% from 2015 to 2016, and that growth was driven by streaming. As of mid-year 2017, the catalog’s earnings grew 39% over the last half of 2016. And streaming income generated about $2 million in the first half of 2017 vs. $2.3 million for ALL of 2016. And Eminem is expected to drop a new album any week now. New music from any artist often drives interest and consumption of older work.
In a moment, I’ll explain more about these music industry macro trends and how we could benefit.
Right now, I’d like to share some of the reasons we’re delighted to have this world-class catalog as part of Royalty Flow’s IPO:
- Eminem was named “Billboard's Artist of the Decade” for 2000–2010.
- He's been nominated for 43 Grammy Awards and won 15, including six for Best Rap Album.
- He won an Oscar for Best Original Song with “Lose Yourself.”
- He was ranked by Rolling Stone and VH1 as one of the 100 Greatest Artists of all time.
- So far in 2017, Eminem is the 12th most streamed artist in the world. And he hasn't released an album in 4 years.
- Eminem is one of the best-selling artists of all time, with 10 No. 1 albums and five No. 1 singles.
- He is the second best-selling male artist of the Nielsen SoundScan era.
- He is the best-selling hip-hop artist ever.
- Globally, he has sold more than 172 million albums.
- And the ultimate sign of a great artist: long-term relevance. This catalog has three albums currently charting on the Billboard 200 that are among the top 20 longest-charting albums in history. One album, Curtain Call, was named the longest-charting hip-hop album of all time by Billboard.
[Note: Eminem is not directly involved. Royalty Flow and Royalty Exchange are working with his former producers, FBT Productions, who earn royalties on a portion of Eminem’s catalog.]
The FBT Portion of Eminem’s Catalog Includes Royalties From:
- All of Eminem’s albums from 1999’s Slim Shady LP up to and including 2013’s Marshall Mathers LP 2.
- Eminem’s side projects, including works with Jay-Z, Akon, Tupac, 50 Cent, and others.
- All of Eminem's music videos from the work he released from 1999–2013.
Financial Highlights of this Catalog
It’s not surprising that a catalog made up of all the musical works of a major artist like Eminem would be lucrative, but here are a few important financial details:
- The catalog’s royalties grew by 43% from 2015 to 2016, even though Eminem hasn’t released a new album since 2013.
- Great catalogs should be generating higher and higher levels of royalty income as streaming subscriptions increase. This catalog certainly is.
- The catalog is very diversified—the top 20 songs generate only 27% of the catalog's total earnings. Unlike many assets, this catalog doesn’t rely on one massive hit to make money.
You now have the opportunity to invest in this catalog via Royalty Flow’s IPO. Early investors will be able to get into this company at the ground floor. Before we dive into our growth strategy, you need to understand more about the Bass brothers...
The Story of FBT and Eminem
One night in 1992, Mark Bass, who together with his brother Jeff Bass, make up the Funky Bass Team (FBT Productions), discovered a young rapper freestyling on a local radio show. Impressed by this rapper's talent and potential, the brothers signed the young artist—soon to be known to the world as Eminem—and in 1996 released his first album Infinite to critical dismay... the album sold less than 100 copies.
Mark and Jeff continued to nurture and support Eminem as he developed the alter ego "Slim Shady." Both exceptional musicians, they crafted catchy tracks without using samples (a common practice in the hip-hop world), and instead played all the instruments themselves. Once they released his breakthrough album the Slim Shady EP in 1997, the brothers continued to work with Eminem, co-writing and/or producing most of his acclaimed recordings and hits through the release of Curtain Call. They've won several Grammys and an Academy Award for Best Original Song with “Lose Yourself” from the film 8 Mile.
And then FBT Productions paved the way for a groundbreaking 9th Circuit Court of Appeals decision in 2011, affirming that payments from digital exploitation of the Eminem recordings were subject to the much higher 50/50 licensing provision in their contract with Universal Music Group. Now, for the first time, a portion of FBT's ongoing royalty interest from the catalog of Eminem's recordings from 1999-2013 is being made available to investors.
Key Financial Facts on the FBT Eminem Royalties:
Streaming royalties from the catalog grew 76% from 2015 to 2016, and another 39% in the first half of 2017 over the last half of 2016. The catalog has generated more than $82 million in royalties since 1999.
Royalty Flow intends to buy the 25% of the FBT royalties already acquired by parent company Royalty Exchange. Shareholders can earn dividends based on the future performance of the Eminem royalties..
Before we dive into the detailed financials of the catalog, let's talk more about music royalties...
Why You Should Consider Music Royalties as Part of Your Portfolio
Why royalties are one of the best alternative assets:
You probably know that alternative investments can be an important part of a broader portfolio. Alternative investments offer the potential of low correlation to traditional investments like stocks and bonds. They often have the potential to generate income as well.
When you add alternative investments to a portfolio you get a significant diversification benefit over time. The goal and result can often be better risk-adjusted returns.
But typically when investors seek out alternative investments they have very few options and those almost never include what we think are the most direct alternative investments available: IP-derived royalty income.
Let me explain how these assets work. Then, I think you’ll agree with me that these are interesting and exciting assets.
Focusing on music royalties, here’s how rightsholders get paid.
The owners of royalty rights are paid based on: streams, downloads, physical album sales, and other usages. In essence, consumption of music drives royalty payments.
And music consumption doesn’t necessarily change when interest rates go up or when stock market sentiment turns bearish, the way other investments can.
In addition, royalties:
- can earn consistent cash flow
- are long-term assets (royalties are paid for the life of the artist + 70 years)
- have relative price, or NAV (Net Asset Value), stability
- have the potential for capital appreciation—especially now
Why Invest in Music Royalties Now
We believe that now is a good time to invest in music royalties because the music industry may be in the beginning of a major bull market. Our hypothesis is that music assets are climbing out of a long, brutal bear market.
For the last 15 years, we believe the industry has been the victim of:
- disaggregation of music from physical albums to digital singles
- mispricing/undervaluation due to lack of transparency
And you can see the results of that bear market in the chart below. But notice one thing... the industry started growing again in 2015.
At Royalty Flow, we're confident we’ve only seen the start of that recovery and we’re not the only ones.
The reason? The rise of digital streaming.
Subscriptions to digital streaming services like Spotify, Apple Music and Pandora have been a game changer for the industry.
Streaming Is Growing Faster Than Anyone Expected
Music streaming generated approximately $3.9 billion in 2016, according to trade group IFPI. In December 2016, Goldman Sachs projected streaming revenues to grow to about $14.1 billion by 2030.
But, streaming is growing faster than anyone expected.
According to an August 2, 2017 Business Insider analysis, “[Spotify] managed to increase its user growth rate as its subscriber base grew. The music streaming service added 10 million subscriber additions in roughly four months, faster than the approximate six months it took to go from 40 million subscribers to 50 million.”
With facts like these, just eight months after Goldman Sachs estimated streaming would get to $14.1 billion by 2030, they revised the forecast.
In fact, they doubled it to $28 billion.
We believe, because of streaming, music is about to enter a long bull market that will cause the tide to rise for rightsholders … and especially for owners of trophy assets like the Eminem royalties.
Here's Why the Industry Growth in 2015 and 2016 Is Just the Beginning...
Every single smartphone owner has a portable music player in their pocket. And streaming is the most convenient and inexpensive way for consumers to get all the music they want. For the price of just one CD per month, Spotify and Apple Music users can stream millions of different songs. The mere convenience of streaming from your phone makes all the difference.
- Music industry trade group IFPI reported 112 million paying subscribers to music streaming services at the end of 2016. That’s about 3% of the 4 billion smartphones worldwide.
- Goldman Sachs analyst Lisa Yang predicts 14% of global smartphone users will subscribe to music services by 2030, raising her previous estimate of 9%.
And the Future Goes beyond the Smartphone
When I was a kid, I wanted a stereo in my room. Today’s kids want a smart speaker like the Alexa—powered Amazon Echo. My 10 & 12-year-old kids use it every day to play their favorite music. I have 4 echo devices in my home right now and I can tell you, they’re amazing.
These devices aren’t just popular with my family. If Goldman Sachs is right, the rise of smart speakers and connected cars could contribute up to $8 billion in additional revenue to the music industry by 2030.
Amazon’s Echo speaker line is expected to ship 10 million units in 2017. A similar device from Google called Google Home is growing in popularity, and Apple will release the HomePod this December.
Direct Access to The Music Industry’s Growth
Although the growth in the music business has attracted a lot of attention, there is no pure play way to invest.
The major record labels and music publishers are not stand-alone public companies, so investors who want to participate in that growth have no direct way to do so. Sony Music contributes less than 10% to the broader Sony conglomerate, and Universal Music Group is tied up among Italian telecoms within Vivendi.
Until now. Royalty Flow is a unique opportunity for investors to gain direct exposure to the music industry’s growth through cherry-picked premium royalty streams.
When people think of music royalties, they typically think of the big-name artists. But, there’s actually an entire ecosystem of contributing songwriters, producers, and other artists behind every hit song. This rightsholder ecosystem consists of hundreds of thousands of people.These individuals don’t have the same financing options as the celebrities they support, who can simply go on tour or sign endorsement deals.
Royalty Exchange and Royalty Flow offer a new opportunity for these rightsholders--flexible financing arrangements that give rightsholders control over how much they want to make available to investors, how much to retain, and the ability to retain their copyright.
This is a first for the industry, but not without precedent.
The Royal Gold Case Study
In a nutshell, Royalty Flow aims to be the Royal Gold (RGLD) of media royalties. Royal Gold acquires and manages precious metal streams, royalties, and similar interests. It helps gold mines finance their projects in exchange for a royalty on every ounce of gold taken out.
The company hit an inflection point in the 1990’s when they acquired a royalty interest in a marquee asset launching an efficient royalty-based business model. Today, Royal Gold has a market cap of about $5.8 billion, but just 23 full-time employees.
Royalty Flow’s approach is as novel today as Royal Gold’s was in the late 1990’s. Royalty Flow seeks to take passive interests in great assets... exactly like the first transaction with a portion of FBTs Eminem catalog.
Like precious metals in the early 2000’s, music royalties are coming out of a brutal bear market. We believe that the music industry is on the cusp of a major bull market, led by the impressive growth of on-demand streaming. If we’re right, our unique approach couldn’t come at a better time.
Royalty Flow is designed to put shareholders closer to where value is created within the growth of the music business. That means acquiring assets with the potential to generate 8-16% returns, while also keeping costs low. By not owning the copyright and instead partnering with great managers/operators, Royalty Flow doesn’t have to take on the overhead costs that are required for labels and publishers.
Royalty Flow can then continue to buy great assets and grow free cash flow per share. It intends to return capital to shareholders through dividends, the first of which we expect to pay within the first 12 months, with a commitment to growing them over time.
This is new in the music and media space, and this is a great time for it. But this isn’t the first company to do this. This business model has existed within the resource space for decades. Companies like Royal Gold have similar criteria, and have grown its business to a $5.5 billion market cap with only 23 employees.
How it works
Royalty Flow is conducting what’s called a “mini IPO” using Regulation A+ of the JOBS Act. This allows any investor to participate, not just accredited investors, but caps the amount raised at $50 million.
On top of the standard Regulation A+ disclosures, Royalty Flow is holding itself to higher standards. That’s because once the Regulation A+ equity offer is over, Royalty Flow intends to list directly to NASDAQ. This gives shareholders liquidity in an active marketplace.
Royalty Flow has attracted three industry veterans to spearhead its independent board of directors. This consists of:
- a lawyer who has managed household-name artists since the 80s and was the co-founder of SoundExchange.
- An audit partner from Deloitte with over 20 years of experience in public accounting.
- And an expert on securitizations who previously spent time with Deutsche Bank.
This combination of income-focused investment strategy, aligned with the interests of shareholders, and a low-cost/capital-efficient structure makes Royalty Flow one of the most unique and interesting investment opportunities today.
How Royalty Flow Will Create Value for Shareholders
By this point, I hope you understand that we believe the music industry is poised to experience a historic recovery and bull market. We expect, but can’t guarantee, that high-quality royalty assets like the Eminem royalties will benefit greatly from the coming bull market in music.
But I wanted to take a few minutes to talk about how you can benefit from investing in Royalty Flow. Royalty Flow is a specialty financing company that acquires and manages media royalty assets.
There are 3 things you should know about Royalty Flow.
- We’ll focus on paying dividends and we intend to grow the dividend over time.
- We’ll acquire assets that we believe have the potential for capital appreciation. We’re looking for boats that will rise with the industry tide.
- And we’re doing this in a capital efficient structure that should have a lower cost base which allows us to reward shareholders.
Let’s consider each of these points in order...
Focus on Paying and Growing the Dividend
We believe that companies that consistently pay and grow their dividends show a deep commitment to their shareholders. That’s why we intend to consistently pay and grow our dividend.
“Dividends have been a major component of the stock market’s overall total returns throughout history. Dividends have contributed anywhere from 25% to 75% of the market’s overall total return over the past seven decades” - Brian Bollinger
So we intend to pay dividends to put money in your pocket and grow those dividends over time.
We intend to pay our first dividend next year and intend to grow this dividend each year as we acquire more income-producing royalty assets.
The Potential for Capital Appreciation
We believe that we’re only at the beginning of the music industry’s rebirth. As streaming becomes more popular, we expect to see the value of music royalty assets increase.
We could be wrong, but we expect that iconic assets like Eminem’s royalties will be worth more in the future than they are currently.
Royalty Businesses are Capital Efficient
The nice thing about royalty businesses is that they are generally very capital efficient. Capital efficiency is the measure of how much a business has to reinvest in order to maintain or grow revenue. So in highly capital efficient businesses, as sales grow, the amount of capital that must be reinvested doesn’t grow or grows at a slower rate.
So with a capital efficient business, as sales and profits grow, capital investments don’t.
We intend to be a very capital efficient business. Our major expenses will likely be listing on a public exchange and professional fees. As we acquire royalty streams, we believe we’ll collect the royalties without having to make substantial ongoing capital expenditures.
We expect that will allow us to reward shareholders.
After the IPO closes, we intend to list Royalty Flow on the NASDAQ, the same national exchange where Facebook, Amazon, and other tech companies trade. If we cannot get listed on the NASDAQ to start, we'll be listed on the over the counter (OTC) markets until we uplist. Either way, after the IPO, we believe that shareholders will have liquidity.
As you know, we intend to start by acquiring the Eminem catalog but we intend to acquire additional royalty streams. Here's how we're going to think about new acquisitions...
The Four Pillars of Our Royalty Acquisitions and Operations
Our criteria for new royalty acquisitions include:
1. A Track Record of Royalty Income
The first thing we look at when making a royalty acquisition is: does the asset have a track record of earning royalty income? Royalty Flow does not plan on speculating on unproven artists or catalogs. We’re looking for assets with earnings history that we expect will generate substantial income in the future.
Our first acquisition, FBT’s Eminem catalog, has a long track record of earning royalties… and we believe that those earnings will continue.
2. Capital Appreciation Potential
We agree with Goldman Sachs when they say: "Streaming services are poised to drive a second and more profitable 'digital revolution' in music after more than a decade of value destruction from piracy and unbundling." With that in mind, when we evaluate potential royalty acquisitions, we’ll keep an eye towards the future and seek to buy assets that have high potential for capital appreciation.
Subscription streaming has transformed the music business and we expect that streaming will drive growth. In 2015, the industry grew for the first time in 15 years. We believe that we’re only in the first inning of the bull market for the music business. Therefore we believe that many of these assets have high potential for capital appreciation.
3. Passive Interests Only
We plan to acquire non-operating interests in great IP. Since we’re not acting as a record label or publisher, we expect it will keep our cost base lower and will allow us to reward shareholders. We’ll allow owners of great assets to take some money off the table but still maintain a substantial economic interest.
That will allow us to acquire great assets that other players in the space can’t profitably buy because of their overhead. And frankly, as investors, you probably only care about generating great returns. We believe that the best way to do that is to get as close to owning the underlying royalty asset as possible.
Royalty Flow offers an option to owners of great assets that others can’t match and we’ll keep our interests aligned with the IP owners we partner with.
4. Established Operating Partners
Since Royalty Flow intends to only acquire passive interests in royalty streams, we must partner with excellent active operators.
We’re looking for operators of assets that have a track record of great stewardship. FBT has been an excellent steward of the Eminem royalties. They’ve demanded consistent earnings audits. They’ve unlocked additional value by vigorously protecting their rights against infringement. They’re a great operating partner for us.
But identifying great operating partners isn’t enough, we must also ensure that our interests are aligned with the operators. We plan to do this by creating shared incentives and putting equal treatment clauses in our agreements.
These four criteria will drive our operating strategy going forward.
Since our first pillar is a track record of royalty earnings, let's talk about the royalty payment history of the FBT Eminem catalog.
The Eminem Royalties Grew 43% Last Year, Here’s What Else You Should Consider…
Royalty Flow parent company Royalty Exchange has acquired 25% of the royalties.
Here’s what 25% of this catalog has earned over the last seven years (audited):
Here are the average earnings per year over a few different time periods for this catalog (audited):
Keep in mind that historical results are not indicative of future performance. Royalty Flow is not entitled to any of the historical payments.
Full Catalog Earnings by Year
Part of the reason for starting Royalty Flow was because, as an investor, I recognized how valuable royalty companies and/or royalty income streams can be. The best part about royalty deals is that after you acquire the royalty, you don’t have to spend any more money on that royalty.
Over the last few years, publicly traded royalty businesses have popped up in a number of industries, as we noted earlier in the form of Royal Gold. And the results have been excellent for shareholders:
As you can see, investors who acquired IPO shares in these royalty companies did extraordinarily well.
Of course, there is no guarantee that investors in Royalty Flow will achieve similar returns.
Royalty Flow intends to use this tried and true model and simply applies it to a new industry... an industry that we believe is in the early stage of recovery after more than a decade of bad news.
What to Do Next If You’re Interested
Starting today, you’ll be able to participate in the Royalty Flow IPO.
To recap, this is the opportunity to get in early with a company that plans to acquire royalties from the world-class Eminem catalog. As an IPO investor, we expect you’ll be able to earn dividends based on the royalties collected.
That means once the Royalty Flow IPO closes, you will have already gained an interest in one of the most iconic music assets in the world. What’s more, your initial investment will grant you an interest in any future royalty acquisitions Royalty Flow undertakes going forward.
Here Are the Terms of the Royalty Flow IPO
The summary below highlights key terms of the Royalty Flow IPO. It does not contain all of the information that may be important to you. Please read our Offering Circular for full details.
Shares in Royalty Flow are priced at $7.50 per share.
We’re seeking to raise a minimum of $11,000,000 and a maximum of $50,000,000.
The minimum investment amount is $2,250. (300 shares)
The IPO shares are Class A common stock. Each share has 1 vote. Royalty Exchange owns all of the Class B common stock, which has 10 votes per share.
Dividend Policy: We intend to pay a growing and sustainable cash dividend derived from available cash received from the royalty interests we acquire.
Use of Proceeds: We intend to use $18,750,000 to acquire the 25% interest from Royalty Flow parent company Royalty Exchange.
We intend to use any remaining net proceeds from this IPO for general corporate purposes, which may include working capital, general and administrative matters, and the acquisition of additional Royalty Interests.
Here are the steps to participate in this IPO…
To reserve your Royalty Flow shares:
Open an account with Folio Investing by clicking here.
- There is no fee for opening an account or buying IPO shares.
- You must have a Folio account to invest in Royalty Flow, and we expect Folio to be the only broker-dealer authorized to make shares available.
- The process takes about 5 minutes - you’ll provide everything that is needed to make sure shares you reserve are held in the proper name.
Fund your Folio account by ACH, bank wire, or check.
- There’s a secure wizard for each method that makes sure you can fund your account easily.
We encourage you to get started, since it can take several days for the funds to appear in your new account.
If you need any further assistance with your Folio account, feel free to contact Folio’s customer service desk.
Once the offering is filled, we’ll close access and you may never be able to buy shares at the IPO price.
If you have any questions, please contact us.
The content above contains forward-looking statements that are subject to risks, uncertainties and assumptions. All statements addressing events or developments that Royalty Flow expects or anticipates will occur in the future, including but not limited to, the success of its offering campaign, listing on a securities exchange and development of a market for its securities, and its business strategy, including acquiring future royalties. Because they are forward-looking, they should be evaluated in light of important risk factors and uncertainties, all of which are outlined in the company’s offering circular. Except as required by law, Royalty Flow disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in the content above.
The offering will be made only by means of an offering circular. An offering statement on Form 1-A relating to these securities was filed with the Securities and Exchange Commission and was qualified on Nov. 22, 2017. You may obtain a copy of the offering circular contained in the offering statement at the following link: https://www.sec.gov/Archives/edgar/data/1709847/000147793217005825/royalty_253g2.htm.
You should read the offering circular before making any investment.
The content above shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No money or other consideration is being solicited at this time with respect to such an offering, and if sent in response to these materials for such an offering, it will not be accepted. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. An indication of interest made by a prospective investor in a Regulation A offering is non-binding and involves no obligation or commitment of any kind.
Our offering statement and any statements related to Marshall Mathers, aka Eminem, have not been approved or endorsed by Marshall Mathers.
The securities to be offered will be highly speculative. Investing in shares of Royalty Flow will involve significant risks. Investment will be suitable only for persons who can afford to lose their entire investment. Furthermore, investors must understand that such investment could be illiquid for an indefinite period of time. No public market currently exists for the securities, and if a public market develops following the anticipated offering, it may not continue.
Due to state Blue Sky laws and timelines, residents of Michigan must wait until after Dec. 4, 2017 to reserve shares. Residents of Colorado, Iowa, Kentucky, Maine, Washington, and Wyoming can reserve shares immediately, but must wait until after Dec. 14, 2017 before any shares they reserve can close.
Purchasers of our Class A Common Stock may be limited in their ability to sell shares of our Class A Common Stock (a secondary sale) to any person in any jurisdiction where applicable state securities laws (Blue Sky Laws) prohibit or limit such sale.