# EDGAR Filing Document

**Accession Number:** 0001860541
**File Stem:** 0001644600-23-000005
**Filing Date:** 2023-1
**Character Count:** 175973
**Document Hash:** 93e48db7aca9e8a2f42b2653dc82ea70
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001644600-23-000005.hdr.sgml**: 20230113

**ACCESSION NUMBER**: 0001644600-23-000005

**CONFORMED SUBMISSION TYPE**: C

**PUBLIC DOCUMENT COUNT**: 6

**FILED AS OF DATE**: 20230113

**DATE AS OF CHANGE**: 20230113

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sweater Inc
- **CENTRAL INDEX KEY:** 0001860541
- **IRS NUMBER:** 843533146
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** C
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 020-31609
- **FILM NUMBER:** 23528354

**BUSINESS ADDRESS:**
- **STREET 1:** 520 MOUNT RAINIER STREET
- **CITY:** BERTHOUD
- **STATE:** CO
- **ZIP:** 80513
- **BUSINESS PHONE:** 435-764-7836

**MAIL ADDRESS:**
- **STREET 1:** 520 MOUNT RAINIER STREET
- **CITY:** BERTHOUD
- **STATE:** CO
- **ZIP:** 80513

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Sweater LLC
- **DATE OF NAME CHANGE:** 20210504

### Attached PDF Documents

**Attachment 1:** `SweaterOMandFinancials.pdf`

OFFERING MEMORANDUM DATED January 11, 2023

![img-0.jpeg](img-0.jpeg)

**Sweater Inc.**  
520 Mount Rainier St.,  
Berthoud, Colorado 80513  
www.sweaterventures.com

**Up to $5,000,000 of SAFE Notes and shares of Preferred Stock into which they may convert.**

**Minimum Investment Amount: $1,000**

Sweater Inc., is offering up to $5,000,000 worth of SAFE Notes and the shares of preferred stock into which they may convert into. The investment will be made through Sweater Inc Community SPV1, LLC, a special purpose investment vehicle exempt from registration under the Investment Company Act pursuant to Rule 270.3a-9 promulgated under that Act (the “Crowdfunding SPV”). The minimum target amount under this Regulation CF offering is $25,000 (the “Target Amount”). The company must reach its Target Amount of $25,000 by March 31, 2023. Unless the company raises at least the Target Amount of $25,000 under the Regulation CF offering by March 31, 2023, no securities will be sold in this offering, investment commitments will be canceled, and committed funds will be returned.

**A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.**

In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

This disclosure document contains forward-looking statements and information relating to, among other things, the company, its business plan and strategy, and its industry. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to the company’s management. When used in this disclosure document and the company offering materials, the words “estimate”, “project”, “believe”, “anticipate”, “intend”, “expect”, and similar expressions are intended to identify forward-looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the company’s action results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements to reflect events or circumstances after such state or to reflect the occurrence of unanticipated events.

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*In the event that we become a reporting company under the Securities Exchange Act of 1934, we intend to take advantage of the provisions that relate to “Emerging Growth Companies” under the JOBS Act of 2012, including electing to delay compliance with certain new and revised accounting standards under the Sarbanes-Oxley Act of 2002.*

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# TABLE OF CONTENTS

| THE COMPANY AND ITS BUSINESS | 6 |
| --- | --- |
| RISK FACTORS | 9 |
| DIRECTORS, EXECUTIVE OFFICERS, AND EMPLOYEES | 15 |
| OWNERSHIP AND CAPITAL STRUCTURE | 17 |
| USE OF PROCEEDS | 18 |
| FINANCIAL DISCUSSION | 18 |
| RELATED PARTY TRANSACTIONS | 19 |
| RECENT OFFERINGS OF SECURITIES | 19 |
| SECURITIES BEING OFFERED AND RIGHTS OF THE SECURITIES OF THE COMPANY | 20 |
| DILUTION | 26 |
| REGULATORY INFORMATION | 28 |
| INVESTMENT PROCESS | 29 |

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*In this Offering Memorandum, the terms “Sweater”, “we”, “us”, “our”, or “the company” refer to Sweater, Inc. and our subsidiary, Sweater Industries LLC, on a consolidated basis. The terms “Sweater Industries” or “our registered investment advisor” refers to Sweater Industries LLC.*

## THE COMPANY AND ITS BUSINESS

### Overview

Sweater Inc. is a C Corporation and was originally registered on October 28, 2019 under the name Sweater LLC, and converted to a Delaware corporation on January 18, 2022. The purpose of the company is to manage and operate the Sweater Cashmere Fund (the “Cashmere Fund” or the “fund”), a closed end interval fund through its subsidiary, Sweater Industries LLC, a Registered Investment Advisor.

The company’s headquarters are in Berthoud, Colorado and began operation in April 2021.

The SPV, Sweater Inc Community SPV1, LLC was recently organized and has no purpose other than to hold the securities to be issued by the company and pass through the rights related to those securities. Investments in this offering will be made through Sweater Inc Community SPV1, LLC, a special purpose investment vehicle exempt from registration under the Investment Company Act.

### Our Mission

Sweater Inc. is a fintech company that aims to democratize access to venture capital by opening the venture capital asset class to the general public.

Sweater’s vision is to pool money from millions of regular people into a world-class venture fund, wisely deploying that capital into startups that shape the world we live in. Our belief is that every founder should be able to build their vision, and every person should be able to support the startups that create the next generation of influence and wealth.

### Our Business

Through our registered investment advisor, we operate and manage a venture fund, the Cashmere Fund. Venture funds are generally funds that allow accredited investors to invest in private companies. Through our mobile app, retail investors are able to invest alongside accredited investors.

Sweater acquires investors through direct to consumer channels to invest into its fund via its mobile app. Pricing is tied to management fees associated with AUM (assets under management) at the annual rate of 2.50% of the average daily net assets of the fund. Additional funds may be added to the ecosystem in the future as the initial fund gains sufficient traction.

### Our Competition

Sweater operates within a unique niche in between venture capital funds and publicly offered funds. Retail consumers cannot place money into traditional VC funds, so from their perspective Sweater competes with alternative investing options such as mutual funds and real estate. On the investing side, we do compete directly with other VC funds for the best opportunities. Our barriers to entry include our unique technology stack that enables us to act at scale, our proprietary deal flow, and our engaged community.

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## Market Overview

The venture capital asset class raised over $128B in 2021 and over $150B in 2022 so far through September. While that money and impact is substantial, the venture capital funds that raise those dollars can only do so from fully accredited investors and qualified purchasers. We believe that Sweater is one of the first venture capital fund that allows anyone to invest, regardless of accreditation status. As of November 14, 2022, the Sweater Cashmere Fund, which is Sweater Inc.'s flagship fund, has over 5,000 Members and has already raised over $10M and has invested in 15 startups and 3 VCs funds. The company has subsequently invested in 2 additional entities. Sweater has over 75,000 other individuals throughout its ecosystem as prospective members on the app, in email nurturing groups, and on its social channels.

## Highlights & Milestones

- In April 2022, the registration for our fund was declared effective by the SEC after an 11 month long application process.
- In June 2022, our mobile app was launched publicly and has since acquired over 17k account holders, and 5000 members who have invested into the fund.
- To date, our fund has made 22 investments (including two follow-on investments).

## Employees

The company currently has 30 full-time employees and no part-time employees.

## Regulation

Both the Sweater Industries LLC and the Sweater Cashmere Fund are regulated entities. Sweater Industries LLC is a registered investment advisor, and the fund is non-listed Delaware statutory trust that is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed-end management investment company that operates as an "interval fund."

As they are regulated entities we need to comply with SEC rules, including audit requirements as well as ongoing licensing in order for its subsidiary to maintain its status as a registered investment advisor and ongoing reporting requirements for the fund with the SEC including monthly reports, annual reports and certain ongoing updates (e.g., filings related to beneficial ownership, etc.). The advisor also has stringent requirements to make sure that the fund is able to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the "Code"), including the requirements that fund distribute at least 90% of its annual net taxable income, if any, to its shareholders.

## Intellectual Property

Sweater holds a pending trademark application for its name and a variety of sub-categories, including those related to its advisor and fund.

## Litigation

The company is not involved in any litigation, and its management is not aware of any pending or threatened legal actions relating to its intellectual property, conduct of its business activities, or otherwise.

## Property

The company leases property at the building its headquarters are located. It currently has a two year lease ending in May 2023. See Note 6 of its Financial Statements.

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## Due Diligence

Due diligence by CrowdCheck, Inc.

![img-1.jpeg](img-1.jpeg)

## RISK FACTORS

The SEC requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

*These are the risks that relate to the company:*

**Our company is new and has limited operating history.**

The company was formed as an LLC in 2019 and converted to a Delaware corporation in 2022. We have limited business operations and it is unclear at this point which, if any, of our current and intended plans may come into fruition and, if they do, which ones will be a success. The company has incurred a net loss and has not generated any revenue since inception. There is no assurance that the company will ever be able to establish successful business operations, become profitable or generate sufficient revenues to operate our business or pay dividends.

**The auditor has issued included a “going concern” note in the audited financials.**

We may not have enough funds to sustain the business until it becomes profitable. Even if we raise funds through a crowdfunding round, we may not accurately anticipate how quickly we may use the funds and if it is sufficient to bring the business to profitability.

**If the company cannot raise sufficient funds, it will not succeed.**

The company is offering membership interests representing SAFE Notes in the amount of up to $5,000,000 in this offering, with a Target Offering Amount of $25,000. Even if the maximum amount is raised, the company will need additional funds in the future in order to grow, and if it cannot raise those funds for whatever reason, including reasons relating to the company itself or to the broader economy, it may not survive. If the company manages to raise only the minimum amount of funds sought, it will have to find other sources of funding for some of the plans outlined in “Use of Proceeds.”

**We operate in a highly regulated industry.**

We are subject to extensive regulation and failure to comply with such regulation could have an adverse effect on our business. Further, our subsidiary Sweater Industries LLC is a registered investment advisor, and our fund is registered under the 1940 Investment Company Act. Our advisor both in its day-to-day operations in the management of the fund has to comply with stringent regulations, and the operation of our fund exposes us to a significant amount of liability. Regulated entities are frequently subject to examination, constraints on their business, and in some cases fines. Some of the restrictions and rules applicable to our subsidiary and our fund could adversely affect and limit some of our business plans of other parts of our business.

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# **Our revenues and profits are subject to fluctuations.**

It is difficult to accurately forecast our revenues and operating results, and these could fluctuate in the future due to a number of factors. These factors may include adverse changes in: number of investors and amount of investors' dollars, the success of world securities markets, general economic conditions, our ability to market our platform to companies and investors, headcount and other operating costs, and general industry and regulatory conditions and requirements. The company's operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant and could impact our ability to operate our business.

# **We are dependent on general economic conditions.**

Our business model is dependent on investors investing in our platform. Investment dollars are disposable income. Our business model is thus dependent on national and international economic conditions. Adverse national and international economic conditions may reduce the future availability of investment dollars, which would negatively impact our revenues and possibly our ability to continue operations. It is not possible to accurately predict the potential adverse impacts on the company, if any, of current economic conditions on its financial condition, operating results and cash flow

# **The company depends on key personnel and faces challenges recruiting needed personnel.**

The company's future success depends on the efforts of a small number of key personnel, including those who have investment expertise, skill, and network of business contacts needed to make the fund successful and thereby help us succeed. In addition, due to its limited financial resources and the specialized expertise required, it may not be able to recruit the individuals needed for its business needs. There can be no assurance that the company will be successful in attracting and retaining the personnel the company requires to operate and be innovative.

# **If the company cannot protect, maintain and, if necessary, enforce its intellectual property rights, its ability to develop and commercialize products will be adversely impacted.**

The company's success, in large part, depends on its ability to protect and maintain the proprietary nature of its technology. The company must prosecute and maintain its existing patents and obtain new patents. Some of the company's proprietary information may not be patentable, and there can be no assurance that others will not utilize similar or superior solutions to compete with the company. The company cannot guarantee that it will develop proprietary products that are patentable, and that, if issued, any patent will give a competitive advantage or that such patent will not be challenged by third parties. The process of obtaining patents can be time consuming with no certainty of success, as a patent may not issue or may not have sufficient scope or strength to protect the intellectual property it was intended to protect. The company cannot assure you that its means of protecting its proprietary rights will suffice or that others will not independently develop competitive technology or design around patents or other intellectual property rights issued to the company. Even if a patent is issued, it does not guarantee that it is valid or enforceable. Any patents that the company or its licensors have obtained or obtain in the future may be challenged, invalidated, or unenforceable. If necessary, the company will initiate actions to protect its intellectual property, which can be costly and time consuming.

# **The company will depend upon strategic relationships to develop, exploit, and manufacture its products. If these relationships are not successful, the company may not be able to capitalize on the market potential of these products.**

The near and long-term viability of the company's products will depend, in part, on its ability to successfully establish new strategic collaborations with startups, who could potentially be portfolio companies of the fund. Establishing strategic collaborations is difficult and time-consuming. Potential collaborators may reject collaborations based upon their assessment of the company's financial, regulatory, or intellectual property position. If the company fails to establish a sufficient number of collaborations on acceptable terms, it may not be able to commercialize its products or generate sufficient revenue to fund further research and development efforts.

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### **Sweater and its providers are vulnerable to hackers and cyber attacks.**

With the increased use of technologies such as the Internet to conduct business, the company (including our App), the fund, and other service providers are susceptible to operational, information security and related risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users). Cyber security failures by or breaches of our company, the App, or other of our service providers (including, but not limited to, fund accountants, custodians, transfer agents and administrators), and the issuers of securities in which the fund invests, have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the fund’s ability to calculate its NAV, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. While the company has established business continuity plans in the event of, and risk management systems to prevent, such cyber-attacks, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, we cannot control the cyber security plans and systems put in place by our service providers. As a result, the company and your investment could be negatively impacted.

The App, through its third-party hosting facilities, will electronically store investors’ bank information, social security numbers, and other personally identifiable sensitive data that is submitted through the App. Similarly, certain our service providers, including the fund’s administrator, may process, store, and transmit such information. The company has procedures and systems in place that it believes are reasonably designed to protect this sensitive information and prevent data losses and security breaches. However, these measures cannot provide absolute security. Any accidental or willful security breach or other unauthorized access could cause shareholder’s (both ours and our funds) secure information to be stolen and used for criminal purposes, and shareholders would be subject to increased risk of fraud or identity theft. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and the third-party hosting facilities we use may be unable to anticipate these techniques or to implement adequate preventative measures. Any security breach, whether actual or perceived, could harm our reputation and that of our fund, resulting in the potential loss of investors and adverse effect on the value of your investment.

### **We face significant competition in the venture capital market, as well as in the FinTech Market.**

Sweater will be competing with other investment companies, investment funds (including private venture capital funds), and institutional investors in making private investments. Many of these competitors are substantially larger and have considerably greater financial, technical, and marketing resources than the Fund. Some competitors may have a lower cost of capital and access to funding sources that are not available to the Fund. In addition, some competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of, or different structures for, private investments than the Fund. The Fund may lose investment opportunities if it is unable to match its competitors’ pricing, terms, and structure. Furthermore, many competitors are not registered investment companies and are thus not subject to the regulatory restrictions that the Investment Company Act imposes on the Fund. As a result of this competition, the Fund may not be able to pursue attractive private investment opportunities from time to time.

**Epidemics, Pandemics, and Public Health Issues.** Our business activities as well as the activities of the fund and its operations and investments could be materially adversely affected by outbreaks of disease, epidemics and public health issues in the United States and globally.

In particular, a respiratory disease caused by a novel coronavirus, or COVID-19, has spread and is currently spreading rapidly around the world since its initial emergence in December 2019. This pandemic has resulted in closing borders,

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enhanced health screenings, healthcare service preparation and delivery, quarantines, cancellations, disruptions to supply chains and customer activity, as well as general concern and uncertainty. The impact of this pandemic, and other pandemics and epidemics that may arise in the future, could affect the economies of many nations, individual companies and the market in general in ways that cannot necessarily be foreseen at the present time. In addition, the impact of infectious diseases in developing or emerging market countries may be greater due to less established health care systems. Health crises caused by the novel coronavirus pandemic may exacerbate other pre-existing political, social and economic risks in certain countries. The impact of the pandemic may last for an extended period of time.

### Risks Related to the Securities

#### Voting control is in the hands of a few large stockholders.

Voting Control is concentrated in the hands of a small number of shareholders. You will not be able to influence our policies or any other corporate matter, including the election of directors, changes to our company's governance documents, expanding the employee option pool, and any merger, consolidation, sale of all or substantially all of our assets, or other major action requiring stockholder approval. Some of the larger stockholders include, or have the right to designate, executive officers and directors of our Board. These few people and entities make all major decisions regarding the company. Further, the company Company's Investor Rights Agreement, the Company cannot undertake certain actions without the affirmative vote of a Preferred Director. These corporate actions include making loans or guarantees, incurring certain amounts of debt, sell or encumber material technology or intellectual property, or enter into strategic relationships involving payment, certain contribution or assignment by the Company of money or assets.

Holders of our Preferred Stock, Jesse Randall and Chad Lewkowski are subject to a drag-along provision such that if holders of the majority of the outstanding shares of the Company's Preferred Stock, the board, and the majority of Common Stock held by the Key Holders vote in favor of certain transactions, all such holders will still be required to participate in the transaction (or series of transactions), effectively reducing the number of holders that need to approve such transactions in order for it to occur. If the SAFE note gets in converted into shares, those shares may be subject to those rights your interest in the company may be sold regardless of whether you believe the transaction is the best or highest value for your investment, and regardless of whether you believe the transaction is in your best interests.

Certain holders of our Preferred Stock have access to more information about the Company than other stockholders. Certain holders of our Preferred Stock have access to information about the Company that is not made available to the Company's other stockholders pursuant to the Company's Investor Rights Agreement, including quarterly unaudited financial statements.

#### The Company's Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

- any derivative action or proceeding brought on our behalf;
- any action asserting a breach of fiduciary duty;
- any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended bylaws; and
- any action asserting a claim against us that is governed by the internal-affairs doctrine.

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This provision would not apply to such lawsuits if the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery) or claims for which the Court of Chancery does not have subject matter jurisdiction. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provision of our amended and restated certification of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.

We believe that the exclusive forum provision applies to claims arising under the Securities Act, but there is uncertainty as to whether a court would enforce such a provision in this context. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. You will not be deemed to have waived the company's compliance with the federal securities laws and the rules and regulations thereunder.

This exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find our exclusive forum provision in our amended and restated certification of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

#### **Our valuation and our offering price have been established internally and are difficult to assess.**

Sweater, Inc. has set the valuation of its company internally. Valuations for companies at this stage are generally purely speculative. We have not generated any revenues so far. Our valuation has not been validated by any independent third party and may decrease precipitously in the future. It is a question of whether you, the investor, are willing to pay this price for a percentage ownership of a start-up company. The issuance of additional shares of Common Stock, or additional option grants may dilute the value of your holdings. You should not invest if you disagree with this valuation. See 'Dilution' for more information.

#### **No guarantee of return on investment.**

There is no assurance that a purchaser will realize a return on its investment or that it will not lose its entire investment. For this reason, each purchaser should read the Form C and all Exhibits carefully and should consult with its own attorney and business advisor prior to making any investment decision.

**You can't easily resell the securities.** There are restrictions on how you can resell your securities for the next year. More importantly, there is no market for these securities, and there might never be one. It's unlikely that the company will ever go public or get acquired by a bigger company. That means the money you paid for these securities could be tied up for a long time.

#### **A SAFE is very different from traditional common stock and it is important to understand these differences in order to make an informed investment decision that is right for you.**

A SAFE is an agreement between you, the investor, and the company in which the company generally promises to give you a future equity stake in the company if certain trigger events occur. Despite its name, a SAFE may not be 'simple' or 'safe.' It is important for you to keep the following in mind when investing in a SAFE:

- SAFEs are not common stock and do not represent a current equity stake in the company in which you are investing. Common stock represents an ownership stake in a company and entitles you to certain rights under state corporate law and federal securities law. A SAFE Note, on the other hand, is an agreement to

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provide you a future equity stake based on the amount you invested if-and only if-a triggering event occurs.

- Our SAFE Note may only convert to equity if certain triggering events occur, and then only at the election of the company.
- There may be scenarios in which the triggers are not activated and the SAFE Note is not converted, leaving you with nothing. For example, if a company in which you invested makes enough money that it never again needs to raise capital, and it is not acquired by another company, then the conversion of the SAFE may never be triggered.

The SEC's Office of Investor Education and Advocacy issued an Investor Bulletin dated May 9, 2017 entitled "Investor Bulletin: Be Cautious of SAFEs in Crowdfunding" which explains these and other risks you may want to consider before investing in this Offering. Our SAFE Notes may never convert into equity or result in payments to investors.

**There is no current market for any shares of the company's stock.**

There is no formal marketplace for the resale of the company's securities. Should the SAFE convert to an equity stake, investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral. The company has no plans to list any of its shares on any OTC or similar exchange.

**SAFEs do not represent current equity stakes in the company so do not have voting rights.**

Investors in this offering will not be able to vote with their SAFE note as they do not represent ownership in the company.

**SAFEs are not common or preferred stock and you are not getting an equity stake in return for your investment.**

SAFEs do not represent a current equity stake in the company in which you are investing. Instead, the terms of the SAFE have to be met in order for you to receive your equity stake.

**SAFEs may only convert to equity if - and only if - a triggering event occurs.**

The company may never conduct a future equity financing or elect to convert the Securities if such future equity financing does occur. In addition, the company may never undergo a liquidity event such as a sale of the company or an initial public offering. If neither the conversion of the securities nor a liquidity event occurs, Investors could be left holding the securities in perpetuity.

**We have not assessed the tax implications of using the SAFE Note.**

The SAFE Note is a type of debt security that does not include a set maturity date. As such, there has been inconsistent treatment under state and federal tax law as to whether the SAFE Note can be considered a debt of the company, or the issuance of equity. Investors should consult their tax advisers.

**The company's management has discretion as to use of proceeds.**

The net proceeds from this offering will be used for the purposes described under "Use of Proceeds." The company reserves the right to use the funds obtained from this offering for other similar purposes not presently contemplated which it deems to be in the best interests of the company and its investors in order to address changed circumstances or opportunities. As a result of the foregoing, the success of the company will be substantially dependent upon the discretion and judgment of management with respect to application and allocation of the net proceeds of this offering. Investors in our securities, will be entrusting their funds to the company's management, upon whose judgment and discretion the investors must depend.

**Future and current fundraising may affect the rights of investors.**

In order to expand, the company may raise funds in private placements and is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future

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capital raising, such as loan agreements, may include covenants that give creditors greater rights over the financial resources of the company.

# **You will not be investing directly into the company, but into a special purpose vehicle.**

Changes to the securities laws that went into effect March 15, 2021, permit us to use a “special purpose vehicle” or “SPV” in this offering. That means that you will invest in Sweater Inc Community SPV1 and with the money you pay, it will buy our convertible notes by becoming a member of Sweater Inc Community SPV1. A condition to using an SPV is that the SPV pass on the same economic and governance rights that are set out in the convertible notes. However, it may not always be possible to replicate those rights exactly, because the SPV is an LLC formed under Delaware law, as opposed to a Delaware corporation. This sort of arrangement has not been used for investing before, and there may be unforeseen risks and complications. You will also be relying on us, as the Manager of the SPV, to make sure the SPV complies with Delaware law and functions in accordance with securities law. The structure of the SPV is explained further in “Securities Being Offered”. The SPV will terminate and distribute the securities it holds to you, so that you may hold them directly, in certain circumstances. Again, this has not been done before, so there may be delays, complications and unexpected risks in that process.

# **DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES**

This table shows the principal people on the company’s team:

| Name | Position | Term of Office | Approx. hours per week (if not full time) |
| --- | --- | --- | --- |
| Executive Officers: |  |  |  |
| Jesse Randall | CEO | November 2019 | Full time |
| Chad Lewkowski | CIO | November 2019 | Full time |
| Matthew Klein | CXO | July 2021 | Full time |
| Emma Clark | COO | November 2021 | Full time |
| Directors: |  |  |  |
| Jesse Randall | Chairman | November 2019 |  |
| Chad Lewkowski | Director | November 2019 |  |
| Fong Wa Chun | Director | January 2022 |  |
| David Wieland | Director | January 2022 |  |
| Ashley Ebersole | Director | September 2022 |  |
| Significant Employees: |  |  |  |
| Jaron Jones | CTO | October 2021 | Full time |

# ***Jesse Randall, Chief Executive Officer & Chairman***

Jesse is the Founder and CEO of Sweater. His passion for startups, venture capital, and entrepreneurship drive him to serve other founders and shape the future that we all participate in. After obtaining an MBA from the Thunderbird School of Global Management and a Master’s of Environmental Policy from the Vermont Law School, Jesse chose to learn the world of venture capital through starting and running a software startup accelerator, working with over 200 companies. He enjoys endurance sports and spending time in the mountains with his family.

**Recent Employment:** CEO at Sweater Inc, 2018 - Current; Owner at DripDrip LLC, 2016-2020; Owner at Deviant Strategy LLC, 2017-2020

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# ***Chad Lewkowski, President and Chief Investment Officer***

Chad is the Co-Founder, President and Chief Investment Officer of Sweater. Prior to Co-Founding Sweater, Chad spent nearly 14 years at Citigroup, and more recently as a Co-Founder of the Boulder based fintech, Neat Capital. In addition to his work in the banking and fintech space, Chad has served as a venture scout and has been an active angel investor. He also serves as a mentor and advisor to many early-stage companies. In his spare time, he enjoys mountain biking, skiing and surfing with his wife and two daughters.

**Recent Employment:** President at Sweater Inc, 2020 - Current; Owner Harpy Eagle Partners, 2017 - Current

# ***Jaron Jones, CTO***

Jaron Jones is the CTO at Sweater. Jaron has a passion for startups, launching new products, and scaling them. He is a seasoned and progressive technology leader with more than twenty years of building software and leading technical teams. Jaron received a B.S. in Information Technology from Utah Valley State College and an MBA from Utah State University. While at SoFi Jaron led teams through a period of high growth that touched the entire suite of financial products (personal loans, student loans, mortgage, invest, and SoFi at Work) and helped grow the platform to 3M+ SoFi Members during his tenure. At Amazon, Jaron led the marketing tech team for Amazon Devices (e.g. Ring, Echo, Kindle, and FireTV) that enabled product marketers to automate the placement of products and promotions on the front page of amazon.com, build product detail pages, storefronts, and much more. The automated tooling was successful and product teams from across Amazon (retail, Fresh, Prime, and others) and other marketplaces (EU, Japan, Canada, Mexico, Australia, and South America) were able to scale and help drive the impressive growth at Amazon over the course of the pandemic during 2020 and 2021. In his spare time he enjoys time with family and anything in the great outdoors

**Recent Employment:** CTO at Sweater Inc, 2021 - Current; SDE at Amazon, 2020 - 2021; Director of Engineering at SoFi 2017 - 2020

# ***Matthew Klein, CXO***

Matthew is Sweater's resident authority on everything direct-to-consumer (DTC). After leaving Florida State University to pursue entrepreneurship, Matthew spent the last two decades at the forefront of the DTC movement, most recently scaling the fastest growing SaaS platform for product development and design-Backbone PLM-as their co-founder and CEO. A techstars mentor and contributing editor for WWD and Forbes, Matthew specializes in unlocking the potential behind big ideas. He's a champion of anything consumer-touching, leading Sweater's world class experience team and optimizing their growth marketing strategy. As a member of the Sweater Cashmere Fund investment committee, he plays an integral role in the investment making process, voting on every investment the fund makes. In addition, Matthew is responsible for building out the Strategic Wealth Division at Sweater, which focuses on high net worth individuals, family offices, advisors, and institutional investors. He continues to keep a pulse on the latest consumer and SaaS digital trends.

**Recent Employment:** CXO & Co Founder, Sweater Inc 2021-current; CEO, Backbone PLM Inc 2014-2020

# ***Emma Clark, COO***

As COO of Sweater, Emma is responsible for building the processes and systems needed to support Sweater's growth as well as leading multiple functions across the organization. With more than 10 years of experience in Fintech across operations, strategy, product and analytics, she is skillful at translating long term vision into day-to-day operations and thrives on building fantastic teams to support that vision.

Prior to joining Sweater, Emma was a member of the executive team at subscription payment platform Recurly. She served as Chief of Staff and Head of Business Operations during the company's growth stage and led efforts through the company's acquisition. After earning a BA from Duke University, Emma began her career at JPMorgan

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Chase before finding her passion for high growth startups. She enjoys fostering the startup community in Sweater's home base of Boulder, CO and can be found paragliding and hiking with her family on the weekends.

**Recent Employment:** COO, Sweater Ventures - 2021 - Present; Head of BizOps & Chief of Staff, Recurly 2015-2021; Product Management, JPMC 2012- 2015

#### ***Fong Wa Chung***

As Head of Venture Capital at Akuna Capital, Fong Wa is responsible for all activities related to Akuna's venture investments. Prior to joining Akuna Capital, Fong Wa held founder/operator roles at GoCharlie.ai and Jetson, both early-stage startups in the AI space. She also worked in private capital raising roles at Barclays and Advantage Capital. Fong Wa holds an MBA from the University of Chicago and a BA from the University of Pennsylvania.

**Recent Employment:** Head of Venture Capital, Akuna Investments - 2021- Present; Co-Founder, GoCharlie.AI - 2020- 2021; Chief Operating Officer, Jetson 2019-2020.

#### ***David Wieland***

David Wieland is a member of Sweater's Board of Directors. David is the co-founder and managing partner at Motivate Ventures, a fintech and enterprise saas focused venture capital firm based in Chicago. Prior to founding Motivate, David started and sold several technology startups including InterviewStream, PowerSurge Technologies, and InnFlux. David received his BA in Philosophy, Government from Notre Dame and his MBA from Northwestern University's Kellogg school of business.

**Recent Employment:** Co-Founder and Managing Partner, Motivate Ventures - 2019- Present

#### ***Ashley Ebersole***

Ashley Ebersole is a longtime legal advisor and thought leader in the securities and fintech spaces. He currently serves as Chief Legal Officer and General Counsel of ZeroEx Labs, a leading blockchain infrastructure company in the distributed exchange space. Prior to ZeroEx, Ashley was a partner at global firm Bryan Cave Leighton Paisner and a principal member of the fintech practice, advising clients - Sweater included - regarding federal and state financial regulatory laws. Prior to BCLP, Ashley spent five years as Senior Counsel at the SEC, serving on its various fintech working groups. Before the SEC, he was an Associate at Skadden for six years.

Prior to entering the legal field, Ashley was an investment banker at Salomon Smith Barney, where he negotiated and executed transactions with total value in excess of $2 billion. He later worked as an executive at an online content company with responsibility for designing and executing its commercial and promotional activities. Ashley graduated cum laude from Amherst College, and earned his law degree from Vanderbilt Law School, after which he clerked for federal judges on the US District Court for the Eastern District of Virginia, and US Court of Appeals for the Sixth Circuit.

**Recent Employment:** General Counsel, 0x Labs 2022- Present; Partner, Bryan Cave Leighton Paisner LLP 2019-2022

### **OWNERSHIP AND CAPITAL STRUCTURE**

#### **Ownership**

The following table shows who owns more than 20% of company's voting securities as of December 19, 2022:

| Name of Beneficial owner | Amount and class of securities held | Percent of voting power prior to the Offering |
| --- | --- | --- |
| Jesse Randall* | 546,191 | 45% |

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*134,409 shares are currently subject to vesting under a stock restriction agreement. Under the agreement, 11,765 shares vest monthly, and Mr. Randall's shares will be fully vested on January 1, 2024.

The following table describes our capital structure as of December 19, 2022:

| Class of Equity | Authorized Limit | Issued and Outstanding | Committed, Not-issued* | Available |
| --- | --- | --- | --- | --- |
| Common Stock | 1,487,080 | 694,491 | 135,189 | 657,400 |
| Preferred Stock | 534,965 | 515,874 | 0 | 19,091 |

*Options that are unissued, but authorized (pre-financing)

## USE OF PROCEEDS

The company anticipates using the proceeds from this offering in the following manner:

| Purpose or Use of Funds | Allocation After Offering Expenses for a $25,000 Raise | Allocation After Offering Expense for a $5,000,000 Raise |
| --- | --- | --- |
| Offering Costs | $25,000 | $150,000 |
| Marketing & Growth | $0 | $1,500,000 |
| Technology | $0 | $1,200,000 |
| Team Growth | $0 | $1,000,000 |
| Fund Ops | $0 | $650,000 |
| Office and Overhead | $0 | $500,000 |

The identified uses of proceeds are subject to change at the sole direction of the officers and directors based on the business needs of the company.

## FINANCIAL DISCUSSION

### Financial Statements

Our financial statements can be found in Exhibit B to the Form C of which this Offering Memorandum forms a part. The financial statements were audited by TaxDrop LLC. The following discussion should be read in conjunction with our audited financial statements and the related notes included in this Offering Statement.

The following discussion includes information based on our unaudited operating data for 2022 and is subject to change once we complete our fiscal year, prepare our consolidated financial statements and our accountant completes a financial review of those statements.

### Overview

The company began operations in June 2021 and began receiving revenue in June 2022 with the launch of its App and fund. Prior to the launch, the company's activities consisted of formation activities, capital raising efforts, and its subsidiary becoming a registered investment advisor.

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## Results of Operations

Total operating expenses consist of general and administrative, facilities, and advertising and marketing. For the fiscal year ended December 31, 2021 total operating expenses were $2,273,698.

As a result of being pre-revenue, the company incurred a net loss of $2,274,270 for the period ended December 31, 2021.

### *Liquidity and Capital Resources*

As of December 31, 2021, the company's cash on hand was $625,109. The company's operations have been financed to date by contributions from members and the issuance of SAFEs. In 2022, the company raised $12,387,098, which it is using to fund its operations. As of December 19, 2022, the company has approximately $4,985,000 cash on hand.

The company expects that the net proceeds of a maximum offering, in addition to its successful SAFE raise will satisfy the company's cash requirements for the next 12 months, given its current monthly burn rate of approximately $750,000. In order to continue as a going concern after that time, develop a reliable source of revenues, and achieve a profitable level of operations, they may need, among other things, additional capital resources. Management's plans to continue as a going concern include raising additional capital through borrowing and the sale of its securities including in private placements.

No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the company. Even if the company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of an equity financing.

### *Indebtedness*

The company does not currently have any debt.

### Trends

We believe that consumer have taken investment management into their own hands. Apps from the likes of Acorns to Robinhood to Yieldstreet are enabling everyday people to take their investments into their own hands and own the entire process. We believe that Sweater is one of first companies to do this for Venture Capital.

### RELATED PARTY TRANSACTIONS

The company has not undertaken any related party transactions.

### RECENT OFFERINGS OF SECURITIES

We have made the following issuances of securities since inception:

- In 2021, the company issued Simple Agreements for Future Equity ("SAFEs") totaling $2,769,583 under Rule 506(b) of Regulation D. The proceeds were used for completing the SEC registration process, building out a waitlist, and establishing the initial team.
- In 2022, the company issued SAFEs totaling $12,387,098 under Rule 506(b) of Regulation D. The proceeds were used for building the mobile application, marketing of the company, building out an investment team, and providing staffing for roles from Fund Administration to Member Support.

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# SECURITIES BEING OFFERED AND RIGHTS OF THE SECURITIES OF THE COMPANY

*The following descriptions summarize important terms of our capital stock. This summary does not purport to be complete and is qualified in its entirety by the Sweater's Certificate of Incorporation, as amended, and its Bylaws. For a complete description of the company's capital stock, you should refer to our Certificate of Incorporation, as amended, our Bylaws, the SAFE Note, the Voting Agreement, the Investors' Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and applicable provisions of the Delaware General Corporation Law.*

Sweater is offering up to $5,000,000 and a minimum of $25,000 worth of membership interests in its SAFE Notes and the shares of preferred stock into which they may convert. The investment will be made through Sweater Inc Community SPV1 LLC, a special purpose investment vehicle exempt from registration under the Investment Company Act pursuant to Rule 270.3a-9 promulgated under that Act.

The minimum investment per investor is $1,000.

## Crowdfunding SPV

The securities in this offering will be issued by both the company and the Crowdfunding SPV. The proceeds from the offering will be received by the Crowdfunding SPV and invested immediately in the securities issued by the company. The Crowdfunding SPV will be the legal owner of the SAFE Notes. Investors in this offering will own membership interests in the Crowdfunding SPV. Pursuant to SEC rules, investors will receive the same economic, voting and information rights in the SAFE Notes (and the shares into which they convert) as if they had invested directly with the company.

## The SAFE Notes

We are offering a specific type of promissory note titled Simple Agreement for Future Equity ('SAFE'). If there is a 'equity financing' (the sale of our preferred stock at a fixed price), the SAFEs will automatically convert into the preferred stock. The preferred stock will have identical rights, privileges, preferences and restrictions as the shares of preferred stock sold in the financing, other than with respect to the liquidation preference and any specific dividend rights will be adjusted for the discount to the share price.

In the event of a change of control of the company (such as an acquisition of the company), a direct listing or an initial public offering ('IPO') prior to the equity financing, the investors would be entitled to payment, to the extent available, see below for more details.

## Terms of the SAFE Notes

The terms of the SAFE Note provide for an automatic conversion in the event we undertake a future equity financing of preferred stock at a fixed price with identical terms to those sold in such future equity financing except that such shares will have an adjusted liquidation preference amount and basis for dividend rights. Included in the SAFE are certain defined terms that are important to your understanding of the operation of the SAFE. Some of those terms are explained here. All of the following explanations are qualified in their entirety by the terms set out in the SAFE itself.

'Discount Price' means the lowest price per share of preferred stock sold in the qualified equity financing multiplied by the Discount Rate.

'Discount Rate' - means the percentage at which the per share price of a future Preferred Stock financing will be multiplied by to determine the per share price for holders of SAFEs. For this offering the amount is 90%.

'Dividend Amount' - means the amount of such dividend that is paid per share of Common Stock multiplied by (x) the Purchase Amount divided by (y) price per share equal to the fair market value of the common stock multiplied by the discount rate.

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“Purchase Amount” - means the amount invested by each investor (aggregated through the SPV) in this offering.

#### *Procedure for Conversion*

Investors in the SAFE note will receive a number of shares of Preferred Stock equal to the Purchase Price divided by the Discount Price.

#### *Cash upon certain Liquidity Events*

In the event of a change of control of the company (such as an acquisition of the company), a direct listing or an initial public offering (“IPO”), the investors would be entitled to payment, to the extent available, equal to the greater of the amount invested or an amount equal to what they would have received if the SAFE Note had been converted to shares of common stock based on the fair market value at the time of the event and reflecting the Discount Rate.

#### *Right to Distribution upon Liquidation*

If the company ceases operations, liquidates, dissolves, winds up or has its assets assigned to creditors prior to an issuance of securities converting the SAFEs, holders of membership interests in the SAFE would be entitled to payment on par with holders of the company’s preferred stock and other SAFEs.

#### *Dividend Rights*

If the company pays a dividend on outstanding shares of Common Stock (that is not payable in shares of Common Stock) while the SAFE is outstanding, the company will pay the Dividend Amount to investors in membership interests of the SAFE at the same time.

#### *Voting Rights*

There are no voting rights associated with the SAFEs. If, and when, the SAFEs are converted, holders of membership interests will be entitled to any votes associated with the underlying shares.

### **General**

The company is authorized to issue is 1,487,080 shares of Common Stock, $0.00001 par value per share (“Common Stock”), and 534,965 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”), of which 375,603 shares are designated “Series Seed Preferred Stock” and 159,3623 shares are designated “Series Seed I Preferred Stock”.

### **Common Stock**

#### *General*

The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and privileges of the holders of the Preferred Stock set forth herein.

#### *Voting*

Each holder of Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders but excluding matters that relate solely to the terms of a series of Preferred Stock.

Holders of Common Stock voting exclusively as a separate class are entitled to elect three directors of the company.

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# **Preferred Stock**

The Series Seed Preferred Stock and Series Seed I Preferred Stock enjoy substantially similar rights, preferences, and privileges.

# **Dividends**

# **Dividend Rights**

Holders of Preferred Stock are entitled to receive dividends, as may be declared from time to time by the board of directors out of legally available funds. Holders of Preferred Stock are entitled to at least their share proportionally (calculated on an as-converted to Common Stock basis) in any dividends paid to the holders of Common Stock.

# **Voting Rights**

Each holder of Preferred Stock is entitled to one vote for each share of Common Stock issuable upon conversion of the Preferred Stock at the then-effective conversion rate. Holders of Preferred Stock are entitled to vote on all matters submitted to a vote of the stockholders as a single class with the holders of Common Stock. Holders of Preferred Stock voting exclusively as a separate class are entitled to elect two directors of the company.

Specific matters submitted to a vote of the stockholders require the approval of a majority of the holders of Preferred Stock voting as if their shares had been converted into Common Stock. These matters include, but are not limited to, any vote to:

- liquidate, dissolve or wind-up the business and affairs of the company, effect any merger or consolidation or any other deemed liquidation event (e.g., vote of at least a majority of outstanding shares of Preferred Stock, certain mergers and consolidations, or the sale, lease, transfer of substantially all of the company's assets) or consent to any of the following:
  - amend, alter or repeal any provision of the Bylaw
  - amend, alter or repeal any provision of the Certificate of Incorporation in a manner that adversely affects the powers, preferences or rights of the Preferred Stock
  - create, authorize the creation of, or issue, or obligate to issue, any other equity security unless such securities ranks junior to the Preferred Stock with respect to rights, preferences and privileges or increase or decrease the authorized number of Preferred Stock and Common Stock
  - certain reclassifications and amendments of existing securities
  - certain redemptions or payment of dividends
  - increase or decrease the number of directors
  - authorization of certain debt

# **Right to Receive Liquidation Distributions**

In the event of our liquidation, dissolution, or winding up of any deemed liquidation event, holders of our Preferred Stock are entitled to liquidation preference superior to holders of Common Stock. Holders of Preferred Stock will receive an amount for each share equal to the greater of (i) the Original Issue Price plus any dividends declared but unpaid or (ii) or such amount per share as would have been payable had all shares of such series of Preferred Stock been converted to Common Stock immediately prior to such event. The "Original Issue Price" is 35.5058 for Series Seed Preferred Stock and $17.0701 for Series Seed I Preferred Stock. Both such amounts are adjusted for any stock dividends, combinations, splits, recapitalizations and the like (each a "Recapitalization Event"). If, upon such event, the assets and funds that are distributable to the holders of Preferred Stock are insufficient to permit the payment to such holders of the full amount of their respective liquidation preference, then all of such assets and funds will be distributed ratably first among the holders of the Preferred Stock in proportion to the full preferential amounts to which they would otherwise be entitled to receive.

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### Conversion Rights

Preferred Stock is convertible into Common Stock voluntarily and automatically. Each share of Preferred Stock is convertible at the option of the holder of the share at any time prior to the closing of a liquidation event. Each share of Preferred Stock is currently convertible into one share of Common Stock, but such conversion rate may be adjusted pursuant to the anti-dilution rights of the Preferred Stock.

Additionally, each share of the Preferred Stock will automatically convert into Common Stock (i) at the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 where the per share offering price is at least $36.72 (as adjusted for Recapitalization Events) and our gross proceeds are greater than or equal to $50,000,000 or (ii) by a vote by a majority of holders of Preferred Stocks. Preferred Stock converts into the same number of shares of Common Stock regardless of whether converted automatically or voluntarily.

### Voting Agreement

In addition to the voting rights of our Preferred Stock under the Company's Certificate of Incorporation, holders of our Preferred Stock are also subject to the Company's Voting Agreement (the "Voting Agreement") entered into by the Company, Jesse Randall and Chad Lewkowski (the "Key Holders") and holders of its Preferred Stock.

Under the terms of the Voting Agreement:

### Election and Removal of Directors

All holders of Preferred Stock agree to vote their shares as necessary to ensure that:

- The number of directors remains five
- The board composition should be as follows:
  - One designee from Akuna Investments LLC ("Akuna") so long as Akuna and its affiliates continue to own stock above a certain ownership threshold.
  - One designee from Motivate Ventures Fund I, L.P. or Motivate Ventures QP Fund I, L.P. or MCM Sweater Seed SPV, LLC, , a Series of Motivate Capital Management Master, LLC (collectively, "Motivate") so long as Motivate and its affiliates continue to own stock above a certain ownership threshold.
  - Should the other Motivate or Akuna fall below the ownership threshold, if the other party is still entitled to designate a board member they will be able to designate two board members.
  - The initial designees shall by Fong Wa Chung (Akuna) and David Wieland (Motivate)
  - Three designees from the holders of Common Stock (not including Common Stock issued or issuable from conversion of Preferred Stock). Jesse Randall and Chad Lewkowski were the original designees.

### Drag-along Right

In the event the holders of a majority of the outstanding shares of Preferred Stock, the board, and the majority of the outstanding shares of Common Stock (excluding shares of Common Stock issued or issuable upon conversion of the Preferred Stock) (the "Electing Holders") approve a sale of the Company, then each Voting Preferred Stockholder and the Company agree:

- To vote all shares in favor of the sale of the Company, and to vote in opposition to any and all other proposals;
- If the proposed transaction is a sale of stock, then agree to sell the same proportion of shares of capital stock of the Company beneficially held by such Stockholder as is being sold by the Selling Investors;

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- To refrain from exercising any dissenters' rights or rights of appraisal under applicable law, or asserting any claim challenging the sale or alleging breach of fiduciary duty of the Selling Investors.
- In the event the consideration to be paid in exchange for the shares includes any securities such that registration or qualification of the securities or a person as a broker or dealer or agent, then the Company may cause to be paid to any such Stockholder an amount in cash equal to the fair value (as determined in good faith by the board) of such securities.
- In the event the Selling Investors appoint a stockholder representative, the Stockholders agree to consent to the appointment of the stockholder representative, the establishment of escrow, expense or similar fund as needed, and the payment of the pro rata portion of such Stockholders' reasonable fees and expenses in connection with the sale of the Company, and not to assert any claim or suit against the stockholder representative absent fraud, bad faith, gross negligence or willful misconduct.
- A sale of the Company means a transaction or series of related transactions in which more than 50% of the Company's outstanding voting power is acquired or a transaction that qualifies as a "Deemed Liquidation Event"

# **Investors' Rights Agreement**

The Company and the holders of the Preferred Stock are subject to our Investor Rights Agreement ("Investors' Rights Agreement"), dated January 26, 2022. Under the terms of this agreement,

# **Registration Rights**

- Holders of at least 50% of the outstanding shares of the registrable securities (for this purpose, generally, (i) the Common Stock issued or issuable upon conversion of the Preferred Stock and (ii) any Common Stock and/or Common Stock issuable upon conversion of outstanding securities held by holders of the Preferred Stock) may demand that the Company file a registration statement on Form S-1 covering the sale of at least 40% of registrable then outstanding (or a lesser percent if the anticipated aggregate offering price, net of selling expenses, would exceed $15,000,000. This right commences the earlier of i) five years after the date of the Investors' Rights Agreement or ii) 180 days after the effective date of the Company's IPO.
- Holders of at least 30% of the outstanding shares of the registrable securities may demand that the Company file a Form S-3 registration statement covering the sale of at least $5 million in the aggregate of the Common Stock issued or issuable upon conversion of the Preferred Stock once the Company is eligible to use such form.
- The Company's CEO may defer taking action in response such requests in good faith provide it would be harmful to the Company by materially interfering with a material acquisition, reorganization or similar transaction, require premature disclosure of material information or render the Company unable to comply with the Securities Act or Securities Exchange Act.

# **Information and Observer Rights**

Holders of at least $500,000 in value of shares of Preferred Stock (as adjusted) and Motivate and Akuna ("Major Investors"), will receive the following information from the Company under this agreement:

- Financial statements, including balance sheet, income statement, a statement of stockholders' equity and cash flow statement within 90 days of the Company's fiscal year end.
- Unaudited statements of income and cash flows for the first three fiscal quarter of each fiscal year, delivered within 45 days after the end of each quarter.
- If requested, a statement showing sufficient information regarding the Company's outstanding securities to allow the Preferred Stockholder to calculate their respective percentage equity ownership on a fully diluted basis, certified by the CFO and CEO and delivered within 45 days after the end of each of the first three quarters.

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- At least 30 days before the end of the fiscal year, the Company will deliver a budget and business plan for the next fiscal year prepared on a monthly basis including balance sheets, income statements and statements of cash flows for such months and any other budgets or revised budgets prepared by the Company.
- Ability to visit the Company and inspect its properties, examine its books and records, and discuss the Company's affairs with its officers with the exception of trade secrets or other confidential information.

This right to information terminates immediately prior to an IPO, the company becomes a reporting company or a deemed liquidation event.

### Right to Future Stock Issuances

If the Company proposes to offer or sell any new equity securities, or securities convertible into equity securities, Major Investors, shall be entitled to purchase at the same price and terms as applicable to the proposed offering, up to that portion of such equity securities that equals the portion of the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise of all Preferred Stock and any other Derivative Securities then outstanding).

If less than all equity securities that would be available for sale to Major Investors are subscribed after 20 days, the remaining equity securities then become available for purchase by the Major Investors who chose to exercise this right.

### Matters Requiring Investor Director Approval

As long as the holders of Preferred Stock are entitled a Preferred Director, the Company agrees that it shall not, without approval of the board of directors, which must include the affirmative vote of one of such Preferred Director then serving on the board:

- Make or permit a subsidiary to make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership or other entity unless wholly owned by the Company;
- Make or permit a subsidiary any loan or advance to any person, including employees or directors of the Company unless in the ordinary course of business;
- Guarantee any indebtedness greater than $100,000 except for trade accounts of the Company arising in the ordinary course of business;
- Incur aggregate indebtedness in excess of $100,000 if not included in a budget approved by the board;
- Hire, terminate or change the compensation of executive officers, including approval of option grants or stock awards;
- Change the principal place of business, enter new lines of business or exit the current line of business;
- otherwise enter into or be a party to any transaction with any director, officer, or employee of the Company or any of their "associates" including with respect to any transaction pursuant to which investment advisor fees would or could be paid to any person that is not a wholly owned subsidiary of the Company, except for (i) transactions contemplated by this Agreement and the Purchase Agreement; or (ii) transactions made in the ordinary course of business and pursuant to reasonable requirements of the Company's business and upon fair and reasonable terms that are approved by a majority of the Board of Directors (but specifically excluding any transaction pursuant to which investment advisor fees would or could be paid to any person that is not a wholly owned subsidiary of the Company);
- Sell, assign, license, pledge or encumber material technology or intellectual property other than licenses sold in the ordinary course of business; and
- Enter into any corporate strategic relationship involving the payment, contribution or assignment by the Company or to the Company of money or assets greater than $250,000.

### Management Side Letters

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Each of Motivate and Akuna have entered into a side letter with the company, which so long as the relevant entity owns 50% of their Preferred Stock, that entity is entitled to additional information rights and access to management. The agreements each terminate upon several conditions, including a firm underwritten IPO and certain consolidations and mergers.

#### **Right of First Refusal and Co-Sale**

The Company, its Key Holders and holders of Preferred Stock are parties to the Right of First Refusal and Co-Sale agreement entered into on January 26, 2022. Under the terms of this agreement,

The Key Holders grant to the Company a right of first refusal in the event such Key Holder proposes to transfer shares of the Company's capital stock at the same price and on the same terms as the proposed transfer. The Key Holders grant a secondary right of refusal to the Major Investors and a tertiary right to other holders of Preferred Stock who ho are a party to this agreement.

If any capital stock proposed to be transferred by a Key Holder is not purchased pursuant to the right of first, second or tertiary refusal, and is then sold, each respective Preferred Stockholder may elect to exercise its right of co-sale and participate on a pro rata basis in such sale.

#### **WHAT IT MEANS TO BE A MINORITY HOLDER**

As an investor in membership interests in SAFE notes of the company, you will not have any rights in regard to the corporate actions of the company, including additional issuances of securities, company repurchases of securities, a sale of the company or its significant assets, or company transactions with related parties.

#### **TRANSFERABILITY OF SECURITIES**

For a year, the securities can only be resold:

- In an IPO or other public offering registered with the SEC;
- To the company;
- To an accredited investor; and
- To a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.

#### **TRANSFER AGENT**

The company the company has not currently engaged a tranfer agent; however, intends to do so in the future.

#### **DILUTION**

Investors should understand the potential for dilution. The investor's stake in a company could be diluted due to the company issuing additional shares. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g., convertible bonds, preferred shares or warrants) into stock.

If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before.

26

There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early-stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).

The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

- In June 2022 Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.
- In December the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company but her stake is worth $200,000.
- In June 2023 the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company and her stake is worth only $26,660.

This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to the aggregate total amount of convertible notes that the company has issued (and may issue in the future, and the terms of those notes).

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

## VALUATION

As discussed in “Dilution” above, the valuation of the company will determine the amount by which the investor’s stake is diluted in the future. An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is immediately diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs.

There are several ways to value a company, and none of them is perfect and all of them involve a certain amount of guesswork. The same method can produce a different valuation if used by a different person.

*Liquidation Value* - The amount for which the assets of the company can be sold, minus the liabilities owed, e.g., the assets of a bakery include the cake mixers, ingredients, baking tins, etc. The liabilities of a bakery include the cost of rent or mortgage on the bakery. However, this value does not reflect the potential value of a business, e.g., the value of the secret recipe. The value for most startups lies in their potential, as many early-stage companies do not have many assets (they probably need to raise funds through a securities offering in order to purchase some equipment).

27

**Book Value** - This is based on analysis of the company's financial statements, usually looking at the company's balance sheet as prepared by its accountants. However, the balance sheet only looks at costs (i.e., what was paid for the asset), and does not consider whether the asset has increased in value over time. In addition, some intangible assets, such as patents, trademarks or trade names, are very valuable but are not usually represented at their market value on the balance sheet.

**Earnings Approach** - This is based on what the investor will pay (the present value) for what the investor expects to obtain in the future (the future return), taking into account inflation, the lost opportunity to participate in other investments, the risk of not receiving the return. However, predictions of the future are uncertain and valuation of future returns is a best guess.

Different methods of valuation produce a different answer as to what your investment is worth. Typically, liquidation value and book value will produce a lower valuation than the earnings approach. However, the earnings approach is also most likely to be risky as it is based on many assumptions about the future, while the liquidation value and book value are much more conservative.

Future investors (including people seeking to acquire the company) may value the company differently. They may use a different valuation method, or different assumptions about the company's business and its market. Different valuations may mean that the value assigned to your investment changes. It frequently happens that when a large institutional investor such as a venture capitalist makes an investment in a company, it values the company at a lower price than the initial investors did. If this happens, the value of the investment will go down.

#### **How we determined the offering price**

The company is selling membership interests in a SAFE note with a 10% discount on a future round. The price of any such future round will be determined based on some of the factors listed above in "Valuation". For instance if the next round would be Series A round, the price could be determined with negotiations with the institutional VC partner.

#### **REGULATORY INFORMATION**

##### **Disqualification**

Neither the company, the Crowdfunding SPV, nor any of its officers or managing members are disqualified from relying on Regulation Crowdfunding.

##### **Annual reports**

The company has not filed annual reports to date. The company is required to file a report electronically with the SEC annually and post the report on its website no later than 120 days after its fiscal year end (December 31). Once posted, the annual report may be found on the company's website at https://www.investinsweater.com/reports.

The company must continue to comply with the ongoing reporting requirements until:

(1) it is required to file reports under Section 13(a) or Section 15(d) of the Exchange Act;

(2) it has filed at least one annual report pursuant to Regulation Crowdfunding and has fewer than three hundred holders of record and has total assets that do not exceed $10,000,000;

(3) it has filed at least three annual reports pursuant to Regulation Crowdfunding;

(4) it or another party repurchases all of the securities issued in reliance on Section 4(a)(6) of the Securities Act, including any payment in full of debt securities or any complete redemption of redeemable securities; or

(5) it liquidates or dissolves its business in accordance with state law.

28

## Compliance failure

Neither the company nor the Crowdfunding SPV has not previously failed to comply with the requirements of Regulation Crowdfunding.

## INVESTING PROCESS

### Information Regarding Length of Time of Offering

**Investment Cancellations:** Investors will have up to 48 hours prior to the end of the offering period to change their minds and cancel their investment commitments for any reason. Once the offering period is within 48 hours of ending, investors will not be able to cancel for any reason, even if they make a commitment during this period.

**Notifications:** Investors will receive periodic notifications regarding certain events pertaining to this offering, such as the company reaching its offering target, the company making an early closing, the company making material changes to its Form C, and the offering closing at its target date.

**Material Changes:** Material changes to an offering include but are not limited to:

A change in minimum offering amount, change in security price, change in management, etc. If an issuing company makes a material change to the offering terms or other information disclosed, including a change to the offering deadline, investors will be given five business days to reconfirm their investment commitment. If investors do not reconfirm, their investment will be cancelled, and the funds will be returned.

**Rolling and Early Closings:** The company may elect to undertake rolling closings, or an early closing after it has received investment interests for its target offering amount. During a rolling closing, those investors that have committed funds will be provided five days' notice prior to acceptance of their subscriptions, release of funds to the company, and issuance of securities to the investors. During this time, the company may continue soliciting investors and receiving additional investment commitments. Investors should note that if investors have already received their securities, they will not be required to reconfirm upon the filing of a material amendment to the Form C. In an early closing, the offering will terminate upon the new target date, which must be at least five days from the date of the notice.

### Investor Limitations

Investors are limited in how much they can invest on all crowdfunding offerings during any 12-month period. The limitation on how much they can invest depends on their net worth (excluding the value of their primary residence) and annual income. If either their annual income or net worth is less than $124,000, then during any 12-month period, they can invest up to the greater of either $2,500 or 5% of the greater of their annual income or Net worth. If both their annual income and net worth are equal to or more than $124,000, then during any 12-month period, they can invest up to 10% of annual income or net worth, whichever is greater, but their investments cannot exceed $124,000. If the investor is an 'accredited investor' as defined under Rule 501 of Regulation D under the Securities Act, as amended, no investment limits apply.

### Updates

Information regarding updates to the offering and to subscribe can be found here, https://www.investinsweater.com/.

29

# **Sweater Inc.**

(a Delaware Corporation)

# **Audited Consolidated Financial Statements**

Period of January 1, 2020 through December 31, 2021

Audited by:

![img-0.jpeg](img-0.jpeg)

TaxDrop LLC
A New Jersey CPA Company

FS - 2

# Financial Statements

# Sweater Inc.

# Table of Contents

| Independent Accountant's Audit Report | FS-3 |
| --- | --- |
| Financial Statements and Supplementary Notes |  |
| Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020 | FS-5 |
| Consolidated Income Statements for the period of January 1, 2020 through December 31, 2021 | FS-6 |
| Statements of Changes in Members' Equity for the period of January 1, 2020 through December 31, 2021 | FS-7 |
| Statements of Cash Flows for the period of January 1, 2020 through December 31, 2021 | FS-8 |
| Notes and Additional Disclosures to the Financial Statements as of December 31, 2021 and December 31, 2020 | FS-9 |

FS - 3

![img-1.jpeg](img-1.jpeg)

# Independent Auditor's Report

November 10, 2022

To: Board of Directors of Sweater Inc.

Attn: Jesse Randall, CEO

Re: 2021 and 2020 Consolidated Financial Statement Audit - Sweater Inc.

# Report on the Audit of the Financial Statements

# Opinion

We have audited the consolidated financial statements of Sweater Inc. and subsidiary, which comprise the balance sheets as of December 31, 2021 and December 31, 2020, and the related statements of income, changes in members' equity, and cash flows for the years then ended, and the related notes to the financial statements. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Sweater Inc. as of December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

# Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Sweater Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

# Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Sweater Inc.'s ability to continue as a going concern.

# Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Sweater Inc.'s internal control. Accordingly, no such opinion is expressed.

FS - 4

- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Sweater Inc.'s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Sincerely,

TaxDrop LLC

TaxDrop LLC
Robbinsville, New Jersey
November 10, 2022

FS - 5

# **Sweater Inc.**  
 **BALANCE SHEETS**  
 **December 31, 2021 and December 31, 2020**  
 **(Audited)**

| ASSETS | 2021 | 2020 |
| --- | --- | --- |
| Current Assets |  |  |
| Cash and cash equivalents | $625,109 | $ - |
| Total Current Assets | 625,109 | - |
| Property and Equipment |  |  |
| Computers and equipment | 5,143 | - |
| Accumulated Depreciation | (572) | - |
| Net Property and Equipment | 4,572 | - |
| Total Assets | $629,680 | $ - |
| LIABILITIES AND MEMBERS' EQUITY |  |  |
| Current Liabilities |  |  |
| Accounts payable | $77,469 | $ - |
| Total Current Liabilities | 77,469 | - |
| Total Liabilities | 77,469 | - |
| Members' Equity |  |  |
| Member Contributions | 56,898 | - |
| Safe Notes | 2,769,583 | - |
| Retained Earnings | (2,274,270) | - |
| Total Members' Equity | 552,211 | - |
| Total Liabilities and Members' Equity | $629,680 | $ - |

The accompanying footnotes are an integral part of these financial statements.

FS - 6

# **Sweater Inc.**  
 **INCOME STATEMENTS**  
 **For the Years Ended December 31, 2021 and December 31, 2020**  
 **(Audited)**

|  | 2021 | 2020 |
| --- | --- | --- |
| Revenues | $ - | $ - |
| Operating Expenses |  |  |
| Advertising and marketing | 809,669 |  |
| General and administrative | 109,365 |  |
| Salaries and wages | 954,140 |  |
| Facility | 26,942 |  |
| Legal Services | 328,582 |  |
| Professional Services - Fund Expenses | 45,000 |  |
| Total Operating Expenses | 2,273,698 | - |
| Other Income/(Expenses) |  |  |
| Depreciation and amortization | (572) |  |
| Total Other income (expense) | (572) | - |
| Net Income (Loss) | $(2,274,270) | $ - |

The accompanying footnotes are an integral part of these financial statements.

FS - 7

# **Sweater Inc.**  
 **STATEMENTS OF CHANGES IN MEMBERS' EQUITY**  
 **For the Years Ended December 31, 2021 and December 31, 2020**  
 **(Audited)**

|  | Member Units | Member Contributions | SAFE Notes | Retained Earnings | Total Members' Equity |
| --- | --- | --- | --- | --- | --- |
| Balance as of January 1, 2020 | - | $ - | $ - | $ - | $ - |
| Net loss | - | - | - | - | - |
| Balance as of December 31, 2020 | - | - | - | - | - |
| Issuance of SAFE Notes |  |  | 2,769,583 | - | 2,769,583 |
| Issuance of Member units | 713,030 | 56,898 | - | - | 56,898 |
| Net loss | - | - | - | (2,274,270) | (2,274,270) |
| Balance as of December 31, 2021 | 713,030 | $56,898 | $2,769,583 | $(2,274,270) | $552,211 |

The accompanying footnotes are an integral part of these financial statements.

FS - 8

# **Sweater Inc.**  
 **STATEMENTS OF CASH FLOWS**  
 **For the Years Ended December 31, 2021 and December 31, 2020**  
 **(Audited)**

|  | 2021 | 2020 |
| --- | --- | --- |
| Cash Flows from Operating Activities |  |  |
| Net Income (Loss) | $(2,274,270) | $ - |
| Adjustments to reconcile net income (loss) to net cash provided by operations: |  |  |
| Depreciation and amortization | 572 | - |
| Changes in operating assets and liabilities: |  |  |
| Accounts payable | 77,469 | - |
| Net cash provided by (used in) operating activities | (2,196,229) | - |
| Cash Flows from Investing Activities |  |  |
| Machinery and Equipment | (5,143) | - |
| Net cash used in investing activities | (5,143) | - |
| Cash Flows from Financing Activities |  |  |
| Issuance of Safe Notes | 2,769,583 | - |
| Member Contributions | 56,898 | - |
| Net cash used in financing activities | 2,826,481 | - |
| Net change in cash and cash equivalents | 625,109 | - |
| Cash and cash equivalents at beginning of period | - | - |
| Cash and cash equivalents at end of period | $625,109 | $ - |

The accompanying footnotes are an integral part of these financial statements.

FS - 9

# **SWEATER INC.**  
**NOTES TO FINANCIAL STATEMENTS**  
**AS OF DECEMBER 31, 2021 AND 2020**

# **NOTE 1 - NATURE OF OPERATIONS**

Sweater Inc. (which may be referred to as the “Company”, “we,” “us,” or “our”) was originally registered on October 28, 2019 under the name Sweater LLC, and converted to a Delaware corporation on January 18, 2022. The purpose of the Company is to manage and operate the Cashmere Fund, a closed end interval fund through its subsidiary, Sweater Industries LLC, a Registered Investment Advisor (“RIA”). The accompanying combined financial statements are presented on a combination of interest basis for the years ending December 31, 2021 and 2020.

The Company’s headquarters are in Berthoud, Colorado. The Company had not begun operations until April 1, 2021.

Since inception, the Company has relied on contributions from members and the issuance of Simple Agreements for Future Equity (“SAFEs”). As of December 31, 2021, the Company may likely incur additional losses prior to generating positive working capital. During the next twelve months, the Company intends to fund its operations with funding from a crowdfunding campaign (see Note 8), and funds from revenue producing activities, if and when such can be realized. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

# **Subsidiary**

The Company’s wholly owned subsidiary, Sweater Industries LLC, was registered in Delaware on July 1, 2021.

# **Cashmere Fund Operations**

The Company operates the Cashmere Fund, a closed end interval fund, through its subsidiary. Investors will manage their accounts and investments through the Sweater proprietary app. The Cashmere Fund will differ from other venture funds as venture funds generally compete for funds from accredited investors looking to make investments into private companies. The Sweater Cashmere Fund is unique in that it allows retail investors to participate alongside accredited investors. Sweater Industries LLC will be owed a management fee at the annual rate of 2.50% of the average daily net assets of the Fund.

# **NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

# **Basis of Presentation**

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

# **Use of Estimates**

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

Significant estimates used in the preparation of the accompanying financial statements include recording of depreciation and amortization and the collectible valuation of accounts receivable.

# **Risks and Uncertainties**

The Company has a limited operating history. The Company’s business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes

FS - 10

# **SWEATER INC.**
**NOTES TO FINANCIAL STATEMENTS**
**AS OF DECEMBER 31, 2021 AND 2020**

in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations.

# **Concentration of Credit Risk**

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

# **Cash and Cash Equivalents**

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company's checking account.

# **Receivables and Credit Policy**

Trade receivables from wholesale customers are uncollateralized customer obligations due under normal trade terms, primarily requiring pre-payment before services are rendered. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoice. The Company, by policy, routinely assesses the financial strength of its customer. As a result, the Company believes that its accounts receivable credit risk exposure is limited and it has not experienced significant write-downs in its accounts receivable balances. As of December 31, 2021 the Company has not begun revenue generating operations therefore there are no accounts receivable.

# **Fixed Assets**

Property and equipment is recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the accounts and the resultant gain or loss is reflected in the income statement.

Depreciation is provided using the straight-line method, based on useful lives of the assets which is three years.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there was no impairment for December 31, 2021.

# **Fair Value Measurements**

US GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

- Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.
- Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable.

FS - 11

# **SWEATER INC.**  
**NOTES TO FINANCIAL STATEMENTS**  
**AS OF DECEMBER 31, 2021 AND 2020**

There were no assets or liabilities requiring fair value measurement as of December 31, 2021 and 2020.

### Income Taxes

Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

There is no income tax provision for the Company for the period from Inception through December 31, 2021 as the Company had no taxable income.

The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of December 31, 2021, the unrecognized tax benefits accrual was zero.

### Revenue Recognition

Effective January 1, 2019, the Company adopted FASB ASC 606, *Revenue from Contracts with Customers* ('ASC 606'). Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Prior to the adoption of ASC 606, we recognized revenue when persuasive evidence of an arrangement existed, delivery of products had occurred, the sales price was fixed or determinable and collectability was reasonably assured. The Company has not begun revenue generating operations as of December 31, 2021 therefore no deferred revenue has been recognized.

### Organizational Costs

In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fee, and costs of incorporation, are expensed as incurred.

### Advertising

The Company expenses advertising costs as they are incurred.

### Professional Services - Fund Expenses

The Company incurs professional services expenses related to the Fund as we perform the required vetting of fund investors. Third-party services are hired to assist in overseeing the financial and compliance side of the Cashmere Fund.

### Recent Accounting Pronouncements

In February 2019, FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as 'lessees', to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2021. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

FS - 12

# **SWEATER INC.**  
 **NOTES TO FINANCIAL STATEMENTS**  
 **AS OF DECEMBER 31, 2021 AND 2020**

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

# **NOTE 3 - RELATED PARTY**

The Company’s subsidiary, Sweater Industries LLC, is a licensed RIA and sole purpose is to manage the Cashmere Fund. From time to time the Company gives advances to its subsidiary. As of December 31, 2021, and 2020, the Company has not made any advances to related parties.

# **NOTE 4 - INCOME TAXES**

The Company has filed its income tax return for the period ended December 31, 2020, which will remain subject to examination by the Internal Revenue Service under the statute of limitations for a period of three years from the date it is filed. The Company is taxed as a partnership but will change its tax status in 2022 to a C Corp.

# **NOTE 5 - MEMBERS EQUITY**

# **Member Units**

In 2021 the Company has issued 713,030 of member units for a total of $56,898.

The Board of Directors are authorized to conduct, direct and exercise control over all activities of the Company that are not delegated to the officers of the Company.

# **Additional Paid-In Capital - SAFEs**

In 2021, the Company issued Simple Agreements for Future Equity (“SAFEs”) totaling $2,769,583. The SAFEs are automatically convertible into preferred units on the completion of an equity financing event. (“Qualified Financing”). The conversion price is the lesser of 80% of the price per unit of preferred units received by the Company in a Qualified Financing or the price per share equal to the quotient of a pre-money valuation of $15,000,000 divided by the sum of all Company interests issued and outstanding, assuming exercise or conversion of all outstanding profits interest, vested and unvested options, warrants and other convertible securities, but excluding all SAFEs, convertible promissory notes, and including all interests reserved and available for future grant under any equity incentive or similar plan of the Company and/or any equity incentive or similar plan to be created or increased in connection with the Qualified Financing. All SAFEs are outstanding as of December 31, 2021.

# **NOTE 6 - COMMITMENTS AND CONTINGENCIES**

The Company is not currently involved with and does not know of any pending or threatening litigation against the Company as of December 31, 2021 (see Note 8 - Subsequent Events).

The Company entered into a lease in May 2021 for the office Boulder, Colorado with a term of 2 years. The lease includes a Tenant pro rata share of operating expenses, taxes and insurance. Future minimum lease payments are as follows:

| Years Ending December 31, | Amount |
| --- | --- |
| 2022 | 29,650 |
| 2023 | 9,158 |

FS - 13

# **SWEATER INC.**  
**NOTES TO FINANCIAL STATEMENTS**  
**AS OF DECEMBER 31, 2021 AND 2020**

Total $38,808

The lease expense for the years ended December 31, 2021 and 2020 totaled $26,942 and $0, respectively.

# **NOTE 7 - GOING CONCERN**

These financial statements are prepared on a going concern basis. The Company began operation in 2021 and incurred a loss since inception. The Company’s ability to continue is dependent upon management’s plan to raise additional funds and achieve profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

# **NOTE 8 - SUBSEQUENT EVENTS**

# **Capital Raise**

In 2022 the Company has raised additional capital of $12,387,098 through SAFE issuances..

# **Crowdfunded Offering**

The Company is offering (the “Crowdfunded Offering”) up to $5,000,000 in Simple Agreements for Future Equity (SAFEs). The Company is attempting to raise a minimum amount of $25,000 in this offering. The Company must receive commitments from investors totaling the minimum amount by the offering deadline listed in the Form C, as amended in order to receive any funds.

The Crowdfunded Offering is being made through Dalmore Group.

# **Management's Evaluation**

Management has evaluated subsequent events through November 10, 2022, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements.

FS - 1

# **Sweater Inc Community SPV1, LLC.**  
**A Delaware Limited Liability Company**  
Financial Statements and  
Independent Accountant's Audit Report

FS - 2

# **Sweater Inc Community SPV1, LLC.**
**BALANCE SHEETS**
**As of December 12, 2022 (Inception)**
**(Audited)**

**ASSETS**

Current Assets

Cash and cash equivalents

Total Current Assets

| $ | - |
| --- | --- |
|  | - |

Total Assets

| $ | - |
| --- | --- |

**LIABILITIES AND MEMBERS' EQUITY**

Current Liabilities

Due to a related party

Total Current Liabilities

| $ | - |
| --- | --- |
|  | - |

Total Liabilities

|  | - |
| --- | --- |

Members' equity (Deficit)

Total Members' Equity

|  | - |
| --- | --- |

**Total Liabilities and Members' Equity**

| $ | - |
| --- | --- |

**The accompanying footnotes are an integral part of these financial statements.**

FS - 3

# **SWEATER INC COMMUNITY SPV1, LLC.  
NOTES TO FINANCIAL STATEMENTS  
AS OF DECEMBER 12, 2022 (INCEPTION)**

# **NOTE 1 - NATURE OF OPERATIONS**

Sweater Inc Community SPV1, LLC (the “Company”) was formed on December 12, 2022 under the laws of the State of Delaware. The Company will undertake the limited purpose of acting as a crowdfunding vehicle of acquiring, holding, and disposing of securities issued by Sweater, Inc. (the “Crowdfunding Issuer” in the upcoming crowdfunding campaign), which will also serve as the Manager of the Company (see Note 6). The Company is headquartered in Boulder, Colorado.

All expenses incurred by the Company for the formation, operation, or winding up of the Company shall be paid by the Crowdfunding Issuer, or the Crowdfunding Issuer shall reimburse the Company for any such expenses paid by the Company. Further, any expenses incurred by the Company for its operations pursuant to its purpose shall be paid solely by the Crowdfunding Issuer.

# **NOTE 2 - GOING CONCERN**

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is recently formed and has limited financial resources to continue its operations. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.

The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate capital financing to perform its intended operations. No assurance can be given that the Company will be successful in these efforts. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

# **NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

# **Basis of Presentation**

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“US GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

# **Use of Estimates**

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could materially differ from these estimates. It is reasonably possible that changes in estimates will occur in the near term.

Significant estimates used in the preparation of the accompanying financial statements include recording of depreciation and amortization and the collectible valuation of accounts receivable.

# **Risks and Uncertainties**

The Company has a limited operating history. The Company’s business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company’s financial condition and the results of its operations.

# **Concentration of Credit Risk**

FS - 4

# **SWEATER INC COMMUNITY SPV1, LLC.**
**NOTES TO FINANCIAL STATEMENTS**
**AS OF DECEMBER 12, 2022 (INCEPTION)**

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

# **Cash and Cash Equivalents**

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. The Company does not yet have any bank accounts.

# **Fair Value Measurements**

US GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and such principles also establish a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

- Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.
- Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable.

There were no assets or liabilities requiring fair value measurement as of December 12, 2022 (inception).

# **Income Taxes**

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when the effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will be realized.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. The Company has determined that there are no material uncertain tax positions.

The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future.

The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.

FS - 5

# **SWEATER INC COMMUNITY SPVI, LLC.  
NOTES TO FINANCIAL STATEMENTS  
AS OF DECEMBER 12, 2022 (INCEPTION)**

The Company may in the future become subject to federal, state and local income taxation though it has not been since its inception, other than minimum state tax. The Company is not presently subject to any income tax audit in any taxing jurisdiction.

# **Revenue Recognition**

Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

No revenue has been earned or recognized as of December 12, 2022 (inception).

# **Organizational Costs**

In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fee, and costs of incorporation, are expensed as incurred.

# **Recent Accounting Pronouncements**

In February 2019, FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as “lessees”, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2021. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

# **NOTE 4 - EQUITY**

The Company is a limited liability company formed on December 12, 2022. It will undertake the limited purpose of acquiring, holding, and disposing of securities (the “Securities”) issued by Sweater, Inc. (the “Crowdfunding Issuer”), which will also serve as the Manager of the Company (see Note 6).

The debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the Company, and no member of the Company is obligated personally for any such debt, obligation, or liability.

Pursuant to the Company’s operating agreement, no member of the company has the ability to withdraw any part of a membership contribution as a Member prior to dissolution and winding up of the Company.

# **NOTE 5 - COMMITMENTS AND CONTINGENCIES**

FS - 6

# **SWEATER INC COMMUNITY SPV1, LLC.  
NOTES TO FINANCIAL STATEMENTS  
AS OF DECEMBER 12, 2022 (INCEPTION)**

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations.

# **NOTE 6 - SUBSEQUENT EVENTS**

# **Limited Liability Company Agreement**

On December 21, 2022, the Company entered into a Limited Liability Company Agreement with Sweater Inc, wherein the Company will serve as a “crowdfunding vehicle” with the limited purpose of acquiring, holding, and disposing of securities issued by Sweater, Inc. (“Crowdfunding Issuer”) which will also serve as the Manager of the Company. The business, property, and affairs of the Company shall be managed by the Manager.

All expenses incurred by the Company for the formation, operation, or winding up shall be paid by the Crowdfunding Issuer, or the Crowdfunding Issuer shall reimburse the Company for any such expenses paid by the Company.

# **Management’s Evaluation**

Management has evaluated subsequent events through December 22, 2022, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements.

**Attachment 2:** `SweaterOfferingPage.pdf`

sweater

FAQ

Get Started

# Welcome to the Sweater Inc. Community Round

We are opening a one-time opportunity for Friends of Sweater to own part of Sweater Inc. This is a first come, first serve opportunity. Welcome.

Invest in Sweater

Litquidity

## Invest Alongside Seasoned VCs

By joining this special community round, you'll be investing in Sweater Inc. behind our other VC partners and dozens of seasoned angels such as Motivate VC, Akuna Capital, MRTNZ Ventures, Kickstart Seed Fund, Curate Capital, Bison

Ventures, Spacestation Investments, and influencers like Litquidity, Andrei Jikh, and Nate O'brien.

## Hear the Full Sweater Story

This is a single take, straight from the heart. This is where we come from. Our purpose is to provide an inclusive opportunity no matter your net worth. This is our DNA.

![img-0.jpeg](img-0.jpeg)

## Sweater Inc. vs. Sweater Cashmere

What's the difference? Watch the video for full details on the important nuances.

Venture-Backed VC Fund

Sweater Inc. is powered by VCs and angel investors. You can join them in owning part of Sweater Inc.'s future.

## Technology Ecosystem

02:26

Sweater Inc. is a technology ecosystem. The Cashmere Fund is part of that ecosystem, as is every product Sweater Inc. ever launches.

The Sweater Cashmere Fund is an independent fund managed by Sweater Inc. The investment opportunity presented here, in this community round, is an investment in the wealthtech operating company, Sweater Inc. An investment at the Sweater Inc. level gives you exposure to all the value the Sweater ecosystem will create in the future.

If you are unaccredited, you will join through an exemption called a RegCF, which allows you to do this.

Invest in Sweater

sweater inc.

sweater industries

*Registered Investment Advisor*

cashmere fund

*Statutory Trust*

# Investment Parameters

Here is an overview of the investment parameters for this RegCF community round.

## Terms of the Investment

This community round is organized as an uncapped SAFE with a 10% discount, which will convert in a future preferred round. Sweater Inc. currently intends to offer equity in a Series A raise in late 2023.

## Investment Amounts

Unaccredited investors participating in the RegCF offering can invest as little as $1,000.

| Investment category | RegCF SPV |
| --- | --- |
| Investment vehicle | Uncapped SAFE, 10% discount |
| Minimum investment (unaccredited) | $1,000 |

Venture Funding

SEC

Mobile App

Member Base

Just the Beginning

## Traction to Date

We like to slay dragons. We build. We execute. To date, we've accomplished some huge milestones.

Fund Investments

Invest in Sweater

Team

From Impossible to Reality

## The Sweater Cashmere Fund

It took Sweater Inc. four years to bring the Cashmere Fund to life. As evidence that it is real, you can read all the details yourself through the prospectus, SAI, and Schedule of Investments, linked on the right. Anyone can download the Sweater app and invest into the Cashmere Fund today. With this foundation, Sweater Inc. will launch additional themed funds in the future alongside the Cashmere Fund, all nested under Sweater Inc.'s umbrella.

Cashmere

Fund

Prospectus.pdf

Statement of

Additional

Information.pdf

Schedule of

Investments

(updated

6/30/22).pdf

# Meet the team

We've already achieved what many told us was impossible. We are a team of 30 with rich experience across startups, fintech, and venture capital.

![img-1.jpeg](img-1.jpeg)

Jesse Randall

CEO & Co-Founder

Thunderbird MBA & Vermont

Law

Linkedin

![img-2.jpeg](img-2.jpeg)

Chad Lewkowski

CIO & Co-Founder

Citi Group & Neat Capital

Linkedin

![img-3.jpeg](img-3.jpeg)

Matthew Klein

CXO & Co-Founder

Backbone PLM & Techstars

Mentor

Linkedin

![img-4.jpeg](img-4.jpeg)

Emma Clark

COO

Recurly & JP Morgan Chase

Linkedin

![img-5.jpeg](img-5.jpeg)

Jaron Jones

CTO

Amazon & SoFi

Linkedin

![img-6.jpeg](img-6.jpeg)

Steve Meads

Staff Software Engineer

SoFi

Linkedin

![img-7.jpeg](img-7.jpeg)

### Cara Morphew

Investment Partner

Chicago Ventures & Uber

Linkedin

![img-8.jpeg](img-8.jpeg)

### Sarah Mayo

Director of Member

Experience

Modiv & CrowdStreet

Linkedin

![img-9.jpeg](img-9.jpeg)

### Andrew Hubright

Director of Design

Community.com

Linkedin

![img-10.jpeg](img-10.jpeg)

### Michael Russ

Head of Strategic

Partnerships

Alto IRA & Hatteras Funds

Linkedin

![img-11.jpeg](img-11.jpeg)

### Lindsey Rohde

Head of Founder Ecosystem

Galvanize & LuLu Lemon

Linkedin

## We Know How to Reach the Masses

We walk a fine line between entertainment and education. Our objective is to capture the attention and imagination of people around the world to learn about venture capital. Our track record is well-proven, and we will continue to take the venture capital asset class to the world.

# Portfolio companies

We've already invested in 15 startups from across the country through the Cashmere Fund-see a handful below. While an investment in Sweater Inc. doesn't give you direct exposure to these companies, it does give you exposure to the fund ecosystem that Sweater Inc. is building. This includes the Cashmere Fund itself and all other funds that will launch under the Sweater Inc. umbrella in the years to come.

01:24

01:08

01:30

01:55

01:10

01:14

## Shape the future

Above all, our objective as a company is to build technology, systems, communities, and pathways that will shape the future of the world we enjoy and that of our children and grandchildren. We believe there is no other industry nor mechanism that will have such a powerful impact. Come join us. Lend a hand in shaping the future.

Invest in Sweater

![img-12.jpeg](img-12.jpeg)

## Raise Progress

as of: 12/1/2022

$12345

**FAQs**

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Disclosure

Copyright © Sweater Ventures Inc

Investors should always conduct their own due diligence, not rely on the financial assumptions or estimates displayed herein, and should always consult with a reputable financial advisor, attorney, accountant, and any other professional that can help them to understand and assess the risks associated with any investment opportunity. Any investment involves substantial risks. Major risks, including related to the Equity Protection and/or the potential loss of some or all principal, are disclosed in the private placement memorandum for each applicable investment. The above may contain forward-looking statements. Actual results and trends in the future may differ materially from those suggested or implied by any forward-looking statements in the above depending on a variety of factors. All written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. Except for any obligations to disclose information as required by applicable laws, we undertake no obligation to update any information contained above or to publicly release the results of any revisions to any statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of the publishing of the above.” All securities-related activity is conducted through Dalmore Group, LLC (“Dalmore”), a registered broker-dealer and member FINRA/SIPC. Dalmore does not make investment recommendations and acts only as the broker/dealer of record for the offering listed. You can review the background of our broker-dealer and our investment professionals on FINRA’s BrokerCheck

## BI Form CRS Form Form C Privacy Policy Terms of Use

This site is operated by Dalmore Group, LLC (“Dalmore Group”), which is a registered broker-dealer, and member of FINRA | SIPC, located at 530 7th Avenue, Suite 902, New York, NY 10018, please check our background on FINRA’s **BrokerCheck**. All securities-related activity is conducted by Dalmore Group, LLC (“Dalmore Group”). Dalmore Group does not make investment recommendations and no communication, through this website or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. Equity crowdfunding investments in private placements, and start-up investments in particular, are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investments through equity crowdfunding tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms are accurate or in agreement with the market or industry valuations. Additionally, investors may receive illiquid and/or restricted stock that may be subject to holding period requirements and/or liquidity concerns. In the most sensible investment strategy for start-up investing, start-ups should only be part of your overall investment portfolio. Further, the start-up portion of your portfolio may include a balanced portfolio of different start-ups. Investments in startups are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest. Dalmore Group does not provide custody services in connection any investments made through the platform.

**Attachment 3:** `SweaterSAFENote.pdf`

THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED IN THIS SAFE AND UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

# SWEATER INC.

## SAFE

### (Simple Agreement for Future Equity)

THIS CERTIFIES THAT in exchange for the payment by [Investor Name] (the “Investor”) of $[_________] (the “Purchase Amount”) on or about [Date of Safe], Sweater Inc., a [Delaware] corporation (the “Company”), issues to the Investor the right to certain shares of the Company’s Capital Stock, subject to the terms described below.

The “Discount Rate” is 90%.

See Section 2 for certain additional defined terms.

### 1. Events

(a) **Equity Financing.** If there is an Equity Financing before the termination of this Safe, on the initial closing of such Equity Financing, this Safe will automatically convert into the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Discount Price.

In connection with the automatic conversion of this Safe into shares of Safe Preferred Stock, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; *provided*, that such documents (i) are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and indemnification obligations for the Investor.

(b) **Liquidity Event.** If there is a Liquidity Event before the termination of this Safe, this Safe will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If any of the Company’s securityholders are given a choice as to the form and amount of Proceeds to be received in a Liquidity Event, the Investor will be given the same choice, *provided* that the Investor may not choose to receive a form of consideration that the Investor would be ineligible to receive as a result of the Investor’s failure to satisfy any requirement or limitation generally applicable to the Company’s securityholders, or under any applicable laws.

Notwithstanding the foregoing, in connection with a Change of Control intended to qualify as a tax-free reorganization, the Company may reduce the cash portion of Proceeds payable to the Investor by the amount determined by its board of directors in good faith for such Change of Control to qualify as a tax-free reorganization for U.S. federal income tax purposes, provided that such reduction (A) does not reduce the total Proceeds payable to such Investor and (B) is applied in the same manner and on a pro rata basis to all securityholders who have equal priority to the Investor under Section 1(d).

(c) **Dissolution Event.** If there is a Dissolution Event before the termination of this Safe, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds equal to the Cash-Out Amount, due and payable to the Investor immediately prior to the consummation of the Dissolution Event.

(d) **Liquidation Priority.** In a Liquidity Event or Dissolution Event, this Safe is intended to operate like standard non-participating Preferred Stock. The Investor’s right to receive its Cash-Out Amount is:

4883-8151-1998.1

(i) Junior to payment of outstanding indebtedness and creditor claims, including contractual claims for payment and convertible promissory notes (to the extent such convertible promissory notes are not actually or notionally converted into Capital Stock);

(ii) On par with payments for other Safes and/or Preferred Stock, and if the applicable Proceeds are insufficient to permit full payments to the Investor and such other Safes and/or Preferred Stock, the applicable Proceeds will be distributed pro rata to the Investor and such other Safes and/or Preferred Stock in proportion to the full payments that would otherwise be due; and

(iii) Senior to payments for Common Stock.

The Investor's right to receive its Conversion Amount is (A) on par with payments for Common Stock and other Safes and/or Preferred Stock who are also receiving Conversion Amounts or Proceeds on a similar as-converted to Common Stock basis, and (B) junior to payments described in clauses (i) and (ii) above (in the latter case, to the extent such payments are Cash-Out Amounts or similar liquidation preferences).

(e) **Termination.** This Safe will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this Safe) immediately following the earliest to occur of: (i) the issuance of Capital Stock to the Investor pursuant to the automatic conversion of this Safe under Section 1(a); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 1(b) or Section 1(c).

## 2. Definitions

'**Capital Stock**' means the capital stock of the Company, including, without limitation, the '**Common Stock**' and the '**Preferred Stock**.'

'**Change of Control**' means (i) a transaction or series of related transactions in which any 'person' or 'group' (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), becomes the 'beneficial owner' (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company's board of directors, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.

'**Direct Listing**' means the Company's initial listing of its Common Stock (other than shares of Common Stock not eligible for resale under Rule 144 under the Securities Act) on a national securities exchange by means of an effective registration statement on Form S-1 filed by the Company with the SEC that registers shares of existing capital stock of the Company for resale, as approved by the Company's board of directors. For the avoidance of doubt, a Direct Listing shall not be deemed to be an underwritten offering and shall not involve any underwriting services.

'**Discount Price**' means the lowest price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate.

'**Dissolution Event**' means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of the Company's creditors or (iii) any other liquidation, dissolution or winding up of the Company (**excluding** a Liquidity Event), whether voluntary or involuntary.

'**Dividend Amount**' means, with respect to any date on which the Company pays a dividend on its outstanding Common Stock, the amount of such dividend that is paid per share of Common Stock multiplied by (x) the Purchase Amount divided by (y) the Liquidity Price (treating the dividend date as a Liquidity Event solely for purposes of calculating such Liquidity Price).

-2-

4883-8151-1998.1

“**Equity Financing**” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed valuation, including but not limited to, a pre-money or post-money valuation.

“**Initial Public Offering**” means the closing of the Company’s first firm commitment underwritten initial public offering of Common Stock pursuant to a registration statement filed under the Securities Act.

“**Liquidity Event**” means a Change of Control, a Direct Listing or an Initial Public Offering.

“**Liquidity Price**” means the price per share equal to the fair market value of the Common Stock at the time of the Liquidity Event, as determined by reference to the purchase price payable in connection with such Liquidity Event, multiplied by the Discount Rate.

“**Proceeds**” means cash and other assets (including without limitation stock consideration) that are proceeds from the Liquidity Event or the Dissolution Event, as applicable, and legally available for distribution.

“**Safe**” means an instrument containing a future right to shares of Capital Stock, similar in form and content to this instrument, purchased by investors for the purpose of funding the Company’s business operations. References to “this Safe” mean this specific instrument.

“**Safe Preferred Stock**” means the shares of the series of Preferred Stock issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences and restrictions as the shares of Standard Preferred Stock, other than with respect to: (i) the per share liquidation preference and the initial conversion price for purposes of price-based anti-dilution protection, which will equal the Discount Price; and (ii) the basis for any dividend rights, which will be based on the Discount Price.

“**Standard Preferred Stock**” means the shares of a series of Preferred Stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing.

### 3. Company Representations

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.

(b) The execution, delivery and performance by the Company of this Safe is within the power of the Company and has been duly authorized by all necessary actions on the part of the Company (subject to section 3(d)). This Safe constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To its knowledge, the Company is not in violation of (i) its current certificate of incorporation or bylaws, (ii) any material statute, rule or regulation applicable to the Company or (iii) any material debt or contract to which the Company is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.

(c) The performance and consummation of the transactions contemplated by this Safe do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material debt or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien on any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.

(d) No consents or approvals are required in connection with the performance of this Safe, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities laws; and (iii) necessary corporate approvals for the authorization of Capital Stock issuable pursuant to Section 1.

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4883-8151-1998.1

(e) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without any conflict with, or infringement of the rights of, others.

#### **4. Reserved**

#### **5. Miscellaneous**

(a) Any provision of this Safe may be amended, waived or modified by written consent of the Company and either (i) the Investor or (ii) the majority-in-interest of all then-outstanding Safes with the same 'Post-Money Valuation Cap' and 'Discount Rate' as this Safe (and Safes lacking one or both of such terms will be considered to be the same with respect to such term(s)), *provided that* with respect to clause (ii): (A) the Purchase Amount may not be amended, waived or modified in this manner, (B) the consent of the Investor and each holder of such Safes must be solicited (even if not obtained), and (C) such amendment, waiver or modification treats all such holders in the same manner. 'Majority-in-interest' refers to the holders of the applicable group of Safes whose Safes have a total Purchase Amount greater than 50% of the total Purchase Amount of all of such applicable group of Safes.

(b) Any notice required or permitted by this Safe will be deemed sufficient when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address listed on the signature page, as subsequently modified by written notice.

(c) The Investor is not entitled, as a holder of this Safe, to vote or be deemed a holder of Capital Stock for any purpose other than tax purposes, nor will anything in this Safe be construed to confer on the Investor, as such, any rights of a Company stockholder or rights to vote for the election of directors or on any matter submitted to Company stockholders, or to give or withhold consent to any corporate action or to receive notice of meetings, until shares have been issued on the terms described in Section 1. However, if the Company pays a dividend on outstanding shares of Common Stock (that is not payable in shares of Common Stock) while this Safe is outstanding, the Company will pay the Dividend Amount to the Investor at the same time.

(d) Neither this Safe nor the rights in this Safe are transferable or assignable, by operation of law or otherwise, by either party without the prior written consent of the other; *provided, however*, that this Safe and/or its rights may be assigned without the Company's consent by the Investor (i) to the Investor's estate, heirs, executors, administrators, guardians and/or successors in the event of Investor's death or disability, or (ii) to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor; and *provided, further*, that the Company may assign this Safe in whole, without the consent of the Investor, in connection with a reincorporation to change the Company's domicile.

(e) In the event any one or more of the provisions of this Safe is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Safe operate or would prospectively operate to invalidate this Safe, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this Safe and the remaining provisions of this Safe will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby.

(f) All rights and obligations hereunder will be governed by the laws of the State of Delaware, without regard to the conflicts of law provisions of such jurisdiction.

(g) The parties acknowledge and agree that for United States federal and state income tax purposes this Safe is, and at all times has been, intended to be characterized as stock, and more particularly as common stock for purposes of Sections 304, 305, 306, 354, 368, 1036 and 1202 of the Internal Revenue Code of 1986, as amended. Accordingly, the

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4883-8151-1998.1

parties agree to treat this Safe consistent with the foregoing intent for all United States federal and state income tax purposes (including, without limitation, on their respective tax returns or other informational statements).

*(Signature page follows)*

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4883-8151-1998.1

IN WITNESS WHEREOF, the undersigned has caused this Safe to be duly executed and delivered.

**SWEATER INC.**

By: _________________________

Name:

Title:

Address: 2000 Central Avenue

Boulder, CO 80301

Email: _________________________

4883-8151-1998.1

**Attachment 4:** `SweaterVideoTranscriptA.pdf`

RegCF | Sweater  
Video Transcripts

## RegCF Disclosure Overview

Welcome to our inner circle. You're here because you're already a close friend of Sweater. We're not opening this to the general public beyond our immediate communities and our personal connections. So thank you for coming this far. We have a small window to allow you to invest alongside the VCs and angels that have already invested in Sweater Inc to date. We don't know whether or not we'll ever be able to offer an investment opportunity for the general public into Sweater Inc again. That said, we invite you to take a close look at the materials, videos, and resources we have organized in this disclosure page for you to gain a level of comfort and trust in the vision of a venture capital world that is open and inclusive for investors of every level.

## Sweater Inc vs Cashmere Fund

Have you ever watched the movie Inception? Get ready for a little bit of that as we discuss how Sweater Inc fits into the venture capital industry and how it's different from the Sweater Cashmere Fund. Inception #1 -- Sweater Inc is effectively a venture backed venture capital fund. We have raised money in exchange for equity from venture capital funds, from across the country and angel investors across more than a dozen states. The money we have raised has allowed us to launch the Cashmere Fund, build the mobile app experience that is live today, conduct sophisticated marketing campaigns to attract investors and members, and power the deal team that deploys the Cashmere Fund and invests into startups. We are a venture backed venture capital fund. Inception #2. You may have already invested in the Sweater Cashmere Fund. This gives you investment exposure to all of the investments the Cashmere Fund has made and will make in the future. Investing in Sweater Inc is an investment in the parent fintech company that owns the ecosystem that the Sweater Cashmere Fund is a part of. Here's how it works: as we mentioned earlier, Sweater Inc is a venture backed fintech company. This company wholly owns a registered investment advisor called Sweater Industries. This is often called an RIA for short. The Cashmere Fund is a separate and fully independent entity set up as a statutory trust. This trust contracts with the RIA Sweater Industries to manage all of its operations and facilitate its investments. This becomes an ecosystem as Sweater Inc opens future funds alongside the Cashmere Fund all contracting centrally with the RIA Sweater Industries. We'll have fun with those fund brands too. We've already got the Cardigan Fund and the Hoodie Fund on the docket. Sweater Inc is the top of the Sweater ecosystem and investment at the level we are offering today provides you with exposure to all the value that Sweater will ever create and you'll be invested right alongside the current and future venture capital funds who support Sweater in its effort to open up the venture capital asset class to every level of investor and build the technology that will revolutionize the entire venture ecosystem.

# The Story of Sweater

Sweater has done a really good job of telling all the stories of our portfolio companies, but we've never really fully documented our own story. So here's the brief version. About four years ago, I went out to start my own venture fund, and almost immediately I was confronted with this reality that I wouldn't be able to invest in my own fund because I was not an accredited investor. And I remember really being taken aback by that and kind of beside myself because I thought, I'm the guy running the fund. How can I not invest in my own fund? And I wasn't really that upset about it, but I was very interested and I was curious. And so I used some of my own personal policy background to go and dive into the rules behind accreditation requirements. And what I found was really off-putting, because effectively the justification for accreditation rules says if you aren't wealthy, then you're probably not smart enough to understand this really complicated stuff and we need to protect you from it. And it was so condescending. And I, I remember being surprised that that was the core of what they were justifying this whole law around and cutting so many people out from this asset class and so many other asset classes. And it lit a fire in me. And so I put aside the idea of starting my own fund and said, I'm going to get to the bottom of this. I'm going to figure out a way to allow anyone to participate in the venture capital asset class, because it's consistently been the number one or number two performing asset class as a category over the last 20 or 30 years. So why is it that 95% of Americans can't participate in it? And I was lit up. I was excited to go after this. But, man, the journey was long. You know, we ended up taking us about two and a half years to actually get an audience with the right people at the SEC. And we were talking to everybody. We talked to attorneys of every shape and size all across the country and every different specialty, trying to figure out who we can talk to inside the SEC. And we finally made the right connection that brought us to them. And the end point ended up being effectively changing our mindset, because what the question became for us to solve was, is there already a preexisting fund structure out there that we can leverage that would allow us to take money from everyday people, from retail investors, and that would also allow us to invest in the same assets as the venture capital fund does, but without actually being by a legal definition of venture capital fund. And that's what we cracked the code on. So when we finally got in front of the SEC, it was like they were waiting for us. They had been having internal discussions for years and they effectively laid out these fund structures in front of us and said, well, how could you operate within these preexisting structures? We took that and came back to them and said, You know what, this one works. And with that we were on a roll, but it still took another six months for us to go out and actually raise money from angel investors to power the whole process. Because going through the SEC takes between nine and twelve months and costs anywhere from a quarter million to half a million dollars to do that. And so we had to bring partners around the table. And overall, it took us a full three years from the time that we discovered that we wanted to do this until, on a personal level, I was able to take a single dollar off the table in order to pursue this. And it's not the typical startup story. There were huge barriers for us to make this a reality. And now that we've launched and we're officially in the market and

we have thousands of members and investors around the table with us, there's nothing that can stop us now.

**Attachment 5:** `SweaterVideoTranscriptB.pdf`

## RegCF Compliance### Marketing Video Transcripts---

This is Sweater (00:54 version)

This is venture capital. It's just rich people getting richer. And this is Jesse. Jesse knew a lot about investing. He helped VC firms turn money into more money. A lot more money. But now he wants to work for you. And that's why he made Sweater. A way for everyone to invest in venture capital. Sweater's team of analysts invests your money in a carefully curated portfolio of smart startups that haven't gone public yet. Sweater reduces the buy-in of venture capital which is typically millions to something more realistic. Sweater is the first VC fund for everyone. Sign up now to be first to get access. Join our tight-knit community today.

Sweater | Better than a Mattress (01:40 version)

This is you. And this is a Sweater party - the future of venture capital. Founders, investors, and everyday people coming together to make something new. Venture capital used to be a private party, but not anymore. And you are? Stuffing money under my mattress. No. Ya don't. Ya, just... don't. What should I do with it, put it in a bank? That's basically the same thing. Savings pays less than the rate of inflation. So, if you're hiding money, you're losing money. Dang. What about the stock market? Crypto? People do those, right? Those ships have either sailed, or they are sinking... and floating again, and sinking. What does NFT even stand for?

NO-FREAKING-THANKS. You do have that friend from high school, who's selling insurance and 'financial advice', and wants to meet you for lunch. No freakin' thanks! Why don't you try on Sweater? Sweater combines your investment power with other investors to fuel promising young start-ups before they even hit the stock market. And as their big ideas become big companies, your investment grows with them. This is called venture capital, and it used to only be accessible to the super rich- like this guy. But now Sweater's giving that power to you. And with regular folks like you invested in venture capital, it has more power to change the world for regular folks just like you. Choose how much you want to initially invest and then make smaller monthly investments to grow your share's worth. Our team of analysts and scouts do the footwork of finding companies, measuring their success, and investing in long term growth. And you can watch it all from the app. So stop waiting, join the party. We can only change the world if we are all invested. Download the Sweater app and start investing in your future, today.

Sweater | 'Next Big Idea' | Founder Inspiration (02:08 version)

Founders, we know you're out there, and we're looking for you. You mind? I'm working. And we don't wanna get in your way, we want to pave it. Right now, the next idea is being sketched out on a napkin. Yes! Like that. It's being talked about around the kitchen table. I think we could do it. Let's do it - let's just do it. And it's being 3D printed in somebody's home office. Right now

someone is giving notice and turning that side hustle into the next big thing. While another group is looking for just a little more runway for their next big idea to take off. With a little investment, next year could be huge. It's going to be amazing! That's where Sweater comes in. Sweater VC is a tight-knit community of ordinary people investing in promising new startups. We know the next big world-changing idea won't be born in a board room. For every ten people with amazing 'what ifs,' there are hundreds of 'yeah, buts.' At Sweater we believe in saying yes to big ideas. We have an app that lets you talk to plants. Yeah, like that, but bigger. Ok, what if all the plants in the world could let us know what they need. We would then know what they need to grow in any environment. Today, on your windowsill, tomorrow on Mars. That's more like it. We believe in founders with vision. We believe in people that are starting something. That's why we're making venture capital accessible to everyone with one of the country's first ever retail venture capital firms, Sweater VC. This isn't free money. It's an investment-based potential for growth and we don't just invest in anyone. We invest in companies that can change industries, market places, and the world. We invest with our dollars, our resources, and a vast network of investors, and then we get out of your way. We don't just take equity. We take your calls when you need it and give you your space when you don't. No problem, I'll be right here. It doesn't matter where you went to school, who you know, where you came from. So consider this your warm introduction. You already have an in with Sweater. With Sweater, there are no cold shoulders and we're already scouting across the country looking for the founders with the next big idea. Founders, we know you're out there and we're coming to you, because we know we can only change the world if we're all invested.

Shappi | Quick Pitch

I'm Danny Qiao and I'm a Senior Associate at Sweater and I have the privilege today of sharing why we invested in Shappi. Shappi is a logistics and shipping platform designed to connect international shoppers with travelers to deliver products by renting the traveler's unused luggage space. The company's platform empowers Latin American consumers to obtain delivery of their US products in a faster, affordable, and more reliable way by connecting them to verified travelers returning from the US to their destination. We invested in Shappi due to our high conviction in the founder, the Shappi platform, and the market white space. Founder and CEO Karla has a proven entrepreneurial track record with previous founder experiences starting a product factory based out of Ecuador, becoming a Founder-in-Residence at Antler in New York City, and most recently launching Shappi through Snap's Yellow accelerator. She has remained deeply connected to the Latin American ecosystem, building a competitive understanding of the obstacles surrounding international logistics. The team is capitalizing on touchpoints that already exist between travelers, products, and their home countries with simplified logistics, technology, and trust. We are so excited to have Shappi and Karla in our portfolio today. Check them out through our Sweater app and sign up to be a verified traveler or shopper today.

Accredible | Quick Pitch

I'm Cash Allred. I'm a principal at Sweater, and here's why we invested in Accredible. Accredible is a tech company building the world's largest database of educational credentials. Educational institutions, credentialing bodies and tech companies use Accredible software to issue digital certificates or badges to the recipients, all verifiable on the blockchain. These credentials form a relationship between the issuer and the recipient and in the future can be used to inform individuals of the optimal educational path for their particular career aspirations beyond their GPA. Accredible has proven they can win the land grab as institutions move from paper to digital credentials with near-perfect retention of over 1700 customers, including Google, GMat, Toyota and many more. So far, they've issued over 42 million credentials to 11 million recipients. As Accredible's database expands, they're gaining new opportunities to create value for both issuers and recipients and build new revenue streams. We are excited to change the future of education by having Accredible in the Sweater portfolio.

#### Curate Capital | Quick Pitch

Hi Sweater Members. I'm Cara, and here's why we invested in Curate. Curate Capital is a venture capital fund whose sole mission is to invest in female-founded businesses that cater to other females. Curate is run by solo GP Carrie Colbert, who brings over 20 years of experience across operations, angel investing, and social media. What's most compelling about Curate is the mission to address a massive gap in funding for female founders, Carrie's fantastic experience, and her network of female limited partners and leaders. In 2021, female-founded startups only received 2% of venture capital dollars, while 45% of startups had a female founder. Beyond these stats, a recent study found that woman-led teams generate 35% higher ROI than all-male teams, providing a huge opportunity for Curate to drive significant impact with a highly-attractive returns profile. After angel investing for five years, Carrie has built an impressive track record and large pipeline of high-quality deal flow. Not only does Carrie have a great operational background with 17 years of experience in cross-functional leadership roles in the oil and gas industry, but she also has a large social media following herself with nearly 85,000 followers on Instagram. Carrie has also attracted a great LP base, with female investors making up 80% of her limited partners. Check out Curate in Sweater's app to learn more about Carrie and her fund.

#### True Footage | Quick Pitch

I'm Cash Allred. I'm a principal Sweater. And this is why we invested in True Footage. True Footage is a tech-enabled appraisal company doing both in-person and desktop residential appraisals. True Footage appraisers leverage proprietary data products to produce more objective appraisals. We were super impressed with True Footage's technology and their growth in both a buyer and seller housing market. True Footage appraisers use their tech to turn around an appraisal in an average of six days, more than twice as fast as the industry average. This is super important for lenders as it reduces snags in closing new loans. For appraisers, True Footage's software brings real market data to their fingertips, making price adjustments less

biased and time-intensive. True Footage appraisers can make more money as they complete five times the number of appraisals they can do on their own. True Footage's growth has been explosive. They 15X their revenue in the last year and are rolling out their offering to one of the largest mortgage companies in the country. They're currently operating in 32 states with over 300 bank and appraisal customers. They're already the largest appraisal company in the US and still have large markets to open up. With interest rates rising and real estate transitioning to a buyer's market, a fast and accurate appraisal is more important than ever to lenders and sellers. Lenders often work with a variety of appraisers, but first turn to their most trusted provider - in this case True Footage before offering business to others. This dynamic allows True Footage to maintain business with existing customers while also gaining new customers looking for a better solution. We are excited to have True Footage in the Sweater portfolio to improve the appraisal process for everyone involved.

#### EarlyBird | Quick Pitch

I'm Cara Morphew. I'm a partner at Sweater, and I'm thrilled to share more about why we invested in EarlyBird. EarlyBird is a fintech mobile app focused on parents opening custodial investment accounts for their kids and offering the ability for friends and family to gift an investment into each child's future. EarlyBird is a registered investment advisor for the youngest generation. Our team was thrilled about the opportunity to invest in EarlyBird because of the market potential, the team, and the mission of creating financial democratization and generational wealth. The baby and family tech market is estimated to be a $50 billion market opportunity globally. And what's amazing about the concept behind EarlyBird is the virality of the product. A user may contribute to a friend's EarlyBird account via their baby registry and then share that with a sibling in hopes of starting contributions for a niece or nephew. 65% of EarlyBird acquisitions have been driven through word of mouth virality. We couldn't be more excited to welcome EarlyBird to the Sweater portfolio. Check out the link to EarlyBird's website in the Sweater app to create an account for a child in your life today.

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM C

### UNDER THE SECURITIES ACT OF 1933

### Issuer Information

**Name of Issuer:** Sweater Inc

**Legal Status:** Corporation

**Jurisdiction of Incorporation/Organization:** DE

**Date of Organization:** 01-23-2022

**Physical Address:** 520 MOUNT RAINIER STREET, BERTHOUD, CO, 80513

**Issuer Website:** https://www.sweaterventures.com/

**Is there a Co-Issuer?:** Yes

**Intermediary Name:** DALMORE GROUP LLC

**Intermediary CIK:** 0001332099

**Intermediary File Number:** 008-67002

**Intermediary CRD Number:** 000136352

### Offering Information

**Compensation to Intermediary:** 4% of all sums raised in this offering (1% of which will be delivered in membership interests), plus a $25,000 fee.

**Financial Interest in Issuer:** Dalmore Group LLC will receive the company's 1% of the interest sold in the same form of security.

**Type of Security Offered:** Other

**Other Description of Security:** SAFE Note

**Number of Securities Offered:** 25000

**Price per Security:** $1.00

**Target Offering Amount:** $25,000.00

**Oversubscription Accepted:** Yes

**Oversubscription Allocation Type:** Other

**Description of Oversubscription:** At the discretion of the company

**Maximum Offering Amount:** $5,000,000.00

**Deadline to Reach Target Amount:** 03-31-2023

### Annual Report Disclosure Requirements

**Current Number of Employees:** 31.00

**Total Assets (Most Recent Fiscal Year):** $629,680.00

**Total Assets (Prior Fiscal Year):** $0.00

**Cash & Cash Equivalents (Most Recent Fiscal Year):** $625,109.00

**Cash & Cash Equivalents (Prior Fiscal Year):** $0.00

**Accounts Receivable (Most Recent Fiscal Year):** $0.00

**Accounts Receivable (Prior Fiscal Year):** $0.00

**Short-Term Debt (Most Recent Fiscal Year):** $77,469.00

**Short-Term Debt (Prior Fiscal Year):** $0.00

**Long-Term Debt (Most Recent Fiscal Year):** $0.00

**Long-Term Debt (Prior Fiscal Year):** $0.00

**Revenues/Sales (Most Recent Fiscal Year):** $0.00

**Revenues/Sales (Prior Fiscal Year):** $0.00

**Cost of Goods Sold (Most Recent Fiscal Year):** $0.00

**Cost of Goods Sold (Prior Fiscal Year):** $0.00

**Taxes Paid (Most Recent Fiscal Year):** $0.00

**Taxes Paid (Prior Fiscal Year):** $0.00

**Net Income (Most Recent Fiscal Year):** $-2,274,270.00

**Net Income (Prior Fiscal Year):** $0.00

**Jurisdictions Offered:**

ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DELAWARE, DISTRICT OF COLUMBIA, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEBRASKA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, NORTH DAKOTA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, PR, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA, WISCONSIN, WYOMING, ALBERTA, BRITISH COLUMBIA, MANITOBA, NEW BRUNSWICK, NEWFOUNDLAND, NOVA SCOTIA, ONTARIO, PRINCE EDWARD ISLAND, QUEBEC, SASKATCHEWAN, YUKON TERRITORY, ISRAEL

### Signatures

**Issuer:** Sweater Inc

**Signature:** Jesse Randall

**Title:** CEO

---

**Signature:** Jesse Randall

**Title:** CEO and Director

**Date:** 01-13-2023

---

**Signature:** Chad Lewkowski

**Title:** CIO and Director

**Date:** 01-13-2023

---

**Signature:** Matthew Klein

**Title:** CXO

**Date:** 01-13-2023

---

**Signature:** Emma Clark

**Title:** COO

**Date:** 01-13-2023