Blue Dot Inc. is offering an innovative "venture seed program" in order to raise initial capital:
Blue Dot envisions two stages for its business development: the current formation stage, and a subsequent commercial execution stage. In the formation stage our goal is to develop the initial technology asset, and to prepare organizationally for the execution phase.
The venture seed program is intended to raise the capital needed for the formation phase. We expect the requirement for this phase not to exceed $50K, and to be completed before mid-1996 (optimally by the 2nd quarter). The formation phase ends with the successful liquidation of the venture fund with capital obtained through offering the developed World Basic(tm) software base to a new venture or other party able to undertake the execution phase.
Qualified participants in the venture seed program invest a portion of the seed capital. This investment is secured by using the World Basic code base as collateral. The essential agreement with the shareholders is that Blue Dot must repay the seed investment before it is able to utilize the code base for further commercial purposes (unless otherwise agreed to by the fund's shareholders). Thus the fund acts much like a "lein" on the code which must be repaid by the company in order to have free and clear title to this key intellectual property asset.
Seed investor's shares are to be repaid at an annualized percentage rate of 50% on the dollar invested. Thus if the commercial execution phase is funded six months after investment the ROI would be 25%.
It should be stressed that this seed fund is a venture program, and that capital invested is risk capital. If a commercial execution phase cannot be intiated there can be no return. No representation to the contrary is expressed or implied. This program is therefore only suitable for sophisticated speculative investors. These risks are reflected in the high rate of interest offered by the program.
At all times the collateral assets remain the property of Blue Dot Inc. Since the funding obtained is to be used to increase the potential market value of the assets no ownership interest in the assets or the company will accrue to the participants, diluting their value.
Blue Dot intends, on a best-effort basis, to offer participants an opportunity to convert their interests into shares in the company at some time in the future on a preferential basis. However because this may possibly conflict with the projected future funding arrangements this cannot be guaranteed.
Shares in the fund are on a dollar-per-share basis. The size of the fund is intended to be kept as small as possible in order to minimize the burden of liquidation. Blue Dot retains all rights to qualify prospective investors, operate, manage and liquidate the fund, and to conduct all other needful business, including obtaining additional capital for the company.
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