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ADDITIONAL DISCLOSURE STATEMENT

Effective Date: January 1, 2025

Distro Channels LLC (“Distro Capital”) provides this document to enhance transparency and clarify the scope and terms of our services. This disclosure details the structure of our services, potential conflicts of interest, and our commitment to protecting client information. We encourage you to review this information carefully and reach out with any questions. Updates to this document will be made periodically, and the most current version can always be accessed via our website or by contacting us directly.

Section 1: Who We Are

Distro Capital LLC specializes in building distribution networks for businesses seeking to raise capital. We focus on recruiting, placing, and managing independent investment sales professionals (“Consultants”) who work under the banner of our clients. These Consultants facilitate general solicitation and investor outreach in compliance with applicable laws, such as Regulation D, Rule 506(c).

Unlike broker-dealers, Distro Capital does not sell securities or provide investment advice. We operate solely as a business service provider, offering tools, expertise, and human capital to help companies scale their fundraising operations.

What We Do:

  • Recruitment and Placement:
    We source and assign Consultants to client companies for investor outreach and capital-raising efforts.
  • Support Services:
    We provide optional management tools, including CRM systems, onboarding support, and team organization.
  • Scalable Network Building:
    We assist in creating hierarchical structures (e.g., Master Agents and sub-agents) to scale teams effectively.

What We Don’t Do:

  • Distro Capital does not hold customer funds, manage investment accounts, or provide ongoing recommendations regarding investments.
  • We do not monitor investor accounts or transactions.

Section 2: Who We Serve

Distro Capital serves businesses seeking to raise capital, including startups, real estate ventures, and alternative investment projects. Our clients engage us to build and manage distribution networks, ensuring a seamless process for investor outreach.

How We Serve Clients:

  • By assigning Consultants who operate under the client’s direction to solicit accredited investors in compliance with Regulation D.
  • By providing tools and systems to enhance the efficiency of capital-raising efforts.

Responsibilities of Our Clients:

  • Clients are responsible for ensuring compliance with all applicable securities laws in their operations.
  • Clients must conduct independent due diligence on investments and investors involved in their fundraising campaigns.

Section 3: Standards of Conduct and Conflict Management

Commitment to Transparency:

We strive to present clear, balanced, and fair information regarding the services we provide. Our role is to support client companies by building and managing their distribution networks, with no direct involvement in investor decision-making.

Potential Conflicts of Interest:

  • Distro Capital earns fees for placing and managing Consultants, which could create a conflict of interest. To address this, we ensure all placements align with the client’s specific needs and goals.
  • We do not prioritize any one client or project over others due to compensation arrangements.

How We Address Conflicts:

  • By clearly disclosing the scope of our services and compensation structure.
  • By ensuring transparency in the recruitment and placement process.
  • By avoiding any practices, such as sales quotas, that could compromise our commitment to client needs.

Section 4: Services and Compensation

Nature of Services:

Distro Capital offers performance-based services, earning compensation for:

  1. Recruiting and Placing Consultants: Fees are earned when Consultants are successfully assigned to client companies.
  2. Management and Support Services: Optional services, such as CRM access and team organization, are available for an additional fee.

Compensation Structure:

  • Compensation is tied to the placement and performance of Consultants. Specific terms are detailed in client agreements.
  • Consultants are independent contractors and are compensated based on their success in raising capital for the client company.

Section 5: Risk Considerations

Private Investment Risks:

While Distro Capital does not directly facilitate investments, we work with companies that raise capital for private investment opportunities. It’s important to note that private investments carry inherent risks, including but not limited to:

  • Illiquidity and significant restrictions on transferability.
  • High volatility and potential loss of principal.
  • Complex tax structures that may delay essential tax information.

We encourage all parties involved to conduct independent due diligence and consult with legal, tax, and financial advisors before proceeding.

Section 6: Protection of Client Information

Distro Capital prioritizes safeguarding client information from misuse and unauthorized access. We implement strict policies and procedures to protect sensitive information and ensure compliance with applicable laws.

Information Security Measures:

  • Access to transactional and operational data is limited to authorized personnel on a need-to-know basis.
  • Systems are continuously monitored to detect and mitigate external threats.
  • Regular training is conducted for employees and Consultants on data protection and confidentiality.

Section 7: Additional Information

How to Learn More:

For additional information about our services or to access the latest version of this disclosure, please contact us directly:

  • Email: info@distrocapital.com
  • Phone: 855.245.1003
  • Website: https://distrocapital.com

Contact for Concerns:

If you have concerns about our services or the conduct of any Consultants assigned to your company, please reach out to us immediately.

Disclaimer:

Distro Capital does not act as a broker-dealer or investment adviser and does not sell securities or provide investment advice. All client companies are responsible for ensuring compliance with securities laws.

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