March 3, 2020
Sally Outlaw
Chief Executive Officer
Worthy Peer Capital II, Inc.
One Boca Commerce Center
551 NW 77 Street, Suite 212
Boca Raton, FL 33487
Re: Worthy Peer Capital II, Inc.
Offering Statement on Form 1-A
Filed February 5, 2020
File No. 024-11150
Dear Ms. Outlaw:
We have reviewed your offering statement and have the following
comments. In some of
our comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to this letter by amending your offering statement and
providing the
requested information. If you do not believe our comments apply to your facts
and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response. After reviewing any amendment to your offering statement and the
information you
provide in response to these comments, we may have additional comments.
Offering Statement on Form 1-A
Part II
Use of Proceeds, page 15
1. We note your disclosure on page 15 that 5% of the proceeds will used for
payments under
the Management Services Agreement. In this regard, we note your
disclosure that you
have not yet determined the the monthly fee or the fee for the annual
salaries of the
executive officers and other personnel employed by Worthy Management. To
the extent
that you are paying back the amount of advances that WFI provided, please
set forth the
interest rate and maturity of such indebtedness. Also, please clarify
whether this
payment is remuneration based either directly or indirectly on the bonds
sold in this
offering. In this regard, we note that the payment to WFI appears to be
based on the
number of bonds sold in the offering.
Sally Outlaw
FirstName LastNameSally Outlaw
Worthy Peer Capital II, Inc.
Comapany NameWorthy Peer Capital II, Inc.
March 3, 2020
March 3, 2020 Page 2
Page 2
FirstName LastName
Our Business, page 18
2. We note your disclosure on page 18 that your business model is
centered primarily around
providing loans for small businesses, including loans to
manufacturers, wholesalers, and
retailers secured by inventory, accounts receivable and/or equipment
and purchase order
financing. Please revise your business section to disclose your plan
of operation so that
investors understand how and when you plan on providing loans,
acquiring real estate and
making investments, including whether loans will be referred to you by
WFI and whether
you have any contracts with third parties related to the services you
intend to provide. In
this regard, we note your disclosure in your Risk Factors section that
you intend to
contract with third parties to provide services related to your online
web lending and
marketing as well as systems that automate the servicing of your loan
portfolios.
Worthy Causes, page 20
3. We note your disclosure on page 20 that bonds can be donated to
charitable
organizations. Please disclose if your investors will be charged a 1%
transfer fee for
making contributions via your Worthy Causes program.
Management
Directors and Executive Officers
Involvement in Certain Legal Proceedings, page 24
4. We note your disclosure regarding the Order Instituting
Cease-and-Desist Proceedings
pursuant to Section 21C of the Exchange Act issued by the U.S.
Securities and Exchange
Commission on September 30, 2016 to Mr. D'Arelli. Please revise your
offering circular
summary to include a summary of the order.
Description of the Worthy II Bonds, page 26
5. We note your disclosure on page 26 that the bonds are "renewable at
the option of the
bond holder." Please disclose the process to renew the bonds and that
the bonds may be
renewed for up to two additional three year terms. In addition, please
disclose that
Worthy II Bonds, prior to the maturity date, are prepayable upon five
days notice by
Worthy Peer Capital II to the bond holder and that the outstanding
principal balance
together with the interest will be credited to the bond holder's
account within five business
days following the prepayment date. Also disclose that prior to the
maturity date, the
bond holder has the right to cause Worthy Peer Capital II to
repurchase the bond at any
time upon five days notice and that the outstanding principal balance
together with the
interest earned through the repurchase date will be credited to the
bondholder's account
within five business days or, if the bondholder withdraws an aggregate
amount greater
than $50,000 in any 30 day period, but, if a bondholder holds in the
aggregate a principal
amount greater than $100,000, the bondholder may not exercise its
right to cause the
company to repurchase any portion of the Worthy II Bonds for a period
of at least twelve
months from the date of purchase.
Sally Outlaw
FirstName LastNameSally Outlaw
Worthy Peer Capital II, Inc.
Comapany NameWorthy Peer Capital II, Inc.
March 3, 2020
Page 3
March 3, 2020 Page 3
FirstName LastName
6. Please disclose whether you plan on claiming an exemption for the
renewals of the bonds
or whether you intend to register the renewals. If you intend to use
the exemption
provided under Regulation A, please disclose to investors whether you
intend to use the
current Form 1-A or to qualify a new one. Please confirm your
understanding that if
Regulation A is used for the renewals, the aggregate offering amount
available to you
under Regulation A would be reduced by the amount of the renewed
bonds.
7. We note your disclosure on page 26 that bond holders "may be charged a
transaction fee if
the method of payment requires the company to incur an expense."
Please disclose how
the transaction fee will be calculated.
8. Your disclosure on page 26 that the "Worthy II Bonds will be governed
and construed in
accordance with the laws of the State of Florida" is inconsistent with
the Form of Worthy
II Bond and the Worthy II Bond Investor Agreement filed as exhibits to
your offering
statement, which state that the Bond will be governed and interpreted
in accordance with
the laws of the State of Delaware. Please revise for consistency.
Similarly, your
disclosure states that you are a Florida corporation but your Form of
Worthy II Bond and
the Worthy II Bond Investor Agreement state that you are a Delaware
corporation and
refer to the bond as a Worthy Bond instead of as a Worthy II Bond.
Please revise for
clarity and consistency.
Plan of Distribution
Arbitration, page 30
9. We note that Section 13 of your Worthy II Bond Investor Agreement
contains a binding
arbitration provision, a jury waiver provision and a class action
waiver. Please revise your
offering statement on page 26 and in your risk factors section on page
15 to further
describe the arbitration, jury waiver and class action waiver
provisions, including a
detailed description of the opt-out provision regarding your
arbitration provision. In
addition, describe any questions as to enforceability under federal
laws, and clarify
whether each of these provisions applies to claims under the federal
securities laws and
whether each such provision applies to claims other than in connection
with this offering.
To the extent that any of these provisions apply to federal securities
laws claims, please
revise the disclosure to state that by agreeing to such provisions,
investors will not be
deemed to have waived the company's compliance with the federal
securities laws and the
rules and regulations thereunder.
Part III
Index to Exhibits, page 34
10. Please revise Exhibit 4.1 to remove the statement that you have read
the offering circular
and other SEC filings as it is inappropraiate to require an investor
to represent that he or
she has read the offering materials.
11. We note that Section 10.06 of your bylaws identifies a state or
federal court located in the
Sally Outlaw
Worthy Peer Capital II, Inc.
March 3, 2020
Page 4
country in which the principal office of the corporation in the State
of Florida is
established as the exclusive forum for certain litigation, including
any "derivative action."
Please disclose whether this provision applies to actions arising
under the Securities Act
or Exchange Act. If so, please also state that there is uncertainty as
to whether a court
would enforce such provision. If the provision applies to Securities
Act claims, please also
state that investors cannot waive compliance with the federal
securities laws and the rules
and regulations thereunder. In that regard, we note that Section 22 of
the Securities Act
creates concurrent jurisdiction for federal and state courts over all
suits brought to enforce
any duty or liability created by the Securities Act or the rules and
regulations thereunder.
If this provision does not apply to actions arising under the
Securities Act or Exchange
Act, please also ensure that the exclusive forum provision in the
governing documents
states this clearly, or tell us how you will inform investors in
future filings that the
provision does not apply to any actions arising under the Securities
Act or Exchange Act.
We will consider qualifying your offering statement at your request. If
a participant in
your offering is required to clear its compensation arrangements with FINRA,
please have
FINRA advise us that it has no objections to the compensation arrangements
prior to
qualification.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff. We also remind you that, following qualification of your
Form 1-A, Rule 257
of Regulation A requires you to file periodic and current reports, including a
Form 1-K which
will be due within 120 calendar days after the end of the fiscal year covered
by the report.
You may contact Michael Henderson at 202-551-3364 or Hugh West at
202-551-3872 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Sonia Bednarowski at 202-551-3666 or Dietrich King at 202-551-8071 with
any other
questions.
FirstName LastNameSally Outlaw Sincerely,
Comapany NameWorthy Peer Capital II, Inc.
Division of
Corporation Finance
March 3, 2020 Page 4 Office of
Finance
FirstName LastName