Phoenix Equity Holdings, LLC (together with its subsidiaries, the “Company”) recognizes that related person transactions present a heightened risk of conflicts of interest (or the perception thereof) and therefore the Company has adopted this policy (the “Policy”) pursuant to which all Related Person Transactions (as defined below) shall be subject to approval or ratification in accordance with the procedures set forth in this Policy. For the purposes of this Policy, a “Related Person Transaction” is an existing or proposed transaction, arrangement, or relationship (or any series of similar existing or proposed transactions, arrangements, or relationships) in which the Company (including any of its subsidiaries) was, is, or will be a participant, the amount involved exceeds $120,000, and in which any Related Person (as defined below) had, has, or will have a direct or indirect material interest.
The Company reviews all known transactions, arrangements, and relationships in which the Company and a Related Person are or will be participants to determine whether such transactions, arrangements, and relationships constitute Related Person Transactions. The Company’s finance team is primarily responsible for developing and implementing processes and procedures to obtain information regarding Related Persons with respect to potential Related Person Transactions and then determining, based on the facts and circumstances, whether such potential Related Person Transactions do, in fact, constitute Related Person Transactions requiring compliance with this Policy. In addition, any potential Related Person Transaction that is proposed to be entered into by the Company must be reported to the Company’s Chief Financial Officer (or his or her designee) by both the Related Person and the person at the Company responsible for such potential Related Person Transaction.
If the Company’s finance team determines that a transaction or relationship is a Related Person Transaction, then the Chief Financial Officer or Chief Legal Officer (or his or her designee) shall present to the Company’s board of managers (including any committee thereof delegated for such purpose, the “Board”) each such Related Person Transaction, including all relevant known facts and circumstances relating thereto. The Board shall review the relevant known facts and circumstances of each Related Person Transaction, including whether the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party, whether the transaction is inconsistent with the interests of the Company and its equity holders, and the extent of the Related Person’s interest in the transaction, taking into account the conflicts of interest and corporate opportunity provisions of the Company’s organizational documents, if any, US-DOCS\155464075.6 and the Company’s Code of Ethics and Conduct (the “Code”), and either approve or disapprove the Related Person Transaction. Any Related Person Transaction may be consummated and may continue only if the Board has approved or ratified such transaction in accordance with the guidelines set forth in this Policy. If advance Board approval of a Related Person Transaction requiring the Board’s approval is not feasible, then the transaction may be preliminarily entered into by management upon prior approval of the transaction by the Company’s Chief Financial Officer or Chief Legal Officer, subject to subsequent ratification of the transaction by the Board; provided that, if ratification shall not be forthcoming, management shall make all reasonable efforts to cancel or annul such transaction. If a transaction was not initially recognized as a Related Person Transaction, then upon such recognition the transaction will be presented to the Board for subsequent ratification; provided that, if ratification shall not be forthcoming, management shall make all reasonable efforts to cancel or annul such transaction.
Management shall update the Board as to any material changes to any approved or ratified Related Person Transaction and shall provide a status report upon request of the Board of all then current Related Person Transactions. However, in the event the Board has established an audit committee and delegated to the audit committee the responsibilities described in this Policy, such update shall occur at the quarterly meetings of such audit committee.
No member of the Board may participate in approval of a Related Person Transaction for which he or she is a Related Person; provided that, if all members of the Board are participating in such Related Party Transaction, the determinations provided for in this Policy with respect to such Related Party Transaction shall be made by the Company’s Chief Financial Officer or Chief Legal Officer (or, if either is also participating in such Related Party Transaction, any other officer of the Company that is not participating in such Related Party Transaction).
The Board has reviewed and pre-approved each of the following types of Related Person Transactions, which shall be deemed to be approved or ratified, as applicable, under this Policy:
1. Compensation:
(a) to an executive officer of the Company (other than the Company’s Chief Executive Officer) if the compensation has been approved by the Company’s Chief Executive Officer; or
(b) to any member of the Board or the Company’s Chief Executive Officer; provided that such compensation has been approved as provided for in the Company’s organizational documents.
2. Transactions that are in the Company’s ordinary course of business and where the interest of the Related Person arises only:
(a) from the Related Person’s position as a director, manager, or partner of another organization that is a party to the transaction; US-DOCS\155464075.6
(b) from the direct or indirect ownership by such Related Person and all other Related Persons, in the aggregate, of less than a 10% equity interest in another person (other than a partnership) that is a party to the transaction;
(c) from both such positions described in clause (a) and such ownership described in clause (b); or
(d) from the Related Person’s position as a limited partner in a partnership in which the Related Person and all other Related Persons, in the aggregate, have an interest of less than 10%, and the Related Person is not a general partner of, and does not have another position in, the partnership.
3. Transactions that are in the Company’s ordinary course of business and where the interest of the Related Person arises solely from the ownership of a class of equity securities in the Company and all holders of such class of equity securities of the Company will receive the same benefit on a pro rata basis.
4. Transactions where the rates or charges involved in the transactions are determined by competitive bids.
5. Transactions where a Related Person purchases or sells any securities of the Company in a transaction involving a registered broker-dealer, including, without limitation, an underwritten offering or at-the-market offering, in each case, that is approved by the Board or a committee of the Board.
6. Indebtedness transactions involving a Related Person who qualifies as a Related Person solely because such person is the beneficial owner of more than 5% of any class of the Company’s voting securities or is the immediate family member of a beneficial owner of more than 5% of any class of the Company’s voting securities as defined in Section III.3. below.
7. Transactions between the Company and a Related Person who qualifies as a Related Person solely on the basis of being a security holder covered by Item 403(a) of Regulation S-K and who does not have any other affiliation with the Company.
All Related Person Transactions are to be disclosed as required in the Company’s applicable filings as required by the U.S. Securities Act of 1933, as amended, and the U.S. Securities Exchange Act of 1934, as amended, and related rules. Furthermore, any Related Person Transaction shall be disclosed to the full Board (to the extent a committee of the Board has been designated for purposes of this Policy). US-DOCS\155464075.6
Management shall assure that all Related Person Transactions are not in violation of and are approved in accordance with any requirements of the Company’s financing or other material agreements.
This Policy is intended to comply with Item 404 of Regulation S-K. Notwithstanding anything herein to the contrary, this Policy shall be interpreted only in such a manner as to comply with Item 404 of Regulation S-K. In the event that a Related Person Transaction would constitute a conflict of interest or a corporate opportunity under the Code, the provisions of the Code also shall apply to such Related Person Transaction. Any such Related Person Transaction may not be approved hereunder unless it is also approved in accordance with the provisions of the Code and disclosed to the public to the extent required by law or the rules of any applicable securities exchange.
For purposes of this Policy, a “Related Person” is:
If you have any questions about this policy, you can contact us by visiting this page on our website: https://www.phoenixenergy.com/contact/
Phoenix Energy One, LLC (“Phoenix Energy” or the “Company”) conducts offerings pursuant to (i) Rule 506(c) of Regulation D (“Private Placement Offerings”) of the Securities Act of 1933, as amended (the “Securities Act”) and (ii) an effective registration statement on Form S-1 under the Securities Act (including a prospectus) filed with the SEC (the “Registered Offering”, and together with the Private Placement Offerings, the “Offerings”)
THIS COMMUNICATION DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, AND SHALL NOT CONSTITUTE AN OFFER, SOLICITATION, OR SALE OF ANY SECURITY, IN ANY JURISDICTION IN WHICH SUCH OFFERING, SOLICITATION, OR SALE WOULD BE UNLAWFUL.
The Private Placement Offerings are exempt from the registration requirements of the Securities Act and only “accredited investors”, as such term is defined in Rule 501 of Regulation D., may invest in such offerings. For more details, you can review accreditation requirements here. The Company has posted a private placement memorandum (together with any related amendments and supplements thereto, the “private placement memorandum”) on its website, which can be accessed via the following link: https://phoenixenergy.com/investment-offerings/
The Registered Offering is being made pursuant to an effective registration statement and prospectus, filed, or registered with the U.S. Securities and Exchange Commission (“SEC”) and appropriate state regulatory agencies. For the Registered Offering only investors meeting certain criteria, including the financial suitability requirements, may invest in the Registered Offering. The eligibility requirements may be found in the offering documentation, including the prospectus, that the Company has filed on EDGAR with the SEC and can be found at www.sec.gov, where you can obtain a free copy of the prospectus. Alternatively, Phoenix Energy or a registered representative of Dalmore will supply additional materials when requested. Call 303.376.9778 or email [email protected] to place a request.
Before you invest, you should read the offering documentation for the relevant Offering, including, with respect to the Registered Offering, the prospectus, and other documents that the Company has filed with the SEC.
While the Company may use general solicitation and general advertising with respect to its debt offerings, which may be conducted through a number of different means, including, among others, the internet, social media, seminars/webinars, and print, the Company will take reasonable steps to verify that the purchasers investing in such offerings meet the applicability suitability standards criteria, including being an “accredited investor” if purchasing securities pursuant to our Private Placement Offering. To that end, investors wishing to purchase securities in such offerings will be required to provide certain supporting materials and other information to the Company for the purpose of verifying “accredited investor” status. Any investment decision will be made only based on the information included in, and for the securities described in, the related offering documents.
Securities offered by Dalmore Group, LLC, a member of FINRA/SIPC. Dalmore and Phoenix are not affiliates.
Investing is subject to risks and should be made only by persons or entities able to bear the risk of and to withstand the total loss of their investment. Investors should always conduct their own due diligence and 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. Major risks, including those related to the potential loss of some or all principal, are disclosed in the private placement memorandum and prospectus for the Company’s Offerings. These Offerings are speculative and illiquid and past performance is not indicative of future results.
The materials set forth on the Company’s website and presentations were prepared by the Company and the analyses contained therein are based, in part, on certain assumptions made by and information obtained from the Company and/or from other sources. The information may not be comprehensive and has not been subject to any independent audit or review. The Company’s internal estimates have not been verified by an external expert, and we cannot guarantee that a third party using different methods would obtain or generate the same results. The Company does not make any representation or warranty, express or implied, in relation to the fairness, reasonableness, adequacy, accuracy or completeness of the information, statements or opinions, whichever their source, contained in such materials or any oral information provided in connection with its presentations or discussions with investors, or any data it generates, and accepts no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. The information and opinions contained in the materials are provided as of the date specified therein, are subject to change without notice and do not purport to contain all information that may be required to evaluate the Company. The Company and its affiliates, officers, employees, and agents expressly disclaim any and all liability which may be based on the materials and any errors therein or omissions therefrom. Neither the Company nor any of its affiliates, officers, employees or agents makes any representation or warranty, express or implied, that any transaction has been or may be affected on the terms or in the manner stated in the materials, or as to the achievement or reasonableness of estimates, prospects or returns, if any. You are cautioned not to give undue weight to such estimates. Numerical figures in the materials have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.
The materials include forward looking statements that reflect the Company’s current views with respect to, among other things, the Company’s growth, operations, and financial performance. Forward looking statements include all statements that are not historical facts. These forward-looking statements relate to matters such as the Company’s industry, business strategy, goals, and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity, and capital resources and other financial and operating information. These forward-looking statements are generally identifiable by forward looking terminology such as “expect,” “believe,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “seek,” “estimate,” “should,” “will,” “approximately,” “predict,” “potential,” “may,” and “assume,” as well as variations of such words and similar expressions referring to the future. Oral information provided in connection with the Company’s presentations or discussions with investors may similarly include forward looking statements.
The forward-looking statements contained in the materials, including but not limited to any outlook, targets, or projections, are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. For example, projections included in the materials assume the Company has continued access to adequate sources of capital to fund operations. The Company’s expectations, beliefs, and projections are expressed in good faith, and the Company’s management believes there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, and projections will result or be achieved.
Actual results may differ materially from these expectations due to changes in global, regional, or local economic, business, competitive, market, regulatory, and other factors, many of which are beyond our control. Management believes that these factors include but are not limited to the risk factors the Company has identified in its offering documents under “Risk Factors.” Risk Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company may not actually achieve the plans, intentions or expectations disclosed in such forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether because of new information, future developments or otherwise, except as may be required by any applicable securities laws.
The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, and certain probable and possible reserves that meet the SEC’s definitions for such terms. The Company discloses estimated proved reserves and estimated probable reserves in its filings with the SEC. The Company’s estimated reserves are prepared by the Company’s internal reservoir engineer and comply with definitions promulgated by the SEC. These estimated reserves are not audited by an independent petroleum engineering firm. Additional information on the Company’s estimated reserves is contained in the Company’s filings with the SEC. In these materials, the Company may use the terms “resources,” “resource potential” or “potential resources,” which SEC guidelines prohibit issuers from including in filings with the SEC. “Resources,” “resource potential” or “potential resources” refer to the Company’s internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques. Such terms do not constitute reserves within the meaning of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers or SEC rules and do not include any proved reserves. Actual quantities that may be ultimately recovered will differ substantially. Factors affecting ultimate recovery include the scope of drilling programs, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates may change significantly as development of properties provides additional data. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production, decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. Estimated proved reserves and estimated probable reserves do not represent or measure the fair value of the respective properties or the fair market value at which a property or properties could be sold. In the event of any such sale, proceeds to the Company may be significantly less than the value of the estimated reserves.
Certain materials contain “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Specifically, the Company presents “EBITDA” as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. The Company believes this measure can assist investors in comparing the Company’s operating performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of its core operating performance. Management believes these non-GAAP measures are useful in highlighting trends in the Company’s operating performance, while other measures can differ significantly depending on long term strategic decisions regarding capital structure, capital investments, etc. Management uses these non-GAAP measures to supplement GAAP measures of performance in the evaluation of the effectiveness of the Company’s business strategies and to make budgeting decisions. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide. However, this measure should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The presentation of this measure has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the Company’s results as reported under GAAP.
The Phoenix Energy designed logo, and our other registered or common law trademarks, service marks, or trade names appearing in the materials are the property of the Company. Solely for convenience, trademarks, tradenames, and service marks referred to in the materials appear without the ®, TM, and SM symbols, but those references are not intended to indicate, in any way, that the Company will not assert, to the fullest extent under applicable law, its rights to these trademarks, tradenames, and service marks. The materials may contain additional trademarks, tradenames, and service marks of other companies that are the property of their respective owners. The Company does not intend our use or display of other companies’ trademarks, trade names, or service marks to imply relationships with, or endorsement or sponsorship of the Company by, these other companies.
An investment in these offerings or any offering is highly speculative and suitable only for persons or entities bonds, evaluate the risks of the investment and an investment should be made only by persons or entities able to bear the risk of and to withstand the total loss of their investment. Prospective investors should consider the following risks, as well as the other risk factors set forth in our offering materials before bonds, to purchase our bonds.
Risks Related to the Bonds and to these Offerings Include, Among Other Risks:
Risks Related to Our Business and Operations Include, Among Other Risks:
Phoenix Capital Group Holdings, LLC is now Phoenix Energy One, LLC doing business as Phoenix Energy.