ERC Communities

3 funds·$61M raised◔ Unclaimed

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Active funds

of 3 vintages

Total raised

$61M

disclosed offerings

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Disclosures & prior history4 disclosures · worst high

Material items extracted from the risk-factor, conflicts, and prior-performance sections of ERC Communities's PPMs. Each is quoted verbatim with its source page — surfaced, not editorialized.

Adverse prior-fund performance disclosed — ERC Communities 1, Inc.

High

Auditor issued a going-concern opinion on the company's financial statements, noting substantial doubt about the company's ability to continue as a going concern given little working capital, no revenue from operations, and ongoing losses since inception.

“The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the financial statements, the Company has stated that substantial doubt exists about the Company's ability to continue as a going concern.”

PPM p.4499% confidence

Key-person history disclosed — ERC Communities 1, Inc. founders and key men

Medium

The company explicitly discloses that its founders and key men are serial entrepreneurs who are likely to exit the business within the next three years, posing material key-man risk.

“The company's founders and key men are serial entrepreneurs. It is likely that some, if not all of the founders and key men, may exit the business within the next three years.”

PPM p.1498% confidence

Related-party conflict disclosed — ERC Communities, Inc. (ERC Parent) and GolfSuites, Inc.

Medium

ERC Parent and its affiliates will receive substantial fees from the company not negotiated at arm's length. The same executives manage ERC Communities 1, ERC Parent, and GolfSuites, Inc. creating conflicts of interest over time allocation, fee setting, and potentially competing real estate interests.

“ERC Parent and its affiliates will receive substantial fees from the company, which fees will not be negotiated at arm's length. These fees could influence ERC Parent's advice to the company as well as the judgment of the affiliated executives of ERC Parent and ERC Communities 1 (which are one in the same).”

PPM p.3497% confidence

Related-party conflict disclosed — ERC Parent loans and advances to ERC 1

Low

ERC Parent may make various loans and advances to ERC 1. These transactions are between related parties and are not at arm's length, providing no assurance that terms are commercially reasonable.

“Loans issued by ERC Parent to ERC 1 may not be made at arm's length. ERC Parent may make various loans to ERC 1. These transactions may not be at arm's length and therefore there is no way to assure third parties that ERC Parent and ERC 1 will be acting in their own self-interest and not subject to pressure or duress from the other party.”

PPM p.1896% confidence