Companies wishing to raise capital by selling a percentage of their future revenues will agree with royalty purchasers, or their agents, as to a limited number of commercial banks, or other entities, into which all revenues arising from the sale or lease of goods or services will be deposited.
The royalty contract Issuer will provide to the selected banks irrevocable instructions to deduct, upon receipt, the agreed percentage of revenues.
The selected banks will transfer the collected revenues to the designee of the original royalty purchaser, which may be a trustee, fund or agent for distribution of the collected revenues.
The members of the board of directors or controlling shareholders of the contract issuing companies will each personally attest to the royalty owners, through the trustee company, the amounts deposited in the selected banks accurately represent all of the revenues received during the prior quarter.
There will be an annual audit of revenues conducted by an independent auditor acceptable to the original investors or the Managing Underwriter of an offering of royalties or designated agent of the royalty purchasers.
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