As filed with the Securities and Exchange Commission on April 17 , 2019

File No. 024-10876

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 1-A/A

(Amendment No. 8 )

REGULATION A OFFERING CIRCULAR

UNDER THE SECURITIES ACT OF 1933

MASTERWORKS 001, LLC

(Exact name of issuer as specified in its charter)

Delaware

(State of other jurisdiction of incorporation or organization)

Spring Place

6 St. Johns Lane

7^th Floor

New York, New York 10013

Phone: (203) 518-5172

(Address, including zip code, and telephone number,

including area code of issuer’s principal executive office)

Joshua B. Goldstein

General Counsel and Secretary

Masterworks 001, LLC

Spring Place

6 St. Johns Lane

7^th Floor

New York, New York 10013

Phone: (203) 518-5172

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copy to:

Laura Anthony, Esq.

Craig D. Linder, Esq.

Anthony L.G., PLLC

625 N. Flagler Drive, Suite 600

West Palm Beach, FL 33401

Phone: (561) 514-0936

Fax: (561) 514-0832

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this preliminary offering circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Securities and Exchange Commission is qualified. This preliminary offering circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a final offering circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the offering circular may be obtained.

MASTERWORKS 001, LLC

Preliminary Offering Circular

April 17 , 2019

Subject to Completion

99,825 Class A ordinary shares

Representing Class A Limited Liability Company Interests

$1,996,500 Maximum Offering Amount 

Masterworks 001, LLC is a Delaware limited liability company formed to hold a single work of art, an oil and silkscreen inks on canvas created in 1979 by Andy Warhol entitled, 1 Colored Marilyn (Reversal Series) (the “Painting”). We believe that, for many investors, our Class A ordinary shares represent an effective means to gain economic exposure to the Painting and, by extension, to the high-end art market. This offering is the first offering of its kind and the first offering conducted by an affiliate of Masterworks.io, LLC.

Masterworks 001, LLC, a Delaware limited liability company, is offering up to 99,825 of its Class A ordinary shares representing Class A limited liability company interests, for an aggregate purchase price of up to $1,996,500, in a “Tier 2” offering under Regulation A (the “Offering”). The offering price will be $20.00 per Class A ordinary share. There is no minimum number of Class A ordinary shares that needs to be sold as a condition of closing of this offering. Subscriptions, once received, are irrevocable by investors but can be rejected by us. This Offering is being conducted on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold, through our underwriter, SDDco Brokerage Advisors LLC (“SDDco-BA”), a registered broker-dealer and a member of the Financial Industry Regulatory Authority (“FINRA”). SDDco-BA is not purchasing or selling any Class A ordinary shares pursuant to this Offering. SDDco-BA will be entitled to receive fees and commissions for sales of the Class A ordinary shares offered hereby from Masterworks Administrative Services, LLC not to exceed 5 .4 % of the gross proceeds of the Offering. See “Plan of Distribution” in this Offering Circular.

The closing of the Offering will occur on the earlier of (i) the date that the subscriptions for the Class A ordinary shares offered hereby total $1,996,500 or (ii) a date determined by the Company in its discretion. The maximum offering period is 270 days from commencement of the offering  but we reserve the right to terminate this Offering for any reason at any time. The offering will commence on the date the offering is qualified by the Securities and Exchange Commission (“SEC”).

Our affiliate Masterworks.io, LLC owns an online investment platform located at https://www.masterworks.io/ (the “Masterworks Platform”) that allows investors to acquire ownership of an interest in special purpose companies that invest in distinct artworks. Through the Masterworks Platform, investors can, once they establish an account, browse and screen potential artwork investments, view details of an investment and sign contractual documents online. The Offering will be conducted through the Masterworks Platform. For additional information regarding the Masterworks Platform, please see page 64.

No public market currently exists for the Class A ordinary shares. We intend to seek to make the Class A ordinary shares available for trading on a trading platform or facilitate sales through brokerage relationships, subject to compliance with applicable laws, although we do not expect any such trading platform or brokerage relationships will be available within the twelve-months following the closing of the Offering. No assurance can be given that we will be able to establish a trading market for the Class A ordinary shares or that any such trading market will be available to all investors.

No sales of Class A ordinary shares will be made prior to the qualification of the Offering statement by the SEC in the United States. All Class A ordinary shares will be initially offered in all jurisdictions at the same price that is set forth in this offering circular.

The Class A ordinary shares on a best efforts basis primarily through the online Masterworks Platform. The Company is not offering, and does not anticipate selling, Class A ordinary shares in any state where SDDco Brokerage Advisors LLC is not registered as a broker-dealer. The subscription funds advanced by prospective investors as part of the subscription process will be held in a non-interest-bearing segregated account of the Company with Cross River Bank, Inc. and will not be commingled with any other funds, unless and until there is a closing of the Offering.

We retain complete discretion to determine that subscribers are “qualified purchasers” in reliance on the information and representations provided to us regarding their financial situation. Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

An investment in the Class A ordinary shares is subject to certain 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. Prospective investors should carefully consider and review the information under the heading “Risk Factors” beginning on page 15.

The SEC does not pass upon the merits of or give its approval to any securities offered or the terms of the Offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”); however, the SEC has not made an independent determination that the securities offered are exempt from registration.

We expect that our operations will not cause us to meet the definition of an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”), because (1) at all times our sole assets will consist only of cash and a single work of art referred to herein as the “Painting”, neither of which is deemed to be a “security” for purposes of the 1940 Act, and (2) at all times we will not be engaged primarily in owning, holding, investing or trading in “securities” (as such term is used for purposes of the 1940 Act).

Our principal office is located at Spring Place, 6 St. Johns Lane, 7th Floor, New York, New York 10013 and our phone number is (203) 518-5172. Our corporate website address is the website address of Masterworks.io, located at www.masterworks.io. Information contained on, or accessible through, the website is not a part of, and is not incorporated by reference into, this offering circular.

This offering circular is following the offering circular format described in Part II of Form 1-A.

SDDCO BROKERAGE ADVISORS LLC 

The date of this offering circular is ______, 2019.

TABLE OF CONTENTS

We have not and SDDco-BA has not authorized anyone to provide any information other than that contained or incorporated by reference in this offering circular prepared by us or to which we have referred you. Neither we nor SDDco-BA take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This offering circular is an offer to sell only the Class A ordinary shares offered hereby but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this offering circular is current only as of its date, regardless of the time of delivery of this offering circular or any sale of Class A ordinary shares.

For investors outside the United States: We have not done anything that would permit this Offering or possession or distribution of this offering circular in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this offering circular.

THIRD PARTY DATA

Certain data included in this offering circular is derived from information provided by third-parties that we believe to be reliable. Information about Andy Warhol and the Painting, as defined below, is derived from Biography.com, which is owned by A&E Television Networks, LLC, Philips Auctioneers LLC, auction notes for the 20th Century & Contemporary Art Evening Sale held on November 16, 2017 and other publicly available sources. The discussions contained in this offering circular relating to Andy Warhol, the Painting and the art industry are taken from third-party sources that the Company believes to be reliable and the Company believes that the information from such sources contained herein regarding Andy Warhol, the Painting and the art industry is reasonable, and that the factual information therein is fair and accurate. Certain data is also based on our good faith estimates, which are derived from management’s knowledge of the industry and independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified such third-party information, nor have we ascertained the underlying economic assumptions relied upon therein. The statistical data relating to the art market is difficult to obtain, may be incomplete, out-of-date, or inconsistent and you should not place undue reliance on any statistical or general information related to the art market included in this offering circular. The art market data used in this offering circular involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. While we are not aware of any material misstatements regarding any market, industry or similar data presented herein, such data was derived from third party sources and reliance on such data involves risks and uncertainties.

TRADEMARKS AND COPYRIGHTS

We own or have applied for rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect our business. We do not own the copyright to the Painting, as such term is defined below. All copyrights associated with the Painting are held by the Andy Warhol Foundation for the Visual Arts and any representation to the contrary is inaccurate. This offering circular may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this offering circular is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this offering circular are listed without their ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property of their respective owners.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This offering circular contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “plan,” “intend,” “expect,” “outlook,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information. Our ability to predict future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual outcomes could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could cause our forward-looking statements to differ from actual outcomes include, but are not limited to, those described under the heading “Risk Factors.” Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this offering circular. Furthermore, except as required by law, we are under no duty to, and do not intend to, update any of our forward-looking statements after the date of this offering circular, whether as a result of new information, future events or otherwise.

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

Our Class A ordinary shares are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this Offering is exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our Class A ordinary shares offered hereby are offered and sold only to “qualified purchasers” or at a time when our Class A ordinary shares are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our Class A ordinary shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

To determine whether a potential investor is an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor must be a natural person who has:

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details.

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

QUESTIONS AND ANSWERS ABOUT THIS OFFERING

The following questions and answers about this Offering highlight material information regarding us and this offering that is not otherwise addressed in the “Offering Summary” section of this offering circular. You should read this entire offering circular, including the section entitled “Risk Factors,” before deciding to purchase the Class A ordinary shares.

Masterworks 001, LLC

c/o Masterworks Administrative Services, LLC

Spring Place

6 St. Johns Lane

7th Floor

New York, New York 10013

Attn: Investor Relations

SUMMARY

This summary highlights selected information contained elsewhere in this offering circular. This summary does not contain all of the information you should consider before investing in the Class A ordinary shares. You should read this entire offering circular carefully, especially the risks of investing in the Class A ordinary shares discussed under “Risk Factors,” before making an investment decision. In this offering circular, unless the context indicates otherwise, the terms “we,” “our,” “ours,” “us,” “Masterworks 001” or the “Company,” refer to Masterworks 001, LLC, a Delaware limited liability company, and its wholly owned subsidiary, Masterworks 001 Cayman, LLC, a Cayman Islands limited liability company, which has not yet been formed but is planned to be formed prior to the completion of this Offering. For purposes of this offering circular, the term “Masterworks” refers to Masterworks.io, LLC, and/or any of its wholly owned subsidiaries, which include Masterworks Administrative Services, LLC, referred to herein as the “Administrator,” Masterworks Gallery, LLC and also includes Masterworks Brokerage, LLC, but does not include Masterworks 001, LLC and its subsidiary. All Masterworks entities are Delaware limited liability companies. For purposes of this offering circular, the term “Painting” refers to that certain painting by Andy Warhol, titled 1 Colored Marilyn (Reversal Series), 1979, Oil and silkscreen inks on canvas. Unless otherwise clear from the context, references throughout this offering circular to “our operating agreement” refers to the Masterworks 001, LLC’s amended and restated operating agreement to be effective on or prior to the qualification of this offering circular by the SEC and the form of which is filed herewith as Exhibit 2.3. The discussions contained in this offering circular relating to Andy Warhol, the Painting and the art industry are taken from third-party sources that the Company believes to be reliable and the Company believes that the information from such sources contained herein regarding Andy Warhol, the Painting and the art industry is reasonable, and that the factual information therein is fair and accurate.

Overview

We were formed as a Delaware limited liability company on March 28, 2018 to acquire the Painting. The Administrator will manage all maintenance and administrative services relating to the Painting and the Company. We will not conduct any business activities except for activities relating to the ownership, maintenance, promotion and the eventual sale of the Painting. Our strategy will be to display and promote the Painting in a manner designed to enhance its provenance and increase its exposure and its value. This Offering is the first offering of its kind and the first offering conducted by an affiliate of Masterworks.io, LLC.

The Painting was purchased at a public auction held by Philips Auctioneers LLC, on November 16, 2017, for $1,815,000 by an agent acting on behalf of Masterworks. We are offering up to 99,825 Class A ordinary shares for aggregate consideration of up to $1,996,500. The closing of the Offering will occur on the earlier of (i) the date that the subscriptions for the Class A ordinary shares offered hereby total $1,996,500 or (ii) a date determined by the Company in its discretion.

We will use all of the proceeds from this Offering, together with any remaining unsold Class A ordinary shares from this Offering, if any, to acquire the Painting from Masterworks. We do not expect to generate any revenues or cash flow unless and until we sell the Painting and no profits will be realized by investors unless they are able to sell their Class A ordinary shares on a trading platform or through brokerage transactions approved by us or the Painting is sold. We will be totally reliant on Masterworks to maintain the Painting and administer our business.

The Artist

The following description of Andy Warhol is derived from Biography.com, which is owned by A&E Television Networks, LLC. The discussions contained in this offering circular relating to Andy Warhol, the Painting and the art industry are taken from third-party sources that the Company believes to be reliable and the Company believes that the information from such sources contained herein regarding Andy Warhol, the Painting and the art industry is reasonable, and that the factual information therein is fair and accurate.

Born on August 6, 1928, in Pittsburgh, Pennsylvania, Andy Warhol was a successful magazine and ad illustrator who became a leading artist of the 1960s Pop art movement. Warhol ventured into a wide variety of art forms, including performance art, filmmaking, video installations and writing, and he controversially blurred the lines between fine art and mainstream aesthetics. Warhol died on February 22, 1987, in New York City.

In the late 1950s, Warhol began devoting more attention to painting, and in 1961, he debuted his first paintings of a genre that came to be known as “pop art” — paintings that focused on mass-produced commercial goods. In 1962, he exhibited the now-iconic paintings of Campbell’s soup cans. These small canvas works of everyday consumer products created a major stir in the art world, bringing both Warhol and pop art into the national spotlight for the first time. Warhol’s other famous pop paintings depicted Coca-Cola bottles, vacuum cleaners and hamburgers. He also painted celebrity portraits in vivid and garish colors; his most famous subjects include Marilyn Monroe, Elizabeth Taylor, Mick Jagger and Mao Zedong. As these portraits gained fame and notoriety, Warhol began to receive hundreds of commissions for portraits from socialites and celebrities. His portrait “Silver Car Crash (Double Disaster)” sold for $105.4 million in 2013, making it one of the most valuable paintings in world history.

In 1964, Warhol opened his own art studio, a large silver-painted warehouse known simply as “The Factory.” The Factory quickly became, one of New York City’s premier cultural hotspots, a scene of lavish parties attended by the city’s wealthiest socialites and celebrities. Warhol’s life and work simultaneously satirized and celebrated materiality and celebrity. On the one hand, his paintings of distorted brand images and celebrity faces could be read as a critique of what he viewed as a culture obsessed with money and celebrity. On the other hand, Warhol’s focus on consumer goods and pop-culture icons, as well as his own taste for money and fame, suggest a life in celebration of the very aspects of American culture that his work criticized. Warhol spoke to this apparent contradiction between his life and work in his book The Philosophy of Andy Warhol, writing that “making money is art and working is art, and good business is the best art.”

The Painting

As evidenced by the artist's signature and date on the verso of the canvas, 1 Colored Marilyn (Reversal Series), is one of the earliest works from a series of oil and silkscreen paintings completed by Andy Warhol between 1979 - 1986. In the works, Warhol revisited one of his most iconic and enduring subjects, the Hollywood star Marilyn Monroe. The Painting, which carried a pre-sale estimate of $1,500,000 - $2,000,000 in Phillips’ November 2017 New York auction, measures 46.4 cm by 34.9 cm (18 ¼ inches by 13 ¾ inches) and was created in 1979. Following its execution, the work was acquired by an American collector from Warhol’s primary dealer, Bruno Bischofberger, in 1984. The Painting remained in the Los Angeles collection of Douglas S. Cramer since its sale, until its acquisition by Masterworks in 2017.

The Art Market

The global art market is influenced by the overall strength and stability of the global economy, geopolitical conditions, capital markets and world events, all of which may affect the willingness of potential buyers and sellers to purchase and sell art.

According to the 201 9 Art Basel Report, the global auction market was $2 9.1 billion in 201 8 and global art sales were estimated at $6 7.4 billion, an increase of 6 % from 201 7 . T he report also states that Post War and Contemporary art, which represents works created from 1945 through the present day, is the largest category in terms of total dollar value of transactions, representing 50% and 46% of all global auction sales in 2018 and 2017, respectively. The Post War and Contemporary segment was followed in size by Modern art and Impressionist and Post-Impressionist art, which accounted for over 29% and 15% of the value in the auction market in 2018, respectively. The market for high end art is highly concentrated, both in terms of buyers and top-selling artists. In 2018, 36.1% of the auction market for Post War and Contemporary art was captured by the top twenty artists, while the top ten alone captured roughly 24.6%. Warhol was third in the segment, just behind Zao Wou-Ki and Jean-Michel Basquiat, with 3.4% of the sales in this category for 2018.

The fine art market is comprised of public auctions and private dealer or gallery sales. The private sales market is characterized by its opacity and is dominated by a small network of industry insiders where the majority of sales occur through consignments. By contrast, the public auction market is relatively transparent and sales occur on specific pre-announced dates. According to the Art Basel Report, the relative size of the private sales market as compared to the auction market tends to shift based on overall sentiment, where optimism in the market tends to favor auction sales. For example, in 201 8 , auction sales accounted for 4 3 % of total sales by dollar volume, as compared to approximately 4 7 % in 201 7 . According to Artnet, the auction market has grown considerably since 2000, with total pre-sale total estimates increasing by approximately 400% from May of 2000 to May of 2018. Of this growth, only approximately 25% is attributed to an increased number of works offered, while the remainder is attributed to price inflation.

One particularly important category within the broader Post War and Contemporary segment is Pop Art. The Pop Art movement emerged independently in Britain and the United States during the mid- to late-1950s and gained widespread recognition in the 1960s. Andy Warhol immediately established himself as one of the leading figures of Pop Art and continues to be one of the best-selling American artists of all time. Central to the movement was the practice of appropriation, where familiar images of consumer culture and mass media, especially, those from advertisements, cinema and everyday objects, were removed by artists from their original context and isolated or combined with unrelated material. By virtue of the technique, banal or kitschy elements of popular culture could be emphasized and examined by Pop Art, often through the use of irony. Many Pop Artists also came to rely on mechanical means of reproduction or rendering techniques as part of their process, thereby further emphasizing the consumer culture central to the work. 

We believe that Warhol was prolific by any measure. The Andy Warhol Catalogue Raisonné, the definitive record of the artist’s paintings, sculptures and drawings, is an ongoing effort by the Andy Warhol Foundation. Thus far, volumes I - V have been released covering the period from 1961 through 197 8 , with volume V I currently in preparation to cover 1978 – 1980 . According to Artnet, Andy Warhol auction sales were $427 million in 2013, $653 million in 2014, $526 million in 2015 and, according to TEFAF and ArtPrice, $168 million in 2016 , $175 million in 2017 , and $244 million in 2018 . According to Artnet, aggregate pre-sale auction estimates for Warhol works offered at May auctions by the leading auction houses over the eighteen-year period from 2000 through 2017 were $2.1 billion, second only to Pablo Picasso whose total was $2.5 billion, and significantly above Claude Monet, who came in third with $1.3 billion in aggregate auction estimates. According to auction data published by Artnet, Warhol was ranked the highest grossing artist in 2014 worldwide across categories, the second highest grossing artist in 2015 and the eighth highest grossing artist in 2016.   For 2018, ArtPrice ranks Warhol as the 5^th most popular artist ranked by turnover, with a record of $37 million for an individual work sold last year. H is all-time auction record was established in November 2013 with the sale of Silver Car Crash (Double Disaster for $105.4 million.

According to a report published by Artnet in 2017, Andy Warhol is the second highest selling artist, with $4.9 billion of total auction sales over the 17-year period prior to publication of the report, behind only Pablo Picasso whose works sold for more than $6.2 billion over the same period. Ownership of Andy Warhol’s work is highly concentrated with several collectors or institutions holding a significant portion of his body of work. The Andy Warhol Museum claims to hold approximately 900 Warhol paintings and the Mugrabi family owns the largest private collection of Andy Warhol paintings, which according to an October 2017 Artnet article includes more than 1,000 works by Andy Warhol.

Administrative Services

There are various services required to administer our business and maintain the Painting. Pursuant to an administrative services agreement between us and Masterworks to be entered into prior to the completion of the Offering, the Administrator will manage all administrative services relating to our business and custodial services relating to the maintenance of the Painting. In exchange for these services and as reimbursement for ordinary and necessary administrative costs, we will issue Class A ordinary shares to the Administrator at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum. The 1.5% share issuance in respect of fees and routine reimbursements to Masterworks will be made on a quarterly basis in arrears and there is no overall limit to the number of shares that may be issued to pay this fee. Any extraordinary or non-routine costs, payments and expenses, if any, will be paid for by the Administrator, but such extraordinary or non-routine costs and payments will be reimbursed upon the sale of the Painting or a sale of our Company, as applicable. Any termination of the Administrative Services Agreement will require the prior written consent of Masterworks Gallery, LLC.

Trading of and Market for the Class A Ordinary Shares

We intend to seek to make the Class A ordinary shares available for trading on one or more trading platforms that are approved by us or to facilitate brokerage transactions. Any such trading or sales activities must be conducted through an alternative trading system, or ATS, registered with the SEC or be exempt from such registration. We do not intend to list the Class A ordinary shares on a national securities exchange. Masterworks may, at some point in the future, apply to become a registered broker dealer and a member of FINRA and operate an online trading platform or execute brokerage transactions and receive transaction-based compensation from trading the Class A ordinary shares. Masterworks has not yet decided to pursue this strategy and the implementation of any such proprietary trading platform is not expected to occur within the first year following this Offering, if ever. Masterworks is seeking to make the Class A ordinary shares available for trading on one or more trading platforms owned and operated by unaffiliated third parties, though no such arrangement currently exists and it is not expected that such an arrangement will be established within the twelve month period following the consummation of the Offering. When and if Masterworks is able to operate a proprietary trading platform or develops a relationship with a third-party to facilitate brokerage transactions or establish secondary market trading of the Class A ordinary shares, it will inform holders of its Class A ordinary shares. There is currently no trading market for the Class A ordinary shares and no assurance can be provided that we can be successful in making the Class A ordinary shares available for trading on any trading platform, that a trading market for the Class A ordinary shares will develop or that any such market or brokerage arrangement will provide you with adequate liquidity to sell your Class A ordinary shares. Any secondary trading or sale of the Class A ordinary shares among investors may be restricted to comply with applicable state and foreign securities laws.

Selling the Painting

Our intention is to own the Painting for a five- to ten-year period, although we may elect to hold the Painting for a longer period or sell the Painting at any time due to certain circumstances. We will have the ability, in our sole and absolute discretion, to sell the Painting at a public auction and liquidate our Company if:

The Painting is effectively perpetually available for sale following the Offering. If any person makes a Bona Fide Offer (as defined in our operating agreement) to purchase the Painting at any point in time, the Administrator will submit such offer to a vote of the then holders of our Class A ordinary shares, excluding any shares beneficially owned by Masterworks (“voting shares”) and if holders of a majority voting shares vote in favor of accepting such Bona Fide Offer, we will accept the Bona Fide Offer and sell the Painting.

If, on the seven-year anniversary of the closing of this Offering, the Administrator determines that an active trading market does not exist or such market does not have sufficient transaction volume to permit reasonable trading in the Class A ordinary shares, the Company will solicit the vote of holders of voting shares to sell the Painting (a “Liquidity Sale”). If the holders of a majority of voting shares vote to sell the Painting, the Administrator will use commercially reasonable efforts to sell the Painting at auction or in a privately negotiated transaction as soon as reasonably practicable, but not later than two years following such vote. If the Administrator proposes to execute such Liquidity Sale pursuant to a privately negotiated transaction and the proposed purchaser is known by the Administrator to be the beneficial owner of at least 10% of the voting shares or is an affiliate of the Administrator (a “Related Party”), the Company shall be required to obtain an additional approval of the terms of such Liquidity Sale with a Related Party purchaser from the holders of a majority of the voting shares as a condition to closing any such Liquidity Sale with a Related Party purchaser.

Further, except as noted above in connection with a Liquidity Sale, if at any time we or Masterworks decide to sell the Painting in a private sale transaction (i.e., non-auction sale), we must submit such proposed sale to a vote of the then holders of our voting shares, and if holders of a majority of the voting shares vote in favor of a sale, the Administrator will then effectuate the private sale.

Following a sale of the Painting, we will pay or reimburse Masterworks for any expenses for which we are responsible in connection with the sale of the Painting, including applicable sales commissions, taxes and other transactional costs and expenses. After payment of such costs, expenses and taxes, the Company will be liquidated, and the remaining net proceeds, if there are any, will be distributed to the then record holders of our shares in accordance with the priorities set forth in our operating agreement. There can be no assurance that there will be any remaining net proceeds to be distributed at such time.

Organizational Structure

The following chart reflects the planned organizational structure of Masterworks following the Offering and the material relationships between us and Masterworks that will exist following the Offering:

*All entities are Delaware limited liability companies, except Masterworks Cayman 001, LLC, which is a Cayman Islands limited liability company. All entities, except Masterworks 001, LLC and its subsidiary, are referred to collectively as “Masterworks.” Our officers will also serve as officers of Masterworks. Masterworks entities will engage in other business activities, including performing services to other companies that have a similar business model as our Company.

Risk Factors

An investment in the Class A ordinary shares includes a number of risks and uncertainties which are described in the “Risk Factors” section of this offering circular, including the following:

Company Information

Our principal office is located at Spring Place, 6 St. Johns Lane, 7^th Floor, New York, New York 10013 and our phone number is (203) 518-5172. Our corporate website address is the website address of Masterworks.io located at www.masterworks.io. Information contained on, or accessible through, the website is not a part of, and is not incorporated by reference into, this offering circular.

We are a manager-managed limited liability company managed by the Board of Managers. We were formed for the specific purpose of acquiring, maintaining, promoting and ultimately selling the Painting. Purchasers of our Class A ordinary shares in this Offering and any previous or subsequent purchasers will be deemed to become party to our operating agreement, a form of which is filed as Exhibit 2.3 hereto. As of the date of this filing, there are 16,015 membership interests of the Company currently issued and outstanding, which are held by Masterworks. On or prior to the time of qualification of this offering circular by the SEC, the Company will enter into an amended and restated operating agreement for Masterworks 001, LLC, which will create two classes of membership interests of the Company in the form of: Class A ordinary shares and Class B ordinary shares, and simultaneously, the 16,015 membership interests will convert automatically into 24,956 Class B ordinary shares. References throughout this offering circular to “shares” refer generically to the Class A ordinary shares and Class B ordinary shares and references to the Masterworks 001, LLC “operating agreement” and the “operating agreement” of Masterworks 001, LLC, refer to the Masterworks 001, LLC amended and restated operating agreement that will become effective on or prior to the time of qualification of this offering circular by the SEC and the form of which is filed herewith as Exhibit 2.3 and unless otherwise stated herein, all discussion throughout this offering circular assumes that the amended and restated operating agreement is in full force and effect.

Subject to applicable law, the Board of Managers will have sole voting power over all matters, including: mergers, consolidations, acquisitions, winding up and dissolution and sale of the Painting; except, the Board of Managers shall not have the authority to amend our operating agreement (except in limited instances described therein), or the administrative services agreement (except in limited instances described therein), issue additional shares (other than pursuant to the administrative services agreement and upon conversion of Class B ordinary shares), incur debt for borrowed money, engage in other business activities or effect a sale of the Painting, subject to certain exceptions, without first obtaining the prior approval or consent of the shareholders.

The Board of Managers consists of three members and shall initially consist of, Scott Lynn, Josh Goldstein and the Independent Manager. Our operating agreement provides that each member of the Board of Managers will serve for an indefinite term, but that each may be removed by a majority of the Board of Managers for any reason, or may choose to withdraw under certain circumstances. In addition, our operating agreement provides that holders of two-thirds (2/3) of the voting shares may affirmatively vote to remove a member of the Board of Managers for “cause.”

THE OFFERING

DETERMINATION OF OFFERING PRICE

The price per each Class A ordinary share was determined by dividing (1) the sum of (a) purchase price that Masterworks paid for the Painting, $1,815,000, plus (b) 10% of such amount which equals the true-up payable to Masterworks, which is $181,500, in connection with its sale of the Painting to us, by (2) 99,825, which is the maximum number of Class A ordinary shares that will be sold in this Offering (or issued to Masterworks if any remain unsold). Masterworks Gallery will own 24,956 Class B ordinary shares representing a 20% profits interest in our Company following the Offering and will own Class A ordinary shares if and to the extent the Offering is not fully subscribed, since the number of unsold Class A ordinary shares, if any, will be paid to Masterworks as part of the purchase price for the Painting. Prior to this Offering, no public market exists for the Class A ordinary shares, and there can be no assurance that a public market will ever exist for the Class A ordinary shares. The Company believes that based on the price paid for the Painting at public auction, historical appreciation rates of similar paintings by the same artist and other factors, the per share offering price constitutes a reasonable estimate of the fair value of the Class A ordinary shares as of the date of this Offering Circular.

DIVIDEND POLICY

We have not declared or paid dividends on the Class A ordinary shares since our formation and do not anticipate paying dividends in the foreseeable future on any shares, unless and until the Painting is sold, at which point we plan to pay a liquidating distribution. There can be no assurance as to the timing of a liquidating distribution or that we will pay a liquidating distribution at all. There are no contractual restrictions on our ability to declare or pay dividends and if any are to be paid in the future, such decision will be at the discretion of our Board of Managers and will depend on our then current financial condition and other factors deemed relevant by the Board of Managers.

RISK FACTORS

The purchase of the Class A ordinary shares offered hereby involves a high degree of risk. Each prospective investor should consult his, her or its own counsel, accountant and other advisors as to legal, tax, business, financial, and related aspects of an investment in the securities offered hereby. Prospective investors should carefully consider the following specific risk factors, in addition to the other information set forth in this offering circular, before purchasing the securities offered hereby.

Risks Related to our Business Model

The Company is a new company and our business model is untested.

The Company is a new company that was formed on March 28, 2018 and had no operating history. We cannot make any assurance that our business model can be successful. Since inception, the scope of our operations has been limited to our formation. Our business model includes novel and unique features that are untested. Our operations will be dedicated to acquiring and maintaining the Painting and facilitating the ultimate sale of the Painting. We do not expect to generate any revenues or cash flow until the Painting is sold and no profits will be realized by our investors unless the Painting is sold for more than we acquired it for and there are sufficient funds after all applicable costs, expenses and taxes in order to effectuate a distribution to holders of our Class A ordinary shares upon our liquidation. We are not aware of another company that has successfully offered investors securities that represent indirect ownership of an interest in a single work of art. Similarly, there are few, if any, companies that have offered investors securities that represents indirect ownership in a single asset with the sole goal of realizing appreciation on the value of that asset. Accordingly, it is impossible to determine in advance how the Class A ordinary shares will trade relative to the underlying value of the Painting or if they will be able to trade at all. It is difficult to predict whether this business model will succeed or if there will ever be any value in the Class A ordinary shares.

We do not expect to generate any revenues.

Our business activities will be dedicated to maintaining the Painting and facilitating the ultimate sale of the Painting, which may not occur for many years. Our intention is to own the painting for a five- to ten-year period, although we may elect to hold the Painting for a longer period or sell the Painting at any time due to certain circumstances. We do not expect to generate any revenues or cash flow unless the Painting is sold and no profits can be realized by our investors unless the Painting is sold for more than we acquired it for and there are sufficient funds to effectuate a distribution after paying the applicable costs, taxes and expenses, or the investors sell their Class A ordinary shares on a trading platform approved by us or through brokerage relationships for more money than they acquired them for. Because we do not expect to generate any positive cash flow, we will be completely reliant on Masterworks to fund our operations. Investors should be prepared to hold their Class A ordinary shares for an indefinite period, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

We are extremely undiversified as a company since our strategy is investing in a single piece of art.

Our Company was formed to acquire, maintain and potentially sell the Painting. We will not invest in any other artwork or assets. Such lack of diversification substantially increases market risks and the risk of loss associated with an investment in our Class A ordinary shares. A consequence of limiting our scope of operations to ownership of a single Painting is that the aggregate returns realized by investors are expected to correlate to the underlying value of the Painting.

We may sell the Painting at a loss or at a price that results in a liquidating distribution that is below the trading price of the Class A ordinary shares, or no liquidating distribution at all.

The Company will have the ability, in its sole and absolute discretion, to sell the Painting at a public auction and liquidate us if:

Any such sale could be affected at an inopportune time, at a loss and or at a price that would result in a distribution of cash that is less than the trading price of our Class A ordinary shares or no liquidating distribution at all, and our investors could lose part or all of their investment in us. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

The timing and potential price of a sale of the Painting are impossible to predict, so investors need to be prepared to own the Class A ordinary shares for an uncertain or even indefinite period of time.

We intend to sell the Painting within a five- to ten-year time horizon, although we may elect to hold the Painting for a longer period due to market conditions or other circumstances. In addition, the occurrence of certain events, such as our inability or unwillingness to make the Class A ordinary shares available for trading on a trading platform approved by us, may compel us to sell the Painting at an earlier time. Accordingly, a risk of investing in the Class A ordinary shares is the unpredictability of the timing of a sale of the painting and the unpredictability of funds being available of a cash distribution and investors should be prepared for both the possibility they will not to receive a cash distribution for many years, if ever, and the contrary possibility that they may receive a liquidating cash distribution at any time following the completion of the Offering. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

Our structure may make it more difficult for us to sell the Painting at the highest possible price.

We have intentionally limited the manner in which we can sell the Painting without shareholder approval. Unless we obtain the prior approval of the then holders of our voting shares, our operating agreement, prohibits us from selling the Painting in a private (i.e. non-auction) sale. If the sale is initiated by the Company, we will execute the sale at a public auction conducted by Christie’s, Sotheby’s, Philips or another leading auction house. If we are approached by a potential purchaser, we will only execute the sale if such transaction is approved by the then holders of our voting shares. A significant percentage of transactions in fine art occur through privately negotiated transactions among art professionals and clients and many collectors and investors do not participate in public auctions. Similarly, collectors and investors may not be inclined to go through the trouble and cost to make an offer if there is a significant risk the shareholders will not approve such offer. Given the uniqueness of our model and the evolving character of the art market it is impossible to determine what effect, if any, these issues will have on our ability to eventually sell the Painting at the highest possible price. Further, there can be no assurance that the Painting can be sold at a profit or at all. The timing of the sale, and the potential value of the Painting will depend upon many factors beyond our control and investors in our Company should be prepared to lose all or part of their investment in our Company.

Our business model involves certain costs, some of which are to be paid for in Class A ordinary shares which will have a dilutive effect on the holders of our Class A ordinary shares.

There are various services required to administer our business and maintain the Painting. Pursuant to an administrative services agreement between us and the Administrator to be entered into prior to the completion of the Offering, the Administrator will manage all administrative services relating to our business and custodial services relating to the maintenance of the Painting. The Administrator will pay all ordinary and necessary costs and expenses associated with the administration of our business and maintenance of the Painting. In exchange for these services and incurring these costs, we will issue Class A ordinary shares to the Administrator at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum as consideration for such activities. Any extraordinary or non-routine services, if any, will be managed and paid for by the Administrator, but actual third-party costs associated with these extraordinary or non-routine services will be reimbursed upon the sale of the Painting or a sale of our Company, as applicable.

Because we do not expect to generate any positive cash flow, we will be completely reliant on the Administrator to fund our operations. The portion of the foregoing fees that are going to be paid in Class A ordinary shares will have a dilutive effect on the holders of our Class A ordinary shares and will effectively reduce the tangible book value per Class A ordinary share over time.

In the event we are able to sell the Painting, your potential investment returns will be lower than the actual appreciation in value of the Painting due to applicable costs, expenses and taxes to be paid.

In the event the Painting is sold, your distribution of cash proceeds will be reduced by costs, expenses and taxes. Sale prices reflected in action records, include the hammer price (i.e. the price at which the auctioneer declared the winning bid), plus the buyer’s premium and are reported net of applicable taxes, fees and royalties. Taxes, fees and royalties are typically paid by the purchaser. The amount of the published sale price a seller of a work receives is typically reduced by all or a portion of the buyer’s premium and there may also be a sales commission. These economic terms are negotiated between the seller and the auction house and vary widely depending on a number of factors, including the value and importance of the specific work, whether the work is sold as an individual piece or part of a larger transaction, anticipated demand levels and other factors. For a work similar to the Painting, it would be reasonable to expect that the net pre-tax cash proceeds to a seller in an auction sale would be in the range of 8% to 15% less than the published sale price, Accordingly, if for example, the Painting were to eventually sell at auction for a sale price of $3.0 million (hammer price, plus buyer’s premium), the net proceeds available to the Company as the Seller would be expected to be in the range of $2,760,000 to $2,550,000, however, the net result could fall outside of this range. The distribution to you upon dissolution of us following a sale will also be taxable to you depending on your tax basis in the Class A ordinary shares, the geographic area in which you reside and your local tax laws. Accordingly, your investment returns upon a sale of the Painting, if such a sale can occur and if such sale can generate sufficient funds for a distribution after accounting for applicable expenses and taxes, may be significantly lower than the actual rate of appreciation of the Painting.

Risks Associated with an Investment in Fine Art

There is no assurance of appreciation of the Painting or sufficient cash distributions resulting from the ultimate sale of the Painting.

There is no assurance that the Painting will appreciate, maintain its present value, or be sold at a profit. The marketability and value of the Painting will depend upon many factors beyond our control. There can be no assurance that there will be a ready market for the Painting, since investment in Painting is generally illiquid, nor is there any assurance that sufficient cash will be generated from the sale of the Painting to compensate members for their investment. Even if the Painting does appreciate in value, the rate of appreciation may be insufficient to cover our administrative costs and expenses.

The value of the Painting is highly subjective and appraised values and auction estimates may differ widely from actual realizable value.

The value of the Painting is inherently subjective given its unique character. Although the auction estimate for the Painting at the November 16, 2017 auction held by Phillips Auctioneers LLC, or “Phillips,” was between $1,500,000 and $2,000,000, investors are cautioned not to put undue emphasis on the auction estimate, which is subject to a number of important qualifications and assumptions. The actual realizable value of a fine artwork may differ widely from auction estimates or its appraised value for a variety of reasons, many of which are unpredictable and impossible to discern. In addition, the net realizable value to a seller is often significantly lower than the published sale price because the net proceeds are typically reduced by all or a portion of the buyer’s premium and there may also be a sales commission.

For non-cash generating assets, such as fine art, valuation is heavily reliant on an analysis of sales history of similar artwork. Experts often differ on which historical sales are comparable and the degree of comparability. The attempt to discern value from historical sales data is extremely challenging for a variety of reasons, including, without limitation:

Accordingly, due to the inherent subjectivity involved in estimating the realizable value of the Painting, any appraisal or estimate of realizable value may prove, with the benefit of hindsight, to be different than the amount ultimately realized upon sale and such differences can be, and often are, material.

An investment in the Painting is subject to various risks, any of which could materially impair the value of the Painting and the market value of our Class A ordinary shares.

Investing in Painting is subject to the following risks:

Although Masterworks Gallery purchased the Painting from a reputable auction house and conducted due diligence in connection with its purchase of the Painting, no amount of due diligence can completely insulate a buyer against these risks and if any of these risks materialize, the value of the Painting may decline, and the trading price of the Class A ordinary shares would be adversely affected.

If the painting is eventually displayed in a gallery space or other location, it could be damaged, and insurance may not cover all of the damages, or even if insurance does cover the damages, it may cause the painting to be unsaleable.

It is planned that the Painting will be permanently stored and or displayed in the United States, though it might be displayed periodically in an international location. We plan to initially store the Painting at an unaffiliated commercial art storage facility in Delaware. The Painting is currently stored at a warehouse located at 111 Alan Drive, Newark DE 19711 in custody of Delaware Freeport LLC. Shareholders will be notified when the Painting is displayed. We plan to obtain and maintain insurance coverage for the Painting. However, the painting may be damaged while being displayed and our insurance may not be able to cover all of the damages resulting therefrom, and even if insurance does cover such damages, the damages may result in the Painting being unsaleable. Accordingly, damage or destruction of the Painting will have a material adverse impact on the value of the Painting and, consequently, the value of the Class A ordinary shares.

We may have overpaid for the Painting.

We plan to purchase the Painting at the same purchase price paid by Masterworks, which is the same as the price paid by Masterworks’ agent at a public auction in November 2017. Accordingly, if Masterworks overpaid for the Painting, we will have overpaid for the Painting. When Masterworks determines how much to pay for any painting, including the Painting, it may not know about additional commissions or incentives the seller, or the seller’s representative (including a dealer or auction house) of the Painting is receiving in the transaction or other facts that prove to be material to its estimate of valuation.

We may not be able to find a buyer for the Painting at a reasonable price.

Art is a highly illiquid asset and a significant percentage of objects go unsold when sent to auction. Even in the event that we attempt to sell the Painting, we cannot guarantee that there will be a buyer at any reasonable price. Additionally, if the Painting does go to an auction sale and is not sold, such failure could damage the reputation of the Painting in the marketplace and make it even more difficult to sell in the future.

The global economy, the financial markets and political conditions of various countries can adversely affect the supply of and demand for works of art.

The global art market is influenced over time by the overall strength and stability of the global economy and the financial markets of various countries, although this correlation may not be immediately evident. In addition, global political conditions and world events may affect our business through their effect on the economies of various countries, as well as on the willingness of potential buyers to purchase the Painting in the wake of economic uncertainty. Accordingly, weakness in those economies and financial markets can adversely affect the supply of and demand for works of art and the value of the Class A ordinary shares. Furthermore, global political conditions may also influence the enactment of legislation that could adversely impact our business.

Temporary popularity of some paintings or categories of art may result in short-term value increases that prove unsustainable as collector tastes shift.

Temporary consumer popularity or “fads” among collectors may lead to short-term or temporary price increases, followed by decreases in value. The demand for specific categories of art and artists is influenced by changing trends in the art market as to which collecting categories and artists are most sought after and by the collecting preferences of individual collectors. These conditions and trends are difficult to predict and may adversely impact our ability to sell the Painting for a profit. These risks of changes in popularity may be greater for a living or emerging artist, as compared to other categories which may have a proven valuation track record over a longer period of time. These trends could result in reduced profitability or a loss upon the sale of the Painting.

We could be exposed to losses in the event of title or authenticity claims.

The buying and selling of artwork can involve potential claims regarding title, provenance and or authenticity of the artwork. Authenticity risk related to works of art may result from incorrect attribution, uncertain attribution, lack of certificate proving the authenticity of the artwork, purchase of a non-authentic artwork, or forgery. In the event of a title or authenticity claim against us by a buyer of the Painting from us, we may or may not have recourse against the seller to us of the Painting, but a claim could nevertheless expose us to losses. In addition, we do not maintain liquid assets to defend or settle any such legal claims and would be reliant on the Administrator to outlay the cost of such defense or settlement.

Ownership of Andy Warhol’s work is highly concentrated, and any large-scale divestiture of a major Warhol collection could negatively affect prices.

The Andy Warhol Museum and the Mugrabi family own the largest collections of Andy Warhol paintings and other sizable collections exist throughout the world. Many art industry participants believe that the Mugrabi family has been largely responsible for the popularity and pricing of Andy Warhol’s work and they have purchased large numbers of Warhol paintings at auction during the past twenty years to keep prices up. If the Mugrabi family or any other major collector were to liquidate a large number of Warhol paintings, the supply demand dynamic that has characterized the Warhol market in recent years could shift dramatically. A significant increase in the number of Warhol paintings available for sale would likely reduce prices.

The Painting could be subject to damage, theft or deterioration in condition, which could have a material adverse effect on the value of the Painting.

We plan to store the Painting in a protected environment with security measures, but no amount of security can fully protect a painting from damage or theft. The damage or theft of valuable property despite these security measures could have a material adverse impact on the value of the Painting and, consequently, the value of our Class A ordinary shares.

Damage to the reputation of the artist, or the subject matter painted by the artist, could impair the value of the Painting.

The value of a work of art is or can be dependent on the individual brand and reputation of the artist and, in the case of this particular work, the subject matter. Although numerous books have been written about the artist and the subject matter, it is possible that historians will uncover previously unknown facts or allegations about them. If any new material revelation were to emerge and such revelation were to cast either the artist of the subject matter in a disparaging light, such revelation could negatively affect demand for the Painting, which could diminish or eliminate its value.

Changes in opinions by experts in the art work regarding authenticity could damage or eliminate the value of the Painting.

Authenticity is often completed by art world experts, and opinions often matter more than scientific data. If a well-respected art expert were to opine negatively on the authenticity of the Painting, it could reduce or eliminate the value of the Painting.

Insurance coverage for the Painting does not cover title claims and may not cover all possible contingencies, exposing us to losses resulting from the damage or loss of the Painting.

We plan to maintain insurance coverage for the Painting against damage or loss of the Painting. Our insurance coverage does not cover title claims and may expressly exclude damage caused by war, losses caused by chemical or biological contamination and certain other potential loss scenarios. Accordingly, a successful claim that Masterworks does not have valid title and ownership to the Painting, or uncovered damage or destruction of the Painting, will have a material adverse impact on the value of our Class A ordinary shares.

Industry sales cycles can be unpredictable.

Purchase behavior by collectors is generally unpredictable due primarily to the discretionary nature, relative scarcity and high values of art purchases. An art buyer may typically purchase art when excess liquidity is abundant. When economic conditions preclude art collectors from purchasing the Painting, such a downturn in sales will affect our ability to sell the Painting. Additionally, many art buyers have significant access to credit to facilitate the purchase of artwork and any changes which would cause art collectors to not access credit could have a serious impact on a collector’s ability to purchase the Painting.

Risks Related to our Reliance on the Administrator

We are totally reliant on the Administrator to maintain and sell the Painting and manage our administrative services.

We do not plan to have employees or intend to maintain or generate any cash flow prior to the sale of the Painting. Accordingly, we are totally reliant on the performance of the Administrator under the administrative services agreement. We plan to rely on the Administrator to perform or administer all necessary services to maintain the Painting, including obtaining insurance and ensuring appropriate storage. The Administrator is also responsible for all administrative services required to maintain our Company, including professional services, regulatory filings, SEC reporting, tax filings and other matters. The Administrator is a newly formed company and has not yet developed a track record of successful performance of these activities. If the Administrator were to default on its obligations under the administrative services agreement, it would be extremely difficult for us to replace the Administrator or internally manage these functions given our lack of cash flow and lack of employees. Any termination of the Administrative Services Agreement will require the prior written consent of Masterworks Gallery, LLC. Accordingly, in the event of a material default by the Administrator under the administrative services agreement, we would likely be forced to sell the Painting. We cannot provide assurance that the timing and or terms of any such sale would be favorable. Further, after the five-year anniversary of this Offering, Masterworks can withdraw for any reason from its position as our Administrator, provided that such withdrawal would only become effective upon a sale of the Painting.

We are totally reliant on the Administrator to maintain sufficient capital resources to pay our fees, costs and expenses.

Although we believe the Administrator has sufficient capital resources and sources of liquidity to perform its obligations under the administrative services agreement for the foreseeable future, there can be no assurance that the Administrator will be able to maintain sufficient capital to satisfy its obligations in future periods. The Administrator’s capital resources and sources of liquidity will be relied upon by our auditors in determining our likely ability to continue as a going concern. Pursuant to and in accordance with the administrative services agreement, the Administrator is required to maintain cash reserves on hand for so long as the Class A ordinary shares remain outstanding sufficient to pay at least one year of estimated expenses to satisfy its obligations under the administrative services agreement. However, there can be no assurance that the Administrator will be able to maintain such cash reserves. If the Administrator’s liquid capital resources and sources of liquidity are insufficient to satisfy its operational requirements, including the management of our Company, for at least one year, our Company will receive qualified audit reports that would likely have a material adverse effect on the value and trading price of our Class A ordinary shares.

The Administrator is a newly formed business and could run out of capital.

The Administrator is a newly formed entity which is responsible for paying expenses of maintaining the Painting, including storage and insurance, as well as administrative costs associated with managing publicly traded companies such as ours. In that regard, we anticipate that the Administrator’s fee revenue will be fixed by contract with each entity that it manages, as it is for our Company, but its expenses will be variable and prone to increases based on market and other factors. In addition, because the Administrator intends to manage entities like ours that do not have liquid assets, it will periodically need to outlay capital for unusual or non-recurring expenses that will only be reimbursable upon a subsequent sale of the underlying Painting, which could result in liquidity shortages. The Administrator currently relies on a single investor, Scott Lynn, for all of its capital and liquidity. If Scott Lynn were to cease funding the Administrator for any reason, the Administrator may not be able to identify additional sources of capital.

The Board of Managers will have complete authority to administer our business consistent with the terms and conditions of our operating agreement, other than material amendments to the operating agreement and the administrative services agreement and any private sale of the Painting and other than the services to be provide by the Administrator, which will administer the day to day operations of the Company pursuant to the administrative services agreement.

The Board of Managers will have sole voting power over all matters, including: mergers, consolidations, acquisitions, winding up and dissolution and sale of the Painting; except, the Board of Managers shall not have the authority to do any the following without first obtaining the prior approval or consent of holders of a majority of the voting shares:

If, on the seven-year anniversary of the closing of this Offering, the Administrator determines that an active trading market does not exist or that such market does not have sufficient transaction volume to permit reasonable trading in the Class A ordinary shares, the Company will solicit the vote of holders of voting shares to sell the Painting (a “Liquidity Sale”). If the holders of a majority of voting shares vote to sell the Painting, the Administrator will use commercially reasonable efforts to sell the Painting at auction or in a privately negotiated transaction as soon as reasonably practicable, but not later than two years following such vote. If the Administrator proposes to execute such Liquidity Sale pursuant to a privately negotiated transaction and the proposed purchaser is known by the Administrator to be the beneficial owner of at least 10% of the voting shares or is an affiliate of the Administrator (a “Related Party”), we shall be required to obtain an additional approval of the terms of such Liquidity Sale with a Related Party purchaser from the holders of a majority of the voting shares as a condition to closing any such Liquidity Sale with a Related Party purchaser.

Members of the Board of Managers may be removed by a majority of the Board of Managers for any reason with or without “cause” or for “cause” as defined in our operating agreement by a vote of the holders of two-thirds (2/3) of the voting shares. This concentration of control in the Board of Managers may delay, deter or prevent acts that would be favored by holders of our Class A ordinary shares. The interests of the Board of Managers or the Administrator may not always coincide with our interests or the interests of the holders of our Class A ordinary shares. As a result, the market price of our Class A ordinary shares could decline, or holders of our Class A ordinary shares might not receive a premium over the then-current market price of our Class A ordinary shares upon a change in control.

Holders of our Class A ordinary shares do not elect or vote on the Administrator and have limited ability to influence decisions regarding our business.

Our operating agreement provides that our assets, affairs and business will be managed under the direction of the Board of Managers. Holders of our Class A ordinary shares do not elect or vote on the Board of Managers and can only remove the Board of Managers by a vote of two-thirds (2/3) of the voting shares and only for “cause” as defined in the operating agreement. Accordingly, unlike the holders of common stock in a corporation, holders of Class A ordinary shares have only limited voting rights on matters affecting our business, and therefore limited ability to influence decisions regarding our business.

As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements, including the requirements for a board of directors or independent board committees.

We do not intend to list the Class A ordinary shares on a national securities exchange. As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements that an issuer listing on a national stock exchange would be. The Board of Managers is made up of Scott W. Lynn, Joshua B. Goldstein, and Leonard J. Sokolow. One of the members of the Board of Managers, Leonard J. Sokolow, serves as the Independent Manager on the Board of Managers (the “Independent Manager”). The Independent Manager serves to protect the interests of the holders of the Class A ordinary shares and is tasked with reviewing and approving all related party transactions of our Company with our affiliates and address all conflicts of interest that may arise between us and the holders of the Class A ordinary shares and our affiliates. If the Independent Manager resigns from such position on the Board of Managers at any time, the remaining members of the Board of Managers shall appoint a replacement that meets the standards of an independent director pursuant to the standards set forth in NASDAQ Marketplace Rule 4200(a)(15). Accordingly, we do not have, nor are we required to have (i) a board of directors of which a majority consists of “independent” directors under the listing standards of a national stock exchange, (ii) an audit committee composed entirely of independent directors and a written audit committee charter meeting a national stock exchange’s requirements, (iii) a nominating/corporate governance committee composed entirely of independent directors and a written nominating/corporate governance committee charter meeting a national stock exchange’s requirements, (iv) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of a national stock exchange, and (v) independent audits of our internal controls. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of a company listed on a national stock exchange.

We are reliant on the integrity of the Masterworks Platform and a security or privacy breach could expose us to liability or damage our reputation.

We will rely on the Masterworks Platform and other systems and technologies owned or licensed to communicate with our shareholders. Masterworks also uses mobile devices, social networking and other online activities to communicate with employees and investors. Such uses give rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information. Masterworks collects sensitive and confidential information, including personal information about investors and private information about employees. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber attacks. The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information, or interference with the Masterworks Platform or any of the Masterworks’ information technology systems or the technology systems of third-parties on which Masterworks relies, could result in business disruption, negative publicity, brand damage, violation of privacy laws and potential liability, any of which could result in a material adverse effect on the value and liquidity of the Class A ordinary shares.

Risk of non-compliance with regulations.

The Class A ordinary shares are being sold by SDDco-BA, which is a registered broker-dealer under the Securities Exchange Act of 1934 (the “Exchange Act”) and registered in each state where the offer and sales of the Class A ordinary shares will occur, and it is anticipated that Class A ordinary shares will be offered and sold only in states where SDDco-BA is registered as a broker-dealer. If a regulatory authority determines that the Administrator, which is not a registered broker-dealer under the Exchange Act or any state securities laws, has itself engaged in brokerage activities that require registration, including initial sale of the Class A ordinary shares on the Masterworks Platform and permitting a registered broker-dealer to facilitate resales or other liquidity of the Class A ordinary shares on the Masterworks Platform, the Administrator may need to stop operating and therefore, the Company would not have an entity managing the Painting. In addition, if the Administrator is found to have operated as a ‘broker-dealer’ without being properly registered, there is a risk that Class A ordinary shares offered and sold while the Administrator was not registered may be subject to a right of rescission, which may result in the early termination of the Offering.

Risks Relating to Potential Conflicts of Interest

Our affiliate, Masterworks Brokerage, may seek register to operate or establish relationships with an automated trading system to enable it to earn transactional fees from trading in our Class A ordinary shares which creates various conflicts of interest.

Masterworks Brokerage may in the future seek SEC registration to become a broker-dealer and a member of FINRA to enable it to earn transactional fees for providing liquidity in the Class A ordinary shares. The operation of a trading market in the Class A ordinary shares, if a trading market can ever exist, will create conflicts of interest if Masterworks Brokerage is entitled to earn transaction-based revenue from trading or brokerage transactions. In addition, Masterworks may charge administrative fees for facilitating access to any such trading platform. If such activities generate trading profits, our affiliates may be incentivized not to sell the Painting and liquidate us, even in situations in which a sale of the Painting is in the best interest of holders of our Class A ordinary shares. This creates a potential conflict of interest between the holders of the Class A ordinary shares which would benefit from a sale of the Painting and Masterworks which benefits from collecting trading fees from the trading of the Class A ordinary shares. Despite steps we have taken to reduce conflicts, including imposing limitations on our ability to sell the Painting and the manner in which such sale would occur, there are inherent conflicts of interest and we cannot assure investors that the Administrator will execute a discretionary sale of the painting at a time that is in the best interest of holders of our Class A ordinary shares.

Although Masterworks will own 24,956 Class B ordinary shares representing a 20% profits interest in our Company, and will own Class A ordinary shares following the Offering, Masterworks may eventually sell its shares.

Masterworks will own 24,956 Class B ordinary shares representing a 20% profits interest in our Company following the Offering and will own Class A ordinary shares if and to the extent the Offering is undersubscribed. Masterworks will agree to lock-up provisions in our operating agreement, that will prohibit it from selling Class B ordinary shares (or Class A ordinary shares issuable upon conversion of Class B ordinary shares) prior to the one-year anniversary of the Offering, though it is permitted to pledge all of its shares to unaffiliated third-party lenders and such lenders shall not be subject to the lock-up if they obtain ownership of the shares in connection with a default by Masterworks on its indebtedness. After the one-year anniversary, Masterworks will have no restrictions on the disposition of any of its retained shares, other than restrictions imposed by applicable securities laws. Accordingly, the alignment that will exist upon closing of the Offering between Masterworks and our other shareholders may not exist in the future. If Masterworks were to sell a significant portion of its shares, the interests of Masterworks may differ significantly from those of investors in the Offering and subsequent holders of the Class A ordinary shares. As a result, we cannot assure investors that Masterworks will execute a discretionary sale of the Painting at a time that is in the best interests of holders of the Class A ordinary shares.

In addition, Masterworks may arrange for some of the Class A ordinary shares it holds to be sold by a broker pursuant to a “10b5-1 trading plan” pursuant to which Masterworks may sell interests at the discretion of their brokers or pursuant to a formula, subject to volume limitations applicable pursuant to federal securities laws. There is a risk that this may result in too many Class A ordinary shares being available for resale and the price of the Class A ordinary shares declining as supply outweighs demand.

Masterworks and Members of the Board of Managers and executive officers will have other business interests and obligations to other entities, including interests and obligations relating to the art industry.

Masterworks expects to engage in other business activities, including other activities relating to the art industry. Masterworks may buy and sell other works of art, enter into pre-auction guarantees, establish a gallery (for viewing purposes), establish other entities similar to us and other activities. In addition, neither the Administrator nor its executive officers nor the Board of Managers will be required to manage us as their sole and exclusive function and they will have other business interests and will engage in other activities in addition to those relating to us. We are dependent on the Administrator and its officers and employees to successfully operate us. Their other business interests and activities could divert time and attention from operating our business.

Our operating agreement contains provisions that exculpate the Board of Managers and the administrative services agreement contains provisions that exculpate the Administrator and its affiliates, and certain other persons engaged on behalf of the Administrator from liabilities with respect to certain actions taken, even if such actions are negligent, which also reduces the remedies available to investors for certain acts by such persons.

Our operating agreement limits the liability of the Board of Managers, any of our members, any person who is an officer of ours and any person who serves at the request of the Board of Managers on behalf of us as an officer, director, members of the Board of Managers, Independent Manager, partner, member, stockholder or employee of such person. The administrative services agreement limits the liability of the Administrator, its affiliates, managers, officers and members. None of the foregoing persons shall be liable to us or the Administrator or any other member of us for any action taken or omitted to be taken by it or by other person with respect to us, including any negligent act or failure to act, except in the case of a liability resulting from any of the foregoing person’s own actual fraud, gross negligence, willful misconduct, bad faith, breach of fiduciary duties that have not been waived, reckless disregard of duty or any intentional and material breach of the operating agreement or conduct that is subject of a criminal proceeding (where such person has reasonable cause to believe that such conduct was unlawful). With the prior consent of the Board of Managers, any of the foregoing persons may consult with legal counsel and accountants with respect to our affairs (including interpretations of the operating agreement) and shall be fully protected and justified in any action or inaction which is taken or omitted in good faith, in reliance upon and in accordance with the opinion or advice of such counsel or accountants. In determining whether any of the foregoing persons acted with the requisite degree of care, such person shall be entitled to rely on written or oral reports, opinions, certificates and other statements of the members of the Board of Managers, officers, employees, consultants, attorneys, accountants and professional advisors of us selected with reasonable care; provided, that no such person may rely upon such statements if it believed that such statements were materially false. The foregoing limitations on liability reduce the remedies available to the holders of the Class A ordinary shares for actions taken which may negatively affect us.

Scott W. Lynn may Have Conflicts of Interest.

Scott W. Lynn, the founder of Masterworks and the individual responsible for funding Masterworks has effective control over the Company’s operations through contractual arrangements with the Lynn Family Trust 001, which currently owns 100% of the membership interests of Masterworks, the Administrator. Mr. Lynn is also our Chief Executive Officer and the Chief Executive Officer of our Administrator and a member of the Board of Managers. Mr. Lynn is an art collector and could have conflicts between business with his personal art collection and the collection of Masterworks, or Mr. Lynn could simply stop funding Masterworks and cause it to cease to exist.

Risks Relating to Ownership of the Class A Ordinary Shares and the Offering

There is no active public market for our Class A ordinary shares and an active trading market may not ever develop or, even if developed, may not be available to all shareholders, may not be sustained or may cease to exist following this Offering, which would adversely impact the market for our Class A ordinary shares and make it difficult, or even impossible to sell your Class A ordinary shares.

There is no active market for our Class A ordinary shares. Although we intend to seek to make the Class A ordinary shares eligible for trading on a trading platform approved by us or to facilitate brokerage transactions, we cannot provide any assurance that we will do so or that we will choose or be able to maintain that eligibility. Even if the Class A ordinary shares are tradeable, we do not know the extent to which investor interest will lead to the development and maintenance of a liquid trading market. Further, we do not expect that our Class A ordinary shares will be traded on any trading platform within twelve months after the closing of this Offering, if at all. Any such trading platform or brokerage relationships may have rules or restrictions that would prevent certain shareholders from trading based on where they hold citizenship, where they reside, their financial situation or other factors. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares will ever be tradable.

It is possible that there will be multiple trading markets established for the Class A ordinary shares due to differences in laws, rules, policies and requirements that may preclude investors in certain geographies from establishing trading accounts on any given platform.

We are seeking to forge a relationship with one or more trading platforms to facilitate trading of the Class A ordinary shares. Most trading platforms do not currently facilitate over the counter trading in securities similar to the Class A ordinary shares on a global basis due to differences in laws and the internal rules, policies and requirements of each individual trading platform relating primarily to complications of verifying identity and compliance with anti-money laundering, tax and securities laws that would be applicable to such transactions. Accordingly, we may seek to make the Class A ordinary shares available for trading on multiple trading platforms. The benefit of such approach would be to increase the percentage of investors that would have access to trading, but there is a risk that the aggregate size of the trading market on any given platform will be diminished, resulting in a fragmented market and a lower likelihood that a seller of Class A ordinary shares will find a willing buyer of those Class A ordinary shares. In addition, the existence of multiple trading markets would likely create arbitrage opportunities and the market price of the Class A ordinary shares may not align across markets, so a buyer or seller may not achieve the best possible execution of a trade on any given trading platform. In addition, the trading fee structure may differ between trading platforms. We do not expect to list our securities on a national securities exchange.

There can be no assurance that any trading platform eligible to trade the Class A ordinary shares will permit investors from any specific geographic region to participate and any such trading platform may also restrict access to trading based on the financial status of the investor or other factors. Accordingly, you should consider the resale market for our Class A ordinary shares to be limited, as you may be unable to resell your Class A ordinary shares without significant expense, or at all.

You may not be able to sell your Class A ordinary shares at or above the offering price.

The initial public offering price for our Class A ordinary shares is based on based on a simple formula. The price per each Class A ordinary share is equal to the quotient of (1) 110% of the purchase price that Masterworks paid for the painting, divided by (2) 99,825, which is the total number of Class A ordinary shares offered in this Offering. In addition, Masterworks will own 24,956 Class B ordinary shares representing a 20% profits interest in our Company. Prior to this Offering, no public market exists for our Class A ordinary shares. You may not be able to sell your Class A ordinary shares at or above the initial offering price, or ever. Investors should be prepared to hold their Class A ordinary shares for an indefinite period, as there can be no assurance that the Class A ordinary shares can ever be tradable.

If our Class A ordinary shares are ever able to trade, the trading price of our Class A ordinary shares may be extremely volatile.

Securities that trade on alternative trading systems, as with other public markets, often experience significant price and volume fluctuations. These fluctuations can be more pronounced for securities that have a small public float, such as our Company. The market price of the Class A ordinary shares could fluctuate widely in price in response to various potential factors, many of which will be beyond our control, including the total number of available buyers or sellers at any point in time, auction listings and sales of other similar paintings, our solicitation of votes in response to a Bona Fide Offer to acquire the Painting or in connection with a Liquidity Sale, economic, market, geopolitical and other external factors. As a result, the market price of our Class A ordinary shares may be volatile, and holders of our Class A ordinary shares will likely experience a decrease in the value of their Class A ordinary shares. No assurance can be given that the market price of our Class A ordinary shares will not fluctuate or decline significantly in the future or that you will be able to sell your Class A ordinary shares when desired on favorable terms, or at all. Investors should be prepared to hold their Class A ordinary shares for an indefinite period, as there can be no assurance that the Class A ordinary shares will ever be tradable.

If you pay part or all of the purchase price for the Class A ordinary shares in this Offering in foreign currency, and we do not close the Offering, or choose to reject the subscription, you could have exposure for currency risk.

Investors in this Offering may be able to make payment of the purchase price in the form of foreign currency if we are able to forge and maintain relationships with licensed currency exchange services providers and provided we are able to do so in accordance with SEC and FINRA guidelines. For those investors who pay in foreign currency, we plan to use a third-party service to convert such payment into U.S. dollars at the time a subscription agreement is executed, and then deposit such funds into a segregated non-interest bearing account of ours. If any funds are returned by us or if we choose to reject a subscription or elect not to proceed with the Offering, such funds will be returned by mail via a check in U.S. dollars. Because certain foreign currency markets are volatile, and the U.S. dollar value of foreign currencies is speculative and the value of your foreign currency at the time you make your subscription may differ substantially from its U.S. dollar value in the future. You may lose money if we choose to reject a subscription or elect not to proceed with the Offering and refund your subscription. Any investor who chooses to pay for the Class A ordinary shares in this Offering in foreign currency is subject to such fluctuations in the value of such foreign currency and the currency risks stemming therefrom.

We will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. Therefore, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our investors could receive less information than they might expect to receive from exchange traded public companies.

We will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year. Therefore, our investors could receive less information than they might expect to receive from exchange traded public companies.

If our Class A ordinary shares ever become tradable, and become subject to the penny stock rules, it would become more difficult to trade our Class A ordinary shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price per Class A ordinary share of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If the price of our Class A ordinary shares is less than $5.00 per Class A ordinary share, our Class A ordinary shares will be deemed a penny stock. The penny stock rules require a broker-dealer, before effecting a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that, before effecting any such transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive:

These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Class A ordinary shares, and therefore holders of our Class A ordinary shares may have difficulty selling their Class A ordinary shares. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares can ever be tradable.

If our Class A ordinary shares are ever able to trade, FINRA sales practice requirements may limit an investors ability to buy and sell our Class A ordinary shares.

If our Class A ordinary shares are ever able to trade, in addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our Class A ordinary shares, which may have the effect of reducing the level of trading activity in our Class A ordinary shares. For these and other reasons, broker dealers may not recommend our Class A ordinary shares, which could reduce the liquidity of the Class A ordinary shares.

Holders of our Class A ordinary shares may face significant restrictions on the resale of the Class A ordinary shares due to state “Blue Sky” laws or rules restricting participation by foreign citizens.

Each state has its own securities laws, often called “blue sky” laws, which limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration and govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered in that state. We do not know whether our Class A ordinary shares will be registered or exempt from registration under the laws of any state. If our Class A ordinary shares are quoted on an alternative trading system, a determination regarding registration will be made by those broker-dealers, if any, who agree to serve as the market-makers for our Class A ordinary shares. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our Class A ordinary shares.

In addition, many trading platforms do not permit non-U.S. citizens or residents to transact on their platforms due primarily to complications associated with obtaining reasonable assurances as to the identity of such individuals and compliance with anti-money laundering, tax and securities laws that would be applicable to such transactions. Accordingly, you should consider the resale market for our Class A ordinary shares to be limited, as you may be unable to resell your Class A ordinary shares without the significant expense of state registration or qualification, or at all.

There is a risk the Offering will not close.

The Offering is structured in a manner such that regardless of the number of Class ordinary shares sold in the Offering to public investors, the number of shares outstanding will be the same, since Masterworks will receive any remaining unsold Class A ordinary shares in lieu of cash as partial consideration for the Painting. Accordingly, there is neither a set “minimum” number of shares that needs to be sold nor is there any guarantee that a minimum number of shares will be sold in the Offering. However, there is no guarantee that the Offering will close. There are numerous possible scenarios pursuant to which the offering may be abandoned, including a material adverse change or event in the capital markets or art markets, which could make it impracticable to consummate the Offering. The emergence of material litigation regarding the painting itself and/or involving Masterworks, the outbreak of war or hostilities, or Masterworks or SDDco-BA’s determination that the offering should be delayed, suspended, or abandoned, due to these or other unforeseeable events.

Sales of our Class A ordinary shares under Rule 144 could reduce the price of our stock.

Following this Offering, Masterworks will own 24,956 Class B ordinary shares, representing a 20% “profits interest” in our fully diluted equity. Aggregate proceeds from both this Offering will not exceed $1,996,500 and not more than 99,825 Class A ordinary shares will be sold in this Offering. The Class B ordinary shares will be convertible into Class A ordinary shares with a value at the time of conversion equal to 20% of the increase in value of our issued and outstanding Class A and Class B ordinary shares. Masterworks will agree to lock-up provisions in our operating agreement that will prohibit it from selling Class B ordinary shares (or Class A ordinary shares issuable upon conversion of Class B ordinary shares) prior to the one-year anniversary of the Offering, provided that Masterworks is permitted to pledge all of its shares to unaffiliated third-party lenders and such lenders shall not be subject to the lock-up if they obtain ownership of the shares in connection with a default by Masterworks on its indebtedness. After the one-year anniversary, Masterworks will have no restrictions on the disposition of any of their shares, other than restrictions in our operating agreement and those imposed by applicable securities laws. These shares held by our affiliates, shall be “restricted securities” as defined in Rule 144 of the Securities Act. In general, our affiliates must either sell their restricted shares in a transaction exempt from the registration requirements of the of the Securities Act, in which case the buyer would own restricted securities that could not trade freely with the Class A ordinary shares sold in this Offering for at least one year from the time of such sale, or they could sell their shares in accordance with Rule 144. Rule 144 requires that these affiliates hold their shares for a period of at least one year, not sell more than one percent of the total issued and outstanding Class A ordinary shares in any 90-day period and resell the Class A ordinary shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of Class A ordinary shares under Rule 144 could reduce prevailing market prices for our securities.

This is a fixed price offering and the fixed offering price may not accurately represent the current value of us or our assets at any particular time. Therefore, the purchase price you pay for Class A ordinary shares may not be supported by the value of our assets at the time of your purchase.

This is a fixed price offering, which means that the offering price for our Class A ordinary shares will not vary based on the underlying value of our assets at any time. Masterworks is retaining 24,956 Class B ordinary shares, representing a 20% “profits interest” in our fully diluted equity. The Class B ordinary shares retained by Masterworks will entitle Masterworks to 20% of the profit on sale of the Painting or the ability to convert such shares into Class A ordinary shares with a value at the time of conversion equal to 20% of the increase in value of our issued and outstanding Class A and Class B ordinary shares. Masterworks will pay all costs associated with the development and operation of the Masterworks Platform, costs associated with the acquisition of the Painting and all costs of our organization and this Offering. The purchase price of the Painting includes a true-up  payment to Masterworks in the amount of $181,500 from the proceeds of the Offering for acquiring and financing the acquisition of the Painting. Masterworks will also be responsible for all ordinary and necessary costs for ongoing administrative expenses, for which it will receive Class A ordinary shares at a rate of 1.5% of the total outstanding Class A ordinary shares per annum. Therefore, the fixed offering price established for our Class A ordinary shares may not be supported by the current value of the Company or the Painting at the time of the Offering or any particular time in the future.

If we face litigation related to the Offering, we may elect to auction the Painting and the proceeds of any sale at such auction may be insufficient to provide an adequate remedy. Further, if investors successfully seek rescission, we would face severe financial demands that we may not be able to meet.

Our Class A ordinary shares have not been registered under the Securities Act and are being offered in reliance upon the exemption provided by Section 3(b) of the Securities Act, including Regulation A promulgated thereunder. We represent that this offering circular does not contain any untrue statements of material fact or omit to state any material fact necessary to make the statements made, in light of all the circumstances under which they are made, not misleading. However, if this representation is inaccurate with respect to a material fact, if this Offering fails to qualify for exemption from registration under the federal securities laws pursuant to Regulation A, or if we fail to register the Class A ordinary shares or find an exemption under the securities laws of each state in which we offer the Class A ordinary shares, each investor may have the right to rescind his, her or its purchase of the Class A ordinary shares and to receive back from us his, her or its purchase price with interest. Such investors, however, may be unable to collect on any judgment, and the cost of obtaining such judgment may outweigh the benefits. If investors successfully seek rescission, we may elect to sell the Painting and there can be no assurance that the proceeds of any such sale would be an adequate remedy for our investors and we would face severe financial demands we may not be able to meet and it may adversely affect any non-rescinding investors.

If we face litigation, unless such litigation is proven to involve fraud or intentional misconduct on the part of the Administrator or our other affiliates, we will be entitled to sell the Painting at auction and the Administrator will be entitled recoup its expenses in connection with defending and or settling such litigation.

Our operating agreement indemnifies the Board of Managers and the administrative services agreement indemnifies the Administrator in all instances not involving fraud or intentional misconduct. In addition, while the Administrator is responsible for all ordinary and necessary expenses incurred in connection with maintaining the Painting and administering our Company, there is an exception for costs incurred in connection with litigation. Accordingly, if there is any litigation involving our Company which does not involve fraud or intentional misconduct, the costs relating to such litigation will be deducted from the funds to be disbursed to holders of Class A ordinary shares upon our sale of the Painting and subsequent dissolution.

Because we do not have an audit or compensation committee, holders of our Class A ordinary shares will have to rely on our Board of Managers and the Independent Manager to perform these functions.

We do not have an audit or compensation committee comprised of an independent director. Indeed, we do not have any audit or compensation committee. The Board of Managers is made up of Scott W. Lynn, Joshua B. Goldstein and Leonard J. Sokolow. One of the members of the Board of Managers, Leonard J. Sokolow, serves as the Independent Manager on the Board of Managers. The Independent Manager serves to protect the interests of the holders of the Class A ordinary shares and is tasked with reviewing and approving all related party transactions between us and our affiliates and address all conflicts of interest that may arise between us and the holders of the Class A ordinary shares and our affiliates. If the Independent Manager resigns from such position on the Board of Managers at any time, the remaining members of the Board of Managers shall appoint a replacement that meets the standards of an independent director pursuant to the standards set forth on NASDAQ pursuant to NASDAQ Marketplace Rule 4200(a)(15).

The securities industry or art industry analysts may publish detailed research reports on us or the Painting, but it is possible that those parties, as well as the media, commentators, and industry experts, will publish informal commentary or news stories about us or the Painting, which may be negative and may negatively impact the value the Class A ordinary shares.

Given the unique features of our business model and this Offering, it is possible that the analysts, media, commentators and industry experts may publicize opinions on the value of the Painting or the Class A ordinary shares which may be negative and which may significantly and adversely affect the value of our Class A ordinary shares.

Purchasers in this Offering and in the aftermarket will experience dilution in the book value of their investment over time.

The initial offering price per Class A ordinary share will be approximately $1.82 above the pro forma net tangible book value per Class A ordinary share immediately following this Offering as a result of the true-up amount payable to Masterworks upon closing of the Offering. The Administrator will earn an administrative services fee in the form of Class A ordinary shares. This fee will when issued effectively further reduce the tangible book value per Class A ordinary share over time. Additionally, if the value of the Class A ordinary shares increases over time, the number of Class A ordinary shares to be issued upon conversion of the Class B ordinary shares will also increase over time resulting in additional dilution to holders of our Class A ordinary shares.

Risks of investing using a credit card.

We may accept credit cards for subscriptions, provided that any such credit card subscription shall not exceed the lesser of $10,000 or the amount permitted by applicable law, per subscriber. An investment in the Class A ordinary shares is a long-term and highly illiquid investment. Payment by credit card may be appropriate for some investors as a temporary funding convenience, but should not be used as a long term means to finance an investment in the Class A ordinary shares. Investors contemplating using their credit card to invest are urged to review the SEC’s Investor Alert dated February 14, 2018 entitled: Credit Cards and Investments – A Risky Combination which is available at https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_riskycombination. Credit card investment will result in incurrence of third-party fees and charges (often ranging from 1.5% - 3.0%), interest obligations which will lower your expected investment returns and could exceed your actual returns. In addition, if you cannot meet your minimum payment obligation, you may damage your credit profile which would make it more difficult and more expensive to borrow in the future.

Provisions of our Certificate of Formation and our Operating Agreement may delay or prevent a take-over which may not be in the best interests of holders our Class A ordinary shares.

Provisions of our Certificate of Formation and the operating agreement may be deemed to have anti-takeover effects, which include, among others, the Board of Managers having sole and exclusive control of the operations of us with the exclusion of the holders of the Class A ordinary shares being able to vote upon certain limited circumstances, and may delay, defer or prevent a takeover attempt.

We do not intend to pay distributions in the foreseeable future and may only make a distribution to the holders of our Class A ordinary shares if the Painting can be sold at a profit to the price we paid and after the costs and expenses associated with the sale there are sufficient funds to effect a distribution upon the liquidation of the Company.

We do not maintain any cash balances and do not intend to pay any distributions in the foreseeable future and may only make a distribution to the holders of our Class A ordinary shares if the Painting can be sold at a profit to the price we paid and other costs and expenses associated with the sale there are sufficient funds to effect a distribution upon our liquidation. Investors should be prepared to never receive a distribution in connection with their ownership of the Class A ordinary shares.

We intend to be taxed as a partnership for U.S. Federal income tax purposes, but the Board of Managers will have the right to elect that the Company be taxed as a corporation, which could have significant tax consequences for certain holders of the Class A ordinary shares.

We currently anticipate that the Company will be taxed as a partnership for U.S. Federal income tax purposes. This means that any gains or losses from the operations of the Company will be passed through to holders of the Class A ordinary shares for reporting on their personal tax returns, but the Company will not pay material entity level Federal income taxes upon a sale of the Painting. The Board of Managers has sole discretion to change the tax election such that the Company would be taxed as a corporation for U.S. Federal income purposes, which would mean that the Company would be required to pay entity level U.S. Federal income taxes on gains, if any, from the sale of the Painting. Any such change could adversely impact the net amount of funds you receive, after taxes, from a sale of the Painting.

By purchasing shares in this Offering, you are bound by the arbitration provisions contained in our subscription agreement which limits your ability to bring class action lawsuits or seek remedies on a class basis.

By purchasing shares in this Offering, investors agree to be bound by the arbitration provisions contained in Section 10 of our subscription agreement which provide that arbitration is the exclusive means for resolving disputes relating to or arising out of the subscription agreement, the shares, the Masterworks Platform, and/or the activities or relationships that involve, lead to, or result from any of the foregoing. Please note that this arbitration provision does not apply to claims made under the federal securities laws. Purchasers of shares in a secondary transaction would also be subject to the same arbitration provisions that are currently in our subscription agreement. Such arbitration provision limits the ability of investors to bring class action lawsuits or similarly seek remedies on a class basis for claims subject to the provision. If invoked, the arbitration is required to be conducted in New York, NY in accordance with New York law. The subscription agreement allows for either the Company or an investor to elect to enter into binding arbitration in the event of any covered claim in which the Company and the investor are adverse parties. While not mandatory, in the event that the Company were to invoke the arbitration clause, the rights of the adverse shareholder to seek redress in court would be severely limited. These restrictions on the ability to bring a class action lawsuit may result in increased costs and/or reduced remedies, to individual investors who wish to pursue claims against the Company.

DILUTION

As of the date of this filing, there are 16,015 membership interests of the Company currently issued and outstanding, which are held by Masterworks. The 16,015 membership interests currently are not convertible.

Investors in this Offering will suffer immediate dilution in the net tangible book value per Share of $1.82 as a result of the true-up amount to be paid to Masterworks as part of our cost of acquiring the Painting. We estimate that the net tangible book value per share upon closing of the Offering after giving effect to the intended use of proceeds from the Offering will be $18.18.

The Class B ordinary shares may also have a dilutive effect following the closing of the Offering. On or prior to the time of qualification of this offering circular by the SEC, the Company will enter into an amended and restated operating agreement which will create two classes of membership interests of the Company in the form of the Class A ordinary shares and Class B ordinary shares (collectively, “Shares”), and simultaneously, the 16,015 membership interests will convert automatically into 24,956 Class B ordinary shares and at that time the Class B ordinary shares will become convertible pursuant to a formula into Class A ordinary shares. The formula for the conversion of the Class B ordinary shares into the Class A ordinary shares is as follows:

Definitions for conversion calculation:

Examples of conversion calculation

The following table illustrates the number and percentage of Class A ordinary shares that would be issued to Masterworks upon conversion of all of its Class B ordinary shares based on hypothetical changes in the trading price or value of the Class A ordinary shares:

Pursuant to the foregoing formula, Class A ordinary shares will only be issuable upon a conversion of Class B ordinary shares if the value of the Class A ordinary shares is higher than $20.00 per share. Upon the closing of this Offering, the value of the Class A ordinary shares will be $20.00 per share based on the offering price and therefore, no shares will be issuable upon a conversion of Class B ordinary shares into Class A ordinary shares at such time.

Nominal consideration was paid for the 16,015 membership interests which will convert into the Class B ordinary shares on or prior to the time of qualification of this offering circular by the SEC upon the execution of the amended and restated operating agreement for Masterworks 001, LLC. The aggregate cash cost to Masterworks for the 24,956 Class B ordinary shares (once they are issued) will be $100.00 (representing the cash payment made in consideration of the issuance of 16,015 membership interests that will convert into Class B ordinary shares) or less than $0.01 per share. If in the future the value of the Class A ordinary shares increases to where there is a gain in value, based on the above formula, there will be additional dilution.

For example, if the value of the Class A ordinary shares is $30 per share, based on the foregoing conversion formula, the Class B ordinary shares will be convertible into 8,319 of Class A ordinary shares if Masterworks decides to convert all of the Class B ordinary shares they hold. The new investors ownership interest would be diluted as follows assuming that 99,825 Class A ordinary shares are sold in the Offering:

Further, as additional Class A ordinary shares are issued to the Administrator as payment for its administrative services after the Offering, the then holders of the Class A ordinary shares will suffer dilution.

PLAN OF DISTRIBUTION

SDDco Brokerage Advisors LLC, a New York limited liability company (“SDDco-BA” or “Underwriter”) will manage the sale of the Class A ordinary shares as an underwriter pursuant to an amended and restated engagement letter agreement dated as of January 29, 2019, which was amended and restated on April 15, 2019, which is attached as Exhibit 1.1 hereto (as amended, the “Engagement Agreement”). SDDco-BA shall use its best efforts to find potential purchasers for the Class A ordinary shares offered pursuant to this offering circular and may engage other broker-dealers to do so. The Underwriter is under no obligation to take the securities and has not committed to purchase any of the Class A ordinary shares offered herein. Subscriptions will be made only through the Masterworks Platform and payment will be made directly to the Company. SDDco-BA shall not directly accept subscriptions or accept payment for the Class A ordinary shares. The subscription funds paid by investors as part of the subscription process will be held in a noninterest-bearing segregated account of the Company with Cross River Bank, Inc. and will not be commingled with any other funds and will not be released, unless and until there is a closing of the Offering. SDDco-BA is a broker-dealer registered with the SEC and a member of the FINRA and the SIPC and is registered in each state where the Offering and sale of the Class A ordinary shares will occur. All fees and expenses of SDDco-BA will be paid by the Administrator and the Company shall have no responsibility for any amounts payable to SDDco-BA. Accordingly, the gross proceeds from the Offering shall be the same as the net proceeds from the Offering.

Online Subscriptions and Bank Account

Our affiliate Masterworks.io, LLC owns the Masterworks Platform and the principals of Masterworks (including Masterworks Administrative Services, LLC) operate the Masterworks Platform located at https://www.masterworks.io/ that allows investors to acquire ownership of an interest in special purpose companies that invest in distinct artworks. Through the Masterworks Platform, investors can, once they register and obtain a user identification and password, browse and screen potential artwork investments, view details of an investment and sign contractual documents online. After the qualification by the SEC of the offering statement of which this offering circular is a part, the Offering will be conducted through the Masterworks Platform, whereby investors will receive, review, execute and deliver subscription agreements electronically as well as make payment of the purchase price in the form of ACH debit transfer or wire transfer into a segregated non-interest bearing account held by us until the closing date of this Offering. The subscription funds paid by investors as part of the subscription process will be held in a noninterest-bearing segregated account of the Company with Cross River Bank, Inc. and will not be commingled with any other funds and will not be released, unless and until there is a closing of the Offering. SDDco-BA will not be responsible for collecting or holding investor funds. We may also permit payment to be made in foreign currency or by credit card if and to the extent we can establish and maintain relationships with licensed currency exchange services providers and or payment processing entities to facilitate such transactions and provided we are able to do so in accordance with SEC and FINRA guidelines. If we accept credit cards, any such credit card subscription shall not exceed the lesser of $10,000 or the amount permitted by applicable law, per subscriber. Investors contemplating using their credit card to invest are urged to carefully review “Risk Factors – Risks of investing using a credit card.” Credit card investment will result in incurrence of third-party fees and charges, interest obligations which will lower your expected investment returns and could exceed your actual returns. In addition, if you cannot meet your minimum payment obligation, you may damage your credit profile which would make it more difficult and more expensive to borrow in the future. Class A ordinary shares will be allocated to a purchaser based on the actual exchange rate in effect at the time a subscription is received. Any form of payment other than U.S. dollars will be converted or exchanged for cash and the cash will be deposited into the segregated account pending the closing. On the closing date, the funds in the account will be released to us and the associated Class A ordinary shares will be issued to the investors in this Offering. If there is no closing of this Offering, the funds deposited in the segregated account will be promptly returned to subscribers, without deduction and generally without interest. If any funds are returned by us if we choose to reject a subscription or elect not to proceed with the Offering, such funds will be returned by mail via a check in U.S. dollars.

Upon closing under the terms as set out in this offering circular, funds will be immediately transferred to us (where the funds will be available for use in the operations of the Company’s business in a manner consistent with the “Use of Proceeds” in this offering circular).

Engagement Agreement with the Underwriter.

We and Masterworks Administrative Services, LLC have entered into an engagement letter agreement , as amended, with the Underwriter which is attached hereto as Exhibit 1.1. The term of the engagement letter agreement began upon execution of the engagement letter agreement on January 29, 2019 and will continue for one-year, unless terminated earlier in accordance with its terms. Masterworks is responsible for the payment of all offering fees and expenses, including the following: (i) fees and disbursements of our legal counsel, accountants, and other professionals we engage; (ii) fees and expenses incurred in the production of offering documents, including design, printing, photograph, and written material procurement costs; (iii) all filing fees, including FINRA and blue sky filing fees; (iv) all of the legal fees related to the registration and qualification of the Class A ordinary shares under state securities laws and FINRA’s issuance of a No Objections Letter; and (v) other distribution expenses. To the extent that any of these fees and expenses are paid by SDDco-BA with our approval, Masterworks will, upon request, reimburse SDDco-BA for such fees and expenses. In the event the offering does not close or the engagement letter agreement is terminated for any reason other than because of SDDco-BA’s material failure to provide the services contemplated by the engagement letter agreement, the Administrator shall reimburse SDDco-BA for all unreimbursed, reasonable, documented, out-of-pocket fees, expenses, and disbursements, including legal fees. SDDco-BA will be entitled to receive commissions from the Administrator in connection with this Offering which will vary depending on a variety of factors, including the total amount of capital raised by SDDco-BA and other broker-dealers engaged by SDDco-BA to assist in the distribution, provided that commissions payable to SDDco-BA for capital raising activities in connection with this Offering shall not exceed 3% of the gross proceeds of the Offering, or $59,895.

In addition, SDDco-BA and representatives of SDDco-BA will receive additional payments in respect of various activities that are not directly attributable to this Offering or any other offering conducted through the Masterworks Platform, but may be deemed underwriting compensation. These payments relate to (i) a $5,000 monthly retainer for administrative support services, (ii) a $750 monthly supervisory fee and (iii) fixed compensation payments to SDDco-BA representatives. These amounts are payable by Masterworks Administrative Services, LLC, which is not an issuer of securities in this Offering or any other proposed offering and such amounts are payable regardless of whether any particular offering is consummated. W e and SDDco-BA have determined that $42,300 of such payments are appropriately allocated to this Offering for purposes of determining maximum aggregate underwriting compensation. Lastly, SDDco-BA is entitled to reimbursement for out-of-pocket costs of up to $5,000 in connection with this Offering. Accordingly, the maximum amount of underwriting compensation for this Offering is $107,195, or approximately 5.4% of the gross offering proceeds. All underwriting compensation will become due and payable by Masterworks upon consummation of this Offering.

Transfer Agent and Registrar

We intend to engage Transfer Online, Inc. (“Transfer Agent”) to be the transfer agent and registrar for the Class A ordinary shares and will be subject to the agreed upon fee schedule.

The Transfer Agent’s address is at 512 SE Salmon St. Portland, OR 97214 and its telephone number is (503) 227-2950. Our Administrator will pay the fees of the Transfer Agent.

Book-Entry Records of Class A ordinary shares

Ownership of the Class A ordinary shares will be represented in “book-entry” only form directly in the name of the respective owner of the Class A ordinary shares and shall be recorded by the Transfer Agent and that no physical certificates shall be issued, nor received, by the Transfer Agent or any other person. The Transfer Agent shall send out email confirmations of positions and notifications of changes “from” us upon each and every event affecting any person’s ownership interest, with a footer referencing the Transfer Agent.

We have no responsibility for any aspect of the actions of the Transfer Agent. In addition, we have no responsibility or liability for any aspect of the records kept by the Transfer Agent relating to, or payments made on account of investors in, the Class A ordinary shares, or for maintaining, supervising or reviewing any records relating to ownership of Class A ordinary shares. We do not supervise the systems of the Transfer Agent.

Investment Amount Limitations

There is a $1,000 minimum purchase requirement. The maximum purchase requirement per investor is $100,000; however, we can waive the minimum or maximum purchase requirements on a case-by-case basis in our sole discretion. Subscriptions, once received, are irrevocable by the investors but can be rejected by us. In addition, our operating agreement, restricts beneficial ownership by any individual shareholder to a maximum of 19.99% of the total voting shares issued and outstanding. For these purposes, the term “beneficial owner” is determined in accordance with Section 13d-3(a) of the Securities Exchange Act of 1934, as amended. This 19.99% limitation does not apply to any of the Masterworks entities.

Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, you are encouraged to refer to www.investor.gov.

As a Tier 2, Regulation A offering, investors must comply with the 10% limitation to investment in the Offering. The only investor in this Offering exempt from this limitation is an accredited investor, an “Accredited Investor,” as defined under Rule 501 of Regulation D. If you meet one of the following tests you should qualify as an Accredited Investor:

Offering Period and Expiration Date

We will commence the sale of the Class A ordinary shares as of the date on which the offering statement of which this offering circular is a part is declared qualified by the SEC. The closing of the Offering will occur on the earlier of (i) the date that the subscriptions for the Class A ordinary shares offered hereby total $1,996,500 or (ii) a date determined by the Company in its discretion. The maximum offering period is 270 days from commencement of the Offering, though we reserve the right to terminate the Offering at any time for any reason .

Testing the Waters

We plan to use the Masterworks Platform website at https://masterworks.io/ to provide notification of this anticipated Offering. Prior to the qualification of the Offering by the SEC, if you desire information about this anticipated Offering, you would go to the Masterworks Platform website. The Masterworks Platform website is planned to contain publicly available information regarding prior auction sales of art created by Andy Warhol. This offering circular as well as amendments to this offering circular after it has been publicly filed and prior to qualification by the SEC will be furnished to prospective investors for their review via download 24 hours per day, 7 days per week on the website as well.

Procedures for Subscribing

After the qualification by the SEC of the offering statement of which this offering circular is a part, if you decide to subscribe for any Class A ordinary shares in this Offering, you should:

Go to the Masterworks Platform website at https://masterworks.io/, and follow the links and procedures described on the website , The website will direct you to receive (upon your acknowledgement that you have had the opportunity to review this offering circular), review, execute and deliver subscription agreements electronically. The website provides a secure portal to enable you to:

Any potential investor will have ample time to review the Offering Circular and Subscription Agreement, along with their counsel, prior to making any final investment decision. We will not accept any money until the SEC declares this offering circular qualified.

All funds received from investors in this Offering will be held non-interest bearing segregated bank account of the Company with Cross River Bank, Inc. SDDco-BA will not be responsible for collecting or holding investor funds. The funds in the account will be released to us only after we close the Offering on the closing date. We intend to complete one closing on the closing date and until that time, the proceeds for the Offering will be kept in the segregated bank account. At the closing, the proceeds will be distributed to us and the associated Class A ordinary shares will be issued to the investors in this Offering. If there is no closing or if funds remain in the account upon termination of this Offering without any corresponding closing, the funds deposited in the segregated account will be promptly returned to subscribers, without deduction and generally without interest. Further, for those investors who pay in foreign currency, we plan to use a third-party service to convert such payment into U.S. dollars at the time a foreign currency subscription is received, and then deposit such funds in the account. Details about the method of effecting the exchange and how an investor can determine the exchange rate in effect at the time of subscription will be available on the Masterworks Platform. Class A ordinary shares will be allocated to a purchaser based on the actual exchange rate. If any funds are returned by us if we choose to reject a subscription or elect not to proceed with the Offering, such funds will be returned by mail in the form of U.S. dollars.

You will be required to represent and warrant in your subscription agreement that you are an accredited investor as defined under Rule 501 of Regulation D or that your investment in the Class A ordinary shares does not exceed 10% of your net worth or annual income, whichever is greater, if you are a natural person, or 10% of your revenues or net assets, whichever is greater, calculated as of your most recent fiscal year if you are a non-natural person. By completing and executing your subscription agreement you will also acknowledge and represent that you have received a copy of this offering circular, you are purchasing the Class A ordinary shares for your own account and that your rights and responsibilities regarding your Class A ordinary shares will be governed by our operating agreement and Certificate of Formation, each filed as an exhibit to the offering circular. Purchasers of our Class A ordinary shares in this Offering and subsequent purchasers will be deemed to become party to the Masterworks 001, LLC operating agreement, a form of which is filed as Exhibit 2.3 hereto.

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

NOTE: For the purposes of calculating your Net Worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Class A ordinary shares.

In order to purchase Class A ordinary shares and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our satisfaction, that he or she is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this Offering.

The Class A shares will not be offered or sold to prospective investors subject to the Employee Retirement Income Security Act of 1974 and regulations thereunder, as amended (“ERISA”).

Non-U.S. investors may participate in the Offering by depositing their funds in the non-interest-bearing account. Any such funds that are received shall be held on deposit until the applicable closing of the Offering or returned if the Offering fails to close.

Selling Restrictions

Notice to prospective investors in Canada

The Offering of the Class A ordinary shares in Canada is being made on a private placement basis in reliance on exemptions from the prospectus requirements under the securities laws of each applicable Canadian province and territory where the Class A ordinary shares may be offered and sold, and therein may only be made with investors that are purchasing as principal and that qualify as both an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions and as a “permitted client” as such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligation. Any offer and sale of the Class A ordinary shares in any province or territory of Canada may only be made through a dealer that is properly registered under the securities legislation of the applicable province or territory wherein the Class A ordinary shares are offered and/or sold or, alternatively, by a dealer that qualifies under and is relying upon an exemption from the registration requirements therein.

Any resale of the Class A ordinary shares by an investor resident in Canada must be made in accordance with applicable Canadian securities laws, which may require resales to be made in accordance with prospectus and registration requirements, statutory exemptions from the prospectus and registration requirements or under a discretionary exemption from the prospectus and registration requirements granted by the applicable Canadian securities regulatory authority. These resale restrictions may under certain circumstances apply to resales of the Class A ordinary shares outside of Canada.

Upon receipt of this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

Notice to prospective investors in the European Economic Area

In relation to each Member State of the European Economic Area (each, a “Relevant Member State”), no offer of Class A ordinary shares may be made to the public in that Relevant Member State other than:

provided that no such offer of Class A ordinary shares shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any Class A ordinary shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. In the case of any Class A ordinary shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the Class A ordinary shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any Class A ordinary shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

We, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.

This offering circular has been prepared on the basis that any offer of Class A ordinary shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of Class A ordinary shares. Accordingly, any person making or intending to make an offer in that Relevant Member State of Class A ordinary shares which are the subject of the Offering contemplated in this offering circular may only do so in circumstances in which no obligation arises for us to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. We have not authorized, nor do we authorize, the making of any offer of Class A ordinary shares in circumstances in which an obligation arises for us to publish a prospectus for such offer.

For the purpose of the above provisions, the expression “an offer to the public” in relation to any Class A ordinary shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Class A ordinary shares to be offered so as to enable an investor to decide to purchase or subscribe the Class A ordinary shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Notice to prospective investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”).

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

Notice to Prospective Investors in Switzerland

The Class A ordinary shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Class A ordinary shares or this Offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to this Offering, our Company, the Class A ordinary shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of Class A ordinary shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of Class A ordinary shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of Class A ordinary shares.

Notice to Prospective Investors in the Dubai International Financial Centre

This offering circular relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This offering circular is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this offering circular nor taken steps to verify the information set forth herein and has no responsibility for the offering circular. The Class A ordinary shares to which this offering circular relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Class A ordinary shares offered should conduct their own due diligence on the Class A ordinary shares. If you do not understand the contents of this offering circular you should consult an authorized financial advisor.

Notice to Prospective Investors in Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, or ASIC, in relation to this Offering. This offering circular does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the Class A ordinary shares may only be made to persons, or the Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the Class A ordinary shares without disclosure to investors under Chapter 6D of the Corporations Act.

The Class A ordinary shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under this Offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring Class A ordinary shares must observe such Australian on-sale restrictions.

This offering circular contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this offering circular is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Notice to prospective investors in China

This offering circular does not constitute a public offer of the Class A ordinary shares, whether by sale or subscription, in the People’s Republic of China (the “PRC”). The Class A ordinary shares are not being offered or sold directly or indirectly in the PRC to or for the benefit of, legal or natural persons of the PRC.

Further, no legal or natural persons of the PRC may directly or indirectly purchase any of the Class A ordinary shares or any beneficial interest therein without obtaining all prior PRC’s governmental approvals that are required, whether statutorily or otherwise. Persons who come into possession of this document are required by the issuer and its representatives to observe these restrictions.

Notice to Prospective Investors in Hong Kong

The Class A ordinary shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the Class A ordinary shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Class A ordinary shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Notice to Prospective Investors in Japan

The Class A ordinary shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

Notice to Prospective Investors in Singapore

This offering circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Class A ordinary shares may not be circulated or distributed, nor may the Class A ordinary shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Class A ordinary shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) A corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire Class A ordinary share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) A trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Class A ordinary shares pursuant to an offer made under Section 275 of the SFA except:

(a) To an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(b) Where no consideration is or will be given for the transfer;

(c) Where the transfer is by operation of law;

(d) As specified in Section 276(7) of the SFA; or

(e) As specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Class A ordinary shares and Debentures) Regulations 2005 of Singapore.

USE OF PROCEEDS TO ISSUER

We expect to receive gross proceeds from this Offering of up to $1,996,500. The Administrator will pay all expenses of the Offering, including fees and expenses associated with qualification of the Offering under Regulation A and all fees and expenses of the Underwriter. Therefore, the gross proceeds from this Offering will equal the net proceeds from this Offering. We will use all of the proceeds, together with any remaining unsold Class A ordinary shares, from this Offering, if any, to acquire the Painting from Masterworks.

DESCRIPTION OF BUSINESS

The discussions contained in this offering circular relating to Andy Warhol, the Painting and the art industry are taken from third-party sources that the Company believes to be reliable and the Company believes that the information from such sources contained herein regarding Andy Warhol, the Painting and the art industry is reasonable, and that the factual information therein is fair and accurate. 

Overview

We were formed as a Delaware limited liability company on March 28, 2018, by Masterworks in order to acquire the Painting. We are a manager-managed limited liability company managed by a Board of Managers. Upon our formation, Masterworks was issued 16,015 shares of membership interests of the Company representing 100% of our membership interests. Masterworks Gallery adopted our operating agreement. Once the Company enters into its amended and restated operating agreement, the Company will then be authorized to enter into and will enter into the administrative services agreement with our Administrator. After the five-year anniversary of this offering, our Administrator can withdraw for any reason from its position as our Administrator, provided that such withdrawal shall be effective only following a sale of the Painting.

The Painting was purchased by an agent of Masterworks at a public auction held by Phillips in November of 2017, for $1,815,000. We are offering up to 99,825 Class A ordinary shares for aggregate consideration of up to $1,996,500 in this Offering. The closing of the Offering will occur on the earlier of (i) the date that subscriptions for the Class A ordinary shares offered hereby total $1,996,500 or (ii) a date determined by the Company in its discretion. We will use all of the proceeds from the Offering, together with Class A ordinary shares not sold in this Offering, if any, to purchase the Painting. We do not expect to generate any revenues or cash flow unless and until the Painting is sold and no profits will be realized by investors unless the Painting is sold for more than we acquired it for and we have sufficient funds after payment of all associated costs and fees in connection with the sale of the Painting, or the investors are able sell their Class A ordinary shares on a trading platform approved by us for a price higher than they purchased them for. We will be 100% reliant on the Administrator to maintain the Painting and administer its business. Following the closing of the Offering, we intend to contribute title to the Painting to our wholly owned subsidiary, Masterworks 001 Cayman, LLC, a Cayman Islands limited liability company, which has not yet been formed, but which is planned to be formed prior to the completion of this Offering.

Pursuant to an administrative services agreement between Masterworks and us to be entered into prior to the completion of the Offering, Masterworks will manage all of our administrative services and will maintain the Painting. The Administrator will be entitled to receive fees and expense reimbursement for ordinary and necessary administration of our operations at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum following the closing of the Offering. The Administrator will also manage any extraordinary or non-routine services which may be required, from time-to-time, including, without limitation, litigation or services in connection with a sale of the Painting or any sale, merger, third-party tender offer or other similar transaction involving us. Any third-party costs incurred by the Administrator or payments made by the Administrator in connection with litigation or major transactions will be reimbursed upon the sale of the Painting or us, as applicable. For more information regarding the administrative services agreement, see “Related Party Transactions.” We will not conduct any business activities except for activities relating to the ownership, maintenance, promotion and the eventual sale of the Painting. Our strategy will be to display and promote the Painting in a manner designed to enhance its provenance and increase its exposure and its value.

Masterworks Experience in the Art Industry

Masterworks is a relatively new organization and the transaction reflected in this offering circular is the first such transaction of its kind. Scott W. Lynn, our Founder and Chief Executive Officer and member of the Board of Managers has been an active collector of contemporary art for more than fifteen years and has built an internationally-recognized collection of Abstract Expressionism that has included works by Clyfford Still, Barnett Newman, Mark Rothko, Willem de Kooning, and more. In 2017, portions of Mr. Lynn’s collection were exhibited at the Royal Academy in London, the Denver Art Museum, and the Palm Beach Museum. At other periods in time, Mr. Lynn’s collection has been exhibited at museums such as the National Gallery, the Guggenheim (New York), and the Museum of Modern Art. Our acquisition strategy is guided by Mr. Lynn and thus far has relied heavily on various outside consultants and advisors that Mr. Lynn has worked with in his personal collecting. We have recently hired and continue to hire personnel with backgrounds in art investment and analysis and as such individuals become members of our team, their biographies are posted on the “Our Team” section of the Masterworks.io website.

About the Art Market

Overview

Statistical data relating to the art market is difficult to obtain, incomplete, or inconsistent. It is a substantially unregulated industry. Although we believe that available data can be useful to gain a general perspective on the rough size and scope of the industry, and to identify broader trends, data with respect to any particular period or market segment is highly variable and subjective. Accordingly, you should not place undue reliance on any data or general information related to the art market.

Primary Sources of Data

There are currently a limited number of sources of publicly available data on the art market. Below are four leading sources often relied upon for information:

Summary

The global art market is influenced over time by the overall strength and stability of the global economy, geopolitical conditions, capital markets and world events, all of which may affect the willingness of potential buyers and sellers to purchase and sell art. The global art market is large, but its exact size is unknown and statistical data is inconsistent. Much of the uncertainty stems from differing estimates of the size of the private dealer and gallery market which is based on survey data, but disparities also exist in reported auction sales. According to the most recent Art Basel Report, global art sales were $6 7.4 billion in 201 8 , up 6 % from 201 7 . The same report estimates that global sales have remained between $54 billion and $68 billion over the past decade, except during 2009 when sales declined to approximately $40 billion, which has believed to have been caused by the global financial crises. According to Artnet, the auction market has expanded considerably since 2000, with total pre-sale estimates increasing for the marquee spring sales by approximately 400% from May of 2000 to May of 2018. Of this growth, only approximately 25% is attributed to an increased number of works offered, while the remainder is attributed to price inflation. The average pre-sale total estimate for works sold in May of 2000 was approximately $600,000 as compared to $1.7 million in May of 2018, where the total estimate is the sum of the high and low estimates divided by two.

The high-end fine art market is defined by works valued in excess of $1 million, is dominated by a small group of ultra-high-net-worth private collectors and institutions, and the group narrows sharply at the very top of the market, with works valued at over $10 million.

According to a worldwide survey conducted by AXA Art Insurance in 2014, the art market is driven by purchasers who are typically male, middle-aged and highly educated. The AXA survey identified four subcategories of art buyers:

According to Deloitte/ArtTactic survey results in 2017, 86% of collectors buy art for emotional reasons, but also focus on investment and 54% of wealth managers view art as a means to safeguard value, which is the highest percentage since the survey began in 2011. Deloitte/ArtTactic also reported in 2017 that 44% of wealth managers are increasing focus and resources on art and wealth management services, the highest percentage since the survey began in 2011 and up from 38% in the prior year.

The art market is commonly classified into several major collecting categories, the definitions of which may change depending on the auction house or reporting entity, but generally, they include the following:

The UBS Art Basel Market Report defines the Post War and Contemporary collecting segment as inclusive of artists born after 1910, with some exceptions for those born prior, but belonging to specific artistic movements coinciding with art made after 1945. The report takes into account data on sales from over 4,000 auctions, including several regional Chinese auctions, and samples the top 250 in order to provide information on the “Fine Art” category. According to the 2018 Report, the Post War and Contemporary category is the largest category in terms of total dollar value of transactions, representing 50 % , or $7.2 billion, of global sales value in 201 8 , followed by the Modern category with 2 9 % and the Impressionist and Post-Impressionist category with 1 5 %. The 2014 AXA survey found that 82% of respondents collect Contemporary art, not exclusively of other categories.

Art sales have become increasingly highly concentrated among a small group of top selling artists, a trend that has been ongoing over the last decade. According to the Art Basel report , despite auction houses selling works by thousands of artists , in 2018, the top 10 artists were responsible for 24% or $1.7 billion in auction sales.

Rankings among the top ten artists for 2018 in the Post War and Contemporary category were as follows ( based on the Art Basel report and Artprice.com) :

The distribution for the top 20 was as follows (Art Basel UBS report):

Art Appraisals, Valuation, and Auction Estimates

Valuation of artwork is more of an art than a science. There is no efficient market that determines the price of a painting and there is no standardized art valuation methodology. The fair market value of art is usually based on a qualitative assessment by expert appraisers using relative valuation techniques. Art is valued by analyzing the comparative prices of similar works, aspects of the specific work, supply and demand factors and subjective perceptions of value. As an example of the inconsistency in valuations and appraisals, the Internal Revenue Service (“IRS”) published a report in 2015 highlighting the changes in valuation of professionally appraised artwork recommended by its art advisory panel of experts in 2015. In 2015, the IRS panel reviewed 446 items with an aggregated taxpayer valuation of $649 million, of which the panel recommended accepting the valuation of 156 items, or 35% and adjusted the valuation of 290 items, or 65% of the appraisals it reviewed. An artist’s reputation is developed through a combination of factors, including:

There is tremendous variability in the market value of individual pieces by any given artist. These differences are influenced by the perceived quality of the work, materials, condition, color, size, subject matter, provenance and other factors.

Auction houses may attempt to estimate the value of a painting, but those estimates may not be “arm’s length” and are often negotiated with the selling party. Therefore, they cannot be used as unbiased guidelines in determining the value of an artwork.

Private and Gallery Sales

According to the Art Basel Report, the relative size of the private dealer and gallery market as compared to the auction market tends to shift based on the overall sentiment, where optimism in the market tends to favor auction sales. For example, in 2018 , auction sales accounted for an estimated 4 3 % of total sales by dollar volume, as compared to approximately 4 7 % in 201 7 . Auction houses are also increasingly participating in the private market, brokering non-auction sales transactions, which in 2016 were estimated by TEFAF to make up over $2 billion.

The private dealer and gallery sales market is characterized by its opacity. Galleries and other intermediaries that sell high end art have extensive relationships with figures like artist, critics, collectors and others in the art market and are often committed to long term objectives, such as enhancing the reputation of an artist they represent or the value of their collection. Accordingly, galleries can be highly selective in determining which collectors are permitted to purchase from them, preferring those that are likely to hold works for a long period of time and enhance the provenance of a piece. Most private and gallery sales are confidential. Galleries are often willing to hold inventory for longer periods of time, and generally, offer works at posted prices unless there is a longstanding relationship with the buyer. Sellers determine pricing in a private sales model where the dealer or gallery act as an intermediary in negotiating the transactions with a buyer.

Auction Sales

Most art auctions sales occur in the United States, the United Kingdom and China. Collectively the three major regions accounted for more than 88 % of global sales in 2017, with the United States leading the market with 40 % of global auction sales, followed by China at 29 % and the United Kingdom at 1 8 %. According to Artnet, the auction market has grown considerably since 2000, with pre-sale total estimates increasing by approximately 400% from May of 2000 to May of 2018. Of this growth, only approximately 25% is attributed to an increased number of works offered, while the remainder is attributed to price inflation. The average pre-sale total estimate for works sold in May of 2000 was approximately $600,000 as compared to $1.7 million in May of 2018, where the total is the sum of the high and low estimates.

In general, the auction market is more transparent and more democratic than the private sales market because the final price is determined through open competition, so that any qualified individual can participate and potentially buy the offered work. Interested buyers place sequential ascending bids in a format referred to by economists as an English Auction. Works which are offered for sale by the auction house on behalf of a potential seller, also referred to as a consignor, are often referred to as lots, which may be comprised of one or more item; most paintings are sold as individual lots. Auction sales occur at a fixed time and are a matter of public record. Bidders determine the price of a piece in an auction sale, though the consignor typically sets a reserve floor price below which they would be unwilling to sell the work.

A low and high estimate of the sale price is set by the auction house, with the consignor’s input, based on a variety of factors, including the prior sales history, market factors, like supply considerations and the reserve price floor. If a consignor does not agree with the estimate range proposed by the auction house, they can elect not to consign the work for sale or can withdraw a consignment. Auction houses often set estimates at levels to either entice bidders to participate or potential consignors to offer their work at auction, thus, estimates should not necessarily be viewed as proxies for determining market value. The price at which an auctioneer declares an item sold at a public auction, referred to as the “hammer price,” does not reflect either the amount realized by a consignor or the price paid by a buyer. In addition to the hammer price, a successful bidder must pay the so-called “buyer’s premium,” which is effectively a commission on the sale that ranges from between 14% and 25%% of the hammer price. Sotheby’s published buyer’s premiums are 25% for a hammer price up to $ 4 00,000, 20% for the portion of a hammer price between $ 4 00,000 to $ 4 .0 million and 1 3 .9% for the portion above $ 4 .0 million. The economics received by a consignor in an auction can vary widely. For works of relatively low value, consignors may be required to pay a seller’s commission to the auction house. For higher value works, consignors often pay no commissions and may be entitled to receive a portion of the buyer’s premium if not the full amount of the purchase price.

The public nature of auction sales poses certain risks for consignors. A work that fails to sell at auction as a result of not attracting a bid in excess of the reserve price, will often be much harder to sell in the future. The rate at which artworks fail to sell at public auction, referred to as the “buy-in rate,” hovers around 30%, according to Artprice, and has averaged 31% for Andy Warhol works listed during the past seventeen years. The value of an artwork is almost entirely subjective, so a failure to sell a piece at auction is damaging to the perceived value of the work, a concept referred to the art industry as “burning” the work. A 2008 study by Beggs and Graddy determined that paintings that previously failed to sell at auction returned 30% less in subsequent sales than other paintings.

In order to attract high-value consignments, an auction house may offer a guaranteed minimum price to a consignor. In exchange, the consignor agrees, if the final sale is in excess of the guaranteed amount, to pay the auction house a certain percentage of sale proceeds above the guaranteed amount. To offset the risk of a sale below the amount guaranteed to the consignor, an auction house may also secure a minimum guaranteed bid from a potential buyer, also known as a “third-party guarantee” or “irrevocable bid”. These guarantees effectively provide certainty that a successful sale will occur. The economic terms of guarantees and irrevocable bids are not typically disclosed and can vary widely based on negotiations between the relevant parties.

Auction sales between the leading Western auction houses, Sotheby’s, Christie’s and Phillips, were approximately $ 12.5 billion in 201 8 . According to the 2018 Art Basel Report, the United States accounted for 40 % of global auction sales in 2017, followed by China at 29 % and the United Kingdom at 18 %.

Auction houses publicly report total sale prices that reflect the hammer price (i.e. the price at which the auctioneer declared the winning bid), plus the buyer’s premium, but tend to exclude applicable taxes, fees and royalties, which are typically paid by the purchaser. The buyer’s premium schedule is published by the auction house and is updated or revised periodically. The buyer’s premium for the New York salesroom of each of the major auction houses as of the date of this offering circular is as follows (percentages and dollar amounts relate to the hammer price):

The amount of the published sale price a consignor receives is typically reduced by all or a portion of the buyer’s premium and, in some instances, a sales commission. The percentage of the buyer’s premium received by the consignor, if any, and the amount of any sales commission payable by the consignor, if any, are negotiated between the consignor and the auction house and vary widely depending on a number of factors, including the value and importance of the specific work, whether the work is sold as an individual piece or part of a larger collection, anticipated demand levels and other factors. For high value items auction houses often waive the sales commission and rebate a portion of the buyer’s premium to the consignor, which is commonly referred to in the industry as an “enhanced hammer.”

Auction houses do not publicly report the economic terms of transactions with consignors, so the Company cannot determine with any degree of confidence what percentage of a sale price would be received by the Company upon consummation of an auction sale. Based on experience, we believe that it would be reasonable to expect that the net pre-tax cash proceeds receivable by the Company in an auction sale would be in the range of 8% to 15% less than the published sale price, Accordingly, if for example, the Painting were to eventually sell at auction for a sale price of $3.0 million (hammer price, plus buyer’s premium), the net proceeds available to the Company would be expected to be in the range of $2,760,000 to $2,550,000, however, the net result could fall outside of this range and such estimate does not account for the potential existence of an arrangement to guaranty a minimum sale price. The existence of any such guarantee arrangement would provide greater certainty of success at auction, but could reduce the sales proceeds to be received by the Company.

Pop Art

The Pop Art movement emerged independently in Britain and the United States during the mid- to late-1950s and gained widespread recognition in the 1960s. Andy Warhol immediately established himself as one of the leading figures of Pop Art and continues to be one of the best-selling American artists of all time. Central to the movement was the practice of appropriation, where familiar images of consumer culture and mass media, especially, those from advertisements, cinema and everyday objects, were removed by artists from their original context and isolated or combined with unrelated material. By virtue of the technique, banal or kitschy elements of popular culture could be emphasized and examined by Pop Art, often through the use of irony. Many Pop Artists also came to rely on mechanical means of reproduction or rendering techniques as part of their process, thereby further emphasizing the consumer culture central to the work.

Andy Warhol

We believe that Andy Warhol is among the most widely known and best-selling American pop artists. It is estimated that Warhol produced about 10,000 works between 1961, when he gave up graphic design until his death in 1987. The exact number is unknown, though the Warhol Foundation for the Visual Arts is in the process of cataloguing his work. Approximately 200 Andy Warhol paintings are auctioned each year on average. Andy Warhol works sold at auction were $427 million in 2013, $653 million in 2014, $526 million in 2015 and, according to TEFAF, $168 million in 2016 , $175 million in 2017 , and $244 in 2018 . According to Artnet, aggregate pre-sale auction estimates for Warhol works offered at May auctions by the leading auction houses over the eighteen-year period from 2000 through 2017 were $2.1 billion, second only to Pablo Picasso, whose total was $2.5 billion and significantly above Claude Monet, who came in third with $1.3 billion. According to auction data published by Artnet, Warhol was ranked the highest grossing artist in 2014 worldwide across categories, the second highest grossing artist in 2015 and the eighth highest grossing artist in 2016. Last year, Andy Warhol was the fifth highest grossing artist globally and the third in his collecting category, according to ArtPrice and the Art Basel UBS report. The highest auction prices paid for Andy Warhol paintings were:

According to an Artnet report published in 2017, Andy Warhol is the second highest selling artist over the 17 years ended prior to the publication of the report, with $4.9 billion of total sales, behind only Pablo Picasso whose works sold for more than $6.2 billion over the same period.

The Andy Warhol museum in his hometown of Pittsburgh, Pennsylvania, with 88,000 square feet on seven floors, is the largest museum in North America dedicated to a single artist. The museum features 900 paintings and a variety of other works. The Warhol Foundation, which oversees commercial exploitation of Warhol’s work is thought to own the largest collection of Warhol paintings. It is also widely believed that the Mugrabi family owns the largest collection of Andy Warhol paintings in private hands, estimated to potentially include more than 1,000 Andy Warhol paintings. Many art industry participants believe that the Mugrabi family has been largely responsible for the popularity and pricing of Andy Warhol’s work and they have purchased large numbers of Warhol paintings at auction.

The Artist

The following description of Andy Warhol is derived from Biography.com, which is owned by A&E Television Networks, LLC. The discussions contained in this offering circular relating to Andy Warhol, the Painting and the art industry are taken from third-party sources that the Company believes to be reliable and the Company believes that the information from such sources contained herein regarding Andy Warhol, the Painting and the art industry is reasonable, and that the factual information therein is fair and accurate.

Born on August 6, 1928, in Pittsburgh, Pennsylvania, Andy Warhol was a successful magazine and ad illustrator who became a leading artist of the 1960s Pop art movement. Warhol ventured into a wide variety of art forms, including performance art, filmmaking, video installations and writing, and he controversially blurred the lines between fine art and mainstream aesthetics. Warhol died on February 22, 1987, in New York City.

In the late 1950s, Warhol began devoting more attention to painting, and in 1961, he debuted his first paintings of a genre that has come to be known as “pop art” — paintings that focused on mass-produced commercial goods. In 1962, he exhibited the now-iconic paintings of Campbell’s soup cans. These small canvas works of everyday consumer products created a major stir in the art world, bringing both Warhol and pop art into the national spotlight for the first time. Warhol’s other famous pop paintings depicted Coca-Cola bottles, vacuum cleaners and hamburgers. He also painted celebrity portraits in vivid and garish colors; his most famous subjects include Marilyn Monroe, Elizabeth Taylor, Mick Jagger and Mao Zedong. As these portraits gained fame and notoriety, Warhol began to receive hundreds of commissions for portraits from socialites and celebrities. His portrait “Silver Car Crash (Double Disaster)” sold for $105.4 million in 2008, making it one of the most valuable paintings in world history.

In 1964, Warhol opened his own art studio, a large silver-painted warehouse known simply as “The Factory.” The Factory quickly became, one of New York City’s premier cultural hotspots, a scene of lavish parties attended by the city’s wealthiest socialites and celebrities. Warhol’s life and work simultaneously satirized and celebrated materiality and celebrity. On the one hand, his paintings of distorted brand images and celebrity faces could be read as a critique of what he viewed as a culture obsessed with money and celebrity. On the other hand, Warhol’s focus on consumer goods and pop-culture icons, as well as his own taste for money and fame, suggest a life in celebration of the very aspects of American culture that his work criticized. Warhol spoke to this apparent contradiction between his life and work in his book The Philosophy of Andy Warhol, writing that “making money is art and working is art, and good business is the best art.”

The Painting

As evidenced by the artist's signature and date on the verso of the canvas, 1 Colored Marilyn (reversal series), is one of the earliest works from a series of oil and silkscreen paintings completed by Andy Warhol between 1979 - 1986. In the works, Warhol revisited one of his most iconic and enduring subjects, the Hollywood star Marilyn Monroe. The Painting, which carried a pre-sale estimate of $1,500,000 - $2,000,000 in Phillips’ November 2017 New York auction, measures 46.4 cm by 34.9 cm (18 ¼ in x 13 ¾ in) and was created in 1979. Following its execution, the work was acquired by an American collector from Warhol’s primary dealer, Bruno Bischofberger, in 1984. The Painting remained in the Los Angeles collection of Douglas S. Cramer after its initial purchase, until its acquisition by Masterworks in 2017.

Provenance.

Bruno Bischofberger Gallery, Zurich

Douglas S. Cramer, Los Angeles (acquired from the above in 1984).

History of Prior Sales.

Set forth below is the historical data for Andy Warhol’s Marilyn Monroe Reversal Series sold at public auction from 1990 to 201 8 . Each of the considered works was created using the same technique between 1979 and 1986, with a singular image of Marilyn Monroe as the subject matter. We have included all works that feature at least one color, outside of the black negative of the image, and excluded those which lack color or hue, such as the Grey Marilyn or Black on Black Reversals, which we believe are not representative of the Painting. The data was sourced from publicly available auction records and does not include private sales. Such data may be incomplete or inaccurate. Although paintings in the Reversal Series have similar characteristics, each individual painting is unique in terms of artistic content, coloring, condition, provenance and other factors. We, therefore, cannot make any determination or representation that any of the data set forth below is useful in determining the value of the Painting and you are urged not to place undue reliance on such data.

Based on the auction sale data presented above, an investment in a composite index of Reversal Series paintings without grey or black works at the beginning of 2008 would have yielded a gross annualized return which is significantly higher than the performance of the S&P 500 Index with dividend reinvestment or the 10-Year U.S. Government Bond Index during the same period, as reflected in the chart below. The historical composite return of the Reversal Series is useful to show historical trends in the value of similar works, but it is not a direct proxy for performance of the Class A ordinary shares, since it reflects composite changes in sales prices and not the returns on any particular painting, there is no current market for the Class A ordinary shares, and it does not include the fees and selling costs described in this Offering Circular. While the below graph shows historical appreciation in the value of the Painting, investors in this offering will only receive net proceeds from the sale of the Painting, if any, after the sale of the Painting and only after reduction of fees and expenses payable by the company are paid. In addition, the past performance of the Reversal Series paintings is not necessarily indicative of future performance. Accordingly, investors should not place undue reliance on historical trends.

INDICES ARE UNMANAGED. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX. INDICES ARE USED FOR COMPARATIVE MODELLING PURPOSES ONLY. THE TIMING OF TRANSACTIONS RELATING TO AN ASSET OR PORTFOLIO, ADVISORY, AND TRANSACTION FEES, AND OTHER MANAGEMENT ACTIVITIES CAN CREATE SIGNIFICANT DIFFERENCES BETWEEN THE PERFORMANCE OF AN INDEX AND AN INVESTMENT SEEKING SIMILAR OR SUPERIOR RELATIVE PERFORMANCE RESULTS

The above disclosures in this section represent auction sales only and do not purport to include data regarding the total number of Andy Warhol Marilyn (Reversal Series) paintings currently in existence. The Company has been unable to find a reliable source of information regarding the total number of Andy Warhol Marilyn (Reversal Series) paintings currently in existence and therefore is unable to provide such information at this time.

Administrative Services

There are various services required to administer our business and maintain the Painting. Pursuant to an administrative services agreement between us and Masterworks to be entered into prior to the completion of the Offering, the Administrator will manage all administrative services relating to our business and custodial services relating to the maintenance of the Painting. The Administrator will be entitled to receive fees and expense reimbursement for ordinary and necessary administration of our operations in the form of Class A ordinary shares at a rate of 1.5% of the total Shares outstanding(excluding Class B ordinary shares) per annum following the closing of the Offering. Any extraordinary or non-routine services, if any, will be managed and paid for by the Administrator, but such extraordinary costs will be reimbursed upon the sale of the Painting or a sale of our Company, as applicable.

Ordinary and necessary administrative and maintenance costs and expenses include:

Extraordinary or non-routine costs for which the Administrator shall be entitled to seek reimbursement include:

Our Inter-Company Agreements with our affiliated entities raise various conflicts of interests in which the best interest of our Administrator and our affiliates may differ from the best interest of holders of the Class A ordinary shares.

Conflicts of Interest include but are not limited to the following:

Selling the Painting

Our intention is to own the Painting for a five- to ten-year period, although we may elect to hold the Painting for a longer period or sell the Painting at any time due to certain circumstances. We will have the ability, in our sole and absolute discretion, to sell the Painting at a public auction and liquidate us if:

The Administrator will continuously offer the Painting for sale and any person can make an offer to purchase the Painting at any point in time. If such offer constitutes a “Bona Fide Offer” as defined in the Masterworks 001, LLC operating agreement, the Administrator will submit such offer to a vote of our shareholders and if holders of a majority of the voting shares vote in favor of a sale in response to such Bona Fide Offer, we will accept the Bona Fide Offer and sell the Painting.

If, on the seven-year anniversary of the closing of this Offering, the Administrator determines that an active trading market does not exist or that such market does not have sufficient transaction volume to permit reasonable trading in the Class A ordinary shares, the Company will solicit the vote of holders of voting shares to sell the Painting (a “Liquidity Sale”). If the holders of a majority of voting shares vote to sell the Painting, the Administrator will use commercially reasonable efforts to sell the Painting at auction or in a privately negotiated transaction as soon as reasonably practicable, but not later than two years following such vote. If the Administrator proposes to execute such Liquidity Sale pursuant to a privately negotiated transaction and the proposed purchaser is known by the Administrator to be the beneficial owner of at least 10% of the voting shares or is an affiliate of the Administrator (a “Related Party”), then we shall be required to obtain an additional approval of the terms of such Liquidity Sale with a Related Party purchaser from the holders of a majority of the voting shares as a condition to closing any such Liquidity Sale with a Related Party purchaser.

Further, if at any time we or Masterworks decide to sell the Painting in a private sale transaction (i.e., non-auction sale), except in connection with a Liquidity Sale to a Purchaser that is not a Related Party, we must submit such proposed sale to a vote of our shareholders, and if holders of a majority of voting shares vote in favor of a sale, the Administrator can then effectuate the private sale.

Following a sale of the Painting, we will pay or reimburse Masterworks for any expenses for which it is responsible, including applicable sales commissions, income taxes, if any, and other transactional expenses. Following the payment of all of such expenses, we will be liquidated, and the remaining net proceeds, if there are any, will be distributed to the holders of record of the Shares entitled to such distribution. However, there can be no assurance as to the timing of a liquidating distribution or that we will pay a liquidating distribution at all.

Competition

At the time we attempt to sell the Painting, we may face substantial competition from other entities and individuals who are selling or seeking to sell similar artwork. These other parties may be better funded and may be able to sell their artworks at a lower price than us. Further, we will face significant risks from other competitive factors, such as the available supply of similar artworks for sale.

Government Regulation

Art Market Regulation

Art as tangible personal property is subject to regulation under different city, state and federal statutory schemes. Generally, domestic art transactions that are conducted within the United States are subject to state Uniform Commercial Code statutes, which govern the sale of goods. Some states have additionally enacted art specific legislation, such as New York’s Arts and Cultural Affairs Law and California’s Resale Royalty Act. In addition, federal statutes such as the Holocaust Expropriated Art Recovery Act and the National Stolen Property Act can apply to title disputes in the art market context. International art transactions involving the import and export of art into and out of the United States will subject us to the rules and regulations established by the United States Customs and Border Protection. Further, we and Masterworks will be subject to the requirements of the federal Cultural Property Implementation Act which is the United States’ accession legislation for the 1970 United Nations Educational, Scientific, and Cultural Organization (UNESCO) Convention which protects countries’ cultural property, including artwork. New York City, as a major art auction center, has enacted legislation governing the activities of auctioneers in the New York City Administrative Code and Masterworks may be subject to these regulations through its transactions and financing arrangements with auctioneers.

Patriot Act

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Patriot Act) is intended to strengthen the ability of U.S. law enforcement agencies and intelligence communities to work together to combat terrorism on a variety of fronts. The Patriot Act, to which we are subject, has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money. The Patriot Act required us to implement policies and procedures relating to anti-money laundering, compliance, suspicious activities, and currency transaction reporting and due diligence on customers. The Patriot Act also requires federal banking regulators to evaluate the effectiveness of an applicant in combating money laundering in determining whether to approve a proposed bank acquisition.

ORGANIZATIONAL STRUCTURE

The diagram below depicts our organizational structure after this Offering assuming all Class A ordinary shares are sold

We were formed as a Delaware limited liability company on March 28, 2018 by Masterworks in order to acquire the Painting. We are a manager-managed limited liability company managed by a Board of Managers. The Class A ordinary shares to be sold in this Offering, when issued, together will represent 80% of the membership interests in us and have certain approval and voting rights in connection with the sale of the Painting as further described in this offering circular and voting on certain amendments to our operating agreement and administrative services agreement and other certain rights pursuant to our operating agreement. As of the date of this filing, there are 16,015 membership interests of the Company currently issued and outstanding, which are held by Masterworks. On or prior to the time of qualification of this offering circular by the SEC, the Company will enter into an amended and restated operating agreement, which will create two classes of membership interests of the Company in the form of Class A ordinary shares and Class B ordinary shares, and simultaneously, the 16,015 membership interests will convert automatically into 24,956 Class B ordinary shares.

The Board of Managers will have sole voting power over all matters, including: mergers, consolidations, acquisitions, winding up and dissolution and sale of the Painting; except, the Board of Managers will not have the authority to do any the following without first obtaining the prior approval or consent of holders of a majority of voting shares:

EMPLOYEES

As of April 17 , 2019, we had no full-time employees and no part-time employees. All of our day to day operations are administered by our Administrator.

LEGAL PROCEEDINGS

There are no legal proceedings currently pending against us which would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened. It is possible that we will find ourselves involved in litigation, in which case we will be wholly reliant on the Administrator to address such litigation as necessary. If the Administrator settles a case or receives and adverse judgment, the Administrator will have the right to auction the Painting and any legal costs, settlement or judgement paid by the Administrator would then be reimbursed upon a sale of the Painting pursuant to the terms of the administrative services agreement.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We were formed as a Delaware limited liability company on March 28, 2018 by Masterworks to acquire the Painting. We have not conducted any operations prior to the date of this offering circular and will not conduct any business activities except for activities relating to the ownership, maintenance, promotion and the eventual sale of the Painting. Our strategy will be to display and promote the Painting in a manner designed to enhance its provenance and increase its exposure and its value. We are not aware of any trends, uncertainties, demands, commitments or events that will materially affect our operations or the liquidity or capital resources of the Administrator.

Critical Accounting Policies and Estimates

The preparation of our financial statements in accordance with generally accepted accounting principles is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. We consider the accounting policies discussed below to be critical to the understanding of our financial statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our consolidated financial statements.

Investment in Artwork

When we acquire the Painting upon closing of the Offering, it will be recorded on the balance sheet at cost, which is the purchase price we pay for the Painting from our affiliate, Masterworks Gallery. The Painting has an indefinite life. We will review the Painting for impairment in accordance with the requirements of ASC 360-10, Impairment and Disposal of Long-Lived Assets (“ASC 360”). Those requirements will require us to perform an impairment analysis whenever events or changes in circumstances indicate that the carrying amount of the Painting might not be recoverable, i.e., information indicates that an impairment might exist. In accordance with ASC 360, we will:

If it is determined that measurement of an impairment loss is necessary, the impairment loss would be calculated based on the difference between the carrying amount of the Painting and its estimated fair value. An impairment loss would be reported as a component of income from continuing operations before income taxes in our financial statements.

Contingent Liabilities

We may be subject to lawsuits, investigations and claims (some of which may involve substantial dollar amounts) that can arise out of our normal business operations. We would continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a thorough analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Because most contingencies are resolved over long periods of time, liabilities may change in the future due to new developments (including new discovery of facts, changes in legislation and outcomes of similar cases through the judicial system), changes in assumptions or changes in our settlement strategy. There were no contingent liabilities as of December 31, 2018.

Income Taxes

We expect that we will be treated as a partnership for U.S. federal income tax purposes and not as an association or publicly traded partnership subject to tax as a corporation. As a partnership, we generally will not be subject to U.S. federal income tax. Instead, each Holder that is subject to U.S. tax will be required to take into account its distributive share, whether or not distributed, of each item of our income, gain, loss, deduction or credit. See “Material U.S. Federal Tax Considerations”. The Administrator will have the authority to act on our behalf with respect to tax audits and certain other tax matters and to make such elections under the Internal Revenue Code and other relevant tax laws as the Administrator deems necessary or appropriate.

As of December 31, 2018, we had no federal and state income tax assets, liabilities or expense.

Liquidity and Capital Resources of the Administrator

Masterworks will pay all costs associated with the development and operation of the Masterworks Platform, costs associated with the acquisition of the Painting and all costs of our organization and this Offering. Masterworks will also be responsible for all ordinary and necessary costs for ongoing administrative expenses, for which it will receive Class A ordinary shares at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum, after the Offering. We do not anticipate that we will maintain any material liquid assets and, accordingly, we will rely upon the Administrator to pay for the maintenance of the Painting and the administration of our business in accordance with the administrative services agreement. The Administrator will be funded with approximately $100,000 in cash or cash equivalents as of the date of qualification of this offering circular and as of the closing and will have no liabilities, commitments or obligations, other than its obligations pursuant to the administrative services agreement as of such dates. We and the Administrator believe that revenues and expense reimbursements from the Company pursuant to the administrative services agreement will be sufficient for the Administrator to perform its obligations under the administrative services agreement for at least the first five-years following the Offering. We do not believe we will need to raise any additional funds through the issuance and sale of securities in the foreseeable future and are not permitted to do so under our operating agreement without the prior approval of holders of the Class A ordinary shares. The Administrator’s original source of financing will be equity contributions from Masterworks.io, LLC. Masterworks.io, LLC is currently funded through a $5.0 million loan from Scott Lynn. Because Scott Lynn controls Masterworks, the loan can effectively be declared due and payable at any time in the discretion of Mr. Lynn. The Administrator will earn fees in the form of additional Class A ordinary shares issued by us and other similar issuer entities, which it may periodically sell to obtain additional liquidity. The direct incremental costs incurred by the Administrator to satisfy its obligations under the administrative services agreement are expected to be less than its revenues, though such revenues may be insufficient to cover the Administrator’s overhead. In addition, the Administrator has covenanted in the administrative services agreement that for so long as such agreement remains in effect, the Administrator will maintain on hand cash reserves sufficient to pay at least one year of estimated expenses to satisfy its obligations under the administrative services agreement to fund the operations of the Issuer until the sale of the Painting.

The Administrator expects to conduct other business activities, including the administration of other entities similar to the Company and expects that, with scale, the Administrator’s revenues will exceed its costs. Further, as noted in the foregoing, the Administrator intends to engage in other business activities, including performing services similar to those to be provided to the Company to other companies, and the Company cannot estimate at this time what the aggregate costs and expenses of the Administrator will be with respect to such activities as they will depend on many factors. Additionally, the Company plans to own the Painting for a five- to ten-year period, although it may elect to hold the Painting for a longer period.

Commitments from Affiliates to Fund Operations

We have a written commitment from the Administrator to fund our operations until we sell the Painting which is contained in the administrative services agreement.

Commitments from Affiliates to Fund Class A ordinary shares, Offering Costs and Expenses

The costs associated with this Offering are estimated to be $150,000 and shall be paid by the Administrator rather than from the net proceeds of the Offering. None of these fees, costs or expenses will be reimbursable by the Company to Administrator, although Masterworks will receive a true-up amount of $181,500 for acquiring and financing the acquisition of the Painting upon closing of the Offering.

MANAGEMENT

Our Administrator

Our day to day operations are managed by the Administrator. The Administrator performs its duties and responsibilities pursuant to our operating agreement and administrative services agreement. Masterworks appointed the Administrator and the Board of Managers can only terminate the administrative services agreement with the prior written consent of Masterworks Gallery, LLC. The Administrator and its affiliates have the exclusive right and power to manage and operate our Company, subject to the powers of our Board of Managers and other than limited voting rights reserved under our operating agreement for the holders of the Class A ordinary shares.

As of the date of this filing, there are 16,015 membership interests of the Company currently issued and outstanding, which are held by Masterworks. On or prior to the time of qualification of this offering circular by the SEC, the Company will enter into an amended and restated operating agreement for Masterworks 001, LLC, which will create two classes of membership interests of the Company in the form of Class A ordinary shares and Class B ordinary shares, and simultaneously, the 16,015 membership interests will convert automatically into 24,956 Class B ordinary shares.

Summary of Administrative Services Agreement

We plan to enter into an administrative services agreement with the Administrator prior to the closing of this Offering. The following summarizes some of the key provisions of the administrative services agreement. This summary is qualified in its entirety by the administrative services agreement itself, which is included as Exhibit 6.2.

Services to be Provided

Pursuant to the administrative services agreement, the Administrator agreed to provide us, though itself directly or through its affiliates, with investment management, advisory, asset management, consulting and other services with respect to the Painting and our operations on the terms and conditions set forth in the administrative services agreement.

The services to be provided by the Administrator under the administrative services agreement include the following:

Third Parties and Exclusivity

Pursuant to the administrative services agreement the Administrator may to the extent it determines that it would be advisable, arrange for and coordinate the services of other professionals, experts and consultants to provide any or all of the services under the administrative services agreement in which case, the costs and expenses of such third parties for providing such services shall be borne by the Administrator with it being understood that the Administrator shall not charge any fees in addition thereto with respect to such outsourced services.

The obligations of the Administrator to us are not exclusive. The Administrator may, in its discretion, render the same or similar services as rendered to us to any person or persons whose business may be in direct or indirect competition with us.

Rights of the Administrator

Pursuant to the administrative services agreement, the Administrator and its affiliates shall have the right to engage in the following activities, and will be responsible for all incremental costs associated with such activities (including taxes):

The Administrator will display or exhibit the Painting if and when the Administrator reasonably believes that such display or exhibition would increase the exposure, profile and appeal of the Painting. In the event that any revenues are generated from such activities, the Administrator may retain such revenues to the extent they offset actual incremental third-party costs associated with such activities and any excess revenues above such incremental third-party costs, if any, shall belong to the Company.

Compensation of the Administrator and Reimbursement

There are various services required to administer our business and maintain the Painting. Pursuant to an administrative services agreement between us and Masterworks to be entered into prior to the completion of the Offering, the Administrator will manage all administrative services relating to our business and custodial services relating to the maintenance of the Painting. The Administrator will receive fees and expense reimbursement for administration of our operations in the form of Class A ordinary shares at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum following the closing of the Offering. Any extraordinary or non-routine services, if any, will be managed and paid for by the Administrator, but such extraordinary costs will be reimbursed upon the sale of the Painting or a sale of our Company, as applicable.

Ordinary and necessary administrative and maintenance costs and expenses include:

Extraordinary or non-routine costs for which the Administrator shall be entitled to seek reimbursement include:

Provision of Financial Information

The Administrator will report to the Company on a semi-annual basis its current and total assets, current and total liabilities, and total equity and the Company intends to include such amounts in its SEC reports.

Termination

The term of the administrative services agreement will terminate upon the first to occur of (i) the dissolution of our Company; or (ii) our termination of the administrative services agreement on the terms set forth in the agreement.

Under the administrative services agreement, we may terminate the agreement at any time upon a vote of our members pursuant to our operating agreement following any of the following:

(i) The commission by the Administrator or any of its executive officers of fraud, gross negligence or willful misconduct;

(ii) The conviction of the Administrator of a felony;

(iii) A material breach by the Administrator of the terms of the administrative services agreement which breach is not cured within 30 days after receipt by the Administrator of a notice of such breach from any member of our Company (provided that if such breach is not capable of cure within 30 days, and the Administrator is diligently taking steps to cure the breach, then no such event shall be deemed to have occurred unless and until the Administrator fails to cure such breach within 60 days after receiving notice thereof);

(iv) A material violation by the Administrator or any of its executive officers of any applicable law that has a material adverse effect on our business; or

(v) The bankruptcy or insolvency of the Administrator.

On the date of termination, or if we do not have the available funds on such date, then as soon as practicable after we do have the available funds, we will pay any accrued but unpaid costs subject to reimbursement owed to the Administrator through to such date.

Indemnification

Under the administrative services agreement we agreed to indemnify, hold harmless, protect and defend the Administrator, its affiliates, any officer, member of the Board of Managers, employee or any direct or indirect partner, member or shareholder of the Administrator, any person who serves at the request of the Administrator on behalf of us (referred to herein as the “Indemnified Persons”) against any losses, claims, damages or liabilities, including legal fees, costs and expenses incurred in investigating or defending against any such losses, claims, damages or liabilities or in enforcing the Indemnified Persons’ rights to indemnification under the administrative services agreement. The indemnification under the administrative services agreement shall not apply to any actions, suits or proceedings in which (i) one or more officers, member of the Board of Managers, partners, members or employees of the Administrator are making claims against the Administrator or one or more other officers, member of the Board of Managers, partners, members or employees of the Administrator; or (ii) we are not a plaintiff, defendant or other party in such action, suit or proceeding and/or will not or could not be reasonably expected to receive any monetary benefit from the outcome of such action, suit or proceeding.

Amendment of Administrative Services Agreement

Amendments to the administrative services agreement may be proposed only by or with the consent of the Administrator and may be approved by the Board of Managers, provided that any amendment that would be adverse or detrimental to the interests of members of the Company must be approved by holders of a majority of voting shares.

Prohibited transactions under our operating agreement

The Board of Managers will have sole voting power over all matters, including: mergers, consolidations, acquisitions, winding up and dissolution and sale of the Painting; except, the Board of Managers shall not have the authority to do any the following without first obtaining the prior approval or consent of holders of a majority of the voting shares:

Sale of Painting

Our intention is to own the Painting for a five- to ten-year period, although depending on market conditions and other circumstances we may elect to hold the Painting for a longer period or sell the Painting at any time. We will have the ability, in our sole and absolute discretion, to sell the Painting at a public auction and liquidate our Company if:

The Painting is effectively perpetually available for sale following the Offering and we intend to promote the sale of the Painting. Any person can make an offer to purchase the Painting at any point in time. If such offer constitutes a “Bona Fide Offer” as defined in the Masterworks 001, LLC operating agreement, the Administrator will submit such offer to a vote of the then holders of our voting shares and if holders of a majority of the voting shares vote in favor of a sale in response to such Bona Fide Offer, we will accept the Bona Fide Offer and sell the Painting.

If, on the seven-year anniversary of the closing of this Offering, the Administrator determines that an active trading market does not exist or that such market does not have sufficient transaction volume to permit reasonable trading in the Class A ordinary shares, the Company will solicit the vote of holders of voting shares to sell the Painting (a “Liquidity Sale”). If the holders of a majority of voting shares vote to sell the Painting, the Administrator will use commercially reasonable efforts to sell the Painting at auction or in a privately negotiated transaction as soon as reasonably practicable, but not later than two years following such vote. If the Administrator proposes to execute such Liquidity Sale pursuant to a privately negotiated transaction and the proposed purchaser is known by the Administrator to be the beneficial owner of at least 10% of the voting shares or is an affiliate of the Administrator (a “Related Party”), we shall be required to obtain an additional approval of the terms of such Liquidity Sale with a Related Party purchaser from the holders of a majority of the voting shares as a condition to closing any such Liquidity Sale with a Related Party purchaser.

Further, if at any time we or Masterworks decide to sell the Painting in a private sale transaction (i.e., non-auction sale), except in connection with a Liquidity Sale to a purchaser that is not a Related Party, we must submit such proposed sale to a vote of the then holders of our voting shares, and if  holders of a majority of voting shares vote in favor of a sale, the Administrator can then effectuate the private sale.

Following a sale of the Painting, we will pay or reimburse Masterworks for any expenses for which we are responsible, including applicable third-party sales commissions, income taxes, if any, and other transactional expenses. Following the payment of all of such taxes and expenses, our Company will be liquidated, and the remaining net proceeds, if there are any, will be distributed to the then holders of record of the shares in accordance with our operating agreement. There can be no assurance as to the timing of a liquidating distribution or that we will pay a liquidating distribution at all.

Executive Officers and Members of the Board of Managers  of the Company

As of the date of this offering circular, which assumes that the Company’s Amended and Restated Operating Agreement is effective, the following sets forth the executive officers and members of the Board of Managers of the Company and their positions and offices as follows:

Scott W. Lynn. Mr. Lynn has served as the Chief Executive Officer and a Board Member  of the Company since November 18, 2018 and has served as the Chief Executive Officer of our affiliate Masterworks.io, LLC since January 2018. Mr. Lynn has been an active collector of contemporary art for more than fifteen years and has built an internationally-recognized collection of Abstract Expressionism that has included works by Clyfford Still, Barnett Newman, Mark Rothko, Willem de Kooning, and more. In 2017, portions of Mr. Lynn’s collection were exhibited at the Royal Academy in London, the Denver Art Museum, the Palm Beach Museum. Mr. Lynn is an Internet entrepreneur and has founded, acquired, or acted as a majority-investor in over a dozen advertising technology, content, and fintech companies. In addition to Masterworks, during the past five years Mr. Lynn has served as Founder, controlling shareholder and a board member of v2 ventures (which is a holding company he controls that owns Adparlor, Inc., Giant Media, Inc., Reachmobi, Inc., Amply, Inc. and Sellozo, Inc.) and Payability, LLC (which he founded and is majority-owner). Mr. Lynn also serves as a board member the Brooklyn Rail (a non-profit publication in the art industry).

Joshua B. Goldstein. Mr. Goldstein has served as a Board Member and the General Counsel and Secretary, and Interim Chief Financial Officer of the Company since November 18, 2018 and has served in such capacities with our affiliate Masterworks.io, LLC since January 2018. On June 1, 2018, Mr. Goldstein was appointed as the interim CFO of the Administrator. From September 2016 through December 2017, Mr. Goldstein was a shareholder in the Denver office of Greenspoon Marder, P.A. From April 2015 through August 2016, Mr. Goldstein was self-employed as a corporate attorney. From September 2012 through March 2015, Mr. Goldstein was Executive Vice President, Chief General Counsel and Corporate Secretary of Intrawest Resorts Holdings, Inc., a NYSE-listed resort and adventure company. Prior to joining Intrawest, Mr. Goldstein was a Counsel in the New York office of Skadden, Arps, Slate, Meagher & Flom, LLP from June 2007 to August 2012 and he was an Associate at Skadden from September 1996 until August 2005, where he concentrated on corporate finance, corporate securities and mergers and acquisitions. Mr. Goldstein was also previously a Partner in the New York office of Torys, LLP. Mr. Goldstein holds a B.A. in business administration from the University of Wisconsin-Madison and a J.D. from Fordham University School of Law and is a Certified Public Accountant (inactive).

Leonard J. Sokolow. Mr. Sokolow has served as a Board Member and the Independent Manager of the Company since November 18, 2018. Since January 1, 2016, Mr. Sokolow has been Chief Executive Officer and President of Newbridge Financial, Inc. and Chairman of its principal subsidiary, Newbridge Securities Corporation. From July 2014 until December 2015, Mr. Sokolow was a consultant and partner at Caribou LLC, a strategic advisory services firm. From July 2008 until July 2013, Mr. Sokolow was President of National Holdings Corporation, and from July 2008 until July 2014 he was Vice-Chairman of the Board of Directors of National Holdings Corporation. From November 1999 until January 2008, Mr. Sokolow was Chief Executive Officer and President, and a member of the Board of Directors, of vFinance Inc., a publicly-traded financial services company, which he cofounded. Mr. Sokolow was the Chairman of the Board of Directors and Chief Executive Officer of vFinance Inc. from January 2007 until July 2008, when it merged into National Holdings Corporation, a publicly traded financial services company. Mr. Sokolow was Founder, Chairman and Chief Executive Officer of the Americas Growth Fund Inc., a closed-end 1940 Act management investment company, from 1994 to 1998. From 1988 until 1993, Mr. Sokolow was an Executive Vice President and the General Counsel of Applica Inc., a publicly-traded appliance marketing and distribution company. From 1982 until 1988, Mr. Sokolow practiced corporate, securities and tax law and was one of the founding attorneys and a partner of an international boutique law firm. From 1980 until 1982, he worked as a Certified Public Accountant for Ernst & Young and KPMG Peat Marwick. Since January 2016 Mr. Sokolow has served as a member of the Board of Directors of SQL Technologies Corp. (SQFL) and Chairman of its Audit Committee and since September 2016, Chairman of its Corporate Development Committee, and since April 2010, he has served as a Director and a member of the Audit Committee of Marquee Energy, Ltd. (formerly, Alberta Oilsands Inc.) (TSX-Venture: MQX). Since June 2006, Mr. Sokolow served on the Board of Directors of Consolidated Water Company Ltd. (NASDAQ: CWCO) and as Chairman of its Audit Committee and, since January 2012, a member of its Nominations and Corporate Governance Committee.

The foregoing individuals have also served in the capacity as executive officers and members of the board of managers of our affiliated entities of Masterworks.

Limited Liability and Indemnification of the Board of Managers, the Administrator and Others

Our operating agreement limits the liability of the Board of Managers, any members of our Company, any person who is an officer of our Company and any person who serves at the request of the Board of Managers on behalf of us as an officer, member of the Board of Managers, partner, member, stockholder or employee of such person and the administrative services agreements limits the liability of the Administrator and its affiliates. None of the foregoing persons shall be liable to us or the Administrator or any other of our members for any action taken or omitted to be taken by it or by other person with respect to us, including any negligent act or failure to act, except in the case of a liability resulting from any of the foregoing person’s own actual fraud, gross negligence, willful misconduct, bad faith, breach of fiduciary duty, reckless disregard of duty or any intentional and material breach of our operating agreement or conduct that is subject of a criminal proceeding (where such person has reasonable cause to believe that such conduct was unlawful). With the prior consent of the Board of Managers, any of the foregoing persons may consult with legal counsel and accountants with respect to our affairs (including interpretations of the Masterworks 001, LLC operating agreement) and shall be fully protected and justified in any action or inaction which is taken or omitted in good faith, in reliance upon and in accordance with the opinion or advice of such counsel or accountants. In determining whether any of the foregoing persons acted with the requisite degree of care, such person shall be entitled to rely on written or oral reports, opinions, certificates and other statements of the members of the Board of Managers, officers, employees, consultants, attorneys, accountants and professional advisors of our Company selected with reasonable care; provided, that no such person may rely upon such statements if it believed that such statements were materially false. The foregoing limitations on liability reduce the remedies available to the holders of the Class A ordinary shares for actions taken which may negatively affect us.

Insofar as the foregoing provisions permit indemnification of members of the Board of Managers, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Term, Withdrawal and Removal of Members of the Board of Managers

Our operating agreement provides that each member of our Board of Managers will serve as our Manager, for an indefinite term, but that the Manager may be removed by a majority of the Board of Managers for any reason or may choose to withdraw as a Manager.

Our members may only remove a member of the Board of Managers for “Cause,” following the affirmative vote of two-thirds (2/3) of the issued and outstanding voting shares. “Cause” is defined as: 

Masterworks Shares

As of the date of this filing, there are 16,015 membership interests of the Company currently issued and outstanding, which are held by Masterworks. On or prior to the time of qualification of this offering circular by the SEC, the Company will enter into an amended and restated operating agreement for Masterworks 001, LLC, which will create two classes of membership interests of the Company in the form of Class A ordinary shares and Class B ordinary shares, and simultaneously, the 16,015 membership interests will convert automatically into 24,956 Class B ordinary shares. The cash proceeds from the Offering are planned to be paid to Masterworks Gallery together with Class A ordinary shares in an amount equal to any remaining unsold Class A ordinary shares not sold in this Offering, if any, to purchase the Painting. In other words, if not all of the 99,825 shares are sold in this Offering, Class A ordinary shares in the amount of such shortfall shall be issued to Masterworks Gallery as part of the payment for the Painting. Further, Masterworks will own 24,956 Class B ordinary shares, representing a 20% “profits interest” in our fully diluted equity. The Class B ordinary shares retained by Masterworks will entitle Masterworks to 20% of the profit on sale of the Painting or the ability to convert such shares into Class A ordinary shares with a value at the time of conversion equal to 20% of the increase in value of our issued and outstanding Shares. Masterworks will agree to lock-up provisions in our operating agreement that will prohibit it from selling Class B ordinary shares (or Class A ordinary shares issuable upon conversion of Class B ordinary shares) prior to the one-year anniversary of the Offering. After the one-year anniversary, Masterworks will have no restrictions on the disposition of any of its shares, other than restrictions in our operating agreement and those imposed by applicable securities laws.

Masterworks Platform

We will conduct this Offering on the Masterworks Platform, which will host this Offering in connection with the distribution of the Class A ordinary shares offered pursuant to this offering circular. The Masterworks Platform is owned Masterworks.io, and is operated by the principals of Masterworks (including Masterworks Administrative Services, LLC). Through the Masterworks Platform, investors can:

We intend to distribute the Class A ordinary shares exclusively through the Masterworks Platform. If and when a secondary trading market or brokerage relationships to facilitate secondary sales is established, we will seek to use the Masterworks Platform in a manner that will integrate with such secondary trading market or brokerage relationships to the extent practical in compliance with applicable rules and regulations to enhance its overall utility for investors. We will not pay Masterworks, the owner of the Masterworks Platform, any sales commissions or other remuneration for hosting this offering on the Masterworks Platform. Neither Masterworks.io, LLC nor any other affiliated entity involved in the offer and sale of the Class A ordinary shares is currently a member firm of the Financial Industry Regulatory Authority, Inc., or FINRA, and no person associated with us will be deemed to be a broker solely by reason of his or her participation in the sale of the Class A ordinary shares.

License Agreement

We will enter into a license agreement with Masterworks, effective upon the commencement of this Offering, pursuant to which Masterworks will grant us a non-exclusive, royalty free license to use the name “Masterworks”. Other than with respect to this license, we will have no legal right to use the “Masterworks” name. In the event that the Administrator ceases to administer our operations, we would be required to change our name to eliminate the use of “Masterworks”.

Involvement in Certain Legal Proceedings

No executive officer, member of the Board of Managers, or significant employee or control person of our Company or the Administrator has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

MANAGEMENT COMPENSATION

The Administrator, and its affiliates will receive certain fees and expense reimbursements for services relating to this Offering and the acquisition, maintenance and sale of the Painting. The items of compensation are summarized below. Neither the Administrator nor their affiliates will receive any selling commissions or dealer manager fees in connection with the offer and sale of the Class A ordinary shares. In addition, Masterworks will own 24,956 Class B ordinary shares, representing a 20% “profits interest” in our fully diluted equity.

The following table sets forth the form of compensation and the recipient of such compensation together with the determination of the amount and the estimated amount.