Terra Adriatica Locksmith Explained EN V1.2

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The Locksmith
Joint Venture Agreement
Explained
Contents
Introduction .....................................................................2
What Does Locksmith Do? ..........................................2
How Does Locksmith Work?........................................3
Why Does Locksmith Work? .......................................3
How Can you Support a Zero Upfront Cost? .........4
Who Makes What?..........................................................4
Sample Illustration .........................................................5
What Can Locksmith Not Guarantee?......................6
So, Is Locksmith Right for Me?....................................8
Version # 1.2

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THE LOCKSMITH JOINT VENTURE EXPLAINED
Introduction
The purpose of this document is to give you a plain language explanation of the process
underpinned by the Locksmith Agreement.
It will explain how, by entering into a Locksmith Agreement with Terra Adriatica, you can
unlock value through the eventual sale of land with unclean title.
It will explain how we’re able to offer this service at no upfront cost or financial risk to yourself
while ensuring you receive over 90% of the net proceeds achieved at sale to the final buyer.
It will provide a clear understanding of how others, including Terra Adriatica, will also benefit.
Lastly, we hope it will illustrate how five years of intensive research and development has
culminated in a unique solution to a problem, deemed by many, to be unsolvable.
Our mantra is that we act at all times on behalf of the Seller. Our entire process ensures full
alignment between all parties, at all times, in achieving the highest price for the land at sale.
If you feel that any of the explanation given below is unclear, or indeed contradicts this mantra,
then we’d really appreciate the opportunity to discuss it with you: hello@terraadriatica.hr.
What Does Locksmith Do?
Significant tracts of real estate in Croatia, worth many billions of Euros, lie economically
dormant due to a lack of clear legal ownership, or ‘clean title’.
Establishing clean title to unlock that value has proved insurmountable for most people due
to the significant complexity, and therefore cost, involved.
The historical reasons for that complexity are many and explored in greater detail on our
website. Fundamentally, however, it stems from missing or often inaccurate data in the land
registries.
Locksmith solves this. It facilitates a unique, fully transparent process to establish clean title
over affected land, ahead of generating value from its sale at the highest possible price.
You, the Seller, pay nothing upfront, risk nothing financially, and receive over 90% of the Net
Proceeds from sale. (As illustrated later on in this document).

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THE LOCKSMITH JOINT VENTURE EXPLAINED
How Does Locksmith Work?
Our platform utilises Artificial Intelligence techniques to help solve the issue of often missing,
incomplete, or simply inaccurate records held within in the land registry.
By navigating, cleaning and then connecting tens of millions of data records, we can provide an
initial picture as to what potential rights a Seller may have to land.
When a Seller signs a Locksmith agreement, they are in effect committing to sell their land once
the title is clean, via a process explained in more detail later. We then assign additional resource
to refine results further and assess the suitability of each potential claim for inclusion within an
existing or future Locksmith Project.
Each Locksmith Project comprises of potentially hundreds, if not thousands of claims from other
sellers. This is essential to achieving the economies of scale to support a viable cost model and the
level of investment required to fund it.
Terra Adriatica has created a comprehensive real-estate map that charts each potential route that
a claim might undertake. Traditionally, significant time and money is often wasted by pursuing a
path that is inefficient or simply incorrect.
We address this on a claim by claim basis through the use of modelling and automated processing
techniques that first chart and then navigate the most efficient journey possible.
Lastly, we work with 3 rd party Investors willing to fund the entire process at their risk, thus supporting
a solution with no upfront cost or financial risk to the Seller.
Why Does Locksmith Work?
Would-be owners of Croatian land have for generations faced the same conundrum when seeking
to claim what is rightfully theirs. Do they commit to an open-ended and costly process to establish
that right, (very possibly for more than the land is worth), or should they abandon hope of ever
trying?
Locksmith provides a solution where each party wins.
Sellers generate value from the sale of land to which he or she has a valid claim. Investors achieve
an attractive return that is appropriate to the risk they undertake, and we take a fee for facilitating
and managing the process from start to end.
The guiding principle behind Locksmith is that the interests of all parties are fully aligned at all
times.
Each party is fully motivated to achieve the highest possible price for the land at sale. Importantly,
Terra Adriatica does not get paid until/unless the Seller themselves receives the final proceeds
from the sale.

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THE LOCKSMITH JOINT VENTURE EXPLAINED
How Can you Support a Zero Upfront Cost?
Traditional solutions often incur a commitment to legal fees, including retainers, over an in de terminable
timeframe.
More often than not, those fees make the process of freeing up even modestly sized plots of land
unviable. Therefore, few succeed or even try.
Providing this service at no upfront cost is fundamental to our offering. It sets us apart from anyone
else and solves perhaps the biggest barrier to freeing up this land.
This is how we do it:
––
We group multiple Locksmith Agreements into ‘Locksmith Projects’.
––
Each project represents a total landmass of sufficient size to support economies of scale,
thereby minimising the cost of establishing clean title.
––
We demonstrate to 3 rd party Investors that we have the technology and processes in place
to unlock the latent value in that land.
––
The Investor agrees to take 100% of the financial risk on the potential future value of the
land and to invest the funds required to facilitate the process. In return, he receives a 10%
return per year on the amount invested.
––
The Investor also receives just under 2% of the proceeds from sale. While a seemingly small
amount, it represents enough of an increase to his overall return and ensures he is aligned
with the Seller to achieve the highest price at sale.
––
The Investor is taking 100% of the financial risk on the future value of the land. He, therefore,
holds title in his name, (transferred by the Seller), as collateral until the land is sold on to a
final buyer.
––
Once the land is sold to the final buyer, the proceeds are distributed as described in detail
in the following section.
In summary, we secure Investors willing to take a risk on the potential, future value of land to fund
the complex process required to realise that value. We do so at no upfront cost or financial risk to
the Seller.
Our business model relies upon generating value from the eventual sale of land. Without a sale at
the end of the process, we would be unable to cover the costs involved.
Who Makes What?
There are three beneficiaries of a Locksmith Agreement:
1. You, the Seller (defined as the Partner in the agreement),
2. The Investor, and
3. Terra Adriatica
You, the Seller, receive payment in two instalments:
1. An Initial Instalment paid by the Investor once clean title has been established. This will
be a relatively small amount, calculated as a proportion of the funding committed by the
Investor. This consideration also supports the legal mechanism of title being transferred to
the Investor (once established) as collateral, until the land is sold.

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THE LOCKSMITH JOINT VENTURE EXPLAINED
2. 90% of the Net Proceeds achieved at sale. Net proceeds is equal to the sale price less the
Initial Instalment, the Investor’s financing fees and associated costs, (including real estate
agency fees, if any).
Together, we estimate these two instalments to equal around 80% of the price achieved at sale.
Please note that while the 90% figure is fixed, the 80% figure can go up or down very slightly,
depending on the time taken to clean and sell the land.
Per the illustration below, we assume a five-year timeframe. Three years to obtain clean title and
two years to sell the land.
The Investor receives their money back, plus a return of:
1. 10% per year on the amount invested to fund the project.
2. 2% of the sale price, less the Initial Instalment.
We, Terra Adriatica, receive 10% of the Net Proceeds from sale in return for facilitating the process.
Sample Illustration
The below table illustrates the distribution of funds against plots of land achieving €5,000, €20,000
and €150,000 at sale. It assumes a period of 3 years to clean the title and 2 years to sell the land.
This is to help illustrate returns on modest-sized plots to an individual Seller.
Price Achieved at Sale (Less Agency Fees): € 5,000 € 20,000 € 150,000
Less:
Cleaning Costs (Variable) € 250 € 1,000 € 7,500
Initial Instalment to seller € 250 € 1,000 € 7,500
Investor Return (10% pa) € 175 € 700 € 5,250
Investor Incentive (2%) € 95 € 380 € 2,850
Investor Income: € 770 € 3,080 € 23,100
Net Proceeds from sale: € 4,230 € 16,920 € 126,900
Terra Adriatica (10% Net Proceeds) € 423 € 1,692 € 12,690
Sellers Share:
Initial Instalment * € 250 € 1,000 € 7,500
90% Share of Net Proceeds ** € 3,807 € 15,228 € 114,210
Sellers Total Share: € 4,057 € 16,228 € 121,710
Expressed as a %'age of Sale Price 81% 81% 81%
*
Paid when clean title is established
**
Paid following the sale of the land
However, as explained, our ability to keep the cost of the process viable only works at a significantly
larger scale, with potentially thousands of plots aggregated into a single Project, realising €30m to
€50m at sale.

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THE LOCKSMITH JOINT VENTURE EXPLAINED
What Can Locksmith Not Guarantee?
We can never emphasise enough just how complex establishing title to affected land is.
Many, (if not most), won’t have to take our word for this. It has been a source of severe frustration
within families for generations and a familiar subject of discussion around many a dinner table.
The task that Locksmith facilitates is enormous. It involves research and co-ordination on a
seemingly impossible scale to track, trace and communicate with the rightful co-owners to any
plot of land.
But we can do it. It will not be easy, but we have the technology, processes and professional
networks in place to support a wholly unique approach to solve this problem.
Yet, as with any process of such complexity, we cannot guarantee that all our assumptions are
100% right, and we are upfront about this. There are three key areas that we cannot guarantee.
Time to Completion:
The illustration we have provided shows a timeframe of five years. Three to clean title and
two to sell. It is entirely possible that our first projects, in particular our Pilot Project, will take
longer, while we refine our service.
The effect, however, on Seller returns as a percentage of the overall sale price is minimal. The
table below illustrates this with timeframes of five, seven and ten years from start to finish for
the same project.
Process Timeframe 5 Yrs 7 Yrs 10 Yrs
Price Achieved at Sale (Less Agency Fees): € 10,000 € 10,000 € 10,000
Terra Adriatica (10% Net Proceeds) € 846 € 836 € 821
Sellers Share:
Initial Instalment* € 500 € 500 € 500
90% Share of Net Proceeds** € 7,614 € 7,524 € 7,389
Sellers Total Share: € 8,114 € 8,024 € 7,889
Expressed as a %'age of Sale Price 81% 80% 79%
*
Paid when clean title is established
**
Paid following the sale of the land
The value of the land with Clean Title:
When you sign a Locksmith agreement, you are doing two things:
1. You are committing to transferring title to the land to the Investor once cleaned, and
to the land being sold at the end of the process to the final buyer.
2. You are taking a risk that the proceeds from the sale of the land might be equal to or
less than the Initial Instalment paid to you by the Investor. In such a case, your share
is capped at that value.
Your Initial Instalment, therefore, is effectively your minimum price. In reality, however, such
an outcome is, in our opinion, highly unlikely.
To fully appreciate how unlikely, you must first understand how the Initial Instalment figure is
calculated and tied to the amount of risk an Investor is willing to take.

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THE LOCKSMITH JOINT VENTURE EXPLAINED
That process is as follows:
––
We approach Investors to fund the cost of cleaning the title to the land. This includes paying
the Initial Instalment to the Seller as well as the legal and administrative costs.
––
They are expected to do so entirely at their risk. If something, however inconceivable,
happened to render the land completely worthless, or less than their investment, then they
bear the loss of the funding they have committed and are left with the land. This scenario
could only result from land failing to reach that minimum price on the open market, in a
fully open and transparent process.
––
At no time are you financially liable for anything, (unless of course, you breach the terms
of the contract).
––
To decide the level of funding that they are comfortable with, the Investor will take a view
on the potential future value of that land with clean title.
––
They will then discount (divide) that value until they arrive at a number that they are
comfortable taking a 100% risk on. This will likely be around 10%.
Your Initial Instalment figure, therefore, is the product of an overtly cautious risk assessment.
As it happens, the lower their number, the more the Seller stands to make at the end of the
process.
We have assumed that Investor will commit around 10% of the estimated future value to
fund both the administrative costs and the Initial Instalment. This means that the end value is
expected to be a significant multiple of this.
The Cost Of Cleaning Land
Given we cannot be 100% specific regarding the time it will take to clean land; it follows that we
are also unable to be 100% specific on the cost of doing so.
That is not to say that time and cost are directly linked; land that takes ten years to clean does
not mean it is twice as expensive as land that takes five years to clean.
It is more accurate to state that the relative complexity of a claim is the most likely factor to
drive cost. ‘Relative’ is the key word here. All claims to such land are inherently highly complex.
Cost is, therefore, variable. Cost is also the element that impacts returns for both the Seller
and Terra Adriatica the most. This table illustrates the impact of a 2x and 3x uplift in the legal
and administrative costs on those returns.
Variable Costs of Cleaning Assumed 2x 3x
Price Achieved at Sale (Less Agency Fees): € 10,000 € 10,000 € 10,000
Terra Adriatica (10% Net Proceeds) € 846 € 751 € 621
Sellers Share:
Initial Instalment* € 500 € 500 € 500
90% Share of Net Proceeds** € 7,614 € 6,759 € 5,589
Sellers Total Share: € 8,114 € 7,259 € 6,089
Expressed as a %'age of Sale Price 81% 73% 61%
*
Paid when clean title is established
**
Paid following the sale of the land
As explained, the Locksmith Process is supported by economies of scale that, in turn, make the
cleaning of title to even modestly sized plots of land economically viable.

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THE LOCKSMITH JOINT VENTURE EXPLAINED
So, Is Locksmith Right for Me?
We wish to be very clear: If you have a valid claim to land, there are the legal and administrative
mechanisms in place, in Croatia, to obtain legal title privately.
The reality, however, is that few people will have the resources, (time or money), to invest in
the process. The majority who do are likely to realise that, from an economic point of view,
the effort is unviable.
This is not an unfounded assumption. It comes from first-hand accounts of countless people
we have met in Croatia and amongst the diaspora, while travelling the USA in 2017, 2018 and
2019, during our research phase.
If you are interested only in establishing clean title and wish to retain ownership of the land,
then we are not right for you. As explained previously, our ability to offer our service at no
upfront cost or financial risk relies on the sale of the land at the end of the process.
However, for the majority of others, we think Locksmith is the most effective solution.
Suppose you are keen to finally establish and benefit from your ancestral right to land. In that
case, we present an option that until now has been unavailable to you.
Suppose you are motivated by the positive effect that returning hundreds of thousands of
hectares to full productivity will have on the Croatian economy. In that case, our project should
be of keen interest to you.
We are not shy to point out that by freeing up your small share of land, not only will you
financially benefit personally, but so too will the country as a whole.
Whether you wish to raise some capital to fund a personal project, or to reinvest (yourself) in
other land, or indeed to help your country prosper, we want to work with you.