Each investor (“Investor”) should be aware that an investment in a single company or multiple companies on the FUND IT platform involves a high degree of risk. The following risk factors are not intended as a substitute for professional legal, tax or financial advice. These risks factors are non-exhaustive and are intended to highlight certain risks associate with investing in securities that are not registered with the Securities and Exchange Commission. Such investments are highly speculative and should not be made by anyone who cannot afford to risk their entire capital contribution. In addition to these risks, you should carefully consider the specific information and risks disclosed by an issuer issuing the securities (each, a “Company,” and collectively, the “Companies”).
Small Business Investment Risk; Investors May, and Frequently Do, Lose All of Their Investment. Investments in Companies involve a high degree of risk. Financial and operating risks confronting the Companies are significant. While targeted returns should reflect the perceived level of risk in any investment situation, such returns may never be realized and/or may not be adequate to compensate an Investor for risks taken. Loss of an Investor’s entire investment is possible and can easily occur. Moreover, the timing of any return on investment is highly uncertain.
A Company’s management may be inexperienced and investors may not be able to evaluate the Company’s operating history. Small businesses may also depend heavily upon a single customer, supplier, or employee whose departure would seriously damage a Company’s profitability. The demand for a Company’s product may be seasonal or be impacted by the overall economy, or a Company could face other risks that are specific to its industry or type of business. Companies may also have difficulty competing against larger companies who can negotiate for better prices from suppliers, produce goods and services on a large scale more economically, or take advantage of bigger marketing budgets. Furthermore, a small business could face risks from lawsuits, governmental regulations, and other potential impediments to growth.
Seed, early-stage and development stage Companies often experience unexpected problems in the areas of product development, manufacturing, marketing, financing, and general management, which, in some cases, cannot be adequately solved. In addition, such Companies may require substantial amounts of financing, which may not be available through institutional private placements or the public markets. In addition, the markets that such Companies target are highly competitive and in many cases the competition consists of larger companies with access to greater resources. The percentage of companies that survive and prosper can be small. Investments in more mature companies in the expansion or profitable stage involve substantial risks. Such Companies typically have obtained capital in the form of debt and/or equity to expand rapidly, reorganize operations, acquire other businesses, or develop new products and markets. These activities by definition involve a significant amount of change in a Company and could give rise to significant problems in sales, manufacturing, and general management of these activities.
A Company’s growth relies on market acceptance. While each Company believes that there will be significant customer demand for its products/services, there is no assurance that there will be broad market acceptance of such Company’s offerings. There also may not be broad market acceptance of a Company’s offerings if its competitors offer products/services which are preferred by prospective customers. In such event, there may be a material adverse effect on a Company’s results of operations and financial condition, and the Company may not be able to achieve its goals.
INVESTMENT IN COMPANIES DEPENDENT UPON NEW SCIENTIFIC DEVELOPMENTS AND TECHNOLOGIES.The value of a Company’s interests may be susceptible to factors affecting the technology industry and to greater risk than an investment in a fund that invests in a broader range of securities. The specific risks faced by such Companies include:
- Rapidly changing science and technologies;
- New competing products and improvements in existing products which may quickly render existing products or technologies obsolete;
- Exposure to a high degree of government regulation, making these Companies susceptible to changes in government policy and failures to secure, or unanticipated delays in securing, regulatory approvals;
- Dependence on the development and maintenance of strategic and collaborative relationships with corporate partners, government agencies, research institutions, universities and hospitals in cases where such relationships are important to the development of a product;
- Scarcity of management, technical, scientific, research and marketing personnel with appropriate training;
- The possibility of lawsuits related to intellectual property rights; and
- Rapidly changing investor sentiments and preferences with regard to technology sector investments (which are generally perceived as risky).
RELIANCE ON MANAGEMENT. The loss of a key person in a Company could have a significant adverse impact on the business of a Company and its financial performance. No assurances can be given that each of such key persons will continue to be affiliated with a Company throughout the term of an investment.
PRIVATE COMPANY RISK. The Companies are not subject to Sarbanes-Oxley regulations and may lack the financial controls and procedures of public companies. A Company may not have the internal control infrastructure that would meet the standards of a publicly-held company, including the requirements of the Sarbanes Oxley Act of 2002. As a privately-held (non-public) Company, a Company is currently not subject to the Sarbanes Oxley Act of 2002, and its financial and disclosure controls and procedures reflect its status as a development stage, non-public company. There can be no guarantee that there are no significant deficiencies or material weaknesses in the quality of a Company’s financial and disclosure controls and procedures. If it were necessary to implement such financial and disclosure controls and procedures, the cost to a Company of such compliance could be substantial and could have a material adverse effect on a Company’s results of operations.
Lack of Information for Monitoring and Valuing Companies. Investors may not be able to obtain all information it would want regarding a particular Company on a timely basis or at all. It is possible that the Investor may not be aware on a timely basis of material adverse changes that have occurred with respect to certain of its investments. As a result of these difficulties, as well as other uncertainties, an Investor may not have accurate information about a Company’s current value. The offering price of the interests have been determined by the Companies based on matters the Companies deem relevant. The offering price is no indication of their value or a Company’s value.
State and Federal Security Laws. The securities being offered have not been registered under the Securities Act of 1933 (the “Securities Act”), in reliance, among other exemptions, on the exemptive provisions of Section 4(2) of the Securities Act and Regulation D under the Securities Act. Similar reliance has been placed on apparently available exemptions from securities registration or qualification requirements under applicable state securities laws. No assurance can be given that any offering currently qualifies or will continue to qualify under one or more of such exemptive provisions due to, among other things, the adequacy of disclosure and the manner of distribution, the existence of similar offerings in the past or in the future, or a change of any securities law or regulation that has retroactive effect. If, and to the extent that, claims or suits for rescission are brought and successfully concluded for failure to register any offering or other offerings or for acts or omissions constituting offenses under the Securities Act, the Securities Exchange Act of 1934, or applicable state securities laws, a Company could be materially adversely affected, jeopardizing the Company’s ability to operate successfully. Furthermore, the human and capital resources of the Company could be adversely affected by the need to defend actions under these laws, even if the Company is ultimately successful in its defense.
Compliance with the criteria for securing exemptions under federal securities laws and the securities laws of the various states is extremely complex, especially in respect of those exemptions affording flexibility and the elimination of trading restrictions in respect of securities received in exempt transactions and subsequently disposed of without registration under the Securities Act or state securities laws.
Absence of Liquidity and Public Markets. There has been no public or private market for the Companies’ securities, and there can be no assurance that any such market would develop in the foreseeable future. There is therefore no assurance that the securities can be resold at all, or near the offering price. An Investor will be required to represent that it is acquiring such securities for investment and not with a view to distribution or resale, that it understands that the securities are not freely transferable and, in any event, that it must bear the economic risk of an investment in the securities for an indefinite period of time because the securities have not been registered under the Act or applicable state Blue Sky or securities laws. The securities cannot be resold unless they are subsequently registered or an exemption from registration is available.
There is no active trading market for the securities being offered and no market may develop in the foreseeable future for any of such securities. Further, there can be no assurance that a Company will ever consummate a public offering of any of the Company’s securities. Accordingly, investors must bear the economic risk of an investment in the securities for an indefinite period of time. Even if an active market develops for such securities, Rule 144 promulgated under the Securities Act (“Rule 144″), which provides for an exemption from the registration requirements under the Securities Act under certain conditions, requires, among other conditions, for resales of securities acquired in a non-public offering without having to satisfy such registration requirements, a six-month holding period following acquisition of and payment in full for such securities assuming the issuer of such securities has filed periodic reports with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for a period of 90 days prior to the proposed sale. If the issuer of such securities has not made such filings, such securities will be subject to a one-year holding period before they can be resold under Rule 144. There can be no assurance that a a Company will fulfill any reporting requirements in the future under the Exchange Act or disseminate to the public any current financial or other information concerning a Company, as is required by Rule 144 as part of the conditions of its availability.
Accordingly, an Investor should be prepared to hold the securities acquired in such offerings indefinitely and cannot expect to be able to liquidate any or all of their investment even in case of an emergency. In addition, any proposed transfer must comply with restrictions on transfer imposed by a Company and by federal and state securities laws. A Company may permit the transfer of such securities out of a subscriber’s name only when his or her request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Securities Act or any applicable state securities or “blue sky” laws.
THERE CAN BE NO ASSURANCE THAT A COMPANY WILL EVER FILE A REGISTRATION STATEMENT TO REGISTER SUCH SECURITIES, THAT SUCH REGISTRATION STATEMENT WILL BECOME EFFECTIVE, OR THAT ONCE EFFECTIVE, SUCH EFFECTIVENESS WILL BE MAINTAINED.
Tax Risks. Tax risks relating to investments in Companies can be difficult to address and complicated. You should consult your tax advisor for information about the tax consequences of purchasing equity securities of a Company.
The structure of any investment in a Company may not be tax efficient for any particular Investor, and no Company guarantees that any particular tax result will be achieved. In addition, tax reporting requirements may be imposed on Investors under the laws of the jurisdictions in which Investors are liable for taxation. Investors should consult their own professional advisors with respect to the tax consequences to them of an investment in a Company under the laws of the jurisdictions in which the Investors and/or a Company are liable for taxation.
Companies may make distributions to investors in an amount sufficient to enable them to pay their federal and state income tax liabilities each year on income allocated to investors. There is no assurance, however, that Companies will have sufficient cash available for that purpose.
FINANCIAL STATEMENTS. A Company may not have audited financial statements nor is it required to provide investors with any annual audited financial statements or quarterly unaudited financial statements. a Company may not have audited financial statements or audited balance sheets reviewed by outside auditors. In addition, a Company is not required to provide Investors in the offering with financial information concerning the Company to which the Investors may use in analyzing an investment in the Company. Therefore, your decision to make an investment in a Company must be based upon the information provided to the investors in its private placement documents without financial statement information and therefore, the limited information provided herewith with which investors will make an investment decision may not completely or accurately represent the financial condition of a Company. Furthermore, as non-reporting SEC companies, Companies are not required to provide you with annual audited financial statements or quarterly unaudited financial statements.
REGULATORY RISKS. Securities will not be registered, and no one has passed upon either the adequacy of the disclosure contained herein or the fairness of the terms of the offering. No governmental agency has reviewed the offerings posted on this portal and no state or federal agency has passed upon either the adequacy of the disclosure contained herein or the fairness of the terms of any offering. The exemptions relied upon for such offerings are significantly dependent upon the accuracy of the representations of the Investors to be made to a Company in connection with the offering. In the event that any such representations prove to be untrue, the registration exemptions relied upon by a Company in selling the securities might not be available and substantial liability to a Company would result under applicable securities laws for rescission or damages.
Forward Looking Statements. The information available to Investors may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance.
Each Company’s forward-looking statements are based on management’s current expectations and assumptions regarding the Company’s business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. A Company’s actual results may vary materially from those expressed or implied in its forward-looking statements. Important factors that could cause the Company’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political and social conditions, the availability, unavailability, or hindered operation of external credit markets, equity markets and other economic systems which a Company may depend upon. There can be no assurance that such markets and economic systems will be available or will be available as anticipated or needed for a Company to operate successfully. Changing economic conditions could potentially adversely impact the valuation of portfolio holdings
A Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends or distributions on your interest in a Company. The timing of profit realization, if any, is highly uncertain. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on this Portal.
MINORITY INVESTMENTS. Minority stakes in Companies have neither the control characteristics of majority stakes nor the valuation premiums accorded to majority or controlling stakes. In such cases, investors will be reliant on the existing management and board of directors of such Companies, which may include representatives of other financial investors and whose interests may conflict with the interests of yours. In addition, a Company’s management may have broad discretion in how a Company use the net proceeds of an offering. Unless a Company has agreed to a specific use of the proceeds from an offering, the Company’s management will have considerable discretion over the use of proceeds from their offering. You may not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately.
By using the FUND IT pLATFORM, you acknowledge and agree that, as a result of your own knowledge or as a result of consultation with your legal and/or financial advisors, you understand the risks involved in an investment in the Companies. You represent that your experience and knowledge in financial and business matters are sufficient for you to be able to evaluate the merits and risks of investment or you are relying upon its own legal and/or financial advisors in making such investment decision. These risk factors are NON-EXHAUSTIVE AND not intended as a substitute for professional legal, tax or financial advice.
You further represent that: (A) YOU can bear the economic risk of losing its entire investment; (B) YOU haVE adequate means of providing for its current needs and personal contingencies and has no need for liquidity in its investment in a Company; and (C) your overall commitment to investments (which are not readily marketable is not disproportionate to your net worth) and your investment in any given Company will not cause such overall commitment to become excessive.