Below is a non-exclusive list of risks Investors commonly face when investing in a Reg. CF Offering:
The SEC does not pass upon the merits of the Securities or the terms of the Offerings on the Platform, nor does it pass upon the accuracy or completeness of any Offering document or literature.
You should not rely on the fact that the Form Cs of the Issuers on the Platform are accessible through the SEC’s EDGAR filing system as an approval, endorsement, or guarantee of compliance as it relates to the Issuer’s Offering. The SEC does not review any Form C, nor any document or literature related to an Issuer’s Offering.
Neither the Offerings on the Platform nor the Securities offered thereunder have been registered under federal or state securities laws.
No governmental agency has reviewed or passed upon any Issuers’ Offering or their Securities. Neither the Issuers’ Offerings on the Platform nor the Securities offered thereunder have been registered under federal or state securities laws. Investors will not receive any of the benefits available in registered offerings, which may include access to quarterly and annual financial statements that have been audited by an independent accounting firm. Investors must therefore assess the adequacy of disclosure and the fairness of the terms of an Offering they are participating in based on the information provided in the applicable Issuer’s Form C and the accompanying exhibits.
Issuers on the Platform have the right to limit individual Investor Commitment amounts based on the Issuer’s determination of an Investor’s sophistication.
Issuers on the Platform may prevent any Investor from committing more than a certain amount in its Offering based on the Issuer’s determination of an Investor’s sophistication and ability to assume the risk of the investment. This means that your desired investment amount may be limited or lowered based solely on an Issuer’s determination and not in line with relevant investment limits set forth by the Reg. CF rules. This also means that other Investors may receive larger allocations of an Issuer’s Offering based solely on the Issuer’s determination.
Issuers on the Platform have the right to extend the Offering deadline.
Issuers on the Platform may extend the Offering deadline beyond what is currently stated in the applicable Issuer’s Form C. This means that your Investment Commitment may continue to be held in escrow while the applicable Issuer attempts to raise the Target Offering Amount even after the offering deadline stated in the applicable Issuer’s Form C is reached. While you have the right to cancel your Investment Commitment in the event the applicable Issuer extends the Offering deadline, if you choose to reconfirm your investment, your Investment Commitment will not be accruing interest during this time and will simply be held until such time as the new offering deadline is reached without the applicable Issuer receiving the Target Offering Amount, at which time it will be returned to you without interest or deduction, or the applicable Issuer receives the Target Offering Amount, at which time it will be released to the applicable Issuer to be used as set forth in the applicable Issuer’s Form C. Upon or shortly after the release of such funds to the applicable Issuer, the Securities will be issued to you.
Issuers on the Platform may also end the Offering early.
If an Issuer’s Target Offering Amount is met after twenty-one (21) calendar days, but before the Issuer’s Offering deadline, an Issuer can end its Offering by providing notice to Investors at least five (5) business days prior to the end of the Offering. This means your failure to participate in the Offering in a timely manner may prevent you from being able to invest in the Offering, and it also means the applicable Issuer may limit the amount of capital it can raise during its Offering by ending its Offering early.
There is no guarantee of a return on an Investor’s investment.
There is no assurance that an Investor will realize a return on their investment in an Issuer on the Platform or that they will not lose their entire investment. For this reason, Investors must be willing to bear the total loss of their investment and each Investor should read the respective Issuer’s Form C and all exhibits carefully and should consult with their attorney and business advisor prior to making any investment decision.
Global crises such as COVID-19 can have a significant effect on an Issuer’s business operations and revenue projections.
With shelter-in-place orders, travel bans, and non-essential business closings potentially happening in the future due to COVID-19, Issuers’ ability to generate revenue may be adversely affected.
The full extent to which the COVID-19 pandemic or any other similar global crisis and the various responses to such global crises may affect Issuers’ businesses, results of operations and financial conditions will depend on numerous evolving factors that Issuers on the Platform may not be able to accurately predict, including: the duration and scope of the crisis; governmental, business and individual actions that have been and continue to be taken in response to a global crisis; the availability of and the cost of access to capital markets; disruptions in or restrictions on an Issuer’s Creator’s ability to work and travel; and interruptions related to a Creator or an Issuer’s network, including impacts on mobile application platform providers, advertising partners and other service providers.
The duration and extent of the impact from the COVID-19 pandemic and any other similar global crisis depends on future developments that cannot be accurately predicted at this time, such as the severity of the crisis, the existence of any additional ripple effects of another global crisis, the extent and effectiveness of government action and the impact of these and other factors on Issuers’ communities and business partners. If Issuers on the Platform are not able to respond to and manage the continued impact of such events effectively, their business may be harmed.