Guide on Educational Information and Risks for Investors

We strongly recommend every investor to seek advice from legal, tax, investment, or other professionals before undertaking any investments, and to thoroughly review all the disclosures and documents provided as part of any investment materials. If uncertain, abstain from investing.

This guide aims to educate prospective investors about the potential risks associated with purchasing securities from startups, emerging private companies, and public entities. Please ensure that you review the crucial information below before initiating your registration process on Equity Track and prior to making any investment commitments on the Equity Track platform.

Understanding Equity Track

Equity Track, operated by Colonial Stock Transfer Company, Inc. serves as a conduit that joins potential investors with businesses seeking growth capital. On our online platform, companies desiring growth equity can present information about their business, fundraising strategies, and value proposition. They can seek feedback and verify interest from potential investors and industry advisors, which can be utilized to refine their fundraising pitches and presentations. This occurs prior to filing their offering documentation with the Securities and Exchange Commission (SEC) under Regulation A+ (Reg A+). Reg A+ allows investors from diverse financial backgrounds and investment experiences to partake in capital market investments. Equity Track also aids companies in their Reg D 506C offerings catering to accredited investors, and Reg S offerings catering to non-US investors.

Equity Track operates as a platform that unites businesses seeking growth advice and capital, individuals, and businesses seeking investment opportunities, and advisors looking to support expanding companies. Assembling all these entities in one place fosters an environment of business and financial opportunity. Companies seeking feedback can share information about their business and fundraising objectives on the platform for others to evaluate, but such actions do not signify a specific company’s agreement to complete an offering.

Equity Track does not act as a broker-dealer or placement agent. Equity Track never offers, brokers, advises, purchases, sells, or engages in any transactions involving SEC or federal or state law regulated securities. Equity Track doesn’t accept, hold, or transfer cash or securities. It doesn’t guarantee a company’s fundraising level or that any intended offering will meet the requirements of applicable federal and state securities laws.

Equity Track does not offer personal financial advice. It does not provide personal financial advice, loans, banking services, consumer credit ratings, credit decisions, financial products, brokerage accounts, insurance, tax advice, legal advice, or any financial or legal services of any kind. Even if a company or investment opportunity is featured on the platform, unless explicitly stated, Equity Track does not endorse it.

Equity Track offers no guarantees to any user. All users of the Platform are responsible for their activities, including but not limited to registration, sharing information about their Company, and any proposed financing, reserving an investment, making an investment, or similar actions.

Considerations and Investment Risks

Every investor is encouraged to consult with a legal, tax, investment, or another professional before making an investment and to carefully review all the disclosures and documents provided as part of any offering materials.

Prior to registering on Equity Track and making any investment, it’s advised to consider the risks associated with crowdfunded securities offerings and determine whether such an investment is suitable. It’s vital to understand that your entire investment could be lost.

Equity Track and its employees are prohibited from offering advice about any offering posted on Equity Track or recommending any investment. Therefore, the decision to invest must be based solely on your own individual evaluation and consideration of the risks involved in a particular investment opportunity posted on Equity Track.

When making an investment in a company on Equity Track, it’s necessary to consider the associated risks. Investing in private/early-stage companies is very risky and speculative, and only those who can afford to lose their entire investment should invest. Prior to making any investment decision, it’s essential to carefully consider the risks associated with the investment type, security, and business. Potential investors acknowledge that they are responsible for conducting their own legal, accounting, and other due diligence reviews of the investment opportunities posted on Equity Track.

Investment Risks

Principal risk: Investment in private companies and startups risks the entire amount of your investment. There are numerous situations in which a company may fail outright or in which you may be unable to sell the stock that you own in the company. In these cases, you may lose your entire investment. Only invest funds that you can afford to lose completely.

Returns risk: Return on investment, if any, is highly variable and isn’t guaranteed. Some private companies and startups may succeed and generate substantial returns, while many others won’t be successful and may only produce minor returns, if any at all. Any returns you may receive will vary in amount, frequency, and timing. Do not invest any funds in which you require a regular, predictable, and/or stable return.

Returns delay: Returns, if any, could take several or many years to materialize. Most companies take between five to seven years to generate any investment return, if at all. It could also take many years before you will know if an investment will yield any return. Do not invest any funds if you require a return within a particular timeframe.

Liquidity risk: Selling your securities may prove to be challenging. Startup investments are privately-held companies and aren’t traded on a public stock exchange. Furthermore, there’s currently no readily available secondary market for private buyers to purchase your securities. Moreover, there may be restrictions on the resale of securities you purchase and your ability to transfer them. Do not invest funds if you require the ability to withdraw, cash out, or liquidate within a fixed period.

Security Risks

Instrument risk: You might be investing in preferred equity, common equity, or convertible notes. These securities instruments have varying inherent risks due to their structure. Ensure you comprehend the nature of the securities instrument that you are investing in.

Dilution: Startups and early-stage companies may need to raise additional capital in the future. When these new investors invest in the company, they might receive newly-issued securities. These new securities will dilute the percentage ownership that you have in the business.

Minority stake: As a smaller shareholder in the business, you may have fewer voting rights or ability to influence the company’s direction than larger investors. This could mean that your securities are treated less favorably than larger security holders.

Valuation risk: Unlike publicly-traded companies that are valued publicly through market-driven stock prices, the valuation of private companies, particularly startups, is difficult to assess.

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