Investors

When you make an investment in an early-stage venture involving equity, you own a piece of that company until it makes an ‘exit’. Getting purchased by another company, selling shares on a public stock market (known as an initial public offering, or IPO), or bankruptcy are common exit scenarios.

That makes company investing one of the most potentially rewarding, and most risky, ways to invest your money. Some companies grow to become icons of an era, like Google, Facebook, or Apple. But for every superstar, there are numerous respectable but quiet exits, and many failures.

That’s why due diligence is so important. Investors need to be as well-educated and confident in their decisions as possible. Losing some or all of your investment is a very real possibility.

AMAG follows SEC rules in determining how much investors can invest in each offering.

The SEC defines people who make over $200,000, or have a net worth over $1 million, as accredited investors. Accredited investors do not have investment limits if they participate in a Reg D or Reg A+ offering. For Reg A+ offerings (Tier II), unaccredited investors may invest up to 10% of the greater of their net worth or their annual income per offering.

For Reg CF offerings, the SEC limits how much investors may invest in private companies in a given year. Reg CF investors may invest the greater of $2,200, or 5% of the lesser of their annual income or net worth, if the investor’s net worth or annual income is less than $107,000. A Reg CF investor may invest 10% of the lesser of their annual income or net worth if both their annual income and net worth are equal to or more than $107,000. There is a $107,000 aggregate investment limit across all issuers. Please review the SEC Bulletin about Regulation Crowdfunding for more information on investor limits under this exemption.

The SEC has only recently allowed crowd investors to get access to private investments thanks to Reg A+ and Reg CF of the 2012 JOBS Act, which also allowed companies to solicit accredited investors publicly through changes to Reg D.

Before the Jumpstart Our Business companies (JOBS) Act of 2012, private companies who wanted to raise capital had to solicit investments via private channels. The JOBS Act quickly allowed privately held companies to solicit investments on public platforms like the internet.

But only accredited investors had access to those investments until the SEC formalized rules for a portions of the law called Title III (Reg CF) and Title IV (Reg A+). Title III & TItle IV allow people of any income to invest in companies.

All companies fundraising on AMAG set their own investment terms according to their offering. Investors investing in equity-based crowdfunding campaigns receive securities on AMAG, and all investors have the same access to opportunities as institutional investors. Larger shareholders may receive certain preferential rights such as pro rata rights, voting rights, conversion rights, a liquidation preference over common stock, and direct access to company founders. Shareholders investing lesser amounts still receive securities at the same price as large investors, but their investment rights may be limited given the smaller size of their investment.

__________ is a FINRA-registered broker dealer and AMAG Funding Portal is a FINRA-registered funding portal with the ability to facilitate investments from any individual over the age of 18 in the U.S., and from international investors.

There are four regulatory exemptions investors invest through. Investors who invest via Regulation CF invest through our funding portal. Investors who invest via Regulation D, Regulation A+, and Regulation S (if they reside internationally) invest through our broker dealer.

Anyone can purchase securities (in equity crowdfunding) in private companies on AMAG. Investors in the U.S. fall under three categories, with different investment limits and requirements for reporting to comply with SEC rules. Reg CF Investors will conduct transactions through AMAG Funding Portal; Reg A+ & Reg D investors will conduct transactions through _______________.

Reg A+ & Reg CF investors can invest as little as $50, and up to any amount according to their individual limits. All investors may invest smaller amounts under Reg A+ and Reg CF, but if they want to invest above their stated limits, they will have to verify their accreditation through the platform and participate in a Reg D investment.

Reg A+, Reg CF and Reg D investors purchase securities of a company at the same price, but there are differences in their investment limits, rights as stockholders, and how they are categorized by the SEC.

AMAG accepts any investment $50 and above through Reg A+ and Reg CF offerings. However, a company may set a minimum investment higher if it chooses. Only accredited investors may invest in Reg D offerings, which may have different minimums – please review the offering documents specific to a given listing for more detail. [International investors are responsible for all banking and wire fees associated with transferring funds into the offering deposit account and/or escrow.]

Reg A+ refers to Title IV (Regulation A+) and Reg CF refers to Title III (Regulation Crowdfunding) of the 2012 JOBS Act, which both allow the general public to invest in private companies for the first time starting May 16, 2016. Reg D refers to Title II (506c) of the 2012 JOBS Act, which allows companies to sell private stock to investors who verify their accreditation status.

Because Reg A+ and Reg CF allow early stage investing by non-accredited investors, the SEC put limits in place to protect the general public from investing more than they can afford to lose in early stage companies, due to the high risk and long horizon of the investment type.

You may invest in multiple companies on AMAG as long as your total amount of investments does not exceed your annual investment limit.

AMAG does not charge any fees to investors; however, fees such as success, processing and service fees are assessed to issuers, which impacts the total proceeds available for use as described in the offering materials.

Only investors investing in Reg D and Reg A+ offerings are eligible to invest as entities on the platform. Investors making investments in Reg CF offerings must be individuals.

There are more high value companies staying private longer. Traditionally, only angel investors and venture capitalists had access to invest in these private companies, but now they’re publicly available on AMAG.

It’s not just about a potential financial return on investment. It’s about becoming part of a company that may change the world. Think about all the companies that have fundamentally changed our culture. Early stage venture capital investing often means investing in ideas, entrepreneurs, and innovation. It also may mean changing the way the world works, influencing people’s lives, and becoming an inextricable part of that story.

On AMAG, our objective is to give everyone access to those opportunities on an open, transparent online market.

Without early-stage investing, the world likely would be a very different place. Great ideas need you.

In investing, the greater risks can yield the greatest gains, but investors should be aware than they can lose some or all of their investments. Less than 10% of companies make it to a subsequent round of funding.

We’re an open marketplace, and we believe that companies from anywhere in the world and from any sector, deserve an opportunity to be on our platform. Although ____________ and/or AMAG Funding Portal conduct a limited proprietary review of all offerings, your due diligence is vital. Investors should be familiar with and willing to accept the high risk associated with private investments.

Private Stock with No Public Market:
Private stocks are securities with no public market for resale. The investments are private and illiquid, so you can’t convert them to cash easily. You should be willing to hold that investment indefinitely.

Need to Do Due Diligence:
Any securities offered on AMAG are offered directly by the companies themselves, and those companies are solely responsible for the contents of any materials made available to prospective investors on the AMAG website. AMAG only reviews a company’s self-verifications that it is free of “bad actors.” AMAG also conducts corporate status checks using public databases, verifies the identities of key founders, and conducts anti-money laundering compliance checks.

Investors are responsible for conducting research on a potential investment, including understanding the company’s exit strategy. An exit strategy is how a company intends to “cash out” their shareholders’ investments. However, there is no guarantee of when or whether that exit strategy will happen.

Difficulty in Valuing Private Companies:
It can be incredibly difficult to value early-stage companies. They’re just starting out, so the company’s value generally can’t be based on its assets, book value, or historical results of operations. You shouldn’t consider the offering’s valuation or share price a formal indication of the company’s worth. Use your judgment to decide the worth of the shares you buy.

Risk of Total Loss:
Many companies fail – that’s why due diligence is so important. It’s up to you to judge if an early-stage company has the potential to succeed. AMAG does not recommend or endorse any of the materials that companies post on the AMAG website, and does not conduct diligence on the business plan, disclosures, risks, prospects, or other investment considerations of any company. You may lose some or all of your investment, and you need to be in a financial position to be able to bear that loss.

• Common Stock and Preferred Stock (Equity Securities)

• Investing in private companies through any type of ‘stock’ or equity security includes the risk of total loss and is extremely speculative.
• When an investor makes an equity investment in a private company, an investor has the opportunity to share in the benefits of a company’s potential business success. However, there is no guarantee or obligation by the company to provide any returns, cash flows or dividends to the investor unless otherwise specified.
• Equity investors may lose their entire investment or may not have a chance for a return for many years. Some equity investments take over a decade to see any returns.
• If a company is liquidated, equity investors typically only receive their capital after all noteholders are paid their capital first, with preferred shareholders then receiving priority over common shareholders. However, investors may, depending on the company’s financial circumstances, be returned some, all or none of their invested capital.

*Investors should always review the disclosures and risks specific to a given offering and its securities structure, which can be found in a company’s offering materials.

Log in to the AMAG website (AnaisMagazine.com) and go to the “Browse Projects” page. On this page, you can browse a variety of companies.

When you open an account on AMAG, we will ask for your name, address, date of birth and other information that will allow ________ and/or AMAG Funding Portal to verify your identity. We may also ask to see your driver’s license or other identifying documents. Federal law requires financial institutions such as broker dealers and funding portals to obtain, verify and record information that identifies each person who opens an account.

Reg A+ investors must self-certify that their investment amount per offering falls within the investment limits required by SEC rules, i.e. 10% of the greater of net worth or annual income.

Reg CF investors will be asked to report income or net worth, and any company investments made in the past year. AMAG will automatically calculate your annual investment limit.

Reg D investors must verify their income or net worth in one of two ways. The easier way is to provide the contact information for an accountant, lawyer, or financial advisor, who completes a simple electronic form confirming that you qualify. Or, you can upload documents, such as financial statements or tax returns, and ___________ may do a soft pull of your credit report to verify your net worth.

Ownership percentage is calculated on a fully-diluted basis assuming the maximum number of securities are sold.

The easiest way to increase your investment is by canceling your original investment in your dashboard and then reinvesting at the higher amount on the offering page.

Yes. For Reg CF offerings, an investor may cancel an investment for any reason until 48 hours prior to the deadline identified in the issuer’s offering materials. Once the round is within 48 hours of ending, you will not be able to cancel for any reason. After an investment is cancelled, you will receive a full refund of your investment.

If you sent your investment via wire transfer, you will receive your investment refund within 1-3 business days. If you sent your investment via ACH transfer or check, you will receive your refund in the form of an ACH transfer or check within 5-7 business days.

AMAG will notify investors when the target offering amount has been met. If a company reaches the target offering amount in a Reg CF offering prior to the deadline identified in its offering materials, it may close the offering early if it provides notice about the new offering deadline. This must be at least five business days prior to such new offering deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment).

If an investor does not cancel an investment commitment in a Reg CF offering before the 48-hour period prior to the offering deadline, the funds will be released to the company upon closing of the offering and the investor will receive securities in exchange for his or her investment.

A successful close is when the company has reached either its target raise amount or its maximum raise amount.

All investment funds are transferred into an offering deposit account and/or escrow account until closing. If a company does not close, all investments will be refunded from these accounts and back to the investors.

Yes. Currently, the platform does not offer this ability as a built-in option, but a repeat investment can be facilitated by contacting info@anaismagazine.com.

AMAG Shareholders Services will manage all investor-relations communication between investors and companies after closing.

Where offerings on AMAG utilize AMAG Shareholder Services, investments in those offerings are held in book entry format. This means the shares are recorded electronically, and the company will not send a paper stock certificate once the deal closes. The shares will be accessible via the Investor dashboard in the investors’ AMAG account, and inquiries regarding the shares and communications with the Company for Reg CF investors can be directed to AMAG Shareholder Services: contact@anaismagazine.com.

As is the case with any equity financing round, companies will naturally be diluting the equity ownership of existing investors. That means your proportion of ownership will be reduced, unless you own AMAG Seed Preferred stock and exercise your right to maintain proportionate ownership.

As with any investment, there is an inherent risk that the company in which you invest may fail. If that is the case, and there is a liquidation event, holders of AMAG Seed Preferred and AMAG CF Preferred Stock will have a liquidation preference over common stock holders of the company. However, in many cases, there are no assets left to distribute, and the entirety of the investment may be lost.

All distributions will be managed by the company itself. However, as Transfer Agent, AMAG Shareholders Services provides information to the company to facilitate any distributions.

The transaction between the issuer and the investor will be completed through the AMAG online platform, by registering an account, submitting an investment commitment, signing subscription documents, and providing banking information to fund your investment.

Any shares will be issued as uncertificated book-entry securities and records will be centralized and recorded electronically in a system managed by the Company’s transfer agent, if elected. The shares will be accessible via the Investor dashboard in the investors’ AMAG account, and inquiries regarding the shares and communications with the Company for Reg CF investors can be managed through the transfer agent.

An issuer may elect to reject any investment commitment at the Issuer’s discretion, prior to closing.

Reg CF securities may not be transferred by the purchaser for one year after the date of purchase, except when transferred:
(1) To the issuer of the securities.
(2) To an accredited investor as verified by ____________.
(3) As part of an offering registered with the Commission.
(4) To a family member of the purchaser or the equivalent, or in connection with certain events, including death or divorce of the purchaser, or other similar circumstances, in the discretion of the Commission.

If an issuer has conducted a Reg CF offering, they are required annually to file with the SEC and post on their website, an annual report along with the financial statements of the issuer certified by the principal executive officer of the issuer to be true and complete in all material respects and a current description of the financial condition of the issuer.

If the issuer has available financial statements that have either been reviewed or audited by a public accountant that is independent of the issuer, those financial statements must be provided and the certification by the principal executive officer will not be required.

The annual report also must include the disclosure required by paragraphs (a), (b), (c), (d), (e), (f), (m), (p), (q), (r), and (x) of § 227.201 of Regulation Crowdfunding. The report must be filed in accordance with the Regulation Crowdfunding Filing Requirements for Form C – AR no later than 120 days after the end of the fiscal year covered by the report.

The annual reporting requirement is ongoing, but may terminate in the future if the issuer qualifies under various circumstances.

An issuer who has successfully closed a Reg CF campaign and is required to provide annual reports under the regulation, may cease to publish said annual reports under the following circumstances:

(1) The issuer is required to file reports under Section 13(a) or Section 15(d) of the Exchange Act.
(2) The issuer has filed, since its most recent sale of securities pursuant to this part, at least one annual report pursuant to this section and has fewer than 300 holders of record.
(3) The issuer has filed, since its most recent sale of securities pursuant to this part, the annual reports required pursuant to this section for at least the three most recent years and has total assets that do not exceed $10,000,000.
(4) The issuer or another party repurchases all of the securities issued in reliance on Section 4(a)(6) of the Securities Act, including any payment in full of debt securities or any complete redemption of redeemable securities.
(5) The issuer liquidates or dissolves its business in accordance with state law.

The required type of financial disclosure depends on how much an issuer has already raised within a year, and how much they intend to raise next.

$107,000 or less: If current offering plus previous raises amounts to $107,000 or less, the issuer provides information from its tax returns (but not the tax returns themselves) certified by the principal executive officer. If financial statements are available they must be provided, too, and again certified by the principal executive officer.

$107,000.01 to $535,000: If the current offering plus previous raises is between $107,000 and $535,000, financial statements are required and must be reviewed by a CPA. If audited financial statements are available, they must be provided.

$535,000.01 to $1.07 million: If current offering plus previous raises amounts to $535,000.01 or more, the required financial statements must be audited by a CPA. However, if the issuer has not previously sold securities under Reg CF, the financial statements will only be required to be reviewed by a CPA.

Note: An audit provides a level of scrutiny by the accountant that is higher than a review. The required information is filed with the SEC and posted at the start of the offering on AMAG and available to the public throughout the offering on the AMAG and SEC sites. It is available to the general public on both websites throughout the offering period – which must be a minimum of 21 days.

How does AMAG Funding Portal get paid?

AMAG Funding Portal charges fees to companies for listing on the platform and as a percentage (%) of the amount raised. The listing fee is determined by the complexity of each company. The percentage fee is a success-based fee that is typically 6% but is subject to change at any time and is disclosed in the offering document of the issuer.

Following completion of an offering conducted through the AMAG Funding Portal, there may or may not be any ongoing relationship between the Company and AMAG Funding Portal.

As a registered funding portal, AMAG Funding Portal cannot and will not:

• Offer investment advice or make recommendations; solicit purchases, sales or offers to buy securities; compensate promoters and other persons for solicitations or based on the sale of securities; and hold, possess, or handle investor funds or securities.
• Allow companies to list securities on our platform that we have a reasonable basis for believing have the potential for fraud or raise other investor protection concerns.
• Have a financial interest in a company that is offering or selling securities on our platform under Regulation Crowdfunding outside of financial interest paid as compensation for the services.
• Compensate any person for providing us with personally identifiable information of any investor or potential investor.