LiveRetail, Inc.

Netshares is an SEC registered broker-dealer. Netshares helps connect issuing companies with investors by acting as an intermediary in securities offered and sold under Title II, III, and IV of the JOBS Act. Netshares is a member of the Finance Industry Regulatory Authority (FINRA) and the Securities Investors Protections Corporation (SIPC).

Please note that while Netshares updates its educational materials for accuracy, Netshares’ lawyers do not represent your interests and therefore its educational materials do not replace a lawyer’s or advisor’s advice regarding your investment decisions. Therefore, if you want your best interests represented, please hire a lawyer or advisor who can represent you. If you decide that your level of investment is not worthwhile to hire lawyers and advisors, you thereby accept you might be “flying blind” in some respects and that Netshares is not responsible for your investment decisions.

For more than two hundred years investors have publicly traded stocks and bonds. But those types of investments have their limitations, leading savvy investors to alternative securities for the purpose of generating income, diversifying portfolios, boosting returns, or raising funds for other projects.

These alternatives include real estate, stock or membership units in privately-held businesses, private equity, commodities, venture capital, farmland/timberland, mineral rights, tax lien certificates, hedge funds, annuities, art and collectibles, or even wine collections or antique coins. In short, a multitude of investment options are available beyond the floor of the New York Stock Exchange.

Why do people invest in alternative securities? Some of the most prevalent reasons include favorable economic conditions, less dependence on typical market fluctuations, leveraging specific knowledge or skills, tax advantages, illiquid investments, higher fees, and market volatility.

As an SEC registered broker-dealer, Netshares conducts due diligence, background checks, and securities enforcement regulatory history checks on issuers and their principals. Netshares conducts due diligence until one can reasonably believe an issuer is complying with its obligations as specified in Section 4A(b) and Regulation Crowdfunding, will not commit fraud, and will not otherwise raise potential investor protection concerns. An approved issuer has an established means of keeping records of any securities holders.

Netshares also provides communications channels for investors and issuers–channels with search functions and other tools for investors. Netshares screens investors to ensure they satisfy per-investor limits and provides investors with educational materials to help them understand and assess the risks of investing.

Netshares does not offer investment advice or recommendations; solicit purchases, sales, or offers to buy securities; Netshares cannot hold, possess, or handle investor funds and/or securities; Netshares cannot compensate promoters or other persons for solicitations; Netshares cannot allow companies with a potential for fraud or other investor protection concerns to list securities on Netshares’ portal; Netshares cannot guarantee any investment outcome; Netshares cannot speak about the merits of a particular or offering to investors; Netshares cannot have a financial interest in its issuers outside of financial interest paid as service compensations; neither can Netshares compensate any individual for providing Netshares with personally identifiable information of any investors or potential investors.

Issuers pay Netshares a fee to use the Netshares communication Portal for Reg CF offerings. This fee may be paid as a flat fee, commission based on the amount of money issuers raise, or in other ways. Issuers may pay additional fees for specified services Netshares provides, including reimbursement of any expenses Netshares incurs on their behalf. Netshares discloses its compensation for each offering in which an issuer invests. If an issuer pays Netshares in whole or in part with its own issuing securities, these securities will always be the same class offered to investors on the Netshares Portal.

Netshares does not charge a fee to investors for offerings via Reg CF or Reg A. For secondary transactions, Netshares may receive a fee for the purchase and/or sale of privately held securities. Every secondary transaction is unique, and fees will differ per transaction.

For any offerings exempted via Regulation D, Netshares receives a Placement Agent Fee equal to a certain percentage of the gross proceeds sold. Placement Agent Fees will vary for each securities offering and will be stated in an offering’s Private Placement Memorandum. Netshares recommends that investors read all offering documents carefully before making any investment decisions. Netshares representatives are available to assist with any questions potential investors may have.

After issuers have prepared and filed SEC Form C, Form C and other issuer offering documents will be publicly available on the Netshares Portal. The Portal also provides publicly viewable communications channels, or chat rooms, where investors can communicate with each other as well as representatives of the issuers listed on our Portal. These channels allow investors to discuss and converse with each other, as well as communicating with issuers’ representatives about investment opportunities or any other questions.

While Netshares will generally not participate in these channels, Netshares reserves the right to establish guidelines and moderate the channels to remove potentially abusive, hateful, fraudulent, or otherwise concern-raising content.

Rule 301(c)(2) requires an intermediary such as a Funding Portal to cancel an offer if it has a reasonable basis to believe that the issuer or the offering presents a potential for fraud or otherwise raises concerns about investor protection.

Rule 402(b)(10) permits a Funding Portal to deny access to its platform to, or cancel an offering of an issuer, pursuant to Rule 301(c)(2). An intermediary may also cancel an offering at any time in accordance with Rules 301 and 402, regardless of the status of the offering.

Netshares provides a platform for issuers to find potential investors. In exchange, issuers pay a service fee. Issuers may also pay for specified services. Netshares therefore has a financial interest in its issuers: they pay to be on the Netshares Portal; pay for additional specified services; and reimburse expenses Netshares incurs on their half. For Regulation CF offerings, Netshares will not have any financial interest in its issuers outside of these circumstances. In certain Regulation CF offerings, Netshares will accept securities paid by issuers as compensation, but they will always be the same class of securities offered to investors. For Regulation A and Regulation D offerings, Netshares may offer private investment funds managed by an affiliated entity. For these private investment fund offerings,Netshares’ (and/or its affiliates) may charge a management fee, carried interest, distribution, and reimbursement for legal, accounting, and banking fees.

Issuers may or may not have an ongoing relationship with Netshares after an offering is complete. Issuers may or may not continue using the Portal to raise money or use services provided by and pay compensation to entities affiliated with Netshares.

According to Rule 301(a), intermediaries must conduct due diligence to have a reasonable basis to believe an issuer will comply with the requirements of Section 4A(b) and Regulation Crowdfunding. An issuer must also have established means of keeping accurate records of the holders of securities. Netshares reserves the right to question or request additional materials to establish the reliability of issuers’ representations. According to Rule 301(c)(1), Netshares bears anti-fraud responsibilities and therefore must conduct background and securities enforcement regulatory history checks on issuers and their officers, directors, and beneficial owners of 20% or more of the issuer’s outstanding voting equity securities–calculated based on voting power.

Rule 301(c)(2) requires that if after allowing an issuer to use the Netshares platform, Netshares acquires additional information indicating an issuer or its potential offering might have a risk of fraud or lack of investor protection, Netshares must promptly remove said issuer’s offering, cancel it, and return or direct the return of any committed funds.

Issuers and certain other people may be the subject of certain disqualifying events during the last 10 years, in which case Title III may not be used. “Certain other people” includes any predecessor of the issuer; any director, officer, general partner, or manager of the issuer; a person owning 20% or more of the Issuer’s voting power; any promoter associated with the issuer; any person who will be paid for soliciting investors; and any general partner, director, officer, or manager of such a solicitor. “Certain disqualifying events” involves improper actions in the securities business such as the conviction of a felony or misdemeanor in connection with the purchase or sale of any security or the loss of license of a securities broker for misconduct, among other “bad actor” incidents.

• How much capital an issuer is trying to raise with its current offering
• Whether this is an issuer’s first offering using Title III
• If this is not an issuer’s first offering, how much the issuer has raised in other Title III offerings during the last 12 months

• Its total income, tax income, and total tax as reported on the Issuer’s Federal tax return, certified by an issuer’s principal executive offer
• Financial statements certified by an issuer’s principal executive officer
• If available, financial statements reviewed or audited by a public accountant independent of an issuer

• Financial statements reviewed by a public accountant independent of the issuer
• If available, financial statements audited by a public accountant independent of the issuer

• If this is an issuer’s first offering under Title III, financial statements reviewed by a public accountant independent of the issuer
• If this not an issuer’s first offering under Title III, financial statements audited by a public accountant independent of the issuer

• Information included on Form C
• Updated financial statements certified by an issuer’s executive office (while reviewed or audited financial statements are not required, if reviewed or audited financial statements are available then they must be provided)
• Disclosure and updates about the issuer’s financial condition

• Fraud: while Netshares conducts due diligence on each issuer before allowing use of the Netshares platform, there is always a risk the offering is a fraud or otherwise raises investor protection concerns
• Lack of professional management: many small companies are managed by founders, and while the founder may have strong technical skills, he or she might not be an effective leader with managerial experience or management skills
• Limited products and services: many companies have core products on which they focus. Failing to adapt these products and services to the changing needs of consumers, continual advancement of technology, and intense competition from other companies could cause a company to fail
• Lack of access to capital: funding Portals are designed to help companies raise the capital they need, however Netshares’ platform is not the solution to all capital problems. Without adequate capital, companies can accumulate debts and eventually fail financially
• Lack of accounting controls: smaller companies typically lack controls that prevent theft, embezzlement, and accounting fraud, leaving them exposed to additional risks
• Lack of technology: many small businesses cannot afford technologies that help them cut costs and make operations more efficient
• Cash flow shortfalls: if a business fails to generate enough money to meet payroll, it might not meet its payment obligations to investors

• Lack of ongoing information: companies that issue securities using Title III must provide some information to investors at least 12 months following the offering, but the information a private company must make available is much less extensive than that of a publicly-traded company, and a private company is allowed to stop providing annual reports in certain circumstances
• Competition: smaller businesses face competition both from big corporations and from other businesses, which can cause a company to be out-competed and thereby fail
• Inability to sell your investment: you cannot sell your securities except in limited circumstances for 12 months starting from the date you acquire them. Be prepared, therefore, to hold your investment for its full term
• Change in economic conditions: unfavorable economic conditions could hurt an issuer’s business and thereby its investors
• Uninsured losses: a company might have inadequate insurance to guard against risks, whether because it cannot afford insurance or does not know enough about insurance. There are also some risks that are nearly impossible to insure against at a reasonable cost
• Unreliable financial projections: while issuers provide financial projections that reflect what they assume about future financial conditions, it is nearly impossible to have accurate financial projects, especially for startups
• Changes in laws: Changes in laws or regulations could hurt many companies. Companies have little to no control over how new laws will affect their business
• Lack of professional advice: unless you hire your own professional advisor, you may be “flying blind” and could potentially make a poor investment decision due to a lack of professional advice. Funding portals cannot and will not offer you any investment advice
• Reliance on management: securities offered on the Portal will most likely not give you the right to participate in an issuer’s business management. Unless you can rely on a company’s management team, you should not invest in said company.

• Equity securities: An equity security, such as the common or preferred stock of a company, makes you a joint owner of that company. As an owner, you have the right to share in any profit distributions and also share in the company’s value appreciation. There are, however, some risks involved with holding equity, including but not limited to:
• Loss of your investment: if a company dissolves, you are paid after all the creditors, meaning there may not be any money left to pay investors after debts have been paid. Thus, you can potentially lose your entire investment
• No dividends: an issuer might not plan to issue dividends. Additionally, a business might not generate enough profit to issue dividends
• Subordination to creditors: in the event of bankruptcy, creditors are paid first and can go after a company’s assets until debts are satisfied. As an investor, you are paid last, meaning there might not be any money left to pay you and other investors
• You may not be able to sell the securities: highly illiquid securities may not find any secondary market on which to be sold. Additionally, securities might have other restrictions that prevent you from transferring them to another investor
• Debt: debt securities, like promissory notes and bonds, allow you to be paid before equity investors in the event of the company’s bankruptcy. A debt based offering is often term loans. These loans can pay any amount of interest or not pay an interest. Many different structures for debt securities exist. You should therefore strongly consider learning about a particular security’s risks before investing. Some risks associated with debt securities include:
• Repayments and payments are not guaranteed: while you, as a creditor, have payment priority if a company dissolves, a company may simply not have enough money to pay its debts
• No third party credit ratings: credit ratings are designed to help investors gauge the risks of a debt security. Securities on our Portal might not be rated by rating agencies such as Moody’s and Standard & Poor’s, leaving investors with little to no objective measure to judge the company’s creditworthiness
• Interest rate might not adequately compensate your risks: chances are that the interest you will earn does not adequately compensate the level of risk you are taking
• Lack of security: a promissory note may or may not be secured by property, such as an interest in real estate or equity

Title III limits how much you can invest each year – not only in any one company, or through any Funding Portal, but in all companies through all Funding Portals. These limits apply only to your investments under Title III (Regulation Crowdfunding). Netshares’ portal will calculate your annual investment limit based on your net worth and income. Investment limits are calculated on a rolling 12-month interval, and every investment in a Regulation Crowdfunding offering on any portal will count toward your annual limit.

For non-accredited investors, the maximum amount you can invest in all Title III offerings during a 12-month period is:

If your annual income or net worth is less than $107,000, you may invest the greater of:

$2,200; or 5% of the greater of your annual income or net worth.

If your annual income and net worth are both at least $107,000, you can invest the lesser of:

$107,000; or 10% of the greater of your annual income or net worth.

There are no investment limits for accredited investors. Once you are verified as an accredited investor, you are free to invest without limits.

You and your spouse may choose to combine your incomes and assets to invest, in which case you will both be treated as a single investor when determining how much you can invest.

First, create and verify an account on the Netshares Portal. Netshares may or may not ask for your proof of income to determine your investment limit. You can then browse listings and think about which offering to choose for your investment. You should strongly consider consulting a lawyer or professional advisor prior to investing to understand and assess any and all risks that come with a particular offering. You can then choose to invest in your selected offer(s) and pledge a dollar amount to the offer(s). By choosing to invest in an offer, you acknowledge the risks that come with investing on a Funding Portal and are able to afford losing your entire investment should the issuing company file for bankruptcy.

Once your purchase of security is completed, Netshares will send you a confirmation email with details about the offer and your investment; this email will serve as proof of your purchase. The issuer is also required to keep records of investors. Netshares conducts due diligence during a screening process until finding a reasonable basis to believe an issuer has means of keeping records of holders of its securities.

The SEC requires any amendment to an offering be reconfirmed with outstanding investment commitments within 5 business days; if an issuer fails to do so, or you as an investor fail to reconfirm your commitment, your commitment will be considered canceled. An issuer must also file Form C/A to disclose changes or updates with the SEC.ation.

You can cancel an investment commitment at any time up to 48 hours before the offering deadline. If you make an investment commitment within 48 hours before the offering deadline, you cannot cancel your investment even if you have just made your commitment.

If you successfully cancel your commitment, Netshares will refund the investment amount to you. This refund process can take as many as 14 days.

Most often, no, but there are exceptions.

Netshares will not disclose any email or phone numbers obtained as part of our issuer on-boarding. You may, however, find contact information on an issuing company’s website, in its offering’s details, or in its business plan. You can always use Netshares’ chat rooms to speak to an issuing company’s representatives.