Educational Materials & Risks – Regulation D Offerings

Investing in private companies is inherently risky and illiquid. You should not invest unless you can afford to lose your entire investment.

Note: the following information pertains to offerings pursuant to Regulation D.
Educational materials and risks about Regulation Crowdfunding (Reg CF) offerings can be found here
Educational materials and risks about Regulation A+ offerings can be found here

Regulation D offerings on Netcapital are provided by Netcapital Securities Inc., a registered broker-dealer and a member of FINRA. These offerings are provided exclusively to accredited investors under Rule 506 of Regulation D of the Securities Act of 1933. The Netcapital platform is operated by Netcapital Systems LLC, and while the platform provides access to these offerings, all Regulation D offerings are provided by Netcapital Securities Inc.

Accredited Investor Requirement

Only accredited investors, as defined in Rule 501(a) of Regulation D, may invest in Reg D offerings on Netcapital. An accredited investor includes:

• Individuals with annual income exceeding $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the two most recent years and a reasonable expectation of the same income level in the current year;
• Individuals with a net worth exceeding $1 million, either alone or together with a spouse or spousal equivalent, excluding the value of the primary residence;
• Certain entities, such as trusts and partnerships, with assets exceeding $5 million;
• Holders of certain professional certifications (e.g., Series 7, Series 65, or Series 82 licenses);
• And other qualifications as defined by the SEC.

Investors must affirm their accredited status and may be required to provide supporting documentation to verify eligibility.

General Risks

When evaluating a Regulation D investment opportunity, you must conduct your own due diligence and assess the risks and merits of the investment. Netcapital Securities Inc. does not endorse or pass judgment on the merits of the securities being offered, and the U.S. Securities and Exchange Commission or other regulatory authorities have not approved, endorsed, or passed upon the merits of these securities or the accuracy of any offering materials.

You acknowledge that:

• Your entire investment may be lost, and you are in a financial position to bear that loss.
• A return on investment may take many years to materialize, if at all.
• Your ownership percentage may be diluted in future financing rounds.
• Your voting power may be limited or diminished as outlined in the offering documents or governing agreements.

Transferability and Liquidity

Reg D securities are restricted securities and may not be resold or transferred except in accordance with Rule 144 or another exemption from registration. There is no public trading market for these securities, and none may ever develop. You should assume that you will be unable to sell or transfer your investment for an indefinite period of time.

Offering Terms and Valuation

The price of the securities offered is typically determined by the issuer and may be based on limited operating history, projections, or subjective valuation methods. The offering price does not necessarily reflect fair market value, and no third-party valuation or appraisal may have been conducted. There is no guarantee that the securities will ever be worth the purchase price or will appreciate in value.

Ongoing Information

Unlike Regulation Crowdfunding (Reg CF) offerings, issuers conducting a Regulation D offering are not required to provide ongoing annual reports or financial statements to investors unless expressly stated in the offering documents. As a result, investors may have limited access to updated financial or operational information about the company after the offering closes.

Side-by-Side Offerings

Some issuers may conduct Side-by-Side offerings, raising capital simultaneously under both Regulation CF and Regulation D. These offerings are made available on the Netcapital platform through separate legal exemptions. Netcapital Securities Inc. manages the Regulation D offering, while Netcapital Funding Portal Inc. manages the Regulation CF offering. Investors should review each offering independently and consider the risks and rights associated with each offering type. A Reg D investor may have different rights and restrictions than a Reg CF investor in the same company.

Promotional Activities

Anyone promoting an offering on behalf of the issuer, including founders, employees, or compensated parties, must clearly disclose such compensation and the nature of their relationship with the issuer in any communications about the offering.