Educational Materials

OVERVIEW

Thank you for accessing VicinityCapital.com. By registering with us, you may access various types of offerings depending on your investor status and your relationship with us. Through VicinityCapital.com (the “Website”), Vicinity LLC (“Vicinity”) and its subsidiaries may make securities offerings of private companies based on various exemptions from registration under the Securities Act of 1933 as amended (the “Securities Act”).

By registering with Vicinity, you acknowledge that you have read, understand, and agree to our FAQ page and the information below.

WHO WE ARE

Vicinity is a South Carolina limited liability company operating a Crowdfunding Platform (the “Platform”, “us” or “we”) through which issuers of securities may offer and sell private securities in offerings exempt from the registration requirements of the Securities Act of 1933 as amended (the “Securities Act”) under Section 4(a)(6) thereof.

Issuers of securities will apply with Vicinity to offer and sell their private securities through the Platform in accordance with the requirements of the Securities Act, Regulation Crowdfunding, and other applicable federal and state securities laws. Issuers will only be allowed to conduct an offering of their securities after being subject to due diligence by Vicinity in regard to fraud, and satisfying Vicinity’s requirements for offering securities through the Platform.

Vicinity strives to provide value beyond the transaction, and there may or may not be an ongoing relationship between the issuer and Vicinity.

WHO WE ARE NOT

As a registered funding portal, Vicinity and its employees are prohibited from the engaging in the following activities:

  • Offering investment advice or making recommendations; soliciting purchases, sales or offers to buy securities; compensating promoters and other persons for solicitations or based on the sale of securities; and holding, possessing, or handling investor funds or securities.
  • Allowing companies to list securities on the Platform that we have a reasonable basis for believing have the potential for fraud or raise other investor protection concerns.
  • Having a financial interest in a company that is offering or selling securities on the Platform under Regulation Crowdfunding (unless such interest paid as compensation for the services we provide.)
  • Compensating any person for providing us with personally identifiable information of any investor or potential investor.

CROWDFUNDING OFFERINGS

Pursuant to Rule 302(b) of Securities and Exchange Commission (“SEC”) Regulation Crowdfunding under the Securities Act (Title III of the JOBS Act), all potential investors who open an account on Vicinity and/or commit to purchasing securities through Vicinity are required to receive and acknowledge certain educational information including:

  • how securities on Vicinity are offered and purchased
  • the risks of investing in such securities;
  • the types of securities offered and any resale restrictions on such securities;
  • investment limits for certain investors;
  • the disclosure generally required to be made available by issuers offering securities on Vicinity; and
  • the relationship between Vicinity, its posted issuers, and investors;

GENERAL EDUCATIONAL MATERIALS:

Investing in Regulation Crowdfunding offerings is different than investing in the public stock market.  The companies on our site may be small and medium sized businesses who may have limited track records and profits.  As such, an investment in the securities offered for sale by issuers through the Platform will carry specific risks that are not necessarily present when investing in other securities, particularly publicly-traded securities offered for sale through a stock exchange such as NASDAQ or the NYSE. These risks are described as follows:

  • Securities purchased through the Platform will be subject to substantial restrictions on transferability, and no public market may ever exist where such securities could be freely tradable.
  • Investors will have limited information on the business’s operating status.  Companies are required to disclose their operating results and financial statements only once a year.
  • Investors in securities through the Platform will have little opportunity to participate meaningfully in business decisions of the issuer. The issuer may decide to sell additional securities in the future, and prior investors may have no or limited rights with respect to approving or disapproving such sale of additional securities. In the event of such a sale, prior investors will experience dilution of their interest in the issuer. This dilution would decrease the investor’s limited voting rights with respect to the securities purchased.
  • Issuers have considerable discretion over how the capital raised is used.  Pay close attention to what a company says it will use the raised funds for.
  • The aggregate amount sold to any investor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such transaction, does not exceed (i) the greater of $2,200 or 5 percent of the lesser of annual income or net worth of such investor, as applicable, if either the annual income or the net worth of the investor is less than $107,000; and (ii) 10 percent of the lesser of annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $107,000, if either the annual income or net worth of the investor is equal to or more than $107,000. This New Account Application requests that you provide certain income and/or net worth information that will allow Vicinity to ensure compliance with these requirements.
  • If an investor does not cancel an investment commitment at least 48 hours prior to the offering deadline, the funds will be released to the issuer upon closing of the offering and the investor will receive securities in exchange for his or her investment. The investor will be notified when the target offering amount has been met.
  • If an investor does not reconfirm his or her investment commitment after a material change is made to the offering, the investor’s investment commitment will be cancelled and committed funds will be returned.
  • If the sum of the investment commitments from all investors does not equal or exceed the target offering amount at the time of the offering deadline, no securities will be sold in the offering, investment commitments will be cancelled and committed funds will be returned without interest.
  • Investors should consider whether an investment in private securities such as those offered through the Platform are appropriate for the investor considering factors as the risks noted in these Educational Materials and the specific risks disclosed by the issuer in their offering materials.
  • An offering can be cancelled by the issuer at any time, and for any reason, prior to closing.
  • Following completion of the offering of securities in which an investor may invest through the Platform, there may or may not be an ongoing relationship between the issuer and Vicinity.
  • Under certain circumstances an issuer may cease to publish annual reports and, therefore, an investor may not continually have current financial information about the issuer.
  • If a business is raising under $535,000 or raising through Regulation Crowdfunding for the first time, it is not required to have its financials audited.
  • Investor understands that the entire amount of his or her investment may be lost, and is in a financial condition to bear the loss of the investment. Investor acknowledges that it will not invest any funds in an offering made through Vicinity’s Platform unless he or she can afford to lose the entire amount of his or her investment.

Vicinity will make these Educational Materials available on its Platform at all times and, if at any time, Vicinity makes a material revision to its educational materials, it will make the revised Educational Materials available to all investors before accepting any additional investment commitments or effecting any further transactions in securities offered and sold in reliance on section 4(a)(6) of the Securities Act (15 U.S.C. 77d(a)(6)).

You certify that you have received, read and understood these Educational Materials prior to the time that your account with the Platform is opened or prior to any investment on the Platform.

EARLY COMPLETION OF OFFERING

If an issuer reaches the target offering amount prior to the deadline identified in its offering materials pursuant to § 227.201(g), the issuer may close the offering on a date earlier than the deadline identified in its offering materials pursuant to § 227.201(g), provided that:

  • The offering remains open for a minimum of 21 days;
  • Vicinity will notify to any potential investors, and gives or sends notice to investors that have made investment commitments in the offering, of:
    • The new, anticipated deadline of the offering;
    • The right of investors to cancel investment commitments for any reason until 48 hours prior to the new offering deadline; and
    • Whether the issuer will continue to accept investment commitments during the 48- hour period prior to the new offering deadline.
  • The new offering deadline is scheduled for and occurs at least five business days after the notice required in paragraph (2) of this section is provided; and
  • At the time of the new offering deadline, the issuer continues to meet or exceed the target offering amount.

MATERIAL CHANGES DURING AN OFFERING

  • If there is a material change to the terms of an offering or to the information provided by the issuer, Vicinity will notify each investor who has made an investment commitment of the material change and that the investor’s investment commitment will be cancelled unless the investor reconfirms his or her investment commitment within five business days of receipt of the notice. If the investor fails to reconfirm his or her investment within those five business days, Vicinity within five business days thereafter must:
    • Give or send the investor a notification disclosing that the commitment was cancelled, the reason for the cancellation and the refund amount that the investor is expected to receive; and
    • Direct the refund of investor funds.
  • If material changes to the offering or to the information provided by the issuer regarding the offering occur within five business days of the maximum number of days that an offering is to remain open, the offering must be extended to allow for a period of five business days for the investor to reconfirm his or her investment.

RETURN OF FUNDS IF OFFERING IS NOT COMPLETED

If an issuer does not complete an offering, Vicinity will within five business days:

  • Give or send each investor a notification of the cancellation, disclosing the reason for the cancellation, and the refund amount that the investor is expected to receive;
  • Direct the refund of investor funds; and
  • Prevent investors from making investment commitments with respect to that offering on its platform.

HOW WE ARE COMPENSATED

Please note that Vicinity may receive compensation from the issuer of securities. Such amounts will be disclosed on the Notice of Investment Commitment delivered to each investor.

Vicinity charges a standard 8% commission of the full raise amount if a company’s raise is successful. Payment may be in a combination of cash and securities, as determined by Vicinity.  Companies will also be charged for specialized or extra services they request and for expenses we incur on their behalf.  We will not take a financial interest in the companies raising funds on our portal other than the securities we might receive as compensation in a raise.  After a raise is complete, we may or may not have an ongoing relationship with the company.  The company could decide to use our portal to raise money in the future or use other services we (or entities affiliated with us) provide.

Vicinity also charges a service fee of 1% of the investor’s returns paid from the issuer.

HOW WE SCREEN BUSINESSES

Legally, Reg. CF portals such as Vicinity  are required to have a “reasonable basis” for believing that a business raising capital on our portal is eligible to offer its securities there.  While we rely on information businesses provide us, we also conduct due diligence.  Additionally, we choose to prohibit some industries from conducting raises on our site, such as pornography and gambling businesses, for example.  While we can decide which businesses aren’t eligible to raise capital on Vicinity , you should not conclude that securities offered on Vicinity  are or will become good investments. If any of the below have been involved in a disqualifying event in the past 10 years, the business also cannot conduct a raise on our site.  Disqualifying events all involve improper actions in the securities business (fraud, money laundering, illegal financing, etc.):

Any predecessor of the business

Any director, officer, general partner or manager

Any person owning 20 percent or more voting power

Any promoter associated with the business

Any person or entity who will be paid for gathering investors, and any general partner, director, officer or manager of this entity

 

PROMOTERS

Any person who promotes an issuer’s offering for compensation or as an owner or employee will be clearly disclosed in all communications on the Platform as associated with the Issuer.

 

TYPES OF SECURITIES OFFERED

The securities we offer include the following:

Common Stock: Conveys a portion of the ownership interest in the company to the holder of the security. Stockholders are usually entitled to receive dividends when and if declared, vote on corporate matters, and receive information about the company, including financial statements. This is the riskiest type of equity security since common stock is last in line to be paid if a company fails. The Common Stock of companies appearing on this platform is generally illiquid, and should therefore be thought of as a long-term investment. Common stock issuers may decide to sell additional securities in the future, resulting in a dilution of prior investors’ interests in the issuer and a corresponding decrease in those investors’ limited voting rights with respect to the securities purchased.

Preferred Stock: Stock that has priority over common stock as to dividend payments and/or the distribution of the assets of the company. Preferred stock can have the characteristics of either common stock or debt securities. While preferred stock gets paid ahead of common stock, it will still only be repaid on liquidation if there is money left over after the company’s debts are paid. In certain circumstances (such as an initial public offering or a corporate takeover) the preferred stock might be convertible into common stock (the riskiest class of equity). You should review the terms of the preferred stock to know when that might happen. Preferred stock may decrease in value and investors may lose some or all of their investment.

Debt / Revenue Share: Securities in which the seller is obligated to repay the investor’s original investment amount at maturity plus interest. Debt securities are essentially loans to the company and the major risks they bear are that there is no guarantee of interest payments and the possibility of issuer default. Revenue share security risks include no guarantee of investor returns and possible loss of principal invested due to possible insufficient issuer revenues. Securities in which the seller is obligated to repay the investor’s original investment amount at maturity plus interest. Debt securities are essentially loans to the company and the major risks they bear are that there is no guarantee of interest payments and the possibility of issuer default. Revenue share security risks include no guarantee of investor returns due to possible insufficient issuer revenues and possible loss of principal invested.

If a business liquidates its assets, debt holders have a priority claim to those assets before equity stakeholders. Sometimes when you buy a debt security on our Platform, it will be secured by property, like an interest in real estate or equity. Other times it will not. In instances where the security is secured by property, it will be indicated as such in the issuer’s offering materials.

Convertible Note: This form of investment is popular with technology startups because it allows investors to initially lend money to the company and later receive shares if new professional investors decide to invest. The sort of convertible note that is most often offered on Vicinity may limit the circumstances in which any part of the loan is repaid, and the note may only convert when specified events (such as a preferred stock offering of a specific amount) happens in the future. You will not know how much your investment is “worth” until that time, which may never happen. You should treat this sort of convertible note as having the same risks as common stock. There is no guarantee that investors will experience a return on their investment and that investors may lose some of all of their investment.

INVESTMENT LIMITS

Regulation Crowdfunding limits how much an investor may invest in any 12-month period depending on a combination of your net worth (excluding the value of your primary residence if you own a home) and your annual income.

Note: you don’t have to make these calculations yourself! Your limit is automatically calculated when you register on our platform and confirmed prior to making an investment.

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

  • $2,200, or
  • 5% of the lesser of your annual income or net worth during any 12-month period.

If both your annual income and your net worth are equal to or more than $107,000 then you can invest:

  • up to 10% of your annual income, or
  • up to 10% of your net worth, whichever is lesser up to a maximum of $107,000 during any 12-month period.

Remember, this is your limit for all Title III investments, not just those with Vicinity! Here are a few examples, courtesy of an SEC Investor Bulletin:

Annual Income Net Worth Calculation 12-month Limit
$30,000 $105,000 greater of $2,200 or 5% of $30,000 ($1,500) $2,200
$150,000 $80,000 greater of $2,200 or 5% of $80,000 ($4,000) $4,000
$150,000 $107,000 10% of $107,000 ($10,000) $10,700
$200,000 $900,000 10% of $200,000 ($20,000) $20,000
$1.2 million $2 million 10% of $1.2 million ($120,000), subject to cap $107,000

 

DISCLOSURE REQUIREMENTS

Form C

Before a company is approved for an equity crowdfunding raise, it must supply a large amount of information to compile a Form C.  The information contained in Form C will be available for your review on our site including:

  • Company name, structure, address and website
  • Company officers, owners and directors and their employment for the last three years
  • Names of each person owning 20 percent or more of the business’s voting securities
  • Type of securities being issued and the minimum and maximum someone can invest
  • Raise target minimum and maximum and how many days the raise will be live
  • Perks being offered to investors
  • Investment risks associated with the particular business
  • How the funds raised will be used
  • Any irregular use of proceeds
  • Articles of Organization, Operating Agreement, Member Consent and Certificate of Good Standing
  • Financial Statements illustrating the company’s financial condition
  • Current debt
  • Previous raises
  • Capital Resources

Before investing in any company, investors should ALWAYS review Form C and other financial documents to determine if the investment is suitable for them.  Note that if you make an investment and important changes occur between the date of your investment and the date of raise close, you will be notified of these changes. After that, you will have five days to reconfirm your investment or your investment will be cancelled.

Annual Filing Obligation of Issuers

Each Issuer that successfully completes a Title III Regulation Crowdfunding securities offering is required to annually file with the SEC a Form C-AR and financial statements. This must be done no later than 120 days after the end of the Issuer’s fiscal year covered by such filing. Each Issuer must also post its Form C-AR and financial statements to its own website, and that link must be provided along with the date by which such report will be available on the issuer’s website.

The Form C-AR contains updated disclosure substantially similar to that provided in the Issuer’s initial Form C, including information on the Issuer’s size, location, principals and employees, business, plan of operations and the risks of investment in the Issuer’s securities; however, offering-specific disclosure is not required to be disclosed in the Form C-AR.

Investors should be aware that an Issuer may no longer be required to continue its annual reporting obligations under any of the following circumstances:

  • The issuer is required to file reports under Section 13(a) or Section 15(d) of the Exchange Act;
  • The issuer has filed at least one annual report pursuant to Regulation Crowdfunding and has fewer than 300 holders of record and has total assets that do not exceed $10,000,000;
  • The issuer has filed at least three annual reports pursuant to Regulation Crowdfunding;
  • 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; or The issuer liquidates or dissolves its business in accordance with state law.

In the event that an Issuer ceases to make annual flings, investors may no longer have current financial information about the Issuer available to them.

CONSENT TO ELECTRONIC DELIVERY

When you create an account with the Website, you are providing consent for Vicinity to provide required disclosures to you electronically. This consent for electronic delivery applies to all required disclosures regarding the investment account you have with us, and is effective until withdrawn by you. Agreeing to accept disclosures electronically means that once we present them to you, and, if required, you accept them, they will apply to you and your investment accounts with us. It also means that we may not mail you copies of disclosures that are provided electronically. Accordingly, you should print or otherwise retain a copy for your records of this disclosure and all other disclosures you receive electronically.

In order to open and maintain an account with the Platform, you must consent to electronic delivery of all disclosures. If you do not want to consent to electronic delivery of documents, you will not be able to open or maintain an account with us.

We may, at our discretion, make electronic disclosures available to you via our website or by e-mail, and may choose to send paper copies of disclosures to you even though we made or could have made them available to you electronically.

You may withdraw your consent to electronic delivery, but doing so will not affect the legal effectiveness, validity, or enforceability of the electronic documents that were provided to you before your withdrawal became effective. If you withdraw consent for electronic delivery, your withdrawal may take up to ten days for us to process and we will close your account with Vicinity.

You can request that we send you a paper copy of any disclosure that was originally provided electronically (we may charge you a fee for providing some documents and we will send these to documents to you using the United States Postal Service), withdraw your consent to receive future documents electronically, or provide us with updated information about how we can contact you electronically by writing to us or by using a method that may be made available to you on this website. If your e-mail address changes, you must provide us with the new address before the change either by writing to us or by using a method that may be made available to you on this website.

You may address any inquiries or questions to us, by sending us an e-mail at [email protected]

In order to receive electronic disclosures, you will need a working connection to the Internet. Your browser must support the Secure Sockets Layer (SSL) protocol. SSL provides a secure channel to send and receive data over the Internet through HS encryption capabilities. Microsoft Internet Explorer® version 7 or higher and Mozilla Firefox® version 3 or higher support this feature. You will also need either a printer connected to your computer to print documents or sufficient hard drive space available to save the information.

We may change this disclosure by posting the revised version on our website. By creating an account with us, you are confirming that you consent to electronic delivery of disclosures, that your system meets the requirements described above, that you are able to access disclosures presented on our website or via e-mail, and that you can either print or electronically store these disclosures.

By creating an account with us, investors attest as to the truth and accuracy of the foregoing information supplied by investor, and acknowledges receipt of these Educational Materials. Investor has read and understood the foregoing matters, and in the event investor has any questions about any of the foregoing matters, investor should contact Joshua Rollins, Vicinity’s Chief Compliance Officer, at [email protected] or 864-501-2279.