- Five Alpha Testing Partners: Mississippi State University, Makami College, Baby Giant Hollyberg, Warpin Media, and Axiom Product Development.
- 25+ corporation leads having expressed interest, including P&G, General Mills, Jabil, & Cincinnati Children's Hospital
- One Patent Pending and Two Provisional Patents filed.
- Kairos Society K50, RvD IDEA Awards Winner, Chicago Innovation Awards 2015 Nominee
- Amount raised:
- Seed :
- Minimum Investment: US $500 per investor
- : Crowd Note
- US $4,000,000 :
- Side by Side Offering
“Anything is possible in VR, but when you reach out the careful illusion falls apart...The ability to move your hands with a natural feedback is the missing piece to full, intuitive immersion.”
- Josh Farkas - Founder, CEO, & VR Development Lead of Cubicle Ninjas
Contact Control Interfaces (Contact CI) is creating haptic human computer interfaces to simulate the sense of touch. Contact CI's mission is to develop and foster a wide scale adoption of haptic technology, which simulates a realistic senses of finger-focused touch, unlocking the human potential only possible with intuitive and natural human computer interfaces.
Maestro, our flagship product, is a haptic data glove featuring hand tracking, positional tracking, vibration haptics, and force feedback haptics, and they are currently in the hands of testing partners spanning from Stockholm to Los Angeles. After a call for partner submissions in Q2 2017, global interest was received from 50+ VR teams seeking Contact CI's haptics for content development, research, and testing projects.
The largest players in haptics drive a vast majority of their revenue from licensing their haptic IP to smart phone, PC, laptop, and gaming console manufacturers. We envision a similar model by licensing our technology to major VR players.
Contact CI is extending the reach of human hands by developing haptic controllers for spatial computing and tele-robotics. Our flagship product, Maestro, is a haptic data glove improving human computer interactions within virtual reality. Maestro's haptic and tracking technologies allows a wearer to interact through natural finger gestures and touch digital objects, as if they were tangible, while using a VR headset like the HTC Vive.
Our first product is Maestro, a haptic data glove for VR. Our glove uses motion tracking and two haptic technologies. Our first haptic technology is a force feedback haptic system, which pulls back and restricts finger movement to simulate contact with objects in the VR space. Our second haptic technology is the vibration finger-caps system, which uses controlled pulses on the fingerprint area of the human finger. Swedish scientist have found this section of the finger is able to discriminate between surfaces patterned with ridges as small as 13 nanometres in amplitude . Fine tuned vibrations allow the user to feel subtle interactions and better simulates texture.
We are also currently prototyping technology using flex-sensor finger tracking technology, which will leverage existing components which we can use to lower costs for our glove.
With Maestro, we are focused on VR enterprise applications such as:
In the short term, we will continue in-market partner testing and application specific pilot projects to validate effectiveness, while preparing to launch a haptic license aimed at combining our sense of touch IP with with leading hand tracking solutions.
Manufacturing and Distribution:
1. Procurement & Sourcing
- We source our components from 1st and 3rd party marketplace suppliers
- We print internal plastics and external housing with high quality 3D printing suppliers
- We fabricate in-house designed circuit boards with a small batch fabrication partner
- All PCBs, breakout boards, and components are assembled by hand in office - we are planning to outsource this when scaling.
- Our current armband is repurposed archery arm guards with a foam layer added for comfort, but we will be transitioning to a custom foam armband that will have the needed structure for support of the housing on the arm and padding for the comfort of the user.
- Our base glove is purchased from a golf glove manufacturer to enable maximum fit and comfort. It is then outfitted with the vibration motor finger caps and tracking exoskeleton. Outfitting is done by our small batch manufacturing partner. After the exotendons and vibration motor wires are fed through the exoskeleton, the top layer of fabric is applied for component protection and aesthetic appeal. We are looking into more custom base glove options
- The glove is attached to the armband, exotendons attached to their respective tracking mechanisms, and vibration motor wires attached to their respective control systems within the housing.
- Final touches are applied, battery is waist mounted. Optimizations in both the mechanical and electrical design can either get the battery small enough to fit in the housing, or some aspects of the electronics can be moved to a custom waist mounted housing to allow the forearm mounted housing to decrease in size.
- Microcontroller and haptic drivers are uploaded with embed software
- Gloves are finally run through a series of validation tests to confirm proper assembly. This is currently done by a member of our team, but in the future we are planning to look into a robotic hand that will run through quality assurance of all aspects of the system.
- Parts are packed in foam and a box designed for optimized shipping protection.
- Packaging is dropped off at our Logistics partner facilities to be directly shipped to customer.
At Contact CI we recognize that the way humans interact with both physical tools and complex data has defined our success as a species. With Virtual Reality, our data has become immersive, but our interfaces remain primitive. We are developing Maestro to bring Natural Touch and gesture controls into the spatial computing era, and unlock the powerful potential of the human hand in these digital worlds of limitless potential. As Syracuse University students in 2014, the founding team began Contact CI’s work on extending the reach of human hands. Mutual passions for biomimetics, wearables, immersive technology, gaming, and robotics has continually help shape the team’s vision for natural and realistic human computer interfaces.The goal today remains the same with the team headquartered in Cincinnati, passionately developing haptic technologies. We’re a small team growing quickly to rapidly develop and iterate the Maestro hardware and software. Our team has been described as extremely curious minds, with ambitious spirits, and massive passions for immersive experiences.
A Side by Side offering refers to a deal that is raising capital under two offering types. If you plan on investing less than US $20,000.00, you will automatically invest under the Regulation CF offering type. If you invest more than US $20,000.00, you must be an accredited investor and invest under the Regulation D offering type.
|Terms & Description|
|Investor Types||Accredited Only||Accredited and Non-accredited|
|Round size||US $1,070,000||US $1,070,000|
|US $0||US $26,400|
|Minimum investment||$20,000||US $500|
|US $350,000||US $350,000|
|US $4,000,000||US $4,000,000|
|Closing Conditions||The Company is making concurrent offerings under both Regulation CF and Regulation D (the "Combined Offerings"). Unless the Company raises at least the Target Amount of $25,000 under the Regulation CF offering and a total of $350,000 under the Combined Offerings (the “Closing Amount”) by the offering end date no securities will be sold in this offering, investment commitments will be cancelled, and committed funds will be returned.||The Company is making concurrent offerings under both Regulation CF and Regulation D (the "Combined Offerings"). Unless the Company raises at least the Target Amount of $25,000 under the Regulation CF offering and a total of $350,000 under the Combined Offerings (the “Closing Amount”) by the offering end date no securities will be sold in this offering, investment commitments will be cancelled, and committed funds will be returned.|
|Investment Management Agreement||All non-Major Purchasers will be subject to an Investment Management Agreement (“IMA”). The IMA will authorize an investment Manager to act as representative for each non-Major Purchaser and take certain actions for their benefit and on their behalf. Please see a copy of the IMA included with the Company's offering materials for additional details.||All non-Major Purchasers will be subject to an Investment Management Agreement (“IMA”). The IMA will authorize an investment Manager to act as representative for each non-Major Purchaser and take certain actions for their benefit and on their behalf. Please see a copy of the IMA included with the Company's offering materials for additional details.|
Invest within 20 days of the Campaign being live.
Receive a Contact CI swag package including a hat and T-Shirt.
Invest $40,000 to $124,999.
Receive a HTC Vive and VR computer loaded with the Contact CI team's favorite VR applications.
Invest $125,000 or greater.
Meet the founding team at VoidVR to experience their, just announced, warehouse scale VR experience made with Disney and ILMxLAB.
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
The graph below illustrates theor the of Contact CI's prior rounds by year.
Please see the financial information listed on the cover page of the Form C and the Reviewed Financials in the Data Room in addition to the following information. Financial statements are attached to the Form C as Exhibit B.
As of December 31, 2016, the Company has not commenced full scale operations. The Company’s activities since inception have consisted of product and business development, and efforts to raise capital. Once the Company commences its planned full scale portion operations, it will incur significant additional expenses. The Company is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and uncertainties; including failing to secure funding to operationalize the Company’s plans or failing to profitably operate the business.
The Company recognizes revenue only when all of the following criteria have been met:
- Persuasive evidence of an arrangement exists;
- De livery has occurred or services have been rendered;
- The fee for the arrangement is fixed or determinable; and
- Collectability is reasonably assured.
The Company has incurred losses from inception of approximately $235,238 which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the issuance of debt or the sale of stock, its ability to commence profitable sales of its flagship product, and its ability to generate positive operational cash flow. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.
Research and development costs are expensed as incurred. Total expense related to research and development was $18,310 and $2,151 for the years ended December 31, 2016 and 2015, respectively.
Property and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.
The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. At December 31, 2016 and 2015, the Company had no items, other than bank deposits, that would be considered cash equivalents. The Company maintains its cash in bank deposit accounts, insured up to $250,000 by FDIC. As of December 31, 2016, and 2015, the Company had $47,967 and $2,639 in cash equivalents.
Liquidity and Capital Resources
The Offering proceeds are essential to our operations. We plan to use the proceeds as set forth above under "use of proceeds", which is an indispensable element of our business strategy. The Offering proceeds will have a beneficial effect on our liquidity, as we currently have $2,127.90 in cash on hand which will be augmented by the Offering proceeds and used to execute our business strategy.
The Company does not have any additional sources of capital other than the proceeds from the Offering.
Capital Expenditures and Other Obligations
The Company does not intend to make any material capital expenditures in the future.
Material Changes and Other Information
Trends and Uncertainties
After reviewing the above discussion of the steps the Company intends to take, potential Purchasers should consider whether achievement of each step within the estimated time frame is realistic in their judgment. Potential Purchasers should also assess the consequences to the Company of any delays in taking these steps and whether the Company will need additional financing to accomplish them.
The financial statements are an important part of this Form C and should be reviewed in their entirety. The financial statements of the Company are attached hereto as Exhibit B.
As discussed in "Dilution" below, the valuation will determine the amount by which the investor’s stake is diluted immediately upon investment. An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their "sweat equity" into the Company. When the Company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is immediately diluted because each share of the same type is worth the same amount, and you paid more for your shares (or the notes convertible into shares) than earlier investors did for theirs.
There are several ways to value a company, and none of them is perfect and all of them involve a certain amount of guesswork. The same method can produce a different valuation if used by a different person.
Liquidation Value - The amount for which the assets of the Company can be sold, minus the liabilities owed, e.g., the assets of a bakery include the cake mixers, ingredients, baking tins, etc. The liabilities of a bakery include the cost of rent or mortgage on the bakery. However, this value does not reflect the potential value of a business, e.g. the value of the secret recipe. The value for most startups lies in their potential, as many early stage companies do not have many assets (they probably need to raise funds through a securities offering in order to purchase some equipment).
Book Value - This is based on analysis of the Company’s financial statements, usually looking at the Company’s balance sheet as prepared by its accountants. However, the balance sheet only looks at costs (i.e. what was paid for the asset), and does not consider whether the asset has increased in value over time. In addition, some intangible assets, such as patents, trademarks or trade names, are very valuable but are not usually represented at their market value on the balance sheet.
Earnings Approach - This is based on what the investor will pay (the present value) for what the investor expects to obtain in the future (the future return), taking into account inflation, the lost opportunity to participate in other investments, the risk of not receiving the return. However, predictions of the future are uncertain and valuation of future returns is a best guess.
Different methods of valuation produce a different answer as to what your investment is worth. Typically liquidation value and book value will produce a lower valuation than the earnings approach. However, the earnings approach is also most likely to be risky as it is based on many assumptions about the future, while the liquidation value and book value are much more conservative.
Future investors (including people seeking to acquire the Company) may value the Company differently. They may use a different valuation method, or different assumptions about the Company’s business and its market. Different valuations may mean that the value assigned to your investment changes. It frequently happens that when a large institutional investor such as a venture capitalist makes an investment in a company, it values the Company at a lower price than the initial investors did. If this happens, the value of the investment will go down.
The largest players in haptics drive a vast majority of their revenue from licensing their haptic IP to smart phone, PC, laptop, and gaming console manufacturers. We envision a similar model by licensing our technology to major VR players.
Larger haptic players:
Immersion Corporations Revenue:
2016: $57,086,000 with 98.2% brought in from haptic royalties and licensing.
2015: $63,393,000 with 97.3 % brought in from haptic royalties and licensing.
2014: $52,937,000 with 97.9% brought in from haptic royalties and licensing.
Immersion Corporation describes their business as a "premier licensing company focused on the creation, design, development, and licensing of innovative haptic technologies that allow people to use their sense of touch more fully as they engage with products and experience the digital world around them."
- Immersion Corporation Annual 10k, March 2017
Synaptics Incorporated Revenue:
2017: $ 1,718,200,000, with 87% coming from human interface product solutions in mobile product applications.
2016: $ 1,666,900,000 with 88% coming from human interface product solutions in mobile product applications.
2015: $ 1,703,000,000, with with 85% coming from human interface product solutions in mobile product applications.
Synaptics describes their business as being a "leading worldwide developer and supplier of custom-designed human interface semiconductor product solutions that enable people to interact more easily and intuitively with a wide variety of mobile computing"
-Synaptics Incorporated, Annual 10k, September 2017
Immersion and Synaptics both pioneered a crucial piece of touch-enabling tech, which allowed them to capitalize on a fundamental change in human computer interaction as the world moved to a touch screen centered society. VR/AR represent another major disruptive change in human computer interaction. As Immersive Computing(VR/AR) gain market traction and global adoption, being the leading provider of a touch interaction technology to platform OEM, with IP protections in place, is a very lucrative opportunity.
Major players in global haptic market, include:
Immersion Corporation , Texas Instruments, Inc. , Precision Microdrives Ltd. , Johnson Electric Holdings Ltd., Ultrahaptics , On Semiconductor Corporation , Microchip Technologies, Inc. , Synaptics Incorporated , SMK Corporation.
Smaller players in global haptic market with virtual reality strategies, include:
Dextra Robotics, Tactile Haptics, AxonVR, NeuroDigital Technologies, FirstTouchVR, CyberGlove Solutions
Data Glove and gesture camera providers with a main focus on motion capture, include:
CyberGlove Solutions, ManusVR, Noitem, Virtual Motion Labs, 5th Dimension Tech, CBF Systems, Leap Motion
Haptic Product, primarily split into:
Haptic End users/applications, primarily split into:
Automotive & Transportation
Education & Research
Engineering & Design
Note: This section represents managements' current view with respect to the potential market size for Contact CI based on business models of larger or more established companies in the haptic industry. It does not represent guarantees of future results, levels of activity, performance, or achievements.
Risks Related to the Company’s Business and Industry
The reviewing CPA has included a “going concern” note in the reviewed financials. We may not have enough funds to sustain the business until it becomes profitable. Even if we raise funds through a crowdfunding round, we may not accurately anticipate how quickly we may use the funds and if it is sufficient to bring the business to profitability.
The Company has low cash position with less than one month of runway. If the Company is unable to hit its revenue projections or raise additional capital, it may be unable to meet its financial obligations.
Additionally, the amount of capital the Company is attempting to raise in this Offering is not enough to sustain the Company’s current business plan. In order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.
Contact CI is over one year away from generating consistent revenue. Given the current stage of its product and the uncertainty around enterprise and consumer adoption and applications, the Company has little visibility into future revenue streams.
The Company is early in its product development cycle and has just shipped its alpha product. Contact CI still has a long R&D process before it can bring a viable product to market and may encounter unexpected technical hurdles. Contact CI may find that there is less demand than expected for its products.
Contact CI faces competition from other companies in VR glove space. Existing companies that engage in the VR business or are within the controller space could introduce new or enhance existing products. Contact CI’s competitors include major companies worldwide. Many of these competitors have significantly greater financial, technical and human resources than the Company has and superior expertise in research and development and marketing approved products and thus may be better equipped than the Company to develop and commercialize products. If the Company is able to establish a market around its product, it may find that larger, better funded companies may enter the market, which could negatively impact Contract CI’s growth.
The Company is not yet manufacturing its products at scale. The Company may face difficulties as it scales up its manufacturing efforts, including difficulty finding a manufacturer, designing a version of its product suitable for mass production, or achieving their target COGS.
Widespread VR adoption has been slower than expected over the past several years. If VR adoption does not increase in the coming years, the Company may find a smaller market than expected for its products.
In order for the Company to compete and grow, it must attract, recruit, retain and develop the necessary personnel who have the needed experience. Recruiting and retaining highly qualified personnel is critical to our success. These demands may require us to hire additional personnel and will require our existing management personnel to develop additional expertise. We face intense competition for personnel. The failure to attract and retain personnel or to develop such expertise could delay or halt the development and commercialization of our product candidates. If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results. Our consultants and advisors may be employed by third parties and may have commitments under consulting or advisory contracts with third parties that may limit their availability to us.
The Company’s success depends on the experience and skill of the board of directors, its executive officers and key employees. In particular, the Company is dependent on Craig Douglass and Tom Buchanan who are CEO and Chief Product Officer of the Company. The Company has entered into employment agreements with Craig Douglass and Tom Buchanan although there can be no assurance that it will do so or that they will continue to be employed by the Company for a particular period of time. The loss of Craig Douglass or Tom Buchanan, or any member of the board of directors or executive officer could harm the Company’s business, financial condition, cash flow and results of operations.
We rely on various intellectual property rights, including patents, trademarks, and licenses in order to operate our business. Such intellectual property rights, however, may not be sufficiently broad or otherwise may not provide us a significant competitive advantage. In addition, the steps that we have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented or designed-around, particularly in countries where intellectual property rights are not highly developed or protected. In some circumstances, enforcement may not be available to us because an infringer has a dominant intellectual property position or for other business reasons, or countries may require compulsory licensing of our intellectual property. Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property, could adversely impact our competitive position and results of operations. We also rely on nondisclosure and noncompetition agreements with employees, consultants and other parties to protect, in part, trade secrets and other proprietary rights. There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights.
We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards required of public companies. We do not have the internal infrastructure necessary, and are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.
The Company has a related party transaction. In 2016, Axiom Consulting exchanged services with the Company and received a $100,000 SAFE agreement. Axiom is a development partner with the Company and is involved with the alpha testing units.
We must acquire or develop new products, evolve existing ones, address any defects or errors, and adapt to technology change. Technical developments, client requirements, programming languages, and industry standards change frequently in our markets. As a result, success in current markets and new markets will depend upon our ability to enhance current products, address any product defects or errors, acquire or develop and introduce new products that meet client needs, keep pace with technology changes, respond to competitive products, and achieve market acceptance. Product development requires substantial investments for research, refinement, and testing. We may not have sufficient resources to make necessary product development investments. We may experience technical or other difficulties that will delay or prevent the successful development, introduction, or implementation of new or enhanced products. We may also experience technical or other difficulties in the integration of acquired technologies into our existing platform and applications. Inability to introduce or implement new or enhanced products in a timely manner could result in loss of market share if competitors are able to provide solutions to meet customer needs before we do, give rise to unanticipated expenses related to further development or modification of acquired technologies as a result of integration issues, and adversely affect future performance.
The products we sell are advanced, and we need to rapidly and successfully develop and introduce new products in a competitive, demanding and rapidly changing environment. To succeed in our intensely competitive industry, we must continually improve, refresh and expand our product and service offerings to include newer features, functionality or solutions, and keep pace with price-to-performance gains in the industry. Shortened product life cycles due to customer demands and competitive pressures impact the pace at which we must introduce and implement new technology. This requires a high level of innovation by both our software developers and the suppliers of the third-party software components included in our systems. In addition, bringing new solutions to the market entails a costly and lengthy process, and requires us to accurately anticipate customer needs and technology trends. We must continue to respond to market demands, develop leading technologies and maintain leadership in analytic data solutions performance and scalability, or our business operations may be adversely affected.
Risks Related to the Securities
The Crowd Notes will not be freely tradable until one year from the initial purchase date. Although the Crowd Notes may be tradable under federal securities law, state securities regulations may apply and each Purchaser should consult with his or her attorney. You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for the Crowd Notes. Because the Crowd Notes have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, the Crowd Notes have transfer restrictions and cannot be resold in the United States except pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the Crowd Notes may also adversely affect the price that you might be able to obtain for the Crowd Notes in a private sale. Purchasers should be aware of the long-term nature of their investment in the Company. Each Purchaser in this Offering will be required to represent that it is purchasing the Securities for its own account, for investment purposes and not with a view to resale or distribution thereof.
We are selling convertible notes that will convert into shares or result in payment in limited circumstances. These notes do not have a maturity date and only convert or result in payment in limited circumstances. If there is a merger, buyout or other corporate transaction that occurs before a qualified equity financing, investors will receive a payment of the greater of two times their purchase price or the amount of preferred shares they would have been able to purchase using the valuation cap. If there is a qualified equity financing (an initial public offering registered under the Securities Act or a financing using preferred shares),the notes will convert into a yet to-be-determined class of preferred stock. The notes will convert at a discount of 20%, or based on a $4 million valuation cap meaning investors would be rewarded for taking on early risk compared to later investors. Outside investors at the time of conversion, if any, might value the Company at an amount well below the $4 million valuation cap, so you should not view the $4 million as being an indication of the Company’s value. If you choose to invest, you should be prepared that your notes will never convert and will have no value.
We have not assessed the tax implications of using the Crowd Note. The Crowd Note is a type of debt security that does not include a set maturity date. As such, there has been inconsistent treatment under state and federal tax law as to whether securities like the Crowd Note can be considered a debt of the Company, or the issuance of equity. Investors should consult their tax advisers.
The Crowd Note contains dispute resolution provisions which limit your ability to bring class action lawsuits or seek remedy on a class basis. By purchasing a Crowd Note this offering, you agree to be bound by the dispute resolution provisions found in Section 6 of the Crowd Note. Those provisions apply to claims regarding this offering, the Crowd Notes and possibly the securities into which the Crowd Note are convertible. Under those provisions, disputes under the Crowd Note will be resolved in arbitration conducted in Delaware. Further, those provisions may limit your ability to bring class action lawsuits or similarly seek remedy on a class basis.
You may have limited rights. The Company has not yet authorized Preferred Stock, and there is no way to know what voting rights those securities will have. In addition, as an investor in the Regulation CF offering you will be considered a non-Major Investor under the terms of the notes offered, and therefore, you have more limited information rights and you will not have the right to automatically participate in future offerings, and therefore not have the same anti-dilution protections as Major Investors.
You will be bound by an investment management agreement, which limits your voting rights. As a result of purchasing the notes, all non-Major Investors (including all investors investing under Regulation CF) will be bound by an Investment management agreement. This agreement will limit your voting rights and at a later time may require you to convert your future preferred shares into common shares without your consent. Non-Major Investors will be bound by this agreement, unless Non-Major Investors holding a majority of the principal amount outstanding of the Crowd Notes or majority of the shares of the preferred equity the notes will convert into, vote to terminate the agreement.
A majority of the Company is owned by a small number of owners. Prior to the Offering the Company’s current owners of 20% or more beneficially own up to 54.5% of the Company. Subject to any fiduciary duties owed to our other owners or investors under Illinois law, these owners may be able to exercise significant influence over matters requiring owner approval, including the election of directors or managers and approval of significant Company transactions, and will have significant control over the Company’s management and policies. Some of these persons may have interests that are different from yours. For example, these owners may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price potential investors are willing to pay for the Company. In addition, these owners could use their voting influence to maintain the Company’s existing management, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to owner approval.
In addition to the risks listed above, businesses are often subject to risks not foreseen or fully appreciated by the management. It is not possible to foresee all risks that may affect us. Moreover, the Company cannot predict whether the Company will successfully effectuate the Company’s current business plan. Each prospective Purchaser is encouraged to carefully analyze the risks and merits of an investment in the Securities and should take into consideration when making such analysis, among other, the Risk Factors discussed above.
Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.
Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for these shares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.
The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.
Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.
You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events — through continuing disclosure that you can use to evaluate the status of your investment.
Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.
Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.
Frequently Asked Questions
A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.
The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.
Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.
Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $1 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive shares, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.
When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by Contact CI. Once Contact CI accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to Contact CI in exchange for your shares. At that point, you will be a proud owner in Contact CI.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Social Security Number or government-issued identification
- ABA bank routing number and checking account number (typically found on a personal check or bank statement)
If you are investing under Rule 506(c) of Regulation D, your status as an Accredited Investor will also need to be verified and you will be asked to provide documentation supporting your income, net worth, revenue, or net assets or a letter from a qualified advisor such as a Registered Investment Advisor, Registered Broker Dealer, Lawyer, or CPA.
The Crowd Note is a security which allows crowd investors to largely realize the same economic benefit traditional investors have historically received when investing in startups. For a convertible note round, investors under $20,000 will have their investment convert into preferred equity at liquidity event, locking in a share price at a discount to the next priced round, and will have an interest rate on their investment. Investors investing $20,000 and over will convert into preferred equity at the subsequent priced round at a discount to that priced round and will have an interest rate on their investment. For a priced round, investors under $20,000 will have their investment convert into preferred equity at a liquidity event, locking in the share price of the current round.
An investor is limited in the amount that he or she may invest in a Reg CF offering during any 12-month period:
- If either the annual income or the net worth of the investor is less than $100,000, the investor is limited to the greater of $2,000 or 5% of the lesser of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $100,000, the investor is limited to 10% of the lesser of his or her annual income or net worth, to a maximum of $100,000.
Separately, Contact CI has set a minimum investment amount of US $500.
Accredited investors investing $20,000 or over do not have investment limits.
You are a partial owner of the company, you do own shares after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.
In certain circumstances a company may terminate its ongoing reporting requirement if:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- The company ceases to do business
However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.
Currently there is no market or liquidity for these shares. Right now Contact CI does not plan to list these shares on a national exchange or another secondary market. At some point Contact CI may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when Contact CI either lists their shares on an exchange, is acquired, or goes bankrupt.
You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.
This is Contact CI's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the Contact CI's Form C. The Form C includes important details about Contact CI's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours before a closing occurs or an earlier date set by the company. You will be sent a reminder notification approximately five days before the closing or set date giving you an opportunity to cancel your investment if you had not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your shares have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your portfolio page
If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your shares have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your portfolio page.