Risk Warning

Investing in start-up and early stage businesses can be very rewarding, but investing in those businesses involves a number of risks. To invest in businesses through Forward Spark, you need to understand the following five important risks:

1. Risk of Loss of Investment

Most startup businesses fail and therefore investing in these businesses may involve significant risk and it is likely you may lose all, or part, of your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk. If a business you invest in fails, neither the company, nor Forward Spark Inc., will pay you back your investment.

2. Risk of Lack of Liquidity

Liquidity is the ease with which you can sell your shares after you have purchased them. Buying shares in businesses pitching through Forward Spark cannot be sold easily as they are unlikely to be listed on a secondary trading market such as NASDAQ, AMEX or the New York Stock Exchange. Even successful companies rarely list shares on such an exchange. In addition, if you purchase B Investment Shares, these are non-voting shares and may not be attractive to potential buyers. Without a public market to find a buyer for shares it may be more difficult to sell them. Investment in crowdfunding assets should be viewed as a long term and illiquid investment. Current rules state you must generally keep any purchased shares at least twelve months from the acquisition date.

3. Risk of Rarity of Dividends

Dividends are payments made by a business to its shareholders from the company’s profits. Most of the companies seeking financing via equity crowdfunding are startups or early stage companies, and these companies will rarely pay dividends to their investors. Profits are typically reinvested into the business to fuel growth and build shareholder value. Businesses have no obligation to pay shareholder dividends.

4. Risk of Possibility of Dilution

Any investment made through equity crowdfunding may be subject to dilution in the future. Dilution occurs when a company issues more shares. Dilution affects every existing shareholder who does not buy any of the new shares being issued. As a result, an existing shareholder’s proportionate shareholding of the company is reduced, or ‘diluted’. This has an effect on a number of things, including voting, dividends and value. Some businesses who pitch through equity crowdfunding offer Seed Shares, which may include pre-emption rights that protect an investor from dilution. In this situation the business must give shareholders with Seed Shares the opportunity to buy additional shares during a subsequent fundraising round so that they can maintain or preserve their shareholding. Please research the pitch and the Articles of the company to see if the shares you are buying will have these pre-emption rights.

5. Risk of the Need for Investment Diversification

Diversification consists of spreading your money across multiple investments to lessen your investment risk. Unfortunately, while diversifying is a crucial part of investing, it will not reduce every type of risk. You should only invest a portion of your available investment funds through Forward Spark Inc. and balance your Forward Spark Inc. investment with safer, more liquid investments. Please note that diversification does not assure a profit or provide a guarantee against investment loss. Investing in startups and early-stage businesses involve RISKS including ILLIQUIDITY, LACK OF DIVIDENDS, LOSS OF INVESTMENT and DILUTION. If you choose to invest in businesses displayed on this portal, you need to be aware and accept that (1) you should invest money you can afford to lose, (2) the stock purchased is restricted, that is such asset is highly illiquid, (3) even if the business is successful, you might not receive any cash return on your investment for years, (4) ordinary events in the life of the firm can cause your ownership percentage to decline, and (5) investments in early-stage companies, should be done only under a larger investment plan whereby the vast majority of the capital is placed in safer, more liquid assets. You only will be allowed to invest with Forward Spark (by Forward Spark, Inc) after you have registered and completed any educational requirements.

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