Glossary

Accredited Investor – In the United States, for an individual to be considered an “accredited investor,” he or she must have a net worth of at least one million US dollars, not including the value of one's primary residence, or have income at least $200,000 each year for the last two years with an expectation to make the same amount this year.

Administrative Fees – Fees charged by WorkforceSoftwareSolutions for listing companies, conducting the necessary due diligence, and managing the investment process, including Application Fee and Vetting Fee. The types and amounts of fees WorkforceSoftwareSolutions may charge are subject to S.E.C. regulations.

Balance Sheet – includes all assets, liabilities and capital.

Break-even Point – helps a business see how much sales are needed to cover costs and expenses in order to start making a profit.

Crowd Financing – Same as Equity Crowdfunding.

Convertible Debt (a.k.a. Convertible Notes) – is a financing vehicle that allows startups to raise money while delaying valuation discussions until the company is more mature. Though technically this is debt the company promises to pay back to its lender(s), convertible notes are meant to convert to equity at a later date. Investors who agree to use convertible notes generally receive a discounted price when they purchase equity since they put in their money in at the earliest, riskiest stages of the business.

Crowdfunding – Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet. There are four types of crowdfunding: donation, reward, debt and equity.

Crowdfunding Act – Same as the JOBS Act.

Crowdsourcing – Using a crowd to obtain ideas, feedback and solutions to develop activities, such as naming a new product or choosing a new design.

Equity Crowdfunding – The offering of securities by a privately held company to the general public (the “crowd”) through an online platform. The model permits anyone to acquire a share in privately held companies (i.e., those that have yet to be sold on public stock exchanges) by allowing a company to offer a certain percentage of its equity for a set amount of capital that it is aiming to raise. Through a funding portal, such as WorkforceSoftwareSolutions, investors can buy small parts of the company’s equity stake, interact with the company’s management team and become advocates for the company within the investors' own social networks.

Funding Period – A specific time, which is set in advance (typically 90 days), allowed for the company to raise funds. The JOBS Act requires an all-or-nothing system in which the company has until the end of the Funding Window to reach its Target Raise or else it receives nothing and the funds raised are returned to the investors.

Funding Portal – Created by the JOBS Act, it is an intermediary to facilitate the crowd’s investment in private companies. WorkforceSoftwareSolutions is a Funding Portal and is subject to S.E.C. regulations and licensing.

Funding Window – Same as Funding Period.

General Assumptions – include interest rates your business will use for loans (both short-term and long-term loans, which often have different interest rates), and also the tax percentage which will be applied toward your Company's profits.

Gross Margin – is the difference between total sales revenue and total cost of sales.

Georgia Based Issuer – means a company that sells securities (i.e., shares) under the Invest Georgia Exemption, your company must (1) be a for-profit business, (2) be formed under the laws of the State of Georgia and registered with the Secretary of State, (3) have its principal office in Georgia, and (4) carry out a significant amount of its business in this State.

Georgia Investor (individual) – for an individual to qualify as a “Georgia Investor” under the Invest Georgia Exemption, he/she must have his/her principal residence in the State of Georgia. Georgia Investor (entity) – for an entity to qualify as a “Georgia Investor” under the Invest Georgia Exemption, it must have its principal office within the State of Georgia.

Invest Georgia Exemption (“IGE”) – is a set of Rules promulgated by the Georgia Commissioner of Securities which permits Georgia-based businesses to crowdfund to Georgia Investors. IGE makes it easier for qualifying Georgia companies to raise capital from others in Georgia. When compared to traditional securities laws, IGE is special because it allows qualifying companies to publicly solicit Georgia Investors, which is the very essence of crowdfunding.

Investment Limit – The JOBS Act limits the amount individuals may invest through Crowdfunding. The Investment Limit for an investor with annual income below $100,000, is the greater of $2,000 or five percent of the investor’s annual income or net worth. For an investor with annual income above $100,000, the maximum is ten percent of the annual income or net worth, up to a maximum of $100,000. This limit pertains to any twelve month period.

Investor Relations – A responsibility of the Company relating to how and when the Company communicates with investors in connection with the Company’s performance. Strategic Investor Relations can help a Company maintain a good relationship with its investors and for subsequent investments can advocate for a Company.

JOBS Act – The full name of the JOBS Act is the Jumpstart Our Business Startups Act. This law is intended to encourage funding of  small businesses in the United States by easing various securities regulations and includes "crowdfunding" provisions, which allow companies to sell securities through open platforms. The JOBS Act passed with bipartisan support and was signed into law by the President of the United States on April 5, 2012.

Non-accredited Investor – An investor who does not meet the requirements to be an accredited investor. This is defined by the U.S. Securities and Exchange Commission's Regulation D. Because of the Crowdfunding Act, non-accredited investors now have the opportunity to receive open invitations to invest in privately-held companies, which was an opportunity previously limited to only the wealthiest Americans.

Portal Fee – The fee due to the Funding Portal for its work in facilitating and managing the Crowdfunding process. The Portal Fee is due from the company only if the Target Raise is met. The company, not the investors, pays the Portal Fee. All fees are subject to the forthcoming S.E.C. regulations.

Pre-Buzz – "Pre-Buzz" is your campaign's preseason. This is the week or weeks leading up to your Go-Live date where you are refining your message and how you deliver it. You are warming up your circles of influence to help you push your campaign to the next level. Pre-Buzz is a necessary aspect of every campaign and should never be overlooked. People can't invest in an opportunity they don't know about so the more people who know the more likely you are to reach your funding goal. Pre-Buzz is everything from going to pitch meetings to developing a social media presence for your company and its importance can't be overlooked.

Projected Cash Flow – presents projected changes in the Company’s cash balances.

Pre-money valuation – refers to your company’s value before receiving funding.

Post-money valuation – the company’s value after receiving funding. For example, if your company’s pre-money valuation is $1 million and you raise $500,000.00 through equity crowdfunding, your company’s post-money valuation $1.5 million.

Start-up Business – A business which generally is less than a year old and has no revenue or only nominal revenue.

Target Raise – The amount of money that the company wants to raise in a crowdfunding campaign. The Crowdfunding Act limits companies to raising $1 million for any twelve month period. If the Target Raise is not met during the Funding Period, the company gets none of the pledged funds, which are returned to the investors. The company may not raise more than the Target Raise. Only if the entrepreneur meets his funding target is the project funded. This is a form of investor protection that requires a minimum buy-in from all the backers before a project is funded. It raises the bar on meeting one’s funding target and forces an entrepreneur to strategically consider how much he needs.

Valuation – is what a company is worth – the selling price of the business. Valuation is an educated guess with the goal of setting an attractive price for the people you want to invest in the Company.