ACE-Net offers a wide array of services for entrepreneurs and private investors. As part of those services, Dan Mitchell, executive director of ACE-Net, answers questions regarding investment issues. Here are some questions our readers have posed:

1.     1.Can I list an offering of LLC interests in an existing real estate property on ACE-NET?

Ans: ACE-Net is permitted only to provide a listing for securities, and by the definition of the SEC, LLC interests are not included. Therefore, we will not be able to list this offering.

  2. Our company is one year old and has been recognized as one of 25 up and

coming Canadian companies to watch for.

We came across ACE-net and before we proceed any further, just wanted to

know if Canadian Incorporated companies are eligible for this listing? Or is

it's just for U.S. companies?

Ans:  Unfortunately, at the present time ACE-net only works with U.S. based companies, largely due to the securities regulations and requirements.

  3.  I am currently seeking $500,000 in investment for a start up company. Do I

need a Lawyer to complete the Ace application?

• Ans:   Offering corporate securities for sale involves significant responsibilities under both federal and state securities laws. Therefore, while most of the documents required for listing on ACE-Net can be prepared on your own, ACE-Net strongly encourages you to seek qualified legal professional assistance during every stage of securities offering.

• Prior to listing on ACE-Net, you are also urged to work with an attorney to develop a comprehensive securities law compliance plan specific to your proposed offering.

• It is critical that you comply with all legal requirements as any mistake you make will not only lead to serious liability, but can also affect your ability to obtain further equity financing later.

  4.    I am looking for a $50,000 line of credit for the purpose of increasing and maintaining ABC’s  purchasing power.  Can Ace-net help me?

 Ans:     No, Ace-net listings are based on investors taking an equity position in the company ( ownership)  Typically the deals range from $250,000 to $5 million in size with the average being $1.2 million. 

5.  How am I informed of potential investors who read and view or plan?

Ans:   Due to security precautions, we cannot provide a detailed list of investors who review your plan.  Local operators can provide you a monthly statement of the number of “hits” your listing has received to give an indication of the activity and interest in your listing.  Truly interested investors will contact you directly, after reviewing the posted information on your company.

6.  How many individuals might review my plan ($500,000)?

Ans:   The number of potential investors depends on the individual situation.  The profile of the company must match the profile of the investor.  A year ago, a dot com would attract a large number of “hits” and a technology manufacturing firm very few.  Today it is just the opposite.  The market is dynamic.  We are in the second round of hot bio-tech funding, but as the success rates begin to emerge something else will replace it as the “hot” investment segment.

7. Do you have any reference available for me to contact?

Ans:  Because we operate under a “no-action” letter granted by the SEC. We are able to provide our services to you at a very reasonable cost.  We are a not-for-profit organization and take no success fees or other form of payment other than the registration fee.  Part of that “no-action” letter requires us to maintain the confidentiality of the investors and deals and we are not permitted to disclose either.  It is difficult for us, but a small inconvenience considering the service provided.

8. What is the average time span before our offering is listed? 

Ans:  It usually takes between 24 and 48 hours to activate a listing once the client has submitted their information and all the requirements have been met.  Once the local operator has received the signed submission notice it is a matter of minutes for activation.  You really should work with the local network operator in submitting your U-7 data, it can save a great deal of time.

9.    Do investors require  a role in the operation of the company?

 Each situation is different.  If the company already has a seasoned and strong management team, and the investor is strictly looking for an opportunity to make money the answer would be no.  If the company has some management weakness and the investor has expertise or knows of someone with strength in that area, they may insist on participation to protect their investment.  It is normal to expect an investor to have a position as a member of the board of directors.

10.  We have  filed with the local state securities administrator and the  Fed SEC for a Reg A Qualification. I believe we will meet Security requirements at both levels. The minimum sale is $1.750MM with a $1.MM = conditional loan commitment and a max of $3.5MM

My question: After qualification, can I place a notice on your site = inviting potential investors from registered States to request a = qualified Offering through our web site or via mail?

Ans:   After you have qualified, you may list your company on the Ace-net web site and it will become available to our accredited investors in all states that have approved the NASAA  guidelines and the accredited investor exemption (44 States)  These states are listed on the Ace-net website.  You will not be required to list your offering in each of those states where you plan to sell the securities.

11.  I signed up to post my company a while ago and never posted it as I  continued to pursue investors face to face.  Do I need to sign up again  or is my registration still good ??

Ans:  Your registration is good for one year, however, once you have made the decision to list with ace-net, it is in your best interest to complete the listing as soon as possible.  While your local operator can assist you in filing, the listing must come from you.  This gives you a good opportunity to review your business proposition and develop additional contacts.

12.   I'm consulting for a health and technology startup that is searching for Angel  financing. They have formed a corporation, pulled together an impressive team, and created a full business plan. Is ACE-Net appropriate for this early stage group?

• Ans:  Ace-net is for companies looking to raise between $250,000 and $5 million in equity capital.  Only entrepreneurs who can sell security interest in their companies can enroll with ACE-Net.

• This means that if you have a corporation or a limited liability company (LLC), you may be listed on the ACE-Net Company Database.

• You cannot be listed if you have a sole proprietorship, general or limited partnership, joint venture, "blank check" or development stage company, or are in an oil or gas business.

• The ACE-Net Entrepreneur Application requires you to certify that you meet this criteria

• It appears that your client meets all the requirements.

 13.   I have 3 acres of property. I would like to build storage buildings for rent on this property. Any information about getting this started ?

Presently there is not a storage area in this neighborhood. I think this is an opportunity for me to venture into this. Any info would be of great importance to me.     

Ans:  The first place to start is at the website (www.ace-net.org) Go to the entrepreneurs page and you will find a great deal of information about qualifying, how to determine how much you need etc.  Under "list your company you will find an application form.  Down load it and complete it.  You can find your local operator by clicking on "contacts and related Links button. Unfortunately, it doesn’t appear that we would b3e able to  assist you at this time.

We work with companies and investors who are looking for equity or ownership investment in the $250,000 to $5 million range.  The companies must be corporations with a board of directors. Contact them to see how they can assist and how they would like the application processed.

14.        Can funds be raised to start a corp. that is buying an existing sole proprietorship business?

• Ans:  you must have a corporation or a limited liability company (LLC), to  be listed on the ACE-Net Company Database.

15.        I am in need of $1,000,000 financing to expand my business and create 4 new positions. We have previously arranged financing, but the company wanted nearly a 40% ROI which we could not afford. I need backing at 10% simple interest for 15 years. Please advise if you can help. My business plan is attached.

Ans:  This is not the type of situation Ace-net is designed to handle. Ace-net investors are looking for an equity investment, whereby they have an ownership interest and a say in the company.  Their expected return on investment will be similar to what you have mentioned and are looking for an exit strategy in three to five years.

16.        How do lawyers register at ACENET? Can Lawyers list companies they work with who meet the criteria once they are enrolled?

Ans:  Lawyers cannot register as an entity with Ace-net, they can register as accredited investors, provided they meet the requirements. Only companies may list on Ace-net, if they choose to have an attorney act on their behalf, that is their prerogative, however an officer of the company must sign off on the submission from.

17.  We filed for a public stock offering with the U.S. Securities and Exchange Commission (the "SEC") on Form SB-2. The SEC has declared our filing effective on August 14, 2001

Recently we blue-sky the offering in 3 states, specifically IL, CO, & GA, and are now awaiting for their response.

We would like to list our offering on ACE-NET to Accredited Investors in states that we have not blue-skyed in. Since this offering is for a maximum of $1 million, we believe the offering is qualified for listing on ACE-NET.

Although this offering is registered on the federal level as a public offering, we would still like to sell the shares to accredited investors under the MAIE exemption in several states.

Please let us know if we qualify.

Ans:  Yes,  This is a good approach , you could have saved filing fees in Illinois, Colorado, and Georgia had you listed with Ace-net earlier.  However, in your Ace-net filing you will need to declare your other offering attempts and their impact on this listing.

18. Can you please forward me more information regarding terms, interest rates, etc Additionally, I would also like to have information on the amounts you finance for specific needs.  For example, if I need $100,000 for land,$250,000 for improvements (roads, sewer and water, fence, etc.) and $15,000for operating/misc. expenses for a total of $365,000.  How much, forexample, would I qualify for if I have excellent credit (and I will still work at my present job?

Ans:  Ace-net is not a lending organization, it works with investors and start-up companies to find equity ( ownership) investment.  Most start-up companies require full time management (60 to 80 hours per week minimum) and all listings would require a business plan that projects revenue and opportunity for at least the next three years.  Then you will find that an exit strategy is required to satisfy the investment.  Most often the development and improvement of real estate would not be a fundable project.

19.        I understand that Rule 504 has been amended since the 1996 "No-ActionLetter" was issued by the SEC. Some of the changes may involves solicitations     Is the SEC letter still in effect, even with the changes to Rule 504?

Ans:  Yes, even through the privatization, the no action letter is still in effect for Ace-net.

20.  Our family wants to relocate to Washington State and start a bed and breakfast, we are all have training in similar fields and would like to combine our knowledge to create a successful business. we do not know

however, to proceed. Please advise.

Ans: GOOD LUCK!