Wassepoester | Laundrillon 1A

1.      Risk associated with the team's knowledge of the market and correctness of forecasts

Risk: The WASSEPOESTER team might not have (proper) knowledge of the market and/or make incorrect forecasts. 

Consequence: If the team does not have sufficient knowledge of the market, it could set incorrect targets. This could lead to a lower valuation in the event of a possible exit because the business plan could not be executed as planned. In that case, there could be lower or even non-existent returns. In the worst case, there could even be a liquidation and bankruptcy of WASSEPOESTER, with partial or complete loss of the invested capital.

Note: WASSEPOESTER's CEO is an experienced entrepreneur who has already achieved successful exits in the past for investors. Over a 12-month period, he developed several proven sales and operational best practices that resulted in increased sales (64.46%) and margins (101.28%) for WASSEPOESTER. The main goal was to apply, test and validate the different ideas with measurable results. Then the most impactful techniques will be applied to new laundromats to increase the overall return on investment.

2.      Risk associated with the need for new financing

Risk: Given the stage of development that project owner is in, it is likely that there will be a need for new financing. 

Consequence: On the one hand, there is the risk that the company will not find investors, which would lead to the dissolution or bankruptcy of the company, causing the investor to lose part or all of his investment. On the other hand, there is the possibility that the company will find new investors, which will lead to dilution, which will be even greater if there is a lower valuation than the one currently used.

Note: Investors will have the opportunity to co-invest in new rounds, at the then current investment terms if new investors are found. 

3.      Risk associated with the tax incentive 

Risk: Investors can obtain a personal income tax reduction of 45% on the amount invested if they invest in start-up micro-enterprises. These companies must meet a number of criteria to qualify for this fiscal measure. One of the criteria is that the activity of the company must not be the continuation of an activity previously carried out by another legal entity. WASSEPOESTER was founded on 12 June of this year and its activity consists of operating a network of laundromats using new technology to optimize them. This technology can possibly be sold to other laundry salons. The goal is thus to change and innovate the market and optimize WASSEPOESTER's network of laundromats through scale expansion. WASSEPOESTER will open new laundromats but will also take over existing laundromats. There is a risk that the competent local tax agent determines that WASSEPOESTER's business is a continuation of a previous activity as some of the laundromats being acquired have been in existence for more than 4 years.

Consequence: If this risk occurs, the personal income tax reduction can either not be accepted by the competent local tax agent or be retroactively reversed, which means that the tax reduction obtained must be repaid.

Note: Whether or not there is a continuation of activity is a question of fact that can only be assessed by the competent local tax agent on the basis of all the facts and circumstances specific to the case. However, there are a number of criteria listed by the FOD Financiën/SPF Finances that may indicate a continuation of an activity previously carried out by another legal entity. The founder of WASSEPOESTER contacted the FOD Financiën/SPF Finances to obtain an assessment on this matter. It was communicated to him informally (in a non-binding manner) that to the extent that the funds from this offer were not used to acquire an existing laundromat but only to open new laundromats, the tax shelter benefit applies. Consequently, WASSEPOESTER decided to focus on opening new locations. In addition, the CEO or WASSEPOESTER itself will pay investors an amount as indemnification equal to the amount of the lost tax reduction if a tax reduction would not be taken into account by the FOD Financiën/SPF Finances because of a continuation of activity.

1.       Risk associated with the acquisition of laundromats.

Risk: There is a risk that WASSEPOESTER acquires a lower number of laundromats in the market than foreseen in the business plan.

Consequence: If this risk occurs, the company will be able to grow at a slower pace than foreseen in the business plan. This could lead to a lower valuation in the event of a possible exit because the business plan could not be executed as planned. In that case, there could be lower or even non-existent returns. 

2.       Risk associated with a new energy crisis

Risk: A second energy crisis could occur.

Consequence: If this risk occurs, WASSEPOESTER will have lower margins. This could lead to a lower valuation in the event of a possible exit because the business plan could not be executed as planned. In that case, there could be lower or even non-existent returns. In the worst case, there could even be a liquidation and bankruptcy of WASSEPOESTER, with partial or complete loss of the invested capital.

Note for both risks: If the company faces the above risks, WASSEPOESTER's growth rate will be lower, but this will not imply a negative cash flow as the majority of costs are variable costs, depending on the number of customers. Fixed costs can easily be covered by a more than worst-case scenario.

Risk: The risk of insolvency means that WASSEPOESTER does not have sufficient funds to meet its payment deadlines (cessation of payments). 

Consequence: If the company does not find alternative financing (shocked credit), it may go bankrupt. The insolvency or bankruptcy of WASSEPOESTER may lead to lower or non-existent returns and in the worst case to a partial or total loss of the invested capital. 

1.           Risk associated with the lack of guarantees.

Risk: Neither the shares of WASSEPOESTER nor the Participatory Notes of the WASSEPOESTER 1A compartment of Spreds Finance provide guarantees of a return or repayment of the invested capital. 

2.           Risk associated with the lack of a fixed return.

Risk: Participatory Notes do not offer a fixed return. The return of the Participatory Notes depends solely on the performance of the Underlying Asset, namely the shares of WASSEPOESTER. 

Consequence for both risks: If the project owner's predictions do not come true (within the predetermined timing), there is a risk of lower or non-existent returns and, in the worst case, partial or complete loss of the invested capital. 

Note for both risks: Investors in Participatory Notes bear the same economic risk as if they were investing directly as shareholders of WASSEPOESTER.

Risk: Although each Spreds Finance compartment is ‘bankruptcy remote’ (meaning that no other creditor can claim a right on or against this compartment) in relation to the others and in relation to the ‘general’ liabilities of Spreds Finance itself, as a result of (i) the terms and conditions of the Notes, (ii) the articles of association of Spreds Finance and (iii)  Article 4 of the Law of 18 December 2016 on crowdfunding; there is a subsidiary risk of  insolvency of Spreds Finance. 

Consequence: Should such insolvency occur, Noteholders may be exposed to the risk of a significant delay in the recovery of their investment.

Note: The probability of this risk occurring is extremely low given the structure and organization of Spreds Finance, in particular the compartmentalization mechanism and the "bankruptcy-remoteness" described above. Each participation taken or loan granted to a project owner is recorded in a separate compartment and is appropriately accounted for in the accounts, taking into account the fact that the accounts are kept by compartment. As a result of (i) the conditions attached to the issue of Participatory Notes, (ii) the articles of association of Spreds Finance and (iii) article 10 of the law regulating the recognition and delimitation of crowdfunding and containing various provisions relating to finance and notwithstanding articles 7 and 8 of the Mortgage Law of 16 December 1851, the assets of a particular compartment serve exclusively to guarantee the rights of investors with respect to this compartment.

1.               Risk associated with the absence of an organized exchange market for Participatory Notes

Risk: Neither the project owner nor Spreds Finance organizes an exchange market for Participatory Notes. It is thus up to the investor himself to find a buyer for his Participating Notes. Given the absence of an exchange market for Participatory Notes, there is no way to adequately establish a comparative pricing methodology for Participatory Notes.

Consequence: A holder of Participatory Notes may not be able to find a buyer for the Participatory Notes it wishes to sell (at the price at which it wishes to sell).

Note: The intention is not to sell the Participatory Notes but to sell the Underlying Asset, often on the occasion of the sale of the Underlying Company itself (see Appendix B, (d)).

2.           Risk associated with the vote by the general meeting of holders of Participatory Notes to sell

Risk: Any decision by Spreds Finance to sell shares of WASSEPOESTER is subject to the approval of the holders of Participatory Notes representing at least 75% of the outstanding Participatory Notes, unless Spreds Finance is required to sell them under a contractual or statutory provision. 

Consequence: Investors thus bear the risk that the general meeting of the holders of Participatory Notes may refuse to approve the sale of the participation, in which case all investors are bound by this decision and thus must wait to obtain redemption of the Participatory Notes.

3.           Risk associated with an investment in a young company

Risk: Investing in shares of young companies entails the risk that a buyer for the shares will not be found, or not at a fair price yielding a market return, or that a buyer will not be found within a reasonable period of time. 

Consequence: If no buyer is found for the holding, redemption of the Participatory Notes is not possible.

Note: Spreds Finance will make every effort within its powers to obtain the best possible price.

Risk: Spreds Finance has not conducted an analysis of the proposed project or of the financial situation of the Underlying Company.

Consequence: Any investor considering subscribing to Participatory Notes should make its own analysis of WASSEPOESTER's solvency, activity, financial situation and prospects.

Note: Any decision to invest in Participatory Notes should be based on a comprehensive analysis of the project and of this sheet of essential investment information. Spreds Finance's model does not provide for the presentation of analyzed projects to investors but allows investors to invest based on the information made available to them, after making their own analyses.