ExpectMe 1A

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

Risk: The EXPECT ME team might not have (proper) knowledge of the market and/or make incorrect forecasts in particular, overestimate the rate at which new hotels sign up.

Consequence: If the team 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 the company, with partial or complete loss of the invested capital.

Note: The company is accompanied by 2 reputable incubators/accelerators: Start it @KBC and imec.istart. The company continues to closely manage its finances and has limited fixed overhead costs. In general, expenses will increase as new contracts are signed.

2.      Risk associated with the size of the team

Risk: Given the stage of development that EXPECT ME is in, it is essential to have the right team for the future development of the company. If the company relies entirely on an indispensable person, there is a risk that this person will withdraw from the company. 

Consequence: If there is only one manager or key person and that person withdraws, the company is (temporarily) without management.  In case of difficulties, no one would be able to represent the company to make decisions.

Note: The founding team members have all signed commitments as part of the shareholder agreement, which keeps them involved in EXPECT ME. In addition, EXPECT ME is working with several outsourcing agencies and partners to ensure continuity should any of the team members resign. Additional retention strategies, including fringe benefits for (new) staff members, will be considered in the future.

3.      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 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 re-invest in new rounds, at the then current investment conditions.

4.      Dilution Risk

Risk: The Company has historically received funds through convertible loans. The goal for these loans is to be converted into shares at some point. 

Consequence: The conversion of the convertible loans will result in dilution for the existing shareholders. In this case, it is not possible to predict exactly what percentage of dilution investors will experience. This percentage depends on a number of factors that are currently unknown, such as the date of conversion and whether or not interest is included in the conversion. 

Note: If all loans are converted into shares during this financing round before cash contributions, no dilution will occur for the EXPECT ME 1A compartment of Spreds Finance.

1.       Risk associated with competition

Risk: A third party (competitor, PMS, etc.) that is more established and has more resources invests in a competitive space selection platform.

Consequence: They can make a greater investment in developing the platform and commercial team, allowing them to scale faster and potentially overtake EXPECT ME. 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 EXPECT ME, with partial or complete loss of the invested capital.

Note: EXPECT ME is seeking additional funding (i.e. through this offer), to continue to grow and remain competitive. At the same time, they also believe it is healthy to have competitors to broaden the landscape and make hotels aware of room selection opportunities in general.

2.               The risk associated with geopolitical influences.

Risk: The occurrence of a force majeure event, such as (but not limited to) a pandemic, natural disaster, political unrest, war or terrorism.

Consequence: This could have a direct effect on the travel industry in general, causing people to travel less and stay in hotels (reducing occupancy rates). As a result, hotels are likely to cut costs and cancel additional services, including room selection platforms such as EXPECT ME. This could lead to a lower valuation in the event of a potential 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 EXPECT ME, with partial or complete loss of the invested capital.

Note: EXPECT ME continues to closely manage its finances and has limited fixed overhead costs. This will help them control or reduce costs and extend the runway, should this occur. In addition, EXPECT ME has a platform that can be rolled out globally. So in the event of a force majeure situation in certain countries or regions, they can shift their focus to other, more stable markets.

Risk: The risk of insolvency means that the company 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 EXPECT ME may lead to lower or non-existent returns and in the worst case to a partial or total loss of the invested capital. 

Type 4 - Risk of lower, delayed or no returns.

1.           Risk associated with the lack of guarantees.

Risk: Neither the shares of EXPECT ME nor the Participatory Notes of the EXPECTME 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 EXPECT ME. 

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 EXPECT ME.

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 Company itself.

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 EXPECT ME 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.

1.               Risk associated with the absence of analysis by Spreds Finance

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

Consequence: Any investor considering subscribing to Participatory Notes should make its own analysis of EXPECT ME'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.

2.               Risk associated with the lack of (periodic) reporting

Risk: There is no obligation for periodic reporting in unlisted companies (except for the cases provided by law, such as the annual general meeting of shareholders and an alarm bell procedure). While some entrepreneurs proactively communicate good and bad news (with a certain periodicity), others do not. As a (minority) shareholder, one cannot enforce reporting (other than in cases provided by law).

Consequence: If an entrepreneur does not do (periodic) reporting, there can be long periods during which investors have no insight into the (financial) state of the company. The lack of reporting does not in itself change the (financial) state of the company but can create a sense of unease among investors. If at some point a company has to file a procedure of judicial reorganization or bankruptcy, this can be a (big) surprise for the investor. 

Note: Investors in Participatory Notes bear the same risk as if they invested directly in EXPECT ME and became shareholders. However, Spreds, as a crowdfunding service provider, tries to encourage each project owner to report at least 2x per year.

To the best of the project owner's knowledge, there are no other material risks associated with its activities.