Heymdall 1A

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

Risk: The HEYMDALL 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 the company, with partial or complete loss of the invested capital.

Note: The company has carried out market research and continues to monitor trends to adapt to demand. Flexible strategies are developed to respond quickly to changes in the market.

2.      Risk associated with the size of the team

Risk: Given the stage of development that HEYMDALL 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 company is run by a team of 4 entrepreneurs, each of whom currently owns 25% of the shares.

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

1.      Risk associated with the specific activities of the company

Risk: Export restrictions or tariffs may impact on the ability to sell products in international markets, and there may be problems with the availability of qualified installers and efficient installation methods.

Consequence: Increased costs or market access restrictions could lead to lower sales and hamper growth in overseas markets, not to mention difficulties in finding qualified installers to ensure correct implementation. 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 HEYMDALL, with partial or complete loss of the invested capital.

Note: The company conducts extensive market research to understand regulatory environments, has extensive experience in these countries, establishes relationships with local partners for installation assistance, and diversifies target markets while remaining informed of international trade policies to minimize the risks associated with exports.

2.      Risk associated with the use of technology 

Risk: Rapid changes in technology may outstrip the company's ability to adapt its products or services, leading to obsolescence.

Consequence: Failure to keep up with technological advances could lead to loss of competitive advantage, reduced market share and lower sales.

Note: The company invests in research and development to stay at the forefront of technology. Regular assessments of technological trends and partnerships with innovation leaders are established to ensure timely product updates and improvements.

3.      Target customer risk

Risk: Targeting the high-end market may limit the customer base and expose the company to fluctuations in demand in this segment.

Consequence: A slowdown in the high-end market could result in lower sales and revenues, making it difficult to maintain growth and cover operating costs.

Note: The company conducts market analysis to understand customer trends and preferences, diversifies its product offerings to attract a wider audience, and establishes flexible pricing strategies to adapt to changing market conditions.

4.      Target customer expectations risk

Risk: High-end and demanding customers can have high expectations of product and service quality, which can put pressure on the business to consistently deliver exceptional experiences.

Consequence: Failing to meet these expectations can lead to customer dissatisfaction, negative reviews and damage to brand reputation, ultimately impacting sales.

Note: The company invests in rigorous quality control processes, comprehensive training for customer care teams and collects feedback to continuously improve products and services, ensuring they meet customer expectations.

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 HEYMDALL 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 HEYMDALL nor the Participatory Notes of the HEYMDALL 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 HEYMDALL. 

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 HEYMDALL.

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 HEYMDALL 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 HEYMDALL'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 HEYMDALL 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.