ONO 1A

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

Risk: The LUCUN 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.

2.      Risk associated with the size of the team

Risk: Given the stage of development that LUCUN 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 for both risks: There are three seasoned entrepreneurs in the company. 

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.

4.      Risk associated with the level of management fees envisaged 

Risk: For 2024, remuneration in the amount of €60,000 is planned for the board members. For 2025, a remuneration of €30,000 per month is foreseen to the governing body until the month of June (included). From July 2025, an amount of €45,000 is foreseen until the end of the year 2025.  
 Consequence: There is a risk that a large part of the funds raised will go purely to fees for the directors/managers.

Note: While competitive salaries are necessary to attract and retain top talent, excessive salaries can affect investors' returns. 

1.      Risk associated with the specific activities of the company.

Risk: LUCUN operates in the energy sector. The company must therefore adapt to the reactions of players in this sector. Suppliers could apply administrative fees to sharing participants.

Consequence: If this risk occurs, the company may set disaffection among participants and difficulty in recruiting new ones. The number of energy-sharing participants could significantly decrease and it could be difficult to recruit new ones. 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 LUCUN, with partial or complete loss of the invested capital.

Note: LUCUN owns lobbying power and good contacts in the administrative field. Public relations and lobbying plan is crucial to LUCUN business.  

2.      Risk associated with changes in legislation

Risk: Changes in legislation, particularly in the energy sector, it could require adjustments in the company's zone of activities or business model.

Consequence: If this risk occurs, it could lead to potential operational disruptions or added costs. This could lead to a slower growth or lower revenue and thus 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: Directive (EU) 2019/944 of the European Parliament and of the Council on common rules for the internal market for electricity and amending Directive 2012/27/EU will force the 28 Member States to roll out local application, LUCUN has the flexibility to move its activities to another target-scale (countries, regions, localities) where their concept is legally authorized. 

3.      Risk associated with intellectual property

Risk: The technology of LUCUN’s algorithm may not be unique and could be copied by big players of the energy-market. 

Consequence: If this risk occurs, a higher speed for competition comes into play and LUCUN may struggle to gain market share. 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 COMPANY, with partial or complete loss of the invested capital. 

Note: LUCUN has carried out an initial freedom-to-operate study and has not identified any blocking intellectual property. The company is now in the written phase of the design registration.

4.      Risk associated with competition

Risk: Large players in the energy market may launch similar activities.

Consequence: Competition could force LUCUN to expand more rapidly across Europe. If LUCUN sets the wrong targets, this could lead to a lower valuation in the event of a potential exit, since the business plan could not be executed as planned. In this case, returns could be lower, or even non-existent. In the worst-case scenario, there could even be a liquidation and bankruptcy of LUCUN, with partial or total loss of invested capital.

Note: Should this risk materialize, LUCUN will take action with prescribers such as unions, federations, photovoltaic panel vendors and real estate syndicates, for whom its activities represent a key advantage. 

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 LUCUN 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 LUCUN nor the Participatory Notes of the ONO 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 LUCUN. 

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 LUCUN.

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 LUCUN 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 LUCUN'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 LUCUN 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.