Presscuff 1A

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

Risk: The PRESSCUFF 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: Different types of market estimations (top down, bottom up) have been performed by PRESSCUFF, next to interviews with specialists to see if there is a clear interest in those submarkets for the company. A sales plan country-by-country and region-by-region is set up.

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

3.      Risk associated with the team

Risk: There is a risk that the team may not perform as expected. 

Consequence: If this risk occurs, there may be lower or later turnover. 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 complete business plan includes a clear path with tangible goals and timelines. In addition, it should include close cooperation with and monitoring of member performance so that behavior can be quickly adjusted as needed.

4.      Risk associated with the use of intellectual property

Risk: The intellectual property is in the name of the VUB and Chapiro. Thus, the patents are not in PRESSCUFF's name. PRESSCUFF must therefore pay for the use of someone else's intellectual property. 

Consequence: Although there is currently a clear agreement regarding the cost of using the IP, there is a risk that this agreement may change in the future and that PRESSCUFF may have to pay more for the IP or, in the worst case, may no longer be able or allowed to use the IP.

Note: Regarding the patents, PRESSCUFF has a worldwide and exclusive license to the VUB and Chapiro patents until the expiration date of those patents. A license fee must be paid to these partners (3% and 0.8% of net sales, respectively, plus the fixed fee mentioned hereafter). If the company is sold, a one-time payment will replace all future license payments.

The license agreement with VUB includes a fixed cost of €84,912 to be paid in 4 times equally divided over 4 years after the capital round. This amount is based on previously incurred costs by the VUB for those patents. Since the VUB currently pays patent renewal fees, these will also be repaid in a similar manner after a capital round. Future patent renewal fees will be paid by PRESSCUFF, as PRESSCUFF is the worldwide, exclusive license fee holder.

1.       Risk associated with (increased) competition

Risk: New, different technologies may emerge and/or competitors may find a way to circumvent patent protection.

Consequence: If this risk occurs, the company may achieve lower sales than projected. 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 PRESSCUFF, with partial or complete loss of the invested capital.

Note: PRESSCUFF will do a clear monitoring of market developments. It may be noted that the problem of lung inflammation due to intubations has been known in the industry for decades but no efficient solution has been found, until now. PRESSCUFF also collaborates with patent specialists.

2.       Risk associated with implementation time

Risk: Implementation may take longer than anticipated.

Consequence: If this risk occurs, it may take longer for the company to achieve the projected revenue. This could lead to a lower valuation in the event of a possible exit because the business plan could not be implemented 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 PRESSCUFF, with partial or complete loss of the invested capital.

Note: PRESSCUFF has already started the certification process and all preparations for the clinical trial so that they can begin the commercialization period as soon as possible.

3.       Risk associated with cost levels

Risk: Cost levels may be higher than anticipated.

Consequence: If this risk occurs, there would be lower gross 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 PRESSCUFF, with partial or complete loss of the invested capital.

Note: PRESSCUFF will clearly monitor cost levels and clear agreements with suppliers are necessary.

4.       Risk associated with changes in legislation

Risk: There may be changes in legislation and/or long lead times with notifying agencies.

Consequence: If this risk occurs, certification will take place later than expected, resulting in lower or later turnover. 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 PRESSCUFF, with partial or complete loss of the invested capital.

Note: PRESSCUFF works with 2 certification specialists with extensive experience. 

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

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

1.        Risk associated with the lack of guarantees

Risk: Neither the shares of PRESSCUFF nor the Participatory Notes of the PRESSCUFF 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 PRESSCUFF. 

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 PRESSCUFF.

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 PRESSCUFF 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 PRESSCUFF'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 PRESSCUFF 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.