ACE GOOD 1A

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

Risk: Despite careful market research, the market for tokenization and income-based financing is still relatively new and can be subject to major fluctuations depending on the global economy, market trends and consumer demand. 

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: To mitigate this risk, ACE GOOD will carry out in-depth market analyses and monitor trends to adjust their offer accordingly.

2.      Risk associated with the size of the team

Risk: Given the stage of development that ACE GOOD 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: With the funds raised in this financing round, ACE GOOD plans to hire a full-time COO, a sales representative and a few freelancers.

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 changes in European regulations on tokenized assets

Risk: The finance and blockchain sector in the European Union is subject to complex and constantly evolving regulations. Laws concerning tokenization and cryptocurrencies may vary, and European authorities may adopt new regulations that could impact the business model. 

Consequence: Technical failures, cybersecurity attacks or data breaches could damage user confidence and lead to financial losses. 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: ACE GOOD is already working with several law firms specializing in crypto-assets to anticipate regulatory compliance. In addition, as is already the case, the company can provide services to customers outside the EU.

2.    Risk associated with technology

Risk: Being a technology platform, ACE GOOD is highly dependent on IT systems and blockchain infrastructures.

Consequence: A slow user uptake could lead to insufficient revenues, negatively impacting cash flow and delaying business development milestones. 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: To reduce this risk, ACE GOOD will implement robust security protocols, regular audits of their systems, and train teams in cybersecurity best practices.

3.    Risk associated with rapid technological change in the tokenization and blockchain sector

Risk: If the platform fails to adapt to new technological trends (such as new blockchain capabilities), it could fall behind its competitors, resulting in a loss of market share.

Consequence: 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 conducted a study to duplicate its product on other protocols in order to anticipate possible technological migrations. ACE GOOD is in talks with crypto foundations to finance the development of its solution on their protocols.

Risk: Operating in different jurisdictions could present compliance challenges, including regulations on data privacy (e.g. GDPR) and on crypto-assets and tokenization.

Consequence: These challenges could delay expansion into new regions. 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: It is essential that the company remains compliant with these regulations to avoid future complications. To mitigate this risk, ACE GOOD invests in continuous regulatory monitoring and works with specialized legal advisors to ensure compliance of all operations.

5.           Risk associated with dependency on a limited number of strategic partners

Risk: The platfirm could become dependant on a limited number of strategic partners.

Consequence: If key partners (such as technology providers or marketing affiliates) fail to deliver, the platform’s operations or growth may be negatively impacted, slowing down expansion plans. 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 will diversify its partnerships and avoid over-reliance on a single provider by building relationships with multiple strategic partners across various functions, from technology to marketing.

1.      Risk associated with insolvency and bankruptcy of the project owner

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 ACE GOOD may lead to lower or non-existent returns and in the worst case to a partial or total loss of the invested capital. 

Risk: Without new financing in the short term, the company will not be able to survive and will have to declare bankruptcy. Indeed, the company is currently in the alarmbellprocedure.
 Consequence: If sufficient funds are not found in the next months, there is a risk that the company will be dissolved or will have to declare bankruptcy, both situations would cause investors to lose part or all of their investment. 

Note: It must be noted that it is very common for start-ups to be in the alarmbellprocedure. The current fundraising aims to resolve the situation.

1.      Risk associated with the lack of guarantees

Risk: Neither the shares of ACE GOOD nor the Participatory Notes of the ACE GOOD 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 ACE GOOD. 

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 ACE GOOD.

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 ACE GOOD 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 ACE GOOD'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 ACE GOOD and became shareholders. However, Spreds, as a crowdfunding service provider, tries to encourage each project owner to report at least 2x per year.

3.      Risk related to the absence of verification of certain key financial figures and ratios

Risk: ACE GOOD publishes an abbreviated income statement model. This means that certain figures (such as sales) do not have to be published. ACE GOOD has chosen not to publish these figures. In addition, the annual accounts for 2024 have not yet been published (which is perfectly normal, given that the annual accounts follow a calendar year and the figures are generally still being prepared by the accountant at this time of year). As a result, certain key financial figures and ratios could not be verified by the equity provider in the annual accounts.

Consequence: There is a risk that these figures are not correct. This could potentially affect investor analysis.

Note: These figures come directly from ACE GOOD's accountant.

1.      Risk associated with the tax treatment of capital gains - government tax on capital gains

Risk: Investors are not currently subject to capital gains tax. However, such a tax has been proposed by the federal coalition agreement.

Consequence: If this tax is in force when investors realise a capital gain, it is possible that this capital gain will be taxed at the rate provided for by the new law.

Note: The date of entry into force of this measure is uncertain. Capital gains existing prior to the entry into force of this measure will not be taken into account. An exemption of €10,000 could be taken into account (this amount would be indexed each year in line with inflation).

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