Het Land Van Ooit 1A

1.      Risk associated with supply chain and inventory management challenges.

Risk: There is a risk of supply chain disruptions, delays in inventory replenishment or inefficiencies in inventory management. 

Consequence: If HLVO faces this risk, it could lead to overstocking, shortages or cash flow constraints, affecting sales and customer satisfaction. 

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: HLVO has introduced an advanced inventory management system to optimize inventory levels and reduce waste. The implementation of a BI-enabled forecasting tool will provide better demand forecasting. The company is also strengthening relationships with suppliers to ensure reliable stock replenishment.

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 and, in particular, a high initial investment for the digital transformation and leasing model.

Consequence: Significant initial investments in ERP systems, BI tools and the leasing model can put short-term pressure on HLVO's cash flow. If implementation is slower than expected, or technical challenges arise, profitability may be delayed. New investments may thus be necessary. 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, resulting in the investor losing some or all of his investment. On the other hand, there is the possibility that the company finds new investors, which will lead to dilution, which will be even greater if there is a lower valuation than the one currently used.

Note: HLVO is implementing a phased investment approach so that operational efficiencies will generate cost savings early on. The subscription-based leasing model will provide recurring revenue, and the “New Life” tool will generate additional revenue through vendor advertising, offsetting costs. 

3.      Risk associated with market trends and changes in consumer behavior. 

Risk: HLVO's stated objectives depend on market trends and changes in consumer behavior. If consumer preference shifts to premium or sustainable baby products, HLVO's position may become less competitive. A decline in discretionary spending due to economic recessions may further affect sales.

Consequence: This could lead to lower revenues and 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: HLVO's focus on subscription and lease options provides more cost flexibility for consumers. In addition, Milestone Bundles and product selections provide a personalized shopping experience that matches changing consumer preferences.

1.      Risk associated with the dependence on the birth list and market expansion through the new business model

Risk: HLVO's continued success depends on the successful launch of the birth list module and market expansion through the new business model with lease and subscription packages.

Consequence: If HLVO fails to significantly increase birth list registrations, it may struggle to generate sustainable revenue streams, impacting scale and expected financial targets. Slow adoption can slow profitability and put pressure on cash flow. 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: HLVO is integrating the “New Life” Birth List Module, making the birth list more accessible and attractive. Investments in targeted marketing, partnerships with maternity hospitals and digital tools will increase adoption. In addition, HLVO is diversifying revenue streams with subscriptions, stroller rentals and vendor-supported advertising, reducing reliance on a single product.

2.      Risk associated with the entry of a ‘copycat’ competitor into the market            

Risk: HLVO's birth list technology developed by HLVO may not be unique and could be copied or possibly blocked by competing IP.

Consequence: The building blocks of the technology may have to be redesigned, delaying market launch and affecting financial results. This could lead to lower revenues and to a lower valuation in case 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 HET LAND VAN OOIT, with partial or complete loss of the invested capital.

Note: HLVO has not identified any blocking IP from competing companies. The current set-up includes anti-counterfeiting technology to prevent copying.

3.      Risk associated with the financial health of the company

Risk: If the company makes no turnover, it will not be able to pay its expenses for 6 months, once the crowdfunding campaign had ended. 

Consequence: If sufficient funds are not found in the coming months, there is a risk that the company will be dissolved (debt-free) or go bankrupt. In both situations, investors would lose part or all of their investment.

Note: If the minimum amount of this offer is raised and to the extent that certain revenue items (such as signed contracts) are taken into account, HLVO can pay its expenses for 12 months before it runs out of cash.

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 HLVO 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 HLVO nor the Participatory Notes of the HET LAND VAN OOIT 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 HLVO. 

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 HLVO.

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 HLVO 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.

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 HLVO'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 absence of an audit of the key financial figures and ratios.

Risk: In 2023, HLVA amended and extended its fiscal year. As a result, the crowdfunding service provider was unable to verify the key financial figures and ratios for that fiscal year.
Consequence: As the financial figures for the fiscal year 2023 have not yet been published, there is a limited risk that these figures will change. This could affect investors' analysis. 

Note: These figures come directly from HLVO's auditor. 

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

4.               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.