Vow 1A

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

Risk: The VOW SUSTAINABLE CARE team might not have (proper) knowledge of the market and/or make incorrect forecasts, in particular an overestimation of the number of sales and the selling price.

Consequence: If the team does not have sufficient knowledge of the market, it could set incorrect targets. Sales could be lower than forecast. This could have a negative impact on margins, profitability and liquidity, which could have a negative impact on margins, profitability and liquidity, which could have a negative impact on margins, profitability and liquidity. 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, with partial or complete loss of the invested capital.

Note: Customer feedback will be collected on an ongoing basis in order to understand how to improve the attractiveness of the shop. Market research will also be carried out to gather feedback from customers who do not buy from the company. Strategies will be developed based on the feedback, focusing first on improving revenue: attracting more customers (marketing, flow builders), increasing basket size (product range), improving the customer experience and frequency of visits, etc.

2.      Risk associated with the size of the team 

Risk: Given the stage of development that VOW SUSTAINABLE CARE 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. There is also a risk of team burnout (overload, tight deadlines).

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 or a delay in the development of VOW SUSTAINABLE CARE's activities could occur.

Note: To maximise its chances of success, VOW SUSTAINABLE CARE has surrounded itself with seasoned experts in the business and sustainability sectors. Selected for the Circular Kickstart accelerator, VOW SUSTAINABLE CARE benefits from the advice of renowned figures such as Stefaan Van Diest and Jan Jonker, and is also part of VOKA's BRYO programme. Since January, Corinne Dumont, co-founder of the SEQUOIA organic supermarket chain and founder of She Counts Ventures, has been working directly with the founder of VOW SUSTAINABLE CARE. For the shop concept, VOW SUSTAINABLE CARE worked with Patrick Glauden and You Studio. With over 40 years' experience in the retail sector, including as ex-Director of Marketing and Innovation at Quick International, Patrick brings a valuable strategic vision to the project.

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. In fact, the company runs the risk of exceeding the planned budget (extended deadlines, unforeseen requirements).

Consequence: With regard to the need for new funding, 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: It should be noted that investors will have the opportunity to re-invest in new rounds, at the then current investment terms if new investors are found. 

4.      Risk associated with intellectual property

Risk: The intellectual property rights (the brand name and logo, the design of the physical shop and the online shop, the code of the online shop and the app, the idea of the ‘scan & go’ retail technology business) will either be sold by VOW SRL (an existing company of which the founder of VOW SUSTAINABLE CARE is the sole shareholder) to the new company (VOW SUSTAINABLE CARE) or contributed to the capital of the new company. The exact structure will be discussed and confirmed at a later date.

Consequence: In the event of a sale, it is possible that part of the funds raised will be used to purchase this IP, although this was not originally planned. The amount that would be used cannot be predicted at this stage because there is no indication of the price at which the IP would be sold. In the event of a contribution in kind (insofar as it is made only after the cash contribution from Spreds Finance's VOW 1A compartment), there would be dilution for Spreds Finance's VOW 1A compartment. The size of this contribution cannot be predicted at this time because, on the one hand, it is not certain that a contribution in kind will take place (which would result in dilution) and, on the other hand, there is as yet no indication of the valuation n at which this contribution would take place.

Note: Discussions are underway to purchase the intellectual property through a contribution in kind, which would take place before the cash contribution from Spreds Finance's VOW 1A compartment.

1.       Risk associated with theft

Risk: Customers could steal products to a greater extent than in ordinary retail shops.

Consequence: If this risk materialises, it 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 VOW SUSTAINABLE CARE, with partial or complete loss of the invested capital. 

Note: A very high theft rate of 5% on average has been included as a basic assumption in the business plan for greater certainty, whereas a rate of 3 to 4% is generally considered very high. The company has planned ongoing investment in information technology to develop security measures aimed at reducing theft rates. Several strategies will be iteratively tested to reduce theft while minimising friction in the customer journey.

2.       Risk associated with the use of scan & go software

Risk: Customer adoption of scan & go may be lower than expected.

Consequence: Store sales could be affected by customers not wishing to use their smartphones to make in-store purchases. If this risk materialises, it could lead to a lower valuation in the event of an eventual exit, as the business plan could not be executed as expected. In this case, returns could be lower or even non-existent. In the worst case, there could even be a liquidation and bankruptcy of VOW SUSTAINABLE CARE with partial or total loss of invested capital.

Note: It will still be possible to make regular cash withdrawals. Customers will be offered a financial incentive to use the ‘scan&go’ software and carry out transactions themselves. VOW SUSTAINABLE CARE will test several options (different fixed amounts and/or %, different ways of communicating the incentive) and staff will greet customers at the shop entrance to inform them about the innovative customer journey and listen to customer feedback in order to learn and improve the user journey.

3.       Risk associated with competition

Risk: There is a risk that new competitors will emerge and develop sustainable products similar to those of VOW SUSTAINABLE CARE and/or that the technology developed by the company could be copied..

Consequence: VOW SUSTAINABLE CARE believes that, in the short term, the emergence of new competitors could prove beneficial, as these companies will popularise the consumption of sustainable care. Although they have more capital to develop more quickly, it will take some time for them to occupy the territory. On the technology side, if other parties launch a ‘scan&go’ retail IT business, this would limit the spin off potential of the ‘scan&go’ software.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 VOW SUSTAINABLE CARE, with partial or complete loss of the invested capital.

Note: VOW SUSTAINABLE CARE will cultivate customer loyalty through a strong community and a strong customer experience, telling a story: David versus Goliath, good versus evil... In addition, for a variety of reasons, VOW SUSTAINABLE CARE will need to be flexible in order to be able to close shops and change locations at minimum cost. The shops are designed on a modular basis to minimise losses when furniture is moved from one location to another. VOW SUSTAINABLE CARE also plans to negotiate ‘pop-up’ clauses in leases, allowing the company to exit or renegotiate rents without penalty during the first two years (to test the location), in the event of the installation of a direct competitor or any other major change that has a lasting effect on turnover. As far as the ‘scan& go’ software is concerned: it's not unique. It's the way the company will do it that is. As soon as VOW SUSTAINABLE CARE has a working prototype of the scan&go software, it will take steps to protect the intellectual property through patents.

4.       Risk associated with margins

Risk: Margins could be lower than expected.

Consequence This could have a negative impact on profitability and liquidity. 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 VOW SUSTAINABLE CARE, with partial or complete loss of the invested capital.

Note: The initial margin has already been validated by an initial purchase of more than 300 references. A strict policy is applied: suppliers who do not offer a minimum margin are not included in the range. The abundance of brands launching and seeking physical distribution contributes to this. But above all, the company wants to cultivate a sense of community, collaboration and loyalty with the brands it selects. The company will continuously seek to improve the margin mix through category management practices, product placement strategies and regular range reviews, sourcing of higher margin products, etc. As VOW SUSTAINABLE CARE grows, the company will negotiate improved pricing, based on the normal market practice of more volume at a discount. Minimum margins will increase.

Risk: The risk of insolvency means that VOW SUSTAINABLE CARE 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 VOW SUSTAINABLE CARE 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 VOW SUSTAINABLE CARE nor the Participatory Notes of the VOW 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 VOW SUSTAINABLE CARE.

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 VOW SUSTAINABLE CARE.

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 VOW SUSTAINABLE CARE 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 VOW SUSTAINABLE CARE’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 VOW SUSTAINABLE CARE 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 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.