Blue Armor 1A

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

Risk: The BLUE ARMOR team might not have (proper) knowledge of the market and/or make incorrect forecasts. Thus, the manufacturing costs of the mRNA may be higher than expected.

Consequence: If the team does not have sufficient knowledge of the market, it could set incorrect targets. Margins could be lower than forecast. 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: To de-risk the investment, the project's R&D phase is divided into two sub-phases. The first phase corresponds to proof of efficacy (18 months), and the second phase corresponds to the development phase (18 months). Discussions have been initiated with Xpress Biologics to mitigate manufacturing costs.

2.      Risk associated with the size of the team 

Risk: Given the stage of development that BLUE ARMOR 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 BLUE ARMOR's activities could occur.

Note: With the funds raised during this financing round, BLUE ARMOR plans to hire four full-time employees for a period ranging from 12 to 18 months, depending on the needs of 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.

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 the level of planned remunerations

Risk: The company must recruit four people, and part of the funds will be allocated to salaries. No executive salaries or management fees will be paid during the first 18 months. However, €415,600 corresponds solely to the salaries of technical staff, according to the HR implementation plan:

The CEO (Arnaud Collard) will receive no salary during this period. This is part of a founders' equity commitment strategy. No general expenses will be allocated to shareholders beyond the technical tasks listed below:

These two contributions are exclusively linked to the project and do not concern governance.

Consequence: On one hand, there is a risk that a (large) part of the raised funds will be dedicated solely to fees (see also Part A (f): Utilization of funds). On the other hand, there is a risk that fees may not be paid in cash but converted into shares, which would cause dilution for other shareholders.

Note: While competitive salaries are necessary to attract and retain top talent, excessive salaries may affect investor returns.

1.       Risk associated with changes in European regulations

Risk: Given the sector in which BLUE ARMOR operates, it must comply with regulatory requirements and safety standards. There is a risk that BLUE ARMOR may (unintentionally) fail to comply with these legal requirements and/or safety standards.

Consequence: If this risk materializes, there could be legal sanctions, product recalls, damage to reputation, and market entry barriers. 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 BLUE ARMOR, with partial or complete loss of the invested capital. 

Note: Market access could be facilitated through the EMA’s MUMS (Minor Use/Minor Species) registration procedure — a system allowing accelerated approval for products intended for niche veterinary indications.

2.       Risk associated with vaccine product development

Risk: The product to be developed is fragile and temperature-sensitive. Currently, similar products can be stored at 4°C for several weeks. There is a risk that the product BLUE ARMOR develops may not be sufficiently stable at 4°C (refrigerator temperature) and may require adjustments to the cold chain, transport, and logistics.

Consequence: If this risk occurs, it will delay market launch, increase costs, and potentially cause missed market opportunities. This 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 BLUE ARMOR with partial or total loss of invested capital.

Note: Customers agree to implement refrigerated storage at -80°C and invest in suitable freezers.

3.       Risk associated with vaccine manufacturing costs

Risk: Manufacturing costs for the mRNA could be higher than BLUE ARMOR has estimated.

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 BLUE ARMOR, with partial or complete loss of the invested capital.

Note: Discussions have been initiated with Xpress Biologics to reduce manufacturing costs.

4.       Risk associated with the market entry of a “copycat” competitor

Risk: The technology developed by the company may not be unique, and competitors could develop a similar approach. Competing intellectual property could be issued during the R&D phase.

Consequence: Some elements of the technology may need to be redesigned, delaying market launch and impacting financial results. 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 BLUE ARMOR, with partial or complete loss of the invested capital.

Note: The company conducted an initial freedom-to-operate study and identified no blocking intellectual property. A formal and thorough freedom-to-operate and patentability study will be carried out once the final design is fixed.

Risk: The risk of insolvency means that BLUE ARMOR 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 BLUE ARMOR 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 BLUE ARMOR nor the Participatory Notes of the BLUE ARMOR 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 BLUE ARMOR.

Consequence for these 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 these risks: Investors in Participatory Notes bear the same economic risk as if they were investing directly as shareholders of BLUE ARMOR.

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 BLUE ARMOR 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 BLUE ARMOR’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 BLUE ARMOR 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: Starting 1 January 2026, a capital gains tax will be applied on the sale of assets. BLUE ARMOR shares will be subject to this capital gains taxation upon exit.

Consequence: If the capital gain realized on the sale of BLUE ARMOR shares exceeds the exemption amount (€10,000 – which can be increased to €15,000), investors will have to pay tax on this capital gain.

Note: As noted above, an exemption of €10,000 is provided (this amount is indexed annually according to inflation).

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