Molfar 1A

1.      Risk associated with the failure to attract a consistent customer base

Risk: The MAVKA GROUP team might not have (proper) knowledge of the market and/or make incorrect forecasts. 

Consequence: Without a steady stream of customers, the restaurant may face reduced revenue, which can lead to financial strain. This could result in the inability to cover operational costs such as rent, utilities, and employee wages, and may eventually lead to the closure of the restaurant, with partial or complete loss of the invested capital.

Note: MAVKA GROUP plans the following mitigating measures:

-        Conduct thorough market research to understand the preferences and needs of the target audience.

-        Implement a strong marketing and promotional campaign to create awareness and buzz around the restaurant's opening.

-        Offer promotions or loyalty programs to encourage repeat visits.

-        Ensure high-quality food, service, and overall customer experience.

-        Regularly review and adapt the menu based on customer feedback and changing trends.

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 co-invest in new rounds, at the then current investment terms if new investors are found. 

1.       Risk associated with non-compliance with local regulations and standards

Risk: Brussels, like many cities, has strict health, safety and operational standards for restaurants.

Consequence: Non-compliance can lead to hefty fines, temporary or permanent closure of the restaurant and damage to the restaurant's reputation. In the worst case, there could even be a liquidation and bankruptcy of MAVKA GROUP, with partial or complete loss of the invested capital.

Note: MAVKA GROUP plans the following mitigating measures:

-        Hire a local consultant or expert familiar with Brussels' restaurant regulations to ensure full compliance.

-        Conduct regular internal audits and inspections to check for compliance.

-        Invest in training for staff to ensure they are aware of and adhere to all required standards.

-        Stay updated with any changes in regulations and quickly adapt to them.

2.       Risk associated with an economic downturn or unexpected external factors (e.g., pandemics, political unrest).

Risk: Economic downturns or unexpected events can reduce people's discretionary spending, leading to decreased patronage.

Consequence: This can result in reduced revenue, the need to lay off staff or the need to adapt the business model (like switching to delivery/takeout). In extreme cases, such external factors could lead to the permanent closure of the restaurant, with partial or complete loss of the invested capital.

Note: MAVKA GROUP plans the following mitigating measures:

-        Maintain a strong financial reserve or have access to a line of credit to weather periods of reduced revenue.

-        Diversify the business model, for instance: offer catering services, takeout, or delivery to supplement dine-in revenue.

-        Stay informed about the global and local economic outlook and adjust business strategies accordingly.

-        Implement cost-saving measures during challenging times, such as optimizing inventory or renegotiating with suppliers.

-        Consider insurance options that cover business interruptions.

Risk: The risk of insolvency means that MAVKA GROUP 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 MAVKA GROUP 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 MAVKA GROUP nor the Participatory Notes of the MOLFAR 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 MAVKA GROUP. 

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 MAVKA GROUP.

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 Underlying Company itself (see Appendix B, (d)).

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 MAVKA GROUP 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.

Risk: Spreds Finance has not conducted an analysis of the proposed project or of the financial situation of the Underlying Company.

Consequence: Any investor considering subscribing to Participatory Notes should make its own analysis of MAVKA GROUP'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.