Key Information about the Investment

Name Security:

Name Provider:

Date:

Convertible Note EmCeBe

P.T. Emas Cemerlang Bersama

01 November 2021

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This document will help you better understand the risks, costs, and returns of the investment.

Be Aware! This document and investment proposal have not been reviewed by any financial regulatory authority.

What is offered and by whom?

The Convertible Notes EmCeBe are offered by P.T. Emas Cemerlang Bersama. The provider is also the issuer of the Convertible Notes EmCeBe.

The issuer has several production companies in the textile sector under (temporary) management. Production is mainly carried out for external clients but is also suitable for production for own account.

The company also undertakes sales and marketing activities for a wide range of apparel and accessories products and natural herbal-based health and skin care products. These activities are fully focused on e-commerce and sales are therefore entirely online via the web stores.

In addition, the company is developing two innovative projects. The first project is a collaborative robot for clothing production, which involves hardware and software development. The second project is the Community Welfare program powered by blockchain technology and crypto. Both projects are supported by the proceeds from the issuance of the Convertible Note.

The website of the issuer is https://www.emcebe.com

What are the main risks for an investor?

In general, the higher the offered or expected return, the higher the risk. The offered or expected return on the Convertible Note is dependent on the profit that P.T. Emas Cemerlang Bersama makes. There is a chance that the profit will be lower than expected or that there will even be a loss, as a result of which the investor may receive less return or even lose the investment sum or part of it.

The profit component of a Convertible Note is not the interest. The interest component of a Convertible Note should be considered a compensatory payment for the amount made available by the investor to the issuer until it can fulfill its commitment to deliver shares.

However, the profitability of the company is certainly an important, but not the only, factor in determining the value of the company when the conversion of the Note into shares will take place.

Both projects benefiting from the proceeds of the issuance of the Convertible Note are innovation projects in the development phase.

The main reasons why P.T. Emas Cemerlang Bersama may not be able to pay out the offered or expected return or even the investment sum are:

  1. Failure to achieve the objective: In innovative projects there is always the risk that the result of the development is not what the development phase started with. There is then a risk that the project will have to be regarded as completely unfeasible. In the worst case scenario, this means that it will not add value to the company and so the shares of the company will be worth less at the start of the conversion of the Note into shares.
  2. Expiration of maturity date or failure to realize qualified equity financing in a timely manner: There is a risk that the maturity date will expire or that the issuer will not realize qualified equity financing in a timely manner. This will mean for the investors that the value of the shares will be significantly lower as no value can be given to one or both innovation projects. The investor, or a majority of investors, will have to agree on any extension of the maturity date, thereby enabling the issuer to secure qualified equity financing, or requiring the issuer to convert the Note into company shares. In both cases, this will mean that the return will be lower than initially anticipated.
  3. Liquidity Event: There is a possibility that the issuer will cause a liquidity event to occur. For a full description of a Liquidity Event, please refer to Page 3 of the Convertible Note Agreement. If the risk of a Liquidity Event occurs, this means that the objectives at the start of the Note will not be achieved and the return for the investor will therefore be lower. In the event of a Liquidity Event, compensation will be provided to the investors of this Convertible Note, more information about this can be found on Page 6, 4.3 Liquidity Event of the Convertible Note Agreement.

The Convertible Notes are not tradable on an exchange or platform and therefore have a limited tradability. This means that there may not be a buyer for the Convertible Note of the relevant investors if they want to discontinue the investment before maturity date. Investors therefore taking on the risk that they will not be able to get their money back at the time desired by the investor and therefore must hold the investment longer or has to sell the Note for a lower price.

There are also other important risks. More information about these risks can be found in this investment disclaimer under the heading “Further information on the risks associated with this investment”.

We would also like to refer to the Convertible Note Agreement:

Page 3.

Page 6.

Page 7.

Liquidity Event

Clause 4., Conversion in general and attention to 4.3 Liquidity Event

Clause 8., Insolvency Events

An investor must in all cases be aware of all the provisions of the agreement.

What is the target audience of this investment?

The Convertible Note EmCeBe is offered to private and professional investors.

The Convertible Note EmCeBe is suitable for investors who do not invest all of their money in these Convertible Notes and who have the knowledge and experience to make their own decision whether to invest in these Notes or not.

The Convertible Notes are not suitable for investors who:

  • do not want to take a risk; or
  • have no experience with investing; or
  • have no understanding of what we do; or
  • do not want to lose money; or
  • borrow money and use it to invest; or
  • have less pension or less money to be able to do the most important things (e.g., for food, housing, and clothing) if they lose money because of the Notes; or
  • cannot afford to miss the money for at least 6 years; or
  • need the interest on the Notes to be able to do the most important things (e.g., for food, housing, and clothing).

THE CONVERTIBLE NOTES EMCEBE ARE NOT AND WILL NOT BE OFFERED IN THE UNITED STATES OR TO ANY U.S. PERSONS (AS DEFINED IN REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1993, AS AMENDED).

What kind of investment is this?

The investor invests in a Convertible Note that entitles the holder to a number of shares to be determined in the future.

The nominal value of the Convertible Note is €50,00.

The net asset value of the Convertible Note is €50,00.

The price of the Convertible Note is €50,00.

Participation is possible from €50,00.

The issue date of the convertible Note is November 1, 2021 or such later date as stated on the agreement.

The term of the Convertible Note is a maximum of 6 years (72 months).

The interest on the Convertible Note is 6% per annum. The Convertible Note has no bonus interest.

More information about the return on investment can be found in this investment disclaimer under the heading “Further information about the return on investment”.

What are the costs for the investor?

The investor will not pay any fees associated with the issuance of the Convertible Note.

When selling the Convertible Note, the investor does not pay any costs other than bank transaction costs to be specified.

What is the investment amount used for?

A maximum of 6% of each Euro of the investment amount is used to cover the costs. The investment amount will be spent on:

  • The (further) development of the two innovation projects;
  • Expansion of sales activities; and
  • Further expansion of the marketing activities.

More information about how the investment amount is spent can be found under the heading “Further information about how the proceeds of this financing is spent” in this investment disclaimer.

Further information on the investment

In this section of the investment disclaimer, you will find more information about the investment proposal and the provider. This gives you more insight into the specific risks, costs and return on investment.

Be Aware! This document and investment proposal have not been reviewed by any financial regulatory authority.

Further information about the provider

The provider is also the issuer of the Convertible Note. The issuer (P.T. Emas Cemerlang Bersama) is a Perseroan Terbatas, Indonesian equivalent of a Limited Liability Company, incorporated on 23 November 2015 and established in Jakarta, Indonesia under company registration No: 09.03.1.70.102174. The address of the issuer is: Axa Tower 45th Floor, Jalan Prof. Dr. Satrio Kav. 18, Kel. Karet Kuningan, Kec. Setiabudi, 12940, Jakarta Selatan DKI, Indonesia. The issuer’s website is https://www.emcebe.com.

Contact person:

P.T. Emas Cemerlang Bersama, Attn: Board of Directors

Axa Tower 45th Floor, Jalan Prof. Dr. Satrio Kav. 18,

Kel. Karet Kuningan, Kec. Setiabudi,

12940, Jakarta Selatan DKI, Indonesia

support@emcebe.com

ysk.koen@gmail.com – Y.S. Koen

Tel.Nr.: +6282113778883

The issuer is controlled by:

Nona Warni Suwarni, Chief Executive Officer – Founder

Yusuf S. Koen, Chief Business Officer – Co-Founder

Tuan Sardi, Chairman of Board of Commissioners – Co-Founder

The shareholders of the issuer are:

Nona Suwarni, holder of 97,5% shares,

Tuan Sardi, holder of 2,5% shares.

These are the main activities of the issuer:

We have several production companies in the textile sector under (temporary) management. Production is mainly carried out for external clients but is also suitable for production for own account. In the near future, we will focus more on our own production and will continue to serve external customers with small orders and new model assembly procedures (sampling). The large production orders will then be placed at the production facilities where we only provide management, but where ownership of the production facility is in the hands of clients that we serve with our consultancy department.

The company also undertakes sales and marketing activities for a wide variety of apparel and accessories products and natural herbal-based health and skin care products. These activities are fully focused on e-commerce and sales are therefore entirely online via the web stores. Expansion can be expected in both categories in order to serve a larger consumer group. We will then mainly sell our own products and thereby further increase our profitability. The correlation between the two product categories can be found in a more personalized lifestyle branding trend that is already underway but for which we believe there will be an even greater demand. Even more than before, we see that consumers have become much more self-conscious in the choices they make when it comes to sustainable clothing and personal care.

In addition, the company is developing two innovative projects. The first project is a collaborative clothing production robot, the development should result in a combined hardware and software solution. The garment production facility will help collect data needed for further development of the collaborative robot. The second project is the Community Welfare program, powered by blockchain technology and crypto. The global pandemic has raised awareness for the well-being of humanity. Then we have to conclude that in 2021 the wealth gap is becoming an even bigger problem than in the first place. This has only fueled calls for a social-financial safety net but has still not led to a well substantiated program. The Community Welfare Program is changing that. Both projects are benefitting from the proceeds of the issuance of the Convertible Note.

Further information on the risks associated with this investment

These are the main risks to the issuer and investors, other than those described earlier in this document.

There are various risks for the issuer and the projects. Circumstances as described below may adversely affect the interests of the issuer and investor. This could potentially affect the ultimate return on investment.

Change in legislation and regulations:

There is a risk that laws and regulations will be amended accordingly. Several factors can play a role in adapting current laws and regulations by countries. For the first project, a change in labor laws and regulations regarding the use of automation in the workplace could have major negative consequences. There will be countries that want to protect their internal labor market and thereby prevent the introduction of automation in the workplace for fear of job loss. Should this happen and the change is adopted by several countries at the same time, it could have an adverse effect on the ultimate profitability of the project, as we will have fewer market opportunities.

For the second project, changing legislation and regulations could have even more far-reaching consequences. In the current setup, we consider a ban on the use of crypto tokens as legal tender, there is no reason to pressure the project by demanding that the crypto token become legal tender. But governments can ban the total ownership of crypto assets and then the physical realization and execution of the entire project could be jeopardized. This could have disastrous consequences for the project, but it will be impossible to introduce a global ban on crypto asset ownership. This means that there are always ways to keep the project operational. We will therefore have to continue to invest in legal aid, these are financial resources that we cannot use for the further development of the blockchain platform. This may delay the full adoption of the project by the general public.

Dependence on management and key personnel:

There is a danger that the entire development of the projects and growth of the company will become dependent on a number of key figures. However, we are not going to create an unnecessarily large organization because we are afraid that the dependence on a limited number of people poses too great a threat. That would be a wrong allocation of financial resources, the resources that our investors entrust to us should be spent mainly on product development. However, this risk of dependence on key personnel can have a negative impact on project growth. The associated risk is more of a risk of time than it should have a negative effect on long-term profitability. If we make a wrong assessment in this area and one of the key personnel stops working on the projects, it may take a while before we find a suitable successor. But that risk doesn’t have to be greater than that.

(Illegal) Use of soft-/hardware by third parties and intellectual property:

The unlawful use of software/hardware by third parties is a risk that mainly relates to the first project. In order to save time and costs during the development phase, we will regularly use open source software, but this use is subject to the condition that changes or adjustments to this software must also be published and thus made available to third parties. No one will later be able to hold us liable for misuse of the intellectual property of others. However, the consequence of this is that we create the possibility that others can misuse our software completely for their own benefit. The effect of this risk may be that others bring a better product to market with software developed by us and this will ultimately negatively affect the return on investment.

Internal- external growth:

If growth comes naturally, for example through increased turnover, that is something that any company can absorb relatively easily. However, when growth is enforced, it can pose a risk to any business. Internal growth can still be managed reasonably well, for example by hiring more staff. But as soon as growth is sought externally through, for example, acquisitions, several risk factors start to play a role. If this growth is enforced, it could have negative consequences for the entire company. For example, attention can be diverted from our own sales department and existing customers. In all cases, it is a process in which one’s own turnover must always be closely monitored, otherwise profitability will fall. If growth is forced, it could ultimately have a negative effect on investors as returns fall short of expectations.

In this phase it will have less impact on the first project, because we are in the development phase with it and there is no immediate need for several new employees. If we take over a company for the first project, it is only because of certain knowledge that is missing internally. For the second project, growth can be a dangerous process where we have to keep a close eye on the balance sheet at all times. This certainly also applies to the company’s, P.T. Emas Cemerlang Bersama, overall performance. For our own activities, growth should only be forced if there is no other option, for example due to a sudden much higher demand for the products we sell. We will then have to make an informed decision as to whether we want to embrace this growth and focus entirely on increasing revenue through growth, or whether we choose other options, such as accepting scarcity. This can also be a strategy for not relying solely on growth. In all cases, we will have to pursue a policy that we will only enforce growth if no other solution is available.

Competition:

Competition is not something that can be dismissed with contempt by any company. When competition affects the company’s business, it’s not the competition’s fault, but rather a very alarming signal that something is going wrong within the company. Of course, we need to know our competitive position in the market, but we will have to focus on providing a good product and service to our customers. This is especially true for the products we now have on offer and for the first project there is always a risk of competition. If we misjudge the related risks, it could have a negative effect on the company’s overall revenue. This will ultimately negatively affect the investor’s participation and returns. Competitiveness should never be underestimated, but we should not make it more important than it is. Loss of competitiveness is more likely to expose weaknesses within the organization and does not have to be a direct reflection of the situation in the market.

Delays in product development:

This is a very important risk factor, something we have no direct control over when it comes to the progress of developments within the projects. It is an uncertainty that no one can remove, that is the annoying factor of innovation. We develop products and projects that do not yet exist, there is no blueprint to compare the development with, there is no frame of reference. We believe that we can mitigate this somewhat by adopting a relatively long term for the convertible Note. If the projects are not ready to show at least a prototype or a beta model and we still want to proceed with the conversion to shares, this will have a negative impact on the valuation of the company. This will weigh heavily on the expected return on investment. If we want to postpone the conversion because of the delay in product development, this too can also have a negative result for the investor. The only correct approach to this problem is in all cases to have very good communication with the investors and always inform about the progress of the developments. But it is ultimately up to the investor to judge the result.

Shortage of qualified personnel:

Any fast-growing organization runs the risk of not being able to find well-qualified personnel at some point. If so, it could have a very negative impact on the company’s performance. Especially when new products are being developed. In our case, this has an inhibitory effect and jeopardizes the timeline within which we want to introduce a prototype. The global pandemic has raised awareness that not all work needs to be site specific. This is again to our advantage as we can have a larger pool of suitable candidates for qualified positions. However, this does not solve everything, and we will have to continue to pay a lot of attention to recruiting the right candidates. However, the risk is always there and any delay at any stage of development can negatively affect the return on investment. However, it does not significantly affect the end-result, so it will not affect the investment to such an extent that the investment should be considered lost. The timeline within which subsequent phases must be reached can be jeopardized, but no more than that.

Limited Equity

The risk of limited equity can have major consequences for any company, but especially for a start-up or fast-growing company. So far, we have financed everything within our company with internal resources and have no external debt. Growth and development will always have to run in sync with the available financial resources. If an imbalance arises, this can have far-reaching consequences for existing agreements with suppliers, customers, investors, and staff. This can ultimately lead to the downfall of any business. We will always have to ensure that sufficient financial resources are available within the company to be able to fulfill agreements, in whatever form. This is one of the reasons why we started this funding round. However, it will be inappropriate to raise unnecessarily large amounts of capital that cannot and/or will not be used in the near future. Because we also have to enter into agreements with investors in which they expect us to perform well. So here too there has to be a balance between how much we need and what we can spend in order to perform adequately. If the agreements on our part are properly fulfilled, we are not immediately afraid that the company and its development projects will be threatened in their very existence.

A situation of force majeure:

To think that we cannot be affected by a force majeure situation is not acknowledging the consequences of a global pandemic. In addition, we are in a region known for being prone to earthquakes and volcanic eruptions. The consequences of such events are difficult or impossible to estimate in advance. However, we will have to anticipate what might happen if such events occur. A situation of force majeure should never be an excuse for the failure of a project or business. Again, we are well aware that we enter into certain agreements with different parties and that we will have to deliver. We will therefore always have to ensure that data and other necessities for relatively normal functioning are accessible to us from different locations. Regardless of the situation, we must continue to work. However, everyone will have to understand that certain deadlines can be exceeded if we are hit by a situation of force majeure.

Further information about how the proceeds of this financing is spent

The total proceeds of the offer are €1.000.000,00.

This amount may also be lower if not all Convertible Notes are subscribed for. The minimum return is €500.000,00.

The proceeds will be used for the following:

  • Development of the Collaborative Robot (€400.000,00);
  • The Community Welfare Program:

50% for Blockchain platform development (€200.000,00);

±25% for the program 1st pilot program (±€100.000,00);

±25% for the organization of the program (±€100.000,00);

  • Expansion of sales activities (€125.000,00);
  • Further expansion of Marketing activities (€75.000,00).

None of the proceeds will be used to cover costs. The issuer intends to bear all costs. However, we have made a reservation for any costs up to €60.000,00. These costs relate to the settlement of the agreement between the investor and the issuer, such as notary fees and formation costs of the participants’ association. Any costs on the part of the investor are for the account of the investor, these may include bank transaction costs and currency exchange costs.

The proceeds are sufficient for this development phase. However, this is only the starting phase of the entire process and several financing rounds are possible. A provision is made for a total amount of €1.500.000,00 under conditions equal to or less favorable to future investors than this financing round.

Developments will show whether we need to make use of the provision in the short term. If we decide to make use of the provision, this will be done in tranches of €500.000,00 each. We will provide reports on the use of resources and the results achieved. The participants’ association will then have to grant permission to release one or more subsequent tranches for financing and associated conditions.

The issuer has no other costs besides the costs related to the investment.

Further information about the return on investment

The return on investment is paid in the form of interest, shares and any future dividend.

The return on this investment is not only supported by an interest component. The interest payment is compensation on the investment amount during the term until the conversion into shares takes place.

The interest is 6% per year.

By default, the investor receives the interest due as soon as the conversion of the Convertible Note takes place, and the investor can therefore choose to also convert the interest amount into shares. However, it is also possible that the investor has the interest paid out as an advance on future interest payments, annually or per calendar quarter, depending on the size of the total investment.

The instrument of this investment is a Convertible Note, where the return on investment is determined by the value of the relevant shares in which the conversion will take place. The investor makes a certain amount of money available in advance to the issuer of the convertible bond to receive shares for it later. As long as the conversion to shares has not yet taken place, the issuer pays a fee in the form of interest of 6% per annum.

Normally, this interest is paid as soon as the conversion into shares takes place. It is up to the investor whether he wants to use the interest to receive more shares, or whether the investor wants to have the interest paid out. However, the investor is also offered the option of receiving an advance on this interest payment, either annually or quarterly. This is settled at the time of conversion; the remainder of the interest then becomes available to the investor.

The conversion into shares will have to take place sometime between the issuance of the Convertible Note and the maturity date (72 months after the issue date). The conversion will be initiated by a so-called Series A financing round, whereby new shares in the company will be issued. These may be new shares in the issuing company, P.T. Emas Cemerlang Bersama, or in a project company established for that purpose. Which option will be chosen is a decision that will have to be taken jointly by all stakeholders, with a clear majority of votes being decisive.

Valuation of the shares - calculation conversion price

The value of the shares is determined by the new valuation of the company once the new financing (Series-A) has taken place (Post-money valuation). However, this new valuation does not determine the purchase value of the shares for the investors in this Convertible Note. The value for which the Convertible Note will be converted into shares depends on the company’s valuation at the time of issuance of the Convertible Note, which is set at €10.000.000,00 (Post-Money valuation). The new valuation given to the company with the Series -A financing will always have to be higher than the current valuation. This will partly depend on the performance in the period between the issuance of the Convertible Note and the Series-A financing.

If the investor does not agree with the future valuation, he can oblige the company to take back his convertible bond for a minimum fixed fee of 2 times the investment sum + any outstanding interest. This also applies in the event that no conversion takes place before the maturity date. In the event that the maturity expires before a conversion takes place, the investors may jointly negotiate with the company the terms of settlement of the Convertible Note. Several options are available, including, but not limited to, the following options:

  • Extension of the maturity date;
  • Conversion into shares at current or majority accepted valuation, to take advantage of future developments;
  • Partial distribution in cash and shares;
  • Higher repurchase value than twice the investment sum.

The investment will generate enough income before the first payout date to reimburse the returns of all investors from that income.

There are no other persons besides the investors who receive income (other than as referred to under ‘expenses’) from the investment.

Further information on the issuer's financial situation

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Further information about the offer and registration

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