The Issuer faces several risk factors that could affect its business, results of operations and financial condition. It is critical to understand these risks to make informed decisions when investing in or interacting with the Issuer. The risks associated can be divided into two sections: risks related to the issuer and risks related to the supply of tokens. MAIN RISK FACTORS RELATED TO THE ISSUER: ● Mergers and Expected Synergies: The Issuer may in the future carry out mergers of companies or assets as part of its strategy. However, there is no guarantee that the expected synergies will materialize as planned. Mergers can face challenges in integrating operations, reducing costs and achieving synergistic benefits, affecting the Issuer’s financial results. Management response: This risk will be mitigated with rigorous due diligence prior to any merger, implementing robust integration plans, and closely monitoring post-merger progress to ensure synergies are realized. Prior to mergers, the Issuer will conduct a thorough evaluation; and will develop clear strategies to overcome challenges and closely monitor operations to ensure business synergies. ● Material Operational Risks: The Issuer’s operations are subject to operational risks that may result in temporary interruptions or interruptions of services. Equipment failures, system outages, natural disasters, cyberattacks, among other factors, can negatively impact your business, reputation, and financial results. Management response: To mitigate these risks, strict cybersecurity protocols will be implemented, regular staff training will be conducted, operations centers will be diversified, and robust disaster recovery plans will be maintained. Implement strong measures against digital threats and train employees to handle emergencies. The Issuer operates to reduce the impact of outages. The Issuer will only work with distribution partners that provide a premium SLA with 99.9% uptime and penalties if they do not fulfill this requirement. ● Changes in legislation: Changes in tax legislation may adversely affect the Issuer’s business and financial results. Management response: This risk will be mitigated by keeping a dedicated legal and tax team under contract to closely monitor regulatory changes and adjust their practices and strategies as needed to comply with applicable legislation. The Issuer maintains a Specialized Legal and Tax team and closely follows regulatory changes and adjust strategies. Adjust practices according to current legislation. ● Judicial and Administrative Proceedings: The Issuer may be involved in judicial, administrative, or arbitral proceedings that, if unfavorable, may adversely affect the Issuer. In addition, actions involving controlling managers or shareholders can affect your image and operations. Management response: This risk will be mitigated by maintaining an experienced legal team, adhering to corporate governance best practices, and taking preventative measures to avoid litigation whenever possible. The Issuer has professionals to face legal proceedings. Maintain good Corporate Governance and follow sound practices to prevent controversies. Avoid litigation and maintain legal compliance. ● Risk of bankruptcy of the issuer: If the issuer goes bankrupt or fails to comply with its obligations to investors, the respective bankruptcy process regulated in the Commercial Procedures Law must continue, as well as the corresponding dissolution and liquidation of the issuing company. Management Response: The issuer mitigates the risk by conducting thorough financial planning and implementing efficient and transparent investment management procedures with quarterly audits provided to the investor’s relation department. ● Risk of Money Laundering, Asset Laundering, Terrorist Financing and Proliferation Financing of Weapons of Mass Destruction: Cryptocurrencies without AML prevention procedures are commonly used by criminals for money laundering activities. Management response: The issuer mitigates the risks through the relevant policies, processes and procedures. For proper identification of the client and its final beneficiary; always requesting the necessary supporting documentation according to the risk identified for each of them. In addition, the risk of fraud is covered by the PLDAFTFPADM. MAIN RISKS RELATED TO THE SUPPLY OF TOKENS: ● Agricultural market risk: Fluctuations in soybean prices can affect the value of tokens, resulting in losses for investors. Agricultural commodity market volatility can be significant and unpredictable, leading to abrupt swings in prices. Management response: The Issuer carries out a thorough assessment of the risks, especially those associated with the agricultural market. The Issuer will diversify its offerings of agro commodities to mitigate this risk. ● Regulatory risk: The offer is subject to complex and ever-changing regulations, which may affect the viability and legality of the project. Different regulations in various jurisdictions can increase the complexity and costs of supply. Management response: Collaborating with legal advisors specializing in cryptocurrencies and complying with all relevant regulations is essential to ensure compliance and continuity of the project. The Issuer has implemented regulatory risk management practices to track, monitor, and analyze market changes and assess their potential impact on the business and update business policies accordingly to ensure compliance with the standards and regulations. ● Liquidity risk: Liquidity can be limited, making it difficult to buy or sell large amounts without significantly impacting prices. Investors should consider diversifying their investment into different crypto assets and using long-term investment strategies to reduce reliance on immediate liquidity. Management response: The Issuer considers long-term investment strategies and asset diversification to reduce reliance on immediate liquidity. ● Technology risk: Security vulnerabilities, network failures, or technical issues can lead to loss of tokens or improper access to investor information. Using secure wallets and maintaining strong cybersecurity practices, such as using two-factor authentication, is essential to protecting assets. Additionally, the smart contract has not been audited, which can lead to security and operational breaches and vulnerabilities. Management response: The Issuer implements robust security measures to protect assets from technological risks, including network vulnerabilities and failures. Once the issuance is determined, the risk is transferred to the distributor that is chosen based on requirements like having ISO 27001, and SOC II type I & II compliance and premium SLAs. ● Smart-contract vulnerability risk: Smart-contracts used for the issuance have not been audited, which can lead to security and operational breaches and vulnerabilities. Management response: The Issuer has selected the leading smart contract audit firm, Consensys and it is scheduled for the end of January 2024. Smart Contract Certificates will be publicly provided once finalized by Consensys Diligence. Additional mitigation factors: As part of the certifier report they have provided a thorough review of the smart contract, and the results can be found in Annex III. ● Counterparty risk: Depending on the structure of the offering, the issuer and the investors may rely on third parties to fulfill contractual obligations, which can be risky if these parties fail to meet their responsibilities. Management response: Conduct a thorough counterparty risk analysis and ensure that the parties involved have a strong track record and are trustworthy. As usual contractual obligations force majeure and act of God may affect the execution of the contract and third parties can fail to comply with its obligations without responsibility. ● Soybean supply risk: Supply is tied to access to the actual product. Disruptions in soybean supply (for weather, logistical or other reasons) can adversely affect the project. Management response: To mitigate these risks, the issuer will maintain effective supply chain management and diversify sources of raw materials that can reduce this risk. ● Risk of market manipulation: As the crypto market may still be less regulated and transparent than traditional financial markets, there is a risk of price manipulation by malicious parties. Participating in trusted markets and using regulated exchanges can help mitigate this risk. Management response: The issuer implements policies of insider information to protect against any insider information use and prevent market manipulation. ● Risk of private key loss: Investors may lose access to their tokens if they lose or compromise their private keys. This can lead to permanent loss of assets. Management response: Storing private keys securely and implementing the use of cold storage with MPC based solutions are measures taken to reduce this risk and enable secure custody. ● Environmental and climate risk: Extreme weather events, such as droughts or floods, can affect soybean production, affecting the value of tokens. Management response: This risk can be reduced with implementations of environmental risk mitigation measures and closely monitoring weather conditions can help reduce this risk. ● Risk of Money Laundering, Asset Laundering, Terrorist Financing and Proliferation Financing of Weapons of Mass Destruction: Cryptocurrencies without AML prevention procedures are commonly used by criminals for money laundering activities. Management response: The issuer mitigates the risks through the relevant policies, processes and procedures. For proper identification of the client and its final beneficiary; always requesting the necessary supporting documentation according to the risk identified for each of them. ● Other factors: The spread of communicable diseases on a global scale, such as the coronavirus (COVID-19) pandemic, may result in increased volatility in crypto markets and negatively affect the global economy, including the crypto-asset economy, affecting the $ESOY Token trading market.