Investment risk factors

Potential investors who intend to acquire the issued Tokens should carefully and thoroughly read the following risk factors associated with the Issuance. The goal is that, along with the rest of the information contained in this issuance offering document, they can make an informed decision about whether they wish to be part of the Issuance.

The information provided to potential investors in this document does not replace financial or investment advice that may be offered or required by professional advisors. Likewise, the information here provided does not validate or replace the assessment of the potential investor's needs, objectives, experience, knowledge, and personal economic circumstances to determine whether they are suitable to be part of the Issuance.

In the following sections, the potential investors are presented with the risks associated with their participation in the Issuance, taking into account the financial, legal, and technological aspects inherent to the business model proposed by the Issuer, as well as the operation of tokenizing the issued securities.

The Issuer's objective is to implement organizational and technological measures to mitigate the risks associated with the proposed business model, as well as the technological infrastructure used for the Issuance. Notwithstanding the risk mitigation measures, it is possible that any of the risks detailed below could materialize, potentially causing adverse effects for the potential investors in the trading and investment operations. Therefore, there is a possibility that the Issuer may be unable to fully or partially meet its obligations under this document.

Risk related to information affecting the financial evolution of the Projec

The information contained in this informational document related to financial forecasts and economic development has been projected based on current information. The economic assumptions made by the Issuer are based on experience and analysis, which lead to the formulation of financial forecasts that the Issuer considers reasonable. These forecasts may change substantially due to future events or new information, which could result in a potential loss of investments.

High-Risk Investment Product

Investments made through innovative technologies such as Blockchain, especially in the early stages of a project like the one presented in this document, carry a high level of risk. These types of investments can yield high returns or, conversely, may be significantly affected to the point where the potential investor could lose the entirety of their investment.

In this regard, investment projects based on the tokenization of issued assets may appear to have high potential for appreciation, but the economic success of these investments depends more on the fluctuations and changes in the market in which the Issuer operates than on the digital representation system of the assets.

In conclusion, this investment product can be categorized as high-risk due to its characteristics, and the potential investor must understand and accept these risks before participating in the Issuance.

Risk Regarding Applicable Regulations to the Issuance

The issuance of tradable securities through blockchain technology is currently very novel and subject to an evolving regulatory framework, which may change across different jurisdictions. This is an innovative project that carries the risk that future regulations governing the use of distributed ledger technologies, the creation of tokens representing securities through smart contracts, and their subsequent transfer between investors, may be adjusted or even prohibited by future legislation.

Risk of Liquidity of the Tokens

The Tokens may carry a liquidity risk, meaning that investors may not find a counterparty at a given moment when they wish to sell them.

Risk Associated with Technology

The technological systems (Blockchain and Smart Contract) used for the digital representation of assets are based on very innovative technologies that are continuously evolving. In this regard, there is a risk of malfunction, dysfunction, or even the complete shutdown of the use of this technology, which could affect the digital representation and the potential transfer of Tokens.

Despite the cybersecurity measures in place, the Issuer cannot guarantee that the token issuance and its subsequent commercialization will not be interrupted or subject to any other errors, so there is an inherent risk of defects or failures. The technology is prepared to address these issues through ERIR instructions.

On the other hand, the transaction validation system and the generation and execution of the Smart Contract are based on Proof-of-Stake consensus mechanisms. This consensus system theoretically allows one or more individuals collectively to control more than 50% of the validation power that allows consensus in the different blockchains used for transactions and Smart Contract execution. In the event that the blockchain suffers an attack by a group of actors using more than 50% of the validation power and potentially validating false transactions, this is a risk inherent to Blockchain technology.

Risk of Custody and Loss of Private Keys

As described in the token commercialization process, potential investors must accept the methodology for storing Beself Brands' Tokens. To achieve this, Beself Brands relies on the technology provided by the digital wallet provider Venly. Each user's assets are recorded on the corresponding blockchain and, therefore, inherit all the security advantages of the underlying blockchain.

Protection of the User's Wallet Private Key

The private key of the wallet, which provides full access to the assets, must be kept strictly confidential. To protect the private key, Venly employs a two-step encryption process: first, by encrypting a randomly generated passphrase; and then dividing this passphrase into two parts using the Shamir Secret Sharing algorithm, which are then re-encrypted. One part is securely stored by Venly in a Key Vault, while the other part is securely stored by the platform with a third encryption layer.

To access the private key and perform operations such as asset transfers or signing transactions, the user initiates the process on the platform with their access credentials. Upon requesting the operation that requires the use of the private key, the platform decrypts the user’s part and sends it to Venly, which, by combining the user’s part with the part stored by them, reconstructs the original passphrase. The passphrase is then used to decrypt the private key and execute the required operations.

This process ensures that only the platform can access and control the wallet, even if one of the parts is compromised.

Risk on Returns

The returns distributed to potential investors who are part of the Issuance will depend on the successful operation of the project and, specifically, on the timing and amount of income received by the Issuer for the development of the project. In the event that the expected returns or business income are not realized or there are delays in the payment from third parties, the distribution and receipt of returns by the investor may be directly affected.

Risk Associated with the Online Market

Depending on fluctuations in the online market, there is a risk that the catalog or market expansion could be impacted. The online sales market is a very large and dynamic market, which can either benefit or harm the expected future projections. Notwithstanding the above, the Issuer is committed to compensating the investor according to the dividend policy explained earlier.