⚠️7. Risk Factors

Risk Factors

The purchase of the Leandro Lopes Token (“$Lopes”) involves a high degree of risk, including but not limited to the risks described below. Before acquiring $Lopes tokens, it is recommended that each buyer carefully weighs all the information and risks detailed in this Whitepaper, and, specifically, the following risk factors. Please further note that the establishment and operation of the LL--Ecosystem may be subject to other risks not foreseen.

7.1 Risks Related to Issuer and its Business

7.1.1 Dependence on IT-Infrastructure

The Lopes and the Lopes-Ecosystem is dependent on the functioning of the software applications, computer hardware, and the internet. This implies that no assurances can be given that a system failure would not adversely affect the use of the $Lopes token. Despite the intended implementation of all reasonable network security measures, the processing IT-systems, in particular used centre servers, are vulnerable to computer viruses, physical or electronic break-ins or other disruptions of a similar nature. Computer viruses, break-ins or other disruptions caused by third parties may result in interruption, delay, or suspension of services, which would limit the use of the Lopes.

7.1.2 Smart Contract Limitations

Smart contract technology may carry significant operational, technological, regulatory, reputational and financial risks. Consequently, it cannot be ensured that smart contracts to the extent used will properly work or that it contains no flaws, vulnerabilities or issues which could cause technical problems and thereby can cause damages.

7.1.3 Insufficient Penetration of the Fashion Market

The success of the $Lopes and the LL-Ecosystem depends on the growth of the Leandro Lopes fashion business and accordingly of the user base of the $Lopes token. Although the Leandro Lopes community already has approximately 30,000 members, it is not ensured that all of these will remain in the future.

Furthermore, the planned growth of the Leandro Lopes community reaching more than 10,000,000 members by 2029 cannot be assured.

7.1.4 Competition

The fashion market is extremely competitive. Leandro Lopes is still a young brand that wishes to establish itself in the upper market segment for younger fashion-conscious buyers. Whether it will succeed cannot be predicted with certainty.

The decisive factors depend on a competitive marketing strategy that takes into account the latest developments, especially across social media and digital environments. The required involvement of celebrities and influencers is necessary for growth in brand reach and relevance across a strong fashion-based audience.

Direct competitors are, for example, Philipp Plein, Balenciaga, but also Louis Vuitton, Prada and Gucci. Admittedly, their products are still significantly more expensive than Leandro Lopes products as they have considerably greater financial power for successful gain in market share. These strong fashion brands have already recognized the virtual fashion world, which appeals to younger customers in particular. Against this background, it is not certain that Leandro Lopes will be able to achieve its goals and the success aimed for in its long-term strategy. In such a case, the value of the Lopes would suffer; also, a total loss cannot be excluded.

7.1.5 Strategic & Business Risks

Strategic risk is the risk associated with future business plans and the strategies of the Issuer. Improper strategic choices or the actual implementation of strategic decisions, as well as lack of responsiveness to changes in the economic environment, can have a serious and significant impact on prospective financial results. The Leandro Lopes Group’s main strategic decision is to expand its business activities to the USA and Asia. The implementation of this strategic decision requires presumably the use of considerable financial resources. The amount of about EUR 10 million that the Leandro Lopes Group aims to spend to achieve successful implementation for these purposes might be far too low.

In the case that there will be a need to invest more money than calculated, which might not be available at a certain point, the Leandro Lopes business might not develop as planned. Therefore, the main business risk that may materialise is that the Leandro Lopes Group will not be able to reach a substantial market share to attract masses of customers and the flow of businesses required to make use of the LL-ecosystem and $Lopes infrastructure across its communities. As a consequence, the value of the $Lopes could suffer. A total loss of the purchased $Lopes cannot be excluded.

7.1.6 Regulatory Risks

The issuance of $Lopes up to an amount of CHF 5 million is permitted in Liechtenstein without registration under the TVTG. However, if $Lopes will be sold abroad, there might exist a different legal treatment concept. Such regulations may conflict with the current $Lopes and LL-Ecosystem. This may result in the need to make substantial modifications, and the suspension or termination of a part or all $Lopes functions and the LL-Ecosystem in a specific jurisdiction.

In particular, the $Lopes token could be qualified and classified as security or payment token and therefore, may only be offered in certain jurisdictions only after registration and distributed in specific jurisdictions via regulated financial instruments brokers or agent intermediaries. If these requirements will not be met, the regulatory authorities in such countries might prohibit the sale of $Lopes and require the unravelling of the purchases of $Lopes tokens. However, the Leandro Lopes AG as issuer of $Lopes might not have the liquidity to pay back the purchase price to the purchasers of $Lopes. This is particularly the case if the amounts to be repaid are very high.

Furthermore, should the $Lopes token be qualified by the Liechtenstein FMA as payment token, Leandro Lopes Holding AG would need to obtain and maintain an e-money licence. Although the current financial services are rendered by an e-money institute, it cannot be excluded that it will terminate its business relation with the Leandro Lopes Holding AG in the future, for example because of a change in its business politics.

Should the Leandro Lopes Holding AG in such a case not be able to replace it by another e-money institution or bank nor obtain its own e-money licence, the LL-Ecosystem would collapse and therewith also the $Lopes token system. As a consequence, the investment in $Lopes tokens might be lost.

7.1.7 Force Majeure

The performances under the LL-Ecosystem may be interrupted, suspended, or delayed due to force majeure circumstances. For the purposes of this Whitepaper, force majeure shall mean extraordinary events and circumstances which could not be prevented and shall include acts of nature, wars, armed conflicts, mass civil disorders, industrial actions, epidemics, lockouts, slowdowns, prolonged shortage or other failures of energy supplies or communication service, acts of municipal, state or federal governmental agencies, other circumstances beyond the Issuer’s control, which were not in existence at the time of the Whitepaper release.

7.1.8 Disclosure of Information

Personal information received from holders of $Lopes, the information about the number of tokens owned, the wallet addresses used, and any other relevant information may be disclosed to law enforcement, government officials, and other third parties when the Leandro Lopes Group AG is required to disclose such information by law, subpoena, or court order.

The Leandro Lopes Group AG shall at no time be held responsible for such information disclosure.

7.1.9 Lack of Funds from ITO Proceeds

The Leandro Lopes Group AG may not reach the target sale amount and may not have sufficient funds to execute its business plan. Furthermore, the Leandro Lopes Group AG may not succeed in creating the necessary momentum and acceptance for $Lopes, which may result in low liquidity and depletion of trades. As a consequence, the positions and plans outlined in this Whitepaper may not only be altered as the project progresses, but also lead to a total loss of the purchased $Lopes.

7.1.10 Delayed Projects & Competition

Although the Leandro Lopes Group AG believes that its assumptions underlying its forward-looking statements are reasonable, any of these may prove to be inaccurate. As a result, it can offer no assurances that the forward-looking statements contained in this Whitepaper will prove to be accurate.

In light of the significant uncertainties inherent in the forward-looking statements contained herein, the inclusion of such information may not be interpreted as a warranty on the part of the Leandro Lopes Group AG that the objectives and plans of the LL-Ecosystem and the Leandro Lopes fashion business project will be successfully achieved.

7.1.11 Non-compliant Use or Misuse of Funds Generated

Funds generated by the $Lopes-ITO shall be used in compliance with this Whitepaper. However, for different reasons, the generated funds may not be distributed accordingly. The order of as well as the amounts of the distributions may be changed. This may be caused for good reason, but also because of negligence. Also, the misuse of the generated funds cannot be excluded. This may harm the business of the Leandro Lopes Group AG, and thereby the value of the $Lopes and lead to a total loss of the paid purchase price.

7.2 Risks Related to the $Lopes

7.2.1 Value of $Lopes

Once purchased, the value of the $Lopes may significantly fluctuate due to various reasons. For example, the markets on which $Lopes will be traded can be manipulated by third parties, the change of the market conditions for cryptocurrencies can be further restricted or prohibited by governments. If such a risk materialises, the purchase of the $Lopes token can even lead to a total loss.

In the long run, there is no guarantee that users will be able to acquire sufficient $Lopes for their use within the LL-Ecosystem and through external platforms, nor is there any guarantee that users will be able to acquire $Lopes through external platforms. The total number of $Lopes is technically limited. If more $Lopes are used for mining purposes than $Lopes are used to purchase Leandro Lopes products and thus recaptured for the delivery and the supply of mined $Lopes, at some point there may not be enough $Lopes to meet mining demands and the Lopes LL-Ecosystem may collapse. Consequently, the value of the $Lopes may be lost.

Furthermore, every $Lopes holder naturally carries the risk of volatile exchange rate fluctuations of the $Lopes towards both other cryptocurrencies and FIAT money exchange rates. Furthermore, every $Lopes holder naturally carries the risk of volatile exchange rate fluctuations of the $Lopes towards both other cryptocurrencies and FIAT money exchange rates.

7.2.2 Bitcoin and Ethereum Volatility

The value development of the $Lopes may be significantly influenced by general digital currency market trends. Disruptions of the token market in general may lead to a severe depreciation of the value of $Lopes. Assumptions with respect to the foregoing involve, among other things, judgments about the future economic, competitive and market conditions and business decisions, most of which are beyond the control of the Leandro Lopes Group AG and are therefore difficult or impossible to accurately predict.

7.2.3 Tax Risks

Holders of $Lopes tokens may be required to pay taxes associated with transactions contemplated herein. It will be a sole responsibility of $Lopes holders to comply with the tax laws of the jurisdictions applicable to them and pay all relevant taxes.

In addition, it cannot be ruled out that the Leandro Lopes AG will have to pay taxes on the proceeds from the sale of the $Lopes tokens. In this case, the net profit could be lower than calculated. As a result, the Leandro Lopes AG might not have the funds it needs to achieve its business objectives. This could mean that the purchase of $Lopes tokens could prove to be useless.

7.3 Risk of Total Loss

There is a risk that investments in the $Lopes could lead to a total loss of the paid purchase price for each of the reasons mentioned above or for any other reason