# Part I

## Information on risks

#### I.1 Offer-Related Risks

The offer of SWEAT involves risks linked to its availability and market perception.

* There is no guarantee that SWEAT will maintain value after admission to trading.
* Purchasers may not find a liquid secondary market to sell SWEAT, resulting in potential losses.
* SWEAT is not backed by assets, deposits, or guarantees, meaning holders bear the full risk of value fluctuation.
* The offer is subject to evolving regulatory oversight, which may result in restrictions on distribution, marketing, or trading.

#### I.2 Issuer-Related Risks

Risks relating to the Sweat Foundation Ltd. as issuer include:

* Financial risks: As a foundation, it is dependent on ecosystem growth and treasury management to sustain operations. Unexpected reductions in funding or revenue may affect its ability to support SWEAT.
* Business activity risks: Sweat Economy operates in a highly competitive consumer-tech and blockchain sector where rapid changes in adoption, user behaviour, or industry trends could undermine sustainability.
* Legal and regulatory risks: As laws governing crypto-assets evolve, especially in the EU and globally, SWEAT could face new compliance burdens or restrictions.
* Internal control risks: Operational challenges such as staffing, process management, or inadequate oversight could affect business continuity.
* Governance risks: Misalignment between stakeholders or ineffective governance could lead to poor strategic decisions that negatively impact SWEAT holders.

#### I.3 Crypto-Assets-Related Risks

Risks linked specifically to SWEAT as a token include:

* Market volatility: The price of SWEAT may fluctuate significantly in response to supply-demand dynamics.
* Liquidity risks: While SWEAT is listed on multiple exchanges, liquidity may vary, impacting holders’ ability to sell at fair value.
* Loss of access: Mismanagement of private keys, wallets, or access credentials may result in the permanent loss of SWEAT.
* Adoption risk: The value and utility of SWEAT depend on continued ecosystem adoption. Lower engagement or fewer partners could reduce demand.

#### I.4 Project Implementation-Related Risks

Risks relating to Sweat Economy’s project execution include:

* Technical delays: Implementation of planned features (e.g., new DeFi integrations or expansion into new markets) may be delayed or encounter setbacks.
* Strategic risks: Failure to establish key partnerships, secure regulatory clarity, or expand user engagement could negatively impact SWEAT’s long-term vision.
* Resource constraints: Human and financial resources may not be sufficient to deliver on the project roadmap, reducing the scope or pace of development.

#### I.5 Technology-Related Risks

Technology risks associated with SWEAT include:

* Blockchain dependency: SWEAT relies on NEAR Protocol and Ethereum, exposing it to network outages, congestion, or protocol-level vulnerabilities.
* Cybersecurity threats: Hacking, phishing, or smart contract exploits could result in theft, data loss, or disruption.
* Software vulnerabilities: Errors in code or unforeseen bugs in smart contracts may create systemic weaknesses.
* Third-party reliance: Validators, exchanges, wallet providers, and service partners could suffer failures, indirectly impacting SWEAT’s usability.

#### I.6 Mitigation Measures

The Sweat Foundation Ltd. and Sweat Economy have implemented or are implementing the following measures:

* Security audits of smart contracts and infrastructure to reduce vulnerability risks.
* Use of energy-efficient blockchains (NEAR, Ethereum post-Merge) to lower environmental impact.
* Ecosystem diversification through DeFi, partnerships, and in-app utility to support adoption.
* Treasury management and reserves to sustain operations through volatile markets.
* Compliance monitoring to adapt to evolving EU and global regulatory requirements.