Bioceres Crop Solutions (BIOX) Risk Analysis

Our business is dependent on our ability to recruit and maintain highly skilled and educated individuals through direct employment or collaboration arrangements, with expertise in a range of disciplines, including biology, chemistry, plant genetics, agronomy, mathematics programming and other specializations which are relevant to our business. Our ability to recruit such talent depends in part on our ability to maintain our market leadership in agricultural biotech industry in countries in which we operate. Maintaining our ability to attract highly skilled workers and leading scientific institutions depends in part on our ability to maintain a strong technology platform and state-of-the-art facilities, as well as our ability to consistently and successfully commercialize our technology. There can be no assurance that we will be able to maintain leading scientific capabilities or continue to successfully maintain advanced technology in the market. Our success is also dependent to a significant degree upon the technical skills and continued service of certain members of our management team, in particular those of our Chief Executive Officer, Dr. Federico Trucco, who has occupied several positions at Bioceres since 2005, and has vast experience and knowledge of our business, strategy and technologies. Furthermore, he has developed and maintained strong relationships with our original shareholders. The cessation of Dr. Trucco's employment for any reason could have a material and negative impact on us. In addition, the number of qualified and highly educated personnel in Argentina, where most of our operations are located, is limited and competition for the services of such persons may be intense. Our inability to secure, retain or find replacements for key management and technical personnel could adversely affect our business and could have a material adverse effect on our business, operating results, financial condition and growth prospects.

We do not enter into non-compete agreements with all of our employees, which prevents us from limiting our key employees from joining our competitors or competing directly against us. As a result, we may be unable to prevent our competitors from benefiting from the expertise of such employees. Direct competition by a former employee could materially adversely affect our business, results of operations and ability to capitalize on our proprietary information.

Due to high levels of inflation, the Argentine government could order salary increases for employees in the private sector, as occurred in the past. Notwithstanding the above, no mandatory salary increase has been ordered by the Argentine government since January 2020. As per the current context, the prohibition on terminations and duplication of severance are not in force. A company is entitled to dismiss, without cause, employees at its convenience, as long as severance is paid in duly manner and time. However, considering the current high levels of inflation and devaluation, we cannot assure that the government may create special measures against further salary depreciation. Furthermore, during 2023, salary increases in the private sector have been more regular than previously reported. However, there have been claims by employees that the increase in salary were not following inflation rates. On November 19, 2023, the second round (ballotage) of the presidential elections in Argentina took place, in which the ruling party Unión por la Patria, with former Minister of Economy Sergio Massa as its main candidate, obtained 44.30% of the votes, and, in contrast, the party La Libertad Avanza, led by Javier Milei, obtained a result of 55.65% of the votes. In this sense, on December 10, 2023, Javier Milei took office as the new President of the Argentine Republic for the next four years. Also, on December 20, 2023, Decree 70/2023 repealed and amended several laws. The Title IV of the Decree 07/2023 contains labor regulations, which modify substantially the Labor Contract Law 20,744. This Title is currently suspended by judicial decision. However, Law 27,742, Law of Foundations and Starting Points for the Freedom of Argentinians, enacted on June 28, 2024 and enforced on July 9, 2024, includes many of the modifications attempted in this regulation. The Law 27,742 introduces important amendments in labor and social security matters, which are contained in two of its titles: (i) Title IV "Promotion of Registered Employment" and (ii) Title V "Labor Modernization". Although the Law 27,742 is enforced, pending issues for regulation or collective bargaining include: (i) the new mechanism for labor registration and the preparation of pay slips; (ii) employment regularization; (iii) a new online platform for reporting irregular registrations; (iv) the creation of a severance fund for dismissal compensation with collaborators. Issues for immediate application and effectiveness as of July 9, 2024 include: (i) the validity of the labor contract registration by the labor provider; (ii) exclusion of service contracts from the scope of the Labor Contract Law (LCT); (iii) non-application of the presumption of employment contracts to self-employed workers who issue invoices; (iv) implementation of the new 6-month probationary period for those hired from July 9, 2024 (up to eight (8) months in companies with six (6) to one hundred (100) workers; and up to one (1) year in companies with up to five (5) workers); (v) reduction to 10 days of the pre-birth period at the pregnant woman's option; (vi) just cause for dismissal in cases of obstruction, blockades, or damage during strike actions; (vii) increased severance compensation in cases of discriminatory dismissal; and (viii) elimination of fines and increased severance compensation in case of misclassification and failure to register employment.

Our results of operations may be affected by the availability and pricing of raw materials, principally materials needed to design our technologies, such as raw glycerin. Factors such as changes in the global or regional levels of supply and demand, weather conditions, seasonal fluctuations, shortages or interruptions, changes in global climates and government regulations could substantially impact the price of raw materials. These and other factors could also cause plant shutdowns, reductions in capacity, delays and increased costs with associated manufacturers. To the extent we are unable to pass on increases in raw materials and energy prices to our customers, a substantial increase in raw material prices or a continued interruption in supply could have a material adverse effect on our business, financial condition and results of operations.

Volatility in the prices of certain commodity products could result in higher overall costs along the agricultural supply chain, which may negatively affect our ability to commercialize our products. We are susceptible to cost volatility in the agricultural industry as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls and government regulations. Further, we may not be able to anticipate or react to such volatility in a timely manner, which could cause our operating results to deteriorate.

The Cayman Islands, together with several other non-E.U. jurisdictions, have legislation aimed at addressing concerns raised by the Council of the E.U. as to offshore structures engaged in certain activities, which attract profits without real economic activity. With effect from January 1, 2019, the International Tax Cooperation (Economic Substance) Act, as revised, came into force in the Cayman Islands introducing certain economic substance requirements for in-scope Cayman Islands entities, which are engaged in certain "relevant activities". As we are a Cayman Islands company, our compliance obligations include filing annual notifications, which need to state whether we are carrying out any relevant activities and whether we are claiming an exemption from the obligations to meet the economic substance tests to the extent required under the Substance Act (the "substance test"). If we are carrying out such relevant activities, or we are claiming such an exemption, we are further required to file annually a report as to whether we have satisfied the substance test or the basis on which we are claiming such exemption. As it is a new regime, it is anticipated that the Substance Act will evolve and be subject to further clarification and amendments. We may need to allocate additional resources to keep updated with these developments and may have to make changes to our operations in order to comply with all requirements under the Substance Act. Failure to satisfy these requirements may subject us to penalties under the Substance Act.

Laws and regulatory standards and procedures that impact our business are continuously changing. Responding to these changes and meeting existing and new requirements may be costly and burdensome. Changes in laws and regulations may occur that could: - impair or eliminate our ability to source technology and develop our products, including validating our products through field trials and passing biosafety evaluations;- increase our compliance and other costs of doing business through increases in the cost to protect our owned and licensed intellectual property, including know-how, trade secrets and regulatory data, or increases in the cost to obtain the necessary regulatory approvals to commercialize and market the products we develop directly or jointly;- require significant product redesign or redevelopment;- render our licensed seed traits and technology and products that incorporate them less profitable or less attractive compared to competing products;- reduce the amount of revenues generated from licenses or other royalties;- restrict or increase the costs of making payments and distributions;- increase our export and import duties and costs or intensify controls and restrictions on our imports; and - discourage us and other collaborators from offering, and end-markets from purchasing, products that incorporate our licensed seed traits and technology. Any of these events could have a material adverse effect on our business, results of operations and financial condition. As of the date hereof, we believe that we substantially comply with regulations in Argentina and other countries in which we operate relating to GM crops. However, if these regulations change, our validation trials and compliance efforts may become costly and burdensome. Any changes in regulation in countries where GM crops are grown or exported into could result in our collaborators, other third parties or us being unable or unwilling to develop, commercialize or sell products that incorporate our licensed seed traits or technology. In addition, we rely on various forms of intellectual property rights protection. Legislation and precedents relating to intellectual property rights in the key markets where we seek protection, such as the United States, Brazil and Argentina, is evolving and changes in laws could affect our ability to obtain or maintain intellectual property rights protection for our products. Any changes to these existing laws and regulations may materially increase our costs, decrease our revenues and disrupt our business.

We are subject to approvals, registrations and regulations relating to different jurisdictions according to the countries in which we operate, which includes, among others, the (i) Argentine regulations relating to biotechnology, food safety and registration of seeds, (ii) the regulations imposed by the U.S. Environmental Protection Agency ("EPA"), among other governmental authorities, and (iii) European Union Registration, Evaluation, Authorization, and Restriction of Chemicals regulation. Further, our business is generally subject to two types of regulations: (i) those that apply to our operations and (ii) those that apply to products containing or based on our technology. We are responsible for applying for and maintaining the regulatory approvals necessary for our operations, particularly those covering our field trials, bio-safety evaluations and feed and food tests. Under the terms of our joint venture agreements, we and our joint venture partners are jointly responsible for obtaining and maintaining the regulatory approvals necessary for the commercialization of products that contain our licensed seed traits and other technologies in the various relevant markets. Regulatory and legislative requirements affect the development, production and sale of our products, including the testing, commercialization and planting of seeds containing our biotechnology licensed seed traits. Failure to receive such approvals or non-compliance with the applicable regulatory regime could adversely impact our operations and business strategy. Additionally, we may face difficulties in obtaining regulatory approvals in jurisdictions in which we have not previously operated or in which we have limited experience. Regulatory regimes in some of our key target markets may be more onerous and enforced by several entities. For example, in Argentina, the Argentine government's regulation of agricultural biotechnology is enacted and enforced primarily by three agencies; (i) the Argentine National Advisory Commission on Agricultural Biotechnology (Comisión Nacional Asesora de Biotecnología Agropecuaria), which regulates activity related to biosafety; (ii) the National Food Safety and Quality Service (Servicio Nacional de Sanidad y Calidad Agroalimentaria) which regulates activity related to food and feed safety; and (iii) the National Seed Institute (Instituto Nacional de Semillas) which controls the registries for both entities and products that are under its jurisdiction, among other functions. Additionally, the National Market Regulator (Dirección Nacional de Mercados) must conduct an economic evaluation. In the United States, the field testing, manufacture, sale and use of crop protection, plant health and plant nutrition products are extensively regulated by the EPA and other state, local and foreign governmental authorities. As we introduce new formulations of and applications for our products, we may need to seek EPA approval prior to commercial sale. For any such approval, the EPA may require us to fulfill certain conditions within a specified period of time following initial approval. Although the EPA has in place a registration procedure for biopesticides there can be no assurance that all of our products or product extensions will be eligible for this streamlined procedure or that additional requirements will not be mandated by the EPA that could make the procedure more time consuming and costly for our future products. Furthermore, in most of our key target markets, including the United States, regulatory approvals must be received prior to the importation and commercialization of genetically modified products. When products containing our licensed seed traits or other technology reach large-scale field trials, bio-safety evaluations and commercial approval stages, if we, our joint ventures or other collaborators are unable to obtain the requisite regulatory approvals or if there is a delay in obtaining such approvals (for example, as a result of negative market perception, consumer groups' legal actions against genetically modified organisms ("GMO"), heightened regulatory standards or unfamiliarity with the applicable regulatory regime), such products may not be commercialized, which would negatively impact our business and results of operations.

On December 29, 2017, the Argentine government enacted the Law No. 27,430, resulting in a major tax reform of the Argentine tax system. One of such reforms was the reduction of the corporate income tax rate from 35% to 30% for fiscal years beginning on or after January 1, 2018, and 25% for fiscal years beginning on or after January 1, 2020. Additionally, the distribution of dividends was subject to income tax withholding at a 7% tax rate if the distributed profits derive from the fiscal years beginning on or after January 1, 2018, or a 13% tax rate if the distributed profits derive from fiscal years beginning on or after January 1, 2020. However, on December 23, 2019, the Solidarity Law suspended the reduction of the corporate tax rate for Argentine Entities to 25% (with dividends being taxed at 13%) and maintained the 30% rate (with dividends being taxed at 7%) until fiscal years initiated on January 1, 2021. Consequently, the effectiveness of the 25% and 13% tax rates was delayed until tax years commencing after January 1, 2021. Finally, on June 16, 2021, the Argentine Government enacted Law No. 27,630 which amended the Argentine Income Tax Law and replaced the 30% fixed rate paid by Argentine companies on their corporate income with a progressive rate ranging from 25% to 35%, depending on the net income of each year. The applicable rate over dividends paid to shareholders, whether they are individuals or undivided estates residing in Argentina or non-Argentine residents, continues to be 7% in all cases, regardless of the tax rate paid by the company at the corporate level. Therefore, as of fiscal year 2021, Argentine entities are subject to a progressive rate ranging from 25% to 35%, depending on the net income of each year. Moreover, dividends distributions to the shareholders mentioned in the paragraph above are subject to a 7% withholding rate. Argentine companies are required to pay the personal assets tax corresponding to Argentine resident individuals, foreign individuals and foreign entities for holding equity interests in such companies as of December 31 of each year. The applicable tax rate until 2018 was 0.25% and the tax is levied on the equity stated in the latest financial statements. Under the Solidarity Law, the tax rate applicable to shares or participations in the capital of companies governed by the Argentine General Companies Act was increased from 0.25% to 0.50% of the pro-rata equity value. On July 8, 2024, Law 27,743 introduced certain amendments to the Personal Assets Tax applicable as a of fiscal year 2023. However, such amendments do not refer to the tax treatment applicable to shares or participations in the capital of Argentine companies. Hence, currently, Non-Argentine residents are subject to Argentine personal assets tax for holding shares and other equity participations in Argentine companies as of December 31 of each year at a rate of 0.50%, which is levied on the proportional net worth value (valor patrimonial proporcional) of the shares arising from the last balance sheet. Argentine companies are obliged to pay the tax on behalf of their Non-Argentine resident shareholders, partners or owners and are entitled to seek reimbursement from them. We cannot assure that the Argentine government or any of its political divisions will not adopt additional changes and reforms in tax matters, nor that these reforms and those that may be adopted in the future will not adversely affect our business, results of operations or financial condition; or our Non-Argentine Residents affiliates or subsidiaries in connection with their holding of shares and equity in Argentine companies.

Any gain resulting from the delivery of our ordinary shares to grantors in connection with the payment of the In-Kind Consideration under the Rizobacter Call Option may be subject to the Tax on Indirect Sales at our level if all the conditions described above in section "The disposition or sale of our ordinary shares may be subject to taxation in Argentina" are verified. If applicable, the Tax on Indirect Sales would believe, at our option, either on: (i) the net gain resulting from the difference between our ordinary shares' tax basis (acquisition cost, equal to the redemption price of such shares) and the value received by us in connection with the payment of the In-Kind Consideration at a 15% tax rate, or (ii) on the value received by us in connection with the payment of the In-Kind Consideration at a 13.5% tax rate. Any resulting Tax on Indirect Sales would be calculated on the proportion of the value that the Argentine assets represent with respect to the total value of our ordinary shares delivered and should be paid to the Argentine tax authorities by our legal representative in Argentina.

Our commercial success depends in part on our ability to obtain intellectual property protection and/or trade secrets protection for the technologies we develop and use. Competitors may use our technologies in jurisdictions where we have not obtained intellectual property protection to develop their own products, and we may be unable to prevent such competitors from importing those infringing products into territories where we have intellectual property protection, but enforcement is not as strong due to the exhaustion of rights. These products may compete with our product candidates and our licensed patents and other intellectual property rights may not be effective or sufficient to prevent them from competing in those jurisdictions. In addition, competitors could use our licensed patent disclosures and/or reverse engineer our trade-secret-protected products in order to produce competing products. Moreover, growers or others in the chain of commerce may raise legal challenges against our intellectual property rights or may infringe upon our intellectual property rights, including through means that may be difficult to prevent or detect. On March 6, 2022, Russia issued a decree permitting the use of certain patents without compensation or license for inventions, industrial designs, and utility models originating in unfriendly countries, which include the United States. Currently, we have eight patents issued by the Russian Federation, which following the March 6, 2022 decree may no longer be afforded any intellectual rights protections. If third party individuals, including the majority owners of the third-party manufacturing plant in Vyborg, Russia, utilize our patents and create versions of our products we would likely have limited to no recourse and would not receive any compensation for any unauthorized use. Moreover, we have one patent granted relating to the expression of HB4 traits in soy and one patent application relating to the expression of HB4 traits in wheat. On May 20, 2024, Russia issued a decree which introduces stringent controls on the acquisition of intellectual property rights by Russian entities from U.S. persons, including governmental approval for new intellectual property agreements with U.S. entities and government clearance for withdrawal of payments. This could significantly hinder our ability to effectively manage financial transactions and intellectual property acquisitions involving Russian parties, potentially delaying or challenging our operations and strategic initiatives in Russia. In Argentina, legislation in respect of breeders' rights includes a concept of a "farmer's privilege," which allows growers to use seeds obtained from their own harvests to be replanted on their own farm. According to the National Seed Institute of Argentina (Instituto Nacional de Semillas), the reserves of seeds kept for personal use has grown significantly in recent years, which may increase the likelihood that growers illegally claiming the privilege may use GM seeds into the market without paying royalties owed to us. During recent years, certain sectors of the Argentine agricultural industry have been requesting that the Argentine plant variety protection ("PVP") Law No. 20,247 be amended. The legal systems of certain countries, including China, where we have sublicensed patent applications, have not historically favored the enforcement of patents or other intellectual property rights, which could hinder us from preventing the infringement of our licensed patents or other intellectual property rights and result in substantial risks to us. Proceedings to enforce our licensed patent rights in the United States or foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our licensed patents at risk of being invalidated or interpreted narrowly and our sublicensed patent applications at risk of not issuing and could provoke third parties to assert patent infringement or other claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license from third parties.

As is the case with other biotech companies, our success is heavily dependent on intellectual property, including patents. Obtaining and enforcing biotech patents involves technological and legal complexity, and is costly, time consuming, and inherently uncertain. The patent position of biotechnology and biochemical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Furthermore, our patents, and those patents for which we have license rights, may be challenged, narrowed, invalidated or circumvented. It is also not possible to patent and protect all knowledge and know-how associated with our products, so there may be areas that are not protected such as certain formulations and manufacturing processes. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The Argentine Patent Office (Instituto Nacional de Propiedad Intelectual) issued Regulation 283/15 with guidelines for examining biotech inventions. These guidelines seriously restrict the patentability of several categories of inventions in the agricultural field. This restriction is still being followed in the practice of the Argentine Patent Office. In September 2016, the Argentine Patent Office issued Argentine Regulation 56/16, under which the Argentine Patent Office will deem that any patent application whose examination had not begun by October 15, 2016 satisfies the substantive requirements of patentability (novelty, non-obviousness and industrial application); provided that a patent has been granted abroad for the same invention by a foreign patent office carrying out substantive examination in a country whose patent law has the same substantive requirements as Argentine law. This can result in prosecution times that are substantially shorter, and similar to those of the fastest jurisdictions. However, the patent office has applied this regulation to biotech cases only when the granted equivalent is directed to matter that is not affected by the guidelines. Furthermore, the claims of the granted equivalent must be amended so as to comply with the requirements of Regulation 283/15. In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. In a recent ruling (in re "Monsanto Technology LLC c/ Instituto Nacional de la Propiedad Industrial s/ Denegatoria de Patente", case number CCF 8044/2007), Tribunal III of the Civil and Commercial Federal Court of Appeals of the City of Buenos Aires confirmed, by revoking a decision of a lower court, the rejection of a biotechnological patent application by the Argentine Patent Office, with the understanding that the invention should be protected as a PVP and not under a patent (the patent application was for a recombinant DNA molecule and a cell transformed by such molecule). Lack of inventive activity and non-patentable matters are also mentioned as grounds in this precedent. The Court of Appeal's decision was appealed to the court of last resort, but the Argentine Supreme Court refused to resolve the case based on the grounds that the issue was moot as the statutory term of the patent under consideration in the case had already expired. The decision of the Court of Appeals has, therefore, become a negative precedent that may adversely affect patentability of the technologies we develop in the future. Depending on decisions by the Argentine and U.S. Congresses, the federal courts in each country, the U.S. Patent and Trademark Office and the Argentine Patent Office, as well as the relevant authorities in other countries in which we hold licensed patents, the laws and regulations governing patents could change in unpredictable ways that may weaken or undermine our ability to obtain new patents or to enforce our existing licensed patents and patents we might obtain in the future.

Our ability to generate significant revenues from our products depends on our joint ventures and licensees' ability to develop, market and sell products and utilize our proprietary technologies without infringing the intellectual property rights and other rights of any third parties. As the agricultural biotech industry continues to develop, we, our collaborators or licensees may become party to, or threatened with, litigation or other adverse proceedings regarding intellectual property or proprietary rights in our technology, processes, developed seed traits or seed treatments. Third parties may assert claims based on existing or future intellectual property rights and the outcome of any proceedings is subject to uncertainties that cannot be adequately quantified in advance. Any litigation proceedings could be costly and time consuming. A negative outcome from an intellectual property infringement suit could result in liability for monetary damages, require us to indemnify our licensees for damages arising from warranties we have made in respect of the intellectual property rights we have licensed, which claims might not be subject to a cap, or treble damages and attorneys' fees if we are found to have willfully infringed a patent. There is also no guarantee that we, our collaborators or licensees would be able to obtain a license under such infringed intellectual property rights on commercially reasonable terms or at all. A finding of infringement could prevent us, our collaborators or our licensees from developing, marketing or selling a product or force us to cease some or all of our business operations. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel may be diverted as a result of these proceedings, which could have a material adverse effect on our operations. In some cases, our agreements with our collaborators or licensees might oblige us to pay for the enforcement of our licensed intellectual property rights, even though our collaborators or licensees may be responsible for commercializing the potentially infringing products. Claims that we have misappropriated the confidential information or trade secrets of third parties could similarly have a negative impact on our business.

Disruption or failure of our IT system due to technical reasons, natural disaster or other unanticipated catastrophic events, including power interruptions, storms, fires, floods, earthquakes, terrorist attacks or armed conflicts could significantly impair our ability to deliver data related to our projects to our collaborators on schedule and materially and adversely affect our relationships with our collaborators, therefore, negatively affect our business and our results of operations. If our existing or future IT system does not function properly, or if the IT system proves incompatible with our new technologies, we could experience interruptions in data transmissions and slow response times, preventing us from completing routine research and business activities. Furthermore, we can provide no assurance that our current IT system is fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats.

In recent years, Argentina has confronted significant market volatility, including numerous periods of low growth or stagnation, inflationary pressures, including the depreciation of the Argentine Peso, evidenced by significantly higher fuel, energy, and food prices, among other factors. Further, the Argentine government increased its direct intervention in the economy, including through the implementation of regulation of market conditions, expropriations or nationalizations and price controls. Therefore, the inflation rate in Argentina and the government's intervention in the economy may adversely affect our business. According to data published by the Argentine National Institute of Statistics and Census (Instituto Nacional de Estadística y Censos) ("INDEC"), the Consumer Price Index ("CPI") increased 95% from January through August 2024, 211% in 2023, 94.8% in 2022 and 50.9% in 2021. If inflation remains high or continues to rise towards a hyperinflation, Argentina's economy will continue to be negatively impacted, and our results of operations could be materially adversely affected. Upon taking office, in December 2023, President Milei signed a decree to stabilize Argentina's economy through spending cuts, devaluing the Argentine Peso and temporarily increasing import taxes and export taxes. In June 2024, the Argentine National Congress approved a law that focused on mass privatization, deregulating certain sectors, and easing labor market rules. The consequences of such law and the economic and political reforms it introduces may cause initial uncertainty and adjustments costs which may adversely affect the Argentine economy, stock market prices, and our business, financial condition, and operational results. No assurances can be made as to the policies that may be implemented by the new Argentine administration, or that political developments in Argentina, will not adversely affect the Argentine economy or our business, financial condition or results of operations.

A major portion of our operations and/or development activities are based in Latin America, notably in Argentina. Accordingly, our financial condition and results of operations are substantially dependent on economic conditions in Argentina and in the remainder of Latin America. Latin American countries have historically experienced uneven periods of economic growth, recessions, periods of high inflation and economic instability. Economic and political developments in Latin America, including future economic changes or crises (such as inflation, currency devaluation or recession), government deadlock, political instability, civil strife, changes in laws and regulations, restrictions on the repatriation of dividends or profits, expropriation or nationalization of property, restrictions on currency convertibility, volatility of the foreign exchange market and exchange controls could impact our operations and/or the market value of the ordinary shares and have a material adverse effect on our business, financial condition and results of operations. Further, in recent years, Argentina has confronted significant market volatility, including numerous periods of low growth or stagnation, inflationary pressures, including the depreciation of the Argentine Peso, evidenced by significantly higher fuel, energy, and food prices, among other factors. Further, the Argentine government increased its direct intervention in the economy, including through the implementation of regulation of market conditions, expropriations or nationalizations and price controls. Therefore, the inflation rate in Argentina and the government's intervention in the economy may adversely affect our business. According to data published by the Argentine National Institute of Statistics and Census (Instituto Nacional de Estadística y Censos) ("INDEC"), the Consumer Price Index ("CPI") increased 95% from January through August 2024, 211% in 2023, 94.8% in 2022 and 50.9% in 2021. If inflation remains high or continues to rise towards a hyperinflation, Argentina's economy will continue to be negatively impacted, and our results of operations could be materially adversely affected. On November 19, 2023, general presidential elections took place in Argentina, and a new coalition La Libertad Avanza, led by Javier Milei, took office on December 10th, 2023, with a principal mandate of curbing inflation and re-aligning macroeconomic variables. On December 20, 2023, Emergency Decree 70/2023 entitled "Bases for the Reconstruction of the Argentine Economy" ("Decree 70/2023") was published in the Official Gazette, repealing and amending several laws to stabilize Argentina's economy through spending cuts, devaluing the Argentine Peso and temporarily increasing import taxes and export taxes. The most relevant measures contained in the Decree 70/2023 included the declaration of public emergency in economic, financial, fiscal, administrative, social security, tariff, health and social matters until December 31, 2025, as well as measures ranging from the repeal of regulations on housing lease contracts, supply of basic necessities, commercialization of mass consumption products, to the modification of the corporate form of companies in which the State has a stake. Moreover, Decree 70/2023 contains 44 sections by means of which changes in the labor regulations in force are ordered. With respect to the latter, different precautionary measures, contained in actions for injunctive relief, have recently been admitted in order to temporarily suspend the effects of Decree 70/2023. All these precautionary measures, filed mainly by labor unions and different workers' unions, have been appealed by the Government of Javier Milei. Currently, it is not possible to confirm what the outcome of these measures filed against Decree 70/2023 will be. In addition, Decree 70/2023 is still subject to a subsequent legislative control established in section 99, paragraph 3, of the National Constitution and in Law 26,122. According to the provisions of the latter, Decree 70/2023 will remain in force until it is rejected by both Chambers of Congress. On March 14, 2024, after failing to comply with the deadlines stipulated by Law 26,122 for the Permanent Bicameral Commission to consider Decree 70/2023, the Senate of the Nation opened special sessions in which it voted for the rejection of Decree 70/2023. Now, DNU 70/2023 awaits its treatment in the Chamber of Deputies of the Nation; in case the Chamber of Deputies votes for its rejection, it would lose its effectiveness. Furthermore, on December 27, 2023, the Administration of President Javier Milei submitted to Congress an extensive bill entitled "Law of Bases and Starting Points for the Freedom of Argentines" (the "Bases Law"). Among the many issues dealt with in the draft of the Bases Law is a broad declaration of emergency and the delegation of legislative powers to the executive branch. In addition, the draft of the Bases Law proposes a general program of deregulation of commerce, services and industry throughout the national territory, as well as the privatization of companies under State control, such as the national airlines (Aerolineas Argentinas), the national train company (Trenes Argentinos), the national postal service (Correo Argentino) and companies engaged in strategic services such as banking, energy, water, among others. After six months of legislative work, on June 27, 2024, the Chamber of Deputies of the National Congress approved the final text of the Bases Law, finally passing the Bases Law. The consequences of such law and the economic and political reforms it introduces may cause initial uncertainty and adjustments costs which may adversely affect the Argentine economy, stock market prices, and our business, financial condition, and operational results. On the same date, the National Congress approved Law No. 2774 on tax measures, including a moratorium and tax amnesty regimes and amendments to the Personal Assets Tax, Income Tax, and Special Regime for Small Taxpayers, among others ("Tax Package"). The aim of this bill is, among others, achieve the voluntary payment of taxes by taxpayers and responsible parties, who, if they join the regime, will obtain different benefits according to the type of adhesion and the type of debt they have. On July 8, 2024, the executive branch issued Decrees No. 592 and 593, whereby it enacted the Bases Law along with the Tax Package. The executive branch issued Decree No. 608 and 695 on July 12, 2024, and August 5, 2024, respectively, regulating certain rules of the Tax Package and the following four chapters of Title II of the Base Law: (i) Administrative Reorganization; (ii) Privatizations; (iii) Administrative Procedure; and (iv) Public Employment. Finally, on August 12, 2024, the executive branch published Decree No. 713 in the Official Gazette through which it moved forward with the regulation of Section of the Bases Law related to contracts and transactional agreements (including concessions). The social, political and economic impact of the reforms and measures announced by the Argentine government to date, such as the ambitious deregulation plan intended to be implemented through Decree 70/2023 and the Bases Law, the consequences of such law and the Tax Package and the impact of future reforms, measures and policies that may be proposed by the new Argentine administration remain uncertain, and could adversely affect the Argentine economy or our business, financial condition or results of operations. In Brazil, the economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. Since the pandemic-induced decline of 3.2% in 2020, Brazil's GDP increased 4.7 in 2021, 3.0% in 2022, 2.9% in 2023, with an expectation of 2.2% growth in 2024. Historically, Brazil's political situation has influenced the performance of the Brazilian economy, and political crisis have affected the confidence of investors and the general public. As a result, Brazil continues to face uncertainty related to the future developments in policies and whether and when such policies and regulations may be implemented. Negative current economic conditions in these markets could have an adverse effect on our financial condition and results of operations.

During recent years, the Argentine government and provinces have defaulted in the payment of their debt, which has limited their access as well as that of private companies to the international financial markets, or it has substantially increased their financing costs. Further, the COVID-19 pandemic has negatively impacted Argentina's economy and deepened its recession which resulted in the need of restructuring of its sovereign debt. ON August 4, 2023, Argentina and Qatar entered into with a loan agreement for US$775 million to assist Argentina in repaying US$1.411 billion owed to the International Monetary Fund (the "IMF") from previous loan facilities. In addition, on August 23, 2023, the former Argentine Minister of Economy announced agreements with the World Bank for U$650 million. The World Bank's Board of Directors approved two financings for Argentina. The first was focused on increasing access to financing for small and medium-sized enterprises to help them better mitigate and adapt to climate risks, while the second supported the strengthening of food programs. Moreover, on June 12, 2024, the People's Bank of China and the Central Bank of Argentina renewed the full activated portion of their currency swap agreement to RMB 35 billion (equivalent to US$ 5 billion) for a period of 12 months. Starting from that date, the Argentine Central Bank will gradually reduce the activated amount over the following 12 months, aligning with the expiration date of the current currency swap agreement. Consequently, this portion will be completely deactivated by midst of 2026. On June 13, 2024, the IMF´s Executive Board concluded the eighth revision of the agreement under the Extended Fund Facility for Argentina. The decision of the Board permitted a disbursement of approximately U$ 800 million, with which the total disbursements in the frame of the agreement increases to U$41.4 billion. This disbursement will support the efforts of the Argentine authorities to reestablish stability and strengthen the external viability of Argentina. In this sense, the Argentine program remains firmly on course, having accomplished all quantitative objectives by March 2024. To sustain this progress, the IMF stated that it is essential for the Argentine government to enhance the quality of fiscal adjustments, initiate the first steps toward improved monetary and exchange rate policies, and implement reforms to unlock growth, formal employment, and investment. If the Argentine government defaults again on the payment of its sovereign debt or the measures adopted and to be adopted by the Argentine government to reduce the fiscal deficit, control inflation and stabilize the foreign exchange market are not effective, Argentina's ability to obtain international or multilateral private financing or direct foreign investment may be limited, which may in turn impair its ability to implement reforms and public policies to foster economic growth, impair the ability of private sector entities to access the international capital markets or make the terms of such financing much less favorable that those accessible by companies in other countries in the region and may accelerate the depreciation of the Peso, foster inflation and deepen the economic crisis and recession. Lack of access to international or domestic financial markets or increase in the costs of such financing could affect the projected capital expenditures for our operations in Argentina, which, in turn, may have an adverse effect on our financial condition or the results of our operations.