BrasilAgro Cia Brasileira de Propriedades Agricolas (LND) Risk Analysis

We are an "emerging growth company" within the meaning of the rules under the Exchange Act. We are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with any PCAOB rules, that, if adopted in the future, would require mandatory audit firm rotation and auditor discussion and analysis pursuant to any future audit rule promulgated by the PCAOB (unless the U.S. Securities and Exchange Commission, or the SEC, determines otherwise). In addition, we are not subject to the additional level of review of our internal control over financial reporting as may occur when outside auditors attest as to our internal control over financial reporting. As a result, our stockholders may not have access to certain information they may deem important. We will remain an emerging growth company for up to five years from the date of our initial public offering of securities under an effective registration statement under the Securities Act, though we may cease to be an emerging growth company earlier under certain circumstances. We take advantage of the exemption from the auditor attestation report requirement and may decide to rely on other exemptions in the future. We do not know if some investors will find our common stock less attractive as a result. The result may be a less active trading market for our common stock, and our stock price may be more volatile.

Part of our strategy with regard to our agricultural properties consists of investing in support infrastructure in order to increase the value of such agricultural properties. In implementing our investment projects, we may face a number of challenges, including: (i) failures or delays in acquiring necessary equipment or services; (ii) higher costs than those originally estimated; (iii) difficulties securing the necessary environmental and government licenses; (iv) changes in market conditions, which could render the projects less profitable than originally estimated; (v) impossibility or delays in acquiring land at attractive prices, or an increase in the land prices on account of growing demand for land by our competitors; (vi) impossibility of, and delay in identifying and acquiring land that is in compliance with Brazilian real estate property laws; (vii) lack of capacity to develop infrastructure and attract qualified labor on a timely and efficient basis; (viii) disputes and litigation relating to the land we acquire; (ix) cultural challenges deriving from the integration of new management and employees in our organization; and (x) the need to update accounting systems, administrative data and human resources. Our inability to manage these risks would adversely affect us.

We depend on suppliers to provide us with fertilizers, seeds, other raw materials and machinery services. Possible delays in the delivery of such items may delay our planting efforts until we are able to establish agreements with other suppliers, or may delay our harvest in case of delay in delivery of machinery. Accordingly, any delays, failures or defects in the delivery of raw materials or inputs or with regard to the provision of services to us by our suppliers could adversely affect our business and results of operations. See "-Our business, financial condition and results of operations may be adversely affected by lack of transportation, storage and processing infrastructure in Brazil, which represents an important challenge for the Brazilian agricultural and agricultural real estate sectors."

Under Brazilian law, ownership of real estate is conveyed only upon proper registration and filing of the relevant public deeds with the Real Estate Registry Office with jurisdiction where the property is located. In certain locations in Brazil, it is frequent to come across real estate registry errors, including duplicate or fraudulent certificates of enrollment and legal challenges. Lawsuits concerning the lawful title of real estate are prevalent in Brazil and, as a result, there is a risk that such errors, fraud or challenges adversely affect our business, financial condition and results of operations, thereby causing the loss of all or substantially all of our agricultural properties.

In August 2010, the then-president of Brazil approved the opinion of the Federal Attorney General's Office (AGU) affirming the constitutionality of Brazilian Law No. 5,709/71, which imposes important limitations on the acquisition and lease of land in Brazil by foreigners and by Brazilian companies controlled by foreigners. Pursuant to this legislation, companies that are majority-owned by foreigners are not allowed to acquire agricultural properties in excess of 100 indefinite exploration modules, or MEI (which are measurement units adopted by the National Institute of Agrarian Development (Instituto Nacional de Colonização e Reforma Agrária, or "INCRA"), within different Brazilian regions, and which range from five to 100 hectares) absent the prior approval of the Brazilian Congress, while the acquisition of areas measuring less than 100 MEIs by such companies requires the prior approval of INCRA. In addition, agricultural areas that are owned by foreigners or companies controlled by foreigners shall not exceed 25% of the surface area of the municipality, of which area up to 40% shall not belong to foreigners or companies controlled by foreigners of the same nationality, meaning that the sum of agricultural areas that belong to foreigners or companies controlled by foreigners of the same nationality shall not exceed 10% of the surface area of the relevant municipality. In addition, INCRA is also required to verify if the agricultural, cattle-raising, industrial or colonization projects to be developed in such areas were previously approved by the relevant authorities. After that analysis, INCRA will issue a certificate allowing the acquisition or rural lease of the property. The purchase and rural lease of agricultural properties that do not comply with the aforementioned requirements need to be authorized by the Brazilian Congress. In both cases, it is not possible to determine an estimated time frame for the approval procedure, since at the date of this annual report, there are no known cases on the granting of such certificates. Recently, Brazilian Law No. 13,986, of April 7, 2020, amended Law No. 5,709/91 and provided that the limitations mentioned above do not apply to: (i) the pledge of real estate as collateral (including the fiduciary transfer of real estate property); and (ii) debt settlements arising from the execution of real estate collateral. Both exceptions favor Brazilian companies controlled by foreigners or foreign entities. We are unable to determine with certainty what percentage of our share capital is owned directly or indirectly by foreign ultimate beneficial owners. If Brazilian authorities determine that we are not in compliance with Law No. 5,709/71, the acquisitions and leasing completed by us after the approval of the opinion of the Federal Attorney General's Office (AGU) in 2010 may be challenged, which could also result in substantial delays in our future acquisitions of rural properties and our inability to obtain the necessary governmental approvals. Additionally, acquisitions made in violation of existing laws and regulations may be declared null and void. The applicability of Law No. 5,709/71 is being discussed in the Original Civil Action (Ação Cível Originária) No. 2,463 and in the Action for Breach of Constitutional Provision (Ação de Descumprimento de Preceito Fundamental) No. 342, both before the Brazilina Supreme Court (STF). The first action (Original Civil Action No. 2,463) concerns the Opinion No. 461/2012-E of the General Inspectorate of Justice of the State of São Paulo (Corregedoria-Geral de Justiça do Estado de São Paulo), which established that notaries and real estate registry officials of the State of São Paulo would be exempt from complying with the restrictions imposed by Law No. 5,709/71 and by Decree No. 74,965/74. The second action (Action for Breach of Constitutional Provision No. 342), which is related to the first lawsuit, was filed on April 16, 2015 by the Brazilian Rural Society (Sociedade Rural Brasileira) questioning the applicability of paragraph 1, article 1, of Law No. 5,709/71 and consequently, of the opinion issued by the Federal Attorney General's Office (AGU) in 2010. A trial began before the Brazilian Supreme Court (STF) in February 2021, with the vote of the rapporteur Justice stating that the restrictions on companies considered to be controlled by a foreign entity must be maintained. A second Justice asked to pause the proceedings to review the file, thereby interrupting the trial, which was only resumed in June 2021, when the Justice presented his vote diverging from the rapporteur, confirming the inapplicability of the restrictions. As of the date of this annual report, a final judgment is still pending, and we are not able to provide an estimate of the timeframe for a final judgment to be issued by the Supreme Court. Depending on the final decisions of these pending lawsuits, we may need to modify our business strategy and intended practices in order to be able to acquire agricultural properties. Additionally, there is an ongoing relevant corporate dispute between a foreign investor and a Brazilian corporation involving the sale of an invested company. In 2017, the foreign investor acquired 49.41% of the invested company, however, the local investor is contesting the transfer of the remaining 50.59% due to various contractual breaches. Among the local investor's allegations is a request to annul the share purchase agreement based on a supposed violation of Law No. 5709/71, which regulates restrictions on the acquisition of real estate by foreigners in Brazil. Furthermore, other lawsuits with the same objective have been filed in Brazil, including a public civil action against the foreign investor, INCRA, and the Brazilian federal government, challenging the violation of the restrictions under Law No. 5.709/71. The disputes between these important investors also led certain other private parties to file public civil actions against the largest agricultural companies in Brazil alleging potential violations of Law No. 5709/71 that may also negatively impact us. Also, the disputes between the aforementioned investors may lead potential rural property sellers to challenge the purchases made by the Company, alleging that, since BrasilAgro has foreign shareholders in its shareholder base, it is possible that there have been violations under Law No. 5,079/71 in connection with our acquisitions. This may have the effect of increasing the number of transactions we must complete, which would increase our transaction costs. It may also require us to adopt alternative measures to reduce our interest in companies that own or lease rural properties, including entering into joint ventures, which increases the complexity and risks associated with these transactions. Any regulatory limitations and restrictions may substantially limit our ability to acquire rural properties, increase the investments, transaction costs or complexity of such transactions or complicate the necessary regulatory procedures, any of which could materially and adversely affect us and our ability to successfully implement our business strategy. For more information, see "Item 4-Information on the Company-Business Overview-Ownership of Agricultural Land in Brazil by Foreigners."

We may be classified as a passive foreign investment company (a "PFIC") for U.S. federal income tax purposes. Such characterization could result in adverse U.S. tax consequences to you if you are a U.S. Holder (as defined in "Item 10-Additional Information-Taxation-U.S. Federal Income Tax Considerations") of our common shares or ADSs. For example, if we are a PFIC, U.S. Holders of our common shares or ADSs may become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, for any taxable year we will be classified as a PFIC for U.S. tax purposes if either (i) 75% or more of our gross income in that taxable year is passive income or (ii) the average percentage of our assets by value in that taxable year that produce or are held for the production of passive income is at least 50%. For this purpose, income from commodities transactions is generally considered passive unless such income is derived in the active conduct of a commodities business. See "Item 10-Additional Information-Taxation-U.S. Federal Income Tax Considerations-Passive Foreign Investment Company."

We currently sell a substantial portion of our total crop production to a small number of customers who have considerable bargaining power. For instance, in the year ended June 30, 2024, three of our customers were responsible for 43.5% of our revenue, and each of these three customers was responsible for at least 10% of our revenue. Of these three customers, two were responsible for 41.1% of our revenue in the grain/cotton segment, and one was responsible for 56.8% of our revenue in the sugarcane segment. Comparatively, in the year ended June 30, 2023, three of our customers were responsible for 45.8% of our revenue, and each of these three customers was responsible for at least 10.0% of our revenue. Of these three customers, one was responsible for 63.1% of our revenue in the sugarcane segment, and two were responsible for 42.0% of our revenue in the grains/cotton segment. See Note 21 to our financial statements included elsewhere in this annual report. The strong competition between a relatively fragmented sector of agricultural producers in the internal and external markets further increases the bargaining power of our highly concentrated customer base. Thus, we may not be able to maintain or form new relationships with customers, which could have a material adverse effect on our business, financial condition and results of operations. Concentration among our customer base also increases the adverse consequences to us should we lose any of our customers or if any of our customers defaults on their obligations to us, either in the form of non-payment or through a breach of any contractual provision or obligation, such as shipping failures or delays. Delays in the shipment of our products could directly affect the planning of our harvest, which could generate losses and result in additional costs to us.