Risk Factors

An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in Fras-Le’s securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Fras-Le’s business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.

The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

Known risks include uncertainties that are limited to the impact of competitiveness on prices and products, the acceptance of products in the market, the behavior of consumers, regulatory approval, the type and fluctuation of currencies, regularity in the supply of raw materials and in operations, among others. The Company is not responsible for updating this document as a result of new inform and/or future events.

The Company is not responsible for investment transactions or decisions taken based on the information contained on this website.

1) Risks Relating to Macroeconomic Factors
  • Political and economic conditions in Brazil may have an adverse affect on Fras-le’s business and on the market value of our common shares.
  • Political, economic and social and risk-perception developments in other countries, especially emerging market countries, may adversely affect the market value of Brazilian securities as well as that of the Company’s common shares.
  • The Brazilian government has exercised and continues to exercise significant influence over the Brazilian economy. This involvement, as well as the country’s political and economic situation, may adversely affect Fras-le’ business and the market price of its common shares.
  • Inflation and government efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and could harm the Company’s business, financial condition, operating income, cash flow and stock price.
  • Exchange rate instability may adversely affect Fras-le’s financial and operating income and the market price of its stock.
  • Developments in the global economy and emerging-market countries could have a negative impact on the Brazilian economy and adversely affect the Company’s access to financing and the market for its shares.
2) Risks Relating to Fras-le’s Business
  • Fras-le operates in highly competitive sectors characterized by constant pressure on prices.
  • The auto parts and railroad equipment sectors require high capital investments.
  • The Company’s growth may require additional funds that may not be available or may be available at unsatisfactory conditions.
  • The sectors in which we operate are cyclical and dependent on the Brazilian and global economies.
  • Fras-le’s activities are subject to environmental regulations and the enactment of new regulations may result in substantial capital expenditure, increasing the need for additional funds.
3) Risks Relating to the Company’s Common Shares
  • The holders of the Company’s common shares may encounter difficulties in registering claims against our Company or other people or in obtaining decisions against us or other parties.
  • The relative volatility and illiquidity of Brazil’s securities markets could substantially limit your ability to sell the Company’s shares at the price and time you desire.
  • The Company may need to raise additional capital in the future and issue new shares through a capital increase, which could dilute the ownership interests of investors.
  • Holders of the Company’s common shares may not be able to exercise preemptive rights.
  • Minority rights in Brazil are different from those conferred in the United States and obtaining compliance with these minority rights may be difficult.
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