An investment in the Company´s common shares involves a high degree of risk. Investors should carefully consider the risks described below before making an investment decision. EZTEC´s business, financial condition and results of operations could be adversely affected by any of these risks, among others. The market price of its common shares could decline due to any of these risks or other factors, and potential investors may lose all or part of their investment. The risks described below are those that EZTEC currently believes may materially affect the company. Additional risks and uncertainties not currently known to EZTEC, or those that it currently deem to be immaterial, may also materially and adversely affect its business and operations.
1) Risks Relating to the Macroeconomic Environment
The Brazilian government exercises significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, could adversely affect EZTEC´s business and the market price of its common shares.
Inflation and government measures to combat inflation may contribute significantly to economic uncertainty in Brazil , adversely affect the Company´s financial condition or results of operations or adversely affect the price of its common shares.
The volatility of the exchange rates of the Brazilian real in relation to the U.S. dollar may adversely affect EZTEC´s financial condition and results of operations.
Political, economic and social events and the perception of risk in other countries, especially emerging market countries, may adversely affect the Brazilian economy, EZTEC´s business and the market value of Brazilian securities, including its common shares, and also limit its access to international capital markets.
Fluctuations in interest rates may negatively affect the Company´s business and the trading price of its common shares.
2) Risk Relating to the Real Estate Industry
EZTEC is exposed to risks associated with real estate development, construction and sales.
The Company´s business is subject to extensive regulation, which could increase its costs and limit, the Company´s development or otherwise adversely affect its business.
The lack of availability of funds to obtain financing may adversely affect the ability or availability of prospective purchasers of real estate to finance their purchases. That can affect negatively the Company´s sales and oblige it to change its financing conditions for the clients.
EZTEC growth may require additional capital, which may not be available or, if available, may not be on terms acceptable for the market.
The real estate industry in Brazil is highly competitive and the Company could lose its position in the market in certain circunstances.
The increase in existing tax rates, the creation of new taxes or the cancellation of certain tax systems or tax treatments from which EZTEC benefits could materially adversely affect the Company.
The mismatch between the rates used to index its revenues and the rates used to index its expenses may adversely affect the Company´s financial condition and results of operations.
3) Risks Relating to EZTEC
EZTEC depends on the results of its subsidiaries, partners and associated companies, but the Company cannot assure you that its subsidiaries and associated companies will distribute these results to us.
A substantial part of its future general sales value is concentrated on a limited number of real estate developments of mixed use. EZTEC is subject to risks normally associated with finance providers.
The Company may not be successful in developments carried out outside the São Paulo metropolitan region.
If the Company’s partnerships and purchasing consortiums are not successful or if EZTEC is unable to maintain a healthy relationship with them, its business and operations may be adversely affected.
The loss of members of its senior management or the inability to attract and retain additional senior management personnel could have a material adverse effect on the Company.
Since the Company recognizes its revenues from property sales based on the percentage of completion method, the adjustment of costs of a development may reduce or cancel the revenues and profit calculated earlier.
4) Risks Relating to this Offering and EZTEC´s Common Shares
Currently, there is no active public market for EZTEC´s common shares. The Company is not able to estimate what extent investors´ interest for its common shares will result in the development of an active market for trading of its common shares on the BOVESPA, and how liquid any market would be if it does develope.
The sale of a significant number of EZTEC´s common shares after this offering may adversely affect its price; furthermore, the future issuance of additional common shares, with the exclusion of shareholders´ preemptive rights, under the terms of the Brazilian corporation law, will dilute the interests of its shareholders.
EZTEC may raise additional capital in the future through the issuance of equity securities, which may result in dilution of the interests of its shareholders.
Investors in this offering will likely suffer immediate dilution in the book value of their investment when purchasing the Company´s common shares.
The interests of EZTEC´s controlling shareholders may conflict with the interests of other holders of its common shares.