Risk Disclosure Statement

Important information regarding the risks associated with digital assets, blockchain technology, and the use of the Phygitals platform.

1. Introduction

This Risk Disclosure Statement provides you with information about some of the risks associated with the use of the Phygitals platform and the holding of digital assets. You should carefully read this statement and consider whether trading, holding digital assets, or using our services is suitable for you in light of your financial condition and risk tolerance.

This list is not exhaustive. There may be other risks associated with the use of the platform and digital assets that are not disclosed in this statement.

2. Risks of Digital Assets

Trading and holding digital assets (including cryptocurrencies like USDC/SOL and Non-Fungible Tokens or "NFTs") involves significant risks, including:

• Volatility: The value of digital assets can be extremely volatile. The price of assets on the Phygitals marketplace can fluctuate rapidly and significantly, and may drop to zero.

• Liquidity: There is no guarantee that there will be an active market for any digital asset. You may not be able to sell your assets when you want to, or at a price you consider fair.

• Regulatory Uncertainty: The regulatory environment for digital assets is evolving. Changes in laws or regulations may adversely affect the value or utility of your assets or the ability of Phygitals to provide services.

• Loss of Private Keys: You are responsible for the security of your private keys and wallet access. If you lose access to your wallet, Phygitals cannot recover your assets.

3. Platform & Technical Risks

Using a blockchain-based platform involves technical risks:

• Software Bugs: The Phygitals platform and the underlying smart contracts may contain bugs, defects, or errors that could compromise the security or functionality of the system.

• Blockchain Network Risk: The Phygitals platform operates on the Solana blockchain. We are not responsible for the operation of the Solana network, which may experience congestion, outages, or other issues.

• Third-Party Dependency: We rely on third-party service providers (including authentication providers, payment processors, and vault partners) for critical functions. Failures or interruptions in these services may affect your ability to use the platform.

• Blockchain Events: The Solana blockchain may experience forks, reorganizations, chain halts, or other significant network events. In such cases, Phygitals will recognize the canonical chain. Duplicate assets from chain splits will not be honored. Phygitals relies on third-party RPC providers and indexers and is not responsible for delays or inaccuracies during blockchain events.

4. Risks of Randomized Rewards (Packs)

Purchasing digital packs involves a randomized reward mechanic:

• No Guarantee of Value: The value of the cards you receive from a pack is not guaranteed and may be less than the purchase price of the pack.

• Probability: The distribution of cards is based on probabilities (odds). Receiving a high-value card is rare. You should review the disclosed odds before purchasing.

• Not an Investment: Pack purchases should be for entertainment and collection purposes only, not as an investment strategy.

5. Vault & Physical Asset Risks

While physical cards are stored in professional vaults, risks remain:

• Damage or Loss: Although our vault partners maintain insurance, there is a risk of damage, loss, or theft of physical items.

• Authentication Errors: Grading and authentication are performed by third-party grading services (such as PSA, BGS, SGC, and CGC). Phygitals relies on their assessments and does not guarantee their accuracy.

• Shipping Risks: Redeeming physical cards involves shipping risks. Phygitals is not liable for loss or damage during transit once the item has been handed to the carrier.

• FMV/Oracle Risk: Fair market value data is provided "as is" from third-party sources. Inaccurate, delayed, or manipulated FMV data could affect pawn loan valuations, marketplace pricing, or insurance claim assessments. Phygitals is not responsible for consequences resulting from FMV data errors.

5.5 Lending & Pawn Risks

Using the pawn/lending feature involves specific risks:

• Asset Loss: If you fail to repay your loan before expiration, your collateralized card is permanently forfeited. There is no grace period.

• Regulatory Risk: Consumer lending regulations vary by jurisdiction. The pawn service may not be available or lawful in all jurisdictions.

• Not Investment Advice: The pawn service is a financial transaction, not investment advice. You should carefully consider whether borrowing against your assets is appropriate for your financial situation.

6. Contact

If you have questions about the risks described in this statement or need further clarification, please contact us:

• Support: [email protected]

• Legal: [email protected]