Risk Disclosures

1. General Investment Risks

All investments involve risk, including the potential loss of principal. No investment is guaranteed, and the value of securities can go down as well as up. Economic factors such as inflation, recession, changes in interest rates, and geopolitical events can significantly impact investment values. Market conditions can change rapidly and unpredictably, affecting the performance of individual securities and the market as a whole. You should be prepared to accept the possibility of losing some or all of your investment.

2. Market Risk

Market risk refers to the possibility that investments will decline in value due to factors affecting the overall market. Stock prices are volatile and can fluctuate dramatically in response to company-specific news, industry trends, economic conditions, interest rate changes, inflation, political events, and investor sentiment. Market downturns can be sudden and severe, potentially resulting in significant losses. Even well-established companies can experience substantial price declines. Diversification may help reduce risk but does not eliminate it, and there is no guarantee that diversification will protect against losses.

3. Liquidity Risk

Liquidity risk refers to the possibility that you may not be able to sell your investments quickly or at a fair price when you want to. While stocks traded on major exchanges are generally liquid, market conditions can affect the ability to sell at desired prices. Custodial accounts may have restrictions on withdrawals until the child reaches the age of majority, which varies by state. Additionally, there may be processing delays when selling securities or withdrawing funds. In extreme market conditions, trading may be halted or restricted, potentially preventing you from accessing your investments when needed.

4. Concentration Risk

Concentration risk arises when investments are concentrated in a small number of securities, companies, or sectors. A portfolio focused on individual stocks that a child loves (such as Disney, Apple, or LEGO) may be less diversified than a broad market index. This concentration can lead to increased volatility and greater exposure to company-specific risks. If one of your concentrated holdings experiences problems, the impact on your portfolio will be more significant than if you held a diversified portfolio. While investing in companies a child knows and loves can be educational and meaningful, it may increase risk compared to a more diversified approach.

5. Credit Risk

Credit risk applies primarily to bonds and other debt securities, but also affects stocks if a company faces financial distress. For stocks, credit risk relates to the possibility that a company may be unable to meet its financial obligations, potentially leading to bankruptcy or significant financial difficulties. Even large, well-known companies can face credit challenges. A company's credit rating and financial condition can change, affecting the value of its securities. While stocks represent ownership rather than debt, company financial problems can cause stock prices to decline significantly or become worthless.

6. Technology and Platform Risks

Using an online investment platform involves technology-related risks, including:

• System failures or technical issues: Software bugs, server outages, or system malfunctions may prevent you from accessing your account, executing trades, or viewing your portfolio when needed.
• Cybersecurity risks and data breaches: Despite security measures, unauthorized parties may gain access to your account information, personal data, or financial information through hacking, phishing, or other cyberattacks.
• Internet connectivity issues: Problems with your internet connection or service provider may prevent you from accessing the platform or executing time-sensitive transactions.
• Platform availability and maintenance: Scheduled maintenance, unexpected downtime, or service interruptions may temporarily prevent access to the platform or delay transaction processing.

7. Regulatory and Legal Risks

Changes in laws, regulations, or tax policies can significantly affect investments and investment strategies. Securities regulations, tax laws, and custodial account rules may change, potentially impacting the structure, taxation, or operation of your investments. Tax implications vary based on your individual circumstances, and you should consult with a tax advisor. Custodial accounts are subject to state-specific laws regarding when funds can be accessed and how they must be managed. Regulatory changes affecting broker-dealers, financial services companies, or the securities industry could impact LittleShares' ability to provide services or affect the costs and terms of investing.

8. No Guarantee of Returns

There is no guarantee that your investments will generate returns or that you will recover your initial investment. Past performance of securities, markets, or investment strategies does not guarantee future results. Historical returns are not indicative of future performance. Investments may lose value, and you may lose some or all of your principal. Even investments in well-known, successful companies can decline in value. The stock market has experienced significant downturns in the past, and future market conditions cannot be predicted. You should only invest money that you can afford to lose and that you do not need for immediate expenses.

9. Suitability and Investment Objectives

Investments should be suitable for your individual circumstances, risk tolerance, time horizon, and investment objectives. LittleShares is designed for long-term investing, not active trading. Before investing, you should carefully consider your financial situation, investment goals, risk tolerance, and time horizon. Custodial accounts are intended for long-term savings and may not be appropriate if you need access to funds before the child reaches the age of majority. You should consult with a qualified financial advisor, tax professional, or other appropriate professional to determine if investments are suitable for your specific situation. LittleShares does not provide personalized investment advice or recommendations.

10. Additional Risks

Additional risks specific to LittleShares' services include:

• Custodial account restrictions: Funds in custodial accounts are legally owned by the child and may have restrictions on access, withdrawals, and use until the child reaches the age of majority in your state (typically 18 or 21).
• Fee structures and their impact: Subscription fees, transaction costs, and other fees reduce investment returns over time. Even small fees can significantly impact long-term returns, especially when compounded over many years.
• Dependency on third-party services: LittleShares relies on partner broker-dealers and other third-party service providers. Issues with these partners could affect account operations, trading capabilities, or access to investments.
• Limited investment options: LittleShares focuses on individual stocks and bonds. You may not have access to all investment products available in the broader market, such as certain mutual funds, ETFs, or alternative investments.
• Educational vs. investment focus: While LittleShares emphasizes the educational value of investing in companies children know, this approach may not always align with optimal diversification or risk management strategies.

11. Acknowledgment

By using LittleShares' services, you acknowledge that you have read, understood, and accept these risk disclosures. You understand that investing involves risk, including the potential loss of principal. You recognize that past performance does not guarantee future results, and that the value of investments can fluctuate. You understand that LittleShares does not provide investment advice, and that you are responsible for your investment decisions. You agree that you have considered your financial situation, risk tolerance, and investment objectives, and that investments through LittleShares are suitable for your circumstances. If you have questions about these risks or whether investing is appropriate for you, you should consult with a qualified financial advisor before making investment decisions.

12. Contact Information

If you have questions about these risk disclosures or investment risks, please contact us:

Email: support@littleshares.com
Support: Contact Us
Mail: LittleShares Support
         P.O. Box [Address]
         [City, State ZIP Code]