Risk Disclosure Statement

Effective Date: February 12, 2026  |  Last Updated: February 12, 2026

This Risk Disclosure Statement (“Disclosure”) is issued by JIL Sovereign Technologies, Inc. (“JIL Sovereign,” “we,” “us,” or “our”) and should be read in conjunction with our Terms of Service and Privacy Policy. This Disclosure is intended to inform you of the material risks associated with the use of the JIL Sovereign platform and the acquisition, holding, or use of JIL tokens and other digital assets.

The risks described below are not exhaustive. Digital asset markets and blockchain technology are rapidly evolving, and new risks may emerge at any time. You should carefully consider all of the risks described herein, as well as any additional risks that may be relevant to your particular circumstances, before using the Services or acquiring JIL tokens.

1. General Risk Warning

Digital assets are not legal tender, are not backed by any government, and are not subject to the same regulatory protections as traditional financial products. Unlike bank deposits, digital assets held on the JIL Sovereign platform are not protected by the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), or any similar government deposit insurance program in any jurisdiction.

The digital asset industry is in its early stages of development and is subject to significant uncertainty. There can be no assurance that the JIL Sovereign platform, the JIL settlement protocol, or the JIL token will achieve widespread adoption, maintain value, or continue to operate. You should only participate with capital you can afford to lose entirely.

2. Market and Volatility Risks

• Price Volatility: The price of JIL tokens and other digital assets can fluctuate dramatically over short periods. Price swings of 10-50% or more within a single day are not uncommon in digital asset markets. Such volatility may result in substantial losses.
• No Guaranteed Value: There is no guarantee that JIL tokens will maintain any particular value. The market price of JIL tokens is determined by supply and demand on secondary markets and may be influenced by factors outside of JIL Sovereign's control.
• Market Manipulation: Digital asset markets may be susceptible to market manipulation, wash trading, spoofing, and other practices that may be illegal in traditional financial markets but may not be effectively regulated or enforced in all jurisdictions.
• Correlation Risk: Digital asset prices may be correlated with broader cryptocurrency market movements (e.g., Bitcoin, Ethereum) and may decline significantly during market-wide downturns regardless of the fundamentals of any individual project.
• Illiquidity Events: During periods of extreme market stress, it may be difficult or impossible to sell digital assets at any price, or to execute transactions at reasonable market prices.

3. Technology and Infrastructure Risks

• Blockchain Technology Risk: The JIL settlement protocol is built on novel technology that has not been tested at scale over extended periods. The consensus mechanism (Batched Proof of History with 14-of-20 BFT), post-quantum cryptographic algorithms (Dilithium/Kyber), and MPC key management protocols may contain undiscovered vulnerabilities, design flaws, or implementation errors.
• Network Failure: The JIL network could experience downtime, congestion, forks, consensus failures, or other disruptions that may temporarily or permanently prevent transactions from being processed.
• Post-Quantum Cryptography: While our post-quantum cryptographic implementations (Dilithium signatures, Kyber key encapsulation) are designed to resist quantum computing attacks, these algorithms are relatively new and have not undergone the decades of real-world testing that traditional cryptographic algorithms have. Unforeseen weaknesses may be discovered.
• Software Bugs: Software is inherently complex and may contain bugs, errors, or vulnerabilities that could result in the loss of digital assets, unauthorized access, or system downtime, despite rigorous testing and auditing.
• Dependency Risks: The JIL Sovereign platform depends on third-party infrastructure, including cloud hosting providers, DNS services, hardware security modules, and external blockchain networks. Failures or disruptions in any of these dependencies could affect the availability or security of the Services.

4. Self-Custody and Key Management Risks

• Key Loss: JIL Sovereign operates a self-custody model. If you lose access to your authentication credentials, key shard, and recovery mechanisms, your digital assets may become permanently and irretrievably inaccessible. JIL Sovereign cannot recover lost keys on your behalf.
• Irreversible Transactions: Blockchain transactions are final and irreversible once confirmed. If you send digital assets to an incorrect address, or if an unauthorized party gains access to your account, the assets cannot be recovered or reversed by JIL Sovereign.
• MPC Infrastructure: While MPC 2-of-3 key management distributes risk across multiple shards, the security of the system depends on the integrity of each component. Compromise of two key shards could result in unauthorized access to your wallet.
• Device Security: The security of your digital assets depends in part on the security of your personal devices (computer, phone). Malware, keyloggers, phishing attacks, SIM swapping, or physical theft of your device could compromise your account.
• Recovery Limitations: Account recovery mechanisms, including social recovery and guardian attestation, are subject to timelock delays and may not be available in all circumstances. Recovery attempts may fail if guardian keys are unavailable or compromised.

5. Cross-Chain Bridge Risks

• Bridge Exploits: Cross-chain bridges are among the highest-risk components in policy and attestation infrastructure. Despite the 14-of-20 multi-signature security model, bridge smart contracts may contain vulnerabilities that could be exploited by attackers, potentially resulting in the theft or loss of bridged assets.
• Finality Differences: Different blockchain networks have different finality characteristics. Assets bridged to or from external chains are subject to the finality and security properties of those chains, which may differ significantly from the JIL network.
• Chain Reorganizations: Reorganizations (reorgs) on external chains could affect the validity of bridged transactions. Bridge transfers may be delayed or reversed if a reorg occurs on the source or destination chain.
• Sovereign Compliance Network (SCN) Validator Collusion: While the 14-of-20 threshold provides Byzantine fault tolerance (tolerating up to 6 compromised SCN validators), a coordinated attack by 14 or more SCN validators could theoretically compromise the bridge. JIL Sovereign mitigates this risk through geographic and jurisdictional distribution across 13 countries, but the risk cannot be entirely eliminated.
• Withdrawal Delays: Large bridge withdrawals may be subject to 24-hour timelocks and additional security reviews, during which the value of the assets may change significantly.

6. Smart Contract Risks

• Code Vulnerabilities: Smart contracts deployed on the JIL network or on bridged chains may contain vulnerabilities, logic errors, or exploitable conditions that could result in the loss or freezing of digital assets.
• Immutability: Once deployed, smart contracts may be difficult or impossible to modify, even if a vulnerability is discovered. While JIL Sovereign implements self-healing contract mechanisms, these systems may not address all potential issues.
• Third-Party Contracts: Tokens created through the Token Factory and smart contracts deployed by third parties on the JIL network are not audited or endorsed by JIL Sovereign. You interact with third-party smart contracts at your own risk.
• Oracle Risk: Smart contracts that rely on external data feeds (oracles) are subject to the accuracy and availability of those feeds. Inaccurate or manipulated oracle data could cause smart contracts to execute incorrectly.

7. Regulatory and Legal Risks

• Evolving Regulation: The legal and regulatory landscape for digital assets is rapidly evolving and varies significantly across jurisdictions. New laws, regulations, or enforcement actions could materially and adversely affect the operation of the JIL Sovereign platform, the value of JIL tokens, or your ability to use the Services.
• Securities Classification: Although JIL tokens are designed and intended as utility tokens, regulatory authorities in one or more jurisdictions may classify JIL tokens as securities, which could subject JIL Sovereign and token holders to additional regulatory requirements, restrictions, or penalties.
• Sanctions and Restrictions: Changes in international sanctions regimes, trade restrictions, or capital controls could limit your ability to use the Services or transact in JIL tokens.
• Taxation: The tax treatment of digital assets, including JIL tokens, is uncertain and varies by jurisdiction. You may be subject to income tax, capital gains tax, value-added tax, or other taxes on your digital asset transactions. Changes in tax law could increase your tax obligations.
• Enforcement Actions: Regulatory authorities may take enforcement actions against JIL Sovereign, SCN validators, or individual users, which could result in fines, operational restrictions, asset freezes, or the cessation of certain services in specific jurisdictions.
• MiCA and Global Frameworks: The EU Markets in Crypto-Assets Regulation (MiCA) and similar frameworks being developed in other jurisdictions may impose new requirements on token issuers, exchanges, and service providers that could affect the availability or operation of the Services.

8. JIL Token-Specific Risks

• Utility Token: JIL tokens are utility tokens designed for use within the JIL Sovereign ecosystem. The utility of JIL tokens is contingent on the continued development, operation, and adoption of the JIL Sovereign platform. If the platform fails to achieve sufficient adoption or is discontinued, JIL tokens may have limited or no utility.
• No Ownership Rights: Holding JIL tokens does not confer any ownership, equity, dividend, profit-sharing, or control rights in JIL Sovereign Technologies, Inc. or any affiliated entity.
• Supply Dynamics: The total supply, circulating supply, and distribution of JIL tokens may be affected by token burns, ecosystem incentives, SCN validator rewards, and governance decisions. Changes in supply dynamics could affect the price of JIL tokens.
• Concentration Risk: A significant portion of JIL tokens may be held by a small number of wallets (including foundation reserves, team allocations, and early investors). Large sales by concentrated holders could negatively impact the market price.
• Network Effects: The value and utility of JIL tokens depend on network effects. If the JIL Sovereign ecosystem fails to attract a sufficient number of users, SCN validators, and developers, the utility and value of JIL tokens may be limited.

9. Liquidity Risks

• Limited Markets: JIL tokens may be traded on a limited number of exchanges or platforms. The availability of trading pairs, market depth, and trading volume may be limited, making it difficult to buy or sell JIL tokens at desired prices.
• Slippage: Large orders may experience significant price slippage due to limited liquidity, particularly during periods of high volatility or market stress.
• DEX Risks: Decentralized exchange (DEX) trading is subject to additional risks, including impermanent loss for liquidity providers, front-running, and sandwich attacks.
• Exchange Risk: Centralized exchanges on which JIL tokens may be listed are subject to their own operational, security, and regulatory risks. JIL Sovereign has no control over the operation or solvency of third-party exchanges.

10. Operational Risks

• Early-Stage Platform: JIL Sovereign is an early-stage project. Many features and services described in our documentation and roadmap are under development and may not be delivered on the anticipated timeline, or at all. Development priorities may change based on technical constraints, market conditions, or regulatory requirements.
• Team and Key Personnel: The success of JIL Sovereign depends on the continued involvement and performance of its leadership team, developers, and key personnel. The departure of key individuals could materially affect the project's development and operations.
• Funding Risk: The continued development and operation of the JIL Sovereign platform depends on adequate funding. There can be no assurance that JIL Sovereign will be able to secure sufficient funding to complete its development roadmap or sustain ongoing operations.
• SCN Validator Operations: The security and performance of the JIL network depend on the reliable operation of 20 independent SCN validators across 13 jurisdictions. SCN Validator downtime, misconfiguration, or compromise could affect network performance and security.
• Governance Risks: On-chain governance mechanisms may lead to protocol changes that adversely affect certain users or token holders. Governance participation may be concentrated among large token holders, potentially leading to decisions that do not represent the interests of all stakeholders.

11. Security Risks

• Cyberattacks: The JIL Sovereign platform, its infrastructure, and its users are potential targets for sophisticated cyberattacks, including but not limited to: distributed denial-of-service (DDoS) attacks, phishing campaigns, man-in-the-middle attacks, supply chain attacks, and zero-day exploits.
• Social Engineering: Attackers may attempt to compromise user accounts through social engineering techniques, including phishing emails, fraudulent websites, impersonation of JIL Sovereign staff, and targeted scams. JIL Sovereign will never ask for your private key shards, passwords, or seed phrases.
• Quantum Computing: While JIL Sovereign implements post-quantum cryptographic algorithms, the timeline and capability of quantum computing advances are uncertain. Future quantum computers may pose risks to cryptographic systems that cannot be fully anticipated today.

12. Wallet Protection Coverage Limitations

• Coverage Scope: Wallet protection coverage (up to $250,000 per incident for eligible accounts) covers only qualifying losses attributable to JIL Sovereign infrastructure failures. It does not cover losses due to user error, negligence, market volatility, third-party actions, regulatory actions, or events outside JIL Sovereign's control.
• Not Government Insurance: Wallet protection coverage is provided by private third-party underwriters and is not equivalent to FDIC, SIPC, or any government deposit insurance program.
• Coverage Availability: Coverage terms, limits, exclusions, and availability are determined by our protection coverage partners and may change at any time. There is no guarantee that coverage will be available for any particular claim or at any particular time.
• Claims Process: Claims are subject to investigation and verification and may be denied if the loss does not meet the coverage criteria. The claims process may take significant time to resolve.
• Aggregate Limits: The protection coverage policy may have aggregate limits that could be exhausted if multiple large claims occur simultaneously (e.g., in a systemic incident).

13. Tax and Accounting Risks

The tax treatment of digital asset transactions, including acquiring, holding, staking, bridging, and disposing of JIL tokens, is uncertain, evolving, and varies significantly across jurisdictions. You are solely responsible for determining your tax obligations and for filing all required tax returns. JIL Sovereign does not provide tax advice and is not responsible for any tax liability arising from your use of the Services. You should consult a qualified tax advisor regarding the tax implications of your digital asset activities.

14. Third-Party and Counterparty Risks

• Third-Party Services: The JIL Sovereign platform integrates with third-party services (KYC providers, fiat ramp providers, analytics services, external blockchain networks). JIL Sovereign is not responsible for the security, availability, or performance of third-party services.
• Counterparty Risk: When engaging in token swaps, bridge transfers, or other transactions that involve counterparties, you are exposed to the risk that the counterparty may fail to perform its obligations.
• External Chain Risks: Digital assets bridged to or from external blockchain networks (Ethereum, XDC, Solana, etc.) are subject to the risks and limitations of those networks, including consensus failures, smart contract vulnerabilities, and network congestion.

15. Forward-Looking Statements

Materials published by JIL Sovereign, including our website, whitepaper, business plan, roadmap, documentation, and marketing materials, may contain forward-looking statements regarding future events, plans, projections, or expected developments. These forward-looking statements are based on current expectations and assumptions and are subject to significant risks, uncertainties, and changes in circumstances that may cause actual results to differ materially from those expressed or implied. Forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them.

16. No Financial Advice

Nothing in this Risk Disclosure, on the JIL Sovereign website, in our documentation, or in any communication from JIL Sovereign or its representatives constitutes financial, investment, legal, tax, or other professional advice. All information is provided for general informational purposes only. You should conduct your own research and consult with qualified professional advisors before making any decisions regarding digital assets, including the acquisition or use of JIL tokens.

JIL Sovereign does not make any recommendation or endorsement regarding the suitability of digital assets, including JIL tokens, for any particular individual or entity.

17. Acknowledgment

By accessing or using the JIL Sovereign platform, acquiring JIL tokens, or using any of the Services, you acknowledge and confirm that:

• You have read, understood, and accept the risks described in this Disclosure;
• You understand that digital assets are highly speculative and that you may lose your entire investment;
• You are acquiring and/or using JIL tokens for their intended utility purposes and not as an investment or with the expectation of profit;
• You have not relied on any statement or representation by JIL Sovereign as financial, investment, legal, or tax advice;
• You have the financial resources and risk tolerance to bear the risks described herein;
• You will comply with all applicable laws and regulations in your jurisdiction.

JIL Sovereign Technologies, Inc.
Email: support@jilsovereign.com
Wilmington, Delaware (Incorporated Headquarters)
Hubs: Texas · Switzerland · UAE · Singapore