A. Reserved B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Risks Related to the Global Economy and Our Business Our business could be adversely affected by global political developments, particularly with regard to United States policies toward Mexico. In 2024, the United States held presidential and congressional elections, resulting in the election of President Donald Trump and Republican control of both the Senate and House of Representatives. The new administration has since signaled and implemented a shift toward more protectionist economic policies, including the imposition of new tariffs and trade restrictions. In February 2025, the administration announced the reinstatement of Section 232 tariffs on all steel imports, effective March 2025. These measures have triggered retaliatory actions and heightened trade tensions with major trading partners such as Mexico, Canada, the European Union and China, which have disrupted international trade flows, increased input costs, and could reduce demand for our products. As of the date of this report, our steel exports to the United States are subject to a 25% tariff under Section 232 of the Trade Expansion Act of 1962. In fiscal year 2025, approximately 3.8% of our consolidated net sales were derived from exports to the United States, and we estimate that the reimposition of Section 232 tariffs resulted in approximately Ps. 280.3 million in additional costs during the year. We have sought to mitigate the impact of these tariffs through shifting product mix and increasing domestic sales in Mexico, although there can be no assurance that these measures will fully offset the impact of existing or future tariff actions. The potential for additional reciprocal tariffs, changes to the USMCA framework (scheduled for joint review in 2026), or retaliatory measures by Mexico or other trading partners could further affect our cost structure, pricing, and competitiveness. We continue to monitor the evolving trade environment and assess its impact on our operations. In addition, the administration issued an Executive Order in January 2025 instructing the U.S. Department of State to designate certain international cartels and transnational criminal organizations as Foreign Terrorist Organizations (“FTOs”). On February 20, 2025, eight entities located in Mexico were designated as FTOs. These designations expand the scope of U.S. enforcement tools and may expose individuals or companies, whether directly or indirectly linked, to increased scrutiny, civil or criminal liability, and business disruption. The potential direct and indirect effects of such designations on businesses operating in or with Mexico remain uncertain. 1 Changes in United States economic, political, and regulatory policies, including the possible renegotiation of trade agreements such as the United States-Mexico-Canada Agreement (USMCA), scheduled for joint review in 2026, or withdrawal from multilateral organizations like the WTO could significantly impact the Mexican economy, with consequences for our customers, suppliers, and operations. Mexico remains highly dependent on trade with the U.S., which receives more than 80% of its exports. Any weakening of this trading relationship, including through new tariffs or reduced investor confidence, could adversely affect Mexico’s GDP growth, exchange rates, investment levels, and overall economic stability. These developments, individually or in combination, could have a material adverse effect on our business, financial condition, results of operations, cash flows, prospects, and the market price of our securities. Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and our ability to export our products outside of Mexico, which could in turn adversely affect our results of operations. Our industry is significantly exposed to unfair trade practices, including dumping, government subsidies, and other anti-competitive pricing strategies, particularly from producers in countries with centrally planned or state-supported economies, such as China. During periods of weaker global demand, these practices tend to intensify, with excess steel production being redirected to international markets at below-market prices. This can result in significant pricing pressure and loss of market share, adversely affecting our revenues and margins. In early 2025, increased low-priced steel exports from Asia, particularly from China, prompted growing concerns about unfair competition in countries such as Brazil and Mexico. In response, government authorities in both countries began evaluating the imposition of anti-dumping duties or import quotas. If adopted, these measures could alter the competitive landscape by restricting low-cost imports, but they may also affect the availability and pricing of certain inputs or finished products that we rely on for our operations. Moreover, the global nature of our operations exposes us to a wide range of trade barriers, including import tariffs, quotas and other protectionist policies that can limit access to key export markets or undermine our competitiveness. The 2025 reinstatement by the United States of a 25% Section 232 tariff on all steel imports further contributes to global trade tension and uncertainty. Retaliatory tariffs or countermeasures by affected countries including Canada, Mexico and the European Union could disrupt supply chains, inflate production costs and diminish our ability to compete effectively in international markets. While these measures are often intended to protect domestic industries, they may displace excess production into less-restricted markets, intensifying competition and placing further downward pressure on global steel prices. We are unable to predict how current or future trade actions will evolve, nor can we ensure that retaliatory or protectionist responses will not escalate. Any prolonged application of such measures could materially and adversely affect our business, financial condition, results of operations and prospects. Our industry is cyclical and both recessions and prolonged periods of slow economic growth could have an adverse effect on our business. Demand for most of our products is cyclical in nature and sensitive to general economic conditions. Our business supports cyclical industries, such as the construction, energy, metals service centers, appliance and automotive industries. As a result, economic slowdowns or a downturn in any of these industries could materially and adversely affect our results of operations, financial condition and cash flows. The global economy has experienced a recovery from the conditions experienced at the onset of the COVID-19 pandemic, but subsequent labor shortages, supply chain disruptions, new or proposed legislation related to governmental spending, inflation and increases in interest rates have impacted, and may continue to impact, economic growth. Challenges from global production overcapacity in the steel industry, ongoing trade policy uncertainty, and shifting macroeconomic conditions, both in the United States and in other regions of the world, remain. We are unable to predict the duration of current economic conditions or the magnitude or timing of changes in economic activity. Future economic downturns or prolonged slow growth in the economy, a sector-specific slowdown in one of our key end-use markets, such as nonresidential construction, or changes in inflation could materially adversely affect our business, results of operations, financial condition and cash flows, especially in light of the capital-intensive nature of our business. 2 Our operations are sensitive to volatility in steel prices and the cost and availability of raw materials. We rely on international markets and certain key suppliers to obtain the raw materials that are critical to the manufacture of steel products. The prices of certain raw materials, including scrap metal and ferroalloys are negotiated on a monthly basis with our suppliers and are subject to market conditions. At any given time, we may be unable to obtain an adequate supply of these critical raw materials with price and other terms acceptable to us. The availability and prices of raw materials may also be negatively affected by new laws and regulations, allocation by suppliers, interruptions in production, accidents or natural disasters, war and other forms of armed conflict or political instability, changes in exchange rates, worldwide price fluctuations, including due to global political and economic factors, changes in governmental, business and consumer spending, inflation, increases in interest rates, labor shortages, and the availability and cost of transportation. Many countries that export steel restrict the export of scrap, protecting the supply chain of some foreign competitors. This trade practice creates an artificial competitive advantage for foreign producers that could limit our ability to compete. If our suppliers increase the prices of our critical raw materials, we may not have alternative sources of supply. In addition, to the extent that we have quoted prices to our customers and accepted customer orders for our products prior to purchasing necessary raw materials, we may be unable to raise the price of our products to cover all or part of the increased cost of the raw materials or pass along increased transportation costs. Also, if we are unable to obtain adequate, cost-effective and timely deliveries of our required raw materials, we may be unable to timely manufacture sufficient quantities of our products. This could cause us to lose sales, incur additional costs, experience margin compressions or suffer harm to our reputation and customer relationships. Excess capacity and oversupply have in the past and may continue in the future to weigh on the profitability of steel producers, including us. The steel industry is affected by global and regional production capacity and fluctuations in steel imports and exports, which are themselves affected by the existence and amounts of tariffs and customer and distributor stocking and destocking cycles. The steel industry has historically suffered from structural overcapacity globally, and the current global steelmaking capacity exceeds the current global consumption of steel, especially for long products. This overcapacity is affected by global macroeconomic trends and amplified during periods of global or regional economic weakness, leading to weaker global or regional demand. In particular, China is both the largest global steel consumer and the largest global steel producer, and the balance between its domestic production and consumption has been an important factor influencing global steel prices. At various points in recent years, reduced Chinese steel demand has not been fully offset by reduced Chinese steel production, which has led to a flood of Chinese steel exports into the markets in which we compete, weighing on demand and depressing market prices. While most recently constraints imposed on Chinese steel production have tempered the risk of excess production, such risk remains, along with the risk of increased exports, in particular if there is a global recession or a Chinese slowdown. See “Risk Factors—Risk Factors Related to Our Business—Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices, which could in turn adversely affect our results of operations.” Market prices for iron ore also underpin those of steel (as its principal input component) to some extent, and iron ore prices depend both on supply and demand conditions. Excess iron ore supply relative to demand has led to depressed prices at various points in recent years and could recur, with a potential effect on steel prices. No assurance can be given that iron ore prices will not decline further, particularly if there is an economic downturn, Chinese steel demand declines, worldwide capacity increases due to new mines coming online or steel demand declines again due, for example, to impacts from geopolitical instability, including the continuing Russia/Ukraine conflict, tensions in the Middle East, U.S. military operations in Iran, Venezuela and other regional conflicts, in particular on energy supply and prices. A renewed phase of steel and iron ore oversupply could materially adversely affect our results of operations and financial condition. Increases in the cost, disruption of supply or shortage of energy could adversely affect our business and results of operations. Our steel plants are large consumers of electricity and natural gas. The prices for and availability of electricity and natural gas can be volatile. Energy prices are often affected by weather, political, regulatory and economic factors beyond our control, and we may be unable to raise the price of our products to offset increased energy costs. Disruptions that impact the supply of our energy resources could temporarily impair our ability to manufacture our products, which may adversely impact our results and financial condition. Furthermore, increases in our energy costs that are not similarly applicable to our competitors’ operations could materially adversely affect our business, results of operations, financial condition and cash flows. 3 We pay special rates for electricity and natural gas in Mexico and enter into fixed-price energy contracts. Failure to maintain such preferential or fixed-price agreements could increase our energy costs, which may adversely affect our business and results of operations. We buy electricity from the A leading global energy group and one of the world’s largest electricity companies by market capitalization, specializing in renewable energy. (IBERDROLA) at preferential rates after successfully obtaining the Qualified User Registry (Registro de Usuario Calificado). We also pay special rates to Transamerica Natural Gas Mexico, Ienova Gas, Naturgy and Engie for the natural gas used at our facilities in Mexico. In Brazil and Mexico, we enter into fixed-price contracts for energy and natural gas. We cannot assure you that these special rates will continue to be available to us in Mexico or that such rates may not increase significantly in the future. We also cannot assure you that we will be able to continue entering into fixed-price arrangements or that the price paid in such agreements will not increase. Changes in the price or supply of electricity or natural gas in the markets in which we operate could materially and adversely affect our business and results of operations. Competition from other steel producers may adversely affect our business. We face significant competition from other steel producers that compete with our products on price, quality and service. The markets for our products are highly competitive and a number of firms, domestic and foreign, participate in the steel, steel products and raw materials markets. Depending on a variety of factors, including the cost and availability of raw materials, energy, technology, labor, transportation and capital costs, currency exchange rates and excessive production, government subsidies of foreign steel producers and other global political and economic factors, our business may be materially adversely affected by more intense competitive forces. We may face increased competition due to the rapid development of technology and rising use of automation technologies. Failure to early adopt and incorporate such technologies to improve productivity, yields, manufacturing technology or support functional teams may put us at a long-term competitive disadvantage. Competition from other materials could significantly reduce demand and market prices for steel products, which could have an adverse impact on our results of operation and financial condition. In many applications, steel competes with other materials that may be used as steel substitutes, such as aluminum, concrete, glass, plastics and wood. Increased use or availability of such materials in substitution for steel products could significantly reduce demand and market prices for steel products, which could in turn have an adverse impact on our business, results of operation and financial condition. Labor disputes may disrupt our operations and relationships with our customers. Our ability to reduce labor costs may be limited in practice or encounter implementation difficulties. Approximately 63% of our employees in Mexico and 37% of our employees outside of Mexico are represented by labor unions and are covered by collective bargaining agreements, which are subject to periodic renegotiation. Strikes or work stoppages could occur prior to, or during, negotiations preceding new collective bargaining agreements, during wage and benefits negotiations or during other periods for other reasons, in particular in connection with any announced intentions to adapt our employee headcount. Further, any such strikes or stoppages could occur at various of our facilities. Prolonged strikes or stoppages could have an adverse impact on our results of operation and financial condition. Failure to comply with environmental laws and regulations may result in fines, penalties or other significant liabilities or prevent us from operating our facilities. We are subject to a broad range of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly stringent standards regarding general health and safety, air emissions, discharges of wastewater, the use, handling and transportation of hazardous, toxic or dangerous materials, waste disposal practices and the remediation of environmental contamination, and health and safety matters, among other things. The costs of complying with, and the imposition of liabilities pursuant to these laws and regulations can be significant, and compliance with new and more stringent obligations may require additional capital expenditures or modifications in operating practices. Failure to comply can result in civil and/or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations and lawsuits by third parties. Despite our efforts to comply with environmental laws and regulations, environmental incidents or events that negatively affect the operations of our facilities may occur. In addition, we cannot assure you that we will always operate in compliance with environmental laws and regulations. If we fail to comply with these laws and regulations, we may be assessed fines or penalties, be required to make large expenditures to comply with such laws and regulations, or be forced to shut down non-compliant operations and face lawsuits by third parties. In addition, environmental laws and regulations are becoming increasingly stringent and it is possible that future laws and regulations may require us to undertake material environmental compliance expenditures and require modifications in our operations. Furthermore, we need to maintain existing and obtain future environmental permits in order to operate our facilities. The failure to obtain necessary permits or consents or the loss of any permits could result in significant fines or penalties or prevent us from operating our facilities. We may also be subject, from time to time, to legal proceedings brought by private parties or governmental agencies with respect to environmental matters, including matters involving alleged property damage or personal injury that could result in significant liability. Certain of our facilities in the United States have been and continue to be the subject of administrative action by federal, state and local environmental authorities. See “Item 8—Financial Information—Legal Proceedings.” 4 We may incur significant liabilities if we are required to remediate contamination at our facilities. Certain of our U.S. facilities are currently under investigation for environmental contamination and we incur costs and liabilities associated with the assessment and remediation of contaminated sites. While some of these investigations and remediation efforts relate to legacy activities by prior owners of our facilities, we may in the future be subject to similar investigations or required to undertake remediation measures. In addition to the impact on current facilities and operations, environmental remediation obligations can rise substantial liabilities in respect of divested assets and past activities. We recognize a liability for environmental remediation when it becomes probable that such remediation will be required and the amount can be reasonably estimated. As estimated costs to remediate change, or when new liabilities become probable, we adjust the record liabilities accordingly. However, due to the numerous variables associated with the judgments and assumptions that are part of these estimates and changes in governmental regulations and environmental technologies over time, we cannot assure you that our environmental reserves will be adequate to cover such liabilities or that our environmental expenditures will not differ significantly from our estimates or materially increase in the future. Failure to comply with any legal obligations requiring remediation of contamination could result in liabilities, imposition of cleanup liens and fines, and we could incur large expenditures to bring our facilities into compliance. See “Item 8—Financial Information—Legal Proceedings.” Global or regional health emergencies, including future pandemics, could materially adversely affect our business, operations, financial condition and cash flows. Public health emergencies, such as pandemics, outbreaks of infectious diseases or other global health crises, have in the past materially disrupted global economic activity, supply chains, labor markets and financial systems. Future health emergencies—whether viral, bacterial or environmental in nature—could again result in governmental restrictions, labor force disruptions, volatility in input costs or supply chain delays. These impacts could increase our operational costs, reduce productivity, delay customer deliveries, and adversely affect demand for our products. The long-term consequences of global health events are inherently uncertain and could amplify other risks we face, including inflationary pressures, shortages of critical materials, and logistical constraints. As a result, any future health emergency could materially adversely affect our business, results of operations, financial condition and cash flows. Implementing our growth strategy, which may include additional acquisitions, may adversely affect our operations. As part of our growth strategy, we may seek to expand our existing facilities, build additional plants, acquire additional steel production assets, enter into joint ventures or form strategic alliances that we expect will expand or complement our existing business. If we undertake any of these transactions, they will likely involve some or all of the following risks: ● disruption of our ongoing business; ● diversion of our resources and of management’s time; ● decreased ability to maintain uniform standards, controls, procedures and policies; ● difficulty managing the operations of a larger company; ● increased likelihood of involvement in labor, commercial or regulatory disputes or litigation related to the new enterprise; ● potential liability to joint venture participants or to third parties; ● difficulty competing for acquisitions and other growth opportunities with companies having greater financial resources; and ● difficulty integrating the acquired operations and personnel into our existing business. We will require significant capital for acquisitions and other strategic plans, as well as for the maintenance of our facilities and compliance with environmental regulations. We may not be able to fund our capital requirements from operating cash flow and we may be required to issue additional equity or debt securities or obtain additional credit resources, which could result in additional dilution to our shareholders. We cannot assure you that adequate equity or debt financing would be available to us on favorable terms or at all. If we are unable to fund our capital requirements, we may not be able to implement our growth strategy. 5 We intend to continue to pursue a growth strategy, the success of which will depend in part on our ability to acquire and integrate additional facilities. Some of these acquisitions may be outside of Mexico, the United States, Canada and Brazil. Acquisitions involve special risks, in addition to those described above, that could adversely affect our business, financial condition and results of operations, including the assumption of legacy liabilities and the potential loss of key employees. We cannot assure you that any acquisition we make will not materially and adversely affect us or that any such acquisition will enhance our business. We are unable to predict the likelihood of any additional acquisitions being proposed or completed in the near future or the terms of any such acquisitions. Disruptions to our manufacturing operations caused, for example, by equipment failures, natural disasters, accidents, explosions, epidemics or pandemics, geopolitical conflicts or extreme weather events could adversely affect our business, results of operations, financial condition and cash flows. Steel manufacturing processes are dependent on critical steel-making equipment, such as furnaces, continuous casters, rolling mills and electrical equipment (such as transformers), and such equipment may incur downtime as a result of unanticipated failures or other events, such as fires, explosions, furnace breakdowns or as a result of natural disasters, accidents, epidemics or pandemics or severe weather conditions. Our manufacturing facilities have experienced, and may in the future experience, plant shutdowns or periods of reduced production as a result of such events. In addition, broader geopolitical instability, including the continuing Russia/Ukraine conflict, tensions in the Middle East, and U.S. military operations in Iran, and Venezuela in 2026, have contributed to volatility in commodity markets, energy prices, and global economic uncertainty, all of which could adversely affect demand for our products. Natural disasters and severe weather conditions could lead to significant damage at our production facilities and general infrastructure or cause shutdowns. Severe weather conditions can also affect our operations due to the long supply chain for certain of the raw materials we use in our processes. Water in particular is crucial to the steelmaking process, and the risk that the authorities may restrict license to withdraw water as a result of chronic drought could increase operating costs and reduce production capacity. Damage to our production facilities due to natural disasters and severe weather conditions could, to the extent that lost production cannot be compensated for by unaffected facilities, adversely affect our business, results of operations or financial condition. More generally, these severe weather conditions could increase in frequency and severity due to climate change. We do not maintain insurance covering losses resulting from catastrophes or business interruptions. In the event we are not able to remedy any significant interruption of our manufacturing capabilities in a prompt or cost-effective manner, our operations could be adversely affected. In addition, if any of our plants are severely damaged or their production capabilities is otherwise significantly affected, we would likely suffer significant losses and capital investments necessary to repair any destroyed or damaged facilities or machinery and would adversely affect our profitability, liquidity and financial condition. Failure to obtain or maintain quality and environmental management certifications may put us at a competitive disadvantage or reduce demand for our products. Automotive parts customers in Mexico and the United States require us to obtain and maintain certifications regarding certain quality and environmental compliance standards, such as ISO 9001, TS 16949 and ISO 14001. While all of our facilities serving such customers comply with such certifications, any failure by us to maintain or renew such certifications, or any failure by us to obtain or comply with any new certifications that may be required by our customers or market practice from time to time, could adversely affect our ability to serve our target market, retain our client base or attract new customers. We cannot provide any assurance that we will be able to maintain these certifications in a timely or cost efficient manner, or at all. Participants in the SBQ steel market must also maintain “approved supplier” certifications such as IATF 16949 (International Automotive Task Force) and ISO 9001 (International Organization for Standardization), which are required by the automotive industry to ensure vehicle quality and safety. While we are an “approved supplier” of steel products for our automotive parts customers, any failure by us to maintain or renew such certifications, including as a result of any future modifications to the requirements necessary to renew or maintain such certifications, could adversely affect our ability to serve our target market, retain our client base, or attract new customers. Maintaining these certifications is key to preserving our market share. We cannot provide any assurance that we will be able to maintain these certifications in a timely or cost-efficient manner, or at all. 6 Any legal proceedings, investigations or claims against us could be costly and time-consuming to defend, and, if adversely decided or settled, could materially and adversely affect our business, financial condition and results of operations and could harm our reputation regardless of the outcome. We may in the future become subject to legal proceedings, investigations, including claims that arise in the ordinary course of business. Any litigation, investigation or claim, whether meritorious or not, could harm our reputation, increase our costs and divert management’s attention, time and resources, which may in turn harm our business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, we do not maintain insurance to cover these risks. Further, our share price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any proceedings, investigations and claims. Greenhouse gas policies and regulations, particularly any binding restriction on emissions of greenhouse gases such as carbon dioxide, could negatively impact our steelmaking operations. Our steel making operations in Brazil and Mexico use electric arc furnaces where carbon dioxide generation is primarily linked to energy use, although our blast and electric arc furnaces have shutdown. In the United States, the Environmental Protection Agency has issued rules imposing inventory and reporting obligations to which some of our facilities are subject, and has also issued rules that will affect preconstruction permits for our facilities where increases in greenhouse gas pollutants are contemplated. The U.S. Congress has debated various measures for regulating greenhouse gas emission (such as carbon dioxide) and may enact them in the future. Such laws and regulations may also result in higher costs for coking coal, natural gas and electricity generated by carbon-based systems (such as coal-fired electric generating facilities). Such future laws and regulations, whether in the form of a cap-and-trade emissions permit system, a carbon tax or other regulatory regime may have a negative effect on our operations. Climate change policy is evolving at regional, national and international levels, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place. As a signatory to the United Nations Framework Convention on Climate Change (the “UNFCCC”), Mexico became subject to the Paris Agreement to fight climate change, which was approved at the 21st session of the UNFCCC conference in 2015. Brazil is a member of the Paris Agreement. On January 27, 2026, the United States’ withdrawal from the Paris Agreement became effective. In addition, in January 2026, the administration announced its intention to withdraw the United States from the UNFCCC itself. The long-term implications of these withdrawals for domestic and international climate regulation remain uncertain, but shifts in U.S. climate policy could affect the regulatory landscape in other jurisdictions in which we operate. We depend on our senior management and their unique knowledge of our business and of the SBQ steel industry, and we may not be able to replace key executives if they leave. We depend on the performance of our executive officers and key employees. Our senior management has significant experience in the steel industry, and the loss of any member of senior management or our inability to attract and retain additional senior management could materially and adversely affect our business, results of operations, prospects and financial condition. We believe that the SBQ steel market is a niche market where specific industry experience is key to success. We depend on the knowledge of our business and the SBQ steel industry of our senior management team. In addition, we attribute much of the success of our growth strategy to our ability to retain most of the key senior management personnel of the companies and businesses that we have acquired. Competition for qualified personnel is significant, and we may not be able to find replacements with sufficient knowledge of, and experience in, the SBQ steel industry for our existing senior management or any of these individuals if their services are no longer available. Our business could be adversely affected if we cannot attract or retain senior management or other necessary personnel. Our tax liability may increase if the tax laws and regulations in countries in which we operate change or become subject to adverse interpretations. Taxes payable by companies in the countries in which we operate are substantial and include income tax, value-added tax, excise duties, profit taxes, payroll related taxes, property taxes and other taxes. Tax laws and regulations in some of these countries may be subject to change, varying interpretation and inconsistent enforcement. Ineffective tax collection systems and continuing budget requirements may increase the likelihood of the imposition of onerous taxes and penalties which could have a material adverse effect on our financial condition and results of operations. In addition to the usual tax burden imposed on taxpayers, these conditions create uncertainty as to the tax implications of various business decisions. This uncertainty could expose us to significant fines and penalties and to enforcement measures despite our best efforts at compliance, and could result in a greater than expected tax burden. In addition, many of the jurisdictions in which we operate, including Mexico, have adopted transfer pricing legislation. If tax authorities impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse effect on our financial condition and results of operations. It is possible that tax authorities in the countries in which we operate will introduce additional tax raising measures. The introduction of any such provisions may affect our overall tax efficiency and may result in significant additional taxes becoming payable. Any such additional tax exposure could have a material adverse effect on our financial condition and results of operations. 7 We are subject to information technology and cyber-security threats which could have an adverse effect on our business and results of operations. We utilize various information technology systems to efficiently address business functions ranging from the operation of our production equipment to administrative computation to the storage of data such as intellectual property and proprietary business information. We continuously evaluate our cyber-security systems and practices, assess potential threats, and improve our information technology networks, policies and procedures to address potential vulnerabilities. Although the Company did not experience a material impact to its operations in this instance, threats from increasingly sophisticated cyber-attacks particularly as the use of artificial intelligence makes these attempts look more legitimate or system failures could result in materially adverse operational disruptions or security breaches of our systems or those of our third-party service providers. These risks could result in disclosure or destruction of key proprietary information or personal data or reputational damage, theft of assets or trade secrets, or could adversely affect our ability to physically produce or transport steel, resulting in lost revenues, as well as delays in reporting our financial results. We also could be required to spend significant financial and other resources to remedy the damage caused by a cyber-security breach, including to repair or replace networks and information technology systems. We may also contend with potential liability for stolen information, increased cyber-security protection costs and litigation expenses. More broadly, while we continue to evaluate artificial intelligence and machine learning tools to improve operational efficiency and support business functions, the use of such technologies introduces inherent risks, including the potential for inaccurate outputs, unintended bias, data security vulnerabilities, and increased regulatory scrutiny. We do not currently rely on AI in a manner that is material to our core operations or financial reporting. We continue to monitor developments in AI regulation in the United States, Mexico, and Brazil, and will adapt our governance and disclosure practices as the regulatory landscape evolves. Our financial statements are prepared in accordance with IFRS and therefore are not directly comparable to financial statements of other companies prepared under U.S. GAAP or other accounting principles. We are listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.), which requires us to prepare our financial statements in accordance with International Financial Reporting Standards (“IFRS”). IFRS significantly differs from U.S. GAAP in certain respects and items on the financial statements of a company prepared in accordance with IFRS may not reflect its financial position or results of operations in the same way they would had such financial statements been prepared in accordance with U.S. GAAP. Accordingly, our financial statements and reported earnings may not be directly comparable with companies in our business that prepare financial statements in accordance with U.S. GAAP. An increase in interest rates in the United States could adversely impact the Mexican economy and may have a negative effect on our financial condition or performance. A decision by the U.S. Federal Reserve to increase interest rates may lead to a general increase in interest rates in the United States. This, in turn, may redirect the flow of capital away from emerging markets and into the United States, because investors may be able to obtain greater risk-adjusted returns in larger or more developed economies rather than in Mexico. Thus, companies in emerging market economies such as Mexico could find it more difficult and expensive to borrow capital and refinance existing debt. This may negatively affect our potential for economic growth and could have a material adverse effect on our business and financial condition. Our controlling shareholder is able to exert significant influence on our business and policies and its interests may differ from those of other shareholders. Industrias CH, S.A.B. de C.V. (“Industrias CH”), which is controlled by the chairman of our board of directors, Rufino Vigil González, owns 51.31% of our shares as of December 31, 2025. Industrias CH nominated all current members of our board of directors and can exercise substantial influence and control over our business and policies, including the timing and payment of dividends. Industrias CH’s interests may differ significantly from those of other shareholders. Furthermore, as a result of Industrias CH’s significant equity position, there is currently limited liquidity in our series B shares and the American Depositary Shares (“ADSs”). 8 Mr. Sergio Vigil González is the Chief Executive Officer of Industrias CH and has in previous years exercised a senior role in our management despite having no formal role in our Company. Since July 2024, he is the Chief Executive Officer of our Company. In this function, Mr. Vigil continues to direct our business strategies, negotiates potential acquisitions and directs intercompany loans, among other things. Mr. Vigil is the brother of our controlling shareholder and Chairman of our board of directors, Rufino Vigil González. We have in the past and may in the future engage in related party transactions with our affiliates. Historically, we have engaged in a number and variety of transactions with our affiliates, including entities that Industrias CH owns or controls. While we believe that these transactions were made on terms that were not less favorable to us than those obtainable on an arm’s-length basis, there was no independent determination of that fact. We expect that in the future we will continue to enter into transactions with our affiliates, and some of these transactions may be significant. See Item 7.B “Related Party Transactions.” Risks Related to Internal Controls and Financial Reporting If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. Effective internal controls are necessary for us to provide reliable financial reports. We have taken a number of measures to remediate the historical material weaknesses and continue to evaluate steps to enhance our internal controls. However, these remediation measures have been and may continue to be time consuming and costly and we cannot be certain that these initiatives will ultimately have the intended effects. If we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and may incorrectly report financial information. In addition, the existence of material weaknesses in our internal controls over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the price of our securities. We cannot assure you that the measures we have taken and plan to take in the future will prevent the identification of any additional material weaknesses or that restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements. For details about our internal control deficiencies and remediation, see Items 15.B. “Controls and Procedures—Management’s Annual Report on Internal Control Over Financial Reporting – Material Weaknesses,” 15.C. “Attestation Report of the Independent Registered Public Accounting Firm,” 15.D. “Changes in Internal Control over Financial Reporting,” and 8 “Financial Information-Legal Proceedings.” Risks Related to the Automotive Industry Sales volume in the automotive industry is volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event. A reduction in automotive industry sales could adversely affect vehicle manufacturing, which could in turn have an adverse effect on our business and results of operations. The automotive market accounted for approximately 78% of our net sales of SBQ products in 2025. Vehicle sales are affected by overall economic and market conditions, consumer behavior, and developing trends such as shared vehicle ownership and ridesharing services. A slowdown in automotive industry sales due to any of these factors could reduce the amount of vehicles manufactured, which could materially affect demand for the steel products we produce and sell. Any reduction in vehicles manufactured, including as a result of weaker demand, has had and could in the future have an adverse effect on our business and results of operations. 9 Our customers in the automotive industry continually seek to obtain price reductions from us, which may adversely affect our results of operations. A challenge that we and other suppliers of intermediary products used in the manufacture of automobiles face is continued price reduction pressure from our customers in the automobile manufacturing business. Downward pricing pressure has been a characteristic of the automotive industry in recent years and it is migrating to all our vehicular markets. Virtually all automobile manufacturers have aggressive price reduction initiatives that they impose upon their suppliers, and such actions are expected to continue in the future. In the face of lower prices to customers, we must continue to reduce our operating costs in order to maintain profitability. We have taken and continue to take steps to reduce our operating costs to offset customer price reductions; however, price reductions are adversely affecting our profit margins and are expected to do so in the future. If we are unable to offset customer price reductions through improved operating efficiencies, new manufacturing processes, sourcing alternatives, technology enhancements and other cost reduction initiatives, or if we are unable to avoid price reductions from our customers, our results of operations could be adversely affected. Risks Related to Mexico Adverse economic conditions in Mexico may adversely affect our financial performance. A substantial portion of our operations are conducted in Mexico and our business is affected by the performance of the Mexican economy. Mexico has historically experienced prolonged periods of economic crises, caused by internal and external factors over which we have no control. Such periods have been characterized by exchange rate instability, high inflation, high domestic interest rates, changes in oil prices, economic contraction, a reduction of international capital flows, balance of payment deficits, a reduction of liquidity in the banking sector and high unemployment rates. Decreases in the growth rate of the Mexican economy, periods of negative growth, or increases in inflation in Mexico could result in lower demand for our products. In recent years, the federal government of Mexico (the “Mexican Government”) cut spending in response to downward trends in international crude oil prices and it may do so again in the future. These cuts could adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects. We cannot assure you that economic conditions in Mexico will not worsen, or that those conditions will not have an adverse effect on our financial performance. Political, social and other developments in Mexico could adversely affect our business and operations. Political, social and other developments in Mexico may adversely affect our business. Social unrest, such as strikes, suspension of labor, demonstrations, acts of violence and terrorism in the Mexican states in which we operate could disrupt the operations of our facilities, which could have an adverse impact on our financial performance. The Mexican Government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican federal governmental actions and policies concerning the economy, the regulatory framework, the social or political context, and state-owned and stated controlled entities or industries could have a significant impact on private sector companies and on market conditions, prices and returns of Mexican securities. In the past, governmental actions have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. In October 2024, Claudia Sheinbaum assumed office as President of Mexico, succeeding Andrés Manuel López Obrador. While President Sheinbaum has maintained continuity with several policies of the prior administration, her presidency has also introduced new initiatives and changes in economic, social and regulatory policy. The potential impact of these and future policy changes, particularly in sectors such as energy, infrastructure, tax, labor and public security, remains uncertain. We cannot predict the effects that political developments in Mexico may have on the Mexican economy or on our industry, nor can we assure you that these events, over which we have no control, will not have a material adverse effect on our business, results of operations or financial condition. The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. The Mexican Government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican Government actions and policies concerning the economy, state-owned enterprises and state controlled, funded or influenced financial institutions could have a significant impact on private sector entities in general and on us in particular, and on market conditions, prices and returns on securities of Mexican companies. The Mexican Government occasionally makes significant changes in policies and regulations, and may do so again in the future. Actions to control inflation and other regulations and policies have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Tax legislation in Mexico is subject to continuous change and we cannot assure you whether the Mexican government may maintain existing political, social, economic or other policies, or whether changes may have a material adverse effect on our financial performance. 10 Mexico has experienced a period of heightened criminal activity, which could affect our operations. In recent years, Mexico has experienced a period of heightened criminal activity, primarily due to the activities of drug cartels and related criminal organizations. Such criminal activity has at times been directed at private companies and their employees, including companies’ industrial properties, including through extortion, theft from trucks or industrial sites, kidnapping and other forms of crime and violence. Criminal activity can lead to increased insurance and security costs, and higher losses stemming from theft and extortion. Furthermore, corruption and links between criminal organizations and authorities could affect our business operations. In 2025 and early 2026, security incidents and government enforcement actions against organized crime groups in Mexico were followed by episodes of violence and disruption in various regions of the country, including in states where we have operations. The U.S. Department of State has maintained travel advisories recommending that U.S. citizens avoid or exercise increased caution when traveling to certain states in Mexico due to security concerns, some of which include regions where we operate facilities. These advisories and the broader perception of insecurity in Mexico could affect investment decisions, workforce availability, and the willingness of customers and business partners to engage in activities in affected regions. Criminal activity continues to exist in Mexico and is likely to continue. We cannot assure you that the levels of violent crime in Mexico, over which we have no control, will not have an adverse effect on Mexico’s economy and, as a result, on our operations and financial performance. Exchange rate fluctuations could adversely affect our financial performance. The Mexican peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject to significant fluctuations in the future. Depreciation of the Mexican peso relative to the U.S. dollar increases a portion of our revenues in U.S. dollar terms, and as well as increases the cost of the raw materials we require for production. The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert Mexican pesos into U.S. dollars (except for certain restrictions related to cash transactions involving a U.S. dollar payment to a Mexican bank) or other currencies. However, severe devaluations or depreciations of the Mexican peso may result in governmental intervention to institute restrictive exchange control policies, as has occurred before in Mexico and other countries in Latin America. Accordingly, fluctuations in the value of the Mexican peso against other currencies, particularly the U.S. dollar, could have a material adverse effect on our business and financial condition. Currency fluctuations or restrictions on transfer of funds outside Mexico may also have an adverse effect on our financial performance and could adversely affect the U.S. dollar value of the price of our Series B shares and the corresponding ADSs. High interest rates in Mexico may increase our financing costs and negatively affect our business and operations. Mexico has experienced, and may again experience, high real and nominal interest rates. Mexico also has, and is expected to continue to have, high real and nominal interest rates relative to the United States. Future changes by the Mexican Central Bank (Banco de México) may negatively impact the Mexican economy or the value of securities issued by Mexican companies, including as a result of any precipitous unwinding of investments in emerging markets, depreciations and increased volatility in the value of their currency and higher interest rates. In addition, if we incur peso-denominated debt in the future, it could be at high interest rates, which could increase our financing costs and adversely affect our business, financial condition and results of operations. High inflation rates in Mexico may affect demand for our products and result in cost increases. Mexico has in the past and may in the future experienced high annual rates of inflation. High inflation rates could adversely affect our business and results of operations by reducing consumer purchasing power, thereby adversely affecting demand for our products, increasing certain costs beyond levels that we could pass on our customers, and by decreasing the benefit to us of revenues earned if the inflation rate exceeds the growth in our pricing levels. 11 Economic and political developments in the United States and elsewhere may adversely affect Mexican economic policy and, in turn, our operations. Economic conditions in Mexico are highly correlated with economic conditions in the United States due to the geographical proximity and the high degree of economic activity between the two countries. As a result, political developments in the United States, including changes in the American administration and governmental policies, can also have an impact on the exchange rate between the U.S. dollar and the Mexican peso, economic conditions in Mexico and the global capital markets. In addition, because the Mexican economy is heavily influenced by the U.S. economy, policies that may be adopted by the U.S. government that are unfavorable to Mexico may adversely affect economic conditions in Mexico. The macroeconomic environment in which we operate is beyond our control and the future economic environment may be less favorable than in recent years. The risks associated with current and potential changes in the Mexican and United States political environment and economies are significant and could have an adverse effect on our financial condition and results of operations. We are subject to Mexican and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business, results of operations and financial condition. Our business encompasses multiple jurisdictions and complex regulatory frameworks, including in relation to economic sanctions, anti-corruption and anti-money laundering matters. Laws and regulations in these areas are complex and constantly evolving and enforcement of them continues to increase. We are subject to the risk that our management, employees, contractors or any person doing business with us may (i) engage in fraudulent activity, corruption or bribery, (ii) circumvent or override our internal controls and procedures or (iii) misappropriate or manipulate our assets to our detriment. Further, we cannot ensure that these compliance policies and processes will prevent intentional, reckless or negligent acts committed by our management, employees, contractors or anyone doing business with us. Any failure—real or perceived—to comply with applicable governance or regulatory obligations by our management, employees, contractors or any person doing business with us could harm our reputation, limit our ability to obtain financing and otherwise have a material adverse effect on our business, financial condition and results of operations. If we fail to comply with any applicable anti-corruption, anti-bribery or anti-money laundering laws, we and our management, employees, contractors or any person doing business with us may be subject to criminal, administrative or civil penalties and other measures, which could in turn have material adverse effects on our reputation, business, financial condition and results of operations. Any investigation of potential violations of anti-corruption, anti-bribery or anti-money laundering laws by governmental authorities in Mexico or other jurisdictions could result in an inability to prepare our consolidated financial statements in a timely manner and could adversely impact our reputation, limit our ability to access financial markets and adversely affect our ability to obtain contracts, assignments, permits and other government authorizations necessary to participate in our industry, which, in turn, could have adverse effects on our business, results of operations and financial condition. Mexico has different corporate disclosure and accounting standards than those in the United States and other countries. A principal objective of the securities laws of the United States, Mexico and other countries is to promote full and fair disclosure of all material corporate information, including accounting information. However, there may be different or less publicly available information about issuers of securities in Mexico than is regularly made available by public companies in countries with more highly developed capital markets, including the United States. The disclosure standards imposed by the Mexican Stock Exchange may be different than those imposed by securities exchanges in other countries or regions such as the United States. As a foreign private issuer, we are not subject to U.S. proxy rules and are exempt from certain reports under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), as we are not required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic reporting companies whose securities are registered under the Exchange Act. These exemptions and accommodations available to foreign private issuers may result in less frequent or less detailed disclosures than those provided by U.S. domestic reporting companies. 12 Risks Related to Brazil Brazilian political and economic conditions, and the Brazilian government’s economic and other policies, may negatively affect our business, operations and financial condition. The Brazilian federal government’s economic policies may have important effects on companies that operate in Brazil, including us. The Brazilian government has often changed monetary, taxation, credit, tariff and other policies to influence the course of Brazil’s economy. The Brazilian government’s actions to control inflation and implement other policies have at times involved wage and price controls, blocking access to bank accounts, imposing capital controls and limiting imports into Brazil. Our results of operations and financial condition may be adversely affected by factors such as: ● fluctuations in exchange rates; ● exchange control policies; ● interest rates; ● inflation; ● tax policies; ● expansion or contraction of the Brazilian economy, as measured by rates of growth in gross domestic product (“GDP”); ● changes in labor regulation; ● energy shortages; ● social and political instability; ● liquidity of domestic capital and lending markets; and ● other political, diplomatic, social and economic developments in or affecting Brazil. Risks Related to Ownership of our ADSs We are a foreign private issuer under the rules and regulations of the SEC and are therefore exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a domestic U.S. reporting company, which reduces the level and amount of disclosure that you receive. We are a foreign private issuer under the rules and regulations of the SEC and are therefore exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a domestic U.S. reporting company, which reduces the level and amount of disclosure that you receive. In addition, as a result of the enactment of the Holding Foreign Insiders Accountable Act (“HFIAA”) in December 2025, our directors and officers are no longer exempt from the Section 16(a) beneficial ownership reporting requirements of the Exchange Act. See “Item 16G—Corporate Governance”. As a foreign private issuer whose ADSs are listed on the NYSE American we are permitted to follow certain home country corporate governance practices instead of certain requirements of the NYSE American. Among other things, as a foreign private issuer we may also follow home country practice with regard to, the composition of the board of directors, director nomination procedure, compensation of officers and quorum at shareholders’ meetings. See Item 10.B “Memorandum and Articles of Association. 13 The market price of our ADSs has been, and may continue to be, highly volatile, and such volatility could cause the market price of our ADSs to decrease and could cause you to lose some or all of your investment in our ADSs. The stock market in general and the market prices of the ADSs on NYSE American, in particular, are or will be subject to fluctuation, and changes in these prices may be unrelated to our operating performance. During the second quarter of 2025, the market price of our ADSs fluctuated from a high of U.S.$34.59 per ADS to a low of U.S.$25 per ADS, and the price of our ADSs continues to fluctuate. We anticipate that the market prices of our securities will continue to be subject to wide fluctuations. The market price of our securities may be subject to a number of factors, including: ● announcements of new products by us or others; ● announcements by us of significant acquisitions, strategic partnerships, in-licensing, joint ventures or capital commitments ● the developments of the businesses and projects of our various subsidiaries; ● expiration or terminations of licenses, research contracts or other collaboration agreements; ● public concern as to the safety of the products we sell; ● the volatility of market prices for shares of companies with whom we compete; ● developments concerning intellectual property rights or regulatory approvals; ● variations in our and our competitors’ results of operations; ● changes in revenues, gross profits and earnings announced by us; ● changes in estimates or recommendations by securities analysts, if the ADSs are covered by analysts; ● fluctuations in the share price of our publicly traded holding company; ● changes in government regulations or patent decisions; and ● general market conditions and other factors, including factors unrelated to our operating performance. These factors may materially and adversely affect the market price of our securities and result in substantial losses by our investors. We cannot assure you that the ADSs will not be delisted from the NYSE American, which could negatively impact the price of the ADSs and our ability to access the capital markets. We cannot assure you that the ADSs will not be delisted from the NYSE American, which could negatively impact the price of the ADSs and our ability to access capital markets. The listing standards of the NYSE American provide that a company, in order to qualify for continued listing, must maintain a minimum share price of $1.00 and satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares and various additional requirements. If we fail to comply with all listing standards applicable to issuers listed on the NYSE American, the ADSs may be delisted. If the ADSs are delisted, it could reduce the price of the ADSs and the levels of liquidity available to our shareholders. In addition, the delisting of the ADSs could materially and adversely affect our access to the capital markets and any limitation on liquidity or reduction in the price of the ADSs could materially and adversely affect our ability to raise capital. Delisting from the NYSE American could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities. There can be no assurance that we will not be classified as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors in shares of our common stock or ADSs. We will be classified as a PFIC in a particular taxable year if, after applying certain look-through rules, either (i) 75 percent or more of our gross income for the taxable year is passive income; or (ii) the average percentage of the value of our assets that produce or are held for the production of passive income is at least 50 percent. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from certain commodities transactions. Cash is generally considered a passive asset for these purposes. Goodwill is an active asset under the PFIC rules to the extent attributable to activities that produce active income. 14 Based on our audited financial statements and relevant market and shareholder data, we believe that we were not a PFIC for U.S. federal income tax purposes with respect to our 2025 and 2024 taxable years, and we do not expect to be a PFIC in the current taxable year or in the foreseeable future. However, whether we are a PFIC is a factual determination made annually after the close of the taxable year, and therefore may be subject to change depending, among other things, upon changes in the composition of our gross income and the relative quarterly average value of our assets. Because we hold a substantial amount of cash, we may be or become a PFIC for any taxable year if the value of our goodwill and other intangible assets that we believe should be treated as active assets are determined by reference to our market capitalization and our market capitalization fluctuates or declines considerably. Accordingly, there can be no assurance that we will not be a PFIC for any year in which a U.S. Holder, as defined in “Item 10.E. Additional Information—Taxation—Passive Foreign Investment Company Status,” holds series B shares or ADSs. If we were to be or become classified as a PFIC for any taxable year during which a U.S. Holder owns the ADSs or series B shares, certain adverse U.S. federal income tax could apply to such U.S. Holder, including increased tax on disposition gains and certain excess distributions and additional reporting requirements. See “Item 10.E. Additional Information— Taxation— Passive Foreign Investment Company Status”.