Item 1A. Risk Factors
ITEM 1A. RISK FACTORS.
In
addition to other information in this Annual Report and in other filings we make with the Securities and Exchange Commission (“SEC”),
the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business,
operating results and financial condition. If any of the following risks occur, our business, cash flow, results of operations, financial
condition and future business prospects could be materially and adversely affected, and the trading price of our common stock could decline.
Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be
considered as a reliable indicator of future performance and stockholders and investors should not use historical trends to anticipate
results or trends in future periods.
Risks
Related to Our Business
We
have a history of substantial net losses and expect losses to continue in the future; if we do not achieve and sustain profitability,
our financial condition could suffer.
We
have experienced substantial net losses, and we expect to continue to incur substantial losses for the foreseeable future. We incurred
net losses of approximately $83.4 million, $201.3 million and $203.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
As of December 31, 2025, we had net working capital of approximately $26 million and an accumulated deficit of approximately $822 million.
We have not yet achieved profitability.
If
our revenue grows slower than we anticipate, or if our operating expenses are higher than we expect, we may not be able to achieve profitability,
and our financial condition could suffer. We can give no assurance that we will ever achieve profitable operations. Even if we achieve
profitability in the future, we may not be able to sustain profitability in subsequent periods. Whether we can achieve cash flow levels
sufficient to support our operations cannot be accurately predicted. We may need to borrow additional funds or sell our equity or debt
securities, or some combination of both, to provide funding for our operations in the future. Such additional funding may not be available
on commercially reasonable terms, or at all, and any equity financing would be dilutive to our stockholders.
We
may need additional capital to fund our growing operations but cannot assure you that we will be able to obtain sufficient capital from
potential sources, and we may have to limit the scope of our operations or take actions that may dilute your financial interest.
We
will need additional capital to fund our growing operations in the future. If adequate additional financing is not available on reasonable
terms or available at all, we may not be able to undertake expansion or continue our marketing efforts and we would have to modify our
business plans accordingly. The extent of our capital needs will depend on numerous factors, including: (i) our profitability; (ii) the
release of competitive products and/or services by our competition; (iii) the level of our investment in research and product development;
(iv) the amount of our capital expenditures, including acquisitions; and (v) our growth. We cannot be certain that additional funding
and incremental working capital will be available to us on acceptable terms, if at all, or that it will exist in a timely and/or adequate
manner to allow for the proper execution of our near and long-term business strategy. If sufficient funds are not available on terms
and conditions acceptable to management and stockholders, we may be required to delay, reduce the scope of, or eliminate further development
of our business operations.
Even
if we obtain requisite financing, it may be on terms not favorable to us, it may be costly and it may require us to agree to covenants
or other provisions that will favor new investors over existing stockholders or other restrictions that may adversely affect our business.
Additional funding, if obtained, may also result in significant dilution to our stockholders.
Our
revenue growth ultimately depends on consumers’ willingness to adopt EVs in a market that is still in its early stages.
Our
growth is highly dependent upon the adoption by consumers of EVs, and we are subject to the risk of reduced demand for EVs. If the market
for EVs does not gain broader market acceptance or develops slower than we expect, our business, prospects, financial condition and operating
results will be harmed. The market for electric vehicles is relatively new, rapidly evolving, characterized by rapidly changing
technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle
announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors
that may influence the purchase and use of alternative fuel vehicles, specifically EVs, include:
● perceptions
about EV quality, safety (in particular with respect to lithium-ion battery packs), design,
performance and cost, especially if adverse events or accidents occur that are linked to
the quality or safety of EVs;
● the
limited range over which EVs may be driven on a single battery charge and concerns about
running out of power while in use;
● limitations
in the development of battery technology;
● concerns
regarding the stability of the electrical grid and the rising price of electricity;
● improvements
in the fuel economy of the internal combustion engine;
● the
initial cost of purchasing EVs compared to conventional gas-powered automobiles;
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● the
number, price and variety of EV models available for purchase;
● consumers’
desire and ability to purchase a luxury automobile or one that is perceived as exclusive;
● EV
supply chain disruptions including availability of certain components such as semiconductors,
microchips, and lithium, availability of batteries and battery materials, and geopolitical,
tariff, and trade issues that may disrupt the EV supply chain;
● volatility
in the cost of oil and gasoline and
the impact of international conflicts;
● government
regulations and economic incentives promoting fuel efficiency and alternate forms of energy;
● access
to charging stations, standardization of EV charging systems and consumers’ perceptions
about convenience and cost to charge an EV; and
● the
availability of tax and other governmental incentives to purchase and operate EVs or future
regulation requiring increased use of zero emission vehicles.
The
influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which would materially
and adversely affect our business, operating results, financial condition and prospects.
War,
terrorism, other acts of violence or natural or human-made disasters may affect the markets in which we operate, our customers, our delivery
of products and customer service, and could have a material adverse impact on our business, results of operations, or financial condition.
Our
business may be adversely affected by instability, disruption or destruction in a geographic region in which we operate, regardless of
cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or human-made disasters, including famine, flood,
fire, earthquake, storm or public health crises. Such events may cause customers to suspend their decisions on using our services, make
it impossible for us to render our services, cause restrictions, and give rise to sudden significant changes in regional and global economic
conditions and cycles. These events also pose significant risks to our personnel and to physical facilities and operations, which could
materially adversely affect our financial results.
Further,
the current Russia-Ukraine and Middle East conflicts have created extreme volatility in the global financial markets and are expected
to have further global economic consequences, including disruptions of the global supply chain and energy markets and heightened volatility
of commodity and raw material prices. In addition, recently there has been increasing geopolitical tension between China and Taiwan that
may affect future shipments from Taiwan based electronics suppliers for certain of our EV chargers. Any such volatility or disruptions
may have adverse consequences for us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as
a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or
on favorable terms, more costly or more dilutive. Our business, financial condition and results of operations may be materially and adversely
affected by any negative impact on the global economy, capital markets or commodity and raw material prices resulting from the conflicts
in Ukraine and the Middle East, the geopolitical tensions between China and Taiwan or any other geopolitical tensions.
Changes
to corporate average fuel economy standards may negatively impact the EV market, which would adversely affect our business.
To
meet higher fuel efficiency and greenhouse gas emission standards for passenger vehicles, automobile manufacturers are increasingly
using technologies, such as turbocharging, direct injection and higher compression ratios, which require high octane gasoline. If
fuel efficiency of vehicles continues to rise, and the affordability of internal combustion vehicles increases, the demand for
electric vehicles could diminish. If consumers no longer purchase EVs, or purchase fewer EVs, it would materially and adversely
affect our business, operating results, financial condition and prospects.
Our
quarterly operating results may fluctuate significantly.
We
expect that our operating results may be subject to substantial quarterly fluctuations. If our quarterly operating results fall below
the expectations of investors or securities analysts, the price of our common stock could decline substantially. We believe that quarterly
comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.
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We
are unable to predict the ultimate impact of equipment order delays and chip shortages on our business and future results of operations,
financial position and cash flows.
The
global chip shortage and supply chain disruption over the past several years caused some temporary delays for us in equipment orders
from our contract manufacturer. As federal, state, local and foreign economies returned to pre-pandemic levels and the demand for charging
station usage increased, these delays and shortages became less apparent; however, we are unable to predict the extent of any final recovery
from prior years due to the uncertainty of the possible occurrence of another pandemic or other epidemics. As a result, we are unable
to predict the ultimate impact that equipment order delays and chip shortages will have on our business and our future results of operations,
financial position and cash flows .
We
rely on a limited number of vendors for our EV charging equipment and related support services. The loss of any of these partners would
negatively affect our business.
We
rely on a limited number of vendors for design, transfer review, manufacturing, and testing of EV charging equipment which is generally sole
sourced with respect to components as well as aftermarket maintenance and warranty services. The reliance on a limited number of
vendors increases our risks, since we do not currently have proven reliable alternative or replacement vendors beyond these key
parties. In the event of production interruptions or supply chain disruptions including but not limited to availability of certain
key components such as semiconductors, we may not be able to take advantage of increased production from other sources or develop
alternate or secondary vendors without incurring material additional costs and substantial delays. Therefore, our business would be
adversely affected if one or more of our vendors were impacted by any interruption at a particular location.
If we or our suppliers
experience a significant increase in demand, or if we need to replace an existing supplier, we may not be able to supplement service
or replace them on acceptable terms, which may impact our ability to install chargers in a timely manner. Thus, the loss of any significant
vendor would have an adverse effect on our business, financial condition and operating results.
We
may be adversely affected by inflationary or market fluctuations, including the impact of tariffs, in the cost of products consumed in
providing our services or our cost of labor.
The
prices we pay for the principal items we consume in performing our services are dependent primarily on current market prices. We have
consolidated certain supply purchases with national vendors through agreements containing negotiated prospective pricing. In the event
such vendors are not able to comply with their obligations under the agreements and we are required to seek alternative suppliers, we
may incur increased costs of supplies and/or supply disruptions.
EV
chargers are impacted by commodity pricing factors, including the impact of tariffs and trade barriers, which in many cases are unpredictable
and outside of our control. We seek to pass on to customers such increased costs but sometimes we are unable to do so. Even when we can
pass on such costs to our customers, from time to time, sporadic unanticipated increases in the costs of certain supply items due to
market or economic conditions may result in a timing delay in passing on such increases to our customers. This type of spike and unanticipated
increase in EV charger costs could adversely affect our operating performance, and the adverse effect could be greater if we are delayed
in passing on such additional costs to our customers (e.g., where we may not be able to pass such increase on to our customers until
the time of our next scheduled service billing review). We seek to mitigate the impact of an unanticipated increase in the cost of such
supplies through consolidation of vendors, which increases our ability to obtain more favorable pricing.
Our
cost of labor may be influenced by factors in certain market areas. Our hourly employees could be affected by wage rate increases in
the federal or state minimum wage rates, wage inflation or local job market adjustments. We do not have a contractual right to automatically
pass through all wage rate increases resulting from wage rate inflation or local job market adjustments, and we may be delayed in doing
so. Our delay in, or inability to pass such wage increases through to our customers could have a material adverse effect on our financial
condition, results of operations and cash flows.
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We
have global operations and face risks related to health crises that could negatively impact our financial condition.
Our
business, the businesses of our customers and the businesses of our charging equipment suppliers could be materially and adversely affected
by the risks, or the public perception of the risks, related to a pandemic or other health crisis like the Covid-19 pandemic. During
the Covid-19 pandemic (March 2020 to May 2023), a significant component supplier of our Blink IQ 200 charging station located in Taiwan
who, in turn, sourced assembly parts from China, was particularly impacted. A significant or prolonged outbreak of contagious diseases
like Covid-19 and its variants in the human population could result in a widespread health crisis that could adversely affect the economies
and financial markets of many countries, resulting in an economic downturn that could affect demand for our EV supply equipment and related
networked services and likely impact our operating results. Such events could result in the complete or partial closure of our Taiwan
supplier’s manufacturing facility, the interruption of our distribution system, temporary or long-term disruption in our supply
chains from Asia and other international suppliers, disruptions, or restrictions on our employees to work or travel, delays in the delivery
of our charging stations to customers, and potential claims of exposure to diseases through contact with our charging stations. If the
impact of an outbreak continues for an extended period, it could materially adversely impact our supply chain, access to capital and
the growth of our revenues.
Climate
change may have a long-term impact on our business.
While
we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are
inherent risks wherever business is conducted. Access to clean water and reliable energy in the communities where we conduct our business,
whether for our offices or for our vendors, is a priority. Climate-related events, including the increasing frequency of extreme weather
events and their impact on critical infrastructure throughout the United States and in other countries where we have operations, have
the potential to disrupt our business, our third-party suppliers and/or the business of our customers, and may cause us to experience
higher attrition, losses and additional costs to maintain or resume our EV charging operations.
Computer
malware, viruses, hacking, cyberattacks, phishing attacks and spamming that could result in security and privacy breaches and interruption
in service could harm our business and our customers.
Computer
malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services and
operations and loss, misuse, encryption or theft of data. Computer malware, viruses, computer hacking, cyberattacks and phishing attacks against
online networking platforms have become more prevalent and may occur on our systems in the future. Any attempts by hackers to disrupt
our website service or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation
or brand. Our network security business disruption insurance may not be sufficient to cover significant expenses and losses related to
direct attacks on our website or internal systems. Efforts to prevent hackers from entering our computer systems are expensive to implement
and may limit the functionality of our services. Though it is difficult to determine what, if any, harm may directly result from any
specific interruption or attack, any failure to maintain performance, reliability, security and availability of our products and services
and technical infrastructure may harm our reputation, brand and our ability to attract customers. Any significant disruption to our website
or internal computer systems could result in a loss of customers and could adversely affect our business and results of operations.
We
have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety
of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints. If our
mobile application is unavailable when customers attempt to access it or it does not load as quickly as they expect, customers may seek
other services.
Our
platform functions on software that is highly technical and complex and may now or in the future contain undetected errors, bugs, or
vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs or vulnerabilities
discovered in our code after deployment, inability to identify the cause or causes of performance problems within an acceptable period
of time or difficultly maintaining and improving the performance of our platform, particularly during peak usage times, could result
in damage to our reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and
financial results.
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We
expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases
of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems and equipment
as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology,
our business and operating results may be harmed. If we do not make the necessary investments or upgrades to maintain a network capable
of operating on current and future generations of broadband cellular network technology, namely the 4G and 5G systems, our business and
operating results could be adversely impacted.
We
have a disaster recovery program to transition our operating platform and data to an alternative location in the event of a
catastrophe. However, there are several factors ranging from human error to data corruption that could materially lengthen the time
our platform is partially or fully unavailable to our user base as a result of the transition. If our platform is unavailable for a
significant period of time as a result of such a transition, especially during peak periods, we could suffer damage to our
reputation or brand, and loss of revenues, all of which could adversely affect our business and financial results.
Growing
our customer base depends upon the effective operation of our mobile applications with mobile operating systems, networks and standards
that we do not control.
We
are dependent on the interoperability of our mobile applications with popular mobile operating systems that we do not control, such as
Google’s Android and iOS, and any changes in such systems that degrade our products’ functionality or give preferential treatment
to competitive products could adversely affect the usage of our applications on mobile devices. Additionally, to deliver high quality
mobile products, it is important that our products work well with a range of mobile technologies, systems, networks and standards that
we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing
products that operate effectively with these technologies, systems, networks or standards.
If
we are unable to keep up with advances in EV technology, we may suffer a decline in our competitive position. The EV industry is characterized
by rapid technological change. If we are unable to keep up with changes in EV technology, our competitive position may deteriorate, which
would materially and adversely affect our business, prospects, operating results and financial condition. As technologies change, we
plan to upgrade or adapt our EV charging stations and Blink Network software to continue to provide EV charging services with the latest
technology. However, due to our limited cash resources, our efforts to do so may be limited. Any failure of our charging stations to
compete effectively with other manufacturers’ charging stations will harm our business, operating results and prospects.
We
need to manage growth in operations to realize our growth potential and achieve expected revenues; our failure to manage growth could
disrupt our operations and ultimately prevent us from generating the revenues we expect.
To
take advantage of the growth that we anticipate in our current and potential markets, we believe that we must expand our marketing operations.
This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect
to continue improving our financial controls, operating procedures and management information systems. We will also need to effectively
train, motivate and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from
generating the revenues we expect.
To
achieve the above-mentioned targets, the general strategies of our company are to maintain and search for appropriate talent who have
innovative mindset and initiatives, as well as to keep a close eye on expansion opportunities through merger and/or acquisition.
We
may be unable to successfully integrate recent acquisitions in a cost-effective and non-disruptive manner.
Our
success depends on our ability to grow our business and enhance and broaden our product offerings in response to changing customer demands,
competitive pressures, and advances in technologies. We continue to search for viable acquisition candidates or strategic alliances that
would expand our market presence and enhance our operating margins. Accordingly, we have previously and may in the future pursue the acquisition
of, investments in or joint ventures relating to, new businesses, products or technologies as a part of our growth strategy instead of
developing them internally. Our future success will depend, in part, upon our ability to manage the expanded business following these
transactions, including challenges related to the management and monitoring of new operations and associated increased costs and complexity
associated with our past acquisitions as well as future acquisitions. Other risks involving potential future and completed acquisitions
and strategic investments include:
● risks
associated with conducting due diligence;
● problems
integrating the purchased businesses, products and technologies;
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● inability
to achieve the anticipated synergies and overpaying for acquisitions or unanticipated costs
associated with acquisitions;
● invalid
sales assumptions for potential acquisitions;
● issues
maintaining uniform standards, procedures, controls and policies;
● diversion
of management’s attention from our core business;
● adverse
effects on existing business relationships with suppliers, distributors and customers;
● risks
associated with entering new markets in which we have limited or no experience;
● potential
loss of key employees of acquired businesses; and
● increased
legal, accounting and compliance costs.
We
compete with other companies for these opportunities, and we may be unable to consummate such acquisitions or joint ventures on commercially
reasonable terms, or at all. In addition, acquired businesses may have ongoing or potential liabilities, legal claims (including tort
and/or personal injury claims) or adverse operating issues that we fail to discover through due diligence prior to the acquisition.
Even
if we are aware of such liabilities, claims or issues, we may not be able to accurately estimate the magnitude of the related liabilities
and damages. In particular, to the extent that prior owners of any acquired businesses or properties failed to comply with or otherwise
violated applicable laws or regulations, failed to fulfill their contractual obligations to their customers, or failed to satisfy legal
obligations to employees or third parties, we, as the successor, may be financially responsible for these violations and failures and
may suffer reputational harm or otherwise be adversely affected. Acquisitions also frequently result in the recording of goodwill and
other intangible assets which are subject to potential impairment in the future that could harm our financial results. If we were to
issue additional equity in connection with such acquisitions, this may dilute our stockholders .
We
have limited insurance coverage for various liabilities and damages, including potential injuries, and such insurance coverage may not
be adequate in a catastrophic situation.
We
hold employer liability insurance generally covering death or work-related injury of employees. We hold product and general liability
insurance covering certain incidents involving third parties that occur on or in the premises of our company. We maintain business interruption
insurance for key locations. Additionally, we hold cybersecurity insurance for certain claims associated with data breaches, cyberattacks,
and other information security incidents. We also maintain directors’ and officers’ liability insurance for certain claims
that may arise against our leadership.
Our
insurance coverage may be insufficient to cover any claim for, or due to, product liability, damage to our fixed assets, inventory or
employee injuries, cyber incidents, regulatory investigations, and litigation. Any liability or damage to, or caused by, our facilities,
our personnel, our information systems, or actions taken by our directors and officers beyond our insurance coverage may result in our
incurring substantial costs and a diversion of resources.
Our
future success depends on our ability to attract and retain highly qualified personnel, including our President and Chief Executive Officer.
Effective
February 1, 2025, Michael Battaglia was named as our new President and Chief Executive Officer. Mr. Battaglia joined our company in 2020
and assumed increasingly senior positions with us, including Chief Operating Officer and Chief Revenue Officer.
Our
business depends on the availability to us of Mr. Battaglia, and our business would be materially and adversely affected if his services
were to be unavailable to us. There is no assurance that Mr. Battaglia will continue to be available to us, although we have entered
into a two-year employment agreement with Mr. Battaglia expiring in February 2027, subject to automatic annual renewals. In addition,
our future success depends upon our ability to attract and retain other highly qualified personnel. Expansion of our business and the
management and operation of our company will require additional managers and employees with industry experience, and our success will
be highly dependent on our ability to attract and retain skilled management personnel and other employees. There can be no assurance
that we will be able to attract or retain highly qualified personnel. As our industry continues to evolve, competition for skilled personnel
with the requisite experience will be significant. This competition may make it more difficult and expensive to attract, hire and retain
qualified managers and employees.
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We
are in a highly competitive EV charging services industry and there can be no assurance that we will be able to compete with our
competitors, some of which are larger and have greater financial resources.
We
face strong competition from competitors in the EV charging services industry, including competitors who could duplicate our model. Many
of these competitors may have substantially greater financial, marketing and development resources and other capabilities than us. In
addition, there are very few barriers to entry to the market for our services. There can be no assurance, therefore, that any of our
current and future competitors, many of whom may have far greater resources, will not independently develop services that are substantially
equivalent or superior to our services. Therefore, investment in our company is risky and speculative due to the competitive environment
in which we may operate.
Our
competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such as
technical qualifications, past contract performance, geographic presence and driver price. Further, many of our competitors may be able
to utilize substantially greater resources and economies of scale to develop competing products and technologies, divert sales away from
us by winning broader contracts or hire away our employees by offering more lucrative compensation packages. If the market for EV charging
stations expands, we expect that competition will intensify as additional competitors enter the market and current competitors expand
their product lines. To secure contracts successfully when competing with larger, well-financed companies, we may be forced to agree
to contractual terms that provide for lower aggregate payments to us over the life of the contract, which could adversely affect our
margins. Our failure to compete effectively with respect to any of these or other factors could have a material adverse effect on our
business, prospects, financial condition or operating results.
If
a third party asserts that we are infringing upon its intellectual property rights, whether successful or not, it could subject us to
costly and time-consuming litigation or expensive licenses, and our business may be harmed.
The
EV and EV charging industries are characterized by the existence of many patents, copyrights, trademarks and trade secrets. As we face
increasing competition, the possibility of intellectual property rights claims against us grows. Our technologies may not be able to
withstand any third-party claims or rights against their use. Additionally, although we have acquired other companies’ proprietary
technology covered by patents, we cannot be certain that any such patents will not be challenged, invalidated or circumvented. Intellectual
property infringement claims against us could harm our relationships with our customers, may deter future customers from subscribing
to our services or could expose us to litigation with respect to these claims. Even if we are not a party to any litigation involving
a customer and third party, an adverse outcome in any such litigation could make it more difficult for us to defend our intellectual
property in any subsequent litigation in which we are a named party. Any of these results could harm our brand and operating results.
Any
intellectual property rights claim against us or our customers, with or without merit, could be time-consuming, expensive to litigate
or settle and could divert management resources and attention. An adverse determination in this regard also could prevent us from offering
our services to our customers and may require that we procure or develop substitute services that do not infringe.
With
respect to any intellectual property rights claim against us or our customers, we may have to pay damages or stop using technology found
to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available on reasonable
terms, may significantly increase our operating expenses or require us to restrict our business activities in one or more respects. The
technology also may not be available for us to license at all. As a result, we may also be required to develop alternative non-infringing
technology, which could require significant effort and expense.
The
success of our business depends in large part on our ability to protect our proprietary information and technology and enforce our intellectual
property rights against third parties.
We
rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and
contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We cannot assure
you that any patents will issue with respect to our currently pending patent applications, in a manner that gives us the protection that
we seek, if at all, or that any future patents issued to us will not be challenged, invalidated or circumvented. Our currently issued
patents and any patents that may be issued in the future with respect to pending or future patent applications may not provide sufficiently
broad protection, or they may not prove to be enforceable in actions against alleged infringers. Also, we cannot assure you that any
future service mark registrations will be issued with respect to pending or future applications or that any registered service marks
will be enforceable or provide adequate protection of our proprietary rights.
We
endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit access
to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use of
our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive
with ours or infringe our intellectual property. The enforcement of our intellectual property rights also depends on our legal actions
against these infringers being successful, but we cannot be sure these actions will be successful, even when our rights have been infringed.
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Further,
effective patents, trademarks, service marks, copyright and trade secret protection may not be available in every country in which our
services are available over the Internet. In addition, the legal standards relating to the validity, enforceability and scope of protection
of intellectual property rights in EV-related industries are uncertain and still evolving.
We
may not be able to protect our intellectual property rights throughout the world.
Filing,
prosecuting and defending all current and future patents in all countries throughout the world would be prohibitively expensive, and
our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In
addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws
in the United States. Consequently, we may not be able to prevent third parties from infringing on our inventions in all countries outside
the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and,
further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as
that in the United States. These products may compete with our product candidates, and our patents or other intellectual property rights
may not be effective or sufficient to prevent them from competing.
The
legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, which could
make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights.
For example, some foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In
addition, some countries limit the enforceability of patents against third parties, including government agencies or government contractors.
In these countries, patents may provide limited or no benefit. Proceedings to enforce our patent rights in foreign jurisdictions could
result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of
being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert
claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be
commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain
a significant commercial advantage from the intellectual property that we develop or license. If we or any of our licensors is forced
to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and
our business, financial condition, results of operations, and prospects may be adversely affected.
The
risk of loss of our intellectual property, trade secrets or other sensitive business or customer confidential information, and disruption
of operations due to cyberattacks or data breaches could negatively impact our financial results.
Cyberattacks
or data breaches could compromise confidential, business-critical information, cause disruptions in our operations, expose us to potential
litigation or harm our reputation. We have important assets, including intellectual property, trade secrets, and other sensitive business-critical
and/or confidential information which may be vulnerable to such incidents. While we have a comprehensive cybersecurity program that is
continually reviewed, maintained and upgraded, we cannot assure that we are invulnerable to cyberattacks and data breaches which, if
significant, could negatively impact our business and financial results.
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Risks
Related to Legal Matters and Regulations
Changes
to existing federal, state or international laws or regulations applicable to us could cause an erosion of our current competitive strengths.
Our
business is subject to a variety of federal, state and international laws and regulations, including those with respect to government
incentives promoting electric vehicles and others. These laws and regulations, and the
interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of
government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues
from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be
enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention.
If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely
affect our business.
There
are many federal, state and international laws that may affect our business, including measures to regulate EVs and charging systems.
If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely
affect our business.
There
are a number of significant matters under review and discussion with respect to government regulations which may affect our business
and/or harm our customers, and thereby adversely affect our business, financial condition and results of operations.
In
addition to government and regulatory agency activity, ESG and privacy advocacy groups, the technology industry, and other industries
have established or may establish various new, additional, or different self-regulatory standards that may place additional burdens on
technology companies. Customers may expect that we will meet voluntary certifications or adhere to other standards established by them
or third parties. If we are unable to maintain these certifications or meet these standards, it could reduce demand for our solutions
and adversely affect our business.
Privacy
concerns and laws, or other domestic or foreign regulations, may adversely affect our business.
We
are currently subject, and/or may in the future be subject, to numerous privacy and data security laws. For example, some U.S. states,
members of the European Economic Area, the United Kingdom, and many other jurisdictions in which we operate have adopted some form of
privacy and data security laws and regulations which impose significant compliance obligations.
The
European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 (“CCPA”),
the California Privacy Rights Act (“CPRA”), the Virginia Consumer Data Protection Act (VCDPA), the Colorado Privacy Act (“CPA”),
the Connecticut Act Concerning Personal Data Privacy and Online Monitoring (“CDPA”) and the Utah Consumer Privacy Act (“UCPA”)
exemplify the vulnerability of our business to the evolving regulatory environment related to personal data. Management’s attention
may be diverted, and our compliance costs and potential liability may increase as a result of additional national and international regulatory
requirements related to data privacy and data security.
Failure
to comply with anticorruption and anti-money laundering laws, including the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”),
and similar laws associated with activities outside of the United States, could subject us to penalties and other adverse consequences.
We
are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act,
the Anti-Bribery Act, and possibly other anti-bribery and anti-money laundering laws in countries in which it conducts activities. It
faces significant risks if it fails to comply with the FCPA and other anti-corruption laws that prohibit companies and their employees
and third-party intermediaries from promising, authorizing, offering, or providing, directly or indirectly, improper payments or benefits
to foreign government officials, political parties and private-sector recipients for the purpose of obtaining or retaining business,
directing business to any person or securing any advantage. Any violation of the FCPA, other applicable anti-corruption laws, and anti-money
laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, or severe
criminal or civil sanctions, which could have a materially adverse effect on our reputation, business, operating results, and prospects.
In addition, ensuring compliance may be costly and time-consuming, and responding to any enforcement action may result in a significant
diversion of management’s attention and resources, significant defense costs, and other professional fees.
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Existing
and future environmental health and safety laws and regulations could result in increased compliance costs or additional operating costs
or construction costs and restrictions. Failure to comply with such laws and regulations may result in substantial fines or other limitations
that may adversely impact our financial results or the results of operation.
We
and our operations, as well as those of our contractors, suppliers, and customers, are subject to certain environmental laws and regulations,
including laws related to the use, handling, storage, transportation, and disposal of hazardous substances and waste as well as electronic
waste and hardware, whether hazardous or not. These laws may require us or others in our value chain to obtain permits and comply with
procedures that impose various restrictions and obligations that may have material effects on our operations. If key permits and approvals
cannot be obtained on acceptable terms, or if other operational requirements cannot be met in a manner satisfactory for our operations
or on a timeline that meets our commercial obligations, it may adversely impact our business.
Environmental
and health and safety laws and regulations can be complex and may be subject to change, such as through new requirements enacted at the
supranational, national, sub-national, and/or local level or new or modified regulations that may be implemented under existing law.
The nature and extent of any changes in these laws, rules, regulations, and permits may be unpredictable and may have material effects
on our business. Future legislation and regulations or changes in existing legislation and regulations, or interpretations thereof, including
those relating to hardware manufacturing, electronic waste, or batteries, could cause additional expenditures, restrictions, and delays
in connection with our operations as well as other future projects, the extent of which cannot be predicted.
Further,
we currently rely on third parties to ensure compliance with certain environmental laws, including those related to the disposal of hazardous
and non-hazardous wastes. Any failure to properly handle or dispose of such wastes, regardless of whether such failure is ours or our
contractors, may result in liability under environmental laws, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), under which liability may be imposed without regard to fault or degree of contribution
for the investigation and clean-up of contaminated sites, as well as impacts to human health and damages to natural resources. Additionally,
we may not be able to secure contracts with third parties to continue their key supply chain and disposal services for our business,
which may result in increased costs for compliance with environmental laws and regulations.
The
enactment of legislation implementing changes in tax legislation or policies in different geographic jurisdictions including the United
States and several European countries could materially impact our business, financial condition and results of operations.
We
conduct business globally and file income tax returns in multiple jurisdictions. Our consolidated effective income tax rate could be
materially adversely affected by several factors, including: changing tax laws, regulations and treaties, or the interpretation thereof
(such as the United States Inflation Reduction Act of 2022 which, among other changes, introduced a 15% corporate minimum tax on certain
United States corporations and a 1% excise tax on certain stock redemptions by United States corporations); the implementation of the
U.S. Corporate Alternative Minimum Tax (CAMT) effective in 2024, which imposes 15% minimum tax on large corporations based on adjusted
financial statement income; tax policy initiatives and reforms under consideration (such as those related to the Organization for Economic
Co-operation and Development’s Base Erosion and Profit Shifting, or BEPS, project, the European Commission’s state aid investigations
and other initiatives); the ongoing global implementation of the OECD’s Pillar Two framework, establishing a 15% global minimum
tax, which may impact multinational tax planning strategies; the practices of tax authorities in jurisdictions in which we operate; the
resolution of issues arising from tax audits or examinations and any related interest or penalties. Such changes may include (but are
not limited to) the taxation of operating income, investment income, dividends received or (in the specific context of withholding tax)
dividends, royalties and interest paid. Additionally, some U.S. state-level tax reforms may influence our overall tax obligations depending
on our operational footprint.
We
are unable to predict what tax reforms may be proposed or enacted in the future or what effect such changes would have on our business,
but such changes, to the extent they are brought into tax legislation, regulations, policies or practices in jurisdictions in which we
operate, could increase the estimated tax liability that we have expensed to date and paid or accrued on our Consolidated Statement of
Financial Position, and otherwise affect our future results of operations, cash flows in a particular period and overall or effective
tax rates in the future in countries where we have operations, reduce post-tax returns to our shareholders and increase the complexity,
burden and cost of tax compliance.
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Our
failure to maintain effective internal control over financial reporting could have a material adverse effect on our ability to report
our financial results on a timely and accurate basis.
As
disclosed under Item 9A., Controls and Procedures, management concluded that material weaknesses in our internal control over financial
reporting existed as of December 31, 2025. We identified deficiencies related to the information and communication component as specified
within the Internal Control Framework, that assessed the source of controls necessary to ensure the reliability of information used in
financial reporting.
Our
failure to maintain appropriate and effective internal controls over our financial reporting could result in misstatements in our financial
statements and potentially subject us to sanctions or investigations by the SEC or other regulatory authorities and could cause us to
delay the filing of required reports with the SEC and our reporting of financial results. Any of these events could result in a decline
in the market price of our common stock. Although we have taken steps to maintain our internal control structure as required, we cannot
guarantee that a control deficiency will not result in a misstatement in the future. See “Item 9A – Controls and Procedures
– Management’s Annual Report on Internal Control Over Financial Reporting” for further information on material weaknesses.
If
our estimates or judgments relating to our critical accounting policies prove to be incorrect, our financial condition and results of
operations could be adversely affected.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and
on various other assumptions that we believe to be reasonable under the circumstances, as discussed under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Annual Report and in our consolidated
financial statements included herein. The results of these estimates form the basis for making judgments about the carrying values of
assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant
assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, allowance
for credit losses, inventory reserves, impairment of goodwill, indefinite-lived and long-lived assets, product warranty accrual, valuation
allowances for deferred tax assets, valuation of common stock warrants, valuation of intangible assets acquired from acquisitions, valuation
of earn-out liabilities and share-based compensation. Our financial condition and results of operations may be adversely affected if
our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to
fall below the expectations of securities analysts and investors, resulting in a decline in the price of our common stock.
Risks
Related to Ownership of Our Securities
Our
common stock price fluctuated significantly in 2025 and is likely to continue to fluctuate from its current level in 2026; our common
stock must maintain a minimum closing bid price of $1.00 to satisfy Nasdaq continued listing standards.
The
market price of shares of our common stock fluctuated significantly in 2025 and is likely to continue to fluctuate from its current level
in 2026. During 2025, for example, the closing price of our shares ranged from a low of $0.64 per share to a high of $3.62 per share
and, through March 27, 2026, our stock price this year ranged from a low of $0.54 per share to a high of $0.92 per share. Future announcements
concerning the introduction of new products, services or technologies or changes in product pricing policies by us or our competitors
or changes in earnings estimates by analysts, among other factors, could cause the market price of our common stock to fluctuate substantially.
Also, stock markets have experienced extreme price and volume volatility in the last twelve months. This volatility has had a substantial
effect on the market prices of securities of many public companies for reasons frequently unrelated to the operating performance of specific
companies. EV and related companies like us, as a group, have experienced these broad market fluctuations, which have caused declines
in the market prices of their common stock. Investors seeking short-term liquidity should be aware that we cannot provide assurance that
our stock price will increase to previously higher levels.
Additionally,
to maintain the listing of our common stock on The Nasdaq Capital Market, we are required to maintain, among other requirements, a minimum
closing bid price of $1.00 per share. If we cannot maintain at least this price for 30 consecutive trading days to satisfy The Nasdaq
Capital Market continued listing standards, our common stock could be delisted, (following limited additional time to regain compliance)
which would harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the
market for our common stock. We may explore alternative means to maintain compliance such as a reverse stock split.
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Failure
to meet Nasdaq’s continued listing requirements could result in the delisting of our common stock, negatively impact the price
of our common stock, and negatively impact our ability to raise additional capital.
We
must continue to satisfy Nasdaq’s continued listing requirements, including, among others, certain corporate governance requirements
and a minimum closing bid price requirement of $1.00 per share. If a company fails for 30 consecutive trading days to meet the $1.00
minimum closing bid price requirement, Nasdaq will send a deficiency notice to the company, advising that it has been afforded a “compliance
period” of 180 calendar days to regain compliance with the applicable requirements.
On
January 26, 2026, the Company received a deficiency letter (the “Notice”) from Nasdaq notifying the Company that, based upon
the closing bid price of the Company’s common stock for the last 30 consecutive trading days, the Company is not currently in compliance
with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth
in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”). The Notice has no immediate effect on the continued listing
status of the common stock on The Nasdaq Capital Market and, therefore, the Company’s listing currently remains fully effective.
In
accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided with a compliance period of 180 calendar days from the date
of the Notice, or until July 27, 2026, to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price
of the common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive trading days prior to July 27, 2026.
If
the Company is not in compliance with the Minimum Bid Requirement by July 27, 2026, the Company may be afforded a second 180 calendar
day compliance period. To qualify for this additional compliance period, the Company will be required to meet the continued listing requirement
for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of
the Minimum Bid Price requirement. We will evaluate available options to regain compliance with the Minimum Bid Requirement. However,
no assurance can be given that we will regain compliance with the Minimum Bid Requirement during the 180-day compliance period, secure
a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.
If
our common stock becomes subject to delisting, it would be subject to rules that impose additional sales practice requirements on broker-dealers
who sell our securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from
effecting transactions in our common stock. This would adversely affect the ability of investors to trade our common stock and would
adversely affect the value of our common stock. These factors could contribute to lower prices and larger spreads in the bid and ask
prices for our common stock. If we seek to implement a reverse stock split to remain listed on Nasdaq, the announcement or implementation
of such a reverse stock split could negatively affect the price of our common stock.
A
possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to further
price volatility in our common stock.
Investors
may purchase shares of our common stock to hedge existing exposure in our common stock or to speculate on the price of our common stock.
Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the
number of shares of our common stock available for purchase in the open market, investors with short exposure may have to pay a premium
to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may, in turn, dramatically increase the
price of our common stock until investors with short exposure are able to purchase additional shares of common stock to cover their short
position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in shares
of our common stock that are not directly correlated to the performance or prospects of our company and once investors purchase the shares
necessary to cover their short position the price of our common stock may decline.
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We
have a number of shares of common stock issuable upon exercise of outstanding warrants and stock options, an ATM common stock program
in place and possible issuance of stock from the warrants granted in August 2025 to the former shareholders of Envoy Technologies; the
issuance of such shares could have a significant dilutive impact on our stockholders.
As
of March 27, 2026, we had outstanding warrants to purchase 5,804,799 shares of common stock and stock options to purchase 433,545 shares
of common stock. Our Articles of Incorporation authorize us to issue up to 500,000,000 shares of common stock, which would permit us to issue
up to an additional approximately 357,000,000 authorized, unissued shares of common stock, after giving effect to the approximate number
of shares of common stock currently outstanding and the number of shares reserved for issuance under warrants and stock options.
On
August 4, 2025, our wholly owned subsidiary, Envoy Technologies, Inc. (“Envoy Technologies”), entered into Amendment No.
4 (the “Fourth Amendment”) to the Agreement and Plan of Merger, dated as of April 18, 2023, with the Company, Envoy
Technologies, Envoy Mobility, Inc. (“Mobility” and formerly Blink Mobility, LLC) and Fortis Advisors LLC, as equity
holders’ agent (as previously amended, the “Merger Agreement”). Pursuant to the Fourth Amendment, the sole
remaining payment obligation to the former shareholders of Envoy Technologies was fully satisfied, and we and Mobility were released
from all claims and liabilities relating to such obligation, with the issuance of (x) $10,000 in shares of our common stock, valued
based on the volume-weighted average trading price for the 25 trading days preceding the issuance date, and (y) warrants exercisable
for shares of our common stock with an aggregate value of $11,000, divided into three tranches with vesting conditions based on
specific stock price achievements, with outstanding unexercised warrants expiring twenty months after their issuance. We issued an
aggregate of 9,696,882 shares of our common stock and issued warrants to purchase an aggregate of 3,898,177 shares of our common
stock in full satisfaction of the consideration payable to the former shareholders of Envoy Technologies. The former shareholders of
Envoy Technologies were granted registration rights for shares of our common stock initially issued and those issuable pursuant to
the exercise of warrants. During the year ended December 31, 2025, 1,470,588 of warrants related to the first tranche of warrants
had become exercisable upon meeting vesting conditions. Furthermore, 653,118 of these warrants were exercised during the year ended
December 31, 2025. The remaining 2,427,589 warrants have not vested as of December 31, 2025.
Sales
of a substantial number of shares of our common stock on the public market could cause the market price of our common stock to decline.
If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price of our common stock
may decline to a market price at which buyers are willing to purchase the offered shares of common stock and sellers remain willing to
sell the shares.
Our
Articles of Incorporation grant our Board the power to issue additional shares of common and preferred stock and to designate a series
of preferred stock, all without stockholder approval.
We
are authorized to issue 540,000,000 shares of capital stock, of which 40,000,000 shares are authorized as preferred stock. Our Board,
without any action by our stockholders, may designate and issue shares of preferred stock in such series as it deems appropriate and
establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights, provided it is consistent
with Nevada law.
The
rights of holders of our preferred stock that may be issued could be superior to the rights of holders of our shares of common stock.
The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to
shares of our common stock. Further, any issuances of additional stock (common or preferred) will dilute the percentage of ownership
interest of then-current holders of our capital stock and may dilute our book value per share.
Certain
provisions of our corporate governing documents and Nevada law could discourage, delay or prevent a merger or acquisition at a premium
price.
Certain
provisions of our organizational documents and Nevada law could discourage potential acquisition proposals, delay or prevent a change
in control of our company, or limit the price that investors may be willing to pay in the future for shares of our common stock. For
example, our Articles of Incorporation and Bylaws, as amended, permit us to issue, without any further vote or action by the stockholders,
up to 40,000,000 shares of preferred stock in one or more series and, with respect to each series, to fix the number of shares constituting
the series and the designation of the series, the voting powers (if any) of the shares of the series, and the preferences and relative,
participating, optional, and other special rights, if any, and any qualifications, limitations or restrictions of the shares of the series.
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If
securities or industry analysts do not publish research or reports about our business or publish inaccurate or unfavorable research reports
about our business, our share price and trading volume could decline.
The
trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us from time to time
should downgrade our shares or change their opinion of our business prospects, our share price would likely decline. If one or more of
these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial
markets, which could cause our share price or trading volume to decline.
Our
business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value
of our securities.
Shareholders
may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to effect changes and assert
influence on our Board and management. Activist campaigns that contest or conflict with our strategic direction or seek changes in the
composition of our Board could have an adverse effect on our operating results and financial condition. A proxy contest would require
us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated costs and require significant
time and attention by our Board and management, diverting their attention from the pursuit of our business strategy. Any perceived uncertainties
as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our Board or senior
management team arising from a proxy contest could lead to the perception of a change in the direction of our business or instability
which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit
our ability to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating
results. If individuals are ultimately elected to our Board with a specific agenda, it may adversely affect our ability to effectively
implement our business strategy and create additional value for our shareholders. We may choose to initiate, or may become subject to,
litigation as a result of a proxy contest or matters arising from a proxy contest, which would serve as a further distraction to our
Board and management and would require us to incur significant additional costs. In addition, actions such as those described above could
cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not
necessarily reflect the underlying fundamentals and prospects of our business.
We
do not intend to pay cash dividends on our common stock for the foreseeable future, and you must rely on increases in the market price
of our common stock for returns on your investment.
For
the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our common stock. Accordingly, stockholders must be prepared to rely on sales of their common stock after
price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common
stock. Any determination to pay dividends in the future will be made at the discretion of our Board and will depend on our results of
operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors the Board deems relevant.