RICHTECH ROBOTICS INC. (RR) Risk Factors

ITEM 1A. Risk Factors

Investing in our securities
involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other
information contained in this Report, before deciding to invest in our securities. If any of the following risks materialize, our business,
financial condition, results of operation and prospects will likely be materially and adversely affected. In that event, the market price
of our Class B common stock could decline, and you could lose all or part of your investment.

An investment in our Class
B common stock involves a high degree of risks. You should carefully consider all of the information in this Report, including the risks
and uncertainties described below, before making an investment in our Class B common stock. Any of the following risks could have a material
adverse effect on our business, financial condition and results of operations. In any such case, the market price of our Class B common
stock could decline, and you may lose all or part of your investment.

Risks Related to Our Industry and Business

We operate in an emerging market, which
makes it difficult to evaluate our business and prospects. If markets for service robotics develop more slowly than we expect, or long-term
end-customer adoption rates and demand are slower than we expect, our operating results and growth prospects could be harmed.

While robots have been applied
to applications like industrial manufacturing and domestic in-home cleaning, the concept of commercial service robots is relatively new
and rapidly evolving, making our business and prospects difficult to evaluate. The growth and profitability of the service robotics market
depends on the increasing level of demand and acceptance of collaborative robots that operate alongside employees. We cannot be certain
that this will happen. If there is pushback against the adoption of robotics in everyday commercial applications, then this market may
develop more slowly than we expect, which could adversely impact our operating results and our ability to grow the business.

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We operate in an emerging industry that
is subject to rapid technological change and will experience increasing competition.

Our product offerings compete
in a broad competitive landscape that includes incumbent actors, and emerging players in the service robotics space, particularly in the
cleaning and indoor delivery automation. Our competitor base may develop new technologies or products that provide superior features or
are less expensive than our products. Our competitors may respond more quickly to new or emerging technologies, undertake more extensive
marketing campaigns, have greater financial, marketing, manufacturing and other resources than we do, or may be more successful in attracting
potential customers, employees and strategic partners. If we are not able to compete effectively, our business, prospects, financial condition,
and operating results will be negatively impacted.

Our business plans require a significant
amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute its stockholders.

While we are near
profitability today, we intend to expand operations outside the United States and continue to invest in the research and development
of our products We anticipate that we will continue to incur expenses for the foreseeable future as we continue to advance our
products and services, expand our corporate infrastructure, including the costs associated with being a public company and further
our research and development initiatives for our products. We are subject to all of the risks typically related to the development
of robotics, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may
adversely affect our business. Until we can generate a sufficient amount of revenue from the commercialization of our products and
services, if ever, we expect to finance our future cash needs through public or private equity or debt financings, third-party
(including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and
licensing arrangements, or any combination of these approaches.

We have limited experience in operating
our robots in a variety of environments. Unforeseen safety issues with our products could result in injuries to people which could result
in adverse effects on our business and reputation.

Our robots operate autonomously
in environments, such as restaurants, hotels, casinos, and healthcare facilities, that are surrounded by various moving and stationary
physical obstacles and by human and vehicles. Such environments are prone to collisions, unintended interactions and various other incidents,
regardless of our technology. Therefore, there is a possibility that our robots may be involved in a collision with any number of such
obstacles or even a human being. Our robots are equipped with advanced sensors that are designed to effectively prevent any such incidents
and are intended to stop any motion at the detection of intervening objects. Nevertheless, real-life environments, especially those in
crowded areas, are unpredictable and situations may arise in which our robots may not perform as intended. A highly publicized incident
of our autonomous robots causing injuries to people could lead to negative publicity and subject us to lawsuits. Such lawsuits or adverse
publicity would negatively affect our band and harm our business, prospects, financial condition and operating results.

We currently have and target many customers,
suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and
warranty standards and potentially competitive internal solutions. If we are unable to sell our products to these customers or are unable
to enter into agreements with customers, suppliers and production counterparties on satisfactory terms, our prospects and results of operations
will be adversely affected.

Several
of our customers and potential customers are large, multinational corporations with substantial negotiating power relative to us. These
large, multinational corporations are also aware of competitor products and are actively engaging with competitors to determine which
products they like better. Meeting the requirements and securing contracts with any of these companies will require a substantial investment
of our time and resource. We cannot assure you that our products will be the one these companies will choose, or that we will generate
meaningful revenue from the sales of our products to these key potential customers. If our products are not selected by these large corporations
or if these corporations decide to go with a competitor, it will have an adverse effect on our business.

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We must successfully manage product introductions
and transitions in order to remain competitive.

We must continually develop
new and improved robotic solutions that meet changing consumer demands. Moreover, the introduction of new products is a complex task involving
significant expenditures in research and development, promotion and sales channel development, and management of existing inventories
to reduce the cost associated with returns and slow moving inventory. We must introduce new robotic solutions in a timely and cost-effective
manner, and we must secure production orders for those solutions from our contract manufacturers and component suppliers. The development
of new robotic solutions is a highly complex process, and while we have a large number of product introductions coming, the successful
development and introduction of new robotic solutions depends on a number of factors, including the following:

If any of these or other
factors becomes problematic, we may not be able to develop and introduce new robotic solutions in a timely or cost-effective manner, and
our business may be harmed.

Our international expansion plans, if implemented,
will subject us to a variety of risks that may harm our business.

We have limited experience
managing the administrative aspects of a global organization. While we intend to continue to explore opportunities to expand our business
in international service robotics markets in which we see compelling opportunities, we may not be able to create or maintain international
market demand for our products. In addition, as we expand our operations internationally, our support organization will face additional
challenges, including those associated with delivering support, training and documentation in languages other than English. We may also
be subject to new statutory restrictions and risks. If we invest substantial time and resources to expand our international operations
and are unable to do so successfully and in a timely manner, our business and financial condition may be harmed.

In the course of expanding
our international operations and operating overseas, we will be subject to a variety of risks, including:

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We continue to implement strategic initiatives
designed to grow our business. These initiatives may prove costlier than we currently anticipate and we may not succeed in increasing
our revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.

We continue to make investments
and implement initiatives designed to grow our business, including:

These initiatives may prove
more expensive than we currently anticipate, and we may not succeed in increasing our revenue, if at all, in an amount sufficient to offset
these higher expenses and to achieve and maintain profitability. The market opportunities we are pursuing are at an early stage of development,
and it may be many years before the end markets we expect to serve generate significant demand for our products at scale, if at all.

Our reputation and brand recognition is
crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our
business, financial condition and results of operations.

Our reputation and brand
recognition, which depends on earning and maintaining the trust and confidence of our current or potential clients, is critical to our
business. We strive to enhance our brand recognition, to attract new customers and to maintain existing customers by consistently delivering
high quality products as well as superior customer experiences. Our reputation and brand are vulnerable to many threats that could be
difficult or impossible to control, and costly or impossible to remediate. Regulatory inquiries or investigations, lawsuits initiated
by clients or other third parties, employee misconduct, perceptions of conflicts of interest and rumors, among other things, could substantially
damage our reputation, even if they are baseless or satisfactorily addressed. We may choose to or be compelled to undertake product recalls
or take other similar actions, which could subject us to adverse publicity, damage our brand and expose us to financial liability. Moreover,
any negative media publicity about our industry in general or product or service quality problems of other companies in our industry,
including our competitors, may also negatively impact our reputation and brand. If we are unable to maintain a good reputation or further
enhance our brand recognition, our ability to attract and retain customers and key employees could be harmed and, as a result, our business
and revenues would be materially and adversely affected.

We rely on third party manufacturers/suppliers
and expect to continue to do so for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient
quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization
efforts.

We rely, and expect to continue
to rely, on third party manufacturers/suppliers. This reliance on third party manufacturers/suppliers increases the risk that we will
not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development
or commercialization efforts. Additionally, we may be unable to establish or continue any agreements with third-party manufacturers/suppliers
or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party
manufacturers/suppliers entails additional risks, including:

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If our current or future
third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be
unable to replace them on a timely basis or at all. Our current and anticipated future dependence upon third party manufacturers/suppliers
may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely
and competitive basis.

Some of our products incorporate certain
components from sole source suppliers, and if our contract manufacturers are unable to source these components on a timely basis, due
to fabrication capacity issues or other material supply constraints, or if there are interruptions in our, or our contract manufacturers’,
relationships with these third-party suppliers, we may not be able to deliver our products to our distributors and customers, which may
adversely impact our business.

We depend on sole source
suppliers for certain components in our products, such as batteries and robotic arm. We have strategically chosen to sole source some
of our supplies in order to ensure the best quality at the best prices. While we believe none of our sole source suppliers are irreplaceable
and that our business is not substantially dependent on any one supplier, a small degree of risk may still exist in terms of cost and
delay involved in switching to new suppliers. For example, these sole source suppliers could be constrained by fabrication capacity issues
or material supply issues, stop producing such components, cease operations or be acquired by, or enter into exclusive arrangements with,
our competitors or other companies. In many cases, we do not have long-term supply agreements with these suppliers. Instead, our contract
manufacturers typically purchase the components required to manufacture our products on a purchase order basis. As a result, most of these
suppliers can stop selling to us at any time, requiring us to find another source, or can raise their prices, which could impact our gross
margins. Any such interruption or delay may force us to seek similar components from alternative sources, which may cause a delay in our
product shipments. In the event we are unable to procure components from our current supplier, we may switch to a different supplier and
our products can be redesigned to work with different components. Such redesign may involve engineering changes and time and effort, which
may cause delays in shipment of our products and adversely affect our operating results. We plan to continue to diversify our suppliers
and implement contingency plans in order to minimize any potential supply disruptions.

Our reliance on sole source
suppliers involves a number of additional risks, including risks related to:

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We
have a global supply chain and global pandemics, the military conflicts in Ukraine and in the Middle East and other macroeconomic factors
may adversely affect our ability to source components in a timely or cost-effective manner from our third-party suppliers due to, among
other things, work stoppages or interruptions. In addition, the lead times associated with certain components are lengthy and preclude
rapid changes in quantities and delivery schedules. We have in the past experienced, and may in the future experience, component shortages
and price fluctuations of key components and materials, and the predictability of the availability and pricing of these components may
be limited. Component shortages or pricing fluctuations could be material in the future. In the event of a component shortage, supply
interruption, or a material pricing change from suppliers of these components, we may not be able to develop alternate sources in a timely
manner, or at all, especially in the case of sole or limited source items. Developing alternate sources of supply for these components
may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or
at all, which may undermine our ability to meet our requirements or to fill customer orders in a timely manner. Any interruption or delay
in the supply of any parts or components, or the inability to obtain parts or components from alternate sources at acceptable prices and
within a reasonable amount of time, would adversely affect our ability to meet our scheduled product deliveries to our customers. This
could adversely affect our relationships with our customers and partners and could cause delays in shipment of our products and adversely
affect our operating results.

Components used in our sensors may fail
as a result of manufacturing, design or other defects over which we have no control and render our devices permanently inoperable.

We rely on third-party component
suppliers to provide certain functionalities needed for the operation and use of our devices. Any errors or defects in such third-party
technology could result in errors in our sensors that could harm our business. If these components have a manufacturing, design or other
defect, they can cause our sensors to fail and render them permanently inoperable. As a result, we may have to replace these sensors at
our sole cost and expense. Should we have a widespread problem of this kind, our reputation in the market could be adversely affected
and our replacement of these sensors would harm our business.

Our robots are highly technical and could
be vulnerable to hardware errors or software bugs, which may harm our reputation and our business.

Bugs and errors could diminish
performance, create security vulnerabilities, affect data quality in logs or interfere with interpretation of data, or even cause personal
injury accidents. Some errors may only be detected under certain circumstances or after extended use. We update our software and firmware
on a regular basis, in spite of extensive quality screening, if a bug were to occur in the process of an update, it could result in devices
becoming permanently disabled or operate incorrectly.

We offer a limited warranty
on all products and any such defects discovered in our products could result in loss of revenue or delay in revenue recognition, loss
of customer goodwill and increased service costs, any of which could harm our business, operating results and financial condition. We
could also face claims for product or information liability, tort or breach of warranty. Defending a lawsuit, regardless of its merit,
is costly and may divert management’s attention and adversely affect the market’s perception of us and our devices. In addition,
if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business
could be harmed.

We may incur significant direct or indirect
liabilities in connection with our product warranties which could adversely affect our business and operating results.

We typically offer a limited
product warranty that requires our products to conform to the applicable specifications and be free from defects in materials and workmanship
for a limited warranty period. As a result of increased competition and changing standards in our target markets, we may be required to
increase our warranty period length and the scope of our warranty. To be competitive, we may be required to implement these increases
before we are able to determine the economic impact of an increase. Accordingly, we may be at risk that any such warranty increase could
result in foreseeable and unforeseeable losses for the company.

Our future success depends in part on recruiting
and retaining key personnel and if we fail to do so, it may be more difficult for us to execute our business strategy. We may need
to hire additional qualified personnel to effectively implement our strategic plan, and if we are unable to attract and retain highly
qualified employees, we may not be able to continue to grow our business.

Our ability to compete and
grow depends in large part on the efforts and talents of our employees. Our employees, particularly engineers and other product developers,
are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating and retaining these
employees. As competition with other companies increases, we may incur significant expenses in attracting and retaining high quality software
and hardware engineers and other employees. The loss of employees or the inability to hire additional skilled employees as necessary to
support the growth of our business and the scale of our operations could result in significant disruptions to our business, and the integration
of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business.

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We believe a critical component
to our success and our ability to retain our best people is our culture. As we continue to grow, we may find it difficult to maintain
our entrepreneurial, execution-focused culture.

Our insurance coverage strategy may not
be adequate to protect us from all business risks.

We have limited liability
insurance coverage for our products and business operations. It is possible that an adverse product liability claim could arise in excess
of our coverage. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than
our actual loss, our business, financial condition and results of operations could be materially and adversely affected. In addition,
we do not have any business disruption insurance. Any business disruption event could result in substantial cost to us and diversion of
our resources.

Additionally, insurance rates
have in the past been subject to wide fluctuation and may be unavailable on terms that we or our customers believe are economically acceptable.
Reductions in coverage, changes in the insurance markets and accidents affecting our industry may result in further increases in our cost
and higher deductibles and retentions in future years and may also result in reduced activity levels in certain markets. As a result,
we may not be able to continue to obtain insurance on commercially reasonable terms. Any of these events could have an adverse impact
on our business, financial condition and results of operations.

The Company’s business can be impacted
by political events, trade and other international disputes, geopolitical

tensions, conflicts, and other business
interruptions.

Political events, trade restrictions, tariffs,
international disputes, geopolitical tensions, armed conflict, and other business disruptions may have a material adverse effect on the
Company and its customers, employees, suppliers, contract manufacturers, logistics providers, distributors, and other channel partners.
A significant portion of the Company’s operations depends on the importation of manufactured components from China. Heightened geopolitical
tensions, tariffs and other trade disputes between the United States and China could adversely impact component availability, manufacturing
capacity, procurement costs, and delivery timelines for the Company’s robotic products. In the event of an armed conflict involving
China or a material escalation of trade restrictions or tariffs, trade between the United States and China could be severely limited or
suspended, which could prevent the Company from delivering products to customers for a prolonged period or indefinitely if suitable alternative
suppliers are not available. Any such disruption to international trade could result in substantial recovery time, increased operating
costs to reestablish supply chains, and the loss of significant sales.

Risks Related to Our Intellectual Property

If we fail to protect or enforce our intellectual
property or proprietary rights, our business and operating results could be harmed.

We currently own the rights
to all of our intellectual property, including three approved patents and nine pending patents. We regard the protection of our patents,
trade secrets, copyrights, trademarks, trade dress, domain names and other intellectual property or proprietary rights as critical to
our success. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual
restrictions. We seek to protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention
assignment agreements with all our employees, consultants, advisors and any third parties who have access to our proprietary know-how,
information or technology. However, we cannot be certain that we have executed such agreements with all parties who may have helped to
develop our intellectual property or who had access to our proprietary information, nor can we be certain that our agreements will not
be breached. Any party with whom we have executed such an agreement could potentially breach that agreement and disclose our proprietary
information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. We cannot guarantee that
our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access
to our trade secrets or independently develop substantially equivalent information and techniques. Detecting the disclosure or misappropriation
of a trade secret and enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, time- consuming
and could result in substantial costs and the outcome of such a claim is unpredictable. Further, the laws of certain foreign countries
do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter
significant problems in protecting and defending our intellectual property or proprietary rights both in the United States and abroad.
If we are unable to prevent the disclosure of our trade secrets to third parties, or if our competitors independently develop any of our
trade secrets, we may not be able to establish or maintain a competitive advantage in our market, which could harm our business.

We have three approved technology
patents and nine technology patents pending and will in the future file patent applications on inventions that we deem to be innovative.
Our ownership of the patents and pending patents are not subject to restrictions or any other arrangements with third parties. However,
there is no guarantee that our patent applications will be issued as granted patents, that the scope of the protection gained will be
sufficient or that an issued patent may subsequently be deemed invalid or unenforceable. Patent laws, and scope of coverage afforded by
them, have recently been subject to significant changes, such as the change to “first-to-file” from “first-to-invent”
resulting from the Leahy-Smith America Invents Act. This change in the determination of inventorship may result in inventors and companies
having to file patent applications more frequently to preserve rights in their inventions, which may favor larger competitors that have
the resources to file more patent applications. Another change to the patent laws may incentivize third parties to challenge any issued
patent in the United States Patent and Trademark Office (the “USPTO”), as opposed to having to bring such an action in U.S.
federal court. Any invalidation of a patent claim could have a significant impact on our ability to protect the innovations contained
within our devices and could harm our business.

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The USPTO and various foreign
governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions to maintain
patent applications and issued patents. We may fail to take the necessary actions and to pay the applicable fees to obtain or maintain
our patents. Non-compliance with these requirements can result in abandonment or lapse of a patent or patent application, resulting in
partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to use our technologies
and enter the market earlier than would otherwise have been the case.

We pursue the registration
of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. We are seeking
to protect our trademarks, patents and domain names in an increasing number of jurisdictions, a process that is expensive and time-consuming
and may not be successful or which we may not pursue in every location.

Litigation may be necessary
to enforce our intellectual property or proprietary rights, protect our trade secrets or determine the validity and scope of proprietary
rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity
or diversion of management and technical resources, any of which could adversely affect our business and operating results. If we fail
to maintain, protect and enhance our intellectual property or proprietary rights, our business may be harmed.

In addition to patented technology, we rely
on our unpatented proprietary technology, trade secrets, designs, experiences, work flows, data, processes, software and know-how.

We rely on proprietary information
(such as trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable or subject
to copyright, trademark, trade dress or service mark protection, or that we believe is best protected by means that do not require public
disclosure. We generally seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services
or employment agreements that contain non-disclosure and non-use provisions with our employees, consultants, contractors and third parties.
However, we may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or may otherwise
fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information, may be limited as to their term
and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. We have limited control
over the protection of trade secrets used by our current or future manufacturing partners and suppliers and could lose future trade secret
protection if any unauthorized disclosure of such information occurs. In addition, our proprietary information may otherwise become known
or be independently developed by our competitors or other third parties. To the extent that our employees, consultants, contractors, advisors
and other third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related
or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our
proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive
business position. Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection
to its trade secrets.

We also rely on physical
and electronic security measures to protect our proprietary information, but we cannot provide assurance that these security measures
will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain and improperly utilize
our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such information
or take appropriate and timely steps to enforce our intellectual property rights.

Under a certain number of our agreements,
we are required to provide indemnification in the event our technology causes harm to third parties.

In certain of our agreements,
we indemnify our customers and manufacturing partners. We could incur significant expenses defending these partners if they are sued for
patent infringement based on allegations related to our technology. In addition, if a partner were to lose a lawsuit and in turn seek
indemnification from us, we could be subject to significant monetary liabilities. While such contracts typically give us multiple remedies
for addressing instances of infringements, such remedies (e.g. product modification, purchase of licenses) could be expensive and difficult
to administer.

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Risks Related to Compliance

We may become subject to new or changing
governmental regulations relating to the design, manufacturing, marketing, distribution, servicing, or use of its products, and a failure
to comply with such regulations could lead to withdrawal or recall of our products from the market, delay our projected revenues, increase
cost, or make our business unviable if it is unable to modify its products to comply.

We may become subject to
new or changing international, federal, state and local regulations, including laws relating to the design, manufacturing, marketing,
distribution, servicing or use of its products. Such laws and regulations may require us to pause sales and modify its products, which
could result in a material adverse effect on its revenues and financial condition. Such laws and regulations can also give rise to liability
such as fines and penalties, property damage, bodily injury and cleanup costs. Capital and operating expenses needed to comply with laws
and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production
or a cessation of our operations. Any failure to comply with such laws or regulations could lead to withdrawal or recall of our products
from the market.

We may become involved in legal and regulatory
proceedings and commercial or contractual disputes, which could have an adverse effect on our profitability and financial position.

We may be, from time to time,
involved in litigation, regulatory proceedings and commercial or contractual disputes that may be significant. These matters may include,
without limitation, disputes with our suppliers and customers, intellectual property claims, stockholder litigation, government investigations,
class action lawsuits, personal injury claims, environmental issues, customs and Value Added Tax (VAT) disputes and employment and tax
issues. In addition, we have in the past and could face in the future a variety of labor and employment claims against us, related to,
but not limited to, general employment practices and wrongful acts. In such matters, private parties or other entities may seek to recover
from us indeterminate amounts in penalties or monetary damages. These types of lawsuits could require significant management time and
attention or could involve substantial legal liability, and/or substantial expenses to defend. Often these cases raise complex factual
and legal issues and create risks and uncertainties. No assurances can be given that any proceedings and claims will not have a material
adverse impact on our consolidated financial position or that our established reserves or our available insurance will mitigate this impact.

We are subject to, and must remain in compliance
with, numerous laws and governmental regulations across various jurisdictions concerning the manufacturing, use, distribution and sale
of our products.

We manufacture and sell products
that contain electronic components, and such components may contain materials that are subject to government regulation in both the locations
where we manufacture and assembles our products, as well as the locations where we sell our products. For example, certain regulations
limit the use of lead in electronic components. Since we operate on a global basis, this is a complex process which requires continuous
monitoring of regulations and an ongoing compliance process to ensure that we, and our suppliers, are in compliance with all existing
regulations. If there is an unanticipated new regulation that significantly impacts our use of various components or requires more expensive
components, that regulation could materially adversely affect our business, results of operations and financial condition.

We are subject to U.S. and foreign anti-corruption
and anti-money laundering laws and regulations. We can face criminal liability and other serious consequences for violations, which can
harm our business.

We are subject to the U.S.
Foreign Corrupt Practices Act, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the Money Laundering
Control Act 18 U.S.C. §§ 1956 and 1957, and other anti-bribery and anti-money laundering laws in countries in which we conduct
activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators
from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients
in the public or private sector, and require that we keep accurate books and records and maintain internal accounting controls designed
to prevent any such actions. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and
other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities.

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As we increase our international
cross-border business and expand our operations abroad, we may continue to engage with business partners and third-party intermediaries
to market our services and to obtain necessary permits, licenses and other regulatory approvals. In addition, we or our third-party intermediaries
may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We
can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors,
partners and agents, even if we do not explicitly authorize such activities. We cannot assure you that all of our employees and agents
will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase
our international business, our risks under these laws may increase.

Detecting, investigating
and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources and attention
from management. In addition, non-compliance with anti- corruption or anti-bribery laws could subject us to whistleblower complaints,
investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions,
suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences.
If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail
in any possible civil or criminal proceeding, our business, operating results and financial condition could be materially harmed.

We are subject to governmental export controls
and sanctions laws and regulations that could impair our ability to compete in international markets and subject us to liability if we
are not in compliance with applicable laws. Changes to such laws and regulations, as well as changes to trade policy, import laws, and
tariffs, may also have a material adverse effect on our business, financial condition and results of operations.

Exports of our products are
subject to export controls and sanctions laws and regulations imposed by the U.S. government and administered by the U.S. Departments
of State, Commerce, and Treasury. U.S. export control laws may require a license or other authorization to export products to certain
destinations and end users. In addition, U.S. economic sanctions laws include restrictions or prohibitions on engaging in any transactions
or dealings, including receiving investment or financing from, or engaging in the sale or supply of products and services to, U.S. embargoed
or sanctioned countries, governments, persons and entities. Obtaining export authorizations can be difficult, costly and time- consuming
and we may not always be successful in obtaining such authorizations, and our failure to obtain required export approval for our products
or limitations on our ability to export or sell our products imposed by export control or sanctions laws may harm our revenues and adversely
affect our business, financial condition, and results of operations. Non-compliance with these laws could have negative consequences,
including government investigations, penalties and reputational harm.

Further, any changes in global
political, regulatory and economic conditions, such as the military conflict involving Russia and Ukraine and the sanctions imposed by
the United States, United Kingdom, European Union, and other jurisdictions on Russia in response to such conflict, or in laws and policies
governing import/export control, economic sanctions, manufacturing, development and investment in the territories or countries where we
currently purchase our components, sell our products, or conduct our business could result in the decreased use of our products by, or
in our decreased ability to export or sell our products to, existing or potential end-customers. Any decreased use of our products or
limitation on our ability to export or sell our products would adversely affect our business, results of operations and growth prospects.
The United States has recently instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements,
the imposition of higher tariffs on imports into the United States, economic sanctions on individuals, corporations or countries, and
other government regulations affecting trade between the United States and other countries where we conduct our business. A number of
other nations have proposed or instituted similar measures directed at trade with the United States in response. As a result of these
developments, there may be greater restrictions and economic disincentives on international trade that could adversely affect our business.
It may be time-consuming and expensive for us to alter our business operations to adapt to or comply with any such changes, and any failure
to do so could have a material adverse effect on our business, financial condition and results of operations.

27

Failures, or perceived failures, to comply
with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate may adversely
impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, our policies
and operations.

Our current and potential
future operations and sales subject us to laws and regulations addressing privacy and the collection, use, storage, disclosure, transfer
and protection of a variety of types of data. For example, the European Commission has adopted the General Data Protection Regulation
and California enacted the California Consumer Privacy Act of 2018, both of which provide for potentially material penalties for non-compliance.
These regimes may, among other things, impose data security requirements, disclosure requirements, and restrictions on data collection,
uses, and sharing that may impact our operations and the development of our business. While, generally, we do not have access to, collect,
store, process, or share information collected by our solutions unless our customers choose to proactively provide such information to
us, our products may evolve both to address potential customer requirements or to add new features and functionality. Therefore, the full
impact of these privacy regimes on our business is rapidly evolving across jurisdictions and remains uncertain at this time.

We may also be affected by
cyber-attacks and other means of gaining unauthorized access to its products, systems, and data. For instance, cyber criminals or insiders
may target us or third-parties with which we have business relationships in an effort to obtain data, or in a manner that disrupts our
operations or compromises our products or the systems into which our products are integrated.

We are assessing the continually
evolving privacy and data security regimes and measures we believe are appropriate in response. Since these data security regimes are
evolving, uncertain and complex, especially for a global business like ours, we may need to update or enhance our compliance measures
as our products, markets and customer demands further develop and these updates or enhancements may require implementation costs. The
compliance measures we do adopt may prove ineffective. Any failure, or perceived failure, by us to comply with current and future regulatory
or customer-driven privacy, data protection, and information security requirements, or to prevent or mitigate security breaches, cyber-attacks,
or improper access to, use of, or disclosure of data, or any security issues or cyber-attacks affecting us, could result in significant
liability, costs (including the costs of mitigation and recovery), and a material loss of revenue resulting from the adverse impact on
our reputation and brand, loss of proprietary information and data, disruption to our business and relationships, and diminished ability
to retain or attract customers and business partners. Such events may result in governmental enforcement actions and prosecutions, private
litigation, fines and penalties or adverse publicity, and could cause customers and business partners to lose trust in us, which could
have an adverse effect on our reputation and business.

If we fail to comply with the laws and regulations
relating to the collection of sales tax and payment of income taxes in the various states in which we do business, we could be exposed
to unexpected costs, expenses, penalties and fees as a result of our non-compliance, which could harm our business.

By engaging in business activities
in the United States, we become subject to various state laws and regulations, including requirements to collect sales tax from our sales
within those states, and the payment of income taxes on revenue generated from activities in those states. A successful assertion by one
or more states that we were required to collect sales or other taxes or to pay income taxes where we did not could result in substantial
tax liabilities, fees and expenses, including substantial interest and penalty charges, which could harm our business.

General Risks Associated with Our Company

Our limited operating history and evolving
business make it difficult to evaluate our current business and future prospects.

Our limited operating history
and the evolution of our business and our industry make it difficult to accurately assess our future prospects. It may not be possible
to discern fully the economic and other business trends that we are subject to. Elements of our business strategy are new and subject
to ongoing development as our operations mature. In addition, it may be difficult to evaluate our business because many of the other companies
that offer the same or a similar range of solutions, products and services as us also have limited operating histories and evolving businesses.

28

If we were to lose the services of members
of our senior management team, we may not be able to execute our business strategy.

Our success depends in large
part upon the continued service of key members of our senior management team. In particular, each of our Chief Executive Officer and co-founder,
Zhenwu Huang, Chief Financial Officer and co-founder, Zhenqiang Huang, and Chief Operations Officer, Phil Zheng is critical to our overall
management, as well as the continued development of our robotics technology, our culture and our strategic direction. All of our executive
officers are at will employees, and we do not maintain any key person life insurance policies. The loss of any member of our senior management
team could harm our business.

We may pursue acquisitions, which involve
a number of risks, and if we are unable to address and resolve these risks successfully, such acquisitions could harm our business.

We have acquired and may
in the future acquire businesses, products or technologies to expand our offerings and capabilities and business. We have evaluated, and
expect to continue to evaluate, a wide array of potential strategic transactions. Any acquisition could be material to our financial condition
and results of operations and any anticipated benefits from an acquisition may never materialize. In addition, the process of integrating
acquired businesses, products or technologies may create unforeseen operating difficulties and expenditures. Acquisitions in international
markets would involve additional risks, including those related to integration of operations across different cultures and languages,
currency risks and the particular economic, political and regulatory risks associated with specific countries. We may not be able to address
these risks successfully, or at all, without incurring significant costs, delays or other operational problems and if we were unable to
address such risks successfully our business could be harmed.

Our ability to effectively manage our anticipated
growth and expansion of our operations will also require us to enhance our operational, financial and management controls and infrastructure,
human resources policies and reporting systems. These enhancements and improvements will require significant capital expenditures and
allocation of valuable management and employee resources.

We expect to experience significant
growth in the scope and nature of our operations. Our ability to manage our operations and future growth will require us to continue to
improve our operational, financial and management controls, compliance programs and reporting systems. We may not be able to implement
improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which
could have an adverse effect on our business, reputation and financial results. Additionally, rapid growth in our business may place a
strain on our human and capital resources. Furthermore, we expect to continue to conduct our business internationally and anticipate increased
business operations in the United States, Europe, Asia and elsewhere. These diversified, global operations place increased demands on
our limited resources and require us to substantially expand the capabilities of our administrative and operational resources and to attract,
train, manage and retain qualified management, technical, manufacturing, engineering, sales and other personnel. As our operations expand
domestically and internationally, we will need to continue to manage multiple locations and additional relationships with various customers,
partners, suppliers and other third parties across several markets.

We are an “emerging growth company,”
and will be able take advantage of reduced disclosure requirements applicable to “emerging growth companies,” which could
make our Class B common stock less attractive to investors.

We are an “emerging
growth company,” as defined in the JOBS Act and, for as long as we continue to be an “emerging growth company,” we intend
to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to “emerging
growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. We could be an “emerging growth company” for up to five years, or until the earliest
of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a
“large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), which would occur if the market value of our Class B common stock that is held by non-affiliates exceeds $700 million as
of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1
billion in non-convertible debt during the preceding three year period.

We intend to take advantage
of these reporting exemptions described above until we are no longer an “emerging growth company.” Under the JOBS Act, “emerging
growth companies” can also delay adopting new or revised accounting standards until such time as those standards apply to private
companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, the information
that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity
interests.

We cannot predict if investors
will find our Class B common stock less attractive if we choose to rely on these exemptions. If some investors find our Class B common
stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class
B common stock and the price of our Class B common stock may be more volatile.

29

We are a “controlled company”
within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements
that provide protection to stockholders of other companies.

We are a “controlled
company” as defined under the Nasdaq Stock Market Rules, as our co-founder and Chief Executive Officer, Zhenwu (Wayne) Huang, beneficially
owns over 50% of the total voting power of our issued and outstanding shares of common stock as of the date of the Original Report. For
so long as we remain a “controlled company” under that definition, we are permitted to elect to rely on, and may rely on,
certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our board of directors must
be independent directors. As a result, you may not have the same protection afforded to stockholders of companies that are subject to
these corporate governance requirements.

We have identified a material weakness in
our internal control over financial reporting as of September 30, 2025. 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.

We have identified a material weakness in our
internal controls over financial reporting as of September 30, 2025 relating to the design and consistent operation of certain entity-level
and process-level controls supporting complex accounting judgments and transaction processing. These controls support, among other areas,
inventory accounting, revenue recognition, investments, intangible assets, and certain payroll-related processes. A material weakness
is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely
basis.

Effective internal controls are necessary for
us to provide reliable financial reports and prevent fraud. Measures to remediate material weaknesses may be time-consuming and costly
and there is no assurance that such initiatives will ultimately have the intended effects. 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. If
we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent
or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial
statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic
reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and adversely
affect our business and operating results. We cannot assure you that the measures we have taken to date, or any measures we may take in
the future, will be sufficient to avoid potential future material weaknesses.

We incur significantly increased costs
as a result of and devote substantial management time to operating as a public company.

As a public company, we
incur significant legal, accounting and other expenses that we did not incur as a private company. For example, we are subject to the
reporting requirements of the Exchange Act and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and
the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC,
including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance practices
and required filing of annual, quarterly and current reports with respect to our business and operating results. These requirements have
increased our legal and financial compliance costs and make some activities more time-consuming and costly. In addition, our management
and other personnel need to divert attention from operational and other business matters to devote substantial time to these public company
requirements. We may also need to hire additional accounting and financial staff with appropriate public company experience and technical
accounting knowledge and will need to maintain an internal audit function. Operating as a public company means it is more expensive for
us to maintain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher
costs to maintain coverage. This could also make it more difficult for us to attract and retain qualified people to serve on our board
of directors, our board committees or as executive officers. In addition, after we no longer qualify as an “emerging growth company,”
as defined under the JOBS ACT we expect to incur additional management time and cost to comply with the more stringent reporting requirements
applicable to companies that are deemed accelerated filers or large accelerated filers, including complying with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. We are in the process of compiling the system and processing documentation needed
to comply with such requirements. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion.

We cannot predict or estimate
the amount of additional costs we may incur as a result of continuing to be a public company or the timing of such costs.

30

Our business is subject to the risks of
earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as network
security breaches, computer viruses or terrorism. Material disruptions of our business or information systems resulting from these events
could adversely affect our operating results.

We and some of the third-party
service providers on which we depend for various support functions are vulnerable to damage from catastrophic events, such as power loss,
natural disasters, terrorism, pandemics, and similar unforeseen events beyond our control.

If a natural disaster, power
outage or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure,
or otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial
period of time. The disaster recovery and business continuity plans we have in place are unlikely to provide adequate protection in the
event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery
and business continuity plans, which could have a material adverse effect on our business.

Furthermore, integral parties
in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen
and severe adverse events, such as a global pandemic. If such an event were to affect our supply chain, it could have a material adverse
effect on our business.

Our ability to use our net operating loss
carryforwards may be limited.

As of September 30, 2025,
we had $18,694 thousand U.S. federal net operating loss carryforwards. Under legislation enacted in 2017, informally titled the Tax Cuts
and Jobs Act (the “TCJA”) as modified in 2020 by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”), unused U.S. federal net operating losses generated in tax years beginning after December 31, 2017, will not expire and may
be carried forward indefinitely, but the deductibility of such federal net operating loss carryforwards in taxable years beginning after
December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the TCJA
or the CARES Act. In addition, our ability to utilize any federal net operating loss carryforwards may be limited under Section 382 of
the Internal Revenue Code of 1986, as amended (the “Code”). The limitations apply if we experience an “ownership change,”
which is generally defined as a greater than 50 percentage point change (by value) in the ownership of our equity by certain stockholders
or groups of stockholders over a rolling three-year period. Similar provisions of state tax law may also apply to limit the use of any
state net operating loss carryforwards. We have not yet completed a Section 382 analysis, and therefore, there can be no assurances that
any previously experienced ownership changes have not materially limited our utilization of affected net operating loss carryforwards.
Future changes in our stock ownership, which may be outside of our control, may trigger an ownership change that materially impacts our
ability to utilize any pre-change net operating loss carryforwards. In addition, there may be periods during which the use of net operating
loss carryforwards is suspended or otherwise limited.

Our management has limited experience in
operating a public company.

Some of our executive officers
have limited experience in the management of a publicly traded company subject to significant regulatory oversight and reporting obligations
under federal securities laws. Our management team may not successfully or effectively manage our transition to a public company. Their
limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in
that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted
to our management and growth. We may not be able to maintain adequate personnel with the appropriate level of knowledge, experience and
training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United
States. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as
a public company, which will increase our operating costs in future periods.

Risks Related to Ownership
of Our Class B Common Stock

An active trading market for our Class
B common stock may not develop or be sustained.

If an active trading market
for our Class B common stock does not develop, you may not be able to sell your shares quickly or at the market price. Our ability to
raise capital to continue to fund operations by selling shares of our Class B common stock and our ability to acquire other companies
or technologies by using shares of our Class B common stock as consideration may also be impaired.

31

The market price and trading volume of
our Class B common stock may continue to be highly volatile, which could lead to a loss of all or part of a stockholder’s investment.

The market price and trading
volume of our Class B common stock has fluctuated widely. During the fiscal year of 2025, the trading price of our Class B common stock
has fluctuated from an intra-day high of $7.43 on October 7, 2025 to an intra-day low of $0.52 on November 15, 2024.

The market price of our
Class B common stock is affected by a variety of factors, including but not limited to:

In addition, the trading
price and trading volume of our Class B common stock has at certain other times in the past exhibited, and may continue to exhibit, extreme
volatility, including within a single trading day. Such volatility could cause purchasers of our Class B common stock to incur substantial
losses. For example, on July 22, 2024, the trading price of our Class B common stock ranged from an intra-day high of $2.59 to an intra-day
low of $1.31, on trading volume of approximately 100 million shares, and on August 7, 2024, the trading price of our Class B common stock
ranged from an intra-day high of $0.728 to an intra-day low of $0.5413, on trading volume of approximately 188 million shares. With respect
to certain such instances of trading volatility, we are not aware of any material changes in our financial condition or results of operations
that would explain such price volatility or trading volume, which we believe reflect market and trading dynamics unrelated to our operating
business or prospects and outside of our control. We are thus unable to predict when such instances of trading volatility will occur
or how long such dynamics may last. Under these circumstances, we would caution you against investing in our Class B common stock unless
you are prepared to incur the risk of incurring substantial losses.

A proportion of our Class
B common stock may be traded by short sellers which may put pressure on the supply and demand for our Class B common stock, creating
further price volatility. In particular, a possible “short squeeze” due to a sudden increase in demand of our Class B common
stock that largely exceeds supply may lead to sudden extreme price volatility in our Class B common stock. Investors may purchase our
Class B common stock to hedge existing exposure in our Class B common stock or to speculate on the price of our Class B common stock.
Speculation on the price of our Class B common stock may involve long and short exposures. To the extent aggregate short exposure exceeds
the number of shares of common stock available for purchase in the open market, investors with short exposure may have to pay a premium
to repurchase our Class B common stock for delivery to lenders of our Class B common stock. Those repurchases may in turn dramatically
increase the price of our Class B common stock until investors with short exposure are able to purchase additional common stock to cover
their short position. This is often referred to as a “short squeeze.” Following such a short squeeze, once investors purchase
the shares necessary to cover their short position, the price of our Class B common stock may rapidly decline. A short squeeze could
lead to volatile price movements in our shares that are not directly correlated to the performance or prospects of our company and could
cause purchasers of our common shares to incur substantial losses.

32

The dual-class structure of our common
stock has the effect of concentrating voting power, which may limit your ability to influence the outcome of important transactions,
including a change in control.

Our Class B common stock
has one (1) vote per share, and our Class A common stock has ten (10) votes per share. Our issued and outstanding share capital consisted
of 39,934,846 shares of Class A common stock and 175,161,127 shares of Class B common stock as of January 20, 2026. Our Chief Executive
Officer and co-founder, Zhenwu Huang, and our Chief Financial Officer and co-founder, Zhenqiang Huang, beneficially own an aggregate of
approximately 66% of the voting power of our outstanding shares of common stock as of January 20, 2026, and as such, these stockholders,
individually or together, may be able to significantly influence matters submitted to our stockholders for approval, including the election
of directors, amendments of our articles of incorporation, as amended, and any merger or other major corporate transactions that require
stockholder approval. See “ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
Our existing stockholders, including Zhenwu Huang and Zhenqiang Huang, individually or together, may vote in a way with which you disagree
and which may be adverse to your interests. This concentrated voting power may, by changing the directors of the Company, have the ultimate
effect of delaying, preventing or deterring a change in control of our Company, could deprive our stockholders of an opportunity to receive
a premium for their shares of common stock as part of a sale of our company and might ultimately materially and adversely affect the market
price of our Class B common stock.

Future transfers by the
holders of shares of Class A common stock may result in those shares converting into shares of Class B common stock. Each share of Class
A common stock is convertible into one share of Class B common stock at any time at the option of the holder, but Class B common stock
shall not be convertible into Class A common stock under any circumstances. However, as long as at least 17,516,113 shares of Class A
common stock remain outstanding, and without giving effect to any future issuances, the holders of our Class A common stock will hold
a majority of the outstanding voting power and will continue to control the outcome of matters submitted to stockholders’ approval.
Our second amended and restated articles of incorporation will generally not prohibit us from issuing additional shares of Class A common
stock, and any future issuance of shares of Class A common stock may be dilutive to holders of Class B common stock.

The dual-class structure of our common
stock may adversely affect the trading market for our Class B common stock.

We cannot predict whether
our dual-class structure will result in a lower or more volatile market price of our Class B common stock or in adverse publicity or
other adverse consequences. For example, certain index providers have announced restrictions on companies with dual-class or multi-class
share structures in their indices. In July 2017, S&P Dow Jones and FTSE Russell announced changes to their eligibility criteria for
the inclusion of shares of public companies on certain indices, including the Russell 2000, the S&P 500, the S&P MidCap 400 and
the S&P SmallCap 600, to exclude companies with multiple classes of shares from being added to these indices. Beginning in 2017,
MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily
barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity
securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights
in its eligibility criteria. As a result, our dual class capital structure would make us ineligible for inclusion in any of these indices,
and mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing
in our Class B common stock. These policies are still relatively new and it is as of yet unclear what effect, if any, they will have
on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared
to those of other similar companies that are included. Furthermore, we cannot assure you that other stock indices will not take a similar
approach to S&P Dow Jones or FTSE Russell in the future. Exclusion from indices could make our Class B common stock less attractive
to investors and, as a result, the market price of our Class B common stock could be adversely affected.

33

If securities or industry analysts do not
publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our
Class B common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
If no securities or industry analysts cover our company, the trading price for our stock would be negatively impacted. If we obtain securities
or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable
research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to
publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Future sales of our Class B common stock
or securities convertible into our Class B common stock may depress our stock price.

Sales of a substantial number
of shares of our Class B common stock or securities convertible into our Class B common stock in the public market could occur at any
time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the
market price of our Class B common stock. For example, we have registered an aggregate of 14,311,215 shares of Class B common stock issuable
under our Amended and Restated 2023 Stock Option Plan on a Registration Statement on Form S-8, filed with the SEC on December 11, 2023,
as amended by Post-Effective Amendment No. 1 to Form S-8, filed with the SEC on November 7, 2023, and such shares can be freely sold
in the public market upon issuance (unless issued to an affiliate of the Company). If a large number of shares of our Class B common
stock or securities convertible into our Class B common stock are sold in the public market after they become eligible for sale, the
sales could reduce the trading price of our Class B common stock and impede our ability to raise future capital.

There can be no assurance that we will
continue to be able to comply with the continued listing standards of Nasdaq.

Our continued eligibility
to maintain the listing of our Class B common stock on Nasdaq depends on a number of factors, including the price of our Class B common
stock. On October 25, 2024, the Company received a notice from Nasdaq notifying the Company that, because the closing bid price for the
Company’s Class B common stock had fallen below $1.00 per share for 30 consecutive business days, the Company no longer complies
with the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Rule 5550(a)(2) of Nasdaq Listing Rules.
Nasdaq’s notice had no immediate effect on the listing of the Company’s Class B common stock on the Nasdaq Capital Market.
Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial compliance period of 180 calendar days, or until April
23, 2025, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s
Class B common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to April 23, 2025. On January
6, 2024, the Company received a notice from Nasdaq that the Company has regained compliance with the minimum bid price requirement and
the matter is closed.

However, there is no guarantee
that the Company will be able to remain in compliance with the continued listing standards of Nasdaq. If Nasdaq delists our securities
from trading on its exchange for failure to meet its listing standards, and we are not able to list such securities on another national
securities exchange, then our Common Stock could be quoted on an over-the-counter market. If this were to occur, we and our stockholders
could face significant material adverse consequences, including:

34

Our directors, executive officers and principal
stockholders have substantial control over us and could delay or prevent a change of corporate control.

Our directors, executive
officers and holders of more than 5% of our Class B common stock, together with their affiliates, beneficially own, in the aggregate,
approximately 81.35% of our outstanding common stock as of January 10, 2025. As a result, these stockholders, acting together, have the
ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger,
consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, have the ability to
control the management and affairs of our company. Accordingly, this concentration of ownership could harm the market price of our Class
B common stock by:

See “Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters” below for more information regarding the ownership
of our outstanding stock by our executive officers, directors and holders of more than 5% of our Class B common stock, together with
their affiliates.

Anti-takeover provisions contained in our
second amended and restated articles of incorporation and second amended and restated bylaws, as well as provisions of Nevada law, could
impair a takeover attempt.

Our second amended and restated
articles of incorporation, second amended and restated bylaws and Nevada law contain provisions which could have the effect of rendering
more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents
include provisions:

These provisions, alone
or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

Nevada law, Nevada Revised
Statutes (“NRS”) Sections 78.411 through 78.444, regulate business combinations with interested stockholders. Nevada law
defines an interested stockholder as a beneficial owner (directly or indirectly) of 10% or more of the voting power of the outstanding
shares of the corporation. Pursuant to Sections NRS 78.411 through 78.444, combinations with an interested stockholder remain prohibited
for three years after the person became an interested stockholder unless (i) the transaction is approved by the board of directors or
the holders of a majority of the outstanding shares not beneficially owned by the interested party, or (ii) the interested stockholder
satisfies certain fair value requirements. NRS 78.434 permits a Nevada corporation to opt-out of the statute with appropriate provisions
in its articles of incorporation.

NRS Sections 78.378 through
78.3793 regulates the acquisition of a controlling interest in an issuing corporation. An issuing corporation is defined as a Nevada
corporation with 200 or more stockholders of record, of which at least 100 stockholders have addresses of record in Nevada and does business
in Nevada directly or through an affiliated corporation. NRS Section 78.379 provides that an acquiring person and those acting in association
with an acquiring person obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders of
the corporation, approved at a special or annual meeting of the stockholders. Stockholders who vote against the voting rights have dissenters’
rights in the event that the stockholders approve voting rights. NRS Section 78.378 provides that a Nevada corporation’s articles
of incorporation or bylaws may provide that these sections do not apply to the corporation. Our second amended and restated articles
of incorporation provide that these sections do not apply.

35

We have never paid dividends on our capital
stock, and we may not pay any dividends in the foreseeable future.

We have never declared nor
paid cash dividends on our capital stock. We may pay dividends in the future if the Company realizes good profits and the board of directors
determines that dividends are advisable, taking into account the Company’s financial and development needs. However, it is also
possible that we may retain any future earnings to finance the operation and expansion of our business, and we may not declare or pay
any dividends in the foreseeable future. Consequently, stockholders may need to rely on sales of their common stock after price appreciation,
which may never occur, as the only way to realize any future gains on their investment.