ITEM 1A. RISK FACTORS
Our business is subject to many risks and uncertainties,
which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial
performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our securities
could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties
not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance.
The statements contained in this Annual Report on Form 10-K that are not historic facts are forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed.
In that case, the trading price of our securities could decline, and investors in our securities may lose all or part of their investment.
These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company
and its securities in the future. References to past events are provided by way of example only and are not intended to be a complete
listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
Risks Related to Our Business
There is substantial doubt of our ability
to continue as a going concern.
We have incurred net losses since our inception.
In the twelve months ended December 31, 2025 and 2024, we incurred operating losses of $2,669,493 and $4,944,026, respectively. As at
December 31, 2025, we have working capital of $7,583,695 and had an accumulated deficit of $26,188,471. In their audit report
for the fiscal year ended December 31, 2025 included in this Annual Report on Form 10-K, our auditors have expressed their concern as
to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash
flows from operations and obtain financing. We intend to continue funding our operations through equity and debt financing arrangements,
which may be insufficient to fund our capital expenditures, working capital and other cash requirements in the long term. There can be
no assurance that the steps management is taking will be successful.
Our business may be materially adversely
affected by any future coronavirus (COVID-19) outbreak or similar global epidemic.
A significant outbreak, epidemic or pandemic of
contagious diseases in any geographic area in which we operate or plan to operate could result in a health crisis adversely affecting
the economies, financial markets and overall demand for our services in such areas. In addition, any preventative or protective actions
that governments implement or that we take in response to a health crisis, such as travel restrictions, quarantines or site closures,
may interfere with the ability of our employees, suppliers and customers to perform their responsibilities. Such results could have a
material adverse effect on our business.
COVID-19 created significant volatility, uncertainty
and economic disruption. COVID-19 has affected nearly all regions around the world. In the United States, businesses as well as federal,
state and local governments implemented significant actions to mitigate this public health crisis. While we cannot predict the duration
or scope of any future COVID-19 outbreak, it may negatively impact our business and such impact could be material to our financial results,
condition and outlook related to:
To the extent COVID-19 or a similar public health
threat has an impact on our business, it is likely to also have the effect of heightening many of the other risks described in this “Risk
Factors” section.
We have a limited operating history in an
evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
We have a limited operating history on which to
base an evaluation of its business and prospects. We are subject to all the risks inherent in a small company seeking to develop, market
and distribute new services, particularly companies in evolving markets. The likelihood of our success must be considered, in light of
the problems, expenses, difficulties, complications and delays frequently encountered in connection with the development, introduction,
marketing and distribution of new products and services in a competitive environment.
Such risks for us include, but are not limited
to, dependence on the success and acceptance of our services and the management of growth. In view of our limited operating history, we
believe that period-to-period comparisons of its operating results are not necessarily meaningful and should not be relied upon as an
indication of future performance.
We are therefore subject to many of the risks
common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and
other resources and lack of revenues.
If we fail to raise capital when needed
it will have a material adverse effect on our business, financial condition and results of operations.
We have limited revenue-producing operations and
will require proceeds from future offerings to execute its full business plan. A failure to raise capital when needed would have a material
adverse effect on our business, financial condition and results of operations. In addition, debt and other debt financing may involve
a pledge of assets and may be senior to interests of equity holders. Any debt financing secured in the future could involve restrictive
covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us
to obtain additional capital or to pursue business opportunities, including potential acquisitions. If adequate funds are not obtained,
we may be required to reduce, curtail or discontinue operations.
Our ability to obtain additional capital on acceptable
terms is subject to a variety of uncertainties, including:
· investors’ perception of, and demand for, our securities;
· our future results of operations, financial condition and cash flow.
Our failure to successfully market our brands
could result in adverse financial consequences.
We believe that continuing to strengthen our brands
is critical to achieving our widespread acceptance, particularly in light of the competitive nature of the market in which we operate.
Promoting and positioning its brands will depend largely on the success of our marketing efforts and our ability to provide high quality
services. There can be no assurance that brand promotion activities will yield increased revenues or that any such revenues would offset
the expenses incurred us in building our brand. If we fail to promote and maintain our brand or incur substantial expenses in an attempt
to promote and maintain our brand or if our existing or future strategic relationships fail to promote our brand or increase brand awareness,
our business, results of operations and financial condition would be materially adversely affected.
We may not generate the same level of revenues
from general construction projects.
Our revenues for the year ended December 31,
2025 and for the year ended December 31, 2024 were approximately $13.63 million and $17.01 million, respectively. There were five
customers (Sano Morio, Handou Syuji, Ming-Chi Chen, Kai-Ling Chen and Sano Morimoto) who represented approximately 81.8% of our
total revenue for the year ended December 31, 2025 of our total revenue for the prior year period. These customers are not located
in mainland China or Hong Kong. Our future plan of operations is to shift away from general construction services to the
construction of fish farms and fish trading business. There can be no guarantee that such shift in operations will generate the same
levels of revenues previously generated through our VIE.
There is no assurance that we will be profitable.
There is no assurance that we will earn profits
in the future, or that profitability will be sustained. There is no assurance that future revenues will be sufficient to generate the
funds required to continue our business development and marketing activities. If we do not have sufficient capital to fund our operations,
we may be required to reduce our sales and marketing efforts or forego certain business opportunities.
We may not have the ability to manage our
growth.
We anticipate that significant expansion will
be required to address potential growth in our customer base and market opportunities. Our anticipated expansion is expected to place
a significant strain on our management, operational and financial resources. To manage any material growth of its operations and personnel,
we may be required to improve existing operational and financial systems, procedures and controls and to expand, train and manage our
employee base. There can be no assurance that our planned personnel, systems, procedures and controls will be adequate to support our
future operations, that management will be able to hire, train, retain, motivate and manage required personnel or that our management
will be able to successfully identify, manage and exploit existing and potential market opportunities. If we are unable to manage growth
effectively, our business, prospects, financial condition and results of operations may be materially adversely affected.
We will need additional financing in order
to grow our business.
From time to time, in order to expand operations
to meet customer demand, we will need to incur additional capital expenditures. These capital expenditures are intended to be funded from
third party sources, including the incurring of debt and/or the sale of additional equity securities. In addition to requiring additional
financing to fund capital expenditures, we may require additional financing to fund working capital, research and development, sales and
marketing, general and administrative expenditures and operating losses. The incurrence of debt creates additional financial leverage
and therefore an increase in the financial risk of our operations. The sale of additional equity securities will be dilutive to the interests
of current equity holders. In addition, there can be no assurance that such additional financing, whether debt or equity, will be available
to us or that it will be available on acceptable commercial terms. Any inability to secure such additional financing on appropriate terms
could have a materially adverse impact on our business, financial condition and operating results.
We rely on our executive officers and the
performance of certain highly skilled personnel, and if we are unable to attract, retain and motivate well-qualified employees, our business
could be harmed.
Our success is dependent on our current executive
officers. Our success also depends in large part on the continued service of our key operational and management personnel. We face intense
competition from our competitors, customers and other companies throughout the industry. The loss of any our executive officers, specifically
Mr. Andy Chin-An Jin, our Chief Executive Officer, or any failure on our part to hire, train and retain a sufficient number of qualified
management -level professionals could impair our business.
In addition, we are also, and will continue to
be, heavily dependent on the skill, acumen and services of our non-management employees. Our future success depends on our continuing
ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand, and
we may incur significant costs to attract them. In addition, the loss of any of our key employees could materially adversely affect our
ability to execute our business plan, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain
the services of any members of our key employees. If we do not succeed in attracting well-qualified employees or retaining and motivating
existing employees, our business could be harmed.
Future acquisitions may have an adverse
effect on our ability to manage our business.
Selective acquisitions currently form part of
our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additional businesses,
services or products that are complementary to our core business. Future acquisitions and the subsequent integration of new companies
into ours would require significant attention from our management. Future acquisitions would also expose us to potential risks, including
risks associated with the assimilation of new operations, services and personnel, unforeseen or hidden liabilities, the diversion of resources
from our existing businesses and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions
and potential loss of, or harm to, relationships with employees as a result of integration of new businesses. The diversion of our management’s
attention and any difficulties encountered in any integration process could have a material adverse effect on our ability to manage our
business.
The value of seafood which we sell (e.g.,
eel) is subject to fluctuation which may result in volatility of our results of operations and the value of an investment in us.
Our business is partly dependent upon the sale
of eel which value is subject to fluctuation and which value greatly fluctuates. Our net sales and operating results vary significantly
due to the volatility of the value of eel and any other seafood that we sell which may result in the volatility of the market price of
our common stock.
We have limited insurance coverage.
We do not have any business liability, disruption
or litigation insurance coverage for our operations in Taiwan. Any uninsured occurrence of loss or litigation or business disruption may
result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.
Competitors and potential competitors may
develop services, products and technologies that make ours obsolete or garner greater market share than ours.
Our ability to compete successfully will depend
on our ability to demonstrate that our services and products are superior to and/or less expensive than other products available in the
market. Some of our competitors have the benefit of marketing their products under brand names that have better market recognition than
ours or have stronger marketing and distribution channels than we do. Increased competition as to any of our products could result in
price reduction, reduced margins and loss of market share, which could negatively affect our profitability.
Certain of our competitors may benefit from government
support and other incentives that are not available to us. As a result, our competitors may be able to develop competing and/or superior
products and compete more aggressively and sustain that competition over a longer period of time than we can. As more companies develop
new intellectual property in our markets, a competitor could acquire patent or other rights that may limit our ability to successfully
market our product.
If our technologies or products are stolen,
misappropriated, or reverse engineered, others could use the technologies to produce competing technologies or products.
Third parties, including our collaborators, contractors,
and others involved in our business often have access to our technologies. If our technologies or products were stolen, misappropriated,
or reverse engineered, they could be used by other parties that may be able to reproduce our technologies or products using our technologies
for their own commercial gain. If this were to occur, it would be difficult for us to challenge this type of use, especially since we
do not own any patents or other intellectual property rights with respect to our technologies and products.
We are subject to certain risks by virtue
of our international operations.
We mainly operate in Taiwan and plan to expand
in other international countries and in the United States. We expect to expand our operations significantly by accessing new markets abroad
and expanding our services offerings. Our ability to manage our business and conduct our operations in other international countries and
in the United States requires considerable management attention and resources and is subject to the particular challenges of supporting
a growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory
systems and commercial infrastructures. Furthermore, in most international markets, we would not be the first entrant, and our competitors
may be better positioned than we are to succeed. Expanding in other international countries and in the United States may subject us to
risks that we have either not faced before or increase our exposure to risks that we currently face, including risks associated with:
· providing solutions in different languages for different cultures;
· credit risk and higher levels of payment fraud;
· compliance with anti-bribery laws;
· currency exchange rate fluctuations;
· political and economic instability in some countries;
· higher costs of doing business in other international countries.
Natural disasters or other catastrophic
events could harm our operations.
Our operations in the U.S. and Taiwan could be
subject to significant risk of natural disasters, including earthquakes, hurricanes, typhoons, flooding and tornadoes, as well as other
catastrophic events, such as terrorist attacks or wars. For example, our manufacturers are all located in Taiwan, which is susceptible
to typhoons and earthquakes. Any disruption in our manufacturers’ manufacturing facilities arising from these and other natural disasters
or other catastrophic events could cause significant delays in the production or shipment of the components of our products until such
manufacturers are able to shift production to different facilities or until we are able to arrange for other third party manufacturers
to manufacture the components of our products. The affected manufacturers may not be able to obtain alternate capacity to manufacture
the components of our products or we may not be able to arrange for other third party manufacturers to manufacture the components of our
products on favorable terms or at all. The occurrence of any of these circumstances may adversely affect our financial condition and results
of operation.
The primary substantial portion of our revenues
will be derived from Taiwan.
We anticipate that sales of our services in Taiwan
will represent our primary revenues in the near future. Any significant decline in the condition of the economy of Taiwan could adversely
affect consumer demand of our services, among other things, which in turn would have a material adverse effect on our business and financial
condition.
Currency fluctuations may adversely affect
our business and if the NT dollar were to decline in value, that would reduce our revenue in U.S. dollar terms.
Our reporting currency is the U.S. dollar and
our operations in Taiwan use their local currency as their functional currencies. Substantially all of our revenue and expenses are in
NT dollars. We are subject to the effects of exchange rate fluctuations with respect to any of such currency. For example, the value of
the NT dollar depends to a large extent on Taiwan government policies and Taiwan’s domestic and international economic and political developments,
as well as supply and demand in the local market.
The income statements of our operations are translated
into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies,
the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for
our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign
currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We
are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars
in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements
into U.S. dollars will lead to a translation gain or loss which is recorded as a component of other comprehensive income. In addition,
we have certain assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes
in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss. We
have not entered into agreements or purchased instruments to hedge our exchange rate risks, although we may do so in the future. The availability
and effectiveness of any hedging transaction may be limited, and we may not be able to successfully hedge our exchange rate risks.
We may be subject to product liability claims
if people or properties are harmed by the services sold by us.
The components of our products intended to be
sold by us, as part of our services, are manufactured by third parties. The components of our products may be defectively designed or
manufactured. As a result, sales of the products could expose us to liability claims relating to personal injury or property damage and
may require product recalls or other actions. Third parties subject to such injury or damage may bring claims or legal proceedings against
us as the reseller of the products. We do not currently maintain any third-party liability insurance or products liability insurance in
relation to products we intend to sell in conjunction with our services. As a result, any material products liability claim or litigation
could have a material and adverse effect on our business, financial condition and results of operations. Even unsuccessful claims could
result in the expenditure of funds and managerial efforts in defending them and could have a negative impact on our reputation.
Risk of litigation.
We and/or its directors and officers may be subject
to a variety of civil or other legal proceedings, with or without merit. From time to time in the ordinary course of its business, we
may become involved in various legal proceedings, including commercial, employment and other litigation and claims, as well as governmental
and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources and
cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, the results of any such actions may
have a material adverse effect on our business, operating results or financial condition.
Even if the claims are without merit, the costs
associated with defending these types of claims may be substantial, both in terms of time, money, and management distraction. The results
of litigation and claims to which we may be subject cannot be predicted with certainty. Even if these matters do not result in litigation
or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate
or resolve them, could harm our business, results or operations and reputation.
Third parties may assert that our employees
or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We employ individuals who previously worked with
other companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not
use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants
or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary
information, of a former employer or other third party. Litigation may be necessary to defend against these claims. If we fail in defending
any such claims or settling those claims, in addition to paying monetary damages or a settlement payment, we may lose valuable intellectual
property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs
and be a distraction to management and other employees.
We currently, and may in the future, have
assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation, the
loss of such assets would have a severe negative affect on our operations and liquidity.
We may maintain our cash assets at certain financial
institutions in the U.S. in amounts that may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit
of $250,000. In the event of a failure of any financial institutions where we maintain our deposits or other assets, we may incur a loss
to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial
condition and our results of operations.
Risks Related to Our Bitcoin Treasury Strategy
Our Bitcoin treasury strategy exposes us
to significant volatility in the price of Bitcoin, which could materially adversely affect our financial condition and results of operations.
We have allocated a portion of our corporate funds
to purchase Bitcoin as part of our corporate treasury strategy. Bitcoin has historically experienced significant price volatility and
is subject to rapid and substantial changes in value driven by market sentiment, liquidity, macroeconomic conditions, changes in interest
rates and other factors that are difficult to predict. Any decline in the market price of Bitcoin could require us to recognize losses
in our financial statements and could reduce our liquidity, increase our need for additional financing and adversely affect our ability
to fund operations, capital expenditures and working capital needs. In addition, our Bitcoin holdings may result in increased volatility
in our reported earnings and cash flows, which may adversely affect investor perception and the market price of our common stock.
Accounting, tax and regulatory developments
relating to digital assets could adversely affect us.
The accounting treatment for digital assets and
related disclosure requirements may evolve and could require us to change our accounting policies, restate prior period financial statements
or incur increased costs to comply with new or revised accounting standards. In addition, the U.S. and foreign jurisdictions continue
to evaluate and implement regulations governing digital assets, including rules relating to custody, reporting, trading, market integrity,
anti-money laundering and sanctions compliance. Changes in laws, regulations, enforcement priorities or interpretations could restrict
our ability to purchase, hold or dispose of Bitcoin, increase our compliance costs, subject us to additional taxes or reporting obligations,
or otherwise materially adversely affect our business, financial condition and results of operations.
We may be unable to safeguard our Bitcoin
holdings, and any compromise, loss, theft or misappropriation of our Bitcoin could materially adversely affect our business, financial
condition and results of operations.
Digital assets are subject to unique risks, including
theft, hacking, social engineering, malware, insider misconduct and technological vulnerabilities. We may hold Bitcoin directly or through
third-party custodians, exchanges or other service providers, and we may be exposed to losses resulting from (i) security breaches, cyberattacks
or operational failures impacting our systems or those of third parties, (ii) the loss or compromise of private keys, passwords or other
credentials necessary to access our Bitcoin, (iii) insolvency, bankruptcy, fraud, misconduct or failure of a custodian, exchange or other
service provider, or (iv) disruptions, delays, forks or other events affecting the Bitcoin network. Any of these events could result in
partial or total loss of our Bitcoin holdings, impair our liquidity and adversely affect our ability to operate our business. Further,
our insurance coverage, if any, may not be sufficient to cover losses relating to digital assets.
Regulatory Risks
We must comply with the Foreign Corrupt
Practices Act while many of our competitors do not.
We are required to comply with the United States
Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials
for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions.
Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time to time in Taiwan. If our competitors engage
in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing
business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Although
we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such
conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could
suffer severe penalties.
Future laws, regulations and standards relating
to corporate governance and public disclosure may create uncertainty for public companies, which may increase legal and financial compliance
costs and make some activities more time consuming.
Future laws, regulations and standards relating
to corporate governance and public disclosure are subject to varying interpretations, in many cases due to their lack of specificity,
and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This
could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and
governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result
in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities
to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business
may be harmed.
Being listed on a national exchange makes it more
expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially
higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our
Board.
Relations between the PRC and Taiwan could
negatively affect our business and financial status and therefore the market value of your investment.
Taiwan has a unique international political status.
The PRC does not recognize the sovereignty of Taiwan. Although significant economic and cultural relations have been established in recent
years between Taiwan and the PRC, relations have often been strained. The government of the PRC has threatened to use military force to
gain control over Taiwan in limited circumstances. Our principal executive offices are located in Taiwan and a substantial majority of
our net revenues are derived from our operations in Taiwan. Therefore, factors affecting military, political or economic conditions in
Taiwan could have a material adverse effect on our results of operations.
A significant disruption in the operations
of our suppliers in Taiwan, such as a trade war or political unrest, could materially adversely affect our business, financial condition
and results of operations.
Any disruption in the operations of our suppliers
in Taiwan or in their ability to meet our needs, whether as a result of a natural disaster or other causes, could impair our ability
to operate our business on a day-to-day basis. Furthermore, since many of these third parties are located outside the U.S., we are exposed
to the possibility of disruption and increased costs in the event of changes in the policies of the U.S. or foreign governments, political
unrest or unstable economic conditions in any of the countries where we conduct such activities. For example, a trade war could lead
to higher tariffs. Any of these matters could materially and adversely affect our development timelines, business and financial condition.
Our business, including our costs and supply
chain, is subject to risks associated with manufacturing.
In the event of a significant disruption in the
supply of the raw materials used in the manufacture of the components of the products we offer, the suppliers that we work with might
not be able to locate alternative suppliers of materials of comparable quality at an acceptable price. For example, natural disasters
may increase raw material costs and impact pricing with our suppliers, and cause shipping delays for the components of our products. Any
delays, interruption, damage to, or increased costs in the manufacture of the components of the products we offer could result in higher
prices to acquire the components of the products or non-delivery of the components of the products altogether, and could adversely affect
our operating results.
Geopolitical conditions,
including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial
results.
Since we operate on a
global basis, our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political
and social instability, acts of war, terrorist activity or other similar events. From time to time, we could have a large investment in
a particular asset type, a large revenue stream associated with a particular customer or industry, or a large number of customers located
in a particular geographic region. Decreased demand from a discrete event impacting a specific asset type, customer, industry, or region
in which we have a concentrated exposure could negatively impact our results of operations.
In February 2022, Russia initiated significant
military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against
Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations,
and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the
conflict continue or worsen. It is not possible to predict the broader consequences of the conflict, including related geopolitical tensions,
and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as any counter measures or retaliatory
actions by Russia or Belarus in response, including, for example, potential cyberattacks or the disruption of energy exports, is likely
to cause regional instability and geopolitical shifts and could materially adversely affect global trade, currency exchange rates, regional
economies and the global economy. In addition, the ongoing conflicts in the Middle East may further impact global economic conditions
and market sentiments. This, in turn, could adversely affect the trading price of our shares of common stock and investor interest in
us.
The Russia-Ukraine war and conflicts in the Middle
East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response
to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional
capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
We continue to
expand our international footprint and operations, and we may expand further in the future, which subjects us to a variety of risks and
complexities which, if not effectively managed, could negatively affect our business.
We currently maintain
operations in Taiwan, and may in the future expand, or seek to expand, our operations to additional foreign jurisdictions.
For example, operating
in Europe exposes us to political, legal and economic risks. In addition, a significant percentage of the production, downstream processing
and sales of our products occurs outside the United States or with vendors, suppliers or customers located outside the United States.
If tariffs or other restrictions are placed by the United States on foreign imports from Taiwan or other countries where we operate or
seek to operate, or any related countermeasures are taken, our business, financial condition, results of operations and growth prospects
may be harmed. Tariffs may increase our cost of goods, which could result in lower gross margins on certain of our products. If we raise
prices to account for any such increase in costs of goods, the competitiveness of the affected products could potentially be reduced.
In either case, increased tariffs on imports from Taiwan or other countries where we operate or seek to operate could materially and adversely
affect our business, financial condition and results of operations. Trade restrictions and sanctions implemented by the United States
or other countries, including sanctions imposed on Russia by the United States and other countries due to Russia’s recent invasion of
Ukraine, could materially and adversely affect our business, financial condition and results of operations.
We are increasingly dependent on information
technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks.
Significant disruptions to our information technology
systems or breaches of information security could adversely affect our business. In the ordinary course of business, we collect, store
and transmit large amounts of confidential information, and it is critical that we do so in a secure manner to maintain the confidentiality
and integrity of such information. We have also outsourced significant elements of our information technology infrastructure; as a result,
we manage independent vendor relationships with third parties who are responsible for maintaining significant elements of our information
technology systems and infrastructure and who may or could have access to our confidential information. The size and complexity of our
information technology systems, and those of our third-party vendors, make such systems potentially vulnerable to service interruptions
and security breaches from inadvertent or intentional actions by our employees, partners or vendors. These systems are also vulnerable
to attacks by malicious third parties and may be susceptible to intentional or accidental physical damage to the infrastructure maintained
by us or by third parties. Maintaining the secrecy of confidential, proprietary and/or trade secret information is important to our competitive
business position. While we have taken steps to protect such information and have invested in systems and infrastructures to do so, there
can be no guarantee that our efforts will prevent service interruptions or security breaches in our systems or the unauthorized or inadvertent
wrongful use or disclosure of confidential information that could adversely affect our business operations or result in the loss, dissemination
or misuse of critical or sensitive information. A breach our security measures or the accidental loss, inadvertent disclosure, unapproved
dissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential information, whether as a result
of theft, hacking, fraud, trickery or other forms of deception, or for any other cause, could enable others to produce competing products,
use our proprietary technology or information and/or adversely affect our business position. Further, any such interruption, security
breach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to us and could
have a material adverse effect on our business, financial position, results of operations and/or cash flow.
Risks Related to our Securities
We may not be able to satisfy the continued
listing requirements of Nasdaq to maintain a listing of our common stock.
As a Nasdaq-listed company, we must meet certain
financial and liquidity criteria to maintain such listing. If we violate the maintenance requirements for continued listing of our common
stock, our common stock may be delisted. In addition, our Board may determine that the cost of maintaining our listing on a national securities
exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq may materially impair our stockholders’ ability
to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for,
our common stock. In addition, the delisting of our common stock could significantly impair our ability to raise capital.
On February 2, 2026, we received written notice
from Nasdaq that, for the 30 consecutive business days from December 17, 2025 through January 30, 2026, the closing bid price of our common
stock did not meet the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market. We have been provided an initial
180-day compliance period, or until August 3, 2026, to regain compliance. If at any time during this period the closing bid price of our
common stock is at least $1.00 per share for a minimum of 10 consecutive business days, Nasdaq is expected to provide written confirmation
of compliance. If we do not regain compliance during this period, we may be eligible for an additional 180-day compliance period, subject
to meeting other continued listing standards and providing written notice of our intent to cure the deficiency, including by effecting
a reverse stock split, if necessary.
The notice has no immediate effect on the listing
or trading of our common stock, which continues to trade on The Nasdaq Capital Market under the symbol “NCRA.” We are evaluating
our options to regain compliance; however, there can be no assurance that we will be able to do so or otherwise maintain our Nasdaq listing.
We have identified material weaknesses in
our internal control over financial reporting. Failure to maintain effective internal controls could cause our investors to lose confidence
in us and adversely affect the market price of our common stock. If our internal controls are not effective, we may not be able to accurately
report our financial results or prevent fraud.
Section 404 of the Sarbanes-Oxley Act of 2002
(“Section 404”) requires that we maintain internal control over financial reporting that meets applicable standards. We may
err in the design or operation of our controls, and all internal control systems, no matter how well designed and operated, can provide
only reasonable assurance that the objectives of the control system are met. Because there are inherent limitations in all control systems,
there can be no assurance that all control issues have been or will be detected.
As of December
31, 2025, we did not maintain effective controls over the control environment. Our weaknesses related to a lack of a sufficient
number of personnel with appropriate training and experience in U.S. general acceptable accounting principles (GAAP) and SEC rules and
regulations with respect to financial reporting functions. Furthermore, we lack robust accounting systems as well as sufficient resources
to hire such staff and implement these accounting systems.
If we are unable, or are perceived as unable,
to produce reliable financial reports due to internal control deficiencies, investors could lose confidence in our reported financial
information and operating results, which could result in a negative market reaction and a decrease in our stock price.
We have a large number of authorized but
unissued shares of our common stock which will dilute your ownership position when issued.
Our authorized capital stock consists of 200,000,000
shares of common stock, of which approximately 177,788,681 shares are available for issuance. Our management will continue to have broad
discretion to issue shares of our common stock in a range of transactions, including capital-raising transactions, mergers, acquisitions
and other transactions, without obtaining stockholder approval, unless stockholder approval is required under law or under Nasdaq Rule
5635(b) which requires stockholder approval for change of control transactions where a stockholder acquires 20% of a Nasdaq-listed company’s
common stock or securities convertible into common stock, calculated on a post-transaction basis. If our management determines to issue
shares of our common stock from the large pool of authorized but unissued shares for any purpose in the future and is not required to
obtain stockholder approval, your ownership position would be diluted without your further ability to vote on that transaction.
Sales of our currently issued and outstanding
shares of common stock and shares of common stock underlying warrants may become freely tradable pursuant to Rule 144 and may dilute the
market for your shares and have a depressive effect on the price of the shares of our common stock.
Approximately 58% of the shares of common stock
are "restricted securities" within the meaning of Rule 144 under the Securities Act (“Rule 144”). As restricted securities,
these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence
that a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of common stock.
Under Rule 144, affiliates who have held restricted
securities for a period of at least six months may, under certain conditions, sell every three months, in brokerage transactions, a number
of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock or the average weekly trading volume
during the four calendar weeks prior to the sale. A sale under Rule 144 or under any other exemption from the Securities Act, if available,
or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common
stock in any active market that may develop.
An active, liquid, and orderly market for
our common stock may not develop.
Our common stock is listed on Nasdaq. An active
trading market for our common stock may never develop or be sustained. If an active market for our common stock does not continue to
develop or is not sustained, it may be difficult for investors to sell their shares of common stock without depressing the market price
and investors may not be able to sell their securities at all. An inactive market may also impair our ability to raise capital by selling
our securities and may impair our ability to acquire other businesses, applications, or technologies using our securities as consideration,
which, in turn, could materially adversely affect our business and the market prices of your shares of common stock.
We may issue preferred stock in different
series with terms that could dilute the voting power or reduce the value of our common stock.
While we have no specific plan to issue preferred
stock in different series, our amended and restated articles of incorporation, as amended (“Articles of Incorporation”) authorizes
us to issue, without the approval of our stockholders, one or more series of preferred stock having such designation, relative powers,
preferences (including preferences over our common stock respecting dividends and distributions), voting rights, terms of conversion or
redemption, and other relative, participating, optional, or other special rights, if any, of the shares of each such series of preferred
stock and any qualifications, limitations, or restrictions thereof, as our Board may determine. The terms of one or more classes or series
of preferred stock could dilute the voting power or reduce the value of our common stock. For example, the repurchase or redemption rights
or liquidation preferences we could assign to holders of a specific preferred stock class could affect the residual value of the common
stock.
The market valuation of our business may
fluctuate due to factors beyond our control and the value of your investment may fluctuate correspondingly.
The market valuations of smaller reporting companies,
such as us, frequently fluctuate due to factors unrelated to the past or present operating performance of such companies. Our market valuation
may fluctuate significantly in response to a number of factors, many of which are beyond our control, including:
· fluctuations in related commodities prices; and
· additions or departures of key personnel.
As a result, the value of your investment in us
may fluctuate.
The trading prices of our common stock could
be volatile and could decline following this offering at a time when you want to sell your holdings.
Numerous factors, many of which are beyond our
control, may cause the trading prices of our common stock to fluctuate significantly. These factors include:
· quarterly variations in our results of operations or those of our competitors;
· delays in end-user deployments of products;
· fluctuations in related commodities prices;
· intellectual property infringements;
· our ability to develop and market new and enhanced products on a timely basis;
· commencement of, or our involvement in, litigation;
· major changes in our Board or management;
· changes in governmental regulations;
· changes in earnings estimates or recommendations by securities analysts;
· our failure to generate material revenues;
· any acquisitions we may consummate;
· short selling activities;
· changes in market valuations of similar companies;
· changes in the prices of commodities associated with our business; and
· general economic conditions and slow or negative growth of end markets.
Additionally, the global
economy and financial markets may be adversely affected by geopolitical events, including Russia’s invasion of Ukraine and the conflicts
in the Middle East.
Securities class action litigation is often instituted
against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us
and divert our management’s attention and resources.
Moreover, securities markets may from time to
time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies,
such as the uncertainty associated with any future COVID-19 outbreaks. These market fluctuations may adversely affect the price of our
common stock and other interests in our Company at a time when you want to sell your interest in us.
Future sales or perceived sales of our common
stock could depress the trading prices of our common stock.
If the holders of our securities were to attempt
to sell a substantial amount of their holdings at once, the market prices of our common stock could decline. Moreover, the perceived risk
of this potential dilution could cause stockholders to attempt to sell their securities and investors to short such securities, a practice
in which an investor sells securities that he or she does not own at prevailing market prices, hoping to purchase such securities later
at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale
to increase, our common stock market price would likely further decline and if such market price is less than the exercise price of the
warrants, make the warrants worthless. All of these events could combine to make it very difficult for us to sell equity or equity-related
securities in the future at a time and price that we deem appropriate.
Our common stock may be affected by limited
trading volume and price fluctuations, which could adversely impact the value of our common stock.
Our common stock has experienced, and is likely
to experience in the future, significant price and volume fluctuations, which could adversely affect the market prices of our common stock
without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results
and changes in the overall economy or the condition of the financial markets could cause the market prices of our common stock to fluctuate
substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results
in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common
stock will be stable or appreciate over time.
We currently do not intend to declare dividends
on our common stock in the foreseeable future and, as a result, your returns on your investment may depend solely on the appreciation
of our common stock.
We currently do not expect to declare any dividends
on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used
to provide working capital, support our operations and finance the growth and development of our business. Any determination to declare
or pay dividends in the future will be at the discretion of our Board, subject to applicable laws and dependent upon a number of factors,
including our earnings, capital requirements and overall financial conditions. In addition, terms of any future debt or preferred securities
may further restrict our ability to pay dividends on our common stock. Accordingly, your only opportunity to achieve a return on your
investment in our common stock may be if the market price of our common stock appreciates and you sell your shares at a profit. The market
price for our common stock may never exceed, and may fall below, the price that you pay for such common stock.
Because we initially became a reporting
company under the Exchange Act by means other than a traditional underwritten initial public offering, we may not attract the attention
of research analysts at major brokerage firms.
We did not become a public reporting company through
a traditional firm commitment underwritten initial public offering. Companies that complete traditional underwritten offerings often receive
broader exposure to research analysts, institutional investors and the financial media at the time of listing. As a result, we may have
received less initial visibility and may continue to receive limited attention from research analysts and investment banks.
We are currently a smaller reporting company and
an emerging growth company, and we do not have research coverage from major brokerage firms. The absence of analyst coverage may limit
investor awareness of our business, reduce institutional interest in our common stock and adversely affect trading volume and liquidity.
In addition, limited analyst visibility may make investment banks less likely to underwrite secondary offerings on our behalf, which could
impair our ability to raise additional capital on favorable terms.
We are an “emerging growth company”
and a “smaller reporting company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable
to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.
We are an “emerging growth company”
and a “smaller reporting company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not “emerging growth companies” and “smaller reporting
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.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can
delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to
take advantage of the extended transition period for complying with new or revised accounting standards.
We will remain an “emerging growth company”
until the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an
effective registration statement under the Securities Act, although we will lose that status sooner if our revenues exceed $1.235 billion,
if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held
by non-affiliates exceeds $700 million as of the last day of our most recently completed second fiscal quarter.
We may continue to be a smaller reporting company
even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller
reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our common stock
held by non-affiliates is equal to or less than $250 million as of the last business day of the most recently completed second fiscal
quarter, and (ii) our annual revenues is equal to or less than $100 million during the most recently completed fiscal year and the market
value of our common stock held by non-affiliates is equal to or less than $700 million as of the last business day of the most recently
completed second fiscal quarter.
We cannot predict if investors will find our common
stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there
may be a less active trading market for our common stock and our stock price may be more volatile. In addition, taking advantage
of reduced disclosure obligations may make comparison of our financial statements with other public companies difficult or impossible.
If investors are unable to compare our business with other companies in our industry, we may not be able to raise additional capital as
and when we need it, which may materially and adversely affect our financial condition and results of operations.
The elimination of personal liability against
our directors and officers under Nevada law and the existence of indemnification rights held by our directors, officers and employees
may result in substantial expenses.