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Forza Innovations Inc (FORZ)
:FORZ
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Risk Overview Q2, 2019
Risk Distribution
60% Finance & Corporate
14% Production
14% Ability to Sell
7% Legal & Regulatory
5% Macro & Political
0% Tech & Innovation
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Forza Innovations Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q2, 2019
Main Risk Category
Finance & Corporate
With 25 Risks
Finance & Corporate
With 25 Risks
Number of Disclosed Risks
42
No changes from last report
S&P 500 Average: 31
42
No changes from last report
S&P 500 Average: 31
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Jun 2019
0Risks added
0Risks removed
0Risks changed
Since Jun 2019
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 3
0
No changes from last report
S&P 500 Average: 3
See the risk highlights of Forza Innovations in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 42
Finance & Corporate
Total Risks: 25/42 (60%)Above Sector Average
Share Price & Shareholder Rights14 | 33.3%
Share Price & Shareholder Rights - Risk 1
Stockholders of our Preferred Stock will be able to exert substantial influence and control over the operations of the Company.Share Price & Shareholder Rights - Risk 2
Our Articles of Incorporation provide for the issuance of up to 25,000,000 shares of Preferred Stock. Should we hereinafter issue Preferred Stock the rights of our common stockholders to receive dividends may be impaired.Our Preferred Stock constitutes a convertible stock in which (1) one preferred Share is convertible into (5) five Common Shares. The preferred Stock holders would be entitled to vote on any matters on which common stock holders are entitled to vote. This would include electing the Board of Directors, increasing the number of shares authorized and other corporate governance matters. Our Sole Officer and Director beneficially owns a substantial majority of the issued and outstanding shares of such preferred stock of the Company and will continue to own sufficient shares after this offering irrespective of its outcome. As a result they will continue to be able to exercise substantial control over the operations of the Company.
Share Price & Shareholder Rights - Risk 3
Opt-in right for emerging growth companyWe have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Share Price & Shareholder Rights - Risk 4
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
Share Price & Shareholder Rights - Risk 5
We may, in the future, issue additional shares of common stock, which would reduce investors' percent of ownership and may dilute our share value.Our Articles of Incorporation, as amended, authorize the issuance of 100,000,000 shares of common stock. As of the date of this annual report the Company had 17,870,000 shares of common stock outstanding. Accordingly, we may issue up to an additional 82,130,000 shares of common stock. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our than existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors and might have an adverse effect on any trading market for our common stock.
Share Price & Shareholder Rights - Risk 6
Our common stock is considered a "penny stock," and thereby is subject to additional sale and trading regulations that may make it more difficult to sell.The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The OTCBB and OTC Markets do not meet such requirements and since the price of our common stock is less than $5.00, our common stock is deemed penny stocks. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser's written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stock holders may have difficulty selling their shares.
Share Price & Shareholder Rights - Risk 7
Limited Public Market of our Securities, and active trading market may not develop.As we are in our early stages, an investment in our company will likely require a long-term commitment, with no certainty of return. The Company was recently approved to start trading its Common Stock on the OTCBB and or OTC Markets. There is currently no trading and none or limited public market for our Common Stock and there is no guarantee that any sustained trading market will develop in the near future or at all. In the absence of an active trading market:
- investors may have difficulty buying and selling or obtaining market quotations;- market visibility for shares of our common stock may be limited; and - a lack of visibility for shares of our common stock may have a depressive effect on the market price for shares of our common stock.
The OTC Markets is a relatively unorganized, inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ or the NYSE MKT (formerly known as the NYSE AMEX). The market for our Common Stock may be illiquid and you may be unable to dispose of your shares of Common Stock at desirable prices or at all. Moreover, there is a risk that our Common Stock could be delisted from the OTCBB Marketplace, in which case it might be listed on the so called "Pink Sheets", which is even more illiquid than the OTCBB Marketplace. The lack of an active market impairs your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional assets by using our shares as consideration.
Share Price & Shareholder Rights - Risk 8
Shareholders may have difficulty in depositing their shares due to regulatory burden on Clearing Firms and Broker Dealers.Existing and prospective shareholders may have difficulty depositing their shares because very few broker dealers and their Clearing Firms are currently accepting shares of a newly listed company on the OTC venue. Such broker dealers and their clearing firms are highly regulated and may not find accepting shares in their best interest because of the regulatory burden from FINRA and or the SEC. All Shareholders may not be able to deposit their shares at all if their broker dealer does not accept low priced stocks. Even if you do deposit shares, they may never clear if the clearing firm affiliated with the broker dealer decides not to do so based on the extreme regulatory burden in clearing low priced stock. The resale market for our common stock could be non-existent because of the above reasons, as the holders of our common stock shareholders may not be able to resell their shares ever. If we are unable to trade and access the public markets, we may be required to cease, exit the public markets, or curtail our reporting obligations.
Share Price & Shareholder Rights - Risk 9
Shareholders may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.Each state has its own securities laws, often called "blue sky" laws, which (1) limit sales of securities to a state's residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state. We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. The resale market for our common stock could be limited, as the holders of our common stock may not be able to resell their shares without the significant expense of state registration or qualification.
Share Price & Shareholder Rights - Risk 10
Our common stock could from time to time become "thinly-traded."The number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or non-existent. Therefore, stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares. Our "thinly-traded" stock is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or weeks when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give stockholders any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
Share Price & Shareholder Rights - Risk 11
Our common stock may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.- The market price of our common stock may fluctuate substantially due to a variety of factors, including:
- our business strategy and plans;- changing factors related to doing business in various jurisdictions within the United States;- new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;- general and industry-specific economic conditions;- additions to or departures of our key personnel;- variations in our quarterly financial and operating results;- changes in market valuations of other companies that operate in our business segments or in our industry;- lack of adequate trading liquidity;- announcements about our business partners;- changes in accounting principles; and - general market conditions.
The market prices of the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation and or trading halts. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management's attention and resources and harm our financial condition and results of operations.
Share Price & Shareholder Rights - Risk 12
Sales of substantial amounts of our common stock in the public market could depress the market price of our common stock.Our common stock is quoted on the OTC Markets and or OTCBB. If our stockholders sell substantial amounts of our common stock in the public market, including the shares of common stock issuable upon the exercise of the any Warrants, shares issued in acquisitions, and shares issuable upon the exercise of outstanding stock options, or the market perceives that such sales may occur, the market price of our common stock could fall and we may be unable to sell our common stock in the future.
Share Price & Shareholder Rights - Risk 13
Our Sole Officer and Director beneficially owns a significant percentage of our outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actionsOur Sole Officer and Director beneficially owns a substantial majority of our voting securities. As a result, currently, and after the offering, the company will possess a significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. The Company's ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.
Share Price & Shareholder Rights - Risk 14
Our auditor has indicated in its report that there is substantial doubt about our ability to continue as a going concern as a result of our lack of revenues and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.Our auditor has indicated in its report that our lack of revenues raises substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments resulting from the outcome of this uncertainty. If we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
Accounting & Financial Operations6 | 14.3%
Accounting & Financial Operations - Risk 1
Our lack of revenues from operations makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.Accounting & Financial Operations - Risk 2
Because we have a limited history of operations we may not be able to successfully implement our business plan.We have less than four months of operational history in our industry. Accordingly, our operations are subject to the risks inherent in the establishment of a new business enterprise, including access to capital, successful implementation of our business plan and limited revenue from operations. We cannot assure you that our intended activities or plan of operation will be successful or result in revenue or profit to us and any failure to implement our business plan may have a material adverse effect on the business of the Company.
Accounting & Financial Operations - Risk 3
Our revenues, operating income and cash flows are likely to fluctuate.We may experience fluctuating revenues, operating income and cash flows and expect that this will occur from time to time in the future. We may experience fluctuations in our annual or quarterly revenues and operating income because of the timing of our customer orders, the types of product and service orders we are working on at different times, hiring trends and decreased productivity because of vacations taken by our professionals. This means our profitability will likely decline if we experience an unexpected variation in the number or timing of new customer orders.
Accounting & Financial Operations - Risk 4
We do not anticipate paying any dividends.No dividends have been paid on the common stock of the Company. The Company does not intend to pay cash dividends on its common stock in the foreseeable future, and anticipates that profits, if any, received from operations will be devoted to the Company's future operations. Any decision to pay dividends will depend upon the Company's profitability at the time, cash available and other relevant factors.
Accounting & Financial Operations - Risk 5
There may be limitations on the effectiveness of our internal controls, and a failure of our control systems to prevent error or fraud may materially harm our company.Proper systems of internal controls over financial accounting and disclosure are critical to the operation of a public company. As we are a start-up company, we are at the very early stages of establishing, and we may be unable to effectively establish such systems, especially in light of the fact that we expect to operate as a publicly reporting company. This would leave us without the ability to reliably assimilate and compile financial information about our company and significantly impair our ability to prevent error and detect fraud, all of which would have a negative impact on our company from many perspectives.
Moreover, we do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely impact us.
Accounting & Financial Operations - Risk 6
There is substantial doubt about our ability to continue, as a going concern, as a result of our lack of revenues and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.Our lack of operating history and financial resources raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty, and if we are unable to secure financing, we may be required to cease or curtail our operations. If we do not secure financing, and related activities or if we do not secure funding to implement our business plan, we estimate current available financial resources will sustain our operations only through the next few months, and then only if continued funding by the management of the company. Because we will need additional capital to implement our business plan and may not be able to obtain sufficient capital, we may be forced to limit the scope of our operations, and our revenues may be reduced.
In connection with implementing our business plans, we will experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including the following:
- our profitability;- our ability to secure financing and acquire machinery and retain skilled production staff;- the ability to generate revenues from the sale of finished product - the ability to attract and retain customers.
We cannot assure you that we will be able to obtain capital in the future to meet our needs. We have no sources of financing identified. If we cannot obtain additional funding, we may be required to:
- limit our ability to implement our business plan;- limit our marketing efforts; and - decrease or eliminate capital expenditures.
Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences, and privileges senior to our Common Stock. Any additional financing may not be available to us, or if available, may not be on terms favorable to us.
Debt & Financing1 | 2.4%
Debt & Financing - Risk 1
Our ability to secure and maintain sufficient credit arrangements is key to our continued operations and there is no assurance we will be able to obtain sufficient additional equity or debt financing in the future.Corporate Activity and Growth4 | 9.5%
Corporate Activity and Growth - Risk 1
Unanticipated Obstacles to Execution of the Business PlanCorporate Activity and Growth - Risk 2
We Will Require Financing To Achieve Our Current Business Strategy And Our Inability To Obtain Such Financing Could Prohibit Us From Executing Our Business Plan And Cause Us To Slow Down Our Expansion or Cease Our Operations.We will need to raise capital over the next twelve months through public or private debt or sale of equity to execute our business plan to become a stable revenue generating company. Such financing may not be available as needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. If we are unable to obtain this financing on reasonable terms, we would be unable to hire the additional employees needed to execute our business plan and we would be forced to delay or scale back our plans for expansion. This would delay our ability to get our operations to profitability and could force us to cease operations. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to execute any future plans for growth. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if or when it is needed on terms we deem acceptable.
Corporate Activity and Growth - Risk 3
Our Business Model may not be sufficient to achieve success in our intended marketOur survival is dependent upon the market acceptance of initially a narrow group of products and services. Should these products and service be too narrowly focused or should the target market not be as responsive as we anticipate, we will not have in place alternate products we can offer to ensure our survival.
Corporate Activity and Growth - Risk 4
If we fail to effectively manage our growth, our business, brand and reputation, results of operations and financial condition may be adversely affected.We may experience a rapid growth in operations, which may place significant demands on our management team and our operational and financial infrastructure. As we continue to grow, we must effectively identify, integrate, develop and motivate new skilled employees, and maintain the beneficial aspects of our corporate culture. To attract top talent, we believe we will have to offer attractive compensation packages. The risks of over-hiring or over compensating and the challenges of integrating a rapidly growing employee base may impact profitability.
Additionally, if we do not effectively manage our growth, the quality of our services could suffer, which could adversely affect our business, brand and reputation, results of operations and financial condition. If operational, technology and infrastructure improvements are not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures to address these issues. To effectively manage our growth, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. This will require that we refine our information technology systems to maintain effective online services and enhance information and communication systems to ensure that our employees effectively communicate with each other and our growing base of customers. These system enhancements and improvements will require significant incremental and ongoing capital expenditures and allocation of valuable management and employee resources. If we fail to implement these improvements and maintenance programs effectively, our ability to manage our expected growth and comply with the rules and regulations that are applicable to publicly reporting companies will be impaired and we may incur additional expenses.
Production
Total Risks: 6/42 (14%)Above Sector Average
Manufacturing1 | 2.4%
Manufacturing - Risk 1
Risks of BorrowingEmployment / Personnel4 | 9.5%
Employment / Personnel - Risk 1
1b. Unresolved staff commentsEmployment / Personnel - Risk 2
We depend heavily on key personnel, and turnover of key senior management could harm our business.Our future business and results of operations depend in significant part upon the continued contributions of our Sole Officer and Director. If we lose her services or if she fails to perform in her current position, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our technical knowledge held by our existing management team. We depend on the skills and abilities of such key employees in managing the engineering, production, technology, research & development, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
Employment / Personnel - Risk 3
Our financial results could suffer if we are unable to achieve or maintain adequate utilization of our skilled staff.Our profitability depends to a large extent on the utilization of our skilled staff, which may be adversely impacted by:
- the number and size of client orders;- the timing of the commencement, completion and termination of orders, which in many cases is unpredictable;- our ability to transition our skilled staff efficiently from completed production jobs to new jobs;- the hiring of additional skilled machinists and fabricators because there is generally a transition period for new employees that results in a temporary drop in our utilization rate;- unanticipated changes in the scope of client orders and agreements;- our ability to forecast demand for our products and services and thereby maintain an appropriate level of engineering and production staff; and - Condition's affecting the industries in which we participate as well as general economic conditions.
- The shop rates of our production staff that we are able to charge are also affected by a number of factors, including:
- our clients' perception of our ability to add value through our products and services;- the market demand for the products and services we provide;- introduction of new products and services by us or our competitors;- our competition and the pricing policies of our competitors; and - General economic conditions.
If we are unable to achieve and maintain adequate overall utilization as well as maintain or increase the average production shop rates for our locations, our financial results could materially suffer.
Employment / Personnel - Risk 4
We Are Dependent on Our President, To Guide Our Initial Operations and Implement Our Plan Of Operations. If We Lose Such Services We Will Have to Change Our Business Plan/Direction or Cease Operations.Our success will depend on the ability and resources of our President. If we lose the services of our CEO, we will be forced to either change our business plan and direction or cease operations. We have no written employment agreement with our CEO. We do not maintain key man life insurance on any of our executive officers and directors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers.
Costs1 | 2.4%
Costs - Risk 1
Controlling manufacturing costs is a significant factor in operating results.Ability to Sell
Total Risks: 6/42 (14%)Above Sector Average
Competition4 | 9.5%
Competition - Risk 1
After we attempt to increase operations, we will face increasing competition from domestic and foreign companies.Competition - Risk 2
We operate in the highly competitive and fragmented industrial manufacturing industry.We compete against many OEM manufacturers, contract machining and fabrication companies. We also compete with OEM in-house operations that are continually evaluating manufacturing products internally against the advantages of outsourcing. We may also be at a competitive disadvantage with respect to price when compared to manufacturers with excess capacity, lower cost structures and availability of lower cost labor. The availability of excess manufacturing capacity of our competitors also creates competitive pressure on price and winning new business. We also face competition from companies that are based in low cost countries. These companies may have lower cost structures and the availability of lower cost labor. To respond to competitive pressures, we may be required to reduce our prices to customers or increase discounts to customers, which would result in lower gross profit margins and decreased revenue. These factors also impact the Company's ability to obtain additional manufacturing programs and retain our current programs.
Competition - Risk 3
The Industrial Manufacturing industry is highly competitive, and we may not be able to compete effectively.The Industrial Manufacturing products and services industry in which we operate includes a large number of participants and is intensely competitive. We face competition from other multi-national companies, established businesses and financially stronger companies. This sector requires capital and infrastructure resources to become competitive and remain relevant. In addition, because there are relatively high barriers to entry, we expect to face tremendous competition from larger more established firms. Many of our competitors have a greater national presence and are also international in scope, as well as have significantly greater personnel, financial, technical and marketing resources. In addition, these competitors may generate greater revenues and have greater name recognition than we do. Our ability to compete also depends in part on the ability of our competitors to hire, retain and motivate skilled personnel, the price at which others offer comparable services and our competitors' responsiveness to their clients. If we are unable to compete successfully with our existing competitors or with any new competitors, our financial results will be adversely affected.
Competition - Risk 4
We may not be able to compete effectively against our competitors.We are engaged in highly competitive field. Competition from other companies in the same field is intense and is expected to increase. Many of our competitors have substantially greater resources, research and development staff, engineering personnel, skilled machinists, sales and marketing staff, and facilities than we do. In addition, other more adequately capitalized and established firms may enter our field. There can be no assurance that our competitors will not develop product service offerings that are more effective than those being developed by us or that would render our product and service offerings obsolete or noncompetitive. Our profitability as a company depends on effective marketing, diverse capability and competitive pricing. There is no assurance that we will be able to price our product competitively or have the purchasing power that large companies enjoy. The industry is very capital intensive due to machinery and plant operations. There is no assurance that we will obtain the funding to acquire the diverse machinery and plant infrastructure that the larger established companies have acquired.
Sales & Marketing1 | 2.4%
Sales & Marketing - Risk 1
Our clients may terminate sales orders and agreements with little or no notice, which may cause us to experience unexpected declines in our profitability and utilization.Brand / Reputation1 | 2.4%
Brand / Reputation - Risk 1
Our ability to maintain and attract new business depends upon our reputation, technical capabilities and the quality of our products and services.Legal & Regulatory
Total Risks: 3/42 (7%)Below Sector Average
Regulation1 | 2.4%
Regulation - Risk 1
FINRA sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares.Litigation & Legal Liabilities2 | 4.8%
Litigation & Legal Liabilities - Risk 1
Our future sales and reputation may be affected by litigation or other liability claims.Litigation & Legal Liabilities - Risk 2
We may be subject to regulatory inquiries, claims, suits prosecutions which may impact our profitability.Any failure or perceived failure by us to comply with applicable laws and regulations may subject us to regulatory inquiries, claims, suits and prosecutions. We can give no assurance that we will prevail in such regulatory inquiries, claims, suits and prosecutions on commercially reasonable terms or at all. Responding to, defending and/or settling regulatory inquiries, claims, suits and prosecutions may be time-consuming and divert management and financial resources or have other adverse effects on our business. A negative outcome in any of these proceedings may result in changes to or discontinuance of some of our services, potential liabilities or additional costs that could have a material adverse effect on our business, results of operations, financial condition and future prospects.
Macro & Political
Total Risks: 2/42 (5%)Below Sector Average
Economy & Political Environment2 | 4.8%
Economy & Political Environment - Risk 1
The economic conditions in the United States and around the world could adversely affect our financial results.Economy & Political Environment - Risk 2
Although we have not yet generated any significant revenues, general economic conditions could reduce our revenues after we commence operations.We have not yet generated significant revenues. General economic conditions could have an impact on our business and financial results after we commence operations. The global economy in general remains uncertain. As a result, original equipment manufacturers (OEM's) and companies may delay or reduce expenditures. Weak economic conditions and/or softness in the consumer or business channels after we commence operations and generate revenues could result in lower demand for industrial products and services, thereby resulting in lower sales revenues, earnings and cash flows.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.