Education
About Us
Working with TipRanks
Follow Us
Nxu, Inc. (NXU)
NASDAQ:NXU
Risk Overview Q4, 2024
Risk Distribution
58% Finance & Corporate
16% Production
10% Legal & Regulatory
8% Tech & Innovation
5% Ability to Sell
3% Macro & Political
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
Nxu 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 Q4, 2024
Main Risk Category
Finance & Corporate
With 46 Risks
Finance & Corporate
With 46 Risks
Number of Disclosed Risks
79
+1
From last reportS&P 500 Average: 32
79
+1
From last reportS&P 500 Average: 32
Recent Changes
30Risks added
23Risks removed
33Risks changed
Since Dec 2024
30Risks added
23Risks removed
33Risks changed
Since Dec 2024
Number of Risk Changed
33
+32
From last reportS&P 500 Average: 4
33
+32
From last reportS&P 500 Average: 4
See the risk highlights of Nxu 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 79
Finance & Corporate
Total Risks: 46/79 (58%)Above Sector Average
Share Price & Shareholder Rights17 | 21.5%
Share Price & Shareholder Rights - Risk 1
Our stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.Added
Share Price & Shareholder Rights - Risk 2
Our stockholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Merger as compared to their current ownership and voting interests in the Company.Added
After the completion of the Merger, the current stockholders of Nxu will generally own a smaller percentage of the combined company than their ownership of the Company prior to the Merger. Immediately after the Merger, our stockholders as of immediately prior to the Merger are expected to own approximately 5% of the outstanding shares of capital stock of the combined company and former Verde stockholders are expected to own approximately 95% of the outstanding shares of capital stock of the combined company, in each case, on a fully-diluted and as-converted basis. Our assumed aggregate enterprise value will be reduced by the excess of certain lease payments remaining unpaid at the Closing over our cash balance at the Closing, and any such reduction will decrease the ownership percentage interest of pre-Merger Nxu stockholders in the combined company. Furthermore, all dilution from the PIPE, including dilution attributable to the PIPE Warrants and the shares of Nxu Class A common stock issuable upon exercise thereof, will be absorbed by pre-Merger Nxu stockholders. As a result, some stockholders will hold a smaller pro rata share and, therefore, a lower percentage of the voting stock of the combined company than such stockholder currently holds in Nxu or Verde as a stand-alone company, respectively.
In addition, Nxu registered for resale by the selling stockholders in the PIPE up to 114,503,816 shares of Nxu Class A common stock, consisting of (1) 6,800,000 PIPE Purchased Shares, (2) 5,200,000 shares of Nxu Class A common stock issuable upon exercise of the Pre-Funded PIPE Warrants, (3) up to 57,251,908 shares of Nxu Class A common stock issuable upon exercise of the Series A PIPE Warrants, and (4) up to 45,251,908 shares of Nxu Class A common stock issuable upon exercise of the Series B PIPE Warrants. The number of shares of Nxu Class A common stock ultimately offered for resale by the selling stockholders is dependent on the issued number of (i) PIPE Purchased Shares, (ii) the Pre-Funded PIPE Warrants and (iii) shares of Nxu Class A common stock issuable upon exercise of the PIPE Warrants. Depending on a variety of factors, including market liquidity of the Nxu Class A common stock, the issuance of shares to the selling stockholders may cause the trading price of Nxu Class A common stock to decline.
Share Price & Shareholder Rights - Risk 3
The contemplated reverse stock split may not increase the combined company's stock price over the long-term.Added
The principal purposes of the contemplated reverse stock split are to (i) increase the per-share market price of Nxu's common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of Nxu as the combined company and the shares of Nxu common stock being issued in the Merger on Nasdaq will be approved and (ii) increase the number of authorized and unissued shares available for future issuance in connection with the Merger.
It cannot be assured, however, that the contemplated reverse stock split will accomplish any increase in the per-share market price of the combined company's common stock for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of the combined company's common stock, it cannot be assured that the contemplated reverse stock split will increase the market price of its common stock by a multiple of the contemplated reverse stock split ratio mutually agreed by Nxu and Verde, or result in any permanent or sustained increase in the market price of Nxu's common stock, which is dependent upon many factors, including the combined company's business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of the combined company might meet the listing requirements for Nasdaq initially after the contemplated reverse stock split, it cannot be assured that it will continue to do so.
Share Price & Shareholder Rights - Risk 4
The contemplated reverse stock split may decrease the liquidity of the combined company's common stock.Added
Although Nxu believes that the anticipated increase in the market price of the combined company's common stock resulting from the contemplated reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the contemplated reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the combined company's common stock. In addition, the contemplated reverse stock split may not result in an increase in the combined company's stock price necessary to satisfy Nasdaq's initial listing requirements for the combined company.
Share Price & Shareholder Rights - Risk 5
The contemplated reverse stock split may lead to a decrease in the combined company's overall market capitalization.Added
Should the market price of the combined company's common stock decline after the contemplated reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the contemplated reverse stock split. The contemplated reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in the combined company's overall market capitalization. If the per share market price does not increase in proportion to the contemplated reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company's common stock will remain the same after the contemplated reverse stock split is effected, or that the contemplated reverse stock split will not have an adverse effect on the combined company's stock price due to the reduced number of shares outstanding after the contemplated reverse stock split.
Share Price & Shareholder Rights - Risk 6
Stockholder litigation could prevent or delay the consummation of the Merger or otherwise negatively impact our business, operating results and financial condition.Added
Putative stockholder complaints, including stockholder class action complaints, and other complaints have been and may be filed against us, our board of directors and/or our officers in connection with the transactions contemplated by the Merger Agreement. The outcome of any litigation is uncertain, and we may not be successful in defending against any such future claims. We may incur significant costs in connection with any such litigation, including costs associated with the indemnification of our directors and officers. Lawsuits filed against us, our board of directors and/or our officers and could delay or prevent the Merger, divert the attention of our management and employees from day-to-day business and otherwise adversely affect our business and financial condition.
On January 28, 2025, an action captioned Mark Stevens v. Nxu, Inc., et al., Case No. 650533/2025 and an action captioned Michael Lewis v. Nxu, Inc., et al., Case No. 650541/2025 were filed in the Supreme Court of the State of New York (the "Complaints"). The Complaints claim that the proxy statement/prospectus filed by Nxu on January 27, 2025 contains materially misleading and incomplete information concerning, among other things: (i) the financial projections for Verde and Nxu, (ii) the financial analysis of Lake Street Capital Markets, LLC ("Lake Street"), financial advisor to Nxu in connection with the Merger, and (iii) the alleged potential conflicts of interest faced by Lake Street and Nxu's Chief Executive Officer and Nxu's President. The Complaints also seek to enjoin the transaction, rescind the transaction should it be consummated or an award of damages if the transaction is consummated, and an award of fees and expenses.
As of March 13, 2025, Nxu has, to its knowledge, received thirteen letters from purported Nxu stockholders alleging certain disclosure deficiencies in our proxy statement/prospectus filed on November 12, 2024 and our prospectus filed pursuant to Rule 424(b)(3) on January 27, 2025, three of which also sought to inspect certain books and records of Nxu related to the Merger and related matters pursuant to Section 220 of the DGCL.
The outcome of the matters described above cannot be predicted with certainty. Additional demands may be received or additional complaints may be filed in connection with the Merger and the transactions contemplated by the Merger Agreement and our prospectus filed on January 27, 2025. If such additional demands are made or additional complaints are filed, absent new or different allegations that are material, we will not necessarily announce such additional demands or complaints.
Furthermore, one of the conditions to the consummation of the Merger is the absence of any governmental order or law preventing the consummation of the Merger or making the consummation of the Merger illegal. Consequently, if a plaintiff were to secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting our ability to complete the consummation of the Merger, then such injunctive or other relief may prevent the Merger from becoming effective within the expected time frame or at all.
Share Price & Shareholder Rights - Risk 7
Nxu's business is currently entirely dependent on the success of the NxuOne™ Charging Network. Nxu's lack of business diversification could cause its stockholders to lose all or some of their investment if Nxu is unable to generate revenues from the NxuOne™ Charging Network.Added
Nxu's business is currently entirely dependent on the success of the NxuOne™ Charging Network and related products. Nxu does not have any other lines of business or other sources of revenue if it is unable to compete effectively in the marketplace. Nxu cannot guarantee that the NxuOne™ Charging Network will be able to achieve profitability alone. Nxu's ability to be profitable will depend on a number of factors, many of which are beyond Nxu's control. This lack of business diversification could cause you to lose all or some of your investment if Nxu is unable to generate revenues since Nxu does not expect to have any other lines of business or alternative revenue sources.
Share Price & Shareholder Rights - Risk 8
Nxu cannot predict the impact its dual class structure may have on its stock price.Added
Nxu cannot predict whether its dual class structure will result in a lower or more volatile market price of its Class A common stock or in adverse publicity or other adverse consequences. For example, because of its dual class structure, Nxu will likely be excluded from certain indexes, and Nxu cannot assure you that other stock indexes will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indexes, exclusion from stock indexes would likely preclude investment by many of these funds and could make its Class A common stock less attractive to other investors. As a result, the market price of Nxu's Class A common stock could be adversely affected.
Share Price & Shareholder Rights - Risk 9
A sale, or the perception of future sales, of a substantial number of shares of Nxu's Class A common stock may cause the share prices to decline.Changed
If Nxu's stockholders sell, or the market perceives that Nxu's stockholders intend to sell for various reasons, substantial amounts of Nxu's Class A common stock in the public market, including shares issued in connection with the exercise of outstanding options, the market price of its shares could fall. Sales of a substantial number of shares of Nxu's Class A common stock may make it more difficult for Nxu to sell equity or equity-related securities in the future at a time and price that Nxu deems reasonable or appropriate. Nxu may become involved in securities class action litigation that could divert management's attention and harm its business. The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices for the common stock of automotive companies. These broad market fluctuations may cause the market price of Nxu's Class A common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of a company's securities. Nxu may become involved in this type of litigation in the future. Litigation often is expensive and diverts management's attention and resources, which could adversely affect its business.
Share Price & Shareholder Rights - Risk 10
If the market price of Nxu's Class A common stock continues to remain under $1.00 per share, the only cure may be to enact a reverse split of the stock. Failure to maintain compliance with Nasdaq's Continued Listing Rules could be costly and have material adverse effects.Changed
Nxu will continue to monitor the closing bid price of its Class A common stock and seek to maintain compliance with all applicable Nasdaq requirements within the allotted compliance periods and may, if appropriate, consider available options, including implementation of an additional reverse stock split, to regain compliance with the Minimum Bid Requirement.
On December 27, 2023, Nxu completed a reverse stock split at a ratio of 1-for-150. If Nxu does not maintain compliance with the Minimum Bid Requirement, Nxu may be forced to complete another reverse stock split, which could negatively affect the price of its Nxu's Class A common stock.
Further, while Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse stock split to maintain or regain compliance with the Minimum Bid Requirement, Nasdaq has stated that a series of reverse stock splits may undermine investor confidence in securities listed on Nasdaq. Accordingly, Nasdaq may determine that it is not in the public interest to maintain Nxu's listing, even if Nxu regains compliance with the Minimum Bid Requirement.
In addition, Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that if a listed company that fails to meet the Minimum Bid Requirement after effecting one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the company is not eligible for a compliance period. Nxu has effected a reverse stock split with a cumulative ratio of 150 shares to one. A subsequent reverse stock split could cause Nxu to exceed the 1-for-250 ratio. If such ratio is exceeded, Nxu would no longer be eligible for a compliance period and may be subject to an immediate delisting notification in the event it cannot comply with the Minimum Bid Requirement in the future.
Any future non-compliance may be costly, divert management's time and attention, and could have a material adverse effect on Nxu's business, reputation, financing, and results of operation. A delisting could substantially decrease trading in Nxu's Class A common stock, adversely affect the market liquidity of Nxu's Class A common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, materially adversely affect its ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Additionally, the market price of Nxu's Class A common stock may decline further and stockholders may lose some or all of their investment.
Share Price & Shareholder Rights - Risk 11
Nxu is an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if Nxu takes advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make its securities less attractive to investors and may make it more difficult to compare its performance with other public companies.Changed
Nxu is an "emerging growth company" within the meaning of the Exchange Act, as modified by the JOBS Act, and Nxu may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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. As a result, Nxu's stockholders may not have access to certain information they may deem important. Nxu could be an emerging growth company for up to five years, although circumstances could cause Nxu to lose that status earlier, including if the market value of Nxu's Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case Nxu would no longer be an emerging growth company as of the following December 31. Nxu cannot predict whether investors will find its securities less attractive because Nxu will rely on these exemptions. If some investors find Nxu's securities less attractive as a result of its reliance on these exemptions, the trading prices of its securities may be lower than they otherwise would be, there may be a less active trading market for its securities and the trading prices of its securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Nxu has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Nxu, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Nxu's financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
Additionally, Nxu is a "smaller reporting company" as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. Nxu will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of Nxu's common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) Nxu's annual revenues exceeded $100 million during such completed fiscal year and the market value of Nxu's common stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent Nxu takes advantage of such reduced disclosure obligations, it may also make the comparison of Nxu's financial statements with other public companies difficult or impossible.
Share Price & Shareholder Rights - Risk 12
Nxu may use equity incentives for employees, advisors, directors, key consultants and select affiliates. Any issuance of stock upon the conversion of options and/or incentive rights will result in the dilution of the ownership interests of its existing stockholders.Changed
Nxu may use equity incentives for employees, advisors, directors, key consultants and select affiliates. Any issuance of stock upon the conversion of options and/or incentive rights, including settlement or exercise of incentive awards prior to or concurrently with the Merger, will result in the dilution of the ownership interests of its existing stockholders.
Share Price & Shareholder Rights - Risk 13
The market price of Nxu's Class A common stock has fluctuated, and may continue to fluctuate, significantly.Changed
The market price of the Nxu Class A common stock has fluctuated, and may continue to fluctuate, significantly and Nxu's stockholders may lose all or part of their investment.
The market prices for securities of startup companies have historically been highly volatile, and the market has from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. The market price of Nxu's Class A common stock has fluctuated, and may continue to fluctuate, significantly in response to numerous factors, some of which are beyond its control, such as:
- actual or anticipated adverse results or delays in its research and development efforts;- its failure to commercialize its Nxu Platform and Nxu Truck;- unanticipated serious safety concerns related to the use of its products;- adverse regulatory decisions;- legal disputes or other developments relating to proprietary rights, including patents, litigation matters and its ability to obtain patent protection for its intellectual property, government investigations and the results of any proceedings or lawsuits, including patent or stockholder litigation;- changes in laws or regulations applicable to the EV industry;- Nxu's dependence on third party suppliers;- announcements of the introduction of new products by its competitors;- market conditions in the EV industry;- announcements concerning product development results or intellectual property rights of others;- future issuances of Nxu's common stock or other securities;- the addition or departure of key personnel;- actual or anticipated variations in quarterly operating results;- announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by Nxu or Nxu's competitors;- its failure to meet or exceed the estimates and projections of the investment community;- issuances of debt or equity securities;- trading volume of Nxu common stock;- sales of Nxu's Class A common stock by Nxu or its stockholders in the future;- overall performance of the equity markets and other factors that may be unrelated to its operating performance or the operating performance of its competitors, including changes in market valuations of similar companies;- failure to meet or exceed any financial guidance or expectations regarding development milestones that Nxu may provide to the public;- ineffectiveness of Nxu's internal controls;- general political and economic conditions;- effects of natural or man-made catastrophic events;- scarcity of raw materials necessary for battery production; and - other events or factors, many of which are beyond Nxu's control.
Further, price and volume fluctuations may result in volatility in the price of Nxu's Class A common stock, which could cause a decline in the value of Nxu's common stock. Price volatility of Nxu's Class A common stock might worsen if the trading volume of its shares is low. The realization of any of the above risks or any of a broad range of other risks, including those described in these "Risk Factors", could have a dramatic and material adverse impact on the market price of Nxu's Class A common stock.
Share Price & Shareholder Rights - Risk 14
Unfavorable securities industry reports could have a negative effect on Nxu's share price.Changed
Any trading market for Nxu's Class A common stock will be influenced in part by any research reports that securities industry analysts publish about Nxu. Should one or more of such analysts downgrade Nxu's securities, or otherwise reports on Nxu unfavorably, or discontinues coverage, the market price and market trading volume of Nxu's Class A common stock could be negatively affected.
Share Price & Shareholder Rights - Risk 15
Nxu's Class A common stock may be delisted from Nasdaq if Nxu does not maintain compliance with Nasdaq's continued listing requirements. If Nxu's Class A common stock is delisted, it could negatively impact Nxu.Changed
Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards. On April 2, 2024, Nxu received a notice from Nasdaq stating that Nxu is not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on Nasdaq (the "Minimum Bid Requirement"). On October 1, 2024, Nxu received a second notice from Nasdaq confirming that Nxu is still not in compliance with the Minimum Bid Requirement as of September 30, 2024 and granting Nxu an additional 180 days, or until March 31, 2025, to regain compliance. Nasdaq's determination is based on Nxu meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market with the exception of the bid price requirement, and Nxu's written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
On September 4, 2024, Nxu received a notice from Nasdaq notifying Nxu that, due to Ms. Nightengale not standing for re-election as a director of Nxu at Nxu's 2024 annual meeting of stockholders held on August 14, 2024, Nxu was no longer in compliance with Nasdaq's audit committee requirements as set forth in Nasdaq Listing Rule 5605. On January 13, 2025, Nxu's board of directors elected Erin Essenmacher to serve as an independent director of Nxu, effective immediately, to fill the vacancy on Nxu's board of directors. Nxu's board of directors also appointed Ms. Essenmacher to fill the existing vacancy on the audit committee of Nxu' board of directors.
No assurances can be provided that Nxu will regain compliance with the minimum bid price requirement within the required compliance period. If Nxu's Class A common stock ultimately were to be delisted for any reason, it could negatively impact Nxu by (i) reducing the liquidity and market price of Nxu's Class A common stock; (ii) reducing the number of investors willing to hold or acquire Nxu's Class A common stock, which could negatively impact Nxu's ability to raise equity financing; (iii) limiting Nxu's ability to use a registration statement to offer and sell freely tradable securities, thereby preventing Nxu from accessing the public capital markets; and (iv) impairing Nxu's ability to provide equity incentives to its employees.
Share Price & Shareholder Rights - Risk 16
Nxu's Bylaws include forum selection provisions, which could limit its stockholders' ability to obtain a favorable judicial forum for disputes with Nxu.Changed
Nxu's Bylaws require that, unless Nxu consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of its business, (ii) any action asserting a claim of breach of a duty owed by any director, officer, employee, agent or stockholder of Nxu to Nxu or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or (iv) any action asserting a claim governed by the internal affairs doctrine. In addition, Nxu's Bylaws require that, unless Nxu consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act and the Exchange Act. Any person or entity purchasing or otherwise acquiring any interest in shares of Nxu's capital stock is deemed to have notice of and consented to the foregoing provisions.
These forum selection provisions in Nxu's Bylaws may limit its stockholders' ability to obtain a favorable judicial forum for disputes with Nxu, which may discourage such lawsuits against Nxu. Nxu cannot be certain as to whether a court would enforce these provisions, and if a court were to find the forum selection provisions contained in Nxu's Bylaws to be inapplicable or unenforceable in an action, Nxu may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, operating results and financial condition. Furthermore, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Share Price & Shareholder Rights - Risk 17
Limitations of director liability and director and officer indemnification.Nxu's Charter limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:
- breach of their duty of loyalty to Nxu or its stockholders;- act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;- unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or - transactions for which the directors derived an improper personal benefit.
These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission. Nxu's Bylaws provide that Nxu will indemnify its directors, officers and employees to the fullest extent permitted by law. Nxu's Bylaws also provide that Nxu is obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. Nxu believes that its Bylaw provisions are necessary to attract and retain qualified persons as directors and officers. The limitation of liability in Nxu's Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to Nxu and its stockholders. Nxu's results of operations and financial condition may be harmed to the extent Nxu pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Accounting & Financial Operations13 | 16.5%
Accounting & Financial Operations - Risk 1
Management's judgment, estimates and assumptions have a significant impact on business decisions and accounting policies.Accounting & Financial Operations - Risk 2
Failure to maintain internal controls over financial reporting would have an adverse impact on Nxu.Changed
Nxu is required to establish and maintain appropriate internal controls over financial reporting. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required by Nxu as a privately held company. Management may not be able to effectively maintain adequate compliance, and Nxu's internal controls over financial reporting may not be effective, which may subject Nxu to adverse regulatory consequences and could harm investor confidence. Failure to maintain controls could also adversely impact its public disclosures regarding Nxu's business, financial condition or results of operations. In addition, management's assessment of internal controls over financial reporting may identify deficiencies and conditions that need to be addressed in Nxu's internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived deficiencies and conditions that need to be addressed in Nxu's internal control over financial reporting, or disclosure of management's assessment of its internal controls over financial reporting may have an adverse impact on the price of the Nxu Class A common stock.
Accounting & Financial Operations - Risk 3
Nxu may not achieve its projected goals in the time frames it announces and expects due to unforeseen factors, including high interest rates and continued inflation increasing the cost to do business.Changed
Any prospective valuation of Nxu at this stage is pure speculation. Nxu's business success, timeline, and milestones are estimated. Nxu's sales volume and cost models are only estimates. Nxu produced these valuations based on existing business models of successful and unsuccessful efforts of other companies within the technology and automotive industries. All such projections and timeline estimations may change as Nxu continues in the development of EV technology.
Nxu has only started limited manufacture and sales. Cost overruns, scheduling delays, and failure to meet product performance goals may be caused by, but not limited to, unidentified technical hurdles and regulatory hurdles, which could materially damage Nxu's brand, business, financial goals, operation and results.
Accounting & Financial Operations - Risk 4
Nxu's estimates of market opportunity and forecasts of market growth may prove to be inaccurate.Estimates of future EV adoption in the U.S., the total addressable market, serviceable addressable market for Nxu's products and services and the EV market in general are included in this Form 10-K. Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. Such uncertainty is enhanced by the prevailing geopolitical and macroeconomic environment. Nxu's internal estimates relating to the size and expected growth of the target market, market demand, EV adoption across individual market verticals and use cases, capacity of automotive and battery original equipment manufacturers ("OEMs") and ability of charging infrastructure to address this demand and related pricing may also prove to be inaccurate. In particular, estimates regarding the current and projected market opportunity for public and commercial fast charging and future fast charging throughput or Nxu market share capture are difficult to predict. The estimated addressable market may not materialize in the timeframe of Nxu's internal projections, if ever and even if the markets meet the size estimates and growth estimates presented, Nxu's business could fail to grow at similar rates.
Accounting & Financial Operations - Risk 5
Nxu does not anticipate dividends to be paid on its Class A common stock and investors may lose the entire amount of their investment.Changed
A dividend has never been declared or paid in cash on Nxu's Class A common stock and Nxu does not anticipate such a declaration or payment for the foreseeable future. Nxu expects to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their Class A common stock. Nxu cannot assure stockholders of a positive return on their investment when they sell their Class A common stock, nor can Nxu assure that stockholders will not lose the entire amount of their investment. Any payment of dividends on its capital stock will depend on Nxu's earnings, financial condition and other business and economic factors affecting Nxu at such a time as the Nxu board of directors may consider it relevant. If Nxu does not pay dividends, its Class A common stock may be less valuable because a return on its stockholders' investment will only occur if Nxu's Class A common stock price appreciates.
Accounting & Financial Operations - Risk 6
The preparation of Nxu's financial statements requires estimates, judgments and assumptions that are inherently uncertain.Changed
Financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. These estimates, judgments and assumptions are inherently uncertain and, if Nxu's estimates were to prove to be wrong, Nxu would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm its business, including its financial condition and results of operations and the price of its securities. For a discussion of the accounting estimates, judgments and assumptions that Nxu believes are the most critical to an understanding of its consolidated financial statements and its business, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", of this Form 10-K.
Accounting & Financial Operations - Risk 7
Nxu has losses which it expects to continue into the future. There is no assurance its future operations will result in a profit. If Nxu cannot generate sufficient revenues to operate profitably or Nxu is unable to raise enough additional funds for operations, the stockholders will experience a decrease in value, and Nxu may have to cease operations.Changed
Nxu is a development-stage technology company that began operating and commenced research and development activities in 2016. As a recently formed "Development Stage Company", it is subject to all of the risks and uncertainties of a new business, including the risk that it may never generate product or services related revenues. Accordingly, it has only a limited history upon which an evaluation of its prospects and future performance can be made. If Nxu is unable to generate revenue, it will not become profitable, and it may be unable to continue its operations. Furthermore, its proposed operations are subject to all business risks associated with new enterprises. The likelihood of its success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the expansion of a business, operation in a competitive industry, and the continued development of advertising, promotions and a corresponding customer base. There can be no assurances that Nxu will operate profitably.
Nxu entered into the Merger Agreement in order to, among other things, potentially increase its liquidity. Assuming the Merger closes, the company following the closing of the Merger (the "combined company") may ultimately fail, decreasing the liquidity of Nxu and stockholder value or cause Nxu to cease operations, and investors would be at risk of losing all or part of their investment in Nxu.
Accounting & Financial Operations - Risk 8
Nxu generated revenue for the first time in 2023, but there is no assurance that it will be able to continue to generate revenue from the sale or deployment of the NxuOne™ Charging Network or from the sale of other proprietary products.Changed
In 2023, Nxu generated revenue for the first time in its history. The 2023 revenue was largely related to product deliveries from its proprietary battery cell and pack division. Nxu has since ceased EV battery development as it focuses its efforts on the NxuOne™ Charging Network. As such, the bulk of its revenue in 2023 was non-recurring. Nxu expects that any source of revenue in 2025 will be solely from the operation or sale of NxuOne™ Charging Stations. If it is unable to find customers to purchase its NxuOne™ Charging Stations, it will not likely be able to meet or exceed its 2025 revenue estimates.
Accounting & Financial Operations - Risk 9
Nxu is an early-stage company with a limited operating history that has never turned a profit and there are no assurances that Nxu will ever be profitable.Changed
Nxu is a relatively new company that was incorporated on November 9, 2016. Currently, Nxu's efforts are focused on operating its MW charging stations. Nxu has never turned a profit and there is no assurance that it will ever be profitable.
Nxu also has limited brand awareness and operating history in the charging industry. Although Nxu has taken significant steps in developing brand awareness, Nxu is a new company and currently has no experience developing or selling EV charging to customers. As such, it is possible that Nxu's lack of history in the industry may impact its brand, business, financial goals, operation performance, and products.
Nxu should be considered a "Development Stage Company," and its operations will be subject to all the risks inherent in the establishment of a new business enterprise, including, but not limited to, hurdles or barriers to the implementation of its business plans. Further, because there is no history of operations there is also no operating history from which to evaluate Nxu's executive management's ability to manage its business and operations and achieve Nxu's goals or the likely performance of Nxu. Prospective investors should also consider the fact that Nxu's management team has not previously developed or managed similar companies. No assurances can be given that Nxu will be able to achieve or sustain profitability.
Accounting & Financial Operations - Risk 10
Nxu's quarterly operating results may fluctuate.Added
Nxu expects its operating results to be subject to quarterly fluctuations. Nxu's net loss and other operating results will be affected by numerous factors, including:
- any intellectual property infringement lawsuit in which Nxu may become involved;- regulatory developments affecting its products and related services; and - Nxu's execution of any collaborative, licensing or similar arrangements, and the timing of payments Nxu may make or receive under these arrangements.
If Nxu's quarterly operating results fall below the expectations of investors or securities analysts, the price of Nxu's Class A common stock could decline substantially. Furthermore, any quarterly fluctuations in its operating results may, in turn, cause the price of Nxu's Class A common stock to fluctuate substantially.
Accounting & Financial Operations - Risk 11
Nxu's ability to utilize loss carry forwards may be limited.Added
Generally, a change of more than fifty percent (50%) in the ownership of a company's stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit Nxu's ability to use its net operating loss carryforwards attributable to the period prior to the change. As a result, if Nxu earns net taxable income, its ability to use its pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations.
Accounting & Financial Operations - Risk 12
Nxu has incurred significant losses since its inception, and Nxu expects to continue to incur losses for the foreseeable future. Accordingly, its financial condition raises substantial doubt regarding its ability to continue as a going concern.Added
During the year ended December 31, 2024, Nxu incurred a net loss of $23.7 million and had net cash used in operating activities of $12.1 million. As of December 31, 2024, Nxu had $2.7 million in cash and an accumulated deficit of $283.4 million. Nxu cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for Nxu to raise additional capital on an immediate basis. Additionally, Nxu cannot provide any assurance that access to capital will be readily available when needed. These matters, among others, raise substantial doubt about Nxu's ability to continue as a going concern for a period of one year after the date hereof. The report of Nxu's independent registered public accountant on its financial statements as of and for the years ended December 31, 2024 and 2023 also includes explanatory language describing the existence of substantial doubt about Nxu's ability to continue as a going concern.
If Nxu is unable to satisfy its capital requirements, Nxu could be required to adopt one or more of the following alternatives: delaying the implementation of or revising certain aspects of its business strategy; reducing or delaying the development of its products; reducing or delaying capital spending, product development spending and marketing and promotional spending; entering into financing agreements on unattractive terms; significantly curtailing or discontinuing operations, or dissolving and liquidating its assets under the bankruptcy laws or otherwise.
There can be no assurance that Nxu would be able to take any of the actions referred to above because of a variety of commercial or market factors, including, without limitation, market conditions being unfavorable for an equity or debt issuance or similar transactions. In addition, such actions, if taken, may not enable Nxu to satisfy its capital requirements if the actions that Nxu is able to consummate do not generate a sufficient amount of additional capital. If Nxu is ultimately unable to satisfy its capital requirements, Nxu would likely need to dissolve and liquidate its assets under the bankruptcy laws or otherwise.
Accounting & Financial Operations - Risk 13
Nxu's limited operating history makes it difficult for Nxu to evaluate its future business prospects.Added
Nxu is a company with an extremely limited operating history and has not generated material revenue from sales of its products and services to date. It is difficult, if not impossible, for Nxu to forecast its future results, and Nxu has limited insight into trends that may emerge and affect its business. In addition, Nxu has engaged in limited marketing activities to date, so there can be no assurance that customers will embrace its services in significant numbers at the prices Nxu establishes. Market and geopolitical conditions, many of which are outside of its control and subject to change, including general economic conditions, the availability and terms of financing, geopolitical developments (such as the ongoing conflicts in Ukraine and the Middle East and political tensions between China and Taiwan and between China and the United States), fuel and energy prices, regulatory requirements and incentives, competition, and the pace and extent of vehicle electrification generally, will impact demand for Nxu's services, and ultimately its success.
Debt & Financing2 | 2.5%
Debt & Financing - Risk 1
Nxu is subject to general securities investment risks.Added
Debt & Financing - Risk 2
Nxu needs to raise additional capital to meet its future business requirements and such capital raising may be costly or difficult to obtain and could dilute current stockholders' ownership interest.Changed
Nxu has relied upon cash from financing activities and in the future, Nxu expects to rely on the proceeds from future debt and/or equity financings, and Nxu hopes to rely on revenues generated from operations to fund all of the cash requirements of its activities. However, there can be no assurance that Nxu will be able to generate any significant cash from its operating activities in the future. Future financing may not be available on a timely basis, in sufficient amounts or on terms acceptable to Nxu, if at all. Any debt financing or other financing of securities senior to the Class A common stock will likely include financial and other covenants that will restrict Nxu's flexibility.
Any failure to comply with these covenants would have a material adverse effect on Nxu's business, prospects, financial condition, and results of operations because Nxu could lose its existing sources of funding and impair its ability to secure new sources of funding. However, there can be no assurance that Nxu will be able to generate any investor interest in its securities. If Nxu does not obtain additional financing, you could lose the entirety of your investment in Nxu.
At this time, Nxu has not secured or identified any additional financing. Nxu does not have any firm commitments or other identified sources of additional capital from third parties or from its officers, directors or other stockholders. There can be no assurance that additional capital will be available to Nxu, or that, if available, it will be on terms satisfactory to Nxu. Any additional financing will involve dilution to Nxu's existing stockholders. If Nxu does not obtain additional capital on terms satisfactory to Nxu, or at all, it may cause Nxu to delay, curtail, scale back or forgo some or all of its product development and/or business operations, or dissolve and liquidate its assets under bankruptcy laws or otherwise. In such a scenario, investors would be at risk of losing all or a part of any investment in Nxu.
Corporate Activity and Growth14 | 17.7%
Corporate Activity and Growth - Risk 1
Nxu will incur significant additional costs as a result of being a public company, and its management will be required to devote substantial time to compliance with its public company responsibilities and corporate governance practices.Changed
Corporate Activity and Growth - Risk 2
The following risk factor does not take into account the proposed Merger and assumes that Nxu remains a stand-alone company except as otherwise noted. There can be no assurance that Nxu's evaluation of strategic alternatives will enhance stockholder value or result in any transaction being consummated, and speculation and uncertainty regarding the outcome of its evaluation of strategic alternatives may adversely impact its business, financial condition and results of operations.Added
On May 10, 2024, Nxu announced its intention to evaluate strategic alternatives. There can be no assurance of the terms, timing or structure of any transaction, or whether any such transaction will take place at all, and any such transaction is subject to risks and uncertainties. The process of reviewing strategic alternatives may involve significant resources and costs. In addition, the announced evaluation of strategic alternatives may cause or result in:
- disruption of its business;- diversion of the attention of management;- increased stock price volatility;- increased costs and advisory fees; and - challenges in retaining key employees
If Nxu is unable to mitigate these or other potential risks related to the uncertainty caused by its exploration of strategic alternatives, it may disrupt Nxu's business or could have a material adverse effect on its financial condition and results of operations in future periods.
Nxu's ability to complete a transaction, will depend on numerous factors, some of which are outside of its control. A merger of independent businesses is complex, costly and time-consuming. To consummate a merger, Nxu may incur asset write-offs and restructuring costs and other related expenses that could have a material adverse impact on its operating results. Mergers also involve numerous other risks, including potential exposure to assumed litigation and unknown environmental and other liabilities, as well as undetected internal control, regulatory or other issues, or additional costs not anticipated at the time of a transaction.
Even if a merger transaction is completed, there can be no assurance that it will be successful or have a positive effect on stockholder value. Further, it is not certain what impact any potential transaction may have on Nxu's stock price, its current stockholders' percentage ownership, business, financial condition, and results of operations.
Corporate Activity and Growth - Risk 3
Nxu's management team does not have experience running a public company.Added
While Nxu's management team has a wide breadth of business experience, none of its executive officers have held an executive position at a publicly traded company prior to Nxu. Given the onerous compliance requirements to which public companies are subject, there is a chance its executive officers will fail to perform at a level expected of public company officers. In such an event, Nxu's share price could be adversely affected. The management team's limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of Nxu. Nxu may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the United States. Nxu may upgrade its systems to an enterprise resource management system, and a delay could impact its ability or prevent it from timely reporting its operating results, timely filing required reports with the SEC and complying with Section 404 of the Sarbanes-Oxley Act. The development of the standards and controls necessary for Nxu to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected.
Corporate Activity and Growth - Risk 4
Nxu may not be able to successfully manage growth.Added
Nxu could experience growth over a short period of time, which could put a significant strain on its managerial, operational and financial resources. Nxu must implement and constantly improve its certification processes and hire, train and manage qualified personnel to manage such growth. Nxu has limited resources and may be unable to manage its growth. Its business strategy is based on the assumption that its customer base, geographic coverage and service offerings will increase. If this occurs, it will place a significant strain on Nxu's managerial, operational, and financial resources. If Nxu is unable to manage its growth effectively, its business will be adversely affected. As part of this growth, Nxu may have to implement new operational, manufacturing, and financial systems and procedures and controls to expand, train and manage its employees, especially in the areas of manufacturing and sales. If Nxu fails to develop and maintain its people and processes, demand for its products and services and its revenues could decrease.
Corporate Activity and Growth - Risk 5
The Merger will involve substantial costs and will require substantial management resources.Added
In connection with the consummation of the Merger, management and financial resources have been diverted and will continue to be diverted towards the completion of the Merger. We expect to incur substantial costs and expenses relating to, as well as the direction of management resources towards, the Merger. Such costs, fees and expenses include fees and expenses payable to financial advisors, other professional fees and expenses, fees and costs relating to regulatory filings and filings with the SEC and notices and other transaction-related costs, fees and expenses. If the Merger is not completed, we will have incurred substantial expenses and expended substantial management resources for which the parties will have received little to no benefit if the Merger does not close.
Corporate Activity and Growth - Risk 6
Another attractive strategic transaction may not be available if the Merger is not completed.Added
If the Merger is not completed and is terminated, there can be no assurance that we will be able to find a party willing to pay equivalent or more attractive consideration than the consideration to be provided under the Merger Agreement or be willing to proceed at all with a similar transaction or any alternative transaction.
Corporate Activity and Growth - Risk 7
Nxu cannot be sure if or when the Merger will be completed.Added
The consummation of the Merger is subject to the satisfaction or waiver of various conditions. Nxu cannot guarantee that the closing conditions set forth in the Merger Agreement will be satisfied. If Nxu is unable to satisfy certain closing conditions or if other mutual closing conditions are not satisfied, Verde will not be obligated to complete the Merger. Under certain circumstances, Verde would be required to pay Nxu a termination fee of $1.0 million.
If the Merger is not completed, our board of directors, in discharging its fiduciary obligations to Nxu's stockholders, would evaluate other strategic alternatives or financing options that may be available, which alternatives may not be as favorable to Nxu's stockholders as the Merger, including a liquidation and dissolution. Any future sale or merger, financing or other transaction, including a liquidation or dissolution, may be subject to further stockholder approval. Nxu may also be unable to find, evaluate or complete other strategic alternatives, which may have a materially adverse effect on Nxu's business.
Until the Merger is completed, the Merger Agreement restricts Nxu from taking specified actions without the consent of Verde and requires Nxu to operate in the ordinary course of business consistent with past practice. These restrictions may prevent Nxu from making appropriate changes to its business or pursuing attractive business opportunities that may arise prior to the completion of the Merger. Further, if certain of Nxu's lease payments remaining unpaid at the Closing exceed Nxu's cash balance at the Closing, then the pre-Merger stockholders of Nxu will own less of the combined company pursuant to the exchange ratio adjustment set forth in the Merger Agreement.
Any delay in completing the Merger may materially and adversely affect the timing and benefits that are expected to be achieved from the Merger.
Corporate Activity and Growth - Risk 8
If Nxu does not successfully consummate the Merger or another strategic transaction, Nxu's board of directors may decide to pursue a dissolution and liquidation of Nxu. In such an event, the amount of cash available for distribution to Nxu's stockholders will depend heavily on the costs and timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities, as to which Nxu can give you no assurance.Added
There can be no assurance that the Merger will be completed. If the Merger is not completed, Nxu's board of directors may decide to pursue a dissolution and liquidation of Nxu. In such an event, the amount of cash available for distribution to Nxu's stockholders will depend heavily on the costs related to and timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as Nxu funds its operations while pursuing the Merger. In addition, if Nxu's board of directors were to approve and recommend, and Nxu's stockholders were to approve, a dissolution and liquidation of Nxu, Nxu would be required under Delaware corporate law to pay Nxu's outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. Nxu's commitments and contingent liabilities may include obligations under Nxu's employment and related agreements with certain employees that provide for certain payments following a termination of employment occurring for various reasons, including a change in control of Nxu, which may include a dissolution of Nxu, litigation against Nxu, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of Nxu's assets would need to be reserved pending the resolution of such obligations.
In addition, Nxu may be subject to litigation or other claims related to a dissolution and liquidation of Nxu. If a dissolution and liquidation were to be pursued, Nxu's board of directors, in consultation with Nxu's advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of Nxu's common stock could lose all or a significant portion of their investment in the event of liquidation, dissolution or winding up of Nxu. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to Nxu's stockholders.
Corporate Activity and Growth - Risk 9
During the pendency of the Merger, we may be limited in our ability to enter into a business combination with another party on more favorable terms because of restrictions in the Merger Agreement, which could adversely affect our business prospects.Added
Covenants in the Merger Agreement impede our ability to solicit proposals or offers relating to acquisitions or similar transactions during the pendency of the Merger, subject to specified exceptions. As a result, if the Merger is not completed, we may be at a disadvantage to our competitors during that period. In addition, while the Merger Agreement is in effect, we are generally prohibited from soliciting, seeking, initiating or knowingly encouraging, inducing or facilitating the communication, making, submission or announcement of any acquisition or competing proposal or taking any action that could reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions.
Any such transactions could be favorable to our stockholders, but we may be unable to pursue them.
Corporate Activity and Growth - Risk 10
Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the transactions contemplated by the Merger Agreement.Added
The terms of the Merger Agreement prohibit us from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances. Any such proposals could be favorable to our stockholders. In addition, if we terminate the Merger Agreement under specified circumstances, Verde could be required to pay us a termination fee of $1.0 million. This termination fee may discourage third parties from submitting competing proposals to us or our stockholders, and may cause the our board of directors to be less inclined to recommend a competing proposal.
Corporate Activity and Growth - Risk 11
If the Merger is not completed, our stock price may decline significantly.Added
The market price of our common stock is subject to significant fluctuations. Market prices for securities of technology companies have historically been particularly volatile. In addition, the market price of our common stock will likely be volatile based on whether stockholders and other investors believe that we can complete the Merger or otherwise raise additional capital to support our operations if the Merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, or at all. The volatility of the market price of our common stock has been and may be exacerbated by low trading volume. Additional factors that may cause the market price of our common stock to fluctuate include:
- the loss of key employees;- future sales of its common stock;- general and industry-specific economic conditions that may affect its research and development expenditures;- the failure to meet industry analyst expectations; and - period-to-period fluctuations in financial results.
Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price of a company's securities, stockholders have often instituted class action securities litigation against such companies.
Corporate Activity and Growth - Risk 12
The completion of the Merger is subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material adverse effects on Nxu.Added
On October 23, 2024, the Company entered into the Merger Agreement with Merger Sub I, Merger Sub II and Verde, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub I will merge with and into Verde, with Verde continuing as a wholly owned subsidiary of Nxu and the surviving corporation of the First Merger, and promptly following the First Merger, Verde shall merge with and into Merger Sub II, with Merger Sub II continuing as the surviving entity of the Second Merger. The Merger Agreement is subject to customary closing conditions.
Specified conditions must be satisfied or, to the extent permitted by applicable law, waived to complete the Merger. These conditions are set forth in the Merger Agreement. We cannot predict whether and when the conditions to the Merger will be satisfied or waived, including but not limited to the requirement that the shares of Nxu common stock to be issued in the Merger be approved for listing on Nasdaq on or prior to the date on which the closing of the Merger occurs. If one or more of these conditions are not satisfied or waived, and as a result, we do not complete the Merger, we would remain liable for significant transaction costs, and the focus of our management would have been diverted from seeking other potential strategic opportunities, in each case without realizing any benefits of the Merger. Certain costs associated with the Merger have already been incurred or may be payable even if the Merger is not consummated. Finally, any disruptions to our business resulting from the announcement and pendency of the Merger, including any adverse changes in our relationships with our customers, clients, suppliers and employees, could continue or accelerate in the event that we fail to consummate the Merger.
In addition, the Merger Agreement generally requires us to operate in the ordinary course of business consistent with past practice, pending consummation of the Merger, and restricts us from taking certain actions with respect to our business and financial affairs without Verde's consent. Such restrictions will be in place until either the Merger is consummated or the Merger Agreement is terminated. These restrictions could restrict our ability to, or prevent us from, pursuing attractive business opportunities (if any) that arise prior to the consummation of the Merger. For these and other reasons, the pendency of the Merger could adversely affect our business, operating results and financial condition.
Corporate Activity and Growth - Risk 13
Failure to complete the Merger could harm our Class A common stock price and our future business and operations.Added
If the Merger is not completed, the price of our Class A common stock may decline and could fluctuate significantly, and we will still incur costs related to the Merger, such as financial advisor, legal and accounting fees, a majority of which must be paid even if the Merger is not completed. If the Merger Agreement is terminated and our board of directors determines to seek another business combination, there can be no assurance that we will be able to find another third party to transact a business combination with, yielding comparable or greater benefits.
The price of our Class A common stock may also fluctuate significantly based on announcements by Verde, other third parties, or us regarding the Merger or based on market perceptions of the likelihood of the satisfaction of the conditions to the consummation of the Merger. Such announcements may lead to perceptions in the market that the Merger may not be completed, which could cause our share price to fluctuate or decline.
If we do not consummate the Merger, the price of our Class A common stock may decline significantly from the current market price, which may reflect a market assumption that the Merger will be consummated. Any of these events could have a material adverse effect on our business, operating results and financial condition and could cause a decline in the price of our Class A common stock.
If we do not successfully consummate the Merger, our board of directors, in discharging its fiduciary obligations to our stockholders, would evaluate other strategic alternatives or financing options that may be available, which alternatives may not be as favorable to our stockholders as the Merger, including a liquidation and dissolution. Any future sale or merger, financing or other transaction, including a liquidation or dissolution, may be subject to further stockholder approval. We may also be unable to find, evaluate or complete other strategic alternatives, which may have a materially adverse effect on our business. In the event of a liquidation and dissolution of the Company, the amount of cash available for distribution to our stockholders will depend heavily on the costs and timing of such liquidation. We would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. Our commitments and contingent liabilities may include obligations under our employment and related agreements with certain employees that provide for certain payments following a termination of employment occurring for various reasons, including a change in control of the Company, which may include a dissolution of the Company, litigation against the Company, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of our assets would need to be reserved pending the resolution of such obligations.
In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of the Company. If a dissolution and liquidation were to be pursued, our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of liquidation, dissolution or winding up of the Company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to our stockholders.
Corporate Activity and Growth - Risk 14
Small public companies are inherently risky and Nxu may be exposed to market factors beyond Nxu's control. If such events were to occur it may impact its operating results.Changed
Managing a small public company involves a high degree of risk. Few small public companies ever reach market stability and Nxu will be subject to oversight from governing bodies and regulations that will be costly to meet. Nxu's present officers have limited experience in managing a fully reporting public company, so Nxu may be forced to obtain outside consultants to assist it with meeting these requirements. These outside consultants are expensive and can have a direct impact on Nxu's ability to be profitable. This will make an investment in Nxu a highly speculative and risky investment.
Production
Total Risks: 13/79 (16%)Below Sector Average
Manufacturing5 | 6.3%
Manufacturing - Risk 1
Nxu's business is subject to risks associated with construction, cost overruns and delays and other contingencies that may arise in the course of completing installations and such risks may increase in the future as Nxu expands the scope of such services with other parties.Manufacturing - Risk 2
Nxu's charging stations may be located in areas that are publicly accessible and may be exposed to vandalism or misuse by customers or other individuals, which would increase Nxu's replacement and maintenance costs.Nxu's public chargers may be exposed to vandalism or misuse by customers and other individuals, increasing wear and tear of the charging equipment. Such damage could shorten the usable lifespan of the chargers and require Nxu to increase its spending on replacement, maintenance and insurance costs and could result in site hosts reconsidering the value of hosting Nxu's charging stations at their sites. In addition, the cost of any such damage may not be covered by Nxu's insurance in full or at all and, in the event of repeated damage to Nxu's charging equipment, Nxu's insurance premiums could increase and it could be subject to additional insurance costs or may not be able to obtain insurance at all, any of which could have an adverse effect on its business.
Manufacturing - Risk 3
Nxu has relied on complex machinery for its operations, and production involves a significant degree of risk and uncertainty in terms of operational performance, safety, security, and costs.Changed
Nxu has relied heavily on complex machinery for its operations and its production involved a significant degree of uncertainty and risk in terms of operational performance, safety, security, and costs. Nxu's manufacturing plant consists of large-scale machinery combining many components, including complex software to operate such machinery and to coordinate operating activities across the manufacturing plant. The manufacturing plant components are likely to suffer unexpected malfunctions from time to time, and will depend on repairs, spare parts, and IT solutions to resume operations, which may not be available when needed. Unexpected malfunctions of the manufacturing plant components may significantly affect operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of Nxu's control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems including the software used to control or operate them, industrial accidents, pandemics, fire, seismic activity, and natural disasters.
Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, products, supplies, tools and materials, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs, and potential legal liabilities, all which could have a material adverse effect on Nxu's business, prospects, financial condition, results of operations, and cash flows. Although Nxu generally carries insurance to cover such operational risks, Nxu cannot be certain that its insurance coverage will be sufficient to cover potential costs and liabilities arising therefrom. A loss that is uninsured or exceeds policy limits may require Nxu to pay substantial amounts, which could adversely affect its business, prospects, financial condition, results of operations, and cash flows.
Manufacturing - Risk 4
Nxu has minimal experience servicing and repairing its charging stations. If Nxu or its partners are unable to adequately service its charging stations, Nxu's business, prospects, financial condition, results of operations, and cash flows could be materially and adversely affected.Changed
Nxu has minimal experience servicing and repairing its charging stations. Servicing its products requires specialized skills, including high voltage training and servicing techniques. Although Nxu is planning to internalize most aspects of vehicle service over time, initially Nxu plans to partner with third parties to enable nationwide coverage for its network. There can be no assurance that Nxu will be able to enter into an acceptable arrangement with any such third-party providers. There can be no assurance that Nxu's service arrangements will adequately address the service requirements of its customers to their satisfaction, or that Nxu and its servicing partners will have sufficient resources, experience, or inventory to meet these service requirements in a timely manner as the volume of charging stations it deploys increases.
As Nxu continues to grow, additional pressure may be placed on its customer support team or partners, and Nxu may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. Customer behavior and usage may result in higher than expected maintenance and repair costs, which may negatively affect its business, prospects, financial condition, results of operations, and cash flows. Nxu also could be unable to modify the future scope and delivery of its technical support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect Nxu's results of operations. If Nxu is unable to successfully address the service requirements of its customers or establish a market perception that it does not maintain high-quality support, Nxu may be subject to claims from its customers, including loss of revenue or damages, and its business, prospects, financial condition, results of operations, and cash flows could be materially and adversely affected.
Manufacturing - Risk 5
Product recall could hinder growth and product liability or other claims could have a material adverse effect on Nxu's business.Changed
If the NxuOne™ Charging Station is unable to meet performance and quality criteria, Nxu may be required to perform product recalls to address said concerns. A product recall can have a substantial cost related to performing such corrective actions. Although Nxu will perform significant internal testing and qualifications, as well as external qualifications through approved third-party vendors against industry standards and regulatory requirements, there will be unperceived conditions which may negatively impact the customer or Nxu expected performance. As such, Nxu may perform a corrective action such as a recall of products, mandatory repairs of defective components, or litigation settlements which can materially affect its financial goals, operation results, brand, business, and products. If Nxu is unable to provide significant charging stations, its business success may be substantially affected.
A significant portion of Nxu's success is its ability to deploy the appropriate number of charging stations, in strategic locations relative to its customers and customer behaviors. If Nxu is unable to deploy charging stations to specified locations, this may negatively affect Nxu's brand, business, financial goals, operational results, and product success in the market. As such, to meet said availability requirements, Nxu will require significant capital investments to rapidly deploy said NxuOne™ Charging Stations, as well as development of relationships with third party members who can assist in deployment of said charging stations. If Nxu is unable to address service requirements, Nxu may negatively affect its customer experience. Nxu's ability to engage with third party operating service stations, as well as its ability to establish company operated locations, will be critical to the success of developing a positive customer experience.
While Nxu will work diligently to meet all company and regulatory safety requirements, there is a chance that a component catastrophically fails. It is possible that through unknown circumstances or conditions out of Nxu's control, some person is injured by its product.
A successful product liability claim against Nxu could require Nxu to pay a substantial monetary award. Moreover, a product recall could generate substantial negative publicity about its products and business. Nxu cannot provide assurance that such claims and/or recalls will not be made in the future.
Employment / Personnel4 | 5.1%
Employment / Personnel - Risk 1
Nxu relies on human resources, the loss of services of any of such personnel may have a material adverse effect on its business and operations.Changed
Employment / Personnel - Risk 2
If Nxu does not successfully establish and maintain itself as a highly trusted and respected name for EV-related technology, Nxu may not be able to retain quality talent or achieve future revenue goals, which could significantly affect its business, financial condition and results of operations.Changed
In order to attract and retain a client base and increase business, Nxu must establish, maintain and strengthen its name and the services it provides. In order to be successful in establishing its reputation, clients must perceive Nxu as a trusted source for quality services. If Nxu is unable to attract and retain clients with its current marketing plans, it may not be able to successfully establish its name and reputation, which could significantly affect its business, financial condition and results of operations.
Employment / Personnel - Risk 3
Nxu is substantially dependent on Nxu's remaining employees to facilitate the consummation of the Merger.Added
Nxu's ability to consummate a strategic transaction depends upon its ability to retain its employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In May 2024, Nxu undertook an organizational restructuring that significantly reduced its workforce in order to conserve its capital resources. As of December 31, 2024, Nxu had only four full-time employees. Nxu's ability to successfully complete the Merger depends in large part on Nxu's ability to retain certain remaining personnel. Despite Nxu's efforts to retain these employees, one or more may terminate their employment with Nxu on short notice. Nxu's cash conservation activities may yield other unintended consequences, such as attrition beyond its planned reduction in workforce and reduced employee morale, which may cause remaining employees to seek alternative employment. The loss of the services of certain employees could potentially harm Nxu's ability to consummate the Merger, to run Nxu's day-to-day business operations, as well as to fulfill Nxu's reporting obligations as a public company.
Employment / Personnel - Risk 4
Nxu is dependent upon its executives for their services and the loss of personnel may have a material adverse effect on Nxu's business and operations.Changed
The loss of the services of Nxu's CEO, CFO, or President, Mr. Mark Hanchett, Ms. Sarah Wyant, or Mrs. Annie Pratt, respectively, could have a material adverse effect on Nxu. Nxu does not maintain any key man life insurance on its executives. The loss of any of its executives' services could cause investors to lose all or a part of their investment. Its future success will also depend on Nxu's ability to retain and motivate other highly skilled employees. Competition for personnel in Nxu's industry is intense. Nxu may not be able to retain its key employees or attract, assimilate or retain other highly qualified employees in the future. If Nxu does not succeed in attracting new personnel or retaining and motivating its current personnel, its business will be adversely affected.
Supply Chain1 | 1.3%
Supply Chain - Risk 1
Nxu relies on a limited number of suppliers and manufacturers for its charging stations. A loss of any of these partners could negatively affect its business or ability to manufacture and deliver NxuOne™ Charging Stations.Costs3 | 3.8%
Costs - Risk 1
Nxu does not own a transportation fleet, nor any fleet vehicles, and so may not be able to transport NxuOne™ Charging Stations once produced. Cost of third-party transport may be high and the risk of loss surrounding transport may be high or hard to predict.Changed
Costs - Risk 2
Changes to fuel economy standards or the success of alternative fuels may negatively impact the EV market and thus the demand for Nxu's products and services.Regulatory initiatives that required an increase in the mileage capabilities of cars and consumption of renewable transportation fuels, such as ethanol and biodiesel, have helped increase consumer acceptance of EVs and other alternative vehicles. However, the EV fueling model is different from gasoline and other fuel models, requiring behavior changes and education of businesses, consumers, regulatory bodies, local utilities and other stakeholders. Further developments in and improvements in the affordability of, alternative technologies, such as renewable diesel, biodiesel, ethanol, hydrogen fuel cells or compressed natural gas, proliferation of hybrid powertrains involving such alternative fuels, or improvements in the fuel economy of internal combustion engine ("ICE") vehicles, whether as the result of regulation or otherwise, may materially and adversely affect demand for EVs and EV charging stations in some market verticals. Regulatory bodies may also adopt rules that substantially favor certain alternatives to petroleum-based propulsion over others, which may not necessarily be EVs. Local jurisdictions may also impose restrictions on urban driving due to congestion, which may prioritize and accelerate micromobility trends and slow EV adoption growth. If any of the above cause or contribute to automakers reducing the availability of EV models or cause or contribute to consumers or businesses no longer purchasing EVs or purchasing fewer of them, it would materially and adversely affect Nxu's business, operating results, financial condition and prospects.
Costs - Risk 3
Nxu is dependent upon the availability of electricity at Nxu's current and future charging stations. Cost increases, delays and/or other restrictions on the availability of electricity would adversely affect Nxu's business and results of Nxu's operations.The operation and development of Nxu's charging stations is dependent upon the availability of electricity, which is beyond Nxu's control. Nxu's charging stations are affected by problems accessing electricity sources, such as planned or unplanned power outages. In recent years, shortages of electricity have resulted in increased costs to users and interruptions in service. In particular, California has experienced rolling blackouts due to excessive demands on the electrical grid or as precautionary measures against the risk of wildfire. In the event of a power outage, Nxu will be dependent on the utility company to restore power. Any prolonged power outage could adversely affect customer experience and Nxu's business and results of operations.
Changes in utility electricity pricing or new and restrictive constructs from regulations applicable to pricing may adversely impact future operating results. For example, some jurisdictions have required Nxu to switch from pricing on a per-minute basis to a per-kWh basis and other jurisdictions may follow suit. Utility rates may change in a way that adversely affects fast charging or in a way that may limit Nxu's ability to access certain beneficial rate schedules. In addition, utilities or other regulated entities with monopoly power may receive authority to provide charging services that result in an anti-competitive advantage relative to Nxu and other private sector operators.
Legal & Regulatory
Total Risks: 8/79 (10%)Below Sector Average
Regulation2 | 2.5%
Regulation - Risk 1
The current presidential administration may create regulatory uncertainty for the alternative energy sector and may have an adverse effect on Nxu's business, prospects, financial condition and operating results.Added
Regulation - Risk 2
Nxu is subject to substantial regulations and unfavorable changes to, or failure by Nxu to comply with, these regulations could substantially harm its business and operating results.Changed
Nxu's charging stations are subject to regulation under international, federal, state, and local laws. Nxu expects to incur significant costs in complying with these regulations. Regulations related to the battery and EV industry are currently evolving and Nxu faces risks associated with these changing regulations.
To the extent that a law changes, Nxu's products may not comply with applicable international, federal, state, and local laws, which would have an adverse effect on its business. Compliance with changing regulations could be time consuming, burdensome, and expensive. To the extent compliance with new and existing regulations is cost prohibitive, its business prospects, financial condition, and operating results would be adversely affected.
Internationally, there may be laws and jurisdictions Nxu has not yet entered or laws Nxu is unaware of in jurisdictions Nxu has entered that may restrict its sales or other business practices. These laws may be complex, difficult to interpret and may change over time. Continued regulatory limitations and obstacles that may interfere with Nxu's ability to commercialize its products could have a negative and material impact on its business, prospects, financial condition, and results of its operation.
Litigation & Legal Liabilities1 | 1.3%
Litigation & Legal Liabilities - Risk 1
Limitations on remedies; indemnification.Taxation & Government Incentives2 | 2.5%
Taxation & Government Incentives - Risk 1
The EV market currently benefits from the availability of rebates, tax credits and other financial incentives from governments, utilities and others to offset the purchase or operating cost of EVs and EV charging stations. The reduction, modification or elimination of such benefits could adversely affect Nxu's financial results and ability to continue to grow.Taxation & Government Incentives - Risk 2
The Merger may fail to qualify as a "reorganization" for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by Verde's U.S. holders in respect of their Verde capital stock.Added
We intend for the Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the Code. Assuming the Merger so qualifies, no gain will be recognized by U.S. holders of Verde capital stock who receive only Nxu common stock in the Merger. It is not, however, a condition to Verde's obligation or Nxu's obligation to complete the transactions that the Merger so qualifies. We have not sought and will not seek any ruling from the IRS regarding any matters relating to the transactions and, as a result, there can be no assurance that the IRS would not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth herein. In the event that the Merger does not qualify as a "reorganization," the Merger would result in taxable gain or loss for each Verde U.S. holder, with the amount of such gain or loss determined by the amount that (x) each Verde U.S. holder's adjusted tax basis in the Verde capital stock surrendered is less or more than (y) the fair market value of the Nxu common stock received in exchange therefor. Each Verde stockholder is urged to consult with his, her or its own tax advisor with respect to the tax consequences of the Merger.
Environmental / Social3 | 3.8%
Environmental / Social - Risk 1
Nxu is subject to requirements relating to environmental and safety regulations and environmental remediation matters which could adversely affect its business, results of operation and reputation.Changed
Environmental / Social - Risk 2
Nxu is susceptible to risks associated with an increased focus by stakeholders and regulators on climate change, which may adversely affect its business and results of operations.Climate-related events, including the increasing frequency of extreme weather events and their impact on critical infrastructure in the United States and elsewhere, have the potential to disrupt Nxu's business and those of its third-party suppliers, and customers, and may cause Nxu to experience higher attrition, losses and additional costs to maintain or resume operations. In addition, Nxu's customers may begin to establish sourcing requirements related to sustainability. As a result, Nxu may receive requests for sustainability related information about its products, business operations, use of sustainable materials and packaging. Nxu's inability to comply with these and other sustainability requirements in the future could adversely affect sales of and demand for its products.
Further, there is an increased focus, including by governmental and nongovernmental organizations, investors, customers, and other stakeholders, on climate change matters, including increased pressure to expand disclosures related to material physical and transition risks related to climate change or to establish sustainability goals, such as the reduction of greenhouse gas emissions, which could expose Nxu to market, operational and execution costs or risks. Nxu's failure to establish such sustainability targets or targets that are perceived to be appropriate, as well as to achieve progress on those targets on a timely basis, or at all, could adversely affect the reputation of its brand and sales of and demand for its products. To the extent legislation is passed, Nxu would incur significant additional costs of compliance due to the need for expanded data collection, analysis, and certification with respect to greenhouse gas emissions and other climate change related risks. Nxu may also incur additional costs or require additional resources to monitor, report and comply with such stakeholder expectations and standards and legislation, and to meet climate change targets and commitments if established.
Environmental / Social - Risk 3
Nxu may face state and federal regulatory challenges, including environmental and safety regulations.Changed
Nxu is subject to numerous federal, state and local environmental laws and regulations governing, among other things, solid and hazardous waste storage, treatment and disposal, and remediation of releases of hazardous materials. There are significant capital, operating and other costs associated with compliance with these environmental laws and regulations. Environmental laws and regulations may become more stringent in the future, which could increase costs of compliance or require Nxu to manufacture with alternative technologies and materials.
Federal, state and local authorities also regulate a variety of matters, including, but not limited to, health, safety and permitting in addition to the environmental matters discussed above. New legislation and regulations may require Nxu to make material changes to Nxu's operations, resulting in significant increases in the cost of production.
Nxu's manufacturing process will have hazards such as but not limited to hazardous materials, machines with moving parts, and high voltage and/or high current electrical systems typical of large manufacturing equipment and related safety incidents. There may be safety incidents that damage machinery or products, slow or stop production, or harm employees. Consequences may include litigation, regulation, fines, increased insurance premiums, mandates to temporarily halt production, workers' compensation claims, or other actions that impact Nxu's company brand, finances, or ability to operate.
Tech & Innovation
Total Risks: 6/79 (8%)Below Sector Average
Innovation / R&D1 | 1.3%
Innovation / R&D - Risk 1
The EV charging market is characterized by rapid technological change, which requires Nxu to continue to develop new products and product innovations. Any delays in such development could adversely affect market adoption of Nxu's products and financial results.Changed
Trade Secrets2 | 2.5%
Trade Secrets - Risk 1
Nxu may have difficulty protecting its intellectual property.Added
Trade Secrets - Risk 2
Intellectual property protection is costly.Filing, prosecuting and defending patents related to Nxu's products and software throughout the world is prohibitively expensive. Competitors may use Nxu's technologies in jurisdictions where Nxu has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where Nxu has patent protection, but where enforcement is not as strong as that in the U.S. These products may compete with Nxu's products in jurisdictions where Nxu does not have any issued or licensed patents and Nxu's patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to technology, which could make it difficult for Nxu to stop the infringement of Nxu's patents or marketing of competing products in violation of Nxu's proprietary rights generally. Proceedings to enforce Nxu's patent rights in foreign jurisdictions could result in substantial cost and divert Nxu's efforts and attention from other aspects of Nxu's business.
Cyber Security1 | 1.3%
Cyber Security - Risk 1
Nxu is highly reliant on its networked charging solution and information technology systems and data, and those of its service providers and component suppliers, any of which systems and data may be subject to cyber-attacks, service disruptions or other security incidents, which could result in data breaches, loss or interruption of services, intellectual property theft, claims, litigation, regulatory investigations, significant liability, reputational damage and other adverse consequences.Technology2 | 2.5%
Technology - Risk 1
Unknown costs and risks may exist with the prolonged use of NxuOne™ Charging Network equipment and related systems, as the technology is recently developed and has not been widely deployed.Technology - Risk 2
A significant interruption of Nxu's information technology systems or the loss of confidential or other sensitive data, including cybersecurity risks, could have a material adverse impact on its operations and financial results.Changed
Given Nxu's reliance on information technology (its own and its third-party providers'), a significant interruption in the availability of information technology, regardless of the cause, or the loss of confidential, personal, or proprietary information (whether Nxu's, its employees', its suppliers', or its customers'), regardless of the cause, could negatively impact its operations. While Nxu has invested in the protection of its data and information technology to reduce these risks and routinely test the security of its information systems network, Nxu cannot be assured that its efforts will prevent breakdowns or breaches in its systems that could adversely affect its business. Management is not aware of a cybersecurity incident that has had a material adverse impact on Nxu's financial condition or results of operations; however, Nxu could suffer material financial or other losses in the future and Nxu is not able to predict the severity of these attacks. The occurrence of a cyber-attack, breach, unauthorized access, misuse, computer virus or other malicious code or other cybersecurity event could jeopardize or result in the unauthorized disclosure, gathering, monitoring, misuse, corruption, loss or destruction of confidential and other information that belongs to Nxu, its customers, its counterparties, or third-party suppliers and providers that is processed and stored in, and transmitted through, Nxu's computer systems and networks. The occurrence of such an event could also result in damage to Nxu's software, computers or systems, or otherwise cause interruptions or malfunctions in Nxu's, its customers', its counterparties' or third parties' operations. This could result in loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect Nxu's business, financial condition or results of operations. As part of Nxu's regular review of potential risks, Nxu analyzes emerging cybersecurity threats to Nxu and its third-party suppliers and providers as well as Nxu's plans and strategies to address them. The Nxu board of directors, which has oversight responsibility for cybersecurity risks, is regularly briefed by management on such analyses.
Ability to Sell
Total Risks: 4/79 (5%)Below Sector Average
Competition1 | 1.3%
Competition - Risk 1
The automotive market, specifically with respect to EVs, is highly competitive, and Nxu may not be successful in competing in this industry.Changed
Demand3 | 3.8%
Demand - Risk 1
Nxu's growth and success are highly correlated with and thus dependent upon the continuing rapid adoption of and demand for EVs and OEMs' ability to supply such EVs to the market.Demand - Risk 2
The EV technology industry is rapidly evolving and may be subject to unforeseen changes which could adversely affect the demand for Nxu's chargers or other products and may increase its operating costs.Changed
Nxu may be unable to keep up with changes in EV technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Developments in alternative technologies, such as advanced diesel, hydrogen, ethanol, fuel cells, or compressed natural gas, or improvements in the fuel economy of the ICE or the cost of gasoline, may materially and adversely affect Nxu's business and prospects in ways Nxu does not currently anticipate.
Demand - Risk 3
The success of Nxu's business depends on attracting and retaining a large number of customers. If Nxu is unable to do so, Nxu will not be able to achieve profitability.Added
Nxu's success depends on attracting a large number of potential customers to purchase services Nxu provides to its customers. If Nxu's customers do not perceive its services to be of sufficiently high value and quality, cost competitive and appealing in performance, Nxu may not be able to retain or attract new customers, and its business, prospects, financial condition, results of operations, and cash flows would suffer as a result. In addition, Nxu may incur significantly higher and more sustained advertising and promotional expenditures than it has previously incurred to attract customers. Nxu may not be successful in attracting and retaining a large number of customers. If Nxu is not able to attract and maintain customers, its business, prospects, financial condition, results of operations, and cash flows would be materially harmed.
Macro & Political
Total Risks: 2/79 (3%)Below Sector Average
Economy & Political Environment2 | 2.5%
Economy & Political Environment - Risk 1
Continuing or worsening inflationary issues and associated changes in monetary policy may result in increases to the cost of charging equipment, other goods, services and personnel, which in turn could cause capital expenditures and operating costs to rise.Economy & Political Environment - Risk 2
Nxu's business could be adversely affected by a downturn in the economy and/or manufacturing.Changed
Nxu is dependent upon the continued demand for EVs and EV charging capacity, making its business susceptible to a downturn in the economy or in manufacturing. For example, a decrease in the number of individuals investing their money in the equity markets could result in a decrease in the number of companies deciding to become or remain public. This downturn could have a material adverse effect on its business, its ability to raise funds, and ultimately its overall financial condition.
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.