ITEM 1A. RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this Annual Report on Form 10-K, before making a decision to invest in our securities. The risk factors in this section describe the material risks to our business, prospects, results of operations, financial condition or cash flows, and should be considered carefully. In addition, these factors constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995 and could cause our actual results to differ materially from those projected in any forward-looking statements (as defined in such act) made in this Annual Report on Form 10-K. Investors should not place undue reliance on any such forward-looking statements. Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “ will likely result, ” “ are expected to, ” “ will continue, ” “ is anticipated, ” “ estimated, ” “ intends, ” “ plans, ” “ believes ” and “ projects ” ) may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Risks Related to Our Business Generally
We have incurred significant net losses, have accumulated deficit, and may require additional capital to continue operations and execute our business strategy.
We have incurred significant net losses since inception. For the years ended December 31, 2025, and 2024, we have incurred net losses of approximately $10.5 million, and $22.5 million, respectively, and as of December 31, 2025, we had an accumulated deficit of approximately $60.1 million. We expect to continue to incur operating losses as we invest in expanding our e-Commerce and healthcare operations, develop new platforms and services, and pursue potential acquisitions.
Our ability to achieve profitability depends on numerous factors, many of which are outside of our control, including growth in revenue, management of operating expenses, the stability of supply chains, reimbursement levels within our healthcare segment, competitive pressures, and overall economic conditions. If revenue growth does not occur at the pace we anticipate, or if our operating expenses increase more rapidly than expected, we may be unable to achieve or sustain profitability.
We may require additional capital to support our operations, fund working capital needs, make strategic acquisitions, expand our healthcare footprint, enhance our technology platforms, and service any indebtedness. We cannot assure you that additional financing will be available on favorable terms, or at all. If we raise funds through the issuance of equity securities, existing stockholders may experience significant dilution. If we incur additional indebtedness, such debt may contain restrictive covenants that limit our operational flexibility and could increase our exposure to interest rate risk.
If we are unable to obtain sufficient capital when needed, we may be required to delay, reduce, or eliminate certain business initiatives, scale back operations, sell assets, or seek protection under applicable bankruptcy laws. Any of these outcomes could materially and adversely affect our business, financial condition, results of operations, and the value of our common stock. Even if we achieve profitability in future periods, we may not be able to sustain or increase profitability on a quarterly or annual basis, and our results from operations and cash flows may fluctuate significantly from period to period.
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Unfavorable global economic conditions, inflation, rising interest rates and financial market volatility could materially adversely affect our business.
Our operations are sensitive to general economic conditions in the United States and globally. Economic downturns, recessions, government shutdowns, credit tightening, inflationary pressures, rising interest rates, supply chain constraints, and volatility in equity and foreign exchange markets could reduce consumer spending on discretionary products, increase our operating costs, impair access to capital, and negatively affect our results of operations and cash flows.
Inflation has increased our operating costs, including product sourcing, freight, fuel, labor and pharmaceutical acquisition costs. We may not be able to pass these increased costs through to customers or reimbursement sources in a timely manner, which may result in margin compression. Increases in benchmark interest rates may increase our cost of capital and reduce our ability to raise additional funds.
Geopolitical conflicts, including the Russia-Ukraine conflict and Middle East hostilities, may contribute to supply chain disruptions, fuel price volatility, currency fluctuations and broader economic uncertainty. The cumulative impact of these macroeconomic conditions could materially adversely affect our business, financial condition, results of operations, and cash flows.
Our business may be adversely affected by pandemics, public health crises, natural disasters, acts of war or other events beyond our control.
Public health crises, including pandemics, as well as natural disasters, severe weather events, terrorist acts, civil unrest and acts of war, could disrupt global supply chains, impair logistics providers, limit workforce availability, reduce consumer demand, restrict travel, and interrupt our operations or those of our suppliers and customers. Such events may also increase credit risk, cause financial market volatility, and impair access to capital. The occurrence of any of these events could materially adversely affect our business and financial condition.
We rely heavily on a single pharmaceutical wholesale distributor for substantially all of our pharmaceutical purchases.
Approximately 98% of our pharmaceutical purchases for the year ended December 31, 2025 were obtained from a single wholesale distributor. The loss of, or material change in, this relationship could result in drug shortages, higher acquisition costs, unfavorable credit terms, or operational disruptions.
Transitioning to alternative suppliers could require regulatory approvals, system integrations, renegotiation of contracts and DEA compliance measures and may not be completed on commercially reasonable terms or within acceptable timeframes. Any disruption in pharmaceutical supply could materially adversely affect our healthcare operations, profitability and cash flows.
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We may fail to maintain compliance with applicable continued listing standards of The Nasdaq Stock Market.
Our common stock is listed on The Nasdaq Stock Market and we must satisfy continued listing requirements, including minimum stock price, public float, stockholders’ equity and other corporate governance standards. If we fail to satisfy these requirements, Nasdaq may issue a deficiency notice and ultimately delist our securities. Any delisting could materially adversely affect the liquidity and market price of our common stock, reduce our ability to raise capital, limit institutional investor participation, and adversely affect our reputation. Even if we are able to regain compliance, the process may be costly and disruptive to management.
We have been notified by The Nasdaq Stock Market LLC of our failure to comply with certain Nasdaq continued listing requirements and if we are unable to regain compliance with all applicable Nasdaq continued listing requirements and standards, our Common Stock could be delisted from Nasdaq.
Our Common Stock is listed on the Nasdaq Capital Market and to maintain our listing, we are required to satisfy continued listing requirements. There can be no assurance we will continue satisfying such continued listing requirements, which include among other requirements, that the closing bid price of our Common Stock be at least $1.00 per share (the “Minimum Bid Price Requirement”) and that that the market value of our publicly held shares of Common Stock be at least $1 million (the “Market Value Requirement”).
On April 28, 2025, we received a letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for the previous 30 consecutive business days, the closing bid price for the Common Stock had been below the minimum $1.00 per share required for continued listing on the Nasdaq Capital Market under the Minimum Bid Price Requirement. The Staff provided the Company with an initial period of 180 calendar days, or until October 27, 2025, to regain compliance with the Minimum Bid Price Requirement.
On October 28, 2025, we received a letter from the Staff notifying us that the Company is eligible for a second 180-day period, or until April 27, 2026 (the “Second Grace Period”) to regain compliance with the Minimum Bid Price Requirement. According to the notification, the Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of its publicly held shares and all other Nasdaq initial listing standards, with the exception of the Minimum Bid Price Requirement, and (ii) the Company’s written notice to Nasdaq of its intention to cure the deficiency during the Second Grace Period by effecting a reverse stock split, if necessary.
To regain compliance with the Minimum Bid Price Requirement, the Company scheduled a special meeting of shareholders (the “Special Meeting”) that occurred on March 27, 2026. At the Special Meeting, the shareholders considered a proposal (the “Reverse Stock Split Proposal”) for the Company to implement one or more reverse stock splits in a range between 1-for-5 to 1-for-50 shares at the discretion of the Board of Directors (the “Reverse Stock Split”). The Reverse Stock Split Proposal, if passed, is intended to increase our stock price to an amount that we expect will allow our common stock to stay trading above the $1.00 minimum threshold in the long term. If the Reverse Stock Split is successful and if we can maintain a trading price above $1.00 for at least ten (10) consecutive trading days, then we expect to be able to regain compliance with the Minimum Bid Price requirement. Maintaining our Nasdaq listing as a publicly traded listed company has numerous benefits to the Company, including our ability to procure more financing for ongoing operations, our ability to further our business strategy and our ability to attract more investor and business partner interest, among others. On March 27, 2026, the shareholders voted to approve the Reverse Stock Split Proposal. Also, on March 27, 2026, the Board of Directors voted to approve a reverse stock split at a ratio of 1-to-10.
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There can be no assurance that the Company will be able to comply with all of the obligations placed on us by Nasdaq in order to regain compliance with such Nasdaq Capital Market continued listing standards, and, assuming that we are able to comply with such obligations, that we will be able to continue to comply with such Nasdaq Capital Market continued listing standards in the future, including the Minimum Bid Price Requirement and the Market Value Requirement. If we fail to regain compliance by the end of the Second Grace Period, we may not be successful in any appeal to Nasdaq to grant additional extensions, or in the event that we are successful, we may not be able to regain compliance by such additional extension date. In the event that we are not successful in such appeal or we are not able to regain compliance with such requirements by any applicable date, our Common Stock will be subject to delisting from Nasdaq. Additionally, assuming we are able to comply with all such obligations, but we fail to comply with all applicable Nasdaq listing requirements in the future, our Common Stock may be subject to delisting from Nasdaq.
In the event of such a delisting and that the Common Stock is not eligible for trading on another national securities exchange, trading of our Common Stock could be conducted in the over-the-counter market operated by the OTC Markets Group, Inc. (“OTC”). In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Common Stock, and it would likely be more difficult to obtain coverage by securities analysts and the news media, which could cause the price of our Common Stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange. Additionally, in the event of such delisting, we may be subject to penalties or defaults under certain of our material agreements, which could materially and adversely affect our business, operating results, cash flows, and financial condition.
The Reverse Stock Split may incentivize stockholders to sell their holdings of our common stock following the effectiveness of the Reverse Stock Split and depress the stock price, which could lead to our delisting from Nasdaq.
Similar with what has happened to our stock price in the past, if a significant number of shares of our common stock are sold into the market over a period of time, the increase in supply could lead to a depression of the stock price and it may be difficult to recover from such depression. Since our common stock has been trading at significantly lower prices than what we expect the stock price will be immediately following the effectiveness of the Reverse Stock Split, some stockholders may take the opportunity to sell some or all of their shares of common stock following the effectiveness of the Reverse Stock Split. If this happens, our stock price could decrease quickly from the opening trading market price on the day of effectiveness of the Reverse Stock Split. If we are not successful in mitigating the volatility to our stock price following that date and over time, then we may not recognize any of the intended benefits of completing the Reverse Stock Split. If the stock price dips below $1.00 again following the completion of the Reverse Stock Split at any point in the ten trading days following the effectiveness of the Reverse Stock Split, then we will be subject to delisting from Nasdaq. Even if we are able to maintain a stock price above $1.00 for ten (10) trading days following the effectiveness of the Reverse Stock Split (or some longer period as Nasdaq may designate at their discretion) or if the Company falls out of compliance with the Minimum Bid Price requirement ( i.e. , our stock price falls below $1.00 for a period of thirty (30) consecutive trading days) in the year following the effectiveness of the Reverse Stock Split, then we will be subject to immediate delisting from Nasdaq.
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If the results of the Reverse Stock Split are different than expected and we are delisted from Nasdaq, the delisting will have a significant adverse impact on our business, operations, cash flows, and financial condition.
While we expect the Reverse Stock Split to increase our stock price and allow us to regain compliance with the Minimum Bid Price Requirement and remain listed on Nasdaq, the effect of the Reverse Stock Split on the market price of our common stock cannot be predicted with certainty, and the results of reverse stock splits by companies under similar circumstances have varied. It is not uncommon for the market capitalization of a company’s common stock to decline in the period following a reverse stock split. Factors unrelated to the number of shares of our common stock outstanding, such as negative financial results or negative developments regarding our product development program or the commercializing and scaling efforts of our products, could adversely affect the market price of our common stock and jeopardize our ability to regain compliance with the Minimum Bid Price requirement. If we cannot maintain our stock price above $1.00 for at least ten consecutive trading days prior to April 27, 2026, then we will be subject to delisting from Nasdaq. Even if the Reverse Stock Split is successful in increasing our stock price above $1.00, we may have challenges in maintaining compliance with other Nasdaq continued listing rules. For example, the Reverse Stock Split may result in a lesser number of round lot holders (holders of at least 100 shares), which could cause us to be noncompliant with a Nasdaq rule requiring that we have at least 300 round lot holders to maintain continued listing compliance. Once a company has been delisted, its stock can trade on OTC, but such companies will have significantly fewer opportunities to attract financing partners and less leverage to negotiate terms for such financing instruments and arrangements that are not overly burdensome or expensive to the company. If our stock trades on OTC, we will not be able to maintain S-3 shelf eligibility. Our S-3 shelf eligibility greatly increases our access to the capital markets and other financing opportunities. If we lose access to this source of capital raising and financing avenues, then we may not be able to source enough capital to finance our business plans and operations, which will materially adversely impact our business, operations, cash flows, and financial condition.
The Reverse Stock Split may not increase the price of our common stock over the long term .
As noted above, the purpose of the Reverse Stock Split is to help regain compliance with the Minimum Bid Price Requirement for continued listing on Nasdaq, as well as to increase the trading price of our common stock to enhance overall liquidity of the common stock by facilitating future financing and attracting new investors. However, the effect of the Reverse Stock Split on the market price of our common stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Stock Split will accomplish these objectives for any meaningful period of time, or at all. While we expect that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of our common stock, we cannot assure you that the Reverse Stock Split will increase the market price of our common stock by a multiple of the Reverse Stock Split ratio, or result in any permanent or sustained increase in the market price of our common stock. The market price of our common stock may be affected by other factors which may be unrelated to the number of shares outstanding, including our business and financial performance, general market conditions, and prospects for future success. Once we have effected a Reverse Stock Split, we must ensure that our stock price trades above $1.00 in the long term. Under a Nasdaq rule that was amended in January 2025, if the Company falls out of compliance with the Minimum Bid Price Requirement (i.e., our stock price falls below $1.00 for a period of thirty (30) consecutive trading days) within one year of the completion of a Reverse Stock Split, then we will be immediately subject to delisting from Nasdaq and we will not be afforded another 180-day compliance period.
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The Reverse Stock Split may decrease the liquidity of our common stock .
The Board of Directors (“Board”) believes that the Reverse Stock Split may result in an increase in the market price of our common stock, which could lead to increased interest in our common stock and possibly promote greater liquidity for our stockholders. However, the Reverse Stock Split may also reduce the total number of outstanding shares of common stock, which may lead to reduced trading and a smaller number of market makers for our common stock, particularly if the price per share of our common stock does not increase as a result of the Reverse Stock Split.
The Reverse Stock Split may result in some stockholders owning “ odd lots ” that may be more difficult to sell or require greater transaction costs per share to sell.
If the Reverse Stock Split is implemented, it may increase the number of stockholders who own “odd lots” of less than 100 shares of common stock. A purchase or sale of less than 100 shares of common stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of common stock following the Reverse Stock Split may be required to pay higher transaction costs if they sell their common stock.
The Reverse Stock Split may lead to a decrease in our overall market capitalization .
The Reverse Stock Split may be viewed negatively by the market and, consequently, could lead to a decrease in our overall market capitalization. If the per share market price of our common stock does not increase in proportion to the Reverse Stock Split ratio, then the value of our Company, as measured by our market capitalization, may be reduced. Additionally, any reduction in our market capitalization may be magnified as a result of the smaller number of total shares of common stock outstanding following the Reverse Stock Split.
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Our business requires significant working capital, and we are exposed to inventory and receivables risk.
Our e-Commerce and healthcare operations require significant working capital to purchase inventory, including satellite communication devices and pharmaceuticals. We may be required to make substantial upfront inventory purchases before corresponding revenues are realized. If we overestimate demand, experience obsolescence due to technological advances, encounter product recalls, or are unable to sell inventory at anticipated margins, we may be required to record inventory write-downs. In addition, delays in reimbursement from payors or payment disputes could increase accounts receivable balances and negatively impact cash flow. Any significant working capital shortfall, inventory impairment or receivable collection issue could materially adversely affect our financial condition, results of operations, and cash flows.
We may not have adequate insurance coverage to protect against all operational and product liability risks.
Our business includes the sale of communications equipment and the dispensing of pharmaceuticals. Product defects, equipment malfunctions, adverse health outcomes or misuse of products could result in claims for personal injury, property damage or other losses. Although we maintain insurance coverage, our policies may not be sufficient to cover all potential liabilities, and certain types of claims may be excluded. Any uninsured or underinsured claim, or a claim exceeding policy limits, could materially adversely affect our financial condition, results of operations, and cash flows.
Risks Related to Our e-Commerce Business
We depend significantly on Amazon marketplaces and fulfillment services, and adverse changes to our relationship with Amazon could materially harm our business.
Amazon marketplaces represented approximately 31% and 33% of our total e-Commerce revenue for the years ended December 31, 2025 and 2024, respectively. We expect Amazon to remain a significant distribution channel.
Amazon may suspend or terminate seller accounts, modify fee structures, alter search algorithms, impose additional compliance requirements, or withhold payments at its discretion. Any limitation, suspension, increased fees, or adverse algorithm changes could significantly reduce our revenues, profitability, and cash flows.
We also rely on Amazon’s fulfillment services to provide expedited shipping. Any disruption in these services or failure to meet Amazon’s performance metrics could negatively impact our marketplace visibility and customer satisfaction.
Amazon may withhold or delay payments to sellers in connection with performance investigations, chargebacks, customer claims or alleged policy violations. Because a significant portion of our revenue is generated through Amazon marketplaces, any extended payment hold or account suspension could materially impact our short-term liquidity. In addition, Amazon competes directly with third-party sellers by offering its own private label products and may use data derived from marketplace activity to inform competitive offerings.
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Our e-Commerce operations depend on global suppliers, manufacturers and logistics providers.
We rely on third-party manufacturers and suppliers for satellite phones, tracking devices, broadband terminals and other products. Certain products or components are sourced from limited suppliers. Disruptions due to production delays, financial distress, geopolitical events, tariffs, port congestion, customs delays or transportation interruptions could lead to inventory shortages and increased costs.
If we cannot obtain sufficient inventory at commercially reasonable prices or pass increased costs through to customers, our margins, results of operations, and cash flows could be materially adversely affected.
We operate in highly competitive markets and technological advances may render our products less competitive.
We face intense competition from established e-Commerce platforms, satellite communications providers, and emerging technologies such as Low Earth Orbit (“LEO”) satellite systems that may reduce demand for certain of our products.
Failure to innovate, adapt to new technologies, or effectively compete on price, service, or product offerings could materially adversely affect our business.
Risks Related to Healthcare and Regulation
Changes in reimbursement rates, healthcare regulations, or pharmacy benefit manager practices could materially adversely affect our healthcare segment.
Our healthcare operations are subject to complex federal and state regulations, including reimbursement from Medicare, Medicaid and PBMs. Changes in reimbursement methodologies, pricing pressure, generic drug deflation, clawbacks, DIR fees, or modifications to the 340B program could reduce margins.
In addition, failure to comply with healthcare laws and regulations could result in fines, penalties, exclusion from government programs, or suspension of operations.
We are subject to extensive and evolving domestic and international laws and regulations.
Our operations are subject to numerous laws relating to commerce, consumer protection, product safety, intellectual property, privacy, anti-corruption, trade compliance, export controls and taxation. Failure to comply could result in fines, penalties, litigation, reputational harm and operational disruption.
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Our healthcare operations are subject to audits, investigations and potential recoupment actions by government agencies and pharmacy benefit managers.
Our pharmacy operations are subject to audits and reviews by Medicare, Medicaid, PBMs, third-party payors, state boards of pharmacy, the DEA, and other federal and state agencies. These audits may result in payment recoupments, penalties, fines, exclusion from reimbursement programs, or other corrective actions.
PBMs may conduct routine or targeted audits and may assert overpayment claims, impose clawbacks, reduce reimbursement rates, or terminate network participation agreements. Government investigations or enforcement actions could result in civil or criminal penalties, suspension of operations, or reputational harm.
Any significant audit finding, reimbursement recoupment, network termination or regulatory action could materially adversely affect our healthcare segment and overall results of operations and cash flows.
Failure to comply with laws and regulations governing controlled substances could materially adversely affect our operations.
To the extent we dispense controlled substances, we are subject to federal and state laws administered by the DEA and other regulatory authorities. These laws impose strict recordkeeping, reporting, security and dispensing requirements. Violations, whether intentional or inadvertent, could result in civil penalties, loss of controlled substance registrations, fines, or criminal liability.
The loss or suspension of any required license or registration could materially impair our ability to operate our pharmacy business.
A significant portion of our pharmacy segment gross profit is derived from participation in the federal 340B Drug Pricing Program, and adverse changes to the program could materially adversely affect our profitability and cash flows .
A material portion of our pharmacy segment gross profit is derived from participation in the federal 340B Drug Pricing Program, including revenues generated through contract pharmacy arrangements. Prescriptions dispensed under the 340B program generally carry significantly higher margins than non-340B prescriptions. As a result, although 340B prescriptions may represent a smaller percentage of total prescription volume, they contribute a disproportionately significant portion of our pharmacy segment gross profit.
The 340B program has been subject to increased regulatory scrutiny, manufacturer restrictions on contract pharmacy arrangements, litigation, legislative proposals, and evolving guidance from the Health Resources and Services Administration (“HRSA”). Pharmaceutical manufacturers have imposed limitations on the distribution of 340B-priced drugs through contract pharmacies, and additional restrictions may be implemented in the future.
Federal or state regulatory changes, judicial decisions, or manufacturer policies that reduce 340B eligibility, limit contract pharmacy arrangements, alter reimbursement methodologies, or otherwise decrease the margin associated with 340B prescriptions could materially reduce our pharmacy segment profitability. In addition, noncompliance with 340B program requirements, whether intentional or inadvertent, could result in repayment obligations, civil monetary penalties, exclusion from the program, termination of covered entity relationships, or reputational harm.
Any material reduction in our ability to generate gross profit from 340B prescriptions could materially adversely affect our business, financial condition, results of operations, and cash flows.
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Risks Related to Data Security and Technology
Security breaches or failures in our information systems could materially harm our business.
We process and store sensitive customer, supplier and business information. Cyberattacks, data breaches, ransomware incidents, employee misconduct or system failures could result in data loss, regulatory penalties, litigation and reputational harm. Despite security measures, no system is immune from attack. A significant cybersecurity incident could materially adversely affect our operations and financial condition.
We may incur significant costs and liabilities in connection with data privacy and cybersecurity regulations.
We are subject to evolving data protection and privacy laws and regulations, including federal and state privacy laws, data breach notification requirements and healthcare privacy regulations such as HIPAA, to the extent applicable. A data breach or failure to comply with applicable privacy laws could result in regulatory investigations, fines, penalties, litigation, mandatory notification costs, credit monitoring expenses, and reputational harm. Compliance with evolving cybersecurity and privacy regulations may require substantial investment in administrative, technical and physical safeguards. Any failure to comply with these requirements could materially adversely affect our business and financial condition.
Risks Related to Acquisitions and Growth
Our growth strategy involves acquisitions and strategic investments that may not achieve expected benefits.
We may pursue acquisitions, investments and joint ventures. These transactions involve integration risks, potential hidden liabilities, management distraction, regulatory approvals and financial exposure. Failure to successfully integrate acquired businesses could materially adversely affect our results of operations and cash flows.
Risks Related to International Operations and China
Our operations in China expose us to political, economic and regulatory risks.
We market products in China and may expand operations there. The regulatory environment in the PRC is evolving and subject to significant government discretion. Changes in trade policy, tariffs, foreign exchange controls, licensing requirements, data security laws or geopolitical tensions between the United States and China could increase costs, restrict operations or reduce demand for our products.
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Retaliatory tariffs imposed by China in response to tariffs enacted by the United States expose us to significant trade-policy risk. Elevated tariff rates and other non-tariff barriers imposed on U.S.-origin goods may adversely affect the competitiveness of certain of our products in the Chinese market. Chinese authorities possess broad discretion to modify tariff rates or impose additional trade restrictions with limited advance notice and may target specific U.S. industries or product categories in response to geopolitical developments.
In response to the current tariff environment, we have paused certain initiatives within our e-Commerce development program that were intended to expand U.S.-origin product sales into China, including the introduction of certain products under our Florida Sunshine brand. For the year ended December 31, 2025, our revenue in China represented less than 1% of our consolidated revenues and did not have a material impact on our results of operations. If elevated tariffs persist, expand, or are reinstated following any temporary easing, our ability to profitably sell certain U.S.-origin products in China could be materially adversely affected. While we continue to sell certain non-U.S.-origin products in China that are not currently subject to additional tariffs, future changes in trade policy could alter the tariff treatment of those products as well.
We cannot predict whether the current trade environment will persist or whether new quotas, duties, tariffs, exchange controls, sanctions, or other restrictions will be imposed by either government. Any such actions could materially adversely affect our business, financial condition, results of operations and cash flows.
Risks Related to Corporate Governance and Public Company Status
Being a public company increases our costs and administrative burdens.
We incur substantial legal, accounting and compliance costs as a public company, including Sarbanes-Oxley compliance. Failure to maintain effective internal controls could impair investor confidence and adversely affect our stock price.
Concentration of ownership may limit other stockholders ’ ability to influence corporate matters.
Our principal stockholders, executive officers and directors collectively own a significant percentage of our outstanding shares, which may allow them to influence corporate actions, including election of directors and approval of major transactions.
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