We have a short history as an operating company selling product. This may adversely affect our ability to accurately predict revenue growth, cash flow, and profitability. Significant overestimates in growth projections or product acceptance could cause inventory excess, write-downs, and capital constraints that affect future financing and sustainability.
Future Financing & Liquidty
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
There is significant competion in consumer electronics, many of whom have much larger resources than us. Competitors may take a large share of the market for our devices in regions not covered by our patents, by challenging the patents, or by ignoring them.
Lack of New Innovation
The company's ability to continually innovate and develop electronically engineered products is significantly dependent on an active role by co-founder and CTO Tim Chinowsky. His loss could have a material adverse effect on the Company.
If we are unable to raise sufficient capital in the future from equality and/or cash flow, we may have inadequate funds to fully develop our business and may need to raise additional capital through equity or debt financings, which may not be available on favorable terms, or at all.
Obstacles to Execution of Our Business Plan
There may be unanticipated obstacles to the execution our business plan. Management reserves the right to make significant modifications to our stated strategies depending on future events.
Our strategy depends on widespread adoption of our software technology
Our customer base is relatively small at this stage (5K users) and our growth strategy depends on widespread adoption of our technology in specific vertical markets i.e music, sports. While we believe we can rapidly grow our customer base, our inability to do so could have a material adverse effect on us. Although our products may offer technical advantages over competitive companies and products, no assurance can be given that our products will attain a degree of market acceptance on a sustained basis or that we will generate revenues sufficient for sustained profitable operations.
Our business significantly depends on manufacturing and distributing electronically engineered goods at contract manufacturers. Disruptions at these factories, in our relationship with them, or in shipping the goods, could cause delays or even lack of product delivery until resolved. Further, manufacturers defects could cause a large scale product recall if it goes unnoticed for a long period of time. This could cause significant unexpected costs to us.