Safe Pro Group (SPAI) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We lack an established operating history on which to evaluate our consolidated business and determine if we will be able to execute our business plan, and we can give no assurance that our operations will result in profits
2. 02We incurred net losses in the years ended December 31, 2025, and 2024, we cannot assure you as to when, or if we will become profitable and generate positive cash flows33% rewritten
3. 03We may need to raise additional capital to grow our business and satisfy our anticipated future liquidity needs, and we may not be able to raise it on terms acceptable to us, or at all
4. 04If we are unable to obtain additional funding when needed, our business operations will be harmed, and if we do obtain additional financing, our then-existing shareholders may suffer substantial dilution
5. 05Raising capital in the future could cause dilution to our existing shareholders and may restrict our operations or require us to relinquish rights
6. 06Rapid technological change in our market and/or changes in customer requirements could cause our products to become obsolete or require us to redesign our products, which would have a material adverse effect on our business, operating results and financial condition
7. 07Product development is a long, expensive and uncertain process, and our failure to develop marketable products in our various markets could adversely affect our business, prospects and financial condition
8. 08We compete with companies that have significantly more resources for their research and development efforts than we have or have received government contracts for the development of new products
9. 09Successful technical development of our products does not guarantee successful commercialization
10. 10Product quality problems, defects, errors or vulnerabilities in our products could harm our reputation and adversely affect our business, financial condition, results of operations and prospects
11. 11If we lose our rights to use software we currently license from third parties, we could be forced to seek alternative technology, which could increase our operating expenses and could adversely affect our ability to compete
12. 12We are dependent upon our distributors in certain jurisdictions to provide localized support and other local services which assist us in avoiding certain costs and investments
13. 13If critical components or raw materials used to manufacture our products become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products, which could damage our business
14. 14Opportunities for expanded uses of our drone-based services in the United States are limited by federal and state laws and rulemaking
15. 15Rapidly evolving technological advances in aviation, aerospace, automation, and/or remote sensing may reduce demand for some of our service offerings
16. 16One of our key customers may bolster its in-house aerial drone capabilities, thereby reducing dependency on our services25% rewritten
17. 17Some of our products may be subject to government regulations pertaining to exportation, which may limit the markets in which we can sell some of our products
18. 18Economic conditions in the U.S. and worldwide could adversely affect our revenues
19. 19Sales to customers outside the United States or with international operations expose us to risks inherent in international sales
20. 20Geopolitical and macroeconomic events and conditions could adversely affect our business, operating results, financial condition and cash flows
21. 21We intend to pursue strategic transactions in the future, which could be difficult to implement, disrupt our business or change our business profile significantly
22. 22Also, such activities could result in one-time charges and expenses and have the potential to either dilute the interests of existing stockholders or result in the issuance of or assumption of debt
23. 23If we fail to protect our intellectual property rights, we could lose our ability to compete in the marketplace
24. 24If we fail to protect our intellectual property rights, our ability to pursue the development of our technologies and products would be negatively affected
25. 25Moreover, any patents issued to us may not provide us with meaningful protection, or others may challenge, circumvent, or narrow our patents. Third parties may also independently develop technologies similar to ours or design around any patents on our technologies
26. 26Other companies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability to generate future revenue and profit
27. 27Security breaches, including cybersecurity incidents and other disruptions could compromise our information, expose us to liability and harm our reputation and business
28. 28We do not carry insurance against all potential risks and losses, and our insurance might be inadequate to cover all of our losses or liabilities or may not be available on commercially reasonable terms
29. 29The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnity
30. 30If a successful product liability claim was made against us, our business could be seriously harmed
31. 31If we are unable to recruit and retain key management, technical and sales personnel, our business will be negatively affected
32. 32If we are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely affect our business, financial condition, results of operations and prospects
33. 33The control deficiencies in our internal control over financial reporting may, until remedied, cause errors in our financial statements or cause our filings with the SEC to not be timely59% rewritten

Risks Relating to our Common Stock

1. 34A sustained, active trading market for our common stock may not be maintained, which may limit investors’ ability to sell shares at all or at an acceptable price
2. 35Our stock price may be volatile, which could result in substantial losses to investors and litigation
3. 36We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future
4. 37There is an increased potential risk for new public companies similar to ours of rapid and substantial price volatility which may add to the risk of investing in our company
5. 38Our officers and directors are entitled to indemnification from us for liabilities under our certificate of incorporation, which could be costly to us and may discourage the exercise of stockholder rights24% rewritten
6. 39Certain anti-takeover provisions of Delaware law could have the effect of delaying or preventing a third party from acquiring us, even if the acquisition arguably could benefit our stockholders
7. 40If equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the market price of our common stock will likely decline
8. 41Notwithstanding the foregoing, the exclusive forum provisions will not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended. or any claim for which the federal courts have exclusive or concurrent jurisdiction
9. 42Our certificate of incorporation allows our board of directors to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock
10. 43Our failure to meet the continued listing requirements of the Nasdaq could result in de-listing of our common stock
11. 44If we are a “controlled company” under the rules of Nasdaq, we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public stockholders
12. 45As an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements
13. 46We intend to take advantage of all of these reduced reporting requirements and exemptions