Universal Safety Products (UUU) risk factors, FY2026 10-K

Risks Related to Our Company

1. 01We have an evolving business model, which increases the complexity of our business
2. 02We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause our stock price to suffer
3. 03We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted

Risks Related to Universal DeFi – General

1. 04Universal DeFi has a limited operating history, which makes it difficult to evaluate its business and prospects
2. 05Universal DeFi will require substantial additional capital, which may not be available when needed
3. 06Universal DeFi has limited personnel and must build the operational, compliance, and information security functions necessary to operate its business
4. 07Universal DeFi’s planned services and business model may change materially before it commences full operations

Risks Related to the Tokenization Business

1. 08Universal DeFi’s tokenization platform is not yet operational and may never launch or achieve market acceptance
2. 09The market for tokenized assets is new and unproven and may not develop as Universal DeFi expects
3. 10Universal DeFi faces competition in tokenization services, including from larger and better-resourced providers
4. 11Universal DeFi’s issuer onboarding occurs before issuance and is not ongoing, and it may not detect issuer misconduct or asset problems that arise after issuance
5. 12Under the platform’s design, issuers control their own tokens after issuance, and the loss or compromise of an issuer’s approvals may permanently impair control of a token, which Universal DeFi may be unable to remedy
6. 13Universal DeFi’s association with assets tokenized through its platform could expose it to reputational harm and claims if those assets prove fraudulent, unbacked, or impaired
7. 14If Universal DeFi elects to administer token environments on behalf of issuers, its responsibilities and risk profile would change materially

Risks Related to Node and Validator Operations and Digital Assets

1. 15Universal DeFi’s node and validator operations, and its tokenization platform, depend on the Ault Blockchain, a new network developed by an affiliated organization that may not achieve adoption or operate as intended
2. 16The digital tokens Universal DeFi earns from its node and validator operations have no current market value, are non-cash and illiquid, and may never have value
3. 17Universal DeFi’s validator must stake tokens and is subject to penalties, including the loss of staked tokens, for downtime or improper operation
4. 18Universal DeFi’s validator is operated by an affiliate under an arrangement that has not been formalized, which involves conflicts of interest and may be disrupted
5. 19The rewards Universal DeFi earns from its Ault Nodes depend on the continued performance of work and on a selection process, and may be less than Universal DeFi expects
6. 20Universal DeFi acquired its node licenses at a cost, the licenses are subject to transfer restrictions, and they may decline in value or be impaired
7. 21Affiliates of the Company are involved in the Ault Blockchain as its developer and as network participants, which creates conflicts of interest and concentration

Technology Risk Factors

1. 22Universal DeFi depends on a third-party developer to build and maintain its tokenization platform
2. 23The platform’s token control depends on a single third-party security provider, and a failure of that provider could disrupt the platform
3. 24Smart contracts and software underlying the platform and the Ault Blockchain may contain vulnerabilities that could be exploited
4. 25A cybersecurity breach, or the loss or theft of cryptographic keys, could result in the loss of assets or the disruption of Universal DeFi’s operations
5. 26The Ault Blockchain is a new network that may experience outages, forks, congestion, or technical failures
6. 27Technological change or obsolescence could render Universal DeFi’s platform or operations uncompetitive

Regulatory Risk Factors

1. 28The regulatory framework for tokenized and digital assets is new, unsettled, and evolving
2. 29The classification of a tokenized asset as a security, a commodity, or another type of asset is uncertain and varies by underlying asset and jurisdiction
3. 30Regulatory requirements applicable to tokenized assets could materially limit, delay, or prevent Universal DeFi from offering its tokenization services, and could require it to curtail or cease that business
4. 31Universal DeFi may be required to obtain licenses or registrations, and may be deemed to be acting as a broker-dealer, transfer agent, money transmitter, or other regulated entity
5. 32Regulation varies by jurisdiction and may restrict, condition, or prohibit Universal DeFi’s services in markets that are material to its business
6. 33International regulatory regimes impose additional and differing requirements that could increase Universal DeFi’s costs or restrict its operations
7. 34Universal DeFi relies on issuers to perform holder-level identity verification, and it may nonetheless face anti-money-laundering liability for the misuse of tokens issued through its platform
8. 35Universal DeFi may become subject to enforcement actions, investigations, or litigation

Risks Related to Our Indebtedness and Liquidity

1. 36We have incurred losses and we may not be able to manage our business on a profitable basis
2. 37Our losses from operations and liquidity conditions raise substantial doubt regarding our ability to continue as a going concern
3. 38To service any future indebtedness and other obligations, we will require a significant amount of cash
4. 39We will need to raise additional capital to fund our operations in furtherance of our business plan

Risks Related to our Business and Operations

1. 40Changes in trade policy in the U.S. and other countries, specifically the People’s Republic of China, including the imposition of additional tariffs and the resulting consequences, may adversely impact our results of operations and financial condition
2. 41Global economic and capital market conditions may cause our access to capital to be more difficult in the future and/or costs to secure such capital more expensive
3. 42Our overall sales are primarily dependent upon the strength of the U.S. housing market
4. 43Competition from a number of companies could result in price reduction, reduced revenue and loss of market share and could harm our results of operations

Risks Related to Ownership of Our Common Stock and Future Offerings

1. 44If we do not continue to satisfy the NYSE American continued listing requirements, our common stock could be delisted from NYSE American
2. 45You may experience future dilution as a result of future equity offerings
3. 46Our common stock price may be volatile
4. 47Volatility in our common stock price may subject us to securities litigation
5. 48We are controlled by current officers, directors and principal stockholders
6. 49The issuance of shares of common stock upon the conversion of convertible notes could affect our stock price
7. 50If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our shares of common stock, the price of our common stock and trading volume could decline

General Risk Factors

1. 51Deterioration of global economic conditions could adversely affect our business
2. 52If our accounting controls and procedures are circumvented or otherwise fail to achieve their intended purposes, our business could be seriously harmed
3. 53Our internal computer systems may fail or suffer security breaches, which could result in a material disruption of our operations
4. 54Many of our competitors are larger and have greater financial and other resources than we do
5. 55The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members
6. 56The elimination of monetary liability against our directors, officers and employees under law and the existence of indemnification rights for or obligations to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees
7. 57We do not anticipate paying cash dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment