Exascale Labs Holdings (XLABW) risk factors, FY2026 10-K

Other

1. 01We have a limited operating history, have incurred net losses since inception, and may not achieve or sustain growth or profitability
2. 02We depend on a limited and constrained supply of advanced GPU chips, and any disruption or increase in cost could adversely affect our business and results of operations
3. 03Demand for AI compute services and accelerated infrastructure may not grow as expected, and customer spending may be volatile
4. 04We operate in a highly competitive market, and we may be unable to compete effectively against larger and better-capitalized competitors
5. 05We depend on third-party GPU capacity suppliers, and disruptions, non-renewals, pricing increases or capacity limitations could adversely affect our business, results of operations and margins
6. 06GPU capacity used to deliver our services is deployed in third-party data centers and partner facilities, and constraints or disruptions in those facilities could materially adversely affect our business
7. 07If we fail to deliver expected performance, efficiency, or reliability for customer workloads, our reputation, customer relationships, and results of operations could be harmed
8. 08Our performance optimization and utilization practices may not achieve intended results, and our methods may not scale as customer requirements and infrastructure complexity increase
9. 09We may experience service interruptions, security incidents, or other operational failures, which could expose us to liability and harm our business
10. 10Our AI-assisted operational tools and automation may not perform as intended and could introduce errors or risks
11. 11Our costs may increase, and we may be unable to pass increased costs through to customers, which could adversely affect our margins and results of operations
12. 12Our revenues may be concentrated in a limited number of customers or engagements, and our results may be volatile due to usage variability and contract dynamics
13. 13We operate in a highly competitive market, and our failure to acquire, retain, or expand our customer base could adversely affect our revenue and growth
14. 14Our AIDC GPU cluster management services may expose us to additional operational, contractual, and liability risks
15. 15Our infrastructure solution capabilities, including modular data centers, liquid cooling, HVDC power, data center interconnectivity and energy storage solutions have not yet generated revenue and may not achieve commercial success
16. 16Rapid technological change in GPUs, networking, and AI software could require us to adapt quickly, and we may be unable to keep pace
17. 17Third parties may claim that our platform infringes, misappropriates, or otherwise violates their intellectual property rights, and such claims could be time-consuming or costly to defend or settle, result in the loss of significant rights, or harm our relationships with our customers or our reputation in the industry
18. 18Some of our technology incorporates “open-source” software, and failure to comply with the terms of the underlying open-source software licenses could adversely affect our business, results of operations, financial condition, and future prospects
19. 19We may be unable to protect our intellectual property, and third-party claims of infringement could be costly and disruptive
20. 20We are subject to laws and regulations, including governmental export and import controls, sanctions, and anti-corruption laws, that could impair our ability to compete in our markets and subject us to liability if we are not in full compliance with applicable laws
21. 21Export controls, trade restrictions, and sanctions could limit our ability to procure GPU hardware or serve certain customers and could increase compliance costs
22. 22Our business is subject to a wide range of laws and regulations, and failure to comply with those laws and regulations could harm our business
23. 23We may be unable to utilize our net operating loss carryforwards to offset future taxable income, which could increase our future tax liabilities
24. 24If we are unable to attract or retain qualified personnel or key personnel, our ability to execute our strategy and maintain service quality could be adversely affected
25. 25Our prior evaluation of blockchain or digital asset-related concepts could create reputational or regulatory scrutiny, and any future evaluation of such initiatives may be subject to heightened regulation
26. 26We may become involved in litigation, from time to time, that may adversely affect us
27. 27Global events and other general economic factors may impact our results of operations
28. 28We have a dual-class share structure with different voting rights, which may adversely affect the value and liquidity of our securities
29. 29Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that our stockholders may view as beneficial
30. 30Hoansoo Lee is also the settlor of, and serves as investment advisor to, each of the Jisu Paul Lee Non-Grantor Directed Trust, the Sophia Jisun Lee Non-Grantor Directed Trust, and the Gabriel Jihwan Lee Non-Grantor Directed Trust, and the beneficiaries of each of those trusts are the children of Hoansoo Lee
31. 31We are a “controlled company” within the meaning of Nasdaq listing rules, and as a result, we are entitled to rely on exemptions from certain corporate governance requirements that could adversely affect the rights of holders of our Class A Common Stock
32. 32The price of our securities may be volatile, and you could lose all or part of your investment
33. 33A liquid trading market for our securities may not be sustained
34. 34We may be unable to maintain the listing of our securities on Nasdaq in the future
35. 35The requirements of being a public company may strain our resources and distract management and we will continue to incur substantial costs as a result of being a public company
36. 36A decline in the price of our Class A Common Stock could affect our ability to raise working capital and adversely impact our ability to continue operations
37. 37Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our business
38. 38Changes to United States tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations
39. 39The resale by certain holders of our Class A Common Stock, or the perception that such sales may occur, could cause the market price of the Class A Common Stock to decline
40. 40Future sales and issuances of our securities could result in additional dilution of the percentage ownership of existing stockholders and could cause our stock price to fall
41. 41We do not intend to pay any cash dividends in the foreseeable future and, therefore, any return on your investment in our securities must come from increases in the fair market value and trading price of such securities
42. 42We are a “smaller reporting company” and an “emerging growth company” under the U.S. federal securities laws, and the reduced reporting requirements applicable to smaller reporting companies and emerging growth companies could make our securities less attractive to investors
43. 43We will remain an emerging growth company until the earlier of
44. 44Our management team has limited experience managing a U.S. public company, and the additional demands associated with operating as a public company may adversely affect our business, financial condition and results of operations