{"url_path":"/sec/avx/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1826397/0001493152-26-023348-index.html","accession_number":"0001493152-26-023348","cik":"0001826397","ticker":"AVX","issuer_name":"AVAX ONE TECHNOLOGY LTD.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1826397/0001493152-26-023348-index.html","primary_entity_key":"0001826397","primary_entity_name":"AVAX ONE TECHNOLOGY LTD."},"word_count":1510,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors**\n\n \n\nThere\nare no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 31,\n2026, under the heading Part I, Item 1A., “Risk Factors,” except for the following -\n\n \n\n**Risks Related to AVAX Delegation, Staking, Liquid\nStaking and Lock-Up Periods**\n\n \n\nWe engage in the delegation and staking of AVAX tokens,\nincluding through liquid staking arrangements. These activities expose us to significant risks that could result in partial or complete\nloss of staked tokens, reduced liquidity, price depreciation of our staked positions, and material adverse effects on our business, financial\ncondition, results of operations, and prospects.\n\n \n\nIn particular, our liquid staking activities are conducted\nthrough Treehouse, where we hold tAVAX and sAVAX tokens. Both tAVAX and sAVAX are issued and supported by smart contracts deployed on\nthe Avalanche C-Chain, including the BENQI Protocol, a decentralized liquid staking and validator infrastructure protocol that issues\ninterest-bearing sAVAX. Although the BENQI Protocol has undergone third-party security audits, smart contracts are inherently vulnerable\nto undiscovered bugs, coding errors, or exploits. Any such vulnerability could be exploited, resulting in partial or total loss of the\nunderlying staked AVAX tokens. Smart contract risk is inherent in all DeFi protocols and cannot be eliminated through audits or other\nrisk mitigation measures.\n\n \n\nThe BENQI Protocol is managed by relatively small\nteams and governed by decentralized autonomous organizations (“DAOs”) controlled by holders of its governance tokens. We do\nnot hold governance tokens and therefore have no ability to influence protocol governance decisions. Token holders could vote to implement\nchanges that materially and adversely affect the terms of liquid staking, including modifications to fee structures, redemption processes,\nvalidator selection criteria, or other operational parameters. Such governance actions, or the failure of governance processes, could\nreduce the value or redeemability of our liquid staking tokens. In addition, the BENQI Protocol (or related protocols) could cease operations,\nexperience a governance failure, or be subject to malicious attacks that compromise its functionality or security.\n\n \n\nLiquid staking tokens such as tAVAX and sAVAX are\nless liquid than the underlying AVAX token. While holders may sell these tokens on decentralized exchanges, such sales may incur significant\nslippage and result in proceeds substantially below the theoretical exchange rate to AVAX, particularly during periods of market stress\nor low liquidity. Neither tAVAX nor sAVAX is widely listed on centralized exchanges, which concentrates trading activity in on-chain liquidity\npools and may exacerbate price dislocations and volatility during periods of elevated selling pressure. The value of both tAVAX and sAVAX\nis directly correlated with the value of AVAX, which has historically experienced, and may continue to experience, significant price volatility.\nAlthough these liquid staking tokens are designed to maintain a predictable and increasing exchange rate relative to AVAX, they may trade\nat a discount to their theoretical value on secondary markets due to liquidity constraints, market sentiment, perceived protocol risks,\nor other factors.\n\n \n\nThere can be no assurance that we will be able to\nredeem or sell our liquid staking tokens at or near their theoretical exchange rate or in a timely manner. Any of the foregoing risks\ncould result in material losses on our staked positions, impair our liquidity, and have a material adverse effect on our business, financial\ncondition, and results of operations.\n\n \n\n**Risks Related to Demand for Data Center Space,\nPower and Connectivity**\n\n \n\nOur business depends upon the demand for data center\nspace, power, and connectivity. We are expanding our business to own, acquire, develop, and operate data centers. A reduction in demand\nfor data center space, power, or connectivity would materially and adversely affect our business, financial condition, results of operations,\nand cash flows.\n\n \n\nOur substantial development pipeline and expansion\nactivities make us particularly vulnerable to general economic slowdowns as well as adverse developments in the data center, Internet,\ndata communications, and broader technology industries. Any such slowdown or adverse development could result in reduced corporate information\ntechnology (“IT”) spending or decreased demand for data center capacity. In addition, changes in industry practices, technological\nadvancements, or the emergence of alternative technologies could reduce or render obsolete the demand for physical data center space that\nwe provide.\n\n \n\nOur customers may elect to develop new data centers\nfor their own use, expand their existing data centers, or consolidate their operations into data centers owned or operated by third parties.\nAny of these actions could reduce demand for our data centers (particularly newly developed facilities), result in the loss of one or\nmore key or potential customers, or place downward pressure on our pricing and occupancy rates. Furthermore, mergers, acquisitions, or\nconsolidations among technology companies could further reduce the number of our existing and potential customers, increase our customer\nconcentration, and make us more dependent on a smaller number of customers.\n\n \n\n32\n\n[Table of Contents](#toc_001)\n\n \n\nIf our customers are acquired by or merge with entities\nthat are not our customers, the resulting company may discontinue or significantly reduce its use of our data centers. We cannot assure\nyou that we will be able to retain our customers, attract new customers, or maintain or increase occupancy and pricing levels at our facilities.\n\n \n\nAny of the foregoing factors could have a material\nadverse effect on our business, financial condition, results of operations, and cash flows.\n\n \n\n**Risks Related to Competition in the Data Center Industry**\n\n \n\nWe face significant competition in the data center\nmarket, which may adversely affect our ability to lease space, maintain occupancy rates, and achieve favorable rental rates at our facilities.\n\n \n\nWe compete with existing data center operators as\nwell as new entrants into the market, including entrants who may acquire our current competitors. Many of our competitors and potential\ncompetitors have material competitive advantages over us, including greater name recognition, longer operating histories, established\nrelationships with current or potential customers, significantly greater financial, marketing, and other resources, and more ready access\nto capital. These advantages may allow them to respond more quickly to new or emerging opportunities, develop or acquire additional data\ncenter capacity, and compete more effectively for customers.\n\n \n\nIf our competitors offer data center space that customers\nor potential customers perceive to be superior to ours (based on factors such as available power, security, location, connectivity, or\nother attributes), or if they offer rental rates at or below current market rates or the rates we are seeking, we may lose existing or\npotential customers, face pressure to reduce our rental rates, or incur significant costs to enhance or upgrade our facilities. In addition,\nmany competitors are continuing to develop additional data center space. An increase in the overall supply of data center capacity, whether\nfrom our competitors or otherwise, could lead to lower rental rates, longer leasing periods, increased vacancy rates, or delays in leasing\nour properties, including newly developed space.\n\n \n\nFurthermore, if customers or potential customers require\nservices or capabilities that we do not currently offer, we may be unable to secure their business. We cannot assure you that we will\nbe able to compete successfully against current or future competitors.\n\n \n\nAny of the foregoing factors could have a material adverse effect on our\noccupancy rates, rental revenues, business, financial condition, results of operations, and cash flows.\n\n \n\n**Any\nfailure of our physical or information technology or operational technology infrastructure or services could lead to significant costs\nand disruptions.**\n\n \n\nOur\nbusiness depends on providing customers with highly reliable services, including with respect to power supply, physical security, cybersecurity,\nand maintenance of environmental conditions. We may fail to provide such services because our operations are vulnerable to, among other\nthings, mechanical or telecommunications failure, power outage, human error, physical or electronic security breaches, cyberattacks,\nwar, terrorism, fire, earthquake, pandemics, hurricane, flood and other natural disasters, sabotage and vandalism.\n\n \n\nSubstantially\nall of our customer agreements include terms requiring us to meet certain service level commitments. A failure to meet these or other\ncommitments or equipment damage in our data centers could subject us to contractual liability, including service level credits against\ncustomer rent payments, legal liability and monetary damages, regulatory sanctions, or, in certain cases of repeated failures, the right\nby the customer to terminate the agreement. Service interruptions, equipment failures or security breaches could also materially impact\nour brand and reputation globally and lead to customer contract terminations or non-renewals and an inability to attract customers in\nthe future.\n\n \n\n**We\nand our third-party providers are vulnerable to cyberattacks and security breaches that could materially disrupt or compromise our operations,\ndata and results.**\n\n \n\nWe\nface evolving risks that threaten the confidentiality, integrity, and availability of information systems and data, including from state-sponsored\nespionage actors, financially motivated hackers, hacktivists and insiders, as well as through diverse attack vectors, such as social\nengineering/phishing, malware (including ransomware), human or technological error, or due to “bugs,” misconfigurations and\nknown and unknown vulnerabilities in hardware, software, systems and processes that support our business. Even if vulnerabilities are\npublicly known or identified through our security tools, we cannot guarantee that patches or mitigating measures will be implemented\nbefore a threat actor can exploit them.\n\n \n\n33\n\n[Table of Contents](#toc_001)"}