{"url_path":"/sec/jfb/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors.**","topic":"sec","document":{"doc_type":"10-K/A","doc_date":"2026-06-17","source_url":"https://www.sec.gov/Archives/edgar/data/2024306/0001493152-26-028959-index.html","accession_number":"0001493152-26-028959","cik":"0002024306","ticker":"JFB","issuer_name":"JFB Construction Holdings","edgar_url":"https://www.sec.gov/Archives/edgar/data/2024306/0001493152-26-028959-index.html","primary_entity_key":"0002024306","primary_entity_name":"JFB Construction Holdings"},"word_count":13168,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors.**\n\n** **\n\n*Investing\nin our securities involves a high degree of risk. Careful consideration should be made of the following factors as well as other information\nincluded in this Annual Report before deciding to invest in our securities. There are many risks that affect our business and results\nof operations, some of which are beyond our control. Our business, financial condition or operating results could be materially harmed\nby any of these risks. This could cause the trading price of our securities to decline, and you may lose all or part of your investment.\nAdditional risks that we do not yet know of or that we currently think are immaterial may also affect our business and the results of\noperations.*\n\n* *\n\n**Risks\nRelating to Our Business and Strategy**\n\n** **\n\n**We\nhave limited management and staff, and our continued success requires us to hire, train and retain qualified personnel and subcontractors\nin a competitive industry.**\n\n** **\n\nAs\nof June 16, 2026 we have a total of 22 full-time employees, and one independent contractor. The success of our business depends upon\nour ability to attract, train and retain qualified, reliable personnel, including, but not limited to, our executive officers and key\nmanagement personnel. Additionally, the successful operation of our business depends upon engineers, project management personnel, other\nemployees and qualified subcontractors who possess the necessary and required experience and expertise and who will perform their respective\nservices at a reasonable and competitive rate. Competition for these and other experienced personnel is intense, and it may be difficult\nto attract and retain qualified individuals with the requisite expertise and in the timeframe demanded by our clients. In certain geographic\nareas, for example, we may not be able to satisfy the demand for our services because of our inability to successfully hire, train and\nretain qualified personnel.\n\n \n\nIn\naddition, the cost of providing our services, including the extent to which we utilize our workforce, affects our profitability. For\nexample, the uncertainty of contract award timing can present difficulties in matching our workforce size with our contracts. If an expected\ncontract award is delayed or not received, we could incur costs resulting from excess staff or redundancy of facilities that could have\na material adverse impact on our business, financial conditions and results of operations.\n\n \n\n**Our\nmanagement team has limited experience operating a company with publicly traded shares.**\n\n** **\n\nMr.\nJoseph F. Basile III, our founder and principal shareholder and the members of our senior management team have never operated a company\nwith shares traded in the public markets and, consequently, are not familiar with many of the requirements applicable to a public company\nwith shares listed on Nasdaq. Our management and other personnel will need to devote a substantial amount of time to ensure compliance\nwith these requirements and we anticipate that we may need to rely upon outside advisors, counsel, and consultants to ensure compliance\nwith applicable laws and regulations and undertaking various actions, such as implementing new internal controls and procedures. We anticipate\nthat compliance with these rules and regulations will increase our legal, accounting, and financial compliance costs substantially. Further,\nthere is a possibility we will need to expand or replace our senior management with individuals with public company experience.\n\n \n\n**We\nlack formalized policies and procedures to ensure adequate board and management oversight of financial reporting, risk management, and\nregulatory compliance.**\n\n** **\n\nOur\nmanagement is responsible for establishing and maintaining adequate internal control over financial reporting, designed to provide reasonable\nassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance\nwith GAAP. Our management is likewise required, every quarter, to evaluate the effectiveness of our internal controls and to disclose\nany changes, deficiencies, or material weaknesses identified through such evaluation in those internal controls. A material weakness\nis a deficiency, or a combination of deficiencies, in internal control over financial reporting, so there is a reasonable possibility\nthat a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.\n\n \n\nWe\nhave identified deficiencies in our internal controls related to board oversight, management review processes, and compliance monitoring.\nSpecifically, we lack formalized policies and procedures to ensure adequate board and management oversight of financial reporting, risk\nmanagement, and regulatory compliance. These deficiencies may result in delays in financial reporting, errors in disclosures, inadequate\nrisk assessment, and an inability to effectively oversee key corporate decisions. If we fail to implement and maintain proper internal\ncontrols and governance structures, we may be unable to comply with SEC reporting obligations, which could lead to regulatory scrutiny,\nlitigation, or loss of investor confidence.\n\n \n\nWhile\nwe have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to evaluate\nour research better and understand the nuances of the public company accounting standards that apply to our financial statements. To\naddress these issues, we intend to implement enhanced internal control measures and engage external advisors. However, there is no assurance\nthat these measures will be implemented effectively or that additional weaknesses will not emerge.\n\n \n\n9\n\n \n\n \n\nIf\nwe are unable to establish effective internal controls over board and management oversight, our ability to operate as a public company\nmay be impaired, potentially resulting in delisting, penalties, or other adverse consequences that could materially affect our business\nand stock price. We can give no assurance that the measures we have taken and plan to take in the future will remediate the deficiencies\nidentified or that any additional deficiencies or weaknesses will not arise in the future due to a failure to implement and maintain\nadequate internal control over financial reporting or circumvention of these controls. In addition, even if we successfully strengthen\nour controls and procedures, in the future, those controls and procedures may not be adequate to prevent or identify irregularities or\nerrors or to facilitate the fair presentation of our financial statements.\n\n \n\n**Our\nbusiness depends on the continued contributions made by Mr. Joseph F. Basile III, our founder, Chairman and Chief Executive Officer.\nThe loss of his services may result in a severe impediment to our business.**\n\n** **\n\nOur\nsuccess is dependent upon the continued contributions made by our founder, Chairman and Chief Executive Officer, Mr. Joseph F. Basile\nIII. If Mr. Basile cannot serve the Company or is no longer willing to do so, the Company does not have a secession plan in place and\nmay not be able to find alternatives in a timely manner or at all. Further, the Company presently has a limited senior management team,\nincreasing the reliance on Mr. Basile’s contributions. As a result, if Mr. Basile left the Company, it would likely result in severe\ndamage to our business operations and would have an adverse material impact on our financial position and operational results.\n\n \n\n**We\nwill require additional capital in order to achieve commercial success and, if necessary, to finance future operations as we endeavor\nto build revenue, but we cannot assure you that we will be able to obtain adequate capital as and when required.**\n\n** **\n\nWe\nwill require significant expenditures to fund future growth. We intend to fund our growth out of the proceeds of recent offerings and\ninternal sources of liquidity or through additional financing from external sources. Our ability to obtain external financing in the\nfuture at a reasonable cost is subject to a variety of uncertainties, including our future financial condition, results of operations\nand cash flows and the condition of the global and domestic financial markets.\n\n \n\nIf\nwe require additional funds and cannot obtain them on acceptable terms when required or at all, we may be unable to fulfill our working\ncapital needs, upgrade our existing facilities or expand our business and may have to reduce the level of our operations. These factors\nmay also prevent us from entering into transactions that would otherwise benefit our business or implementing our future strategies.\nAny debt financing that we undertake may be expensive and might impose covenants that restrict our operations and strategic initiatives,\nincluding limitations on our ability to incur liens or additional debt, pay dividends, repurchase our capital stock, make investments\nand engage in mergers, consolidations, and asset sale transactions. Equity financing may be on terms that are dilutive or potentially\ndilutive to our shareholders, and the prices at which new investors would be willing to purchase our equity securities may be lower than\nthe trading prices of such equities. If new sources of financing are required, but are unattractive, insufficient, or unavailable, then\nwe could be required to modify our business plans or growth strategy which could have a material adverse effect on our business, results\nof operations or financial condition.\n\n \n\n**Our\nfuture expansion plans are subject to uncertainties and risks.**\n\n** **\n\nOur\nstrategic plans for future expansion into new geographical regions and business segments are subject to various uncertainties and risks\nthat could materially affect our business, financial condition, and results of operations. Expanding into new regions of the U.S. involves\nsignificant challenges, including unfamiliarity with local market conditions, regulatory environments, and competitive landscapes. These\nfactors can lead to increased costs, delays, and operational inefficiencies, potentially impacting our profitability and growth. Our\nsuccess in new markets depends on our ability to effectively market our services and establish a strong presence. Failure to gain market\nacceptance for our construction services, whether in commercial construction, franchise locations, luxury homes, or multi-family dwellings,\ncould result in lower-than-expected revenues and hinder our expansion efforts.\n\n \n\nAs\nwe expand our operations, we face the challenge of integrating new projects with our existing business. This includes aligning new projects\nwith our current operational standards, managing increased complexity, and ensuring consistent quality across all of our business segments.\nAny failure in operational integration could disrupt our business and negatively impact on our financial performance. Furthermore, each\nregion and business segment may have distinct regulatory requirements. Ensuring compliance with varying local, state, and federal regulations\ncan be complex and costly. Non-compliance could result in legal penalties, project delays, and reputational damage, adversely affecting\nour business.\n\n \n\n**We\nwill experience significant risks while attempting to enter the real estate development market.**\n\n** **\n\nThe\nCompany’s entry into real estate development exposes it to a range of risks that could materially and adversely affect its financial\ncondition, results of operations, and growth prospects. Real estate development projects are capital intensive and typically involve\nsignificant upfront costs, including land acquisition, construction, permitting, and financing expenses, which may not be recovered if\na project fails to meet its anticipated return on investment. Additionally, development projects are subject to various external factors\nbeyond the Company’s control, such as changes in local zoning laws, delays in permitting, fluctuations in construction costs, interest\nrate volatility, and shifts in market demand for commercial and residential properties. These risks are exacerbated by the cyclical nature\nof the real estate market, where downturns in the economy or disruptions in the credit markets may result in reduced project feasibility,\nlower occupancy rates, or diminished property values. Any failure to accurately project development timelines, secure adequate financing,\nor adapt to market conditions could impair the profitability of real estate development initiatives and negatively impact the Company’s\noverall financial performance.\n\n \n\n10\n\n \n\n \n\n**We\nwill experience significant risks while attempting to enter the AI Autonomous Robotics market.**\n\n** **\n\nEntering\nthe AI autonomous robotics market exposes the Company to substantial strategic, operational, and financial risk that differ meaningfully\nfrom our traditional construction and development activities. This sector is characterized by rapid technological change, high R&D\ncosts, and intense competition from well-capitalized technology firms, making it difficult to achieve and maintain a competitive advantage.\nThe regulatory environment for autonomous system is still evolving, creating uncertainty around compliance, safety standards, and potential\nliability exposure.\n\n \n\n**If\nwe are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately\nawarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract.**\n\n** **\n\nWe\nderive revenue from fixed unit price contracts, cost-plus contracts and lump sum contracts. The nature of our contracts, particularly\nthose that are fixed-price, subjects us to risks associated with cost overruns, operating cost inflation and potential claims for liquidated\ndamages. Fixed unit price contracts require us to provide materials and services at a fixed unit price based on approved quantities irrespective\nof our actual per unit costs. Lump sum contracts require that the total amount of work be performed for a single price irrespective of\nour actual per unit costs. Cost-plus contracts allow us to be reimbursed for all allowable costs plus a fixed fee. We realize a profit\non our contracts only if we accurately estimate our costs and then successfully control actual costs and avoid cost overruns, and our\nrevenue exceeds actual costs. If our cost estimates for a contract are inaccurate, or if we do not execute the contract within our cost\nestimates, then cost overruns may cause us to incur losses or cause the contract not to be as profitable as we expected. The final results\nunder these types of contracts could negatively affect our business, financial condition, results of operations and cash flows.\n\n \n\nThe\ncosts incurred and gross margin realized on our contracts can vary, sometimes substantially, from our original projections due to a variety\nof factors, including, but not limited to:\n\n \n\n●\non site conditions that differ from those assumed in the original bid or contract;\n\n \n\n●\nfailure to include required materials or work in a bid, or the failure to estimate properly the quantities or costs of materials needed\nto complete a contract;\n\n \n\n●\ncontract or project modifications creating unanticipated costs not covered by change orders;\n\n \n\n●\nfailure by our suppliers, subcontractors, designers, engineers, joint venture partners, or clients to perform their obligations;\n\n \n\n●\ndelays in quickly identifying and taking measures to address issues which arise during contract execution;\n\n \n\n●\nchanges in availability, proximity and costs of materials, including steel, concrete, aggregates and other construction materials, as\nwell as fuel for our equipment;\n\n \n\n●\nclaims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which\nour work is part;\n\n \n\n●\ndifficulties in obtaining required governmental permits or approvals;\n\n \n\n●\navailability and skill level of workers in the geographic location of a project;\n\n \n\n●\ncitations issued by any governmental authority, including OSHA;\n\n \n\n●\nunexpected labor conditions, costs or work stoppages;\n\n \n\n●\nchanges in applicable laws and regulations;\n\n \n\n●\ndelays caused by weather conditions;\n\n \n\n●\nfraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, joint venture partners or clients or\nour own personnel; and\n\n \n\n●\nmechanical problems with our machinery or equipment.\n\n \n\n11\n\n \n\n \n\n**We\ncurrently maintain all our cash and cash equivalents with one financial institution, and, therefore, our cash and cash equivalents could\nbe adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.**\n\n** **\n\nWe\ncurrently maintain all our cash and cash equivalents with one (1) financial institution, Seacoast National Bank. As of June 16, 2026,\nour cash balance in excess of Federal Deposit Insurance Corporation insurance (“FDIC Insurance”) limit was $10,818,120. Therefore,\nwe may not be able to recover a substantial portion of these cash and cash equivalents, in the event of the failure of any such financial\ninstitutions. As a result of the recent inability of certain businesses with accounts at Silicon Valley Bank to gain access to their\ndeposits and the greater focus on the concerns of potential failures of other financial institutions in the future, we are considering\ndiversifying our investments by transferring cash not required for immediate use into short-term treasury bills and also considering\ntransferring a portion of our cash and cash equivalents to other financial institutions in order to reduce the risks associated with\nmaintaining all of our cash and cash equivalents at three financial institutions. Additionally, we intend to work with our current financial\ninstitution to increase the amount of funds held there that are insured by FDIC Insurance. Notwithstanding these efforts, the failure\nof our financial institutions in which our cash and cash equivalents are held, the resulting inability for us to obtain the return of\nour funds from any of those financial institutions, or any other adverse condition suffered by any of those financial institutions, could\nimpact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.\n\n \n\n**Increased\ncosts of labor and materials can materially and adversely affect our business, results of operations or financial condition.**\n\n** **\n\nHigher\nthan expected costs of labor and materials, including transportation costs related to increased fuel pricing, may adversely affect our\nability to realize profits on our construction projects. Inflation, interest rate impacts on our suppliers’ pricing, and supply\nchain failures are potential causes for such increased costs. It is difficult to accurately project these costs when bidding on a project,\nand there is no guarantee that we will be able to pass these higher costs on to our customers. As a result, an increase in such costs\ncould have a material adverse effect on our business, results of operations, or financial condition.\n\n \n\nRecent\ninflationary pressures have materially impacted our operations and may continue to do so in the future. Specifically, we have experienced\ndelayed commencement dates on projects as we have had to revise budgets and proposals to account for the rising costs of labor and materials.\nInflation has caused the prices of key construction materials, such as steel, lumber, and concrete, to rise substantially. These increased\ncosts have made projects more expensive overall. Additionally, stronger lending requirements, elevated borrowing costs and increased\nfinancing rates have delayed our clients in securing construction loans, further impacting project timelines. While most of these inflationary\ncosts are passed directly to the consumer as a pass-through cost, the cumulative effect of these delays and increased costs have and\nmay continue to have a significant adverse impact on our profitability and cash flow.\n\n \n\n**Supply\nchain disruptions could materially affect our business.**\n\n** **\n\nOur\nbusiness operations rely heavily on a stable and efficient supply chain. Any disruptions, terminations, or interruptions in our supply\narrangements, as well as increases in the cost of materials and products, could have a material adverse effect on our business, financial\ncondition, and results of operations. We depend on a network of suppliers for the materials and products necessary for our construction\nprojects. Disruptions in this supply chain, whether due to natural disasters, geopolitical events, transportation issues, or other unforeseen\ncircumstances, can lead to delays in project timelines, increased costs, and reduced profitability. Our supply arrangements are critical\nto maintaining a steady flow of materials. The termination or interruption of these arrangements, whether due to supplier bankruptcy,\ncontract disputes, or other reasons, could force us to seek alternative suppliers, potentially at higher costs and with longer lead times.\nThis could negatively impact our ability to complete projects on schedule and within budget. Fluctuations in the cost of materials and\nproducts, driven by factors such as inflation, changes in market demand, or supply shortages, can significantly impact our operating\nexpenses. Increased costs for key materials like steel, concrete, and lumber can erode our profit margins and make it more challenging\nto offer competitive pricing to our clients. Additionally, the quality and availability of materials are crucial to our construction\nprojects. Any decline in the quality of supplied materials or shortages in availability can lead to project delays, increased rework,\nand higher costs. Ensuring consistent quality and availability is essential to maintaining our reputation and client satisfaction.\n\n \n\n**The\nrecent imposition of tariffs by the U.S. government on imports from Canada, Mexico, and China presents several risks that could materially\nand adversely affect our business operations and financial performance.**\n\n** **\n\nRecent\ntariffs and proposed tariffs, including the 25% tariffs on Canadian and Mexican imports and 20% tariffs on Chinese goods encompass essential\nconstruction materials such as steel, aluminum, and lumber. While the Company does not purchase materials from these countries, the tariffs\nmay cause delays and shortages in obtaining necessary materials, potentially leading to project delays and increased costs. This could\nadversely affect our ability to meet project deadlines and contractual obligations and may lead to higher expenses for our projects and\ncould negatively impact our profit margins.\n\n \n\n12\n\n \n\n \n\nIn\nresponse to U.S. tariffs, Canada and Mexico have announced plans for their own tariffs on American products. Such retaliatory actions\ncould further disrupt supply chains and increase costs for materials and goods essential to our operations.\n\n \n\nThe\ntariffs have introduced significant uncertainty into the market, leading to volatility in material prices and potential delays in project\ntimelines. This uncertainty could affect our strategic planning and financial forecasting.\n\n \n\nWe\nare actively monitoring the situation and exploring strategies to mitigate these risks, including seeking alternative suppliers, adjusting\nproject timelines, and exploring cost-saving measures. However, there can be no assurance that these efforts will fully offset the potential\nnegative impacts of the tariffs.\n\n \n\n**Our\nability, or inability, to establish strategic partnerships and expand our operations may adversely affect our business and our plans.**\n\n** **\n\nOur\nability to establish and maintain strategic partnerships is crucial for the expansion of our operations and overall business success.\nBuilding strong relationships with our clients, especially franchise clients, is essential for securing repeat business and referrals\nto new clients. However, if we are unable to effectively establish these partnerships, our growth plans may be adversely affected. The\nsuccess of our expansion efforts depends on our ability to foster trust and collaboration with our partners. Failure to do so could result\nin missed opportunities for new projects and hinder our ability to penetrate new markets. Additionally, any disruptions or challenges\nin our existing partnerships could negatively impact our reputation and limit our ability to attract new clients.\n\n \n\n**Adverse\neconomic conditions that impact consumer spending may materially affect our business and our partners’ businesses.**\n\n** **\n\nOur\nbusiness, as well as the businesses of our partners, is significantly influenced by general economic conditions. Economic downturns,\nrecessions, or periods of economic uncertainty can lead to reduced consumer spending, which may have a material adverse effect on our\nconstruction and development projects. During economic downturns, consumers often reduce spending, including on new homes and commercial\nproperties. This reduction in consumer spending can lead to decreased demand for our construction and development services, resulting\nin lower revenues and profitability.\n\n \n\nEconomic\nconditions can also impact the availability and cost of financing for our projects. Tightened credit markets and higher interest rates\ncan make it more difficult and expensive for us and our partners to secure the necessary funding for ongoing and future projects. This\ncan delay or halt project development, further impacting our financial performance. Economic instability can lead to disruptions in the\nsupply chain, affecting the availability and cost of materials and labor. Increased costs and delays in obtaining necessary resources\ncan negatively impact project timelines and budgets, reducing our overall profitability. Economic conditions can also lead to increased\nmarket volatility, affecting property values and investment returns. Fluctuations in real estate markets can impact the valuation of\nour projects and the ability to sell or lease properties at favorable terms, further affecting our financial stability.\n\n \n\n**The\nfailure of our IT systems or a security breach involving consumer or employee personal data could have a materially adverse effect on\nour reputation and business, results of operations or financial condition.**\n\n** **\n\nOur\nbusiness operations utilize a variety of cloud-based IT systems. We are dependent on these systems for all commercial transactions, and\nsupply chain and inventory management. Although we (i) have established a firewall for our network, (ii) conduct regular system updates\nand employee training, (iii) regularly backup our data and (iv) have established appropriate contingency plans to mitigate the risks\nassociated with a failure of our IT systems or a security breach, if one of our key IT systems were to suffer a failure or security breach\nthis could have a material adverse effect on our business, results of operations or financial condition. Further, we rely on third parties\nfor certain IT services. If an IT service provider were to fail or the relationship with us were to end, we might be unable to find a\nsuitable replacement in a timely manner, and our business, results of operations or financial condition could be materially and adversely\naffected. We continually modify and enhance our IT systems and technologies to increase productivity and efficiency. As new systems and\ntechnologies are implemented, we could experience unanticipated difficulties resulting in unexpected costs and adverse impacts to our\nmanufacturing and other business processes. When implemented, the systems and technologies may not provide the benefits anticipated and\ncould add costs and complications to ongoing operations, which may have a material adverse effect on our business, results of operations\nor financial condition.\n\n \n\nWe\nreceive and store personal information in connection with human resources operations, marketing efforts and other aspects of our businesses.\nAdditionally, we exchange information with numerous trading partners across all aspects of our operations. Any security breach of our\nIT systems or those of our dealers, distributors and trading partners could result in disruptions to our operations or erroneous transactions.\nTo the extent that such a breach results in a loss or damage to our data, or an inappropriate disclosure of confidential or personal\ninformation, it could cause significant damage to our reputation, affect our relationships with our clients, lead to claims against us\nand ultimately materially and adversely affect our business, results of operations or financial condition.\n\n \n\nAs\nof the date of this annual report, we have not experienced a material cyber security incident.\n\n \n\n13\n\n \n\n \n\n**Failure\nto maintain safe work sites could result in significant losses, which could materially affect our business and reputation.**\n\n** **\n\nBecause\nour employees and others are often in close proximity with mechanized equipment, moving vehicles, and chemical substances, our construction\nand maintenance sites are potentially dangerous workplaces. Therefore, safety is a primary focus of our business and is critical to our\nreputation and performance. Many of our clients require that we meet certain safety criteria to be eligible to work on the project. Unsafe\nwork conditions, including OSHA violations, also can increase employee and subcontractor turnover, which increases project costs and\ntherefore our overall operating costs. If we fail to implement safety procedures, implement ineffective safety procedures or fail to\nhave adequate insurance policies in place, our employees and subcontractors could be injured, and we could be exposed to investigations\nand possible litigation. Our failure to maintain adequate safety standards through our safety programs could also result in reduced profitability\nor the loss of projects or clients, and could have a material adverse impact on our financial position, results of operations, cash flows\nor liquidity.\n\n \n\n**Potential\nlawsuits could expose us to substantial liabilities.**\n\n** **\n\nOur\nbusiness operations expose us to the risk of litigation, which could result in substantial liabilities and adversely affect our financial\ncondition and results of operations. Legal claims and disputes related to contract performance, construction defects, workplace safety,\nand environmental regulations can lead to significant legal expenses, settlements, or judgments. Even if we successfully defend against\nthese claims, the associated costs can strain our financial resources and negatively impact profitability. Additionally, litigation can\nharm our reputation, disrupt operations, and divert management’s attention from core business activities. While we maintain insurance\ncoverage, it may not fully cover all potential liabilities, leading to significant out-of-pocket expenses.\n\n \n\n**We\nmay be unable to obtain or maintain sufficient bonding capacity, which could materially and adversely affect our business.**\n\n** **\n\nSome\nof our contracts require performance and payment bonds. Our ability to obtain performance and payment bonds primarily depends upon our\ncapitalization, working capital, past performance, management expertise, reputation and certain external factors, including the overall\ncapacity of the surety market. If we are unable to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded\nfrom being able to bid for certain projects or successfully contract with certain clients. In addition, even if we are able to successfully\nrenew or obtain performance or payment bonds, we may be required to post letters of credit in connection with such bonds, which could\nnegatively affect our liquidity and results of operations.\n\n \n\nIt\nis standard for sureties to issue or continue bonds on a project-by-project basis, and they can decline to do so at any time or require\nthe posting of additional collateral as a condition thereto. Events that adversely affect the insurance and bonding markets generally\nmay result in bonding becoming more difficult to or costly to obtain in the future. If we were to experience an interruption or reduction\nin the availability of our bonding capacity as a result of these or any other reasons, or if bonding costs were to increase, we may be\nunable to compete for certain projects that require bonding, which would materially and adversely affect our financial condition, results\nof operations or liquidity.\n\n \n\n**Our\ninsurance may not be sufficient.**\n\n** **\n\nWe\ncarry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage, discussed in the “Insurance”\nsection. Nonetheless, we are not fully insured against all possible risks, nor are all such risks insurable. We may be forced to cover\nthe costs of certain realized risks which may have a material adverse effect on our business, results of operations or financial condition.\n\n \n\n**Our\nbusiness requires us to pay contracting licensing fees for each state that we operate in. We may not be able to justify the cost of compliance\nin a particular state or locality thus necessitating that we allow our license to expire. This may have a materially adverse effect on\nour business, results of operations or financial condition.**\n\n** **\n\nEach\nstate within the United States maintains its own licensing regime with respect to construction and development business. The applicable\nfees and compliance rules may prove too costly for us and senior management may choose to permit our license-to-do-business in certain\nstates to expire. We may make such a decision based on the costs outweighing the benefits, although our judgment may prove incorrect,\nand we may forfeit the possibility of significant profit by withdrawing from a certain state. Poor decision-making with respect to allowing\ncertain licenses to expire or to maintaining them indefinitely may have a materially adverse effect on our business, results of operations\nor financial condition.\n\n \n\n14\n\n \n\n \n\n**We\ndepend on third parties for equipment and supplies essential to operate our business.**\n\n** **\n\nWe\nrely on third parties to sell or lease equipment to us and to provide us with supplies including construction materials necessary for\nour operations. We cannot assure you that our favorable working relationships with our suppliers will continue in the future. In addition,\nthere have historically been periods of supply shortages in our industry.\n\n \n\nThe\ninability to purchase or lease equipment that is necessary for our operations could severely impact our business. If we lose our supply\ncontracts and receive insufficient supplies from third parties to meet our clients’ needs, or if our suppliers experience price\nincreases or disruptions to their business, such as labor disputes, supply shortages or distribution problems, our business, financial\ncondition, results of operations, liquidity and cash flows could be materially and adversely affected.\n\n \n\nMany\ntimes our subcontractors are responsible for purchasing supplies for our projects so their inability to adequately source materials impacts\nour ability to operate. To help offset this risk, the Company has multiple trade accounts with suppliers to source supplies and materials\nthat our subcontractors are unable to procure.\n\n \n\n**We\nhave not made use of confidentiality agreements in the past and, although we intend to rely on such agreements in future dealings with\nour suppliers, employees, consultants, and other parties, the prior lack or the breach of such agreements could adversely affect our\nbusiness and results of operations.**\n\n** **\n\nIn\nthe past, we have not made use of confidentiality agreements with our employees, clients, consultants and other parties to protect proprietary\ninformation or trade secrets. We intend to rely on such confidentiality agreements on a go-forward basis. Current and former employees\nnot covered under confidentiality agreements may divulge our proprietary information or trade secrets. The release of such proprietary\ninformation or trade secrets could adversely affect our business and results of operations. Additionally, for individuals covered by\nfuture confidentiality agreements, there can be no assurance that these agreements will not be breached, that we would have adequate\nremedies for any such breach or that our proprietary information or trade secrets will not otherwise become known to or independently\ndeveloped by competitors. To the extent that consultants, key employees or other third parties apply technological information independently\ndeveloped by them or by others to our proposed projects, disputes may arise as to the proprietary rights to such information that may\nnot be resolved in our favor. We may be involved from time to time in litigation to determine the enforceability, scope and validity\nof our rights. Any such litigation could result in substantial cost and diversion of effort by our management and technical personnel\nat the expense of other tasks related to our business.\n\n \n\n**Our\nfailure to meet the schedule or performance requirements of our contracts could adversely affect us.**\n\n** **\n\nIn\nmost cases, our contracts require completion by a scheduled acceptance date. Failure to meet any such schedule, unless the result of\nnon-fault issues such as force majeure, could result in additional costs, penalties or liquidated damages being assessed against us,\nand these could exceed projected profit margins on the contract. Performance problems on existing and future contracts, such as material\nshortages, changes to the scope of work or subcontractor performance, could cause actual results of operations to differ materially from\nthose anticipated by us and could cause us to suffer damage to our reputation within the industry and among our clients.\n\n \n\n**We\nmay choose, or be required, to pay our subcontractors even if our clients do not pay, or delay paying us for the related services.**\n\n** **\n\nWe\nuse subcontractors to perform portions of our services. In some cases, we pay our subcontractors before our clients pay us for the related\nservices. We could experience a material decrease in profitability and liquidity if we choose, or are required, to pay our subcontractors\nfor work performed for clients that fail to pay, or delay paying us, for the related work.\n\n \n\n**Our\nsubcontractors may fail to satisfy their obligations or we may be unable to maintain these relationships, which could have a material\nadverse effect on our business.**\n\n** **\n\nOur\nbusiness relies heavily on subcontractors to fulfill various aspects of our construction projects. If our subcontractors fail to satisfy\ntheir obligations to us or other parties, it could lead to project delays, increased costs, and potential legal disputes. Such failures\ncan negatively impact our reputation, client relationships, and overall project outcomes. Maintaining strong relationships with our subcontractors\nis crucial for our operational success. If we are unable to sustain these relationships, whether due to financial instability, performance\nissues, or competitive pressures, it could disrupt our supply chain and project schedules. This disruption may result in higher costs\nand reduced efficiency, adversely affecting our profitability and growth prospects.\n\n \n\n**Intense\ncompetition may adversely affect our business and financial condition.**\n\n** **\n\nWe\noperate in a highly competitive industry, and we face significant competition from both established companies and new market entrants.\nSome of our competitors have greater financial, technical, and marketing resources than we do, which may allow them to invest in expansion,\nacquisitions, and other strategic initiatives and to respond more quickly to new opportunities, technological advancements, and changes\nin consumer preferences. Our competitors may engage in aggressive pricing strategies, offer more attractive terms to clients, or invest\nheavily in marketing and promotional activities. These actions can lead to reduced market share, lower sales volumes, and decreased profitability\nfor our business. Additionally, established competitors may have stronger brand recognition and customer loyalty, which can be difficult\nfor us to overcome. This can limit our ability to attract new clients and retain existing ones, impacting our growth and market position.\n\n \n\n15\n\n \n\n \n\n**We\nmay lose business to competitors that underbid us, and we may be unable to compete favorably in our highly competitive industry.**\n\n** **\n\nSome\nof our project awards are determined through a competitive bidding process in which price is the determining factor. We compete against\nmultiple competitors in all of the markets in which we operate, most of which are local or regional operators. Some of our competitors\nare larger than we are, are vertically integrated and/or have similar or greater financial resources than we do. As a result, our competitors\nmay be able to bid at lower prices than we can due to the location of their plants or as a result of their size or vertical-integration\nadvantages. An increase in competition may result in a decrease in new project awards to us at acceptable profit margins.\n\n \n\n**We\ncould incur material costs and losses as a result of claims that our materials do not meet regulatory requirements or contractual specifications.**\n\n** **\n\nWe\nprovide our customers with materials designed to comply with building codes or other regulatory requirements, as well as any applicable\ncontractual specifications. If our materials do not satisfy these requirements and specifications, material claims may arise against\nus, our reputation could be damaged and, if any such claims are for an uninsured, non-indemnified or product-related matter, then resolution\nof such claim against us could have a material adverse effect on our financial condition, results of operations or liquidity.\n\n \n\n**Unionization\nactivities may disrupt our operations and increase our costs.**\n\n** **\n\nAlthough\nnone of our employees are currently covered under collective bargaining agreements, our employees or those of our suppliers may elect\nto be represented by labor unions in the future. If a significant number of our employees or that of our suppliers were to become unionized\nand collective bargaining agreement terms were significantly different from our or our suppliers’ current compensation arrangements,\nit could have a material adverse effect on our business, financial condition and results of operations. In addition, a labor dispute\ninvolving some or all our or that of our suppliers or employees may harm our reputation, disrupt our operations and reduce our revenues,\nand resolution of disputes could increase our costs. Further, if we enter into a new market with unionized construction companies, or\nthe construction companies in our current markets become unionized, construction and build-out costs for new projects in such markets\ncould materially increase.\n\n \n\n**We\nhave a limited operating history upon which investors can evaluate our future prospects.**\n\n** **\n\nWe\nhave a limited operating history upon which an evaluation of our business plan or performance and prospects can be made. The business\nand prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications encountered\nin connection with a newly established business and new industry. The risks include, but are not limited to, the possibility that we\nwill not be able to develop functional and scalable products and services, or that although functional and scalable, our products and\nservices will not be economical to market; that our competitors hold proprietary rights that preclude us from marketing such products;\nthat our competitors market a superior or equivalent product; that we are not able to upgrade and enhance our portfolio and to accommodate\nnew features and expanded service offerings; or the failure to receive necessary environmental clearances for our presence in certain\nmarkets. To successfully introduce and market our services at a profit, we must establish brand name recognition and competitive advantages\nfor our services. There are no assurances that we can successfully address these challenges and if unsuccessful, we and our business,\nfinancial condition and operating results could be materially and adversely affected.\n\n \n\nThe\ncurrent and future expense levels of our business are based largely on estimates of planned operations and future revenues rather than\nexperience. It is difficult to accurately forecast future revenues because our business is new and our market has not been developed.\nIf our forecasts prove incorrect, the business, operating results and financial condition of the Company may be materially and adversely\naffected. Moreover, we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in revenues.\nAs a result, any significant reduction in planned or actual revenues may immediately and adversely affect our business, financial condition\nand operating results.\n\n \n\n16\n\n \n\n \n\n**We\ncould be exposed to significant liability claims if we are unable to obtain insurance at acceptable costs and adequate levels or otherwise\nprotect ourselves against potential claims.**\n\n** **\n\nOur\nservices entail the inherent risk of liability claims or product recalls. Liability insurance is expensive and, if available, may not\nbe available on acceptable terms at all periods of time. A successful liability claim or issue could inhibit or prevent the successful\ncommercialization of our services, cause a significant financial burden on the Company, or both, which in either case could have a material\nadverse effect on our business and financial condition.\n\n \n\n**Risks\nRelating to Our Industry**\n\n** **\n\n**Our\nresults of operations fluctuate from quarter to quarter and from year to year as they are affected, among other things, by the seasonal\nnature of the construction industry.**\n\n** **\n\nOur\nresults of operations experience substantial fluctuations from quarter to quarter and year to year. Any negative economic conditions\nthat occur during the months of traditionally higher sales of a given product could have a disproportionate effect on our results of\noperations for the entire fiscal year. We may also make strategic decisions to deliver and invoice customers at certain dates to lower\ncosts or improve supply chain efficiencies or may be forced to do so because of supply chain issues or disruption. As a result, our results\nof operations are likely to fluctuate significantly from period to period such that any historical results should not be considered indicative\nof the results to be expected for any future period. In addition, we incur significant additional expenses in the periods leading up\nto the beginning of new projects which may also result in fluctuations in our results of operations. Our annual and quarterly gross profit\nmargins are also sensitive to a number of factors, many of which are beyond our control. This seasonality in revenues, expenses and margins,\nalong with other factors that are beyond our control, including general economic conditions, changes in consumer preferences, weather\nconditions, including major weather events such as hurricanes, geopolitical uncertainty, the cost or availability of raw materials or\nlabor, discretionary spending habits and currency exchange rate fluctuations, could materially and adversely affect our business, results\nof operations or financial condition.\n\n \n\n**We\nare subject to laws, rules and regulations regarding safety, health, environmental and noise pollution and other issues that could cause\nus to incur fines or penalties or increase our operating costs.**\n\n** **\n\nWe\nare subject to federal, state local, and municipal laws, rules and regulations in the United States regarding product safety, health,\nenvironmental and noise pollution and other issues that could cause us to incur fines or penalties or increase our operating costs, all\nof which could have a material adverse effect on our business, results of operations or financial condition. Namely, we are required\nto comply with the Occupational Safety and Health Act of 1970, which helps to ensure safe and healthy working conditions for workers\nby setting and enforcing standards and by providing training, outreach, education, and assistance. A failure to comply with, or compliance\nwith, any such requirements or any new requirements could result in increased expenses to modify our products, or harm to our reputation,\nwhich could have a material adverse effect on our business, results of operations or financial condition.\n\n \n\n**Our\noperations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible\nlosses which may not be covered by insurance.**\n\n** **\n\nOperating\nhazards inherent in our business, some of which may be outside our control, can cause personal injury and loss of life, damage to or\ndestruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks\nwe believe are consistent with industry practice, but this insurance may be inadequate or unavailable to cover all losses or liabilities\nwe may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts\nare accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of claims incurred but not reported.\nHowever, liabilities subject to insurance are difficult to estimate due to unknown factors, including the severity of an injury, the\ndetermination of our liability in proportion to other parties, the number of unreported incidents and the effectiveness of our safety\nprograms. If we were to experience insurance claims or costs above our estimates, we may be required to use working capital to satisfy\nthese claims rather than using working capital to maintain or expand our operations.\n\n \n\n**The\nconstruction services industry is highly schedule driven, and our failure to meet the schedule requirements of our contracts could adversely\naffect our reputation and/or expose us to financial liability.**\n\n** **\n\nIn\nsome instances, we guarantee that we will complete a project by a certain date. Any failure to meet contractual schedule or completion\nrequirements set forth in our contracts could subject us to responsibility for costs resulting from the delay, generally in the form\nof contractually agreed-upon liquidated damages, liability for our customer’s actual costs arising out of our delay, reduced profits\nor a loss on that project, damage to our reputation and a material adverse impact to our financial position, results of operations, cash\nflows and liquidity.\n\n \n\n17\n\n \n\n \n\n**Natural\ndisasters, unusually adverse weather, pandemic outbreaks, boycotts and geo-political events could materially and adversely affect our\nbusiness, results of operations or financial condition and the market for stocks globally.**\n\n** **\n\nThe\noccurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, pandemic outbreaks, boycotts\nand geo-political events, such as civil unrest and acts of terrorism, upheavals in international relations, or similar disruptions could\nmaterially and adversely affect our business, results of operations or financial condition. These events could result in physical damage\nto one or more of our properties or construction projects, increases in fuel or other energy prices, temporary or permanent closure of\none or more of our projects, temporary lack of an adequate workforce in a market, temporary or long-term disruption in the supply of\nraw materials or building supplies, and disruption to our information systems, and, ultimately, have a material adverse impact on our\nbusiness, results of operations or financial condition. Further, such events could materially and adversely affect the financial markets.\nThe price of our common stock may decline significantly if such an event were to occur. Our business operations are subject to interruption\nby natural disasters, fire, power shortages, pandemics and other events beyond our control. Such events could make it difficult or impossible\nfor us to deliver our products and services to our customers and could decrease demand for our products and services.\n\n \n\n**We\nmay not have sufficient resources to effectively introduce and market our services and products, which could materially harm our operating\nresults.**\n\n** **\n\nContinuation\nof market acceptance for our existing services and products requires substantial marketing efforts and will require our sales account\nexecutives and contract partners to make significant expenditures of time and money. In some instances, we will be significantly or totally\nreliant on the marketing efforts and expenditures of our contract partners, outside sales agents and distributors.\n\n \n\nCommercialization\nof our products and services require us to expand our own marketing and sales capabilities or consider collaborating with additional\nthird parties to perform these functions. We may, in some instances, rely significantly on sales, marketing and distribution arrangements\nwith collaborative partners and other third parties. In these instances, our future revenue will be materially dependent upon the success\nof the efforts of these third parties.\n\n \n\nShould\nwe determine that expanding our own marketing and sales capabilities continues to be required, we may not be able to attract and retain\nqualified personnel to serve in our sales and marketing organization, to develop an effective distribution network or to otherwise effectively\nsupport our commercialization activities. The cost of establishing and maintaining a more comprehensive sales and marketing organization\nmay exceed its cost effectiveness. If we fail to further develop our sales and marketing capabilities, if sales efforts are not effective\nor if costs of increasing sales and marketing capabilities exceed their cost effectiveness, our business, results of operations and financial\ncondition would be materially and adversely affected.\n\n \n\n**We\noperate in a highly competitive industry.**\n\n** **\n\nWe\nmay encounter competition from local, regional, or national entities, some of which have superior resources or other competitive advantages\nin the larger construction and real estate development space. Intense competition may adversely affect our business, financial condition,\nor results of operations. These competitors may be larger and more highly capitalized, with greater name recognition. We will compete\nwith such companies on brand name, quality of services, level of expertise, advertising, product and service innovation and differentiation\nof product and services. As a result, our ability to secure significant market share may be impeded.\n\n \n\n**We\nmay require additional financing to sustain or grow our operations. Raising additional capital may cause dilution to our existing stockholders\nand investors, or restrict our operations.**\n\n** **\n\nWe\nmay need to seek additional capital through a variety of means, including through private and public equity offerings and debt financings,\ncollaborations, or strategic alliances and acquisitions. To the extent that we raise additional capital through the sale of equity or\nconvertible debt securities, or through the issuance of shares under other types of contracts, the ownership interests of our stockholders\nmay be diluted, and the terms of such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise\nprice adjustments and other provisions that adversely affect the rights of our stockholders, including rights, preferences and privileges\nthat are senior to those of our holders of Common Stock in terms of the payment of dividends or in the event of a liquidation. In addition,\ndebt financing, if available, could include covenants limiting or restricting our ability to take certain actions, such as incurring\nadditional debt, making capital expenditures, entering into contractual arrangements, or declaring dividends and may require us to grant\nsecurity interests in our assets.\n\n \n\n18\n\n \n\n \n\n**Risks\nRelating to Our Securities**\n\n** **\n\n**The\nexisting market for our securities developed very recently, and we do not know whether it will provide you with adequate liquidity.**\n\n** **\n\nPrior\nto our recent offering, there had not been a public market for our securities. We cannot assure you that an active trading market for\nour common stock will continue, having only developed recently. You may not be able to sell your shares quickly or at the market price\nif trading in our common stock is not active. The initial public offering price for the shares was determined by negotiations between\nus and representatives of the underwriters and may not be indicative of prices that will ultimately prevail in the trading market.\n\n \n\n**JFB\nConstruction Holdings is a holding company.**\n\n** **\n\nWe,\nJFB Construction Holdings, are a holding company and our only significant assets are the membership interest and capital stock of our\ncurrent or future subsidiaries. As a result, we are subject to the risks attributable to our subsidiaries. As a holding company, we conduct\nsubstantially all of our business through its subsidiaries, which generate substantially all of our revenues. Consequently, our cash\nflows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of our subsidiaries\nand the distribution of those earnings to us. The ability of these entities to pay dividends and other distributions will depend on their\noperating results and will be subject to applicable laws and regulations which require that solvency and capital standards be maintained\nby such companies and contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation\nor reorganization of any of our subsidiaries, holders of indebtedness and trade creditors will generally be entitled to payment of their\nclaims from the assets of that subsidiary before any assets are made available for distribution to us.\n\n \n\n**The\nmarket price of our common stock is likely to be highly volatile, and you could lose all or part of your investment.**\n\n** **\n\nInvesting\nin our stock involves substantial risk due to potential for rapid and unpredictable fluctuations in our stock price. The trading price\nof our common stock is likely to be volatile and may experience rapid and unpredictable changes. This volatility can make it difficult\nfor investors to assess the rapidly changing value of our stock and may prevent you from being able to sell your shares at or above the\nprice you paid for them. Our stock price could be subject to wide fluctuations in response to a variety of factors, which include:\n\n \n\n●\nactual or anticipated fluctuations in our quarterly or annual operating results;\n\n \n\n●\npublication of research reports by securities analysts about us or our competitors or our industry;\n\n \n\n●\nthe public’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission\n(“SEC”);\n\n \n\n●\nour failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to\nthe market; additions and departures of key personnel;\n\n \n\n●\nadditions and departures of key personnel;\n\n \n\n●\nstrategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or\nchanges in business strategy;\n\n \n\n●\nthe passage of legislation or other regulatory developments affecting us or our industry;\n\n \n\n●\nspeculation in the press or investment community;\n\n \n\n●\nchanges in accounting principles;\n\n \n\n●\nterrorist acts, acts of war or periods of widespread civil unrest;\n\n \n\n●\nnatural disasters and other calamities; and\n\n \n\n●\nchanges in general market and economic conditions.\n\n \n\nIn\naddition, instances of extreme stock price run-ups followed by rapid price declines and significant stock price volatility may occur,\nand these fluctuations may be unrelated to our actual or expected operating performance, financial condition, or prospects. Broad market\nand industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. In the\npast, securities class action litigation has often been initiated against companies following periods of volatility in their stock price.\nThis type of litigation could result in substantial costs and divert our management’s attention and resources and could also require\nus to make substantial payments to satisfy judgments or to settle litigation.\n\n \n\n19\n\n \n\n \n\n**Our\nquarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due\nto seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.**\n\n** **\n\nOur\nquarterly operating results may fluctuate significantly because of several factors, including:\n\n \n\n●\nlabor availability and costs for hourly and management personnel;\n\n \n\n●\nchanges in interest rates;\n\n \n\n●\nmacroeconomic conditions, both nationally and locally;\n\n \n\n●\nchanges in consumer preferences and competitive conditions;\n\n \n\n●\nexpansion to new markets;\n\n \n\n●\nincreases in infrastructure costs; and\n\n \n\n●\nin commodity prices.\n\n \n\nUnanticipated\nfluctuations in our quarterly operating results could result in a decline in our stock price.\n\n \n\n**Our\nfailure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.**\n\n** **\n\nIf,\nwe fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing\nbid price requirement, Nasdaq may take steps to delist our common stock. Such delisting would likely have a negative effect on the price\nof our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a de-listing,\nwe would take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such\naction taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common\nstock, prevent our common stock from dropping below Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s\nlisting requirements.\n\n \n\n**If\nour shares are delisted from Nasdaq and become subject to the penny stock rules, it would become more difficult to trade our shares.**\n\n** **\n\nThe\nSEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally\nequity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized\nfor quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions\nin such securities is provided by the exchange or system. If we do not obtain or retain a listing on Nasdaq and if the price of our common\nstock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction\nin a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.\nIn addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules,\na broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive\n(i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions\ninvolving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have\nthe effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty\nselling their shares.\n\n \n\n**We\nhave no current plans to pay cash dividends on our common stock for the foreseeable future, and you may not receive any return on investment\nunless you sell your common stock for a price greater than that which you paid for it.**\n\n** **\n\nWe\nmay retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends\nfor the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors\nand will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and\nother factors that our Board of Directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of\nany existing and future outstanding indebtedness we or our subsidiaries incur, including our credit facility. As a result, you may not\nreceive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid\nfor it and any potential investor who anticipates the need for current dividends should not purchase our securities. See the section\nentitled “*Dividend Policy*.”\n\n \n\n20\n\n \n\n \n\n**We\ncannot predict the effect our dual-class structure may have on the market price of our Class A Common Stock.**\n\n** **\n\nWe\ncannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A common stock, adverse\npublicity or other adverse consequences. The dual-class structure of our common stock may make us ineligible for inclusion in certain\nindices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices\nwould not invest in our Class A common stock. In addition, it is unclear what effect, if any, such policies will have on the valuations\nof publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to\nsimilar companies that are included. Due to the dual-class structure of our common stock, we may be excluded from certain indices and\nwe cannot assure you that other stock indices (including Nasdaq) will not take similar actions. Given the sustained flow of investment\nfunds into passive strategies that seek to track certain indices, exclusion from certain stock indices may preclude investment by many\nof these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class\nA common stock may be adversely affected.\n\n \n\n**We\nwill incur significantly increased costs as a result of operating as a public company and our management will be required to devote substantial\ntime to new compliance initiatives.**\n\n** **\n\nAs\na public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley\nAct, as well as rules subsequently implemented by the SEC and Nasdaq, has imposed various requirements on public companies. Our management\nand other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we anticipate that compliance\nwith these rules and regulations will increase our legal, accounting and financial compliance costs substantially. A number of those\nrequirements will require us to carry out activities we have not done previously. For example, we will create new board committees and\nadopt new internal controls and disclosure controls and procedures. In addition, these rules and regulations may make our activities\nrelated to legal, accounting and financial compliance more difficult, time-consuming and costly and may also place undue strain on our\npersonnel, systems and resources. Furthermore, if we identify any issues in complying with those requirements (for example, if we or\nour auditors identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur\nadditional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions\nof us. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material\nadverse effect on our business, financial condition and results of operations. For example, we expect these rules and regulations to\nmake it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur\nsubstantial costs to maintain our current levels of such coverage. These increased costs will require us to divert a significant amount\nof money that we could otherwise use to expand our business and achieve our strategic objectives. Advocacy efforts by stockholders and\nthird parties may also prompt additional changes in governance and reporting requirements, which could further increase our costs.\n\n \n\n**Unanticipated\nchanges in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect\nour financial condition and results of operations.**\n\n** **\n\nWe\nwill be subject to income taxes in the United States, and our domestic tax liabilities will be subject to the allocation of expenses\nin differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors,\nincluding:\n\n \n\n●\nchanges in the valuation of our deferred tax assets and liabilities;\n\n \n\n●\nexpected timing and amount of the release of any tax valuation allowances;\n\n \n\n●\ntax effects of stock-based compensation;\n\n \n\n●\ncosts related to intercompany restructurings;\n\n \n\n●\nchanges in tax laws, regulations or interpretations thereof; or\n\n \n\n●\nlower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings\nin jurisdictions where we have higher statutory tax rates.\n\n \n\nIn\naddition, we may be subject to audits of our income, sales and other transaction taxes by federal, state and local authorities. Outcomes\nfrom these audits could have an adverse effect on our financial condition and results of operations.\n\n \n\n**A\nchange in tax laws or regulations could increase our tax burden and adversely affect our business.**\n\n** **\n\nChanges\nin tax laws or regulations at the federal or state level could significantly impact our financial condition and results of operations.\nAny increase in our tax burden due to new legislation or changes in existing tax policies could reduce our profitability and cash flows.\nThis includes potential changes in corporate tax rates, deductions, credits, and other tax-related provisions that could increase our\noverall tax liability. Additionally, compliance with new tax regulations may require substantial time and resources, further straining\nour financial and operational capacities. Uncertainty and complexity in the tax landscape can also complicate our financial planning\nand forecasting, making it more challenging to manage our business effectively. These factors could collectively have a material adverse\neffect on our business, financial condition, results of operations, and cash flows.\n\n \n\n21\n\n \n\n \n\n**Changes\nto accounting rules or regulations may adversely affect the Company’s financial statements.**\n\n** **\n\nChanges\nto existing accounting rules or regulations may impact our financial statements, and in turn, impact the reporting of our future results\nof operations, result in additional costs to the Company or cause negative perception of the Company’s financial outlook by investors\nor analysts. Other new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred\nand may occur in the future.\n\n \n\n**Changes\nto estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates may cause\nus to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.**\n\n** **\n\nIn\naccordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with\nregard to our operations, as well as our overall performance, in connection with our impairment analyses for long-lived assets. When\nimpairment triggers are deemed to exist for our operations, the estimated undiscounted future cash flows are compared to its carrying\nvalue. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal to the difference between the carrying value\nand the fair value is recorded. The projections of future cash flows used in these analyses require the use of judgment and a number\nof estimates and projections of future operating results. If actual results differ from our estimates, additional charges for asset impairments\nmay be required in the future. If future impairment charges are significant, this could have a material adverse effect on the results\nof our operations.\n\n \n\n**We\nare an “emerging growth company,” and any decision on our part to comply with certain reduced disclosure requirements.**\n\n** **\n\nWe\nare an “emerging growth company” as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company,\nwe may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but\n(i) not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,\n(ii) not being required to comply with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”),\nrequiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide\nadditional information about the audit and the financial statements of the issuer, (iii) not being required to comply with any new audit\nrules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, (iv) reduced disclosure obligations regarding executive\ncompensation in our periodic reports and proxy statements, and (v) exemptions from the requirements of holding a nonbinding advisory\nvote on executive compensation and stockholder approval of any golden parachute payments not previously approved.\n\n \n\nWe\ncould remain an emerging growth company until the earlier of: (i) the last day of the fiscal year in which we have total annual gross\nrevenues of $1.24 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our first sale\nof common equity securities pursuant to an effective registration statement; (iii) the date on which we have issued more than $1.0 billion\nin nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer. We cannot\npredict if investors will find our securities less attractive if we choose to rely on these exemptions. If some investors find our securities\nless attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our securities\nand our stock price may be more volatile. Further, as a result of these scaled regulatory requirements, our disclosure may be more limited\nthan that of other public companies and you may not have the same protections afforded to stockholders of such companies.\n\n \n\nSection\n107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section\n7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting\nstandards. We have opted for taking advantage of the extended transition period for complying with new or revised accounting standards\npursuant to Section 107(b) of the Jobs Act.\n\n \n\n**We\nare a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies\nwill make our common stock less attractive to investors.**\n\n** **\n\nWe\nare a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934. For as long as we continue to be a smaller reporting\ncompany, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are\nnot smaller reporting companies, including reduced disclosure obligations regarding executive compensation in our periodic reports and\nproxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on smaller reporting\ncompany exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for\nour common stock, and our stock price may be more volatile.\n\n \n\n22\n\n \n\n \n\n**As\nan “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which could leave\nour stockholders with less information or fewer rights available to stockholders of more mature companies.**\n\n** **\n\nFor\nas long as we remain an “emerging growth company”, we have elected to take advantage of certain exemptions from various reporting\nrequirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited\nto:\n\n \n\n●\nnot being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;\n\n \n\n●\ntaking advantage of an extension of time to comply with new or revised financial accounting standards;\n\n \n\n●\nreduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and\n\n \n\n●\nexemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden\nparachute payments not previously approved.\n\n \n\nWe\nexpect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Because of these\nlessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more mature\ncompanies.\n\n \n\n**We\nare a “controlled company” within the meaning of Nasdaq listing standards and, as a result, will qualify for exemptions from\ncertain corporate governance requirements.**\n\n** **\n\nWe\nare a “controlled company” within the meaning of the Nasdaq listing standards. For so long as we remain a controlled company,\nwe technically qualify and are eligible to be exempted from the obligation to comply with certain Nasdaq corporate governance requirements,\nhowever, we do not plan to take advantage of the exemptions provided to controlled companies, which include\n\n \n\n●\nour Board of Directors is not required to be comprised of a majority of independent directors;\n\n \n\n●\nour Board of Directors is not subject to the compensation committee requirements; and\n\n \n\n●\nwe are not subject to the requirements that director nominees be selected either by the independent directors or a nomination committee\ncomprised solely of independent directors.\n\n \n\n●\nour Board of Directors is not required to be comprised of a majority of independent directors;\n\n \n\nThe\ncontrolled company exemptions do not apply to the audit committee requirement or the requirement for executive sessions of independent\ndirectors. We are required to disclose in our annual report that we are a controlled company and the basis for that determination. Although\nwe do not plan to take advantage of the exemptions provided to controlled companies, we may in the future take advantage of such exemptions.\nOur status as a controlled company could cause our securities to be less attractive to certain investors or otherwise adversely affect\nour securities’ trading price.\n\n \n\n**If\nsecurities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they\nchange their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.**\n\n** **\n\nThe\ntrading market for our common stock may be influenced by the research and reports that securities or industry analysts may publish about\nus, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our common\nstock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely\ndecline. If any analyst who may cover us was to cease coverage of our company or fail to regularly publish reports on us, we could lose\nvisibility in the financial markets, which in turn could cause the price of our common stock or trading volume to decline.\n\n \n\n**Anti-takeover\nprovisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay or prevent a change in control of our company\nand may affect the trading price of our common stock.**\n\n** **\n\nThe\nanti-takeover provisions of the Nevada law may discourage, delay or prevent a change in control by prohibiting us from engaging in a\nbusiness combination with an interested stockholder for a period of three (3) years after the person becomes an interested stockholder,\neven if a change in control would be beneficial to our existing stockholders. Our Articles of Incorporation and our Bylaws, may discourage,\ndelay or prevent a change in our management or control over us that stockholders may consider favorable. For example, our Board of Directors\nhas the right to issue preferred stock without stockholder approval that could be used to dilute a potential hostile acquirer. As a result,\nyou may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures, and\nefforts by stockholders to change the direction or management of the Company may be unsuccessful.\n\n \n\n23\n\n \n\n \n\n**Failure\nto establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material\nadverse effect on our business and stock price.**\n\n** **\n\nTo\ncomply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls\nand procedures and hiring additional accounting or internal audit staff, all of which would is likely to add additional attention and\ncosts to the Company. In addition, we may identify material weaknesses in our internal control over financial reporting that we may not\nbe able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404.\n\n \n\nIf\nwe identify weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in\na timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public\naccounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may\nlose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively\naffected, and we could become subject to investigations by Nasdaq, once our securities are listed, the SEC or other regulatory authorities,\nwhich could require additional financial and management resources.\n\n \n\n**Liability\nof directors for breach of duty is limited under Nevada law.**\n\n** **\n\nOur\narticles of incorporation limit the liability of directors to the maximum extent permitted by Nevada law. Nevada law provides that directors\nof a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability\nfor any:\n\n \n\n●\nbreach of their duty of loyalty to us or our stockholders;\n\n \n\n●\nact or omission not in good faith or that involves intentional misconduct or a knowing violation of law;\n\n \n\n●\nunlawful payments of dividends or unlawful stock repurchases or redemptions; or\n\n \n\n●\ntransaction from which the directors derived an improper personal benefit.\n\n \n\nThese\nlimitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability\nof equitable remedies such as injunctive relief or rescission.\n\n \n\nOur\nbylaws provide that we will indemnify for our directors and officers to the fullest extent permitted by law, and may indemnify employees\nand other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the\nfinal disposition of any action or proceeding.\n\n \n\nWe\nentered into separate indemnification agreements with our directors and officers. These agreements, among other things, require us to\nindemnify our directors and officers for any and all expenses (including reasonable attorneys’ fees, retainers, court costs, transcript\ncosts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery\nservice fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by such directors or officers or on his\nor her behalf in connection with any action or proceeding arising out of their services as one of our directors or officers, or any of\nour subsidiaries or any other company or enterprise to which the person provides services at our request provided that such person follows\nthe procedures for determining entitlement to indemnification and advancement of expenses set forth in the indemnification agreement.\nWe believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors\nand officers.\n\n \n\nThe\nlimitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from\nbringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation\nagainst directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results\nof operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors\nand officers pursuant to these indemnification provisions.\n\n \n\nIn\nso far as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling\nus, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities\nAct and is therefore unenforceable. At present, there is no pending litigation or proceeding involving any of our directors or officers\nas to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result\nin a claim for indemnification.\n\n \n\n24"}