{"url_path":"/sec/turb/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1963439/0001213900-26-057672-index.html","accession_number":"0001213900-26-057672","cik":"0001963439","ticker":"TURB","issuer_name":"Turbo Energy, S.A.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1963439/0001213900-26-057672-index.html","primary_entity_key":"0001963439","primary_entity_name":"Turbo Energy, S.A."},"word_count":18572,"has_tables":true,"body_markdown":"**ITEM 3. KEY INFORMATION**\n\n \n\n**A. [RESERVED]**\n\n \n\nNot applicable.\n\n \n\n**B. Capitalization and Indebtedness**\n\n \n\nNot applicable.\n\n \n\n**C. Reasons for the Offer and Use of Proceeds**\n\n \n\nNot applicable\n\n \n\n**D. Risk Factors**\n\n \n\n*An investment in our ADSs\ninvolves a high degree of risk. The following risk factors describe circumstances or events that could have a negative effect on our business,\nfinancial condition or operating results. You should carefully consider the risks described below, together with all of the other information\nincluded in this annual report, before making an investment decision. If any of the following risks actually occur, our business, financial\ncondition or results of operations could suffer. In that case, the trading price of our ADSs could decline, and you may lose all or part\nof your investment. Additional risks and uncertainties not currently known to us or that we currently believe are not material could also\nimpair our business, financial condition or operating results. Some statements in this annual report, including statements in the following\nrisk factors, constitute forward-looking statements. Please refer to the section titled “Cautionary Statement Regarding Forward-Looking\nStatements.”*\n\n* *\n\n**Summary of Risk Factors**\n\n** **\n\nInvesting in our Company\ninvolves significant risks. These risks include the following:\n\n \n\n \n●\nOur products may experience quality problems from time to time that could result in negative publicity, litigation, product recalls and warranty claims, which could result in decreased revenues and harm to our brands.\n\n \n\n \n●\nWe expect to incur research and development costs and devote significant resources to developing new solar energy storage and management products, which could significantly reduce our profitability and may never result in revenue to the Company.\n\n \n\n1\n\n \n\n \n\n \n●\nOur success depends on our ability to develop new products and capabilities that respond to customer demand, industry trends or actions by our competitors and failure to do so may cause us to lose our competitiveness in the photovoltaic energy storage industry and may cause our profits to decline.\n\n \n\n \n●\nWe are dependent on a few customers for a significant amount of our net revenues.\n\n \n\n \n●\nWe depend on limited-source suppliers for key components and products. If we are unable to source these components and products on a timely basis, we will not be able to deliver our products to our customers.\n\n \n\n \n●\nIf we or our contract manufacturers are unable to obtain raw materials in a timely manner or if the price of raw materials increases significantly, production time and product costs could increase, which may adversely affect our business.\n\n \n \n \n\n \n●\nFailure to regain compliance with Nasdaq could\nresult in the delisting of our ADSs from The Nasdaq Capital Market, which would adversely affect the liquidity and market price of our\nsecurities.\n\n \n\n \n●\nThe loss of, or events affecting, one of our major customers could reduce our sales and have an adverse effect on our business, financial condition and results of operations.\n\n \n\n \n●\nWe currently report our financial results under IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles.\n\n \n\n \n●\nWe are a Spanish corporation, and it may be difficult to enforce judgments against us in U.S. domestic courts.\n\n \n\n \n●\nWe are dependent on information technology systems, infrastructure and data. We or third parties upon which we rely could be subject to breaches of our information technology systems caused by system security risks, failure of our data protection, cyberattacks and erroneous or non-malicious actions or failures to act by our employees or others with authorized access to our networks, which could cause significant reputational, legal and financial damages.\n\n \n\n \n●\nThe software we use in providing system configuration recommendations, potential energy savings estimates, weather forecasts and other data metrics to customers relies, in part, on third party information that may not be accurate, or up-to-date; this may therefore generate inaccurate recommendations or estimates, which could potentially harm our reputation and customer confidence.\n\n \n\n \n●\nIf we fail to protect, or incur significant costs in enforcing, our intellectual property and other proprietary rights, our business and results of operations could be negatively impacted.\n\n \n\n \n●\nIf we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.\n\n \n\n \n●\nOur planned expansion into existing and new markets could subject us to additional business, financial and competitive risks.\n\n \n\n \n●\nIf we do not forecast demand for our products accurately, we may experience product shortages, delays in product shipment or excess product inventory, any of which will adversely affect our business and financial condition.\n\n \n\n \n●\nChanges in the United States trade environment, including the recent imposition of import tariffs, could adversely affect the amount or timing of our future revenue, results of operations or cash flows.\n\n \n\n \n●\nOur international operations subject us to additional risks that could adversely affect our business, results of operations and financial condition.\n\n \n\n \n●\nChanges in current laws or regulations or the imposition of new laws or regulations, or new interpretations thereof, in the solar energy sector, by federal or state agencies in the United States or foreign jurisdictions could impair our ability to compete, and could materially harm our business, financial condition and results of operations.\n\n \n\n2\n\n \n\n \n\n \n●\nThe deposit agreement provides that any legal action may only be instituted in a state or federal court in the city of New York, which may result in holders of our ADSs or ordinary shares having limited choice of forum and limited ability to obtain a favorable judicial forum for complaints against us or our respective directors, officers or employees.\n\n \n\n \n●\nThe deposit agreement waives holders of our ADSs’ right to jury trial in any legal proceeding arising out of the deposit agreement or the ADRs against us and/or the depository, which could result in less favorable outcomes to the plaintiffs in any of such actions.\n\n \n\n \n●\nThe form of Representative’s Warrant provides that any legal action may only be instituted in a state or federal court in the city of New York, New York, which may result in holders of the Representative’s Warrant having limited choice of forum and limited ability to obtain a favorable judicial forum for complaints against us or our respective directors, officers or employees.\n\n \n\n \n●\nWe are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.\n\n \n\n \n●\nMr. Enrique Selva Bellvis, our Chairman of the Board, currently owns a majority of our outstanding ordinary shares. As a result, he has the ability to approve all matters submitted to our shareholders for approval.\n\n \n\n \n●\nFuture issuances of our ADSs or ordinary shares or securities convertible into, or exercisable or exchangeable for, our ordinary shares, or the expiration of lock-up agreements that restrict the issuance of new ADSs or ordinary shares or the trading of outstanding ADSs or ordinary shares, could cause the market price of our ADS to decline and would result in the dilution of your holdings.\n\n \n\n \n●\nWe have broad discretion in the use of our cash and cash equivalents, including the net proceeds we received in our initial public offering, and may not use them effectively.\n\n \n\n \n●\nHolders of ADSs are not treated as holders of our ordinary shares.\n\n \n\n**Risks Relating to Our Business and Industry**\n\n** **\n\n**Our solar energy storage products may experience\nquality problems from time to time that could result in negative publicity, litigation, product recalls and warranty claims, which could\nresult in decreased revenues and harm to our brands.**\n\n \n\nA catastrophic failure of\nour products could cause personal or property damages for which we would be potentially liable. Damage to or the failure of our products\nto perform to customer specifications could result in unexpected warranty expenses or result in a product recall, which would be time\nconsuming and expensive. Any product recall in the future, whether it involves our or a competitor’s product, may result in negative\npublicity, damage our brand and materially and adversely affect our business, financial condition and results of operations. In the future,\nwe may voluntarily or involuntarily initiate a recall if any of our products are proven to be or possibly could be defective or noncompliant\nwith applicable environmental laws and regulations, including health and safety standards. Such recalls involve significant expense and\ndiversion of management attention and other resources, which could adversely affect our brand image, as well as our business, financial\ncondition and operating results.\n\n \n\nOur solution, by making use\nof energy monitoring and management software, is susceptible to cyberattacks that could cause the management system to malfunction or\neven stop, without preventing the photovoltaic generation of the installation.\n\n** **\n\n**We may be subject to product liability claims**.\n\n \n\nIf one of our products were\nto cause injury to someone or cause property damage, including as a result of product malfunctions, defects, or improper installation,\nthen we could be exposed to product liability claims. We could incur significant costs and liabilities if we are sued and if damages are\nawarded against us. Further, any product liability claim we face could be expensive to defend and could divert management’s attention.\nThe successful assertion of a product liability claim against us could result in potentially significant monetary damages, penalties or\nfines, subject us to adverse publicity, damage our reputation and competitive position, and adversely affect sales of our products. In\naddition, product liability claims, injuries, defects, or other problems experienced by other companies in similar industry could lead\nto unfavorable market conditions for the industry as a whole and may have an adverse effect on our ability to attract new customers, thus\nharming our growth and financial performance.\n\n** **\n\n3\n\n \n\n** **\n\n**We expect to incur research and development\ncosts and devote significant resources to developing new products, which could significantly reduce our profitability and may never result\nin revenue to the Company.**\n\n \n\nOur future growth depends\non penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new products that\nachieve market acceptance. We plan to incur significant research and development costs in the future as part of our efforts to design,\ndevelop, manufacture and introduce new products and enhance existing products. Our research and development expenses were 267,740 (approximately\nUS$ 314,220), €361,333 and €361,420 during the fiscal years ended December 31, 2025, 2024, and 2023, respectively, and are likely\nto grow in the future. Further, our research and development program may not produce successful results, and our new products may not\nachieve market acceptance, create additional revenue or become profitable.\n\n \n\nThe research and development\nof new products and technologies is costly and time consuming, and there are no assurances that our research and development of new products\nwill be either successful or completed within anticipated timeframes, if at all. Our failure to technologically evolve and/or develop\nnew or enhanced products may cause us to lose competitiveness in the renewable energy storage market. In addition, in order to compete\neffectively in the renewable energy storage industry, we must be able to launch new products to meet our customers’ demands in a\ntimely manner. However, we cannot provide assurance that we will be able to install and certify any equipment needed to produce new products\nin a timely manner, or that the transitioning of our manufacturing facility and resources to full production under any new product programs\nwill not impact production rates or other operational efficiency measures at our manufacturing facility. In addition, new product introductions\nand applications are risky, and may suffer from a lack of market acceptance, delays in related product development and failure of new\nproducts to operate properly. Any failure by us to successfully launch new products, or a failure by our customers to accept such products,\ncould adversely affect our results.\n\n \n\n**The energy storage markets in which we operate\nare in their infancy and highly competitive, and we may not be successful in competing in these markets as the industry further develops.\nWe currently face competition from new and established competitors in the global regions we serve and expect to face competition from\nothers in the future, including competition from companies with new technology.**\n\n \n\nThe worldwide energy storage\nmarket is in its infancy, and we expect it will become more competitive in the future. We also expect more regulatory burden as customers\nadopt this new technology. There is no assurance that our energy storage solutions will be successful in the respective markets in which\nthey compete. A significant and growing number of established and new companies, as well as other companies, have entered or are reported\nto have plans to enter the energy storage market. Most of our current and potential competitors have significantly greater financial,\ntechnical, manufacturing, marketing, sales networks and other resources than we do and may be able to devote greater resources to the\ndesign, development, manufacturing, distribution, promotion, sale and support of their products. Increased competition could result in\nlower unit sales, price reductions, revenue shortfalls, loss of customers and loss of market share, which could harm our business, prospects,\nfinancial condition and operating results. The energy storage industry is highly competitive.\n\n \n\nWe face competition from\nother manufacturers, developers and installers of energy storage systems, as well as from large utilities. Decreases in the retail prices\nof electricity from utilities or other renewable energy sources could make our products less attractive to customers.\n\n \n\n**Events that negatively impact the growth\nof renewable energy will have a negative impact on our business and financial condition.**\n\n \n\nThe growth and profitability\nof our business is dependent upon the future growth of renewable energy, such as wind and solar. The growth of renewable energy and an\nincrease in the number of renewable energy projects are dependent upon a number of factors, including governmental policies offering incentives\nthat encourage the building of renewable energy projects and offset the cost of alternative energy sources, including new technologies.\nAny events or change in the regulatory framework or electricity energy market that negatively impact the growth and development of renewable\nenergy, particularly wind and solar energy, will have a negative impact on our business and financial condition.\n\n \n\n4\n\n \n\n \n\nThe solar industry is an\nevolving industry that has experienced substantial changes over the years, and we cannot be certain that consumers and businesses will\nadopt solar PV systems as an alternative energy source at levels sufficient to continue to grow our solar energy storage business. Traditional\nelectricity distribution is based on the regulated industry model under which businesses and consumers obtain their electricity from a\ngovernment regulated utility. For alternative methods of distributed power to succeed, businesses and consumers must adopt new purchasing\npractices. The viability and continued growth in demand for solar energy solutions and energy storage systems and, in turn, our products,\nmay be impacted by many factors outside of our control, including:\n\n \n\n \n●\nmarket acceptance of solar energy storage systems based on our product platform;\n\n \n\n \n●\navailability and amount of government subsidies and incentives to support the development and deployment of solar energy solutions;\n\n \n\n \n●\ncost competitiveness, reliability and performance of solar energy storage systems compared to conventional and non-solar renewable energy sources and products;\n\n \n\n \n●\nour ability to timely introduce and complete new designs and timely qualify and certify our products;\n\n \n\n \n●\nthe extent to which the electric power industry and broader energy industries are deregulated to permit broader adoption of solar electricity generation and storage;\n\n \n\n \n●\nthe cost and availability of key raw materials and components used in the production of solar energy systems;\n\n \n\n \n●\nprices of traditional utility-provided energy sources;\n\n \n\n \n●\nwhether solar system installers, system owners and solar financing providers will adopt our energy storage solutions;\n\n \n\n \n●\nlevels of investment by end-users of solar energy products, which tend to decrease when economic growth slows; and\n\n \n\n \n●\nthe emergence, continuance or success of, or increased government support for, other alternative energy generation technologies and products.\n\n \n\nIf demand for solar energy\nsolutions does not grow, demand for our products from residential homeowners, commercial businesses and utilities will decrease, which\nwould have an adverse impact on our ability to increase our revenue and grow our business. Further, our success depends on continued demand\nfor solar energy solutions and the ability of solar equipment vendors to meet this demand. Supply chain disruptions, increased interest\nrates and higher inflation, have caused and may continue to cause various negative effects, including an inability to meet the needs of\nour existing or potential end customers. If demand for solar energy solutions decreases or does not grow, demand for our products will\ndecrease, which would have an adverse impact on our ability to increase our revenue and grow our business.\n\n \n\n**Increased scrutiny from stakeholders and regulators regarding\nESG practices and disclosures, including those related to sustainability, and disclosure could result in additional costs and adversely\nimpact our business and reputation.**\n\n \n\nCompanies across all industries\nare facing increased scrutiny regarding their ESG practices and disclosures and institutional and individual investors are increasingly\nusing ESG screening criteria in making investment decisions. Our disclosures on these matters or a failure to satisfy evolving stakeholder\nexpectations for ESG practices and reporting, which may conflict with one another, may potentially harm our reputation and impact employee\nretention, customer relationships and access to capital. For example, certain market participants use third-party benchmarks or scores\nto measure a company’s ESG practices in making investment decisions and customers and suppliers may evaluate our ESG practices or\nrequire that we adopt certain ESG policies as a condition of purchasing our products or services. In addition, our failure or perceived\nfailure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce,\nor at all, could expose us to government enforcement actions and private litigation. Furthermore, complying or failing to comply with\nexisting or future federal, state, local, and foreign legislation and regulations applicable to ESG practices, which may conflict with\none another, could cause us to incur additional compliance and operational costs or actions and suffer reputational harm, which could\nmaterially and adversely affect our business, financial condition and results of operations.\n\n \n\n5\n\n \n\n \n\nOur ability to achieve any\ngoal or objective, including with respect to environmental and diversity initiatives and compliance with ESG reporting standards, is subject\nto numerous risks, many of which are outside of our control. Examples of such risks include the availability and cost of technologies\nand products that meet sustainability and ethical supply chain standards, evolving regulatory requirements affecting ESG standards or\ndisclosures, our ability to recruit, develop and retain diverse talent in our labor markets, and our ability to develop reporting processes\nand controls that comply with evolving standards for identifying, measuring and reporting ESG metrics. Methodologies for reporting ESG\ndata may be updated and previously reported ESG data may be adjusted to reflect improvement in availability and quality of third-party\ndata, changes in assumptions, changes in the nature and scope of our operations and other changes in circumstances. Our processes and\ncontrols for reporting ESG matters across our operations and supply chain are evolving along with multiple disparate standards for identifying,\nmeasuring and reporting ESG metrics, including ESG-related disclosures that may be required by the SEC, European and other regulators,\nand such standards may change over time, which could result in significant revisions to our current goals, reported progress in achieving\nsuch goals, or ability to achieve such goals in the future. As ESG best-practices, reporting standards and disclosure requirements continue\nto develop, we may incur increasing costs related to ESG monitoring and reporting.\n\n \n\n**If the estimates and assumptions we use\nto determine the size of our total addressable market are inaccurate, our future growth rate may be affected and the potential growth\nof our business may be limited.**\n\n \n\nMarket estimates and growth\nforecasts are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. Even if the\nmarket in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.\nOur market opportunity is also based on the assumption that our existing and future offerings will be more attractive to our customers\nand potential customers than competing products and services. If these assumptions prove inaccurate, our business, financial condition\nand results of operations could be adversely affected.\n\n \n\n**We have a history of losses and may not\nbe able to achieve or sustain profitability in the future.**\n\n \n\nOur net loss for the years ended\nDecember 31, 2025, 2024 and 2023 totaled €(1,156,309) (approximately US$(1,357,044), €(3,337,000) and €(2,013,788), respectively. \nWe cannot predict when or whether we will reach or maintain profitability.\n\n** **\n\n**We are dependent on a few customers for\na significant amount of our net revenues.**\n\n \n\nHistorically a significant amount\nof our product sales has been generated from a small number of customers. For example, our top 10 customers, on an aggregate basis, accounted\nfor approximately €13,418,531 (approximately $15,747,988) in revenue or 68% of our total revenue for the fiscal year ended December\n31, 2025. For the fiscal year ended December 31, 2024, revenues from our top 10 customers accounted for approximately €4,391,090,\nor 44.9% of our total revenue. For the fiscal year ended December 31, 2023, revenues from our top 10 customers accounted for approximately\n€5,004,061, or 35.9% of our total revenue.\n\n \n\nThere are inherent risks\nwhenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict\nthe future level of demand for our services that will be generated by these customers. In addition, revenues from these larger customers\nmay fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions\nor other facts, some of which may be outside of our control. If any of these customers experience declining or delayed sales due to market,\neconomic or competitive conditions, we could be pressured to reduce the prices we charge for our services and products, which could have\nan adverse effect on our margins and financial position and could negatively affect our revenues and results of operations and/or trading\nprice of our ADSs. If any of these large customers terminates our services, such termination would negatively affect our revenues and\nresults of operations and/or trading price of our ordinary shares. There is no assurance that we will be successful in our efforts to\nconvince customers to accept our products. Our failure to sell our products could have a material adverse effect on our financial condition\nand results of operations.\n\n \n\n6\n\n \n\n \n\nFor most of our sales and\ncustomers, we do not have long-term contracts. Future agreements with respect to pricing, returns, promotions, among other things, are\nsubject to periodic negotiation with such customers. No assurance can be given that our customers will continue to do business with us.\nThe loss of any of our significant customers will have a material adverse effect on our business, results of operations, financial condition\nand liquidity. In addition, the uncertainty of product orders can make it difficult to forecast our sales and allocate our resources in\na manner consistent with actual sales, and our expense levels are based in part on our expectations of future sales. If our expectations\nregarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.\n\n \n\n**Real or perceived hazards associated with\nLithium-ion battery technology may affect demand for our products.**\n\n \n\nPress reports have highlighted\nsituations in which lithium-ion batteries have caught fire or exploded. For instance, in 2020, LG Chem recalled several residential solar\nbattery storage products because of concerns about fire safety. Five fires involving these battery systems have been reported, including\nan explosion at an energy storage facility in Arizona that caused several injuries. Such publicity has resulted in a public perception\nthat lithium-ion batteries are dangerous and unpredictable. Although we believe that the battery packs installed in our *SUNBOX*\nenergy storage systems are safe, these perceived hazards may result in customer reluctance to adopt our *SUNBOX* energy storage solutions.\n\n \n\n**Economic conditions may adversely affect\nconsumer spending and the overall general economic health of our retail customers, which, in turn, may adversely affect our financial\ncondition, results of operations and cash resources.**\n\n \n\nUncertainty about the existing\nand future global economic conditions may cause our customers to defer purchases or cancel purchase orders for our products in response\nto tighter credit, decreased cash availability and weakened consumer confidence. Our financial success is sensitive to changes in general\neconomic conditions both on a global and regional basis. Recessionary economic cycles, higher interest borrowing rates, higher fuel and\nother energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates\nand other changes in tax laws or other economic factors that may affect consumer spending or buying habits could continue to adversely\naffect the demand for our products. If credit pressures or other financial difficulties result in insolvency for our customers it could\nadversely impact our financial results. There can be no assurances that government and consumer responses to the disruptions in the financial\nmarkets will restore consumer confidence.\n\n** **\n\nSince 2020, the European Union’s inflation rate has risen from 0.48%\nin 2020 to 2.3% as of December 2025. However, recent inflationary pressures have not had a significant impact on our operations. While\ninflation is recognized as a potential risk, we do not believe that the impact of inflation on our operations is material. It is possible,\nhowever, that future inflationary pressures could have a greater impact on our operations, and we will monitor this risk closely.\n\n \n\n**We are dependent on a limited number of\nsuppliers for our batteries, inverters, and photovoltaic modules and the inability of these suppliers to continue to deliver, or their\nrefusal to deliver, these products at prices and volumes acceptable to us would have a material adverse effect on our business, prospects\nand operating results.**\n\n \n\nWe source batteries, inverters, and photovoltaic modules from a limited\nnumber of manufacturers located in China. For batteries, while we obtain components for our products and systems from multiple sources\nwhenever possible, we have spent a great deal of time in developing and testing our batteries that we receive from our key suppliers.\nWe currently have five different battery suppliers who are all located in China. For our inverters, we import them from a two partners\nsuppliers based in China. The current reliance on partners suppliers from China for our main products has not, to date, posed any material\ndrawbacks. The large number of suppliers in that country means that we can change suppliers with some ease. A geopolitical conflict with\nChina on a global level would be a potential supply problem, although the economic impact on a large scale in all sectors and in all markets\nwould be even more serious than the lack of supplies.\n\n \n\nAs to the photovoltaic modules\nand the structures that support them, they are purchased from different suppliers in the market. We generally do not maintain long-term\nagreements with our source suppliers, as we don’t consider them as a value-added product and we are always looking for the best\nbalance between quality and price. While we believe that we will be able to establish additional supplier relationships, we may be unable\nto do so in the short term or at all at prices, quality or costs that are favorable to us.\n\n \n\n7\n\n \n\n \n\nIn addition, the conception,\ndesign, manufacture of the exterior and structural part, and assembly of components for our *SUNBOX* energy storage systems are all\ncompleted in Spain. The assembly of our *SUNBOX* systems is provided by a single supplier located in Spain. Any disruption between\nour relationship with the supplier, or if the supplier is unable to meet our demands, our business and results of operations could be\nadversely affected.\n\n \n\nChanges in business conditions,\nwars, regulatory requirements, economic conditions and cycles, governmental changes and other factors beyond our control could also affect\nour suppliers’ ability to deliver components to us on a timely basis or cause us to terminate our relationship with them and require\nus to find replacements, which we may have difficulty doing. Furthermore, if we experience significant increased demand, or need to replace\nour existing suppliers, there can be no assurance that additional supplies of component parts will be available when required on terms\nthat are favorable to us, at all, or that any supplier would allocate sufficient supplies to us in order to meet our requirements or fill\nour orders in a timely manner. The loss of any limited source supplier or the disruption in the supply of components from these suppliers\ncould lead to delays in the deliveries of our battery products and systems to our customers, which could hurt our relationships with our\ncustomers and also materially adversely affect our business, prospects and operating results.\n\n \n\nIf we do not forecast demand\nfor our products accurately, we may experience product shortages, delays in product shipment or excess product inventory, any of which\nwill adversely affect our business and financial condition. We manufacture our products according to our estimates of customer demand.\nThis process requires us to make multiple forecasts and assumptions relating to the demand of our distributors, their end customers and\ngeneral market conditions. Because we sell most of our products to distributors, who in turn sell to their end customers, we have limited\nvisibility as to end-customer demand. We depend significantly on our distributors to provide us visibility into their end-customer demand,\nand we use these forecasts to make our own forecasts and planning decisions. If the information from our distributors turns out to be\nincorrect, then our own forecasts may also be inaccurate. Furthermore, we do not have long-term purchase commitments from our distributors,\ninstallers or end customers, and our sales are generally made by purchase orders that may be canceled, changed or deferred without notice\nto us or penalty. As a result, it is difficult to forecast future customer demand to plan our operations. If we overestimate demand for\nour products, or if purchase orders are canceled or shipments are delayed, we may have excess inventory that we cannot sell. We may have\nto make significant provisions for inventory write-downs based on events that are currently not known, and such provisions or any adjustments\nto such provisions could be material. We may also become involved in disputes with our suppliers who may claim that we failed to fulfill\nforecasts or minimum purchase requirements. Conversely, if we underestimate demand, we may not have sufficient inventory to meet end-customer\ndemand, and we may lose market share, damage relationships with our distributors and end customers and forgo potential revenue opportunities.\nObtaining additional supply in the face of product shortages may be costly or impossible, particularly in the event of supply chain disruptions\nand our outsourced manufacturing processes, which could prevent us from fulfilling orders in a timely and cost-efficient manner or at\nall. In addition, if we overestimate our production requirements, our contract manufacturers may purchase excess components and build\nexcess inventory. If our contract manufacturers, at our request, purchase excess components that are unique to our products and are unable\nto recoup the costs of such excess through resale or return or build excess products, we could be required to pay for these excess parts\nor products and recognize related inventory write-downs.\n\n \n\n**Tariffs imposed on lithium-ion batteries\nby the United States government or a resulting trade war could have a material adverse effect on our results of operations.**\n\n \n\nIn 2018, the United States\ngovernment announced tariffs on certain steel and aluminum products imported into the United States, which has led to reciprocal tariffs\nbeing imposed by the European Union and other governments on products imported from the United States. The lithium-ion battery industry\nhas also been subjected to tariffs implemented by the United States government on goods imported from China. Any restrictions or tariffs\nimposed on products that we import into the United States for sale could adversely and directly impact our cost of sales. In addition,\nchanges in U.S. trade regulations and policies could have an adverse impact on trade relations between the U.S. and certain foreign countries,\nwhich could materially and adversely affect our relationships with our international suppliers and reduce the supply of goods available\nto us. Further, we cannot predict the extent to which the U.S. will adopt changes to existing trade regulations and policies, which creates\nuncertainties in planning our sourcing strategies and forecasting our margins. If additional tariffs are imposed on our products, or other\nretaliatory trade measures are taken, our costs could increase, and we may be required to raise our prices, which could materially and\nadversely affect our results.\n\n \n\n8\n\n \n\n \n\nAlthough we are currently\nnot conducting business in the United States, we plan to enter the U.S. market in 2025. Given that all of our lithium-ion batteries are\nmanufactured in China, tariffs on lithium-ion batteries imported from China are expected to increase our costs, require us to increase\nprices to our customers or, if we are unable to do so, result in lower gross margins on the products sold by us.\n\n \n\nThe trade war could have\na significant adverse effect on world trade and the world economy, as well as on our results of operations. If governments in the jurisdictions\nwhere we conduct business impose tariffs on components imported by us from China, such tariffs could have a material adverse effect on\nour business and results of operations.\n\n \n\n**Increases in costs, disruption of supply\nor shortage of raw materials, in particular lithium-ion phosphate cells, could harm our business.**\n\n \n\nWe may experience increases\nin the costs or a sustained interruption in the supply or shortage of raw materials. Any such increase or supply interruption could have\na materially negative impact on our business, prospects, financial condition and operating results. For instance, we are exposed to multiple\nrisks relating to price fluctuations for lithium-iron phosphate cells.\n\n \n\nThese risks include:\n\n \n\n \n●\nthe inability or unwillingness of battery manufacturers to supply the number of lithium-iron phosphate cells required to support our sales as demand for such rechargeable battery cells increases;\n\n \n\n \n●\ndisruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and\n\n \n\n \n●\nan increase in the cost of raw materials, such as iron and phosphate, used in lithium-iron phosphate cells.\n\n \n\n**We may face significant costs relating to\nenvironmental regulations for the storage and shipment of our lithium-ion batteries and inverters.**\n\n \n\nWe operate our business globally.\nVarious governmental regulations impose significant environmental requirements on the manufacture, storage, transportation and disposal\nof various components of advanced energy storage systems. Although we believe that our operations are in material compliance with applicable\nenvironmental regulations, there can be no assurance that changes in such laws and regulations will not impose costly compliance requirements\non us or otherwise subject us to future liabilities. Moreover, governments may enact additional regulations relating to the manufacture,\nstorage, transportation, and disposal of components of advanced energy storage systems. Compliance with such additional regulations could\nrequire us to devote significant time and resources and could adversely affect demand for our products. There can be no assurance that\nadditional or modified regulations relating to the manufacture, storage, transportation, and disposal of components of advanced energy\nsystems will not be imposed.\n\n** **\n\n**The economic benefit of our energy storage\nsystems to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies,\nwhich cost structure is subject to change.**\n\n \n\nThe economic benefit of our\nenergy storage systems to our customers includes, among other things, the benefit of reducing such customers’ payments to the local\nelectric utility company. The rates at which electricity is available from a customer’s local electric utility company is subject\nto change and any changes in such rates may affect the relative benefits of our energy storage systems. Further, the local electric utility\nmay impose “departing load,” “standby” or other charges on our customers in connection with their acquisition\nof our energy storage systems, the amounts of which are outside of our control, and which may have a material impact on the economic benefit\nof our energy storage systems to our customers. Changes in the rates offered by local electric utilities and/or in the applicability or\namounts of charges and other fees imposed by such utilities on customers acquiring our energy storage systems could adversely affect the\ndemand for our energy storage systems.\n\n \n\n9\n\n \n\n \n\nAdditionally, the electricity\nproduced by our energy storage systems is currently not cost competitive in some geographic markets, and we may be unable to reduce our\ncosts to a level at which our energy storage systems would be competitive in such markets. As such, unless the cost of electricity in\nthese markets rises or we are able to generate demand for our energy storage systems based on benefits other than electricity cost savings,\nour potential for growth may be limited.\n\n \n\n**If we fail to scale our business operations\nand otherwise manage future growth and adapt to new conditions effectively as we grow our Company, we may not be able to produce, market,\nsell and service our products successfully.**\n\n \n\nAny failure to manage our\ngrowth effectively could materially and adversely affect our business, prospects, operating results and financial condition. Our future\noperating results depend to a large extent on our ability to manage our expansion and growth successfully. We may not be successful in\nundertaking this expansion if we are unable to control expenses and avoid cost overruns and other unexpected operating costs; adapt our\nproducts and conduct our operations to meet local requirements; implement the required infrastructure, systems and processes; and find\nand hire the right skills to make our growth successful.\n\n** **\n\n**If we are unable to achieve our targeted\nmanufacturing costs for our energy storage solutions, our financial condition and operating results will suffer.**\n\n \n\nThere is no guarantee we\nwill be able to achieve sufficient cost savings to reach our gross margin and profitability goals. We may also incur substantial costs\nor cost overruns in utilizing and increasing the production capability of our energy storage system facilities. If we are unable to achieve\nproduction cost targets on our products pursuant to our plans, we may not be able to meet our gross margin and other financial targets.\nMany of the factors that impact our manufacturing costs are beyond our control, such as potential increases in the costs of our materials\nand components, such as lithium iron phosphate, nickel and other components of our battery cells. If we are unable to continue to control\nand reduce our manufacturing costs, our operating results, business and prospects will be harmed.\n\n** **\n\n**Our business will be adversely affected\nif we are unable to protect our intellectual property rights from unauthorized use or infringement by third parties.**\n\n \n\nAny failure to protect our\nproprietary rights adequately could result in our competitors offering similar products, potentially resulting in the loss of some of\nour competitive advantages and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and\noperating results. Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To\naccomplish this, we rely on a combination of patents, patent applications, trade secrets, including know-how, employee and third-party\nnondisclosure agreements, copyright laws, trademarks, intellectual property licenses and other contractual rights to establish and protect\nour proprietary rights in our technology.\n\n \n\nThe protection provided by\npatent laws is and will be important to our future opportunities. However, such patents and agreements, as well as various other measures\nwe may take to protect our intellectual property from use by others, may not be effective for various reasons, including the following:\n\n \n\n \n●\nthe patents we have been granted may be challenged, invalidated or circumvented because of the pre-existence of similar patented or unpatented intellectual property rights or for other reasons;\n\n \n\n \n●\nthe costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement impracticable; and\n\n \n\n \n●\nexisting and future competitors may independently develop similar technology and/or duplicate our systems in a way that circumvents our patents.\n\n** **\n\n10\n\n \n\n** **\n\n**Our patent applications may not result\nin additional issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting\nproducts similar to ours.**\n\n \n\nTurbo Energy has been granted\nthree patents by the Spanish Patent and Trademark Office (“SPTO”) and has one patent application still pending. Our pending\npatent application may not result in a patent being issued, which may have a material adverse effect on our ability to prevent others\nfrom commercially exploiting products similar to ours.\n\n \n\nWe cannot be certain\nthat we are the first creator of inventions covered by our patents or pending patents or the first to file patent applications on\nthese inventions, nor can we be certain that our pending patent application will result in an issued patent or that any of our\nissued patents will afford protection against a competitor. In addition, patent applications that we intend to file in different\ncountries are subject to different laws, rules and procedures, and thus we cannot be certain that our patent applications will be\nissued. In addition, some countries provide significantly less effective patent enforcement than others, such as the United\nStates.\n\n \n\nThe status of patents involves\ncomplex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot be certain that the patent\napplications that we file will result in patents being issued, or that our patents and any patents that may be issued to us in the near\nfuture will afford protection against competitors with similar technology. In addition, patents issued to us may be infringed upon or\ndesigned around by others and others may obtain patents that we need to license or design around, either of which would increase costs\nand may adversely affect our business, prospects, financial condition and operating results.\n\n \n\n**A failure of our information technology (“IT”) and\ndata security infrastructure could adversely affect our business and operations.**\n\n** **\n\nThe efficient operation\nof our business depends on our IT systems, some of which are managed by third-party service providers. We rely upon the capacity, reliability\nand security of our IT and data security infrastructure and our ability to effectively manage our business data, accounting, financial,\nlegal and compliance functions, communications, supply chain, order entry and fulfillment, and expand and routinely update this infrastructure\nin response to the changing needs of our business. Our existing IT systems and any new IT systems we utilize may not perform as expected.\nIf we experience a problem with the functioning of an important IT system or a security breach of our IT systems, including during system\nupgrades or new system implementations, the resulting disruptions could adversely affect our business.\n\n \n\nDespite our implementation\nof reasonable security measures, our IT systems, like those of other companies, are vulnerable to damages from computer viruses, natural\ndisasters, fire, power loss, telecommunications failures, personnel misconduct, human error, unauthorized access, physical or electronic\nsecurity breaches, cyber-attacks (including malicious and destructive code, phishing attacks, ransomware, and denial of service attacks),\nand other similar disruptions. Such attacks or security breaches may be perpetrated by bad actors internally or externally (including\ncomputer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors). Cybersecurity threat actors\nemploy a wide variety of methods and techniques that are constantly evolving, increasingly sophisticated, and difficult to detect and\nsuccessfully defend against. Moreover, we may not have the current capability to detect certain vulnerabilities, which may allow those\nvulnerabilities to persist in our systems over long periods of time. Additionally, it may take considerable time for us to investigate\nand evaluate the full impact of incidents, particularly for sophisticated attacks. These factors may inhibit our ability to provide prompt,\nfull, and reliable information about the incident to our customers, partners, regulators, and the public. Geopolitical tensions or conflicts,\nsuch as Russia’s invasion of Ukraine, may further heighten the risk of cyber-attacks.\n\n \n\nThe emergence and maturation\nof Artificial Intelligence (“AI”) capabilities may also lead to new and/or more sophisticated methods of attack, including\nfraud that relies upon “deep fake” impersonation technology or other forms of generative automation that may scale up the\nefficiency or effectiveness of cyber-attacks. We have experienced such incidents in the past, and any future incidents could expose us\nto claims, litigation, regulatory or other governmental investigations, administrative fines and potential liability. Any system failure,\naccident or security breach could result in disruptions to our operations. A material network breach in the security of our or our service\nproviders’ IT systems could include the theft of our trade secrets, customer information, human resources information or other\nconfidential data, including but not limited to personally identifiable information. Although past incidents have not had a material\nadverse effect on our business operations or financial performance, to the extent that any disruptions or security breach results in\na loss or damage to our data, or an inappropriate disclosure of confidential, proprietary or customer information, it could cause significant\ndamage to our reputation, affect our relationships with our customers and strategic partners, lead to claims against us from governments\nand private plaintiffs, and otherwise adversely affect our business. We cannot guarantee that future cyberattacks, if successful, will\nnot have a material effect on our business or financial results.\n\n \n\n11\n\n \n\n \n\nMany governments have enacted\nlaws requiring companies to provide notice of cyber incidents involving certain types of data, including personal data. If an actual\nor perceived cybersecurity breach of security measures, unauthorized access to our system or the systems of the third-party vendors that\nwe rely upon, or any other cybersecurity threat occurs, we may incur liability, costs, or damages, contract termination, our reputation\nmay be compromised, our ability to attract new customers could be negatively affected, and our business, financial condition, and results\nof operations could be materially and adversely affected. Any compromise of our security could also result in a violation of applicable\ndomestic and foreign security, privacy or data protection, consumer and other laws, regulatory or other governmental investigations,\nenforcement actions, and legal and financial exposure, including potential contractual liability. In addition, we may be required to\nincur significant costs to protect against and remediate damage caused by these disruptions or security breaches in the future. While\nwe carry cyber insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will\ncontinue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future\nclaim.\n\n \n\n**We rely on trade secret protections through\nconfidentiality agreements with our employees, customers and other parties; the breach of such agreements could adversely affect our\nbusiness and results of operations.**\n\n \n\nWe rely on trade secrets,\nwhich we seek to protect, in part, through confidentiality and non-disclosure agreements with our employees, customers and other parties.\nThere can be no assurance that these agreements will not be breached, that we would have adequate remedies for any such breach or that\nour trade secrets will not otherwise become known to or independently developed by competitors. To the extent that consultants, key employees\nor other third parties apply technological information independently developed by them or by others to our proposed projects, disputes\nmay arise as to the proprietary rights to such information that may not be resolved in our favor. We may be involved from time to time\nin litigation to determine the enforceability, scope and validity of our proprietary rights. Any such litigation could result in substantial\ncost and diversion of effort by our management and technical personnel.\n\n \n\nIn relation to the field\nof AI and machine learning, there is uncertainty and ongoing litigation in different jurisdictions as to the degree and extent of protection\nwarranted for AI and machine learning systems, including as to materials that were created by AI technologies. If we fail to protect\nour intellectual property rights adequately, including with respect to any AI or machine learning technologies, our competitors may gain\naccess to our technology and our business, financial condition and results of operations may be adversely affected. Additionally, we\nuse AI tools, including tools provided by third parties, to develop or assist in the development of our own software code. While use\nof such tools makes our development process more efficient, AI tools have sometimes generated content that is “substantially similar”\nto proprietary or open-source code on which the AI tool was trained. If such AI tools generate code that is too similar to other proprietary\ncode, or to software processes that are protected by patent, we could be subject to intellectual property infringement claims. Further,\nwe may be unable to recover any or all defense costs or damages as a result of infringement claims from the third-party providers of\nsuch AI tools. If the artificial intelligence tools we use generate code that is too similar to open-source code, we risk losing protection\nof our own proprietary code that is commingled with such code.\n\n \n\nAdditionally, new laws regulating\nAI - in particular generative AI, algorithmic recommendation and deep synthesis technologies - have been enacted in China, and in August\n2024, the European Union’s EU AI Act entered into force, establishing a comprehensive, legal framework for the regulation of AI\nsystems across the EU. The majority of obligations under the EU AI Act will apply from August 2026, and once fully applicable, the EU\nAI Act will have a material impact on the way AI is regulated in the EU, including requirements around transparency, conformity assessments\nand monitoring, risk assessments, human oversight, security, accuracy, general purpose AI and foundation models. There is also an increase\nin litigation in a number of jurisdictions, including the United States, relating to the development, security and use of AI.\n\n \n\n12\n\n \n\n \n\n**Our implementation and use of AI and machine\nlearning technologies may not be successful, which may impair our ability to compete effectively, result in reputational harm and have\nan adverse effect on our business.**\n\n** **\n\nWe use machine learning,\nAI and automated decision-making technologies throughout our business, and are making significant investments to continuously improve\nour use of such technologies. For example, we use machine learning and AI technologies (including generative AI) to power our AI-powered\n*Turbo Energy App*, which allows our SUNBOX users to benefit from intelligent data collection, optimized stored energy management\nand predictive analytics which provide real-time insight into weather and electricity price forecasts, solar panel performance, energy\nconsumption and material cost saving opportunities, among other metrics. As with many technological innovations, there are significant\nrisks and challenges involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage\nof such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or the profitability\nof our AI-enabled solutions.\n\n \n\nFurther, changes and ongoing\ndevelopment in how we use AI and machine learning technologies and how we train our models, in particular if those AI or machine learning\nmodels are (i) incorrectly designed or implemented; (ii) trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise\npoor quality data; and/ or (iii) are adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material\nperformance issues, could negatively impact the performance of our AI-powered *Turbo Energy App* and business, as well as our reputation\nand the reputations of our customers and partners, or we could incur liability through the violation of laws or contracts to which we\nare a party or through civil claims.\n\n \n\nThe market for AI and machine\nlearning technologies is rapidly evolving and remains unproven in many industries, including our own. We cannot be sure that the market\nwill continue to grow or that it will grow in ways we anticipate. We are in varying stages of development in relation to our products\nor services which utilize proprietary AI and machine learning technologies, and we may not be successful in our ongoing development of\nthese technologies in the face of novel and evolving technical, reputational and market factors. Our failure to successfully develop\nand commercialize our products or services which utilize proprietary machine learning and AI technologies could depress the market price\nof our stock and impair our ability to (i) raise capital; (ii) expand our business; (iii) provide, improve and diversify our product\nofferings; (iv) continue our operations and efficiently manage our operating expenses; and (v) respond effectively to competitive developments.\n\n \n\nWe also use AI technologies\nlicensed from third parties in our technologies and our ability to continue to use such technologies at the scale we need may be dependent\non access to specific third-party software and infrastructure. We cannot control the availability or pricing of such third-party AI technologies,\nespecially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers.\nIf any such third-party AI technologies become incompatible with our solutions or unavailable for use, or if the providers of such models\nunfavorably change the terms on which their AI technologies are offered or terminate their relationship with us, our solutions may become\nless appealing to our customers and our business will be harmed. In addition, to the extent any third party AI technologies are used\nas a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions,\ndamage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable\nto recover damages from the affected provider.\n\n \n\nThe continuous development,\nmaintenance and operation of our AI and machine learning technologies is expensive and complex, and may involve unforeseen difficulties\nincluding material performance problems, undetected defects or errors. For instance, a machine learning model can experience decay (also\nknown as “model drift”) in which its performance and accuracy decreases over time without further human intervention to correct\nsuch decay. We may encounter technical obstacles, and it is possible that we may discover additional problems that may prevent our proprietary\ntechnologies from operating properly, which could adversely affect our business, customer relationships and reputation.\n\n \n\nWe face significant competition\nfrom other companies in our industry in relation to the development and deployment of AI and machine learning technologies. Those other\ncompanies may develop AI technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop and\ndeploy. If we cannot develop, offer or deploy new AI technologies as effectively, as quickly and/or as cost-efficiently as our competitors,\nwe could experience a material adverse effect on our operating results of operation, customer relationships and growth. Further, our\nability to continue to develop or use such technologies may be dependent on access to specific third-party software, services and infrastructure,\nsuch as processing hardware, and we cannot control the availability or pricing of such third-party software and infrastructure, especially\nin a highly competitive environment.\n\n \n\n13\n\n \n\n \n\n**Any compromise of the cybersecurity of\nour platform could materially and adversely affect our business, operations and reputation.**\n\n \n\nOur products use cutting-edge\ntechnology through our proprietary software development. Our existing software system and any new software systems we utilize may not\nperform as expected. If we experience a problem with the functioning of an important software system or a security breach of our information\ntechnology (“IT”) systems, including during system upgrades or new system implementations, the resulting disruptions could\nadversely affect the operation of our Turbo Energy App and our business.\n\n \n\nDespite our implementation\nof reasonable security measures, our IT systems, like those of other companies, are vulnerable to damages from computer viruses, natural\ndisasters, fire, power loss, telecommunications failures, personnel misconduct, human error, unauthorized access, physical or electronic\nsecurity breaches, cyber-attacks (including malicious and destructive code, phishing attacks, ransomware, and denial of service attacks),\nand other similar disruptions. Such attacks or security breaches may be perpetrated by bad actors internally or externally (including\ncomputer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors).\n\n \n\nCybersecurity is a risk\nthat Umbrella Global’s Board of Directors has identified as a key area to be addressed through collaboration with a consulting\nfirm at the group level. To this end, Turbo Energy has assigned responsibility for cybersecurity oversight to the IT manager, who works\nclosely with an internal team and trusted local vendors. All parties with access to the management software suite have signed a corresponding\nconfidentiality agreement, and information is not shared or accessible to any hardware supplier.\n\n \n\nFurthermore, we are actively\nworking to eliminate remote access to hardware data of suppliers involved in the manufacture of our products. We recognize the importance\nof ensuring the security and privacy of our systems and customer data, and we remain committed to implementing robust cybersecurity measures\nto mitigate potential risks.\n\n \n\nCybersecurity threat actors\nemploy a wide variety of methods and techniques that are constantly evolving, increasingly sophisticated, and difficult to detect and\nsuccessfully defend against. Any future incidents could expose us to claims, litigation, regulatory or other governmental investigations,\nadministrative fines and potential liability. Any system failure, accident or security breach could result in disruptions to our operations.\nA material network breach in the security of our IT systems could include the theft of our trade secrets, customer information, human\nresources information or other confidential data, including but not limited to personally identifiable information. To the extent that\nany disruptions or security breach results in a loss or damage to our data, or an inappropriate disclosure of confidential, proprietary\nor customer information, it could cause significant damage to our reputation, affect our relationships with our customers and strategic\npartners, lead to claims against us from governments and private plaintiffs, and adversely affect our business. We cannot guarantee that\nfuture cyberattacks, if successful, will not have a material effect on our business or financial results.\n\n \n\nMany governments have enacted\nlaws requiring companies to provide notice of cyber incidents involving certain types of data, including personal data. If an actual\nor perceived cybersecurity breach of security measures, unauthorized access to our system or the systems of the third-party vendors that\nwe rely upon, or any other cybersecurity threat occurs, we may incur liability, costs, or damages, contract termination, our reputation\nmay be compromised, our ability to attract new customers could be negatively affected, and our business, financial condition and results\nof operations could be materially and adversely affected. Any compromise of our security could also result in a violation of applicable\nsecurity, privacy or data protection, consumer and other laws, regulatory or other governmental investigations, enforcement actions,\nand legal and financial exposure, including potential contractual liability. In addition, we may be required to incur significant costs\nto protect against and remediate damage caused by these disruptions or security breaches in the future.\n\n** **\n\n14\n\n \n\n \n\n**We may need to raise additional capital\nor financing to continue to execute and expand our business.**\n\n \n\nWhile we expect that our\navailable cash and credit facilities will be sufficient to sustain our operations for the next twelve months from the date of this report,\nwe may need to raise additional capital to support our operations and execute our business plan. We may be required to pursue sources\nof additional capital through various means, including joint venture projects, sale and leasing arrangements and debt or equity financings.\nAny new securities that we may issue in the future may be sold on terms more favorable for our new investors than the terms of our initial\npublic offering. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible\nsecurities that will have additional dilutive effects. We cannot ensure that additional funds will be available when needed from any\nsource or, if available, will be available on terms that are acceptable to us. Further, we may incur substantial costs in pursuing future\ncapital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other\ncosts. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible\nnotes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing\nmay be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact\nthe availability and cost of future financings. If the amount of capital we are able to raise from financing activities, together with\nour revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.\n\n \n\n**While we have not made material acquisitions\nto date, should we pursue acquisitions in the future, we would be subject to risks associated with acquisitions.**\n\n \n\nWe may acquire additional\nassets, products, technologies or businesses that are complementary to our existing business. The process of identifying and consummating\nacquisitions and the subsequent integration of new assets and businesses into our own business would require attention from management\nand could result in a diversion of resources from our existing business, which in turn could have an adverse effect on its operations.\nAcquired assets or businesses may not generate the expected financial results. Acquisitions could also result in the use of cash, potentially\ndilutive issuances of equity securities, the occurrence of goodwill impairment charges, amortization expenses for other intangible assets\nand exposure to potential unknown liabilities of the acquired business.\n\n** **\n\n**If we are unable to recruit and retain\nkey management, technical and sales personnel, our business would be negatively affected.**\n\n \n\nFor our business to be successful,\nwe need to attract and retain highly qualified management, technical and sales personnel. The failure to recruit additional key personnel\nwhen needed with specific qualifications and on acceptable terms or to retain good relationships with our partners might impede our ability\nto continue to develop, commercialize and sell our products. To the extent the demand for skilled personnel exceeds supply, we could\nexperience higher labor, recruiting and training costs in order to attract and retain such employees. We face competition for qualified\npersonnel from other companies with significantly more resources available to them and thus may not be able to attract the level of personnel\nneeded for our business to succeed.\n\n** **\n\n**We may be required to obtain the approval\nof various government agencies to market our products.**\n\n \n\nOur products are subject\nto product safety regulations by numerus governmental organizations. Accordingly, we may be required, or may voluntarily determine to,\nobtain approval of our products from one or more of the organizations engaged in regulating product safety. These approvals could require\nsignificant time and resources from our technical staff, and, if redesigns were necessary, could result in a delay in the introduction\nof our products in various markets and applications. There can be no assurance that we will obtain any or all of the approvals that may\nbe required to market our products.\n\n** **\n\n15\n\n \n\n \n\n**Natural disasters, public health crises,\npolitical crises and other catastrophic events or other events outside of our control may adversely affect our business.**\n\n \n\nAny natural disaster related\ndisruptions or other events outside of our control could affect our business negatively, harming our operating results. In addition,\nif our facilities, or the facilities of our suppliers, third-party service providers or customers, is affected by natural disasters,\nsuch as earthquakes, tsunamis, power shortages or outages, floods or monsoons; public health crises, such as pandemics and epidemics,\npolitical crises, such as terrorism, war, political instability or other conflict; or other events outside of our control, our business\nand operating results could suffer. Moreover, the types of natural disasters noted above could negatively impact consumer spending in\nthe impacted regions or, depending upon the severity, globally, which could adversely impact our operating results. Similar disasters\noccurring at our vendors’ manufacturing facilities could impact our reputation and our consumers’ perception of our brands.\n** **\n\n \n\nFor instance, in October\n2024, torrential rains fell in Valencia, Spain, where our corporate headquarters and warehousing facility are located, causing flash\nfloods that claimed more than 200 lives, swept away cars and wrecked many homes and businesses. While our corporate headquarters suffered\nno material damage, our warehousing facility was directly impacted by high flood waters and a portion of our legacy product inventory,\nvalued at approximately €2.1 million, was compromised. In collaboration with our business insurance carrier, we completed an assessment\nof the impact of the storm on our warehousing operations and confirmed that €1.9 of the losses were fully covered. However, the\nflooding resulted in the delay of fulfilling customer orders and the disruption of our warehousing operations for several weeks.\n\n \n\n**If the current effective income tax rate\npayable by us in any country in which we operate is increased or if we lose any country-specific tax benefits, then our financial condition\nand results of operations may be adversely affected.**\n\n \n\nWe conduct business in 17\ncountries, namely Germany, Spain, France, UK, Greece, Italy, Poland, Portugal, Romania, Chile, Czech Republic, Senegal, Netherlands,\nSlovenia, China, UK and Luxemburg and are actively engaged in expanding into the U.S. and Latin America; and we file income tax returns\nin multiple jurisdictions. Our consolidated effective income tax rate could be materially adversely affected by several factors, including\nchanges in the amount of income taxed by or allocated to the various jurisdictions in which we operate that have differing statutory\ntax rates; changing tax laws, regulations and interpretations of such tax laws in multiple jurisdictions; and the resolution of issues\narising from tax audits or examinations and any related interest or penalties.\n\n \n\n**The ongoing military conflict in Ukraine\nand geopolitical instability globally may negatively affect our business and financial condition.**\n\n \n\nWe are currently operating\nin a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability\ndue to the ongoing military conflict between Russia and Ukraine. Our business may be materially adversely affected by any negative impact\non the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.\n\n \n\nU.S. and global markets\nare experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between\nRussia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length\nand impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including\nsignificant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor\nthe situation in Ukraine and globally and assessing its potential impact on our business.\n\n \n\nGovernments in the United\nStates and many other countries, or the Sanctioning Bodies, have imposed economic sanctions on certain Russian individuals, including\npoliticians, and Russian corporate and banking entities. The Sanctioning Bodies, or others, could also institute broader sanctions on\nRussia. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities,\na weakening of the ruble or other adverse consequences to the global economy.\n\n \n\n16\n\n \n\n \n\nThe current war in Ukraine,\nand geopolitical events stemming from such conflicts, could cause consumer confidence and spending to decrease or result in increased\nvolatility in the worldwide financial markets and economy. The extent and duration of the military action, resulting sanctions and resulting\nfuture market disruptions in the region are impossible to predict, but could be significant and have a severe adverse effect on worldwide\nfinancial markets and economy.\n\n \n\nAny of the abovementioned\nfactors could adversely affect consumer demand, our business, financial condition, results of operations, liquidity and cash flows. The\nextent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.\nAny such disruptions may also magnify the impact of other risks described in this Item.\n\n \n\n**Adverse market, economic and political\nconditions, including the ongoing conflict between Ukraine and Russia, recent events in the Middle East, recent trade disputes and other\nevents or circumstances beyond our control could have a material adverse effect on us.**\n\n \n\nAnother economic or financial\ncrisis or rapid decline of the consumer economy, significant concerns over energy costs, geopolitical issues, including the ongoing conflict\nbetween Ukraine and Russia, recent events in the Middle East, recent trade disputes between the U.S. and other countries resulting in\nthe imposition of increased tariffs on products imported into the U.S., and the availability and cost of credit can contribute to increased\nvolatility, diminished expectations for the economy and the markets, and high levels of structural unemployment by historical standards.\nMarket, political and economic challenges, including dislocations and volatility in the credit markets, general global economic uncertainty,\nand changes in governmental policy on a variety of matters such as trade, tariffs and manufacturing policies may adversely affect the\neconomy and financial markets, our financial condition, results of operations, and the trading price of our ADS.\n\n \n\n**We are a Spanish corporation, and it may\nbe difficult to enforce judgments against us in U.S. domestic courts.**\n\n \n\nWe are a corporation organized\nunder the laws of the Kingdom of Spain and substantially all of our assets are located outside the United States. Virtually all of our\nassets and a substantial portion of our current business operations are conducted in Spain. In addition, almost all of our directors\nand officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons\nare located outside the United States. As a result, it may be difficult or impossible for U.S. shareholders to serve process within the\nUnited States upon us or to enforce judgment upon us for civil liabilities in U.S. courts. In addition, you should not assume that courts\nin the countries in which we are incorporated or where our assets are located (1) would enforce judgments of U.S. courts obtained in\nactions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws or (2) would enforce,\nin original actions, liabilities against us based upon these laws**.**\n\n \n\n**The deposit agreement provides that any\nlegal action may only be instituted in a state or federal court in the city of New York, which may result in holders of our ADSs or ordinary\nshares having limited choice of forum and limited ability to obtain a favorable judicial forum for complaints against us or our respective\ndirectors, officers or employees.**\n\n \n\nThe deposit agreement, the\nADRs and the ADSs will be interpreted in accordance with the laws of the State of New York. The rights of holders of ordinary shares\n(including ordinary shares represented by ADSs) are governed by the laws of the Kingdom of Spain. As an owner of ADSs, you irrevocably\nagree that any legal action arising out of the Deposit Agreement, the ADSs or the ADRs, involving the Company or the Depositary, may\nonly be instituted in a state or federal court in the city of New York.\n\n \n\nThis choice of forum provision\nmay increase cost for the holders of our ADSs or ordinary shares and limit their ability to bring a claim in a judicial forum that they\nfind favorable for disputes with us, the depositary or the depositary’s respective directors, officers or employees, which may\ndiscourage such lawsuits against us, the depositary and the depositary’s respective directors, officers or employees. However,\nit is possible that a court could find either choice of forum provision to be inapplicable or unenforceable. The enforceability of similar\nchoice of forum provisions has been challenged in legal proceedings. It is possible that a court could find this type of provision to\nbe inapplicable or unenforceable.\n\n \n\nTo the extent that any such\nclaims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought\nto enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the\nSecurities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created\nby the Securities Act or the rules and regulations thereunder. Accordingly, actions by holders of our ADSs or ordinary shares to enforce\nany duty or liability created by the Exchange Act, the Securities Act or the respective rules and regulations thereunder must be brought\nin a federal court in the city of New York. Holders of our ADSs or ordinary shares will not be deemed to have waived our compliance with\nthe federal securities laws and the regulations promulgated thereunder. In addition, because substantially all of our assets are located\noutside the United States and almost all of our directors and officers are nationals and residents of countries other than the United\nStates, courts in the countries in which we are incorporated or where our assets are located may not enforce judgments of U.S. courts\nobtained in actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws.\n\n \n\n17\n\n \n\n \n\n**The deposit agreement waives holders of\nour ADSs’ right to jury trial in any legal proceeding arising out of the deposit agreement or the ADRs against us and/or the depository,\nwhich could result in less favorable outcomes to the plaintiffs in any of such actions.**\n\n \n\nThe deposit agreement provides\nthat, to the extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary\narising out of or relating to our ordinary shares, the ADSs or the deposit agreement, including any claim under U.S. federal securities\nlaws. If we or the depositary oppose a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable\non the facts and circumstances of that case in accordance with applicable case law. However, you will not be deemed, by agreeing to the\nterms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules\nand regulations promulgated thereunder.\n\n \n\nTo our knowledge, we believe\nthat a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York,\nwhich govern the deposit agreement, by a federal or state court in the City of New York, which has exclusive jurisdiction over matters\narising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts\nwill generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial.\n\n \n\nThis jury trial waiver provision\ncan discourage claims or limit shareholders’ ability to bring a claim in a judicial forum that they find favorable. If any holders\nor beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement\nor the ADSs, including claims under federal securities laws, such holder or beneficial owner may not be entitled to a jury trial with\nrespect to such claims, which may have the effect of limiting and discouraging lawsuits against us and the depositary. If a lawsuit is\nbrought against either or both of us and the depositary under the deposit agreement in New York, it may be heard only by a judge or justice\nof the applicable trial court, which would be conducted according to different civil procedures and may result in increasing costs of\nbringing a claim and having limited access to information and other imbalances of resources between us and the depositary and the claimant.\nA case that is only heard by a judge or justice of the applicable trial court may result in different outcomes than a trial heard by\njury would have. Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under\nthe terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves\nas a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with U.S. federal securities laws and\nthe rules and regulations promulgated thereunder.\n\n \n\n**The form of Representative’s Warrant\nprovides that any legal action may only be instituted in a state or federal court in the city of New York, New York, which may result\nin holders of the Representative’s Warrant having limited choice of forum and limited ability to obtain a favorable judicial forum\nfor complaints against us or our respective directors, officers or employees.**\n\n \n\nThe form of Representative’s\nWarrant will be interpreted in accordance with the laws of the State of New York. Holders of the Representative’s Warrant are irrevocably\nagreeing that any legal action arising out of the Representative’s Warrant involving the Company may only be instituted in a state\nor federal court in the city of New York.\n\n \n\nThis choice of forum provision\nmay increase costs for the holders of the Representative’s Warrant and limit their ability to bring a claim in a judicial forum\nthat they find favorable for disputes with us, which may discourage such lawsuits against us. However, it is possible that a court could\nfind the choice of forum provision to be inapplicable or unenforceable. To the extent that any such claims may be based upon federal\nlaw claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability\ncreated by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent\njurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the\nrules and regulations thereunder. Accordingly, actions by holders of the Representative’s Warrant to enforce any duty or liability\ncreated by the Exchange Act, the Securities Act or the respective rules and regulations thereunder must be brought in a federal court\nin the city of New York. Holders of the Representative’s Warrant will not be deemed to have waived our compliance with the federal\nsecurities laws and the regulations promulgated thereunder. In addition, because substantially all of our assets are located outside\nthe United States and almost all of our directors and officers are nationals and residents of countries other than the United States,\ncourts in the countries in which we are incorporated or where our assets are located may not enforce judgments of U.S. courts obtained\nin actions against us based upon the civil liability provisions of applicable U.S. federal and state securities laws.\n\n \n\n18\n\n \n\n \n\n**We are a foreign private issuer within\nthe meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public\ncompanies.**\n\n \n\nBecause we qualify as a\nforeign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United\nStates that are applicable to U.S. domestic issuers, including:\n\n \n\n \n●\nthe rules under the Exchange Act requiring the filing\nwith the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;\n\n \n\n \n●\nthe sections of the Exchange Act regulating the solicitation\nof proxies, consents, or authorizations in respect of a security registered under the Exchange Act;\n\n \n\n \n●\nthe sections of the Exchange Act requiring insiders\nto file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in\na short period of time; and\n\n \n\n \n●\nthe selective disclosure rules by issuers of material\nnonpublic information under Regulation FD.\n\n \n\nWe are required to file\nan annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results\non a semi-annual basis as press releases, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial\nresults and material events will also be furnished to the SEC via Current Reports on Form 6-K. However, the information we are required\nto file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S.\ndomestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you\ninvesting in a U.S. domestic issuer.\n\n \n\n**As a foreign private issuer, we are permitted\nto rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection\nto holders of our shares.**\n\n \n\nWe are exempted from certain\ncorporate governance requirements of Nasdaq by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted\nto follow the governance practices of our home country in lieu of certain corporate governance requirements of Nasdaq. As result, the\nstandards applicable to us are considerably different than the standards applied to domestic U.S. issuers. For instance, we are not required\nto:\n\n \n\n \n●\nhave a majority of Independent Directors;\n\n \n\n \n●\nhave an Audit Committee as we will not be considered\na Public Entity under Spanish law and in case Turbo would be listed in a Growth market in Spain equivalent to Nasdaq will have a\nmajority of the board be independent (although all of the members of the Audit Committee must be independent under the Exchange Act);\nor\n\n \n\n \n●\nhave a Compensation Committee and a Nominating and\nCorporate Governance Committee to be comprised solely of “independent directors.”\n\n \n\nAlthough we do not currently\nintend to rely upon these “home country” exemptions, we may rely on some of these exemptions in the future. As a result,\nour shareholders may not be provided with the benefits of certain corporate governance requirements of Nasdaq.\n\n \n\n19\n\n \n\n \n\n**Mr. Enrique Selva Bellvis, our Chairman\nof the Board, currently owns a majority of our outstanding ordinary shares. As a result, he has the ability to approve all matters submitted\nto our shareholders for approval.**\n\n \n\nMr. Enrique Selva Bellvis,\nour Chairman of the Board, currently owns approximately 62.39% of our outstanding ordinary shares as of the date of this annual report.\nHe therefore may have the ability to approve all matters submitted to our shareholders for approval including:\n\n \n\n \n●\nelection of our Board of Directors;\n\n \n\n \n●\nremoval of any of our directors;\n\n \n\n \n●\nany amendments to our certificate or articles of incorporation;\nand\n\n \n\n \n●\nadoption of measures that could delay or prevent a\nchange in control or impede a merger, takeover or other business combination involving us.\n\n \n\nIn addition, this concentration\nof ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in\nturn could reduce our share price or prevent our shareholders from realizing a premium over our share price.\n\n \n\n**We qualify as a “controlled company”\nunder Nasdaq corporate governance rules and we may be exempt from certain corporate governance requirements that could adversely affect\nour public shareholders.**\n\n \n\nSince Mr. Enrique Selva\nBellvis, our Chairman of the Board, is the beneficial owner of a majority of the voting power of our issued and outstanding share capital,\nwe qualify as a “controlled company” under the Nasdaq Stock Market Rules. Under these rules a company of which more than\n50% of the voting power is held by an individual, group or another company is a controlled company and may elect not to comply with certain\ncorporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the Nasdaq\nStock Market Rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of\nindependent directors. A “controlled company” may elect not to comply with certain corporate governance requirements, including,\nwithout limitation (i) the requirement that a majority of the Board of Directors consist of independent directors, (ii) the requirement\nthat the compensation of our officers be determined or recommended to our Board of Directors by a Compensation Committee that is comprised\nsolely of independent directors, and (iii) the requirement that director nominees be selected or recommended to the Board of Directors\nby a majority of independent directors or a Nominating and Corporate Governance Committee comprised solely of independent directors.\nCurrently, we rely on the “controlled company” exemption. Since we elect to rely on the “controlled company”\nexemption, a majority of the members of our Board of Directors are not independent directors and our Nominating and Corporate Governance\nCommittee and Compensation Committees do not consist entirely of independent directors. Our status as a controlled company could cause\nour securities to look less attractive to certain investors or otherwise harm our trading price.\n\n \n\n**We will be subject to ongoing public reporting\nrequirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our shareholders\ncould receive less information than they might expect to receive from more mature public companies.**\n\n \n\nWe qualify as an “emerging\ngrowth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure\nrequirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act\nof 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107\nof 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 for complying with new or revised accounting standards. In other words, an emerging growth company can\ndelay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected\nto take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those\nof companies that comply with such new or revised accounting standards.\n\n \n\n20\n\n \n\n \n\nWe will remain an emerging\ngrowth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least\n$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering;\n(iii) the date on which we have, during the preceding three year period, issued more than $1.0 billion in non-convertible debt; or (iv)\nthe date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market\nvalue of our securities that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed\nsecond fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS\nAct discussed above.\n\n \n\nBecause we will be subject\nto ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies,\nour shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict\nif investors will find our securities less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions\nwould result in less active trading or more volatility in the price of our securities.\n\n \n\n**Future issuances of our ADSs or ordinary\nshares or securities convertible into, or exercisable or exchangeable for, our ordinary shares, or the expiration of lock-up agreements\nthat restrict the issuance of new ADSs or ordinary shares or the trading of outstanding ADSs or ordinary shares, could cause the market\nprice of our ADS to decline and would result in the dilution of your holdings.**\n\n \n\nFuture issuances of our\nADSs or ordinary shares or securities convertible into, or exercisable or exchangeable for, our ordinary shares, or the expiration of\nlock-up agreements that restrict the issuance of new ADSs or ordinary shares or the trading of outstanding ADS or ordinary shares, could\ncause the market price of our ADSs to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future\nexpirations of lock-up agreements, on the price of our ADSs. In all events, future issuances of our ADSs or ordinary shares would result\nin the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that\nlocked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our ADSs. In connection\nwith our initial public offering, we, all of our directors and officers and certain of our shareholders have entered into lock-up agreements\nwith the underwriters, pursuant to which we and they have agreed with the underwriters, subject to certain exceptions, not to sell, transfer\nor dispose of, directly or indirectly, any of our ADSs or ordinary shares or securities convertible into or exercisable or exchangeable\nfor our ordinary shares for a period of (i) 180 days after the closing of our initial public offering in the case of our Company, (ii)\n12 months after the closing of our initial public offering in the case of our directors and officers, and (iii) 180 days after the closing\nof our initial public offering in the case of our shareholders, as further described in the section titled “*Underwriting*.”\nIn addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements\nmay be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our ordinary shares may become\navailable for resale, subject to applicable law, including without notice, which could reduce the market price for our ADSs.\n\n \n\n**Future issuances of debt securities, which\nwould rank senior to our ADSs and ordinary shares upon our bankruptcy or liquidation, and future issuances of preferred shares, which\ncould rank senior to our ADSs and ordinary shares for the purposes of dividends and liquidating distributions, may adversely affect the\nlevel of return you may be able to achieve from an investment in our ADSs.**\n\n \n\nIn the future, we may attempt\nto increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders\nwith respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made\nto holders of our ADSs or ordinary shares. Moreover, if we issue preferred shares, the holders of such preferred shares could be entitled\nto preferences over holders of ADSs and ordinary shares in respect of the payment of dividends and the payment of liquidating distributions.\nBecause our decision to issue debt or preferred shares in any future offering, or borrow money from lenders, will depend in part on market\nconditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings\nor borrowings. Holders of our ADSs must bear the risk that any future offerings we conduct or borrowings we make may adversely affect\nthe level of return, if any, they may be able to achieve from an investment in our ADSs.\n\n \n\n21\n\n \n\n \n\n**There is a risk that we will be a passive\nforeign investment company for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors\nin our shares.**\n\n \n\nIn general, a non-U.S. corporation\nis a passive foreign investment company (“PFIC”) for any taxable year in which (i) 75% or more of its gross income consists\nof passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the\nproduction of, passive income. For purposes of the above calculations, a non-U.S. corporation that owns at least 25% by value of the\nshares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly\nits proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties\nand certain gains. Cash is a passive asset for these purposes.\n\n \n\nBased on the expected composition\nof our income and assets and the value of our assets, including goodwill, which is based on the expected price of the shares in our initial\npublic offering, we do not expect to be a PFIC for our current taxable year. However, the proper application of the PFIC rules to a company\nwith a business such as ours is not entirely clear. Because the proper characterization of certain components of our income and assets\nis not entirely clear, because we will hold a substantial amount of cash following our initial public offering, and because our PFIC\nstatus for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which\nmay be determined, in part, by reference to the market price of our shares, which could be volatile), there can be no assurance that\nwe will not be a PFIC for our current taxable year or any future taxable year.\n\n \n\nIf we were a PFIC for any\ntaxable year during which a U.S. investor holds shares, certain adverse U.S. federal income tax consequences could apply to such U.S.\ninvestor. See “*Material Income Tax Considerations-U.S. Federal Income Taxation Considerations-Passive Foreign Investment Company\nConsequences*” for additional information.\n\n \n\n**We have broad discretion in the use of\nour cash and cash equivalents and may not use them effectively.**\n\n \n\nOur management has broad\ndiscretion to use our cash and cash equivalents, including the net proceeds we received from our initial public offering in September\n2023, to fund our operations and could spend these funds in ways that do not improve our results of operations or enhance the value of\nour ordinary shares. You will not have the opportunity, as part of your investment decision, to assess whether our cash and cash equivalents\nare being used appropriately. You must rely on the judgment of our cash management decisions. The failure by our management to allocate\ncash effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our ordinary\nshares to decline.\n\n \n\n**The market price of our ADSs may fluctuate,\nand you could lose all or part of your investment.**\n\n \n\nThe market price for our\nADSs is likely to be volatile, in part because our shares have not been traded on a U.S. national securities exchange. In addition, the\nmarket price of our ADSs may fluctuate significantly in response to several factors, most of which we cannot control, including:\n\n \n\n \n●\nactual or anticipated variations in our operating\nresults;\n\n \n\n \n●\nincreases in market interest rates that lead investors\nof our ADSs to demand a higher investment return;\n\n \n\n \n●\nchanges in earnings estimates;\n\n \n\n \n●\nchanges in market valuations of similar companies;\n\n \n\n \n●\nactions or announcements by our competitors;\n\n \n\n \n●\nadverse market reaction to any increased indebtedness\nwe may incur in the future;\n\n \n\n \n●\nadditions or departures of key personnel;\n\n \n\n \n●\nactions by shareholders;\n\n \n\n \n●\nspeculation in the media, online forums, or investment\ncommunity; and\n\n \n\n \n●\nour ability to maintain our Nasdaq listing.\n\n \n\n**If securities analysts do not publish research\nor reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.**\n\n \n\nThe trading market for our\nADSs relies in part on the research and reports that industry or financial analysts publish about our Company or our industry. We do\nnot control these analysts. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore,\nif one or more of the analysts who do cover our Company downgrade our stock or industry, or the stock of any of our competitors, or publish\ninaccurate or unfavorable research about our business, the price of our ordinary shares could decline. If one or more of these analysts\nceases coverage of the Company or fails to publish reports on it regularly, we could lose visibility in the market, which in turn could\ncause our stock price or trading volume to decline.\n\n \n\n22\n\n \n\n \n\n**We may not be able to satisfy listing requirements of the Nasdaq\nCapital Market to maintain the listing of our ADSs.**\n\n \n\nWe must meet certain financial\nand liquidity criteria to maintain the listing of our ADSs. If we violate Nasdaq listing requirements, our ADSs may be delisted. If we\nfail to meet any of Nasdaq’s listing standards, our ADSs may be delisted. In addition, our Board of Directors may determine that\nthe cost of maintaining our listing on a U.S. national securities exchange outweighs the benefits of such listing. A delisting of our\nADSs may materially impair our shareholders’ ability to buy and sell our ADSs and could have an adverse effect on the market price\nof, and the efficiency of the trading market for, our ADSs. The delisting of our ADSs could significantly impair our ability to raise\ncapital and the value of your investment.\n\n \n\n**Failure to regain compliance with Nasdaq\ncould result in the delisting of our ADSs from The Nasdaq Capital Market, which would adversely affect the liquidity and market price\nof our securities.**\n\n** **\n\nOn January 12, 2026, we received\na notice from The Nasdaq Stock Market LLC (“Nasdaq”) stating that, based on our reported financial information, we are no\nlonger in compliance the continued listing requirement to maintain a minimum of $2.5 million in stockholders’ equity for companies\nlisted on The Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(1). Consistent with Nasdaq’s standard procedures, the\nnotice provided a 45-day period, until February 26, 2026, for us to submit a plan to regain compliance. We submitted our compliance plan\nto Nasdaq on February 26, 2026, and are awaiting Nasdaq’s determination; if accepted, Nasdaq may grant us an extension of up to\n180 calendar days from the date of the notice to evidence compliance. The notice did not result in the immediate suspension of trading\nor delisting of our ADSs. However, there can be no assurance that Nasdaq will accept our plan, grant us additional time to regain compliance,\nor that we will ultimately be able to evidence compliance within any period that may be allowed. If we are unable to regain compliance\nin accordance with Nasdaq’s requirements, our ADSs could be subject to delisting from the Nasdaq Capital Market.\n\n \n\nAny delisting of our ADSs\nfrom The Nasdaq Capital Market would have a material adverse effect on the liquidity and market price of our securities. Delisting could\nalso limit or eliminate the news and research coverage for our Company, reduce the willingness of investors, including institutional investors,\nto hold or purchase our securities, and impair our ability to access the public capital markets on acceptable terms or at all. In particular,\nif our ADSs were delisted and quoted only on an over-the-counter market, we could experience reduced trading volume and increased price\nvolatility, and it might be more difficult or costly for us to raise additional capital through the sale of equity or equity-linked securities.\nEquity issuances to regain or maintain compliance, including sales under our at-the-market offering or other offerings under our Form\nF-3 shelf, may be dilutive to existing shareholders and may occur at prices below the prevailing market price. In addition, we may be\nrequired to devote significant management time and incur additional legal, accounting and other expenses to seek to regain compliance,\nand measures we might take in an effort to do so – such as changes to our operating plan, financing transactions, or other strategic\nactions – may not be successful and could themselves entail risks and uncertainties. \n\n \n\nMoreover, even if Nasdaq\naccepts our compliance plan, we may be required to achieve specified milestones within prescribed timeframes. Our plan contemplates (i)\nraising additional equity capital under our effective Form F-3 registration statement, including through this at-the-market offering and/or\nregistered direct offerings, and (ii) seeking shareholder approval to convert approximately €1.2 million of indebtedness owed to\nour parent company, Umbrella Global Energy, S.A., into equity. Although our parent company currently holds approximately 66% of our voting\npower and has indicated its intention to vote in favor of the debt conversion, the conversion remains subject to shareholder approval\nand other corporate and regulatory requirements, and there can be no assurance that it will be completed on the anticipated timeline,\nor at all. There is no assurance we will meet any required milestones, that market conditions will permit us to raise the targeted amounts,\nthat our operating results or financial condition will improve sufficiently to evidence compliance with Nasdaq’s continued listing\nstandards, or that we will be able to maintain compliance on an ongoing basis. If we are delisted, the terms of any future financing we\nseek could be less favorable, and delisting could also result in negative publicity and the loss of confidence by suppliers, customers,\nbusiness partners and employees, any of which could further harm our business, financial condition and results of operations. These risks\ncould materially and adversely affect the market for our securities.\n\n \n\n**Purchasers of ADSs will not be directly\nholding our ordinary shares.**\n\n \n\nA holder of ADSs will not\nbe treated as one of our shareholders and will not have direct shareholder rights. Our constitution and Spanish law govern our shareholder\nrights. The depositary, through the custodian or the custodian’s nominee, will be the holder of the ordinary shares underlying\nADSs held by purchasers of ADSs. Purchasers of ADSs have ADS holder rights. The deposit agreement among us, the depositary and purchasers\nof ADSs as an ADS holder, and all other persons directly and indirectly holding ADSs, sets out ADS holder rights, as well as the rights\nand obligations of us and the depositary.\n\n \n\n**Your right as a holder of ADSs to participate\nin any future preferential subscription rights offering or to elect to receive dividends in ordinary shares may be limited, which may\ncause dilution to your holdings.**\n\n \n\nThe deposit agreement provides\nthat the depositary will not make rights available to you unless the distribution to ADS holders of both the rights and any related securities\nare either registered under the Securities Act or exempted from registration under the Securities Act. If we offer holders of our ordinary\nshares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory\nassurance from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act\nbefore making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any\nsuch rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able\nto establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights\nofferings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is\nunable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow\nthe rights to lapse, in which case you will receive no value for these rights.\n\n \n\n23\n\n \n\n \n\n**You may not be able to exercise your right\nto vote the ordinary shares underlying your ADSs.**\n\n \n\nHolders of ADSs may exercise\nvoting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement.\nThe deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix\na record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon\ntimely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (i) the notice\nof the meeting or solicitation of consent or proxy sent by us and (ii) a statement as to the manner in which instructions may be given\nby the holders.\n\n \n\nYou may instruct the depositary\nto vote the ordinary shares underlying your ADSs. Otherwise, you will not be able to exercise your right to vote, unless you withdraw\nthe ordinary shares underlying the ADSs you hold. However, you may not know about the meeting far enough in advance to withdraw those\nordinary shares. If we ask for your instructions, the depositary, upon timely notice from us, will notify you of the upcoming vote and\narrange to deliver our voting materials to you and will try to vote ordinary shares as you instruct. We cannot guarantee you that you\nwill receive the voting materials in time to ensure that you can instruct the depositary to vote your ordinary shares or to withdraw\nyour ordinary shares so that you can vote them yourself. If we do not ask for your instructions, you can still send voting instructions\nto the depository and the depository may try to carry out those instructions, but it is not required to do so.\n\n \n\n**You may be subject to limitations on the\ntransfer of your ADSs and the withdrawal of the underlying ordinary shares.**\n\n \n\nYour ADSs are transferable\non the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient\nin connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally\nwhen our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because\nof any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason\nsubject to your right to surrender your ADSs and receive the underlying ordinary shares. Temporary delays in the surrendering of your\nADSs and receipt of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our\ntransfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend\non our ordinary shares. In addition, you may not be able to surrender your ADSs and receive the underlying ordinary shares when you owe\nmoney for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental\nregulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities. See “ITEM 12.D. *American\nDepositary Shares*” for more information.\n\n \n\n**Holders of ADSs are not treated as holders of our ordinary shares.**\n\n \n\nHolders of ADSs are not\ntreated as holders of our ordinary shares, unless they surrender the ADSs to receive the ordinary shares underlying their ADSs in accordance\nwith the deposit agreement and applicable laws and regulations. The depositary is the holder of the ordinary shares underlying the ADSs.\nHolders of ADSs therefore do not have any rights as holders of our ordinary shares, other than the rights that they have pursuant to\nthe deposit agreement. See “ITEM 12.D. *American Depositary Shares”* for more information.\n\n \n\n**We do not expect to declare or pay dividends\nin the foreseeable future.**\n\n \n\nWe do not expect to declare\nor pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our\nbusiness. Therefore, holders of our ADSs will not receive any return on their investment unless they sell their securities, and holders\nmay be unable to sell their securities on favorable terms or at all.\n\n \n\n**U.S. investors may have difficulty enforcing\ncivil liabilities against our Company, our directors or members of senior management and the experts.**\n\n \n\nCertain members of our senior\nmanagement and Board of Directors are non-residents of the United States, and a substantial portion of the assets of such persons are\nlocated outside the United States. As a result, it may be impracticable to serve process on such persons in the United States or to enforce\njudgments obtained in U.S. courts against them based on civil liability provisions of the securities laws of the United States. Even\nif you are successful in bringing such an action, there is doubt as to whether Spanish courts would enforce certain civil liabilities\nunder U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition,\nawards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in Spain or elsewhere outside the\nUnited States. An award for monetary damages under U.S. securities laws would be considered punitive if it does not seek to compensate\nthe claimant for loss or damage suffered and is intended to punish the defendant. The enforceability of any judgment in Spain will depend\non the particular facts of the case as well as the laws and treaties in effect at the time. The United States and Spain do not currently\nhave a treaty or statute providing for recognition and enforcement of the judgments of the other country (other than arbitration awards)\nin civil and commercial matters.\n\n \n\n24\n\n \n\n \n\nAs a result, our U.S. public\nshareholders may have more difficulty in protecting their interests through actions against us, our management or our directors than\nwould shareholders of a corporation incorporated in a jurisdiction in the United States.\n\n \n\n**There is a risk that we will be a passive\nforeign investment company for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors\nin our securities.**\n\n \n\nIn general, a non-U.S. corporation\nis a PFIC for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average\nquarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the\nabove calculations, a non-U.S. corporation that owns at least 25% by value of the shares of another corporation is treated as if it held\nits proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other\ncorporation. Passive income generally includes dividends, interest, rents, royalties and certain gains. Cash is a passive asset for these\npurposes.\n\n \n\nBased on the expected composition\nof our income and assets and the value of our assets, including goodwill, and the price of the ADSs in our initial public offering, we\ndo not expect to be a PFIC for our current taxable year. However, the proper application of the PFIC rules to a company with a business\nsuch as ours is not entirely clear. Because the proper characterization of certain components of our income and assets is not entirely\nclear, because we hold a substantial amount of cash following our initial public offering, and because our PFIC status for any taxable\nyear will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined,\nin part, by reference to the market price of our shares, which could be volatile), there can be no assurance that we will not be a PFIC\nfor our current taxable year or any future taxable year.\n\n \n\nIf we were a PFIC for any\ntaxable year during which a U.S. investor holds ADSs, certain adverse U.S. federal income tax consequences could apply to such U.S. investor."}