Roboai (AIIO) Risk Analysis

Not all of our directors and executive officers are residents of the United States, and the assets of the company or these persons may be located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forum in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.

Our Amended and Restated Memorandum and Articles of Association contains provisions that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests. Among other provisions, subject to the right of our shareholders as specified in the Amended and Restated Memorandum and Articles of Association, the ability of our board of directors to issue additional shares, with or without preferred, deferred or other rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, at such times and on such other terms as the board of directors may determine, to the extent authorized but unissued, and without shareholder approval, may make it more difficult for our shareholders to remove incumbent management and accordingly discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

A number of our directors and executive officers reside within Mainland China for at least a significant portion of the time. As a result, it may be difficult for investors to effect service of process upon our management located in Mainland China. It may also be difficult for investors to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against our officers and directors located in Mainland China. In addition, there is uncertainty as to whether the courts of Mainland China would recognize or enforce judgments of U.S. courts against our management located in Mainland China predicated upon the civil liability provisions of the securities laws of the United States or any state. There is uncertainty as to whether the courts of Mainland China would enforce judgments of United States courts or Cayman courts obtained against our management located in Mainland China predicated upon the civil liability provisions of the U.S. federal and state securities laws. The courts in Mainland China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between Mainland China and the country where the judgment is made or on principles of reciprocity between jurisdictions. Mainland China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. Further, according to the PRC Civil Procedures Law, courts in Mainland China will not enforce a foreign judgment against our management located in Mainland China if they decide that the judgment violates the basic principles of laws of Mainland China or national sovereignty, security or public interest. As a result, it may be difficult for our shareholders or investors to effect service of process upon our management inside Mainland China, and it is uncertain whether and on what basis a court in Mainland China would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on laws of Mainland China against a company in Mainland China, if they can establish sufficient nexus to Mainland China for a court in Mainland China to have jurisdiction, and meet other procedural requirements. However, it would be difficult for foreign shareholders to establish sufficient nexus to Mainland China by virtue only of holding our securities.

The price of our securities may fluctuate significantly due to, among other things, general market and economic conditions. An active trading market for our securities may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business conditions and the release of our financial reports. Additionally, if our securities become delisted from Nasdaq and are quoted on the OTC Bulletin Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange), the liquidity and price of our securities may be more limited than if we were quoted or listed on the New York Stock Exchange, Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

On November 12, 2024, the Company received a delisting determination notice (the "Determination") from the staff of the Listing Qualifications Department (the "Staff") of Nasdaq to delist the Company's securities from Nasdaq on the grounds that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) because it failed to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2023 (the "2023 Annual Report") with the SEC by November 11, 2024, the extended deadline previously approved by the Staff for filing such report. On January 6, 2025, the Company received notice (the "January 6, 2025 Notice") from the Staff informing the Company that: (i) the Company no longer met the audit committee requirements for continued listing on Nasdaq set forth in Nasdaq Listing Rule 5605 due to the resignations of Messrs. Xiaoma (Sherman) Lu and Changqing (Benjamin) Ye on December 6, 2024 and Ms. Xinyue (Jasmine) Geffner on December 7, 2024; and (ii) the Company is not in compliance with Nasdaq Listing Rule 5250(c)(2) because it failed to the file a Form 6-K containing interim balance sheet and income statement as of the end of its second quarter ended June 30, 2024, which two deficiencies serve as additional bases for delisting. On January 16, 2025, the Company attended the hearing before a Hearings Panel (the "Panel"). On February 24, 2025, the Panel issued its decision ("Decision") to grant the Company's request for continued listing on Nasdaq, subject to the conditions that: (i) on or before March 30, 2025, the Company shall file restatements for the financial statements included in the Company's Form 20-F for fiscal year 2022 and the interim financial statements for fiscal year 2023; (ii) on or before May 12, 2025, the Company shall file its 2023 Annual Report and its interim financial statements for fiscal year 2024; and (iii) on or before May 12, 2025, the Company shall demonstrate compliance with Nasdaq Listing Rule 5605(c)(2). On March 31, 2025, the Company filed Amendment No. 1 to the Annual Report on Form 20-F for fiscal year 2022 and Amendment No. 1 to its report Form 6-K for the six-month periods ended June 30, 2023 and 2022. On January 9, 2025, the board of directors of the Company appointed (i) Elizabeth Ching Yee Chung as a member of the Board, as chairperson of the audit committee and as a member of the compensation committee; (ii) Benjamin Bin Zhai as a member of the board and as chairperson of the compensation committee; (iii) Jin He as a member of the Board, as a member of the audit committee and as a member of the compensation committee; (iv) Joseph Levinson as a member of the Board and as a member of the audit committee; and (v) Jinming Dong as Chief Financial Officer of the Company. With the appointments of Ms. Chung and Messrs. He and Levinson to the Board's audit committee on January 9, 2025, the Company believes that it has regained compliance with the audit committee requirements in Nasdaq Listing Rule 5605(c)(2). On February 24, 2025, the Panel issued its decision on the Company's appeal, granting the Company's request for continued listing until May 12, 2025 while the Company seeks to regain compliance with the aforementioned deficiencies, subject to the Company meeting certain compliance milestones. The Company filed its 2023 Annual Report on April 28, 2025 and its interim report for the six months ended June 30, 2024 on May 12, 2025. On May 19, 2025, the Company received a letter from the Panel informing the Company that it had regained compliance with the requirements set forth in Nasdaq Listing Rules 5250(c)(1) (the "Periodic Filing Rule"), 5250(c)(2), and 5605(c)(2), and in application of Nasdaq Listing Rule 5815(d)(4)(B), the Company will be subject to a mandatory Panel monitoring period of one year from May 19, 2025 (the "Mandatory Panel Monitor"). If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Periodic Filing Rule, the Staff will issue a delisting determination and notice and the Company will not be permitted to provide the Staff with a plan of compliance, nor will the Staff will be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810(c)(3). On May 21, 2025, the Company received a delisting determination letter, informing the Company that in accordance with the Mandatory Panel Monitor, as a result of the Company's failure to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2024 (the "2024 Annual Report") with the SEC and comply with the Periodic Filing Rule, the Company's securities will be delisted from Nasdaq (the "2025 Delisting Determination"). Unless the Company requests an appeal of the delisting determination by May 28, 2025, trading of the Company's ordinary shares and warrants will be suspended at the opening of business on May 30, 2025 and a Form 25-NSE will be filed with the SEC, which will remove the Company's securities from listing and registration on Nasdaq. On May 28, 2025, the Company requested a hearing to appeal the 2025 Delisting Determination and an extended stay of the trading suspension until a Hearings Panel has rendered a decision on such appeal. The Company is working diligently to file the 2024 Annual Report as soon as practicable, however there can be no assurance that the Company will be able to regain compliance with the Periodic Filing Rule or will otherwise maintain compliance with other Nasdaq listing criteria. There can be no assurance that the Hearings Panel will grant the Company's request for continued listing or stay the suspension of the Company's securities. On May 28, 2025, the Company issued a press release announcing its receipt of the 2025 Delisting Determination. If we fail to satisfy the continued listing requirements of Nasdaq, Nasdaq may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action we take to attempt to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements. Additionally, if our securities become delisted from Nasdaq, for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if it were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

We are an "emerging growth company" as defined in the JOBS Act. We will remain an "emerging growth company" until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination (the "Closing"), (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as "emerging growth companies," including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation. In addition, Section 102(b)(1) of the JOBS Act exempts "emerging growth companies" from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used. Furthermore, even after we no longer qualify as an "emerging growth company," as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including, but not limited to, the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information. As a result, our shareholders may not have access to certain information they deem important. We cannot predict if investors will find our Class B ordinary shares less attractive because it relies on these exemptions. If some investors find our Class B ordinary shares less attractive as a result, there may be a less active trading market and share price for our Class B ordinary shares may be more volatile.

We cannot predict whether our dual-class capital structure will result in a lower or more volatile market price of our Class B ordinary shares, adverse publicity or other adverse consequences. Certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. For example, in July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company's voting rights in the hands of public shareholders, and S&P Dow Jones announced in the same month that it would no longer admit companies with multiple-class share structures to certain of its indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities "with unequal voting structures" in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, our dual-class capital structure might make our Class B ordinary shares ineligible for inclusion in any of these indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in our Class B ordinary shares. It is unclear what effect, if any, these policies will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class capital structure of our ordinary shares, we will likely be excluded from certain indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class B ordinary shares less attractive to other investors. As a result, the market price and liquidity of our Class B ordinary shares could be materially adversely affected.

In addition to being a foreign private issuer, we are a "controlled company" as defined under the Listing Rules of Nasdaq, because Alan Nan Wu, our Executive Chairman, is able to exercise 78% of the aggregate voting power of our total issued and outstanding shares. For as long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our board of directors must be independent directors or that we have to establish a nominating committee and a compensation committee composed entirely of independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. For additional information regarding the corporate governance practices that we intend to follow in lieu of Nasdaq requirements, see the section of this annual report entitled "- The market price and trading volume of our Class B ordinary shares and warrants may be volatile." The stock markets, including Nasdaq on which we list our Class B ordinary shares and warrants under the symbols "AIIO," and "AIIOW," respectively, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market is sustained for our Class B ordinary shares and warrants, the market price of our Class B ordinary shares and warrants may be volatile and could decline significantly. In addition, the trading volume in our Class B ordinary shares and warrants may fluctuate and cause significant price variations to occur. If the market price of our Class B ordinary shares and warrants declines significantly, you may be unable to resell your shares or warrants at or above the market price of such shares and warrants. We cannot assure you that the market price of our Class B ordinary shares and warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following: - the realization of any of the risk factors presented in this annual report;- actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition;- additions and departures of key personnel;- failure to comply with the requirements of Nasdaq;- failure to comply with the Sarbanes-Oxley Act or other laws or regulations;- future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to the expiration of contractual lock-up agreements;- publication of research reports about our company;- the performance and market valuations of other similar companies;- failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;- new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to our company;- commencement of, or involvement in, litigation involving our company;- broad disruptions in the financial markets, including sudden disruptions in the credit markets;- speculation in the press or investment community;- actual, potential or perceived control, accounting or reporting problems;- changes in accounting principles, policies and guidelines; and - other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism or responses to these events. In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management's attention and resources, which could have a material adverse effect on us. Our periodic operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price. Our operating results may fluctuate significantly because of several factors, including: - labor availability and costs for hourly and management personnel;- our ability to successfully develop, commercialize, and obtain market acceptance for our products;- changes in interest rates;- impairment of long-lived assets;- macroeconomic conditions, both internationally and locally;- changes in consumer preferences and competitive conditions;- expansion to new markets; and - fluctuations in commodity prices.

The trading market for our securities is and will be influenced by the research and reports that industry or financial analysts publish about our business. We do not control these analysts, or the content and opinions included in their reports. As a new public company, we may be slow to attract research coverage and the analysts who publish information about our securities will have had relatively little experience with our company, which could affect their ability to accurately forecast our results and make it more likely that we may fail to meet their estimates. In the event that we obtain industry or financial analyst coverage, if any of the analysts who cover our company issues an inaccurate or unfavorable opinion regarding our company, the price of our securities would likely decline. If our financial results fail to meet, or significantly exceed, the announced guidance or the expectations of analysts or public investors, analysts could downgrade our securities or publish unfavorable research about us. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause the price of our securities or trading volume to decline.

The SEC has adopted a number of rules to regulate "penny stock" that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. "Penny stocks" generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on Nasdaq if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our Class B ordinary shares could be considered to be a "penny stock" within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in our Class B ordinary shares, which could severely limit the market liquidity of such ordinary shares and impede their sale in the secondary market. A U.S. broker-dealer selling a penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the "penny stock" regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a "penny stock", a disclosure schedule prepared in accordance with SEC standards relating to the "penny stock" market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the "penny stock" held in a customer's account and information with respect to the limited market in "penny stocks". The market for "penny stocks" has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

Alan Nan Wu, through Muse Limited, a company incorporated in the British Virgin Islands ("Muse Limited"), owns 100% of our Class A ordinary shares and 426,941 of our Class B ordinary shares, which represent 72.3% of the voting interests of Robo.ai Inc. For so long as he holds at least a majority of the voting interests of Robo.ai Inc., Alan Nan Wu will have the ability, through our board of directors, to significantly influence decision-making with respect to our business direction and policies. Matters over which Alan Nan Wu may, directly or indirectly, exercise significant influence include: (i) the election of members of our board of directors; (ii) business combinations and other merger transactions requiring shareholder approval, including proposed transactions that would result in our shareholders receiving a premium price for their shares; and (iii) amendments of our Amended and Restated Memorandum and Articles of Association or increases or decreases in the size of our board of directors. Even if Alan Nan Wu's voting interests fall below a majority, he may continue to be able to strongly influence our decisions. In addition, such concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our shareholders. As a result, such concentrated control may adversely affect the market price of our Class B ordinary shares.