Arbe Robotics (ARBE) Risk Analysis

Our executive officers and directors and their affiliates beneficially own or control the voting rights with respect to approximately 35% of our ordinary shares. They will have the power to control any action for which shareholder approval is required or sought by us, particularly since our Restated Articles provide that a quorum for action by shareholders at a meeting called by the board of directors is two shareholders holding at least 25%.

Under our Restated Articles, the competent courts of Tel Aviv, Israel, will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer, or other employee to us or our shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Israeli Companies Law or the Israeli Securities Law, 1968-5728 (the "Israeli Securities Law"). This exclusive forum provision is intended to apply to claims arising under Israeli law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act. Our Restated Articles also provide that, unless we consent in writing to the selection of an alternative forum and the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, including all causes of action asserted against any defendant to such a complaint. This provision does not affect any other claim for which federal district courts in the United States would have exclusive jurisdiction and expressly does not apply to causes of action arising under the Securities Exchange Act. Such exclusive forum provision in the Restated Articles will not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived their compliance with these laws, rules, and regulations. This exclusive forum provision may limit a shareholder's ability to bring a claim in a judicial forum of its choosing for disputes with us, our directors, officers, or other employees, which may discourage lawsuits against us, our directors, officers, and employees. Investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder, including the provisions of the Securities Act that provide that state and federal courts in the United States both have jurisdiction over claims based on the Securities Act. A United States court may not enforce the provision in our Restated Articles that provides for exclusive jurisdiction of the federal district courts in actions under the Securities Act. Another obstacle to the assertion of claims against us or our directors or officers is the fact that most of them are not residents of the United States, and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may therefore be difficult to effect within the United States. It may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law are applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing these matters. Additionally, the acceptance of foreign judgment in Israel is mainly regulated in the Foreign Judgment Enforcement Law, 5718-1958, pursuant to which Israeli courts might not enforce judgments obtained in the United States against us or our non-U.S. directors and executive officers, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors. An Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if our enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.

As a foreign private issuer, we are generally subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of our home country, which is Israel, in lieu of Nasdaq corporate governance requirements relating to independent directors and the formation and composition of board committees, with respect to the disclosure of third-party director and nominee compensation and the requirement to distribute annual and interim reports. These corporate governance practices in Israel may differ significantly from Nasdaq corporate governance listing standards. Currently, we do not plan to rely on the home country practice exemption with respect to our corporate governance, other than the quorum requirements. Our Restated Articles provide that two shareholders holding 25% of the voting shares constitute a quorum, as contrasted with the Nasdaq requirement of a minimum of one-third of a company's outstanding voting securities. If we choose to take advantage of other home country practices in the future, our shareholders may be afforded less protection than they otherwise would enjoy under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.

We may issue additional ordinary shares or other securities (including convertible securities) in the future in connection with, among other things, our equity incentive plan without shareholder approval, although we require shareholder approval for the creation of a class or series of preferred shares. The creation of a class or series of preferred shares required shareholder approval. Our issuance of additional ordinary shares would have the following effects: - Our existing shareholders' proportionate ownership interest may decrease;- The amount of cash available per share, including for the payment of dividends in the future, may decrease;- The relative voting strength of each previously outstanding ordinary share may be diminished; and - The market price of our ordinary shares may decline. Any such issuance may be dilutive to our shareholders or may cause the stock price to decrease.

Our Restated Articles provide for a classified board of directors, with each class of directors being elected for a term of three years. As a result, the shareholders will vote for only one-third of the board each year. A classified board of directors may make it more difficult for a third party to gain control of us, which may affect the opportunity of our shareholders to receive any potential benefit that could be available from a third party seeking to obtain control over us.

The warrants that we issued in the merger (the "Merger") pursuant to which our wholly-owned subsidiary, Autobot MergerSub, Inc. was merged with an into Industrial Tech Acquisitions Inc. ("ITAC"), a special purpose acquisition corporation, generally known as a SPAC, pursuant to which ITAC became our wholly-owned subsidiary, and we issued ordinary shares and warrants to the holders of ITAC' common stock and warrants, in exchange for ITAC's private warrants are treated as liabilities. As a result of the Merger, the 3,112,080 private warrants held by the members of the ITAC former sponsor are treated as liabilities. E. Scott Crist, one of our directors, holds 2,303,031 of these warrants. The Accounting Standards Codification 815, Derivatives and Hedging ("ASC 815") provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statements of operations. As a result of the recurring fair value measurement, as long as the warrants are outstanding, our financial statements and results of operations may fluctuate quarterly based on factors that are outside of our control. Due to the recurring fair value measurement, we will recognize non-cash gains or losses on the private warrants each reporting period based on the change in the derivative liability, and the amount of such gains or losses could be material. Further, the gain or loss on the derivative liability, which will not be related to our operations, could result in our reporting a loss in a period in which our operations are profitable and net income in a period in which we have a significant loss from operations. Since the amount of the warrant liability reflects the market price of our ordinary shares, to the extent that the market price of our ordinary shares increases from period to period, we are likely to recognize a financial expense, and to the extent that the market price of our ordinary shares declines from period to period, we would recognize financial income.

Fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Because our ordinary shares are publicly traded, the trading price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities, and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline. Factors affecting the trading price of our securities may include: - actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to them;- changes in the market's expectations about our operating results;         - public sales by us of our stock in negotiated transactions to investors who may immediately sell the shares;- success of competitors;         - the market's attitude toward Israel and Israeli technology companies;- our operating results failing to meet the expectations of securities analysts or investors in a particular period;- changes in financial estimates and recommendations by securities analysts concerning us or the market or potential market for driverless cars and other vehicles;- operating and share price performance of other companies that investors deem comparable to us;- the market's perception of our ability to develop and market our products;- the market's perception as to our ability to develop and maintain any perceived technological advantage it may have;- actions by social media users to seek to increase activity in our securities;- Changes or anticipated changes in laws and regulations affecting our business;- our ability to meet compliance requirements, including compliance with the Nasdaq continued listing requirements;- commencement of, or involvement in, litigation involving us or the automotive industry in general;- changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;- the volume of our ordinary shares available for public sale;- changes in trading patterns resulting from social media action not related to the results of our business;- any major change in our board or management;- sales of substantial amounts of our ordinary shares by our directors, executive officers, or significant shareholders, or the perception that such sales could occur;- general economic and political conditions such as recessions, interest rates, international currency fluctuations, and acts of war or terrorism; and - all of the risks described in these Risk Factors. Broad market and industry factors may materially harm the market price of our securities, irrespective of our operating performance. Global stock markets in general and Nasdaq in particular have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks and our securities are not predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies that investors perceive to be similar to us could depress our share price regardless of our business, prospects, financial conditions, or results of operations. A decline in the market price of our securities could also adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Certain provisions of Israeli law and our Restated Articles could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or for our shareholders to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. For example, Israeli corporate law regulates mergers, requires that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company are exceeded (subject to certain conditions), and establishes a high ownership threshold to squeeze out minority shareholders in a full tender offer. Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders, especially whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. See the section titled "Material Israeli Tax Considerations - Taxation of Our Shareholders."

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

Because we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our Restated Articles and the Israeli Companies Law, with minor exceptions pertaining to U.S. securities laws. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Israeli Companies Law, each shareholder of an Israeli company has to act in good faith in exercising such shareholder's rights and fulfilling such shareholder's obligations toward the company and other shareholders and to refrain from abusing such shareholder's power in the company, including, among other things, in voting at the general meeting of shareholders and class meetings on amendments to a company's articles of association, increases in a company's authorized share capital, mergers, and transactions requiring shareholders' approval under the Israeli Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote, who has the power to appoint or prevent the appointment of a director or officer in the company, or who has other powers toward the company, has a duty to act in fairness towards the company. Moreover, a shareholder also has a general duty to refrain from discriminating against other shareholders. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.

Certain provisions of Israeli law and our Restated Articles could have the effect of delaying or preventing a change in control, may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. Among other things: - Israeli Companies Law regulates acquisitions and requires that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company are exceeded (subject to certain conditions);- The Israeli Companies Law requires special approvals for certain transactions involving directors, officers, or significant shareholders and regulates other matters that may be relevant to these types of transactions;- The Israeli Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;- Our Restated Articles divide our directors into three classes, each of which is elected for a three-year term once every three years;- Our Restated Articles provide that certain articles can be amended or changed only by the majority of at least sixty percent (60%) of the total voting power of the shareholders. - Our Restated Articles do not permit a director to be removed except by a vote of a majority of the voting power of the shareholders represented at a general meeting in person or by proxy and voting thereon, as one class, and disregarding abstentions from the count of the voting power of the shareholders present and voting; and - Our Restated Articles provide that director vacancies may be filled by our board of directors. Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders, especially whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a restrictive period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if the shares have not been disposed of. See the section titled "Material Israeli Tax Considerations - Taxation of Our Shareholders." Our board of directors has sole discretion as to whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future, operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that our directors may deem relevant. The Israeli Companies Law imposes restrictions on our ability to declare and pay dividends. See the section titled "Item 10.B Additional Information-Dividend and Liquidation Rights" for additional information. Payment of dividends may also be subject to Israeli withholding taxes. See the section titled "Material Israeli Tax Considerations" for additional information.