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Vislink Technologies (VISL) Risk Analysis
Risk Overview Q3, 2024
Source: the company's latest filing for the period ended Sep 30, 2024, filed Nov 14, 2024
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1Our failure to meet Nasdaq's continued listing requirements could result in our common stock's delisting, which could negatively impact its market price and liquidity and our ability to access the capital markets.
Any Nasdaq action relating to failure to comply with Nasdaq's continued listing requirement, including a formal delisting, could hurt the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any such delisting action may materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all. Delisting or potentially delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities. In the event of any delisting or potential delisting, we may attempt to take action to restore our compliance with Nasdaq's listing requirements. We cannot assure that any such action taken by us would allow our common stock to remain listed or be re-listed, stabilize the market price or improve the liquidity of our common stock, maintain a minimum closing bid price of $1.00 per share as required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5450(a)(1) or prevent future non-compliance with Nasdaq's listing requirements. If Nasdaq delists our shares of common stock from trading on its exchange for failure to meet Nasdaq's listing standards, we and our stockholders could face significant material adverse consequences, including: - a limited availability of market quotations for our securities; - reduced liquidity for our securities; - a determination that our common stock is a "penny stock," which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; - a limited amount of news and analyst coverage, and - a decreased ability to issue additional securities or obtain additional financing. In addition, the stock market, in general, the Nasdaq Capital Market, and telecommunication companies, in particular, frequently experience extreme price and volume fluctuations unrelated or disproportionate to the operating performance of such companies. Broad market and industry factors, including potentially worsening economic conditions and other adverse effects or developments, may negatively affect the market price of our common stock, regardless of our actual operating performance. Realizing any of the above risks or a broad range of other risks, including those described in this "Risk Factors" section, could have a dramatic and negative impact on the market price of our common stock.
- Share Price & Shareholder Rights - Risk 2We may face various risks associated with shareholder activists or shareholder demands for better performance.
There is no assurance that we will not be subject to shareholder activism or demands. Such activities could interfere with our ability to execute our strategic plan, be costly and time-consuming, disrupt our operations, and divert management and employees' attention.
- Share Price & Shareholder Rights - Risk 3If securities analysts do not publish research or reports about our business or if they downgrade our common stock or our sector, our common stock price and its trading volume could decline.
The research may partly impact the trading market for our common stock and reports that industry or financial analysts publish about us or our business or business sectors. We do not control these analysts. There is no guarantee that analysts will cover our common stock. The lack of research coverage may adversely affect our market price if analysts do not cover our common stock. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the analysts who do cover our business downgrade our common stock or industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our company, the price of our common stock could decline. If one or more of these analysts cease coverage of us or fail to publish reports on it regularly, we could lose visibility in the market, which could cause our stock price or trading volume to decline.
- Corporate Activity and Growth - Risk 4Our business strategy may include acquisitions, a strategy which may entail numerous risks, including the risk of management diversion and increased costs and expenses, all of which could negatively affect the Company's profitability.
Our business strategy may include, among other things, strategic acquisitions, as well as potential opportunistic acquisitions and strategic actions. An acquisition strategy may entail several risks, including diverting management's attention from other business concerns, the incurrence of substantial legal and other advisory fees, and the potential need to finance such acquisitions with additional equity and/or debt. Once completed, acquisitions, including those we have made over the past several years, may entail additional risks, including unanticipated costs and liabilities of the acquired businesses, including environmental liabilities, that could materially adversely affect our results of operations; increased regulatory compliance relating to the acquired business; difficulties in assimilating acquired businesses, their personnel and their financial reporting systems, which would prevent the expected benefits from the transaction from being realized within the anticipated timeframe; negative effects on existing business relationships with suppliers and customers; and loss of key employees of the acquired businesses. In addition, any future acquisitions could result in the incurrence of additional debt and related interest expense, contingent liabilities, and amortization expense related to intangible assets, which could have a material adverse effect on our business, financial condition, operating results, and cash flows, or the issuance of additional equity, which could dilute our stockholder's equity interests. There can be no assurance that we can negotiate any acquisitions we may pursue successfully, receive the required approvals for any acquisition, otherwise conclude any acquisition successfully, or that any acquisition will achieve the anticipated synergies or other positive results. Overall, if our acquisition strategy is not successful or if acquisitions are not well integrated into our existing operations, the Company's profitability, business, and financial condition could be negatively affected.
Risk Highlights Q3, 2024
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 49
- Share Price & Shareholder Rights - Risk 1At several of our annual stockholder meetings, including our 2019 Annual Meeting of Stockholders, we failed to obtain ratification by our stockholders of specific proposals submitted for approval of our stockholders at prior annual meetings, which could be deemed defective corporate acts.
At our 2015 Annual Meeting of Stockholders, our Board submitted to our stockholders for their approval (i) a proposal to approve our 2015 Employee Stock Purchase Plan and (ii) a proposal to approve our 2015 Incentive Compensation Plan. At our 2016 Annual Meeting of Stockholders, our Board submitted to our stockholders for their approval (i) a proposal to approve our 2016 Employee Stock Purchase Plan and (ii) a proposal to approve our 2016 Incentive Compensation Plan. At our 2017 Annual Meeting of Stockholders, our Board submitted to our stockholders, for their approval, (i) a proposal to approve an amendment to our 2016 Employee Stock Purchase Plan to increase the number of shares of common stock available for sale under such plan; (ii) a proposal to approve an amendment to our 2016 Incentive Compensation Plan to increase the number of shares of Common stock available for sale under such plan; and (iii) a proposal to approve our 2017 Incentive Compensation Plan. At each of these annual meetings, our inspector of elections determined that the applicable proposal received the requisite stockholder approval under our amended and restated bylaws ("Bylaws") and certified that the proposal passed, which was subsequently disclosed in an applicable Current Report on Form 8-K. Questions have been raised about whether the votes on such proposals were tabulated following our Bylaws' provisions and whether the requisite votes were obtained to approve each of these proposals. According to the provisions of Section 204 of the General Corporation Law of the State of Delaware ("DGCL") and to continue to remain in compliance with Nasdaq's Listing Rules, we submitted all these proposals, again, to our stockholders at our 2019 Annual Meeting of Stockholders for ratification to resolve any defects in the corporate acts relating to the approval of these proposals by our stockholders at the prior meetings. We could not obtain ratification by our stockholders for any proposals submitted to them at the 2019 Annual Meeting of Stockholders. Although we intend to resubmit these proposals to our stockholders for ratification, there can be no assurance that any of these proposals will be ratified. If we cannot secure such ratifications or are deemed inadequate, this could result in a determination that none of the shares issued by us under these plans were duly authorized and validly issued, which could create accounting issues, affect our liquidity and capital structure, and expose us to claims from recipients of any stock awards granted according to such plans, any of which could have a material adverse effect on our business and results of operations.
- Share Price & Shareholder Rights - Risk 2Our stock price may be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.
Our Common stock trading price could be highly volatile and subject to wide fluctuations in response to various factors, including factors beyond our control. These factors include those discussed in the other "Risk Factors" section of this Report on Form 10-K. Also, the stock markets in general and the markets for telecommunication stocks have experienced volatility. These broad market fluctuations may adversely affect our common stock's trading price or liquidity. In the past, when the market price was volatile, holders of that stock sometimes instituted securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the case, and our management's attention would be diverted from the operation of our business, which could seriously harm our financial position. Any adverse determination in litigation could also subject us to significant liabilities. Some companies that have had volatile market prices for their securities have been the target of a hostile takeover or subject to involvement by activist stockholders. If, for any reason, we were to become the target of a hostile takeover attempt or activist campaign, it could result in substantial costs and divert resources and the attention of executive management from our business.
- Share Price & Shareholder Rights - Risk 3Our failure to meet Nasdaq's continued listing requirements could result in our common stock's delisting, which could negatively impact its market price and liquidity and our ability to access the capital markets.
Any Nasdaq action relating to failure to comply with Nasdaq's continued listing requirement, including a formal delisting, could hurt the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any such delisting action may materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all. Delisting or potentially delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities. In the event of any delisting or potential delisting, we may attempt to take action to restore our compliance with Nasdaq's listing requirements. We cannot assure that any such action taken by us would allow our common stock to remain listed or be re-listed, stabilize the market price or improve the liquidity of our common stock, maintain a minimum closing bid price of $1.00 per share as required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5450(a)(1) or prevent future non-compliance with Nasdaq's listing requirements. If Nasdaq delists our shares of common stock from trading on its exchange for failure to meet Nasdaq's listing standards, we and our stockholders could face significant material adverse consequences, including: - a limited availability of market quotations for our securities; - reduced liquidity for our securities; - a determination that our common stock is a "penny stock," which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; - a limited amount of news and analyst coverage, and - a decreased ability to issue additional securities or obtain additional financing. In addition, the stock market, in general, the Nasdaq Capital Market, and telecommunication companies, in particular, frequently experience extreme price and volume fluctuations unrelated or disproportionate to the operating performance of such companies. Broad market and industry factors, including potentially worsening economic conditions and other adverse effects or developments, may negatively affect the market price of our common stock, regardless of our actual operating performance. Realizing any of the above risks or a broad range of other risks, including those described in this "Risk Factors" section, could have a dramatic and negative impact on the market price of our common stock.
- Share Price & Shareholder Rights - Risk 4If our common stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our common stock because they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted several rules to regulate "penny stock" that restrict transactions involving stock deemed 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 reduce 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 the exchange or system provides current price and volume information concerning transactions in such securities). Our shares of common stock have in the past constituted, and may again in the future constitute, "penny stock" within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage them from effecting transactions in shares of our common stock, which could severely limit the market liquidity of such shares of common stock and impede their sale in the secondary market. A U.S. broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with a net worth above $1,000,000 or an annual income exceeding $200,000 or $300,000 together with their spouse) must make a unique suitability determination for the purchaser and must receive the purchaser's written consent to the transaction before a sale unless the broker-dealer or the transaction is otherwise exempt. Also, the "penny stock" regulations require the U.S. broker-dealer to deliver, before any transaction involving a "penny stock," a disclosure schedule prepared under SEC standards relating to the "penny stock" market unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer must also disclose commissions payable to the U.S. broker-dealer, the registered representative, and current quotations for the securities. Finally, a U.S. broker-dealer must submit monthly statements disclosing recent price information concerning the "penny stock" held in a customer's account and information for the limited market in "penny stocks." According to the SEC, stockholders should know that the "penny stocks" market has suffered from fraud and abuse patterns in recent years. Such practices 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 salespersons; (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 the desired level, resulting in investor losses. Our management is aware of the historical abuses in the penny stock market. Although we do not expect to dictate the market's behavior or broker-dealers who participate, management will strive within the confines of practical limitations to prevent the described patterns from being established concerning our securities.
- Share Price & Shareholder Rights - Risk 5We may face various risks associated with shareholder activists or shareholder demands for better performance.
There is no assurance that we will not be subject to shareholder activism or demands. Such activities could interfere with our ability to execute our strategic plan, be costly and time-consuming, disrupt our operations, and divert management and employees' attention.
- Share Price & Shareholder Rights - Risk 6If securities analysts do not publish research or reports about our business or if they downgrade our common stock or our sector, our common stock price and its trading volume could decline.
The research may partly impact the trading market for our common stock and reports that industry or financial analysts publish about us or our business or business sectors. We do not control these analysts. There is no guarantee that analysts will cover our common stock. The lack of research coverage may adversely affect our market price if analysts do not cover our common stock. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the analysts who do cover our business downgrade our common stock or industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our company, the price of our common stock could decline. If one or more of these analysts cease coverage of us or fail to publish reports on it regularly, we could lose visibility in the market, which could cause our stock price or trading volume to decline.
- Share Price & Shareholder Rights - Risk 7Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and reduce our common stock's market price.
Our amended and restated certificate of incorporation ("Certificate of Incorporation"), and our Bylaws contain provisions that could delay or prevent a change in our Vislink Technology Inc.'s control. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include: - authorizing the Board to issue, without stockholder approval, preferred stock with rights senior to those of our common stock; and - they require advance notification of stockholder nominations and proposals. Also, the provisions of Section 203 of the DGCL govern us. These provisions may prohibit large stockholders, particularly those owning 15% or more of our outstanding voting stock, from merging or combining with us for a specific time without our Board's consent. These and other provisions in our Certificate of Incorporation and our Bylaws and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our common stock, and result in the market price of our common stock being lower than it would be without these provisions.
- Share Price & Shareholder Rights - Risk 8If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our common stock, our share price and trading volume could decline.
The research will influence the trading market for our shares of common stock and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. If any analysts who may cover us change their recommendation regarding our common stock adversely or provide more favorable relative recommendations about our competitors, our share price would likely decline. If any analyst who may cover us were to cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which could cause our common stock price or trading volume to decline.
- Share Price & Shareholder Rights - Risk 9Future sales and issuances of our common stock or rights to purchase our common stock, stock incentive plans, and upon the exercise of outstanding securities exercisable for shares of our common stock could result in substantial additional dilution of our stockholders, cause our stock price to fall and adversely affect our ability to raise capital.
We will require additional capital to continue to execute our business plan and advance our research and development efforts. If we raise additional capital by issuing additional equity securities and exercising outstanding warrants, our stockholders may experience substantial dilution. We may sell shares of preferred or common stock in one or more transactions at prices that may be at a discount to the then-current market value of our common stock and on other terms and conditions as we determine from time to time. Any such transaction could result in substantial dilution of our existing stockholders. If we sell shares of our common stock in more than one transaction, stockholders who purchase our common stock may be materially diluted by subsequent sales. Such sales could also cause a drop in the market price of our common stock. The issuance of shares of our common stock in connection with public or private financing, in connection with our compensation programs, and upon exercise of outstanding warrants will have a dilutive impact on our other stockholders, and the issuance, or even potential issuance, of such shares, could hurt the market price of our common stock. The exercise of stock options, warrants, and other securities could cause our stockholders to experience substantial dilution. In addition to warrants issued in 2018, 2019, and 2020, in February 2021, we issued warrants to purchase up to 454,546 shares of our common stock. Moreover, holders of our stock options and warrants are likely to exercise them, if ever, when we otherwise could obtain a price for the sale of our securities that is higher than the exercise price per security of the options or warrants. Such exercises, or the possibility of such exercises, may impede our efforts to obtain additional financing by selling additional securities or making such financing more costly. It may also reduce the price of our common stock.
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