EZRG EZRaider Company (CE)

ITEM 1A. RISK FACTORS

An investment in our securities involves a high degree of risk. The risks described below include all material risks to investors that are known to our company. You should carefully consider such risks before investing in our securities. Our business, financial condition and results of operations could be materially harmed by these risks. As a result, the trading price of our common stock could decline, and you might lose all or part of your investment. When determining whether to buy our common stock, you should also refer to the other information in this Transition Report, including our financial statements and the related notes included elsewhere in this Transition Report.

Risks Related to Our Business and Industry

We have a limited operating history which makes the evaluation of our future business prospects difficult.

Before the consummation of the Merger, we were a shell company with no operating history and no assets other than cash. Effective upon the consummation of the Merger, we redirected our business focus towards the business of importing EZRaider Vehicles from D.S Raider and distributing and selling them in the United States through EZ Global. EZ Global commenced its business operation in August 2019 and is an early-stage company with a limited operating history. Its primary activities have been related to the organizational activities and the development of its distribution business, including the initiation of sales and marketing efforts related to EZRaider Vehicles. Our success is dependent upon the successful implementation of our business plan. Any future success that we might achieve will depend upon many factors, including factors beyond our control that cannot be predicted at this time. These factors may include but are not limited to:

Because of our limited operating history, our ability to accurately forecast revenue is very difficult. To the extent we are unsuccessful in establishing our business strategy and increasing our revenues through the implementation of our sales and marketing strategy, we may be unable to appropriately adjust spending in a timely manner and will have to reduce our operating expenses, causing us to forego potent revenue-generating activities. These conditions may have a material adverse effect on the business operating results and financial condition of the Company. As such we may not be able to achieve positive cash flows and our lack of operating history and experience makes evaluation of our future business and prospects difficult.

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The industry and the markets in which we operate are highly competitive and subject to rapid technological change.

The markets in which we operate are highly competitive. We operate primarily in the micro-mobility industry that is subject to rapidly evolving changes, rapid technological developments and product evolution, rapid changes in customer requirements and preferences, frequent new product introductions and enhancements, adoption and implementation of new laws and regulations in response to our growing industry and associated technology. As we expand our business into new markets, or introduce new offerings into existing markets, regulatory bodies or courts may claim that (i) we are subject to additional requirements, (ii) either our manufacturer, Flex, or our supplier, D.S Raider, is subject to additional requirements, or (iii) we are prohibited from conducting our business in certain jurisdictions. For example, if we migrate from back-road or off-road settings to on-street use, we will be subject to safety and equipment requirements applicable by both federal and state safety regulations including turn signals and rearview mirrors.

Quality problems with our vehicles could harm our reputation and erode our competitive position.

The success of our business will depend upon the quality of our vehicles and our relationships with customers. If our vehicles fail to meet our customers’ standards, our reputation could be harmed, which would adversely affect our marketing and sales efforts. We cannot assure you that our customers will not experience quality problems with our vehicles.

We may not be able to maintain our competitive position if we face intense competition from other distributors, many of which have significantly greater resources.

The market for electric vehicles and light electric vehicles is intensely competitive and is characterized by frequent technological changes and evolving industry standards. We expect competition to become more intense. Increased competition may result in a decline in average selling prices, causing a decrease in gross profit margins. We have faced and will continue to face competition from other distributors. Potential customers may choose to do business with established vehicle manufacturers and distributors, because of their perception that such vehicle manufacturers are more stable, and have greater manufacturing capacity and capability to adapt battery products to their vehicles.

Competitors who produce, sell and rent smaller micro-mobility platforms like scooters, ebikes and mopeds typically have greater financial, personnel, technical, manufacturing, marketing, sales and other resources than we do. As a result, these competitors may be in a stronger position to respond quickly to market opportunities, new or emerging technologies and evolving industry standards.

Future acquisitions may be unsuccessful and may negatively affect operations and financial conditions.

We plan to grow organically but we will also opportunistically pursue potential acquisitions of complementary businesses. Our wholly own subsidiary, EZ Global, entered into the Share Purchase Agreement with D.S Raider on February 21, 2021, as amended on March 30, 2021, on August 31, 2021, December 30, 2021 and March 11, 2022, pursuant to which the Exclusivity Date for the closing of the D.S Raider Acquisition has been extended until March 31, 2022. The Share Purchase Agreement’s Exclusivity Date for the D.S Raider Acquisition has expired, and the Company is currently evaluating its options. Should we acquire D.S Raider, or other companies, the integration of businesses, personnel, product lines and technologies can be difficult, time-consuming and subject to significant risks. Any difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and decrease our revenue and results of operations.

We are a distributor of EZRaider products and as such we have only one supplier, D. S Raider, to rely upon, and we have a limited term of exclusivity rights under the Distribution Agreement if we fail to meet certain criteria.

We do not manufacture EZRaider products. EZ Global is the exclusive distributor of EZRaider products in the United States, which products are produced by D.S Raider in Israel through a third party, Flex. On September 2, 2021, D.S Raider and EZ Global renewed the initial Distribution Agreement, pursuant to which D.S Raider appointed EZ Global as its exclusive distributor of EZ Raider products in the United States until September 2, 2022. Pursuant to the Memorandum entered between D. S. Raider and EZ Global on December 31, 2021, this exclusive right has been extended until January 31, 2023, subject to EZ Raider performing its obligations as set forth in the Memorandum. Although EZ Global paid the required Down Payment and placed the Purchase Orders on a timely basis in accordance with the terms of the Memorandum, EZ Global has not yet paid the outstanding balance for the Purchase Order it previously secured. Under the terms of the Memorandum, the non-payment of this outstanding balance due by EZ Global permits D.S Raider to terminate the Distribution Agreement, in its sole discretion, and keep the balance of the Down Payment as the agreed-upon damage.

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We are dependent on our sole supplier D.S Raider and upon a third-party assembly company that D.S Raider utilizes to assemble EZRaider products.

EZRaider products contain numerous purchased parts that D.S Raider, our sole supplier, and its assembly source, procure. D.S Raider uses Flex Manufacturing in Israel to assemble EZRaider products and has thus far met all orders placed in a timely manner. However, it would negatively affect our business if they are unable to meet purchase orders in a timely manner, have difficulties acquiring raw materials and or parts such as lithium batteries, shipping finished goods, or ensuring customs clearance of products. Any significant unanticipated demand or delays our supplier faces could require them to procure additional components in a short amount of time. There is no assurance that D.S Raider will be able to secure additional or alternative sources of supply or develop replacements for certain components of the products. Any unexpected difficulties or delays with key suppliers by D.S Raider could result in a downstream delay and potential loss of access to finished goods necessary for our operations.

There is no assurance that our supplier will ultimately be able to meet the cost, quality and volume needed to fulfill our orders. Furthermore, as our sales increase, we will need to accurately forecast, purchase, warehouse and transport to our facilities finished goods at higher volumes than we have experience with. If we are unable to accurately match the timing and quantities of purchases to our actual plans or capabilities, or successfully implement automation, inventory management and other systems to accommodate the increased complexity in our supply chain, we may have to incur unexpected storage, transportation and write-off costs, which could have a material adverse effect on our financial condition and operating results.

Unforeseen or recurring operational problems at the third part assembly facility, or a catastrophic loss of the third-party assembling facility, may cause significant loss or delayed production and adversely affect our results of operations.

Our supplier’s assembly process could be affected by operational problems that could impair production capabilities and the timeframes within which we expect to receive our purchased vehicles. The assembly facility, which our sole supplier utilizes, could experience disruptions or shutdowns at their facility for any number of reasons, including but not limited to:

If D.S Raider’s assembly provider is compromised or shut down, it may experience prolonged startup periods, regardless of the reason for the compromise or shutdown. Those startup periods could range from several days to several weeks or longer, depending on the reason for the compromise or shutdown and other factors. Any disruption in their operations could cause a significant loss of assembly production, delays in their ability to produce EZRaider Vehicles to meet our sales orders, and adversely affect our results of operations. If D.S Raider fails to procure a replacement assembler, they may be required to move operations to a replacement assembler which could cause delays in production and changes to the cost of goods. Any of these events individually or in the aggregate could have a material adverse effect on our business, financial condition and operating results.

We may be unable to accurately forecast our vehicle delivery needs, which could harm our business, financial condition and results of operations.

We deliver vehicles locally by our internal transportation resources if within a certain distance of our location in Kent, Washington. For all other orders we use various service providers for ground shipping. In the future we anticipate utilizing a third-party common carrier and will likely enter an agreement with such a carrier for services. It will be important to accurately forecast vehicle delivery volumes in advance. It will be difficult to predict, especially months in advance, our vehicle delivery volumes and it could have a material adverse effect on our business, financial condition and results of operations.

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Failure to maintain the strength and value of the EZRaider brand could have a material adverse effect on our business, financial condition and results of operations.

Our success depends, in part, on the value and strength of the EZRaider brand, and is heavily dependent on D.S Raider’s actions as well. Maintaining, enhancing, promoting and positioning the EZRaider brand, particularly in new markets where we have limited brand recognition, will depend largely on the success of our marketing efforts and our ability to provide high-quality services, products and resources, and a consistent, high-quality customer experience. Our brand could be adversely affected if either we or D.S Raider fail to achieve these objectives, if we fail to comply with laws and regulations, if we are subject to publicized litigation, or if our public image or reputation were to be tarnished by negative publicity. Some of these risks may be beyond our ability to control, such as the effects of negative publicity regarding our suppliers or third-party providers of services or negative publicity related to members of management. Any of these events could hurt our image, resulting in reduced demand for our products and a decrease in net sales. Further, maintaining, enhancing, promoting and positioning the EZRaider brand’s image may require us to make substantial investments in marketing and employee training, which could adversely affect our cash flow, and which may ultimately be unsuccessful. These factors could have a material adverse effect on our business, financial condition and results of operations.

We will be almost entirely dependent upon revenue generated from a limited number of products in the near term, and our future success will be dependent upon our ability to design and achieve market acceptance of new product offerings and vehicle models.

Revenue to date has come mostly from the sale of the three current EZRaider models, Ecarts, and accessories. We are unaware of any future vehicle models that may be in development. There can be no assurance that we will be able to sustain revenues from current product offerings, nor whether D.S Raider will design future models of vehicles, or develop future services, that will meet the expectations of our customers, or that any future models will become commercially viable.

In addition, historically, automobile customers have come to expect new and improved vehicle models to be introduced frequently. In order to meet these expectations, we may in the future be required to introduce new models as well as enhanced versions of existing vehicle models. As technologies change in the future for automobiles, we will be expected to offer upgrades or adaptations of vehicles and introduce new models. Our sales and offerings are limited to the development of such new vehicles by D.S Raider, our sole supplier. EZRaider Vehicles are currently used in off-road and leisure settings in the United States. We believe we will need to address additional markets and expand our customer demographic to further grow our business. Our failure to address additional market opportunities could materially harm our business, financial condition, operating results and prospects.

We could experience significant delays or other complications in the delivery of finished goods to ramp sales of our vehicles, which could harm our brand, business, prospects, financial condition and operating results.

Having experienced past delays or complications, partially as a result of COVID-19, we may experience future delays or other complications in connection with EZRaider Vehicles. Any significant delay or other complication in the assembly and production of EZRaider Vehicles, or the delivery of finished goods to increase sales, including complications associated with expanding our capacity, could materially damage our brand, business, prospects, and financial condition and operating results.

Certain components of our products, specifically the batteries, pose safety risks that may cause accidents, which could lead to liability to us, cause delays in the manufacturing of our product and/or adversely affect market acceptance.

Our battery systems contain Li-ion cells, which have been used for years in laptops and cell phones. On rare occasions, Li-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer attention on the safety of these cells. Moreover, there have been numerous widely publicized reports of electric buses bursting into flames, particularly in China. The events have also raised questions about the suitability of these Li-ion cells for automotive applications. We have subjected our battery systems to various tests and damaging treatments such as baking, overcharging, crushing or puncturing to assess the response of our battery systems to deliberate and sometimes destructive abuse. However, there can be no assurance that a field failure of our battery systems will not occur, which could damage the vehicle in which it is fitted, or lead to personal injury or death, and may subject us to lawsuits. Moreover, any failure of a competitor’s battery system, especially those that use a high volume of cells similar to ours, may cause indirect adverse publicity for us. Such adverse publicity would negatively affect our brand and harm our business, prospects, financial condition and operating results.

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As with any battery, our lithium-based batteries can short circuit when not handled properly. Due to the high energy and power density of lithium-based batteries, a short circuit can cause rapid heat buildup. Under extreme circumstances, this could cause a fire. This is most likely to occur during the formation or testing phase of our process. While we incorporate safety procedures and specific safety testing in our battery testing facilities to minimize safety risks, we cannot assure you that an accident in any part of our facilities where charged batteries are handled will not occur. Any such accident could result in injury to our employees or damage to our facility and would require an internal investigation by our technical staff. Our general liability insurance may not be sufficient to cover potential liability that would result from such accidents. Any such injuries, damages or investigations could lead to liability to us, cause delays in the manufacturing of our product and/or adversely affect market acceptance which could adversely affect our operations and financial condition.

Furthermore, the manufacturing process incorporates pulverized solids, which can be toxic to employees when allowed to become airborne in high concentrations. We have incorporated safety controls and procedures into our manufacturing processes designed to maximize the safety of our employees and neighbors. Any related incident, including fire or personnel exposure to toxic substances, could result in significant manufacturing delays or claims for damages resulting from injuries, which could adversely affect our operations and financial condition.

Our future growth depends upon the willingness of specialty-vehicle consumers to adopt electric vehicles.

Our growth is highly dependent upon the adoption of such vehicles by consumers. If the markets for such vehicles in the world do not develop as we expect or develop more slowly than we expect, our business, prospects, financial condition and operating results will be harmed, because demand for our products and services will not increase as expected or may even be reduced. The market for alternative fuel vehicles is relatively new, rapidly evolving, and characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.

Other factors may influence the adoption of electric vehicles, including, but not limited to:

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If any market fails to achieve our expected level of growth, we may have excess manufacturing capacity and may not be able to generate enough revenue to achieve or sustain our profitability.

Risks Related to Our Financial Condition and Capital Requirements

We have a history of losses and will need substantial additional funding to continue our operations, and we may not raise the funds necessary.

Our operations have consumed substantial amounts of cash since inception. We have incurred losses since our incorporation and formation in 2012. To date, we have financed our operations through a mix of investments from private investors and the incurrence of debt. Additional funding from those or other sources may not be available when or in the amounts needed, on acceptable terms, or at all.

The various ways we could raise additional capital carry potential risks. Under the Share Purchase Agreement with D.S. Raider, as amended, the Company, through EZ Global, had the exclusive right to acquire 100% of the capital stock of D.S Raider on or before March 31, 2022 for an aggregate purchase price of $30,000,000, plus shares representing 21% of the Company’s common equity. The Share Purchase Agreement’s Exclusivity Period for the D.S Raider Acquisition has expired, and the Company is currently evaluating its options.

We may need to raise the capital necessary to acquire D.S Raider, or for other business purposes, through the sale of equity, or securities convertible into equity. This would result in dilution to our then existing stockholders, which could be significant depending on the price at which we may be able to sell our securities. Any equity securities issued also could provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise additional capital through the incurrence of indebtedness, we will likely become subject to covenants restricting our business activities, and holders of debt instruments may have rights and privileges senior to those of our equity investors. In addition, servicing the interest and principal repayment obligations under debt facilities could divert funds that would otherwise be available to support research and development, or commercialization activities.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern.

The Company’s historical financial statements have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring net losses and accumulated deficit and expressing substantial doubt in our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity financing or other capital, attain further operating efficiencies, reduce expenditures, and, ultimately, generate revenue after the Merger. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, if adequate funds are not available to us when we need them, we will be required to curtail our operations, which would, in turn, further raise substantial doubt about our ability to continue as a going concern.

Risks Related to Regulatory Requirements in the Industry We Operate

The industry in which we operate is subject to ongoing regulatory obligations and reviews. There could be an adverse change or increase in the laws and/or regulations governing our business. Maintaining compliance with these requirements may result in significant additional expense to us, and any failure to maintain such compliance could cause our business to suffer.

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We and our operating subsidiary are subject to various laws and regulations in different jurisdictions, and the interpretation and enforcement of laws and regulations are subject to change. We also will be subject to different tax regulations in each of the jurisdictions where we will conduct our business or where our management or the management of our operating subsidiary is located. We expect that the scope and extent of regulation in these jurisdictions, as well as regulatory oversight and supervision, will generally continue to increase. There can be no assurance that future regulatory, judicial and legislative changes in any jurisdiction will not have a material adverse effect on us or hinder us in the operation of its business. In addition, we may incur substantial costs to comply with current or future environmental, health and safety laws and regulations applicable to us.

These current or future laws and regulations may impair our research, development or production efforts or impact the research activities we pursue. While we plan to comply with governmental safety regulations, mobile and stationary source emissions regulations, and other standards, meeting government-mandated safety standards is costly and often technologically challenging. If we fail to comply with applicable regulations or requirements, this could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions. An adverse outcome in any such litigation could require us to pay contractual damages, compensatory damages, punitive damages, attorneys’ fees and costs. These enforcement actions could harm our business, financial condition and results of operations. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition and results of operations could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.

The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or reputational damage, may negatively affect our business.

Government safety standards also require manufacturers to remedy defects related to vehicle safety through safety recall campaigns, and a manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard. Should we, D.S Raider, or government safety regulators determine that safety or other defect or noncompliance exists with respect to certain EZRaider Vehicles before the start of production, the launch of such vehicle could be delayed until such defect is remedied. The costs associated with any protracted delay in new product launches necessary to remedy such defects, or the cost of recall campaigns to remedy such defects in vehicles that have been sold, could be substantial. Further, adverse publicity surrounding actual, or alleged safety-related or other defects could damage our reputation and adversely affect sales of EZRaider Vehicles.

Product defects could adversely affect the results of our operations and may expose us to product liability claims.

The marketing, sale and distribution of EZRaider products may subject us to product liability claims, alleging that EZRaider Vehicles we sold cause injuries. A product liability claim could result in substantial damages and be costly and time-consuming for us to defend, which could harm our business, prospects, operating results and financial condition. Even our compliance with governmental standards does not necessarily prevent us from product liability litigation, which can entail significant cost and risk.

The motor vehicle industry experiences significant product liability claims, and we face an inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in personal injury or death. While we maintain product liability insurance, this insurance may not fully protect us from the financial impact of defending against product liability claims. Any product liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future.

Additionally, any product liability lawsuit could lead to regulatory investigations, product recalls or withdrawals, damage our reputation or cause current vendors, suppliers and customers to terminate existing agreements and potential customers and partners to seek other suppliers, any of which could negatively impact our results of operations. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about EZRaider Vehicles, our business and inhibit or prevent the commercialization of other future vehicle candidates, which could have material adverse effect on our brand, business, prospects and operating results. Any lawsuit seeking significant monetary damages either in excess of our liability coverage, or outside of our coverage, may have a material adverse effect on our reputation, business and financial condition. We may not be able to secure product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy.

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Risks Related to Our Intellectual Property

Limited intellectual property protection may cause us to lose our competitive advantage and adversely affect our business.

We have been granted, pursuant to the Authorized Exclusive Distribution Agreement, dated September 12, 2019, and amended September 2, 2021, a limited non-exclusive license to use the D.S Raider’s trademarks related to the products we distribute. D.S Raider holds one design patent related to Ornamental Design for Personal Standing Vehicle which is registered in Israel, the U.S. under D845177, Europe and China. D.S Raider has also filed for three additional apparatus patents related to the vehicle one of which is published in the U.S., Europe, China, and Japan related to its Vehicle with a front and/or rear mechanism, based on the application of a lateral, horizontal force on the vehicle’s chassis; one related to Wheel Assembly (Wheels and Motors); and one of which is provisional in the U.S. related to Monitoring and Predicting Breakdowns in Vehicles. D.S Raider also holds registered trademarks for the D.S Raider and EZRaider names in the U.S., Israel, Europe, China, Japan (D.S Raider pending), and Australia. The pending patent applications and/or any patent applications we may file in the future may not be successful. To date, we have relied on copyright, trademark and trade secret laws, as well as confidentiality procedures and licensing arrangements, to establish and protect intellectual property rights to the D.S Raider technologies and vehicles. We typically enter into confidentiality or license agreements with employees, consultants, consumers and vendors in an effort to control access to and distribution of technology, software, documentation and other information. Policing unauthorized use of this technology is difficult and the steps taken may not prevent misappropriation of the technology. In addition, effective protection may be unavailable or limited in some jurisdictions. Litigation may be necessary in the future to enforce or protect our rights and D.S Raider’s rights, or to determine the validity and scope of the rights of others. If D.S Raider declines to enforce its rights, our business may be adversely affected. Such litigation could cause us to incur substantial costs and divert resources away from daily business, which in turn could materially adversely affect the business.

Our failure to obtain or maintain the right to use certain intellectual property may negatively affect our business.

Our future success and competitive position depend in part upon our ability to obtain or maintain the right to use the certain proprietary intellectual property of D.S Raider used in or related to the EZRaider products. This may be achieved, in part, by (i) ensuring we maintain our distribution agreement with D.S Raider to ensure we have the right to use the intellectual property related to EZRaider products, and (ii) by prosecuting claims against others who we believe are infringing our rights and by defending claims of intellectual property infringement brought by others. In the future, we may commence lawsuits against others if we believe they have infringed our rights, or we may become subject to lawsuits alleging that we have infringed the intellectual property rights of others. For example, to the extent that D.S Raider has previously incorporated third-party technology and/or know-how into certain products we sell for which they do not have sufficient license rights, both D.S Raider and our company could incur substantial litigation costs, be forced to pay substantial damages or royalties, or even be forced to cease sales in the event any owner of such technology or know-how were to challenge our subsequent sale of such products (and any progeny thereof). In addition, to the extent that D.S Raider discovers or has discovered third-party patents that may be applicable to products or processes in the development of EZRaider products, they may need to take steps to avoid claims of a possible infringement, including obtaining non-infringement or invalidity opinions and, when necessary, re-designing or re-engineering products. However, we cannot assure you that these precautions will allow us to successfully avoid infringement claims. Our involvement in intellectual property litigation could result in significant expense to us, adversely affect the development of sales of the challenged product or intellectual property and divert the efforts of our management personnel, whether or not such litigation is resolved in our favor. Further, to the extent action is required to be taken by D.S Raider, we may not be able to enforce or require that they take such action. In the event of an adverse outcome in any such litigation, we (and D.S Raider) may, among other things, be required to:

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We depend on our senior management team, and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business.

Our success depends on the skills, experience and performance of our Chief Executive Officer, Moshe Azarzar, and our key employees. The effort of our Chief Executive Officer will be important as we continue to develop and expand our commercial activities. The loss or incapacity of existing members of our executive management team could negatively impact our operations if we experience difficulties in hiring qualified successors. Qualified employees periodically are in great demand and may be unavailable in the time frame required to satisfy our customers’ requirements. Expansion of our business could require us to employ additional personnel. There can be no assurance that we will be able to attract and retain sufficient numbers of skilled employees in the future. The loss of personnel or our inability to hire or retain sufficient personnel at competitive rates could impair the growth of our business.

We also rely on our leadership team in the areas of finance, marketing, services, general and administrative functions, and sales. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business.

Our future success depends upon our ability to attract and retain executive officers and other key technology, sales, marketing, engineering, manufacturing and support personnel and any failure to do so could adversely impact our business, prospects, financial condition and operating results.

To continue to execute our growth strategy, we also must attract and retain highly skilled personnel. Competition is intense for salespeople. The pool of qualified personnel with experience working with the electric vehicle, in the micro-mobility market is limited overall and specifically in Kent, Washington, where our principal office is located. In addition, many of the companies with which we compete for experienced personnel have greater resources than we have and are located in metropolitan areas that may attract more qualified workers.

In addition, in making employment decisions, particularly in high-technology industries, job candidates often consider the value of the equity awards they are to receive in connection with their employment. Volatility in the price of our stock might, therefore, adversely affect our ability to attract or retain highly skilled personnel. Furthermore, the requirement to expense certain stock awards might discourage us from granting the size or type of stock awards that job candidates require to join us. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.

Risk Associated with our International Business.

We are subject to certain risks in connection with doing business internationally which could adversely affect our business.

Because we import our products from a country outside the United States, our business operations are subject to a variety of risks, including:

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Our business is subject to currency fluctuations beyond our control.

The Company is headquartered in the U.S. with its sole manufacturer and supplier in Israel, and may make sales in international jurisdictions, making it subject to foreign currency fluctuations and such fluctuations may materially affect the Company’s financial position and results. The Company reports its financial results in U.S. dollars with the majority of transactions denominated in U.S. dollars. As the exchange rates between the U.S. dollar fluctuate against other foreign currencies including the New Israeli Shekel (“NIS”), the Company may experience foreign exchange gains or losses. The Company does not use an active hedging strategy to reduce the risk associated with currency fluctuations.

We face risks related to the current global economic environment which could harm our business, financial condition and results of operations.

The state of the global economy continues to be uncertain. The current global economic conditions and uncertain credit markets, concerns regarding the availability of credit pose a risk that could impact our international relationships, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors, including financial institutions. Global trade issues and the impositions of tariffs could also have an adverse effect on our international business activities. If the current global economic environment deteriorates, our business could be negatively affected.

Our ability to expand into international markets is uncertain.

We intend to expand our operations into international markets. In addition to general risks associated with international expansion, such as foreign currency fluctuations and political and economic instability, we face the following risks and uncertainties any of which could prevent us from selling our products in a particular country or harm our business operations once we have established operations in that country:

If we are unable to expand into international markets in the manner expected, our business, financial condition, results of operations and prospects may be materially and adversely affected.

A cybersecurity breach may adversely affect the Company’s reputation, revenue and earnings.

The Company and certain of its third-party service providers and vendors receive, store, and transmit digital personal information in connection with the Company’s operations, financial services operations, e-commerce, vehicle services offerings and other aspects of its business. The Company’s information systems, and those of its third-party service providers and vendors, are vulnerable to the continually evolving cybersecurity risks. Unauthorized parties may attempt in the future to gain access to our systems or the information the Company and its third-party service providers and vendors maintain and use through fraud or other means of deceiving our employees and third-party service providers and vendors. Hardware, software or applications the Company develops or obtains from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security and/or the Company’s operations. The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or detect. The Company has implemented and regularly reviews and updates processes and procedures to protect against unauthorized access to or use of secured data and to prevent data loss. However, the ever-evolving threats mean the Company and third-party service providers and vendors must continually evaluate and adapt systems and processes, and there is no guarantee that they will be adequate to safeguard against all data security breaches or misuses of data. Any future significant compromise or breach of the Company’s data security, whether external or internal, or misuse of the customer, employee, franchisee, supplier or Company data could result in disruption to the Company’s operations, significant costs, lost sales, fines and lawsuits, and/or damage to the Company’s reputation. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and evolving requirements, compliance could also result in the Company being required to incur additional costs.

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Potential tariffs or a global trade war could increase our costs and could further increase the cost of our products, which could adversely impact the competitiveness of our products and our financial results.

Our vehicles depend on materials from China, namely batteries, which are among the main components of our vehicles. We cannot predict what actions may be taken with respect to tariffs or trade relations between the United States and China, what products may be subject to such actions, or what actions may be taken by China in retaliation. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact our supply chain and access to equipment, our costs and our product margins. Any such cost increases or decreases in availability could slow our growth and cause our financial results and operational metrics to suffer.

Risk Related to Managing Our Growth

If we acquire D.S Raider or other companies, we may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy. We expect our operating expenses to increase in the future with no assurance that revenues will be sufficient to cover those expenses and delaying or preventing the Company from achieving profitability.

We anticipate growth in our business operations as a result of the contemplated acquisition of D.S Raider. While we believe that the acquisition of D.S Raider will be a strategic and commercial fit with our current business and will provide us with opportunities to expand our business, this acquisition will likely result in (i) the issuance of equity that would dilute our existing stockholders’ percentage of ownership; (ii) incur debt and assume liabilities; (iii) incur amortization expenses related to intangible assets or incur large and immediate write-offs. If we complete this acquisition of D.S Raider, we cannot assure you that it will ultimately strengthen our competitive position or that it will be viewed positively by customers, financial markets or investors.

In general, future acquisitions could pose numerous additional risks to our operations, including:

This future growth could create a strain on our organizational, administrative and operational infrastructure, including manufacturing operations, quality control, technical support and customer service, sales force management and general and financial administration. Our ability to manage our growth properly will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures. If we are unable to manage our growth effectively, we may be unable to execute our business plan, which could have a material adverse effect on our business and our results of operations. If revenues do not increase to correspond with these expenses or if outside capital is not secured, there may be a material adverse effect on our business, cash flow and financial condition.

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If we are unable to support demand for our current and our future products, including ensuring that we have adequate resources to meet increased demand our business could be harmed.

As our commercial operations and sales volume grow, we will need to continue to increase our workflow capacity for processing, customer service, billing and general process improvements and expand our internal quality assurance program, among other things. We may also need to purchase additional equipment and increase our manufacturing, maintenance, software and computing capacity to meet increased demand. We cannot assure you that any of these increases in scale, expansion of personnel, purchase of equipment or process enhancements will be successfully implemented.

Risks Relating to our Common Stock

Our common stock has a limited trading market, which could affect your ability to sell shares of our common stock and the price you may receive for our common stock.

Our common stock is currently traded on the over-the-counter market on the OTC Pink tier maintained by OTC Markets, Inc. under the symbol “EZRG”. However, as the OTC Pink tier is an unorganized, inter-dealer, over-the-counter market that provides significantly less liquidity than Nasdaq or other national securities exchanges, there has been only limited trading activity in our common stock, and we have a relatively small public float compared to the number of our shares outstanding. If an active trading market for our common stock does not develop or is not sustained, you may not be able to sell your shares quickly or at the market price. Our ability to raise capital to continue to fund operations by selling shares of our common stock and our ability to acquire other companies or technologies by using shares of our common stock as consideration may also be impaired.

Our stock price may be volatile, which could result in substantial losses to investors and litigation.

In addition to changes to market prices based on our results of operations and the factors discussed elsewhere in this “Risk Factors” section, the market price of and the trading volume for our common stock may change for a variety of other reasons, not necessarily related to our actual operating performance. The capital markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In addition, the average daily trading volume of the securities of small companies can be very low, which may contribute to future volatility. Factors that could cause the market price of our common stock to fluctuate significantly include:

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Any of these factors, as well as broader market and industry factors, may result in large and sudden changes in the trading volume of our common stock and could seriously harm the market price of our common stock, regardless of our operating performance. This may prevent you from being able to sell your shares at or above the price you paid for your shares of our common stock, if at all. In addition, following periods of volatility in the market price of a company’s securities, stockholders often institute securities class action litigation against that company. Our involvement in any class action suit or other legal proceedings could divert our senior management’s attention and could adversely affect our business, financial condition, results of operations and prospects.

We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

We currently intend to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay cash dividends will be dependent upon our financial condition, operating results, capital requirements, applicable contractual restrictions and other such factors as our board of directors may deem relevant.

The sale or availability for the sale of substantial amounts of our common stock could adversely affect the market price of our common stock.

Sales of substantial amounts of shares of our common stock, or the perception that these sales could occur, could adversely affect the market price of our common stock and could impair our future ability to raise capital through common stock offerings. Our executive officers and directors beneficially own, collectively, a substantial percentage of our outstanding common stock. If one or more of them were to sell a substantial portion of the shares they hold, it could cause our stock price to decline.

In connection with the Merger in September 2021, we issued in the aggregate 28,550,000 shares of our common stock, all of which shares were restricted shares that may not currently be sold in the public markets under Rule 144 under the Securities Act. In addition, as of the date of this Transition Report we have outstanding warrants to purchase an aggregate of 5,000,000 shares of our common stock. The sale of shares issuable upon exercise of warrants or upon conversion of convertible debt could adversely affect the price of shares of our common stock. Any issuance of our common stock that is not made solely to then-existing stockholders proportionate to their interests, such as in the case of a stock dividend or stock split, will result in dilution to each stockholder.

We may need to raise additional capital in the future. Additional capital may not be available to us on reasonable terms, if at all, when or as we require. If we issue additional shares of our common stock or other securities that may be convertible into, or exercisable or exchangeable for, our common stock, our existing stockholders will experience further dilution and could trigger anti-dilution provisions in outstanding warrants.

We need to raise additional capital to help fund our business operation. Future financings may involve the issuance of debt, equity and/or securities convertible into or exercisable or exchangeable for our equity securities. These financings may not be available to us on reasonable terms or at all when and as we require and as we require funding. If we are able to consummate such financings, the trading price of our common stock could be adversely affected and/or the terms of such financings may adversely affect the interests of our existing stockholders. Any failure to obtain additional working capital when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.

Our officers and directors are entitled to indemnification from us for liabilities under our articles of incorporation, which could be costly to us and may discourage the exercise of stockholder rights.

Our articles of incorporation provide that we possess and may exercise all powers of indemnification of our officers, directors, employees, agents and other persons and our bylaws also require us to indemnify our officers and directors as permitted under the provisions of the Florida Business Corporation Act. We also have contractual indemnification obligations under our agreements with our directors and officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our company and stockholders.

If equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the market price of our common stock will likely decline.

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The trading market for our common stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish about us and our business. We may never obtain research coverage from securities and industry analysts. If no securities or industry analysts commence coverage of our company, the market price for our common stock could decline. In the event we obtain securities or industry analyst coverage, the market price of our common stock could decline if one or more equity analysts downgrade our common stock or if those analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about us or our business.