Vislink Technologies Inc

In addition to the other information in this Form 10-K, readers should consider the following essential factors carefully. These factors, among others, in some cases, have affected, and in the future could affect, our financial condition and results of operations and could cause our future results to differ materially from those expressed or implied in any forward-looking statements that appear in this Form 10-K or that we have made or will make elsewhere.

Since inception, we have incurred net losses, including net losses of approximately $20.5 million and $9.1 million for the years ended December 31, 2024, and 2023, respectively. As a result of ongoing losses, as of December 31, 2024, we had an accumulated deficit of approximately $329.7 million, $5.5 million of cash, and $1.0 million of investments in governmental securities.

In November 2024, we initiated restructuring actions to streamline operations, reduce costs, and focus on key markets. The Company incurred one-time costs related to severance, lease termination, and other restructuring initiatives of approximately $6.5 million in 2024. Expected annual cost savings related to these initiatives are approximately $7.8 million. There is no assurance that these objectives will be fully achieved or that the restructuring will result in all of the anticipated cost savings, and actual results, including the anticipated savings of these activities, may differ from these estimates.

Our ability to achieve and sustain profitability will depend on our ability to successfully realize these savings, generate additional revenue streams, and navigate competitive pressures. Failure to do so could adversely affect our financial condition, operations results, and our common stock’s value.

We may require additional capital to fund our operations, develop new products, and expand. If we do not obtain additional financing, our business prospects, financial condition, and results of operations will be adversely affected.

As of December 31, 2024, we had $5.5 million in cash and $1.0 million in investments in government securities. While we anticipate cost savings from our restructuring actions, there is no assurance that these savings will be fully realized or sufficient to meet our long-term strategic objectives. Even if we recognize all or a portion of these savings, these savings may not fully offset our funding needs.

We may require additional capital in the future to fund our business and operations. We may also consider raising additional capital in the future to expand our business, pursue strategic investments, take advantage of financing opportunities, or for other reasons, including:

Additional capital may not be available to us at such times or in the amounts needed. Even if capital is available, it might be available only on unfavorable terms. Any issuance of additional equity or equity-linked securities could dilute our existing stockholders, and any new equity securities could have rights, preferences, and privileges superior to those of holders of our common stock. Debt financing, if available, may involve restrictive covenants on our operations or our ability to incur additional debt, pay dividends, repurchase our stock, make investments, and engage in merger, consolidation, or asset sale transactions. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish or license some rights to our technologies or products on terms that are not favorable to us. If access to sufficient capital is unavailable as and when needed, our business will be materially impaired. We may be required to cease operations, curtail one or more product development or expansion programs, significantly reduce expenses, sell assets, seek a merger or joint venture partner, file for protection from creditors, or liquidate all our assets.

Furthermore, we may require additional capital to develop new products in the future, and we may not be able to secure adequate additional financing when needed on acceptable terms or at all. To execute our business strategy, we may issue additional equity securities in public or private offerings, potentially at discounts to our common stock’s current or future market price. If we cannot secure further funding, we may be forced to forego strategic opportunities or delay, scale back, or eliminate future product development.

Our global operations expose us to risks associated with public health crises or pandemic outbreaks. These crises or outbreaks could disrupt our operations and materially and adversely affect the results of our operations and financial condition.

Our business may be exposed to risks from public health crises, such as pandemics. Events like the COVID-19 pandemic have disrupted supply chains, increased costs, reduced customer demand, and created economic volatility, which could materially affect our operations and financial results. Future public health crises, the emergence of new variants, or other global disruptions could impair our ability to source materials, secure labor, or deliver products to customers, resulting in adverse financial impacts.

Our industry is highly competitive, and we may need to compete more effectively.

The communications industry is highly competitive and rapidly evolving. Many competitors are larger, with more significant financial, technical, and operational resources. The pace of technological change also introduces the potential for new competitors to use different or more cost-effective technologies. If we cannot compete successfully or differentiate our products, our market share and financial performance may be adversely affected.

Defects or errors in our products and services or products made by our suppliers could harm our brand and relations with our customers and expose us to liability. If we experience product recalls, we may incur significant expenses and experience decreased demand for our products.

Our complex products may contain defects or errors that become apparent only during use, potentially damaging our reputation and customer relationships and exposing us to liability. Defects in components, materials, or software from our suppliers could disrupt customers’ operations, reduce demand for our products, and harm our revenues. Additionally, recalls, rework, or repairs stemming from product defects may result in significant expenses not fully covered by warranty reserves, further impacting profitability.

Future impairment charges could have a material adverse effect on our financial condition and the results of operations.

We evaluate finite-lived intangible assets for impairment when events or changes in circumstances suggest their carrying value may not be recoverable. Such events could include significant changes in the business climate, sustained declines in market value, legal or regulatory actions, or the sale or disposal of business segments. If the fair value of these assets falls below their book value, we may be required to record significant impairment charges, which could materially affect our financial results in the period incurred.

Although our products may not cause users technical issues, our business and reputation may be harmed if users perceive our solutions to cause a slow or unreliable network connection or a high-profile network failure.

Our products are used in various environments to deliver video transmission, mobile broadband connectivity, and interference mitigation. While external factors unrelated to our products may impact performance, users might incorrectly perceive our technology as the cause of poor network reliability or failures. Similarly, high-profile network failures caused by components we did not supply could still be attributed to our products, damaging our reputation, business, and financial results.

Our ability to sell our products will be highly dependent on the quality of our support and service offerings, and our failure to offer high-quality support and services would adversely affect our sales and operating results.

Our channel partners and end customers rely on our support organization to resolve product-related issues. Effective support is critical for successful marketing, sales, and customer retention. However, we have limited control over the quality of support our channel partners provide, who may also support third-party products, potentially diverting resources from our solutions. Our channel partners may fail to effectively assist customers in deploying our products, resolving post-deployment issues, or providing adequate ongoing support. In each case, our reputation and ability to generate sales may be harmed. Additionally, performance guarantees offered to customers or partners could result in significant resource demands and expenses if unforeseen technical problems arise.

We are subject to increasing operating costs and inflation risks, which may adversely affect our performance.

We face rising operating costs driven by inflationary pressures, including higher wages, benefits, and other expenses. While we aim to offset these increases through revenue growth and operational efficiencies, there is no assurance these efforts will succeed. If operating expenses rise faster than revenues, our cash flow and margins could be materially impacted.

Inflationary wage increases, whether due to competition for talent or ordinary pay adjustments, may further increase costs across the countries in which we operate. Our profitability may be reduced if we cannot pass these costs on to customers or justify premium pricing.

We may need to recruit and retain qualified personnel, which may affect our business, financial condition, results of operations, and prospects.

As we expand our operations and sales, development, and administrative functions, we will require additional qualified personnel. However, competition for skilled talent is intense, and failure to attract, retain, and motivate highly skilled individuals could hinder our ability to execute our marketing and development activities. This may adversely impact our business, financial condition, and growth prospects.

We rely on key executive officers, and their knowledge of our business and technical expertise would be difficult to replace.

We depend on our executive officers for their technical knowledge, management skills, and experience in the telecommunications industry. Although we have agreements with these officers containing customary confidentiality and non-compete provisions, we do not maintain “key person” life insurance policies. The loss of key personnel could delay product development, reduce customer retention, and divert management resources, adversely affecting our operating results.

We purchase some components, subassemblies, and products from a limited number of suppliers. The loss of these suppliers may substantially disrupt our ability to obtain orders and fulfill sales as we design and qualify new components.

We rely on third-party components and technology, with some sourced from a single or limited number of suppliers. Our contract manufacturers often depend on purchase orders rather than long-term contracts with these suppliers, increasing the risk of supply shortages. If these suppliers continue providing components or prioritize other customers, our product delivery ability could be improved.

Supply chain disruptions due to global conflicts, such as the Russia-Ukraine war, the conflict in Gaza, or trade sanctions, may further limit our access to essential parts. Even if they are available, we may face challenges securing sufficient components at reasonable prices or of acceptable quality. These supply constraints could delay production, hinder our ability to meet customer demand, and adversely impact our business, operating results, and financial condition.

The imposition of tariffs could adversely affect our business and financial results.

Many of our raw materials are sourced, directly or indirectly, from outside the U.S. The current U.S. presidential administration has enacted tariffs on raw materials from various countries, and the rapidly evolving international trade environment has created economic and operational uncertainties that could significantly harm our business and results of operations. Any significant changes in tax or trade policy, such as the imposition of additional tariffs or duties on imported products, between the U.S. and countries from which we source raw materials could require us to take specific actions, including but not limited to raising prices on products we sell and seeking alternative sources of supply from vendors in other countries with whom we have less familiarity, which could adversely affect our reputation, sales, and our results of operations.

Additionally, tariffs and duties are often based on the classifications of the goods imported, which are routinely subject to review by customs authorities. We cannot predict whether those authorities will change the determination of the classifications of any of our imports. Any such changes could result in increased tariffs or duties, or other restrictions on our importation of goods. The imposition of and our response to new or enhanced trade restrictions on imports or exports, or any selective or inconsistent application relating to trade restrictions, could result in a substantial adverse effect on our business, competitive position, results of operations, and financial condition.

We do not have long-term contracts with our existing contract manufacturers. The loss of any of our current contract manufacturers could adversely affect our business, operating results, and financial condition.

We do not have long-term contracts with our existing contract manufacturers. If any of them become unable or unwilling to manufacture our products, we may face delays or increased costs in securing alternative manufacturers. Such disruptions could adversely impact our ability to fulfill customer demand, harming our business, operating results, and financial condition.

Our intellectual property protections may be insufficient to safeguard our technology adequately.

Our ability to compete effectively depends on the proprietary technology we develop internally. As of December 31, 2024, we have eight U.S. patents granted, two international patents granted, and no pending patent applications. However, there is no assurance that future patents will be issued or that we will have the resources to enforce any issued patents against infringement.

We also rely on copyright, trademark, trade secret laws, and contractual agreements to protect our technology. Despite these measures, third parties can copy, misappropriate, or use our proprietary information without authorization. Policing unauthorized use is challenging, particularly in jurisdictions with limited IP protections. Additionally, some critical technology cannot be patented, increasing reliance on other safeguards. Litigation may be necessary to enforce our rights, which could be costly and uncertain.

We may be subject to claims of intellectual property infringement or invalidity. Expenses incurred for monitoring, protecting, and defending our intellectual property rights could adversely affect our business.

We may be subject to claims alleging intellectual property infringement or invalidity, resulting in costly litigation, damage, or the need to purchase licenses. If we are found to infringe on others’ rights, we may be required to discontinue certain products or systems. Monitoring and protecting our intellectual property are challenging and expensive, and undetected infringements or misappropriations could weaken our competitive position.

Litigation to protect or defend intellectual property can be resource-intensive, reducing funds available for product initiatives and distracting management from daily operations. These expenses and disruptions could adversely affect our cash flow, results of operations, and overall business performance.

Enforcement of our intellectual property rights abroad, particularly in China, is limited, and it is often difficult to protect and enforce such rights.

Intellectual property protection outside the United States is generally less comprehensive and enforceable. In particular, China’s intellectual property regime presents challenges due to limited legal protections, inconsistent enforcement, and prolonged timelines for resolving claims. These issues make it challenging to prevent the misappropriation or unauthorized copying of our technology and products.

Infringement cases in China, such as unauthorized manufacturing or sales involving patented inventions, may be difficult to sustain due to unclear rules of evidence and regulatory inconsistencies. These challenges could allow competitors to harm our business by reducing product pricing, diluting our brand reputation, or impacting sales in the Chinese and other export markets.

The intellectual property rights of others may prevent us from developing new products or entering new markets.

The telecommunications industry evolves rapidly, requiring us to introduce new products and continuously expand into emerging markets. However, if key technologies are protected by the intellectual property rights of others, including competitors, we may be unable to incorporate them into our products or enter the markets they create. Such restrictions could limit our innovation, reduce competitiveness, and harm our financial condition, operating results, or growth prospects.

We may be subject to infringement claims in the future.

We may unknowingly infringe on filed patent applications or issued patents covering our products. Infringement claims could result in injunctions or other equitable relief that block us from selling or supplying our products or licensing our technology. Defending such claims could require substantial resources, divert management’s attention, and lead to time-consuming and costly litigation, regardless of the merits.

Infringement claims could also result in:

These outcomes could materially and adversely affect our business, financial condition, and prospects.

We rely on the availability of third-party licenses. If these licenses are available only on less favorable terms or not in the future, our business and operating results will be harmed.

Our products incorporate third-party licensed technology, and we may need to renew existing licenses or acquire new ones for current or future products. There is no assurance that these licenses will be available on favorable terms or at all. Failure to obtain required licenses or engaging in litigation over licensing rights could delay product releases and adversely affect our business, operating results, and financial condition.

Additionally, reliance on nonexclusive third-party licenses may limit our ability to protect our proprietary rights and reduce our competitive advantage.

We expect to base our inventory purchasing decisions on our forecasts of customers’ demand, and if our projections are inaccurate, our operating results could be materially harmed.

We base inventory purchasing decisions on customer demand forecasts, which involve multiple assumptions and may not be accurate. If we underestimate demand, we may succeed in meeting customer needs, resulting in lost revenue opportunities, damaged customer relationships, and potential market share losses. Conversely, overestimating demand could lead to excess or obsolete inventory, stock rotation returns from distributors, and reduced inventory value, increasing costs and lowering liquidity.

Failure to align inventory with customer demand could materially impact our revenue, costs, and operating results.

If our technology did not work as planned or if we were unsuccessful in developing and selling new products or penetrating new markets, our business and operating results would suffer.

Our success depends on our ability to design, develop, and market new products and enhancements that meet evolving customer needs. Our technology must perform as intended and achieve market acceptance to maintain our competitive position, revenue, and customer relationships.

Rapid technological changes and potential obsolescence characterize the markets we target. Failure to anticipate shifts, develop new technologies, or adapt to market changes could result in product obsolescence and revenue loss. Developing new products requires significant investment, prolonged development cycles, and rigorous testing, and there needs to be assurance that these efforts will yield meaningful revenue or competitive differentiation.

Delays in product development or technical flaws in releases could diminish market impact, harm our reputation, and reduce customer adoption. If we fail to introduce successful products or expand into new markets, our business, competitive position, and operating results will suffer.

We rely extensively on information technology systems and could face cybersecurity risks.

Our business depends heavily on secure information technology systems to manage operations, develop new opportunities, and support digital products and services. Cybersecurity threats, including hacking, phishing, ransomware, and data breaches, are increasingly sophisticated and pose significant risks to our operations and reputation. We have been subject to cyberattacks in the past, some of which successfully disrupted our systems. Although we believe the impact and consequences of such attacks have not been material, we cannot guarantee that our defensive measures will prevent future attacks or mitigate their consequences.

Successful cyberattacks or security incidents could lead to unauthorized access, corruption, or loss of sensitive data, intellectual property, or trade secrets, as well as service disruptions and reputational harm. These incidents may expose us to legal liability, regulatory fines, and financial losses. Additionally, social media misuse by employees or third parties could further risk exposing sensitive information.

Effective cybersecurity requires substantial investment, ongoing monitoring, and frequent updates to address evolving threats. Failures in cybersecurity or IT infrastructure performance could reduce customer confidence, harm our ability to attract and retain clients, and negatively impact our business and operating results.

Our industry is subject to rapid technological change, and to compete successfully, we must make substantial investments in new products, services, and technologies.

Rapid technological advancements and evolving customer expectations characterize our industry. To remain competitive, we must invest significantly in developing new products, technologies, and enhancements. However, these efforts may fail, and our latest technologies may fail to generate meaningful revenues.

Our success depends on our ability to anticipate technological developments, protect intellectual property, meet customer requirements, and price our offerings competitively. Introducing new technologies or industry standards could render our existing products or those under development obsolete or unmarketable. If we respond to technological advances or experience delays in developing and introducing new products, demand for our offerings and those of our customers could increase, damaging our competitive position and financial performance.

Regulatory changes may further increase costs, reduce demand, or delay product shipments, adversely affecting our ability to generate revenue and operate efficiently.

At 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, we submitted proposals to approve our 2015 Employee Stock Purchase Plan and 2015 Incentive Compensation Plan. At subsequent annual meetings in 2016 and 2017, additional proposals were submitted for new and amended employee stock purchase and incentive compensation plans. While these proposals were certified as approved under our bylaws and disclosed in applicable Current Reports on Form 8-K, questions were later raised about whether the votes were tabulated correctly and whether the requisite approvals were obtained.

To address these concerns and comply with Nasdaq’s Listing Rules due to the listing of our common stock on Nasdaq at that time, we resubmitted all these proposals for ratification under Section 204 of the Delaware General Corporation Law at our 2019 Annual Meeting of Stockholders. However, stockholders did not ratify the proposals. We intend to re-submit them for ratification at a future meeting of stockholders, but there is no assurance that they will be approved.

If these proposals are not ratified, or if the ratifications are deemed inadequate, it may be determined that shares issued under these plans were not duly authorized or validly issued. This could create accounting issues, impact our liquidity and capital structure, and expose us to claims from stock award recipients. Any of these outcomes could materially and adversely affect our business, financial condition, and results of operations.

Demand for our defense-related products and products for emergency response services depends on government spending.

A portion of our business relies on military and government markets, which are subject to governmental appropriations and budget constraints. While some contracts are authorized multi-year, funding is typically appropriated annually, and programs may only be partially funded, with continuation dependent on future appropriations.

We cannot guarantee that military and government spending will be allocated to programs benefiting our business. A decrease in government spending, termination of contracts, or failure to fully fund ongoing programs could materially and adversely affect our financial position and operating results. Additionally, we must be assured that new government-related communication and broadcasting programs we participate in will proceed to full-scale production as expected.

Our potential customers for our communication and surveillance products and solutions include the U.S. Government or Government-related entities subject to congressional appropriations. Reduced funding for military and government procurement and research and development programs would likely adversely impact our ability to generate revenues.

A portion of our revenue depends on communication, surveillance, and satellite products and solutions sold to U.S. Government entities, including the Department of Defense. Government programs we seek to participate in must compete for funding during congressional budget and appropriations hearings, influenced by political changes, economic conditions, and other factors beyond our control.

The current U.S. presidential administration has recently undertaken significant efforts to cut federal government spending. Government shutdowns, delays in federal appropriations, or reliance on continuing resolutions may terminate or postpone funding opportunities critical to our business. Reductions, extensions, or terminations of government programs or shifts in defense, military, and intelligence priorities could adversely affect our ability to generate revenue and profits.

Changes to laws or regulations governing government contracting, shifting political support for defense and security programs, and uncertainties arising from global geopolitical events, delays in approval of government contracts due to reductions in the federal workforce, may also affect our participation in U.S. government programs. Reductions in government spending on such programs could negatively impact our business and financial performance.

Contracting with government entities can be complex, expensive, and time-consuming.

The procurement process for government entities is more challenging than that for private sector contracts. It requires compliance with complex laws and regulations related to contract formation, administration, performance, and pricing at the federal, state, and local levels.

Government contracts often include specialized terms, preferential pricing requirements, or “most favored nation” clauses, which may increase compliance costs and complexity. Meeting these requirements can be time-consuming and expensive, and even if successful, the increased costs associated with serving government customers may negatively impact our margins and profitability.

Unstable market and economic conditions may seriously affect our business, financial condition, and share price.

Global economic volatility and disruptions, including reduced credit availability, inflation, unemployment, tariffs, and geopolitical conflicts, pose significant risks to our business. Events such as the COVID-19 pandemic, the Russia-Ukraine war, and conflicts in the Red Sea, Persian Gulf, and Gaza Strip may exacerbate capital market instability, disrupt supply chains, and impact energy markets.

Economic instability could hinder our ability to secure necessary financing on favorable terms, potentially increasing costs or diluting equity. Rising inflation and higher interest rates could further increase personnel and operating costs, negatively affecting our financial condition and results of operations.

Our failure to comply with complex U.S. and foreign laws and regulations could adversely affect our operations.

We are subject to numerous laws and regulations, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other anti-corruption, anti-bribery, and anti-money laundering laws, which prohibit improper payments to government officials to obtain business advantages. These laws also hold us accountable for the actions of third-party business partners, representatives, and agents. Despite policies to ensure compliance, violations could occur, particularly as we expand internationally. Such violations have and, in the future, may result in investigations, whistleblower complaints, legal fees, reputational damage, and financial penalties.

Our international operations expose us to additional risks, including complex and inconsistent foreign regulations, tariffs, trade restrictions, and export controls. Compliance failures could result in fines, penalties, or export restrictions, making it challenging to serve foreign markets. Furthermore, changes in international tax laws, trade policies, or regulatory requirements could increase costs, reduce revenue, and adversely affect our operations and financial condition. On February 10, 2025, President Trump signed an executive order directing the Attorney General, or a period of 180 days (1) effectively halt the initiation of new FCPA investigations and enforcement actions and (2) undertake a detailed review of any such existing matters with an eye toward restoring proper bounds on enforcement. However, there can be no assurance that potential violations during this temporary pause in enforcement will minimize or eliminate the potential damages identified above.

Various cost-cutting measures we have implemented and may implement in the future could unintentionally impact our business, financial condition, and results of operations.

We have, and continue to engage in, various measures to decrease costs and improve our operating structure. We may not realize the anticipated benefits from these efforts on the whole or in part due to unforeseen difficulties, delays, or unexpected costs. If we cannot achieve the expected operational efficiencies and cost savings from these efforts, our operating results, financial condition, and cash flows would be adversely affected. We may also discover that these efforts make pursuing new opportunities and initiatives difficult, which may require us to incur additional and unanticipated costs and expenses. Our failure to accomplish any of the above activities and goals may have a material adverse impact on our business, financial condition, and results of operations.

Risks Related to Our Industry and its Regulatory Context

Regulation of the telecommunications industry could harm our operating results and prospects.

The telecommunications industry is highly regulated, and changes to laws governing internet communications, intellectual property networks, and commerce could negatively impact our business. Potential regulations may include sales taxes, tariffs, and provider access charges. In jurisdictions where we market equipment and services, regulations affecting service or content providers’ business models could reduce demand for our products.

U.S. Federal Communications Commission (the “FCC”) regulations and cybersecurity, privacy, and data protection laws in various jurisdictions may increase compliance costs and impact equipment requirements. Additionally, environmental regulations, such as the EU’s electronic waste and hazardous substance directives, could increase manufacturing and operational costs.

Some governments prohibit purchasing security products that fail to meet indigenous certification criteria, which may conflict with international standards and limit our ability to compete. These regulations could decrease demand, raise costs, restrict market access, and delay revenue recognition, materially affecting our business, financial condition, and results of operations.

New regulations or standards or changes in existing laws or standards in the United States or internationally related to our products may result in unanticipated costs or liabilities, which could have a material adverse effect on our business, results of operations, and future sales, and could place additional burdens on our business operations.

Our products are subject to government regulations and industry standards in the United States and internationally. For example, U.S. regulations from agencies like the FCC and Occupational Safety and Health Administration and similar international rules govern radio emissions, electrical safety, electromagnetic compatibility, and chemical substances. Compliance with these evolving regulations and standards is critical for market acceptance.

As regulations and standards change, we may need to modify our products or develop new versions, which could increase costs and delay product introductions. Failure to comply with these regulations or delays in achieving compliance could harm our business and prevent us from entering specific markets. Additionally, uncertainty around future regulatory policies may reduce demand for our products, and channel partners or end customers may require product alterations to address anticipated regulatory changes.

Our inability to adapt to new or changing regulations could adversely affect our business, results of operations, and financial condition.

Compliance with environmental, health, and safety laws and regulations, including new rules requiring higher standards, may increase costs, limit our ability to utilize supply chains and force product design changes.

Our operations and products are subject to various environmental, health, and safety laws and regulations in our jurisdictions. Manufacturing our products involves substances regulated under these laws, and compliance is essential to maintain product marketability and avoid penalties. Non-compliance, including by any contract manufacturers we employ, could lead to immediate charges, fines, and increased remediation costs, negatively impacting our operations and financial condition.

Compliance with existing and new regulations may require us to modify product designs, adjust supply chains, or incur additional recycling, waste processing, or insurance costs. These costs could adversely affect our competitiveness, revenues, and profitability. We cannot assure that future laws or changes to existing regulations will not further increase costs or impact our ability to operate effectively in certain markets.

Governmental regulations affecting the import or export of products or affecting products containing encryption capabilities could negatively impact our revenues.

The U.S. and various foreign governments impose controls, export license requirements, and restrictions on importing and exporting certain technologies, particularly encryption technology. Regulations may require certifications, source code reviews, or governmental recovery of private encryption keys. Recent changes in countries like Russia, China, and India have introduced stricter requirements for encryption products and critical technologies.

Failure to obtain the required approvals or comply with these regulations could harm our international and domestic sales, adversely affecting our revenue. Additionally, sanctions and export restrictions, such as those imposed by the U.S. and EU on Russia due to the Ukraine conflict, further complicate compliance and could result in penalties, increased costs, or restrictions on import/export privileges, limiting our ability to pursue particular government or international projects.

If wireless devices pose safety risks, we may be subject to new regulations, and demand for our products, licensees, and customers may decrease.

Regulatory agencies, including the FCC and international counterparts, have updated guidelines for evaluating radiofrequency emissions from wireless devices. Even if unfounded, concerns about the safety of radiofrequency emissions may reduce consumer demand for wireless devices, impacting our products and those of our licensees and customers.

Interest groups have urged investigations into claims that wireless technologies pose health risks or interfere with medical devices, airbags, and hearing aids. Concerns about distractions caused by wireless devices while driving may also prompt new legislation. Any resulting regulations or restrictions could decrease product demand and negatively affect our business and financial performance.

The current U.S. presidential administration has undertaken significant efforts to cut federal government spending, which could negatively impact our business and results of operations.

The current U.S. presidential administration has recently undertaken significant efforts to cut federal government spending and reorganize the reporting structure for various federal agencies. Funding for specific federal agencies has been cut entirely. The workforces at various federal agencies have been suspended, furloughed, or fired. Any cuts to defense spending could impact our contracts with government entities or any private entities reliant on government contracts. In addition, there could be significant decreases to the number of personnel employed at any federal agency responsible for approving our government contracts or the government contracts of our third parties. Any of the foregoing could significantly negatively impact our business and results of operations, particularly of our Mil/Gov products and product lines now and in the future.

Risks Related to Our Common Stock

We recently transferred the trading of our common stock from The Nasdaq Stock Market to the OTCQB. Because our common stock is quoted on the OTC, your ability to sell your shares in the secondary trading market may be limited.

On February 10, 2025, we filed a Form 25 with the SEC to voluntarily delist our common stock from trading on Nasdaq. Our common stock was quoted for trading with the OTCQB of OTC Markets on February 12, 2025. The decision to move common stock trading from Nasdaq to OTC Markets was made to reduce costs and improve operational efficiencies. As a result of the transfer of our common stock from Nasdaq to the OTCQB, we anticipate that our stockholders may face negative consequences related to our securities, including but not limited to:

Because our common stock is quoted on the OTCQB, your ability to sell your shares in the secondary trading market may be limited. Since February 12, 2025, the OTCQB is the only trading market for our common stock. We cannot assure our stockholders that our common stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of our common stock on this market, whether the trading volume of our common stock will be sufficient to provide for respective efficient trading markets or whether quotes for our common stock will continue on this market in the future, which could result in significantly lower trading volumes and reduced liquidity for investors seeking to buy or sell our common stock. As a result, prices for shares of our common stock may be lower than might otherwise prevail if our common stock was listed on a national securities exchange.

We are subject to penny stock rules which will make the shares of our common stock more difficult to sell.

We are subject to the SEC’s “penny stock” rules since our shares of common stock trade below $5.00 per share and are not traded on a national securities exchange. Penny stocks generally are equity securities with a per share price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, as well as the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing before completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.

In addition, the penny stock rules require that before a transaction the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock may find it more challenging to sell their securities.

The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculatively low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Our 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 and bylaws include provisions that could delay or prevent a change in Vislink Technologies, Inc. control, even if stockholders might favor such a transaction. These provisions include:

Additionally, we are governed by Section 203 of the Delaware General Corporation Law, which may restrict mergers or combinations with significant stockholders (those owning 15% or more of voting stock) without prior Board approval for a specified period.

These provisions may discourage takeover attempts, reduce the appeal of our common stock to investors, and result in a lower market price for our shares than might otherwise occur.

We have identified material weaknesses in our internal controls and procedures over financial reporting and have determined that our disclosure controls were ineffective. These represent material weaknesses previously identified which we have not yet been able to remediate. In the future, we may identify additional material weaknesses that may cause us to fail to meet our reporting obligations, including timeliness, or result in material misstatements of our financial statements. If we fail to remediate our material weaknesses or implement adequate controls and procedures for our financial reporting, our ability to accurately and timely report our financial results could be adversely affected, which would likely adversely affect the value of our common stock.

We have identified material weaknesses in our internal controls over financial reporting and determined that our disclosure controls were ineffective as of December 31, 2024. Specifically, we lack sufficient accounting personnel to maintain proper segregation of duties and conduct adequate risk assessments, and we have not fully documented the design and operation of our controls. These weaknesses could result in errors in our financial statements or lead to their restatement. We previously identified these material weaknesses but have not yet been able to remediate them.

To address these issues, we are implementing improvements, including:

Until these measures are fully implemented and operated effectively, there is no assurance that we can prevent future errors or meet our financial reporting obligations under Section 404 of the Sarbanes-Oxley Act. Failure to do so could lead to a loss of investor confidence, adversely affect the trading price of our common stock, and restrict future access to capital markets.

The trading price of our common stock may be highly volatile and subject to wide fluctuations due to factors beyond our control, including those discussed in this report’s “Risk Factors” section. Additionally, broad market fluctuations, especially in the telecommunications sector, could adversely affect our stock price and liquidity.

Stock price volatility has, in the past, led to securities class action litigation against companies. If stockholders file such lawsuits against us, we could incur significant legal costs and distractions to management, negatively impacting our financial position and operations. Adverse rulings in such litigation could also result in substantial liabilities.

Volatile stock prices may also target us for hostile takeover attempts or activist campaigns, which could lead to significant costs and divert executive management’s attention from operating the business, further impacting our financial condition.

We may face various risks associated with shareholder activism or demands for better performance.

On February 12, 2025, Hale Capital Partners, LP (“Hale Capital”) filed a Schedule 13D with the SEC, reporting its acquisition of approximately 12% of our outstanding common stock. Between that date, and the date of this filing, Hale Capital filed amendments to the Schedule 13D and various reports on Form 4 under Section 16 of the Exchange Act, disclosing increases in Hale Capital’s holdings of our stock. As of the date of this filing, Hale Capital has publicly disclosed beneficial ownership of 376,594 shares, representing approximately 15.26% of our outstanding common stock. As of the date of this filing, we have not received any communication from Hale Capital regarding potential changes to our governance, management, or strategic direction. We may, now or in the future, be subject to shareholder activism or demands for improved performance, which could interfere with the execution of our strategic plan. Such activities may be costly, time-consuming, and disruptive to our operations, diverting the attention of management and employees from business priorities and potentially harming our financial performance and shareholder value.

If 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 market for our common stock may be influenced by research and reports published by industry or financial analysts. We cannot control whether analysts will cover our stock; a lack of coverage could adversely affect our market price. Analysts may also have limited expertise with our business model, leading to inaccurate or unfavorable reports.

If analysts downgrade our stock, sector, or competitors or cease coverage entirely, we may lose market visibility, resulting in a decline in our stock price and trading volume.

In the future, we could elect to deregister our securities under the Securities Exchange Act of 1934, as amended. Deregistration would result in less disclosure about us and may negatively affect our securities’ liquidity and trading prices.

In the future, if eligible to do so, our board of directors (our “Board”) may elect to voluntarily deregister our securities under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and suspend our reporting obligations with the SEC. by filing a Form 15 to voluntarily deregister our securities and suspend our reporting obligations under the Exchange Act, if eligible to do so. If the Board approves such deregistration, we would file a Form 15 and our obligations to file reports pursuant to the Exchange Act, including but not limited to periodic reports, such as annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, would be suspended immediately upon the filing of the Form 15 with the SEC. Following any deregistration, we would not expect to publish periodic financial information or furnish such information to our stockholders except as may be required by applicable laws, or stock exchange, or over-the-counter market rules. As a result, our quotations of our securities may be moved from the OTCQB to a “lower tier” of OTC Markets. As a result of any one or more of the foregoing factors, deregistration may result in less disclosure about us and may negatively affect the liquidity and trading prices of our securities.

General Risk Factors

We may fail to meet publicly announced financial guidance or other expectations about our business, which would cause our common stock to decline in value.

Occasionally, we may provide preliminary financial results or forward-looking guidance based on current expectations and assumptions. These statements involve risks and uncertainties, including changes to underlying assumptions or the occurrence of risks related to our performance and business, as discussed in this report.

Failure to meet financial guidance or market expectations regarding our future performance could harm our reputation, reduce investor confidence, and cause our stock price to decline.

As a U.S. public company, we must comply with the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the rules and requirements of the OTCQB, and other securities regulations. These obligations increase our legal and financial compliance costs, demand additional resources, and make certain activities more time-consuming and costly.

Increased disclosure of our business and financial condition may expose us to litigation threats or claims from competitors and third parties. Even if resolved in our favor, such claims could divert management’s attention and resources, negatively impacting our business and operating results.

If 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 trading market for our common stock is influenced by research and reports published by industry and securities analysts about us, our business, our market, or our competitors. Adverse changes in analyst recommendations regarding our stock or more favorable recommendations about our competitors could cause our stock price to decline.

If analysts cease coverage of our company or fail to publish reports regularly, we may lose visibility in the financial markets, reducing stock price and trading volume.

Any impairment of goodwill, other intangible assets, or long-lived assets could negatively impact our operations.

Goodwill, intangible assets, and long-lived assets are subject to annual impairment tests or evaluations when events indicate potential impairment. If the carrying value of these assets exceeds their fair value, we must write off the excess during the determination period. Additionally, intangible and long-lived assets are amortized or depreciated over their useful lives, which may accelerate based on circumstances.

Future acquisitions or investments may require recording goodwill, and unforeseen issues with these businesses could reduce anticipated returns or asset values, triggering impairment evaluations. Significant write-offs or accelerated amortization of these assets could adversely impact our operations, financial condition, and results.

If our estimates relating to our critical accounting policies are based on assumptions or judgments that change or prove incorrect, our operating results could fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

Preparing financial statements under U.S. generally accepted accounting principles requires management to make estimates, assumptions, and judgments about asset values, liabilities, revenues, and expenses. Based on historical experience and reasonable assumptions, these estimates significantly impact our reported financial results.

If assumptions change or actual results differ from our estimates, our operating results could fall below analysts’ and investors’ expectations, leading to a decline in our stock price. Key areas involving significant estimates include reserves for receivables and inventories, recoverability of long-lived assets, deferred tax asset valuation allowances, and valuations of equity, derivative instruments, and acquired assets and liabilities. Inaccuracies in these estimates could materially impact our financial performance and condition.

Future 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.

To fund our business plan and research and development efforts, we may issue additional equity securities, including shares of common stock, preferred stock, or securities that are convertible into common stock. These transactions may occur at prices below the current market value, resulting in significant dilution to existing stockholders and potentially causing our stock price to decline. Subsequent sales of common stock could further dilute stockholders who purchased shares in earlier transactions.

Issuing common stock under compensation programs, public or private financings, or exercising stock options and warrants will also dilute existing stockholders. It could negatively affect the market price of our stock. Additionally, holders of warrants and options may exercise them when the market price exceeds the exercise price, which could reduce our ability to raise additional capital or increase the cost of future financing.

The issuance or potential issuance of additional shares may harm our stock price, liquidity, and stockholders’ equity value.

Risks Relating to Acquisitions

Our business strategy may include acquisitions, which may entail numerous risks, including management diversion and increased costs and expenses, all of which could negatively affect the Company’s profitability.

Our business strategy may include pursuing strategic or opportunistic acquisitions, which entail several risks, including:

Acquisitions may also require additional debt financing, leading to increased interest expenses or contingent liabilities, and could result in equity issuances that dilute existing stockholders. There is no assurance that we can successfully negotiate or complete acquisitions, obtain required approvals, or realize anticipated synergies or benefits.

If acquisitions are unsuccessful or poorly integrated into our operations, they could adversely affect our profitability, business, financial condition, and cash flow.

Our acquisition strategy involves several risks.

We actively pursue acquisition opportunities, including those involving businesses with differing operational characteristics from ours. However, acquisitions carry several unique risks, including:

Additionally, competition for acquisition candidates may limit opportunities and drive higher acquisition prices. Integration challenges could reduce focus on future acquisitions or core operations, impacting earnings and growth. Future acquisitions may also involve paying premiums above fair value or incurring additional debt, potentially adversely affecting our operations and financial condition results.