RISK FACTORS

I. Business Risks

• This Company is dependent upon the continued contributions to the Company by certain Key Personnel. The loss of such individuals could seriously impact our ability to both maintain existing operations and pursue new initiatives. Key risks related to our industry include, without limitation, the following.
• The Company initiated efforts to develop its products, but has not yet optimized them, nor does the Company have a fully-funded marketing effort; competitive offerings may make it more difficult than management anticipates in order to meet future-looking financial results.
• OPUM is an early-stage commercial company operating in a new category of smart orthopedic rehabilitation, and our success is uncertain.
• OPUM US Inc. has only recently begun commercializing its Digital Knee® platform in the United States; while the Group has several years of research and pilot experience, our products are still in the early stages of adoption, and we have limited operating history as a revenue-generating business; there is no assurance that the market will accept our smart-brace and SaaS-based rehabilitation solutions or that we will achieve commercial success; we expect to incur operating losses as we continue to fund sales expansion, clinical validation, and product development.
• Clinical-Validation Risk: Market adoption depends in part on compelling clinical evidence supporting the Digital Knee® platform; delays in IRB approvals, insufficient study enrollment, unfavorable results, or failure to complete clinical trials could reduce payer acceptance, hinder provider adoption, and negatively impact commercialization.
• Dependence on a Single Commercial Product: OPUM currently depends almost entirely on the Digital Knee® platform for commercial revenue; any delay, quality issue, regulatory challenge, or market resistance involving this single product would materially affect the Company’s performance; OPUM may not successfully develop additional products or diversify revenues in the near term.
• OPUM may require substantial additional capital to fund operations and growth and may not be able to raise it on acceptable terms; inability to obtain adequate financing may require delays or scale-backs in commercial launches, R&D programs, or expansion plans; future equity financing may dilute shareholders and debt financing may impose restrictive covenants.
• Intercompany IP-Ownership and Foreign-Jurisdiction Enforcement Risk: All core patents are held by OPUM Technologies Innovations Ltd., a New Zealand subsidiary, and licensed to OPUM US Inc.; enforcement of these patents in U.S. courts may be limited by foreign-jurisdiction issues, transfer-pricing scrutiny, or licensing changes.
• Market adoption of smart-brace technology is not guaranteed; surgeons and PT clinics may hesitate to change workflows or invest in digital tools; failure of providers or payers to recognize clinical or economic benefits may harm revenue.
• Clinician Adoption and Workflow-Change Risk: Commercialization depends on orthopedic surgeons, physical therapists, and clinic staff incorporating the technology into workflows; providers may resist change, prefer incumbents, or decline to use digital systems; slow adoption could materially affect growth.
• Reimbursement frameworks may change or fail to support the offering; changes in coding rules, reimbursement rates, or payer policies could materially impact usage and revenue.
• Volatility in RTM/RPM Reimbursement Codes: CMS may reduce rates, narrow eligibility, or eliminate RTM billing categories, lowering clinician incentives.
• Customer-Concentration Risk: Early revenue is expected to be concentrated among a limited number of orthopedic clinics and PT networks; loss of any major customer could materially impact revenue.
• Competition from established brace manufacturers, digital-rehabilitation companies, or emerging smart-brace start-ups may limit growth; OPUM may not have resources to compete successfully with larger or better-funded companies.
• Emerging AI-Rehabilitation Competitors: AI-driven digital-rehabilitation platforms may reduce OPUM’s competitive advantage.
• OPUM depends on successful collaboration between the U.S. commercial arm and New Zealand subsidiaries; disruptions in supply chains, engineering support, logistics, or governance could delay delivery and increase costs.
• Foreign-Currency Exchange Risk: R&D, engineering, and manufacturing in New Zealand expose OPUM to NZD/USD fluctuations.
• Cross-Border Tax and Transfer-Pricing Risk: Intercompany arrangements may be subject to audits, withholding obligations, and repatriation restrictions.
• IP Risks: The cost and difficulty of generating, protecting, and defending intellectual property may be substantial; competitors may bring infringement claims that are costly to defend and unpredictable in outcome.
• Trade-Secret Risk: Reliance on confidentiality agreements may not sufficiently protect trade secrets, especially across jurisdictions.
• Failure to Realize Targets: Failure to deliver on the business plan may negatively affect cash flow, impair financing ability, and reduce operational capability.
• Key Personnel Risk: Loss of key executives or technical staff could delay development and hurt customer/investor relationships.
• Scaling Manufacturing and Supply Chain: Component shortages, QC failures, regulatory issues, shipping delays, and geopolitical restrictions may impair manufacturing; certain critical components have long lead times and no substitutes.
• Counterfeiting and Offshore-Production Risk: Offshore manufacturing increases risk of unauthorized duplication or counterfeit products harming safety and brand.
• Tariff and Trade-Regulation Risk: New tariffs, duties, or import regulations may increase cost of goods and reduce competitiveness.
• Multi-Jurisdiction Regulatory Compliance Risk: Failure to maintain FDA registration or other certifications may result in enforcement actions or costly modifications.
• Cyber-Security and System-Outage Risk: Breach or outage of the SaaS platform could lead to penalties, litigation, reputational harm, and customer loss.
• Third-Party Logistics and Vendor Risk: Failures of external vendors or partners may disrupt product delivery or reimbursement support.
• Pricing Pressure and Margin Compression: BOM cost increases or reimbursement-linked pricing constraints may harm margins.
• Supplier Termination and Component Lifecycle Risk: Discontinued components or supplier termination may require costly redesigns.
• Hardware, Firmware, and Recall Risk: Defects or malfunctions could trigger recalls, reputational damage, and regulatory expense.
• SaaS Reliability and Cloud-Vendor Dependency: Cloud outages or disruptions may impair clinician workflows and customer trust.
• Cyber-Insurance Coverage Risk: Coverage limits may be insufficient and premiums may rise.
• Regulatory Reclassification and Policy-Change Risk: New FDA standards or classification changes may create costly delays.
• Limited Operating History: OPUM has a short operating history with recurring losses and expects continued losses; no assurance exists regarding profitability or product commercialization.
• Going-Concern and Recurring-Losses Risk: Additional capital is required to continue operations; lack of funding may force the Company to curtail or cease business.
• Shareholder Loan Priority and Liquidity Risk: Approximately $2MM in shareholder loans may have priority in liquidation and pressure liquidity.
• Financial Uncertainty: Even $9.9MM in gross proceeds provides only limited runway; additional capital will likely be required.
• Future Capital Requirements May Be Substantial: Progress, partnerships, regulatory approval, patent costs, and commercialization needs will drive future capital requirements and potential dilution.
• Need for External Partnerships: Success may depend on collaborations with brace companies, insurers, clinicians, and others; failure of partners to perform or termination of arrangements may harm development or commercialization.
• Third-Party Reimbursement Need: OPUM’s revenue may depend on payer reimbursement; lack of reimbursement could reduce valuation and profitability.
• Product-Liability Exposure: Product failure may expose OPUM to liability exceeding insurance coverage.
• Founder/Management Control Risk: Founders and executives hold a majority of voting stock and may exert substantial control over corporate decisions.
• Conflicts of Interest: Board and executives may have external commitments that create conflicts or reduce focus on OPUM.

II. Risks Associated with The Offering

• Accredited Investor Verification Risk: Investors must provide documentation to verify Accredited Investor status under Rule 506(c); insufficient documentation may result in rejection.
• Offering Price Risk: The offering price is set by OPUM and may not reflect market value; future financings may occur at lower valuations.
• No Distributions: OPUM does not anticipate making distributions.
• Dilution Risk: Investors will experience immediate and significant dilution; future rounds may cause further dilution.
• Equity Incentive Dilution and Option-Pool Expansion: Future equity awards may dilute investors.
• Lack of Liquidity: No ready market exists for shares; transferability is restricted; investment should be viewed as long-term.
• Availability and Timing of Future Financing: Future capital needs depend on development, collaborations, regulatory approvals, patents, and commercialization.
• Discretion Over Use of Proceeds: The Company may redirect proceeds at its discretion.
• Tax Ramifications: OPUM is a C-corp; investors should consult tax advisors.
• Corporate Tax Risks and NOL Limitations: NOL usage may be restricted by tax rules, increasing future tax burdens.