Harbor BioSciences (HRBR) Risk Analysis

Air Wisconsin currently relies on a single aircraft type, the CRJ-200 regional jet, and a single engine type, the General Electric ("GE") CF34-3B1 engine. The issuance of FAA or manufacturer directives restricting or prohibiting the use of this aircraft type or engine type, or Air Wisconsin's inability to obtain necessary parts and services related to this aircraft type or engine type, would negatively impact our business and financial results. In addition, any concerns raised regarding the safety or reliability of the CRJ-200 regional jet or the GE CF34-3B1 engine, whether or not directly associated with Air Wisconsin's fleet, could result in concerns about Air Wisconsin's fleet that could negatively impact our business. The CRJ-200 regional jet is no longer in production. Air Wisconsin has been highly dependent upon Bombardier, as the sole manufacturer of Air Wisconsin's aircraft, and GE, as the sole manufacturer of Air Wisconsin's aircraft engines, to provide sufficient parts and related maintenance and support services to it in a timely manner. In June 2020, Bombardier consummated an agreement with Mitsubishi Heavy Industries, Ltd. ("Mitsubishi"), pursuant to which Mitsubishi purchased Bombardier's regional jet program, including all aspects of the CRJ-200 regional jet, such as type certificates, maintenance, support, refurbishment, marketing and sales activities. Air Wisconsin's operations could be materially and adversely affected by the failure or inability of Mitsubishi or GE to provide required maintenance or support services, or as a result of unscheduled or unanticipated maintenance requirements for Air Wisconsin's aircraft or engines.

All air carriers, including Air Wisconsin, are subject to regulation by the DOT, the FAA and other governmental agencies. Regulations promulgated by the DOT primarily relate to economic aspects of air service. The FAA is responsible for regulating and overseeing matters relating to the safety of air carrier flight operations, including the control of navigable air space, the qualification of flight personnel, flight training practices, compliance with FAA airline operating certificate requirements, aircraft certification and maintenance requirements. In addition, airports and municipalities enact rules and regulations that affect Air Wisconsin's operations. A decision by the FAA to ground, or require time consuming inspections of or maintenance on, all or any of Air Wisconsin's aircraft for any reason may have a material adverse effect on Air Wisconsin's operations and our financial condition. Further, Air Wisconsin's business may be subject to additional costs as a result of potential regulatory changes, which additional costs could have an adverse effect on our operating results.

Securities class action litigation may be instituted against companies following periods of volatility in the overall market and in the price of a company's securities. As a result of the requirement to comply with Exchange Act reporting obligations, a significant amount of information regarding our business and operations, including our financial condition and operating results, is publicly available, which may result in threatened or actual litigation or other disputes with our stockholders, employees or other constituents. For example, we are aware of the filing of several lawsuits relating to facts arising in connection with the restatement of our previously issued consolidated financial statements. If such claims are successful, we may be required to pay damages, in which case our insurance costs could increase, and our liquidity and results of operations could suffer. Even if the claims are resolved in our favor, these lawsuits could result in substantial costs, a diversion of management's attention and harm to our reputation, which could harm our business, financial condition and results of operations.

Air Wisconsin is subject to federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment and noise, including those relating to emissions to the air, discharges to surface and subsurface waters, safe drinking water and the use, management, disposal and release of, and exposure to, hazardous substances, oils and waste materials. Certain legislative bodies and regulatory authorities are increasingly focused on climate change and have taken actions to implement additional laws, regulations, and programs intended to protect the environment. For example, the federal government, as well as several state and local governments, have implemented legislative and regulatory proposals and voluntary measures intended to reduce greenhouse gas emissions. Compliance with laws, regulations, and other programs intended to reduce emissions or otherwise protect the environment may require Air Wisconsin to reduce its emissions, secure carbon offset credits or otherwise pay for emissions, or make capital investments to modify certain aspects of its operations to reduce emissions. Future policy, legal, and regulatory developments relating to the protection of the environment could have a direct effect on Air Wisconsin's operations (or an indirect effect through its third-party providers of parts or services or airport facilities at which it operates) and increase its costs and have a material adverse effect on its operations. Any such developments could have an adverse impact on our business, results of operations and financial condition. Air Wisconsin is also subject to environmental laws and regulations that require it to investigate and remediate soil or groundwater contamination to meet certain remediation standards. Under certain laws, generators of waste materials, and current and former owners or operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring response actions. Liability under these laws may be strict and joint and several, meaning that Air Wisconsin could be liable for the costs of cleaning up environmental contamination regardless of fault or the amount of contamination directly attributable to it, which liability could have an adverse impact on our results of operations and financial condition.

The airline industry is highly competitive. Air Wisconsin has traditionally competed primarily with other regional airlines, some of which are owned or operated by major airlines. The airline industry has undergone substantial consolidation, and new airlines have entered the market. Any additional consolidation or significant alliance activity within the airline industry, and the entrance of new competitors into the market, could further limit our growth opportunities. Similarly, any further consolidation or restructuring of any major air carrier's regional jet programs, including as a result of fleet strategy changes announced by several major carriers, could negatively impact Air Wisconsin's future growth opportunities, which would have a material adverse effect on our business, financial condition and results of operations.

The airline business is affected by numerous factors, many of which are beyond Air Wisconsin's control, including air traffic congestion at airports, air traffic control inefficiencies, adverse weather conditions, natural disasters, facility disruptions, acts of war or terrorism, increased security measures, and the outbreak of disease. Factors that cause flight delays or cancellations frustrate passengers, increase operating costs and decrease revenues, which in turn adversely affect profitability and cash flows from operations. In addition to the factors noted above, Air Wisconsin's operations and our financial condition are currently affected, and may in the future be affected, by many other factors and conditions beyond Air Wisconsin's control, including: - any shortage of qualified pilots, mechanics and flight attendants, in particular as a result of the recent reduction in Air Wisconsin's workforce, and any increases in compensation and the continuing pressure to significantly increase wages in the industry;- access to airport terminals and facilities;- capital expenditures required to maintain or expand fleet operations;- regulatory changes, including those impacting funding for EAS markets;- changes in the availability of necessary parts and equipment, particularly as a result of the CRJ-200 no longer being in production;- actual or potential changes in geopolitical conditions, including wars, outbreak of hostilities, terrorism, or government sanctions;- air traffic control delays or disruptions;- changes in demand for airline travel or tourism, consumer preferences, or demographic trends;- changes in demand for the CRJ-200, or aircraft with similar capacity, including as a result of major airlines significantly reducing or retiring their use of single class 50-seat aircraft;- changes in the competitive environment due to pricing, industry consolidation, or other factors;- labor disputes, strikes, work stoppages, or similar matters impacting employees;- potential interference with aviation equipment from the deployment of 5G wireless telecommunications systems; and - actual or potential changes in economic conditions, including rising fuel and other commodity prices, recessionary concerns, increasing interest rates, inflation, tariffs, and changes in discretionary spending and consumer confidence. The occurrence of any or all of such factors or conditions could materially and adversely affect Air Wisconsin's operations and our financial condition. Moreover, in light of the termination of the American capacity purchase agreement, and given the competitive nature of the airline industry and the publicly announced fleet strategy changes by several major carriers, we believe limited opportunities exist for Air Wisconsin to enter into a new capacity purchase agreement. Further, if Air Wisconsin is unable to successfully identify and implement revenue generating activities, it may be required to pursue alternative strategies, sell or lease certain assets, raise additional equity or debt financing, or cease business operations entirely. Even if Air Wisconsin is successful in pursuing growth opportunities in the future, there is no guarantee they will allow Air Wisconsin to achieve or maintain profitable operations.

The performance and reliability of Air Wisconsin's and third-party service providers' technology is critical to Air Wisconsin's ability to compete effectively. Any internal technological error, failure or large-scale external interruption in the information systems, networks, hardware, software and technological infrastructure Air Wisconsin depends on, such as U.S. air traffic control systems, power, telecommunications or the internet (collectively, "IT Systems"), may disrupt Air Wisconsin's internal network, impact its ability to conduct its business and safely operate its flights, lower its utilization of aircraft, and result in increased costs or penalties. Air Wisconsin's IT Systems (including systems provided by third parties) may be vulnerable to a variety of sources of interruption due to events beyond its control, including natural disasters, terrorist attacks, telecommunications or IT System failures, computer viruses, cyber criminals and other security issues. In addition, Air Wisconsin faces numerous and evolving cybersecurity risks that threaten the security, confidentiality, integrity and availability of its IT Systems, including from diverse threat actors such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, security breaches, malfeasance by insiders, human or technological error, computer viruses, malicious or destructive code, misconfigurations, "bugs" or other vulnerabilities in commercial software that is integrated into Air Wisconsin's or third-party service providers' IT Systems, products or services, malware (including ransomware) and other attacks, including through fraud or other means of deception. The methods used to obtain unauthorized access, disable or degrade service or attack or sabotage systems are constantly evolving, and threat actors are becoming increasingly sophisticated in using techniques and tools – including artificial intelligence – that circumvent security controls, evade detection and remove forensic evidence. As a result Air Wisconsin may be unable to anticipate or to detect, investigate, remediate or recover from attacks or incidents for long periods of time. Further, Air Wisconsin may not be able to prevent all data breaches, misuses of data or other cybersecurity incidents. There can be no assurance that our cybersecurity risk management program and processes, including Air Wisconsin's policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems. Because Air Wisconsin relies on third-party vendors and service providers for functions critical to its business, including information technology infrastructure and services, successful cyberattacks that disrupt or result in unauthorized access to third-party IT Systems can materially impact its operations and financial results. Remote and hybrid working arrangements at Air Wisconsin (and at many third-party service providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. Certain Air Wisconsin third-party service providers have experienced cybersecurity incidents, and Air Wisconsin expects such incidents to continue in varying degrees. While to date no incidents have had a material impact on Air Wisconsin's operations or our financial results, we cannot guarantee that material incidents will not occur in the future. Any cybersecurity incident or other adverse impact to the availability, integrity or confidentiality of Air Wisconsin's IT Systems could compromise our ability to operate flights or technology systems, result in legal claims or proceedings, regulatory investigations and enforcement actions, liability or regulatory penalties, disruption to its operations, damage to its reputation, and/or significant incident response, system restoration or remediation and future compliance costs. Any or all of the foregoing could adversely affect our business, results of operations and financial condition. Laws, regulations and other requirements relating to the privacy, security and handling of information about individuals, and the application and interpretation of those requirements, are constantly evolving. There has been heightened legal and regulatory focus on data privacy and security, including in relation to cybersecurity incidents, and it is possible that new laws or regulations or interpretations may require us to incur significant costs, implement new processes or change our handling of information and business operations. Any failure or perceived failure to comply with laws, regulations and other requirements relating to the privacy, security and handling of information could result in legal claims or proceedings, regulatory investigations or enforcement actions. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.