Financial Risks

The main financial risks comprise the Company’s limited resources, tax risks and risk related to the liquidity of the shares.

Liquidity Risk (Shares)

As regards Morphic’s shares, there is a risk that turnover may vary during certain periods and that the spread between bid and offer prices is large from time to time. The liquidity of Morphic’s shares can be affected by a number of different internal and external factors. Internal factors include announcements of the takeover of new companies, new products, technological shifts, quarterly variations in the Company’s operating profits and changes in earnings and revenue forecasts. External factors include general economic conditions, economic downturns and other fac­tors that are not related to the development of the Company’s business. Fluctuations in those markets where Morphic conducts operations could also have a significant impact on the Company’s share price.

Market Growth

The rapid expansion primarily in the wind power, fuel cell and energy technology fields may require relatively large investments. If the Company fails to obtain finance or to use its resources in the optimum way, this could have a negative impact on the Group.

Tax Risks

In connection with issuing warrants to the Group’s employees, Morphic has commissioned a valuation of these warrants that has been used as a basis for pricing. If the tax authority were to decline to accept the valuation, this could result in tax penalties and an obligation on Mor­phic to pay employer contributions.