Item 1A. Risk Factors
Item 1A. Risk Factors
Summary of Risk Factors
Our business and an investment in our Class A common stock are subject to numerous risks and uncertainties, including those described below. This summary does not address all of the risks that we face. You should carefully consider the risks and uncertainties described in this Item 1A, together with all of the other information contained in this Annual Report. Our principal risks include the following:
● We have incurred recurring losses and have an accumulated deficit, and we may require additional financing to fund our operations.
● We may require additional capital to support our operations and growth, and additional financing may not be available on acceptable terms, or at all.
● A substantial portion of our revenue is derived from two related-party customers, and the loss or reduction of business from either customer could adversely affect us.
● Our SmartGuide relies on technology licensed from Nextelligence, Inc., a company principally owned and controlled by William A. Mobley, Jr., and interruption of our rights under that license could materially affect our business.
● Our ability to grow depends on attracting and retaining subscribers, and our reported subscriber count includes inactive accounts and may not reflect current platform engagement or monetization potential.
● We depend on third-party partners, service providers and infrastructure, and disruptions, cyber-attacks, system failures or failures of third-party technology could adversely affect our operations and subscribers.
● Privacy, data-security and payment-processing risks, including unauthorized access to subscriber or billing information, could harm our reputation and subject us to liability.
● We depend on our proprietary technology and intellectual property, and may be unable to protect our intellectual property or successfully defend against third-party intellectual property claims.
● We depend on key management and qualified personnel, and certain executive officers have responsibilities to other businesses that may create conflicts of interest.
● Our PaaS, BEST and D2D deployment models are relatively new and may not achieve broad market acceptance; BEST is subject to regulatory uncertainty and D2D depends on telecom operator and ISP adoption.
● Changes in laws or regulations governing Internet access and net neutrality, or actions by Internet service providers, could increase our costs or impair access to our services.
● An active and liquid trading market for our Class A common stock may not be sustained, and the market price of our Class A common stock has been highly volatile and may continue to be highly volatile.
● Our dual-class capital structure concentrates substantial voting control with Mr. Mobley, limits other shareholders’ ability to influence corporate matters and may affect our eligibility for inclusion in certain stock market indices.
● We are a controlled company under Nasdaq rules and rely on an exemption from the requirement that a majority of our board of directors consist of independent directors.
● We currently have limited securities analyst coverage, and the failure of additional analysts to initiate coverage, the loss of existing coverage or unfavorable analyst research could adversely affect the market price and trading volume of our Class A common stock.
● If we fail to satisfy Nasdaq’s continued listing requirements, our Class A common stock could be suspended or delisted.
● Future issuances or sales of substantial amounts of our Class A common stock, including shares issued in financings, could dilute existing shareholders and adversely affect our stock price.
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● Sales under our Equity Purchase Agreement with Amiens Technology Investments LLC may result in substantial dilution, and the amount of financing available under that agreement is uncertain and depends in part on our stock price, liquidity and satisfaction of other conditions.
● If we fail to maintain effective internal control over financial reporting, our financial reporting could be impaired, investor confidence could decline and we could face regulatory or other adverse consequences.
● We do not intend to pay cash dividends for the foreseeable future, so shareholders’ returns, if any, will depend on appreciation in the market price of our Class A common stock.
Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Annual Report, including our financial statements, the notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, results of operations and future prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.
Risks Related to Our Business
We have incurred recurring losses from operations and may require additional financing to fund our operations.
We have incurred recurring losses from operations. As of June 30, 2026, we had an accumulated deficit of approximately $219.7 million and a stockholders’ equity of approximately $2.25 million. For the years ended June 30, 2026, and 2025, we incurred net losses of approximately $13.0 million and $14.1 million, respectively. Our failure to generate sufficient revenues, effectively manage expenses or raise additional capital could adversely affect our ability to achieve our intended business objectives.
Although our independent registered public accounting firm’s report on our financial statements for the year ended June 30, 2026, does not contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, our history of recurring operating losses and accumulated deficit subject us to risks regarding our ability to generate sufficient revenues and maintain adequate liquidity to fund our operations.
In July 2026, we completed a private placement of shares of our Class A common stock and pre-funded warrants for aggregate gross proceeds of approximately $23.7 million. Although we believe that the proceeds from this financing, together with our other available sources of liquidity, will provide sufficient capital to fund our operations for at least 12 months, there can be no assurance that our estimates regarding our capital requirements will prove accurate or that we will not require additional financing.
We have historically funded our operations primarily through sales of our Class A common stock to accredited investors, debt financing and the exchange of Class A common stock for services received by us. If we require additional financing, we cannot be certain that such financing will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that could adversely affect our ability to conduct our business. If we are not able to raise additional capital when required or on acceptable terms, we may have to: (i) significantly delay, scale back or discontinue the development or commercialization of new products; (ii) seek collaborators for further development and commercialization of our products; or (iii) relinquish or otherwise dispose of some or all of our rights to technologies or products that we would otherwise seek to develop or commercialize.
Our SmartGuide relies on a technology that we license from Nextelligence, Inc. and any interruption of our rights as a licensee could have a significant adverse impact on some major aspects of our business, such as product development, customer retention and sales.
Our SmartGuide has been built on technology developed by Nextelligence, Inc., or Nextelligence, and used by us pursuant to a Technology License and Development Agreement (as amended, the “Technology Agreement”). Nextelligence is principally owned and controlled by William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman. The Technology Agreement provides that Nextelligence is obligated to provide all further development, improvement, modification, maintenance, management and enhancement services related to the technology. The Technology Agreement may be terminated if, among other things, we breach the Technology Agreement, if we become insolvent or subject to bankruptcy laws, or if there is a change of control (as defined in the Technology Agreement). If we were not able to use the technology for any reason, it could have a significant adverse impact on some major aspects of our business, such as product development, customer retention and sales.
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If our efforts to attract and retain subscribers are not successful, our business will be adversely affected.
Our ability going forward to attract and retain subscribers will depend on our ability to consistently provide a robust, valuable and quality experience for selecting and viewing TV shows, movies and channels and access to online radio stations. Furthermore, the relative service levels, content offerings, pricing and related features of competitors to our service may adversely impact our ability to attract and retain subscribers. If consumers do not perceive our service offering to be of value, or if we introduce new or adjust existing services that are not favorably received by them, we may not be able to attract subscribers. In addition, many of our subscribers are re-joining our service or originate from word-of-mouth advertising from existing subscribers. Our attracting and retaining subscribers may depend on our ability to:
If our efforts to satisfy our existing subscribers are not successful, we may not be able to attract new subscribers, and as a result, our ability to maintain or grow our business will be adversely affected. Subscribers cancel their subscription to our service for many reasons, including a perception that they do not use the service sufficiently, the need to cut household expenses, availability of content is limited, competitive services provide a better value or experience, and customer service issues are not satisfactorily resolved. We must continually add new subscribers both to replace subscribers who cancel and to grow our business beyond our current subscriber base. If too many of our subscribers cancel our service, or if we are unable to attract new subscribers in numbers sufficient to grow our business, our operating results will be adversely affected. If we are unable to successfully compete with current and new competitors in both retaining our existing subscribers and attracting new subscribers, our business will be adversely affected. Further, if excessive numbers of subscribers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to replace these subscribers with new subscribers.
Our reported subscriber count includes inactive accounts and may not be indicative of current platform engagement or monetization potential.
We define a “subscriber” as any individual or entity that has registered for access to our platform, whether on a paid or free (ad-supported) tier basis. This metric represents cumulative account registrations since inception, and includes accounts that may be dormant, inactive or no longer engaged with the platform. We do not currently remove accounts from our subscriber count based on inactivity or lack of engagement, and we do not separately report the number of active users. As a result, our reported subscriber figures may significantly overstate the number of users who actively use the platform, generate advertising impressions, or contribute to revenue in any given period. Investors should not rely on our total subscriber count as a measure of current platform usage, engagement, or monetization capacity. If we were to adopt an active-user metric or reclassify inactive accounts, the resulting figures could be materially lower than the subscriber counts currently reported.
If we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations would be materially and adversely affected.
The market for online video, radio and games is characterized by rapidly changing technology, evolving industry standards, new service and product introductions and changing customer demands. Although we have developed new products and services in order to meet customer demands, new technologies and evolving business models for delivery of entertainment video continue to develop at a fast pace and we may not be able to keep up with all of the changes. Consumers are afforded various means for consuming online video, radio and games. The various economic models underlying these differing means of entertainment video delivery include subscription, pay-per-view, ad-supported and piracy-based models. Several competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we do. New entrants may enter the market with unique service offerings or approaches to distributing online video, radio and games and other companies also may enter into business combinations or alliances that strengthen their competitive positions. The changes and developments taking place in our industry may also require us to re-evaluate our business model and adopt significant changes to our long-term strategies and business plan. If we are unable to successfully or profitably compete with current and new competitors, programs and technologies, our business will be adversely affected, and we may not be able to increase or maintain market share, revenues or profitability.
We may not be able to maintain or grow our revenue or our business.
Since the beginning of fiscal year 2019, we have been focused on investing in and developing new technologies, which we anticipate will drive future growth and provide us with a sustainable revenue stream. In addition, we have transitioned from a “single-license” model to a “multi-license” model. We believe that our new technology, coupled with our sales and marketing strategy, will enable us to generate revenue through free registrations of FreeCast.com by partnering with retailers, manufacturers, operators and/or distributors of streaming devices, mobile phones, broadband carriers, broadcasters, property managers, multi-dwelling developers, builders and various mass consumer communities of streaming TV viewers, in exchange for a negotiated revenue-sharing percentage with each distributor on a case-by-case basis. However, there can be no assurance that we will be able to generate sufficient revenue from distributor fees or fees from premium content purchased by subscribers through our SmartGuide to fund our operations in the future. In addition, our growth may become stagnant for many other reasons, including decreasing consumer spending, increasing competition, slowing growth in the consumption of online video, radio and games, changes in government policies or general economic conditions.
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If we are not able to manage our growth, our business could be adversely affected.
We are currently engaged in an effort to grow our service by promoting online access renewal, developing new products, expanding internationally and to residents of rural areas. As we undertake all these changes, if we are not able to manage the growing complexity of our business, including improving, refining or revising our systems and operational practices, our business may be adversely affected.
We are reliant on a limited number of customers, and the loss of one or more of these customers would adversely affect our business.
For the fiscal years ended June 30, 2026, and 2025, two related-party customers accounted for more than 36% and 35%, respectively, of our total revenue. The loss of either customer, or a substantial reduction in their business with us, would adversely affect our financial performance and our business. Our reliance on a small customer base limits our ability to mitigate downturns in specific customer relationships or industry segments. Strategic decisions made by these customers could adversely impact our operations, including pricing, service levels and product development priorities. Financial instability or delayed payments from these customers could negatively affect our liquidity and working capital. We cannot be certain that we will retain these customers or replace the revenue if we lose them. Any disruption in our relationship with these two customers would likely have an adverse impact on our financial condition and business.
If our efforts to build strong brand identity and improve subscriber satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our operating results may be adversely affected.
We must continue to build and maintain strong brand identity for our products and services, which have expanded over time. We believe that strong brand identity will be important in attracting subscribers. If our efforts to promote and maintain our existing brands and brands we develop in the future are not successful, our operating results and our ability to attract subscribers may be adversely affected. From time to time, subscribers’ express dissatisfaction with our service, including, among other things, title availability, processing and service interruptions. To the extent dissatisfaction with our service is widespread or not adequately addressed, our brand may be adversely impacted and our ability to attract and retain subscribers may be adversely affected. With respect to our international expansion, we will also need to establish our brand and to the extent we are not successful, our business in new markets would be adversely impacted.
If we are unable to maintain effective and cost-efficient subscriber acquisition and marketing channels, our subscriber levels and operating results may be adversely affected.
We utilize a broad mix of marketing programs to promote our service to potential new subscribers. We obtain new subscribers through our online marketing efforts, including paid search listings, banner ads, text links and permission-based e-mails. In addition, we have engaged in various offline marketing programs, including TV and radio advertising, direct mail and print campaigns, consumer package and mailing insertions. We maintain an active public relations program to increase awareness of our service and drive subscriber acquisition. We opportunistically adjust our mix of marketing programs to acquire new subscribers at a reasonable cost with the intention of achieving overall financial goals. If we are unable to maintain or replace our sources of subscribers with similarly effective sources, or if the cost of our existing sources increases, our subscriber levels and marketing expenses may be adversely affected.
We may not be able to continue to support the marketing of our service by current means if such activities are no longer available to us, become cost prohibitive or are adverse to our business. If companies that currently promote our service decide that we are negatively impacting their business, that they want to compete more directly with our business or enter a similar business or decide to exclusively support our competitors, we may no longer be given access to such marketing through them. In addition, if advertising rates increase, we may curtail marketing efforts or otherwise experience an increase in our marketing costs. Laws and regulations impose restrictions on the use of certain channels, including commercial e-mail and direct mail. We may limit or discontinue use or support of e-mail and other activities if we become concerned that subscribers or potential subscribers deem such activities intrusive, which could affect our goodwill or brand. If the available marketing channels are curtailed, our ability to attract new subscribers may be adversely affected.
We may face claims or liability relating to content accessed or made available through our services, which could adversely affect our business and results of operations.
We face potential liability for negligence, copyright, patent or trademark infringement or other claims based on content accessed or made available through our services. We also may be subject to claims based on content that is accessible from our website through links to other websites. As we expand our services and partnerships, the scope of potential liability relating to content may increase. Any such claims, whether or not meritorious, could result in costly litigation, divert management’s attention and resources, damage our reputation or require us to alter our services, any of which could adversely affect our business and results of operations.
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We rely upon a number of partners to offer our service.
We currently offer subscribers the ability to easily navigate available sources of online video channels, video on demand and consume such media through their computers and other Internet-connected devices. If we are not successful in maintaining existing and creating new relationships with content providers, or if we encounter technological, content licensing or other impediments to our ability to organize content, our ability to grow our business could be adversely impacted. Furthermore, mobile devices and TVs are manufactured and sold by entities other than FreeCast and while these entities should be responsible for the devices’ performance, the connection between these devices and FreeCast may nonetheless result in consumer dissatisfaction toward FreeCast and such dissatisfaction could result in claims against us or otherwise adversely impact our business.
Any significant disruption in our computer systems or those of third-party service providers that we rely on could adversely impact our business.
Subscribers and potential subscribers access our service through our website or their TVs, computers, game consoles, or streaming or mobile devices. Our reputation and ability to attract, retain and serve subscribers depend on the reliable performance of our computer systems and those of third-party service providers that we utilize in our operations. Interruptions in these systems, or with the Internet in general, including discriminatory network management practices, could make our service unavailable or degraded. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our service to existing and potential subscribers.
Our servers and those of third-party service providers we use in our operations are vulnerable to computer viruses, physical or electronic break-ins, cyber-attacks and similar disruptions, which could lead to interruptions and delays in our service and operations, as well as loss, misuse or theft of data. Our website periodically experiences directed attacks intended to cause a disruption in service. Any successful attempt to disrupt our service or internal systems could harm our business, be expensive to remedy and damage our reputation. Our insurance does not cover expenses related to attacks on our website or internal systems, and efforts to prevent such attacks are costly and may limit the functionality of our services.
We rely on third-party service providers, including cloud computing and distributed infrastructure platforms, to support critical aspects of our operations, including data processing, storage and service delivery. Because we cannot easily switch our operations to alternative providers, any disruption of or interference with our use of these third-party services, whether due to technological, operational or business-related issues, could adversely impact our operations and the experience of our subscribers.
In addition, fires, floods, earthquakes, power losses, telecommunications failures and other catastrophic events could damage our systems or those of our third-party service providers or cause them to fail completely. As we do not maintain fully redundant systems, any such disruption could result in prolonged downtime, loss of subscribers and harm to our business and results of operations.
We rely heavily on our proprietary technology to locate and organize online video, radio and games and to manage other aspects of our operations, and the failure of this technology to operate effectively could adversely affect our business.
We continually enhance or modify the technology used for our operations. We cannot be sure that any enhancements or other modifications we make to our operations will achieve the intended results or otherwise be of value to our subscribers. Future enhancements and modifications to our technology could consume considerable resources. If we are unable to maintain and enhance our technology, our ability to retain existing subscribers and to add new subscribers may be impaired. In addition, if our technology or that of third-parties we utilize in our operations fails or otherwise operates improperly, our ability to retain existing subscribers and to add new subscribers may be impaired. Also, any harm to our subscribers’ personal computers or other devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.
Privacy concerns and restrictions on our ability to use subscriber data could adversely impact our business and reputation.
In the ordinary course of business and, in particular, in connection with merchandising our service to our subscribers, we collect and utilize data supplied by our subscribers. We currently face certain legal obligations regarding the manner in which we treat such information. Other businesses have been criticized by privacy groups and governmental bodies for attempts to link personal identities and other information to data collected on the Internet regarding users’ browsing and other habits. Increased regulation of data utilization practices, including self-regulation or findings under existing laws, which limit our ability to use collected data, could have an adverse effect on our business. In addition, if we were to disclose data about our subscribers in a manner that was objectionable to them, our business reputation could be adversely affected, and we could face potential legal claims that could impact our operating results.
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Our reputation and relationships with subscribers would be harmed if our subscriber data, particularly billing data, were accessed by unauthorized people.
We maintain personal data regarding our subscribers, including names and, in many cases, mailing addresses. With respect to billing data, such as credit card numbers, we rely on licensed encryption and authentication technology to secure such information. We take measures to protect against unauthorized intrusion into our subscribers’ data. If, despite these measures, we, or our payment processing services, experience any unauthorized intrusion into our subscribers’ data, current and potential subscribers may become unwilling to provide the information to us necessary for them to become subscribers, we could face legal claims, and our business could be adversely affected. Similarly, if a well-publicized breach of the consumer data security of any other major consumer Web site were to occur, there could be a general public loss of confidence in the use of the Internet for commerce transactions which could adversely affect our business.
In addition, we do not obtain signatures from subscribers in connection with the use of credit cards by them. Under current credit card practices, to the extent we do not obtain cardholders’ signatures, we are liable for fraudulent credit card transactions, even when the associated financial institution approves payment of the orders. From time to time, fraudulent credit cards are used on our Web site to obtain service. Typically, these credit cards have not been registered as stolen and are therefore not rejected by our automatic authorization safeguards. While we do have a number of other safeguards in place, we nonetheless experience some loss from these fraudulent transactions. We do not currently carry insurance against the risk of fraudulent credit card transactions. A failure to adequately control fraudulent credit card transactions would harm our business and results of operations.
We may not be able to adequately protect our intellectual property rights.
We rely on a combination of trademark, copyright, trade secret and other intellectual property laws, as well as confidentiality procedures and contractual provisions, to protect our proprietary technology, business processes and other intellectual property. These measures may not be sufficient to prevent unauthorized use, disclosure or misappropriation of our intellectual property.
Confidentiality agreements with employees, contractors and other third parties may be breached, and we may not have adequate remedies for any such breach. In addition, policing unauthorized use of our intellectual property is difficult, time-consuming and costly, and we may be unable to detect or prevent such unauthorized use. Our trade secrets may be disclosed, become known to competitors or be independently developed by others. If we are unable to adequately protect our intellectual property rights, our competitive position could be adversely affected, and our business, financial condition and results of operations could be materially harmed.
Intellectual property claims against us could be costly and result in the loss of significant rights.
We may be subject to claims by third parties that we have infringed, misappropriated or otherwise violated their intellectual property rights. These claims may arise from our use of technology, content, business processes or other aspects of our operations. As the number of patents and other intellectual property rights in our industry increases, the risk of such claims may also increase.
Defending against intellectual property claims, regardless of their merit, can be costly, time-consuming and may divert the attention of management and technical personnel. If we are unable to successfully defend against such claims, we may be required to pay damages, enter into costly licensing agreements, modify or discontinue certain products or services, or develop alternative technologies, any of which could adversely affect our business.
In addition, we may be unable to obtain licenses to use intellectual property on commercially reasonable terms, or at all. Any such claims or limitations could materially and adversely affect our business, financial condition and results of operations.
We depend on key management as well as experienced and capable personnel generally, and any failure to attract, motivate and retain our staff could severely hinder our ability to maintain and grow our business.
We rely on the continued service of our senior management, including our founder and Chief Executive Officer and Chairman of our board of directors, William A. Mobley, Jr., other members of our executive team and other key employees to develop our products, services and solutions. In our industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. As a result, our human resources organization focuses significant efforts on attracting and retaining individuals in key technology positions. If we lose the services of any member of management or key personnel and are unable to attract or locate suitable or qualified replacements, or otherwise hire talented personnel, we may incur additional expenses to recruit and train new staff, making it more difficult to meet our business objectives, which could severely disrupt our business and growth. In addition, our ability to execute our strategy depends in part on our ability to engage and retain qualified third-party contractors.
Our Chief Executive Officer and Chief Financial Officer also serve as executive officers of other companies and such other positions may create conflicts of interest for such officers in the future.
William A. Mobley, Jr., our Chief Executive Officer and Chairman, works full-time for us, devoting approximately 50 hours a week to our business. Mr. Mobley also works part-time for Nextelligence and serves as its Chief Executive Officer and Chairman of the board of directors. Mr. Mobley’s duties to Nextelligence may compete for his full attention to our business; accordingly, he may have conflicts of interest in allocating time between those separate business activities.
Jonathan Morris, our Chief Financial Officer, works full-time for us, devoting approximately 45 hours a week to our business. Mr. Morris also advises a special purpose acquisition company, Twelve Seas Investment Co III, on a limited basis as a consultant and its Chief Financial Officer. Mr. Morris’ duties to these other businesses may compete for his full attention to our business; accordingly, he may have conflicts of interest in allocating time between those separate business activities.
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We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our Class A common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include, among other things, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We could remain an emerging growth company until June 30, 2031, although circumstances could cause us to lose that status earlier, including if our annual gross revenues reach the applicable statutory threshold, we become a “large accelerated filer” as defined under the Exchange Act or we issue more than $1 billion in non-convertible debt securities during the preceding three-year period.
We are also a “smaller reporting company,” as defined under the Exchange Act. For so long as we continue to qualify as a smaller reporting company, we may take advantage of certain scaled disclosure requirements available to smaller reporting companies. If we qualify as a smaller reporting company after we cease to qualify as an emerging growth company, we may continue to rely on certain of these scaled disclosure requirements.
We cannot predict whether investors will find our Class A common stock less attractive because we rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our Class A common stock.
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes–Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. However, as an “emerging growth company,” our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
In addition, to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. In addition, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
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If we fail to maintain effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could adversely affect investor confidence and the market price of our Class A common stock.
We are required to maintain internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
If we identify material weaknesses or significant deficiencies in our internal control over financial reporting, we may be unable to prepare accurate and timely financial statements or comply with applicable reporting requirements. Remediation of any deficiencies that we identify may require us to incur additional costs and devote significant management and other resources to improving our internal controls. If we are unable to establish and maintain effective internal control over financial reporting, investors may lose confidence in our financial reporting, the market price of our Class A common stock could decline, and we could become subject to regulatory scrutiny or other adverse consequences.
Future issuances of our Class A common stock or securities convertible into or exercisable for our Class A common stock could result in substantial dilution to our existing shareholders.
We are authorized to issue 320,000,000 shares of Class A common stock. Our amended and restated articles of incorporation authorize our board of directors to issue additional shares of Class A common stock and options, rights, warrants and other securities relating to Class A common stock, subject to applicable law and Nasdaq requirements. Future issuances of Class A common stock or securities convertible into or exercisable for Class A common stock, whether in connection with acquisitions, financings, equity compensation or otherwise, may dilute the ownership and voting interests of our existing shareholders. Such issuances could also adversely affect the market price of our Class A common stock.
Future sales of substantial amounts of our Class A common stock in the public market, or the perception that such sales may occur, could adversely affect the market price of our Class A common stock.
Sales of substantial amounts of our Class A common stock in the public market, including shares issued pursuant to previously completed financings, or the perception that such sales may occur, could adversely affect the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities.
As of September 25, 2026, we had 36,861,774 shares of Class A common stock outstanding, of which 20,726,462 shares were designated as unrestricted on the records of our transfer agent. In connection with our July 2026 private placement, we issued 4,666,667 shares of Class A common stock and pre-funded warrants to purchase 3,243,807 additional shares of Class A common stock. All of the pre-funded warrants have since been exercised and the underlying shares of Class A common stock have been issued. The shares issued in the private placement and upon exercise of the pre-funded warrants have been registered for resale under the Securities Act. The resale of a substantial number of these shares, or the perception that such resales may occur, could adversely affect the market price of our Class A common stock.
In addition, certain other outstanding shares of our Class A common stock remain subject to contractual leak-out restrictions through March 10, 2027. As those restrictions expire or otherwise cease to apply, additional shares may become eligible for sale in the public market, which could create additional downward pressure on the market price of our Class A common stock.
Anti-takeover provisions contained in our articles of incorporation and bylaws could impair a takeover attempt.
Our articles of incorporation and bylaws contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
Any provision of our articles of incorporation or bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
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We incur significantly increased costs and devote substantial management time to operating as a public company.
As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance costs, makes some activities more difficult, time-consuming or costly, and increases demand on our systems and resources.
The requirements of being a public company require significant resources and management attention. We are required to maintain disclosure controls and procedures and internal control over financial reporting appropriate for a public company. We also incur additional costs associated with preparing and filing periodic and current reports with the SEC, maintaining compliance with Nasdaq listing standards, obtaining directors’ and officers’ liability insurance and complying with applicable corporate governance requirements. These requirements may divert management’s attention from other business concerns, which could adversely affect our business, financial condition and results of operations.
In addition, when we cease to qualify as an emerging growth company, we may become subject to additional requirements, including the independent auditor attestation requirements relating to our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, if we are otherwise subject to those requirements at that time. Compliance with these requirements could further increase our costs and demands on management and other personnel.
Risks Related to Our Industry
Changes in consumer viewing habits, including more widespread usage of demand methods of entertainment video consumption could adversely affect our business.
The manner in which consumers seek entertainment online is changing rapidly. Digital cable, wireless and Internet content providers are continuing to improve technologies, content offerings, user interfaces and business models that allow consumers to access entertainment video-on-demand with interactive capabilities. The devices through which online video, radio and games can be consumed are also changing rapidly. For example, content from cable service providers may be viewed on laptops and mobile devices and content from Internet content providers may be viewed on TVs. If competitors providing similar services address the changes in consumer habits in a manner that is better able to meet content distributor and consumer needs and expectations, our business could be adversely affected.
Changes in laws or regulations governing the Internet, including laws affecting net neutrality, could adversely affect our business.
Our business depends on consumers’ ability to access our services over the Internet. Changes in laws or regulations governing Internet access, or actions by broadband and other Internet service providers, could affect the cost, quality or availability of access to our services. For example, Internet service providers could attempt to impose additional fees, restrict or otherwise disadvantage access to certain content or services, or otherwise affect the speed or quality with which consumers can access our services.
The regulatory framework governing Internet access and net neutrality has changed significantly over time. In 2024, the Federal Communications Commission adopted an order that generally restored the regulatory framework applicable to broadband Internet access service under Title II of the Communications Act and reinstated certain net neutrality rules. In January 2025, the U.S. Court of Appeals for the Sixth Circuit invalidated that order. In addition, certain states have adopted or considered their own requirements concerning Internet access and net neutrality. The legal and regulatory framework therefore remains subject to change at the federal and state levels.
Future legislative, regulatory or judicial developments could permit Internet service providers greater latitude to impose fees, prioritize certain traffic, restrict access or otherwise affect the delivery of Internet-based services. Any such developments that increase our costs or impair the ability of consumers to access our services could adversely affect our business, financial condition and results of operations.
Although we are now operating our Platform-as-a-Service, Broadcast-Enabled Streaming TV and Direct-to-Mobile deployment models, these offerings remain relatively new and there can be no assurance that they will achieve broad market acceptance.
We have developed three deployment models—Platform-as-a-Service (PaaS), Broadcast-Enabled Streaming TV (BEST), and Direct-to-Device (D2D)—that are intended to enable telecom operators, ISPs, broadcasters, and other partners to launch branded streaming services using our infrastructure. These models represent new and evolving business lines that have not yet generated significant revenue. There can be no assurance that potential partners will adopt these deployment models, that we will be able to successfully integrate broadcast-to-streaming conversion or digital rights management technologies at scale or that market conditions will support the pricing and revenue-sharing structures contemplated by these offerings. If these deployment models fail to gain market acceptance, our growth strategy and results of operations could be materially and adversely affected.
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Our BEST model is subject to regulatory uncertainty related to broadcast standards and Over-the-Air television policy.
Our BEST model operates at the intersection of traditional over-the-air broadcasting and internet streaming, an area subject to evolving federal regulation. Changes in FCC policy regarding broadcast encryption, ATSC 3.0 implementation timelines, digital rights management requirements or over-the-air (OTA) spectrum allocation could affect the viability or cost-effectiveness of our BEST deployment model. Additionally, our BEST model depends on cooperation from local broadcasters who may face their own regulatory constraints or may prefer competing technology solutions. Uncertainty in the regulatory environment for broadcast-to-streaming conversion could delay adoption by broadcast partners and adversely affect our ability to deploy BEST at scale.
Our D2D platform depends on telecom operator and ISP adoption, and our failure to secure and maintain these partnerships could limit our growth.
Our D2D deployment model is designed for distribution through telecom operators and ISPs. The success of this model depends on our ability to negotiate and maintain favorable partnership agreements with these entities, many of which have significantly greater resources and bargaining power than we do. Telecom operators and ISPs may choose to develop competing in-house solutions, partner with larger competitors, or decline to prioritize video distribution services. Additionally, the delivery of video through 5G mobile broadband, satellite connectivity, and other networks contemplated by D2D is subject to network capacity constraints, coverage limitations, and the pace of infrastructure deployment by third-party carriers over which we have no control.
Risks Related to Ownership of Our Class A Common Stock
An active and liquid trading market for our Class A common stock may not be sustained, which could limit our shareholders’ ability to sell their shares.
Our Class A common stock began trading on The Nasdaq Global Market on March 10, 2026. Since that date, trading volume in our Class A common stock has varied significantly. On certain trading days, fewer than 100,000 shares of our Class A common stock have traded, while on other trading days trading volume has been substantially higher. This significant variation in trading volume may continue, and there can be no assurance that an active and liquid trading market for our Class A common stock will be sustained.
A limited or inconsistent trading market could impair the ability of our shareholders to sell their shares at the time they wish to sell them or at a price they consider reasonable and could increase the volatility of the market price of our Class A common stock. A limited trading market could also impair our ability to raise capital through future sales of equity securities.
The market price of our Class A common stock has been highly volatile and may continue to be highly volatile, and shareholders may lose all or a substantial portion of their investment.
The market price of our Class A common stock has experienced significant volatility since it began trading on The Nasdaq Global Market on March 10, 2026. Our Class A common stock closed at $9.13 per share on March 10, 2026, its first day of trading. Since that date, the closing price of our Class A common stock has ranged from a low of $0.59 per share to a high of $9.84 per share, and on September 9, 2026, the closing price was $1.29 per share. The market price and trading volume of our Class A common stock may continue to fluctuate significantly.
The market price of our Class A common stock may be affected by numerous factors, many of which are beyond our control, including variations in our operating results; our ability to achieve revenue growth; announcements regarding our products, services, customers or strategic relationships; changes in the competitive environment in which we operate; changes in estimates or recommendations by securities analysts, if any; future issuances or sales of our Class A common stock; the size of our public float and trading volume; general economic and market conditions; and other events or factors affecting us or the technology and media industries.
In addition, the stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices of securities of companies regardless of their operating performance. These broad market fluctuations, as well as general economic, political and market conditions, may adversely affect the market price of our Class A common stock. As a result of these factors and the limited trading history of our Class A common stock, shareholders may be unable to sell their shares at or above the price at which they acquired them and may lose all or a substantial portion of their investment.
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Our dual-class capital structure has the effect of concentrating voting control with our founder, Chief Executive Officer and Chairman, William A. Mobley, Jr., which limits or precludes our other shareholders’ ability to influence corporate matters.
Our Class A common stock is entitled to one vote per share, while our Class B common stock is entitled to fifteen votes per share. Mr. Mobley beneficially owns substantially all of our outstanding Class B common stock and, as a result of our dual-class capital structure and his ownership of shares of our common stock, controls a substantial majority of the combined voting power of our outstanding capital stock. Accordingly, Mr. Mobley is able to control matters submitted to our shareholders for approval, including the election and removal of directors, amendments to our organizational documents, and the approval of significant corporate transactions, including a merger, sale of substantially all of our assets or other change of control.
Mr. Mobley’s voting control may delay, deter or prevent a change in control or other business combination that our other shareholders might otherwise consider favorable and may prevent our other shareholders from influencing significant corporate decisions. The interests of Mr. Mobley may differ from or conflict with the interests of our other shareholders. This concentration of voting control may also adversely affect the market price of our Class A common stock.
Our dual-class capital structure could affect our eligibility for continued inclusion in certain stock market indices, which could adversely affect the trading price and liquidity of our Class A common stock.
Our Class A common stock is currently included in certain stock market indices. However, certain providers of stock market indices have adopted policies that limit or restrict the inclusion of companies with multiple classes of common stock or unequal voting rights in certain of their indices. These policies differ among index providers and are subject to change. As a result of our dual-class capital structure, we could become ineligible for continued inclusion in certain indices or may be ineligible for inclusion in other indices in the future.
Investment funds, exchange-traded funds and other investment vehicles often seek to track particular indices. If our Class A common stock were removed from an index in which it is currently included, or if our dual-class capital structure prevents our inclusion in other indices, demand for our Class A common stock from certain institutional investors could be reduced. Any such exclusion or removal could adversely affect the trading price, trading volume and liquidity of our Class A common stock.
We are a “controlled company” within the meaning of the Nasdaq listing rules and, as a result, rely on an exemption from certain corporate governance requirements that provide protections to shareholders of other companies.
Because William A. Mobley, Jr., our founder, Chief Executive Officer and Chairman, controls more than 50% of the voting power for the election of directors, we are a “controlled company” under the Nasdaq listing rules. As a controlled company, we are permitted to elect not to comply with certain Nasdaq corporate governance requirements, including the requirement that a majority of our board of directors consist of independent directors and certain requirements relating to the nomination of directors and the determination of executive compensation by independent directors.
We currently rely on the controlled-company exemption from the requirement that a majority of our board of directors consist of independent directors. Our board of directors currently consists of four directors, two of whom are independent under the Nasdaq listing rules. Our Audit Committee and Compensation Committee, however, each consist solely of our two independent directors. We may elect to rely on additional controlled-company exemptions in the future for so long as we remain eligible to do so. If we rely on such exemptions, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of Nasdaq’s corporate governance requirements.
The controlled-company exemptions do not exempt us from Nasdaq’s audit committee requirements, and we remain subject to the applicable requirements regarding the independence and composition of our Audit Committee.
We currently have limited securities analyst coverage, and the failure of additional analysts to initiate coverage, the loss of existing coverage or unfavorable analyst research could adversely affect the market price and trading volume of our Class A common stock.
We currently have limited research coverage by securities or industry analysts. If additional securities or industry analysts do not initiate coverage of us, or if analysts that currently cover us cease coverage or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which could cause its market price or trading volume to decline. In addition, if one or more analysts who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about our business, the market price of our Class A common stock could decline.
If we are unable to meet the continued listing requirements of Nasdaq, Nasdaq will delist our Class A common stock.
Our Class A common stock is currently listed on the Nasdaq Global Market. In the future, if we are not able to meet Nasdaq’s continued listing standards, we could be subject to suspension and delisting proceedings. A delisting of our Class A common stock and our inability to list on another national securities exchange could negatively impact us by: (i) reducing the liquidity and market price of our Class A common stock; (ii) reducing the number of investors willing to hold or acquire our Class A common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.
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We do not intend to pay dividends on our Class A common stock for the foreseeable future, so any returns will be limited to changes in the value of our Class A common stock.
We have never declared or paid any cash dividends on our Class A common stock. We currently intend to retain any future earnings to finance the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future. As a result, shareholders may only receive a return on their investment in our Class A common stock if the market price of our Class A common stock increases and they are able to sell their shares at a profit.
We may require additional capital to support our operations and growth, and such capital may not be available on acceptable terms, or at all.
In July 2026, we completed a private placement of shares of our Class A common stock and pre-funded warrants for aggregate gross proceeds of approximately $23.7 million. Although we believe that the proceeds from this financing, together with our other available sources of liquidity, will provide sufficient capital to fund our operations for at least 12 months, our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of expenditures to support our operations and growth initiatives, the development and commercialization of our products and services, and general economic and market conditions.
We may therefore require additional financing in the future. Additional financing may not be available when needed or, if available, may not be available on terms acceptable to us. If we raise additional capital through the issuance of equity or equity-linked securities, our existing shareholders may experience significant dilution. If we raise additional capital through debt financing, we may become subject to restrictive covenants or other terms that could adversely affect our operations. If we are unable to obtain additional financing when required, we may be required to delay, reduce or discontinue certain operations, development activities or growth initiatives, which could adversely affect our business, financial condition and results of operations.
Sales of our Class A common stock under our Equity Purchase Agreement may result in substantial dilution to our existing shareholders and could adversely affect the market price of our Class A common stock.
Pursuant to our Equity Purchase Agreement with Amiens Technology Investments LLC, as amended, we may, subject to specified conditions and limitations, sell up to $50 million of shares of our Class A common stock. The number of shares that we may issue will depend in part on the market price of our Class A common stock at the time of each sale. If the market price of our Class A common stock declines, a greater number of shares may be required to obtain a given amount of proceeds, resulting in greater dilution to our existing shareholders. Sales of shares to Amiens, and resales of those shares into the public market, or the perception that such sales may occur, could also adversely affect the market price of our Class A common stock.
The amount of financing that we may receive under our Equity Purchase Agreement is uncertain and depends on the market price and liquidity of our Class A common stock and other conditions.
We cannot predict the number of shares that we may sell under the Equity Purchase Agreement or the aggregate proceeds that we ultimately may receive. The purchase price for shares sold under the Equity Purchase Agreement is based on 95% of the applicable market price during the ten-trading-day pricing period following an Advance Notice. Accordingly, declines in the market price of our Class A common stock may reduce the proceeds we receive per share and increase the number of shares required to obtain a given amount of financing. In addition, our ability to sell shares under the Equity Purchase Agreement is subject to the conditions and limitations contained in the agreement, and there can be no assurance that we will receive the full $50 million commitment.
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