What changed in this filing

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Item 1A. Risk Factors

2024-02-29 compared with 2023-03-10 · 35 added, 36 removed, 171 unchanged (29% of the section changed)

1 unchanged sentence

An investment in our common stock involves a significant degree of risk.

Many of the risk factors are, and will continue to be, exacerbated by the COVID-19 pandemic and any worsening of the economic environment.

Many of the risk factors are, and will continue to be, exacerbated by any worsening of the economic environment.

You should not invest in our common stock unless you can afford to lose your entire investment.

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We cannot anticipate with any degree of certainty what our revenues will be in future periods.

While our revenues increased approximately 26.4% in 2022 as compared to 2021, our gross profit margin decreased to 60.0% in 2022 from 73.4% in 2021.

While our revenues decreased approximately 2.2% in 2023 as compared to 2022, our gross profit margin increased to 85.8% in 2023 from 60.0% in 2022.

We reported an operating loss of approximately $10.3 million in 2023 as compared to an operating loss of approximately $12.6 million in 2022.

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As of December 31, 2023, we have approximately $4.4 million in cash, cash equivalents and short-term marketable securities.

Our net working capital was $2.8 million.

Our net working capital was $211.1 thousand.

We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities.

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During 2023 these customers accounted for 60.4%, 12.8%, and 5.7% of our revenues, respectively.

In 2021, three separate customers accounted for 14.3%, 15.6% and 33.0% of our revenues, respectively.

The amount of revenue

we receive from these customers is dependent on a number of factors outside of our control, for InDirect customers this includes the amount they charge for advertisements, the depth of advertisements available from them, and their ability to display relevant ads in response to end user queries and for Direct customers this includes changes in advertising budgets resulting from their own business circumstances.

In 2021 and throughout 2022 we onboarded several Direct clients that contributed to revenue growth.

We have experienced churn in our Direct customer base where some Direct clients that were material to 2021 were not served or only partially served in 2022 and some Direct clients that were material to 2022 are no longer being served.

In 2022, two of the same customers and another customer accounted for 29.1%, 24.1% and 12.9% of our revenues, respectively.

The amount of revenue we receive from these customers is dependent on a number of factors outside of our control, this includes the amount they charge for advertisements, the depth of advertisements available from them, and their ability to display relevant ads in response to end user queries and changes in advertising budgets resulting from their own business circumstances.

Throughout 2022 we onboarded several clients that contributed to revenue growth.

We have experienced churn in our customer base where some clients that were material to 2021 were not served or only partially served in 2022 and some clients that were material to 2022 are no longer being served.

Historically, we have been able to replace lost clients with new clients or by expanding our relationship with existing clients, however, we would likely experience a significant decline in revenue and our business operations could be significantly harmed if we continue to lose material customers or are unable to replace lost clients.

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These partners may experience difficulty in attracting and maintaining users for a number of reasons, including competition, rapidly changing markets and technology, industry consolidation and changing consumer preferences.

We have experienced a decrease in the number of supply partners and quantity of Internet traffic from supply partners within CampSight beginning in late April 2020.

We have experienced a decrease in the number of supply partners and quantity of Internet traffic from supply partners within Bonfire beginning in late April 2020.

Additionally, we are experiencing turnover in our supply partner network and there can be no assurance traffic levels will increase to prior levels or that we will be able to replace supply partners that have left our network.

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In the technology industry, there is substantial and continuous competition for engineers with high levels of experience in designing, developing and managing software and Internet-related services, as well as competition for executives and sales and operations personnel.

Many of our competitors have substantially more resources than we do and have the ability to compensate highly skilled personnel at higher levels than

Many of our competitors have substantially more resources than we do and have the ability to compensate highly skilled personnel at higher levels than we can.

We may not be successful in attracting and retaining qualified highly skilled personnel.

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If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.

The COVID-19 pandemic could have a material adverse impact on our business, results of operations and financial condition .

In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, China.

Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic—the first pandemic caused by a coronavirus.

The outbreak has resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines and travel bans, intended to control the spread of the virus.

The COVID-19 outbreak has already caused severe global disruptions.

Beginning in late April 2020, we experienced a significant reduction in demand (marketing budgets) within the CampSight platform and a modest decline in demand within the IntentKey platform, the combination of which resulted in a significant reduction in our revenue run rate.

Generally, marketing budgets tend to decline in times of a recession.

During 2020, we curtailed expenses, including compensation and travel and issued a work from home policy to protect our employees and their families from virus transmission associated with co-workers and we began to experience interruptions in our daily operations, as a result of these policies.

During 2021, we changed our policies and reopened our offices on a limited basis and our revenue has returned to growth on a year over year basis.

We maintain long-standing relationships with Yahoo!

and Google that provide access to hundreds of thousands of advertisers from which most of our CampSight and digital publishing revenue originates.

Any adverse impact on the operations of those companies would have a correspondingly adverse impact on our revenues in future periods.

We will continue to assess the impact of the COVID-19 pandemic on our Company, however, at this time we are unable to predict all possible impacts on our Company, operations and revenues.

Should revenues turn downwards or fail to return to historical levels on a consistent basis, we may not be able to offset expenses quickly enough which could have a material adverse effect on our business, results of operations, financial condition and cash flows and adversely impact the trading price of our common stock.

Technological Risks

Our business must keep pace with rapid technological change to remain competitive.

Our business operates in a market characterized by rapidly changing technology, evolving industry standards, frequent new product and service announcements, enhancements, and changing customer demands.

We must adapt to rapidly changing technologies and industry standards and continually improve the speed, performance, features, ease of use and reliability of our services.

This includes making our products and services compatible and maintaining compatibility with multiple operating systems, desktop and mobile devices, and evolving network infrastructure.

If we fail to do this, our results of operations and financial position could be adversely affected.

Our business operates in a rapidly changing technological landscape, evident with the introduction of AI tools like ChatGPT in 2022 along with the deprecation of third-party cookies.

To stay competitive, we must swiftly adapt to evolving industry standards, new product releases, and changing customer preferences.

Continual improvement of our services' speed, performance, and compatibility across diverse platforms is crucial.

Failure to keep pace with these technological shifts could adversely affect our financial position and results of operations.

Our services may be interrupted if we experience problems with our network infrastructure .

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If our services were to be interrupted, it could cause loss of users, customers and business partners, which could have a material adverse effect on our results of operations and financial position.

We employ information including operational technology systems to support our business and to collect, store and/or use proprietary and confidential information.

Security and data breaches, cyberattacks and other cybersecurity incidents involving our information technology systems, networks and infrastructure could disrupt or interfere with our operations;

result in the compromise and misappropriation of proprietary and confidential information belonging to us or our customers, suppliers and employees;

and expose us to numerous expenses, liabilities and other negative consequences, any or all of which could adversely impact our business, reputation and results of operations.

In the ordinary course of business, we rely on information technology networks and systems, some of which are provided, hosted or managed by vendors and other third parties, to process, transmit and store electronic information, and to manage or support a variety of businesses.

Additionally, we collect and store certain data, including proprietary business information, and have access to confidential or personal information in certain of our businesses that is subject to privacy and cybersecurity laws, regulations and customer-imposed controls.

Third parties and threat actors, including organized criminals, nation-state entities, and/or nation-state supported actors, may attempt to gain unauthorized access to our information and operational technology networks and infrastructure, data and other information.

Despite our cybersecurity and business continuity counter measures (including employee and third-party training, monitoring of networks and systems, patching, maintenance, and backup of systems and data), our information and operational technology systems, networks and infrastructure are still potentially susceptible to cyber-attack, insider threat, compromise, damage, disruption or shutdown, including as a result of the exploitation of known or unknown hardware or software vulnerabilities in our systems or the systems of our vendors and third-party service providers, the introduction of computer viruses, malware or ransomware, service or cloud provider disruptions or security breaches, phishing attempts, employee error or malfeasance, power outages, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events.

Despite our cybersecurity counter measures, it is possible for security vulnerabilities or a cyberattack to remain undetected for an extended time period and the prioritization of decisions with respect to security measures and remediation of known vulnerabilities that we and the vendors and other third parties upon which we rely make may prove inadequate to protect against these attacks.

Any cybersecurity incident or information or operational technology network disruption could result in numerous negative consequences, including the risk of legal claims or proceedings, investigations or enforcement actions by U.S., state, or foreign regulators;

liabilities or penalties under applicable laws and regulations, including privacy laws and regulations in the U.S.

and other jurisdictions;

interference with our operations;

the incurrence of remediation costs;

loss of intellectual property protection;

the loss of customer, supplier or employee relationships;

and damage to our reputation, any of which could adversely affect our business.

Although we maintain insurance coverage for various cybersecurity and business continuity risks, there can be no guarantee that all costs, damages, expenses or losses incurred will be fully insured.

We are subject to risks from publishers who could fabricate clicks either manually or technologically.

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Although we have click fraud detection software in place, we cannot guarantee that we will identify all fraudulent clicks or be able to recover funds distributed for fabricated clicks.

This risk could materially impact our ability to borrow, our cash flow and the stability of our business.

This risk could materially impact our ability to borrow, our revenue, cash flow and the stability of our business.

Regulatory Risks

26 unchanged sentences

or (vi) if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.

There are no assurances how the market price of our common stock will be impacted in future periods as a result of the general uncertainties in the capital markets and any specific impact on our Company as a result of the coronavirus.

There are no assurances how the market price of our common stock will be impacted in future periods as a result of the general uncertainties in the capital markets.

If the NYSE American delists our common stock, investors may face material adverse consequences, including, but not limited to, a lack of trading market for our common stock, reduced liquidity, decreased analyst coverage of our common stock, and an inability for us to obtain any additional financing to fund our operations that we may need.

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Our agreements with distribution partners and key customers do not require minimum levels of usage or payments, and our revenues therefore fluctuate based on the actual usage of our service each quarter by existing and new distribution partners.

In addition to the impact of the COVID-19 pandemic on our revenues, quarterly fluctuations in our operating results also might be due to numerous other factors, including:

Quarterly fluctuations in our operating results also might be due to numerous other factors, including:

our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners;

7 unchanged sentences

discounts offered to advertisers by upstream advertising networks;

• our history of litigation;

our ability to hire, train and retain sufficient sales, client management and other personnel;

27 unchanged sentences

If we raise additional capital by issuing additional equity securities or use equity securities for acquisitions, existing shareholders may be diluted.

If our capital resources are insufficient at any time in the

future, we may be unable to fund acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

If our capital resources are insufficient at any time in the future, we may be unable to fund acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Any usage of capital to fund an acquisition could lead to a decrease in liquidity.

11 unchanged sentences

In addition, if we are unsuccessful in integrating our acquisitions in a timely and cost-effective manner, our financial condition and results of operations could be adversely affected.

UNRESOLVED STAFF COMMENTS.

Not applicable to a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors