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You should read this summary together with the more detailed description of each risk factor contained below.
−Removed: Risks Related to Operating our Business
• Our business depends significantly on our ability to retain our key personnel, attract new personnel, and manage attrition.
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• Delays in our implementation cycles could have an adverse effect on our results of operations.
−Removed: Risks Related to our Financial Condition and Operating Results
+Added: • If the sale of Kasamba is completed, we will no longer be engaged in the consumer segment of our business and our future results of operations will be dependent solely on our business segment.
+Added: • We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could adversely affect our business and results of operations.
• Our quarterly revenue and operating results may fluctuate significantly, which may cause a substantial decline in the trading price of our securities.
2 unchanged sentences
• Because we recognize revenue from subscriptions for our service over the term of the subscription, declines in business may not be immediately reflected in our operating results.
−Removed: Risks Related to Industry Dynamics and Competition
• If we are unable to develop and maintain successful relationships with partners, service partners, social media, and other third-party consumer messaging platforms and endpoints, our business, results of operations, and financial condition could be adversely affected.
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• Downturns in the global economic environment or in particular industries in which our sales are concentrated may adversely affect our business and results of operations.
−Removed: Risks Related to Security Vulnerabilities and Service Reliability
• Failures or security breaches in our services or systems, those of our third-party service providers, or in the websites of our customers, including those resulting from cyber-attacks, security vulnerabilities, defects, or errors, could harm our business.
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• Failure to license necessary third-party software for use in our products and services, or failure to successfully integrate third-party software, could cause delays or reductions in our sales, or errors or failures of our service.
−Removed: Risks Related to Regulatory and Data Privacy Issues
• Our business is subject to a variety of U.S.
3 unchanged sentences
• Future regulation of the internet or mobile devices may slow our growth, resulting in decreased demand for our services and increased costs of doing business.
−Removed: Risks Related to our Intellectual Property
• Our products and services may infringe upon intellectual property rights of third parties and any infringement could require us to incur substantial costs and may distract our management.
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• Issues in the use of AI in our product offerings may result in reputational harm or liability.
−Removed: Risks Related to our International Operations and Tax Issues
• Our results of operations may be adversely impacted due to our exposure to foreign currency exchange rate fluctuations.
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• Political, economic, and military conditions in Israel could negatively impact our Israeli operations.
−Removed: Risks Related to our Outstanding Convertible Notes
• Servicing our debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.
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• The capped call transactions may affect the value of the Notes and our common stock.
−Removed: Risks Related to our Common Stock
• Our stock price has been, and may continue to be, highly volatile, which could reduce the value of your investment and subject us to litigation.
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In the technology industry, there is substantial competition for key personnel, including skilled engineers, sales executives and operations personnel.
−Removed: We may not be able to successfully recruit, integrate and retain qualified personnel in the future, which could impact our ability to innovate and deliver new or updated products to our customers, which could harm our
−Removed: Among other things, our decision to close virtually all of our offices following the onset of the COVID-19 pandemic may make it harder for us to recruit and retain our personnel.
+Added: We may not be able to successfully recruit, integrate and retain qualified personnel in the future, which could impact our ability to innovate and deliver new or updated products to our customers, which could harm our business.
+Added: Among other things, our decision to shift to a remote working environment following the onset of the COVID-19 pandemic may make it harder for us to recruit and retain our personnel.
If our retention and recruitment efforts are ineffective, employee turnover could increase and our ability to provide services to our customers would be materially and adversely affected.
Furthermore, the requirement to expense stock options may discourage us from granting the size or type of stock option awards that job candidates may require in order to join our company.
−Removed: In addition, we may not be able to outsource certain functions.
We expect to evaluate our needs and the performance of our staff on a periodic basis and may choose to make adjustments in the future.
−Removed: If the size of our staff is significantly reduced, either by our choice or otherwise, it may become more difficult for us to manage existing, or establish new, relationships with customers and other counter-parties, or to expand and improve our service offerings.
+Added: If the size of our staff is significantly reduced, either by our choice or otherwise, it may become more difficult for us to manage existing, or establish new, relationships with customers and other counterparties, or to expand and improve our service offerings.
It may also become more difficult for us to implement changes to our business plan or to respond promptly to opportunities in the marketplace.
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We anticipate that additional investments in our internal infrastructure, data center capacity, research, customer support and development, and real estate spending will be required to scale our operations and increase productivity, to address the needs of our customers, to further develop and enhance our services, to expand into new geographic areas, and to scale with our overall growth.
−Removed: We may also need to make additional investments with third party outsourcing providers, such our announced plans to work with a digital services and consulting company to move our technology infrastructure to the public cloud.
+Added: We may also need to make additional investments with third party outsourcing providers, such as our announced plans to work with a digital services and consulting company to move our technology infrastructure to the public cloud.
The additional investments we are making will increase our cost base, which will make it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term, and there is no guarantee that they will be successful or meet our customers’ needs.
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If a significant number of our customers, or any one customer to whom we provide a significant amount of services, were to terminate services, reduce the amount of services purchased, or fail to purchase additional services, our results of operations may be negatively and materially affected.
−Removed: Dissatisfaction with the nature or quality of our services could also lead customers to terminate our service.
+Added: Dissatisfaction with the nature or quality of our services as well as reductions in our customers’ spending levels or declines in customer activity as a result of general economic conditions or uncertainty in financial markets, could also lead customers to terminate our service.
We depend on monthly fees and interaction-based fees from our services for substantially all of our revenue.
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Because of the historically small amount of services sold in initial orders, we depend significantly on the growth of our customer base and sales to new customers and sales of additional services to our existing customers.
−Removed: The success of our
−Removed: consumer offerings similarly depends on our ability to attract and retain new customers.
+Added: The success of our consumer offerings similarly depends on our ability to attract and retain new customers.
Our revenue could decline unless we are able to obtain additional customers or alternate revenue sources.
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Gainshare pricing is contingent on the degree to which a customer achieves its financial objectives, such as increased revenue or reduced operating costs.
−Removed: If we are unsuccessful in achieving these objectives for our customers (including as a result of broader market events, such as normalization of pandemic-specific shopping trends and returns to physical, in-store shopping experiences), it will reduce the revenue that we recognize from Gainshare and could result in our operating the program at a financial loss, which could have a materially adverse impact on our financial results.
+Added: If we are unsuccessful in achieving these objectives for our customers (including as a result of broader market events, such as inflation and recessionary pressures, decreased consumer confidence, normalization of pandemic-specific shopping trends and returns to physical, in-store shopping experiences), it will reduce the revenue that we recognize from Gainshare and could result in our operating the program at a financial loss, which could have a materially adverse impact on our financial results.
Our expansion into new products, services, and technologies could subject us to additional risks.
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The extent to which the COVID-19 pandemic impacts our business, results of operations, financial condition, cash flows or prospects will depend on future developments, which are highly uncertain and that we may not be able to accurately predict, including the duration and severity of the pandemic;
−Removed: governmental, business and individual actions that have been and continue to be taken in response to the pandemic;
+Added: governmental, business and individual actions that
+Added: have been and continue to be taken in response to the pandemic;
the rate of vaccine adoption, the effectiveness of global vaccine distribution efforts and vaccine efficacy;
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While we have been able to operate effectively from remote locations, the long-term impact of such work arrangements remains unknown.
−Removed: For example, such remote work arrangements may increase the risk of cyber incidents or data
−Removed: breaches and may present workplace culture challenges.
+Added: For example, such remote work arrangements may increase the risk of cyber incidents or data breaches and may present workplace culture challenges.
Furthermore, we have incurred expenses associated with the early termination of various leases at our office locations around the world.
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If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
−Removed: As part of our business strategy, we have made and will continue to make acquisitions to add complementary businesses, products, technologies, revenue and intellectual property rights.
+Added: As part of our business strategy, we have made and may continue to make acquisitions to add complementary businesses, products, technologies, revenue and intellectual property rights.
In October 2018, we acquired AdvantageTec, Inc., a leading provider of texting solutions for service departments of automotive dealerships that helps enable the conversational experience across the entire dealership, including variable and fixed operations.
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In July 2021, we acquired German conversational AI company e-bot7.
−Removed: In October 2021, we acquired VoiceBase, Inc., a leader in real-time speech recognition and conversational analytics;
−Removed: and Callinize Inc., dba Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support services.
+Added: In October 2021, we acquired VoiceBase, a leader in real-time speech recognition and conversational analytics;
+Added: and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support services.
+Added: In February 2022, we acquired WildHealth, which leverages advanced machine learning to combine DNA analysis, biometrics, microbiome testing and phenotypic data in an effort to provide people with a blueprint for optimized health.
Acquisitions and investments involve numerous risks to us, including:
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We cannot assure you that additional funding, if required, will be available to us in amounts or on terms acceptable to us.
−Removed: If sufficient funds are not available or are not available on acceptable terms, our ability to fund any potential expansion, take advantage of acquisition opportunities, develop or enhance our services or products, or
−Removed: otherwise respond to competitive pressures would be significantly limited.
+Added: If sufficient funds are not available or are not available on acceptable terms, our ability to fund any potential expansion, take advantage of acquisition opportunities, develop or enhance our services or products, or otherwise respond to competitive pressures would be significantly limited.
Those limitations would materially and adversely affect our business, results of operations, cash flows, and financial condition.
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Because we sell complex, integrated solutions, it can take many months to close sales as customers evaluate our product offering against available alternatives and define their requirements.
−Removed: We are often required to expend substantial time, effort, and money educating potential customers them about the value of our offerings.
+Added: We are often required to expend substantial time, effort, and money educating potential customers about the value of our offerings.
The increasingly complex needs of our customers can contribute to a longer sales cycle.
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If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be canceled or delayed and our costs could increase, which could negatively impact our operating results.
+Added: If the sale of Kasamba is completed, we will no longer be engaged in the consumer segment of our business and our future results of operations will be dependent solely on our business segment.
+Added: The business of Kasamba, Inc.
+Added: (“Kasamba”) and its associated assets and liabilities represent the entire consumer segment of our business, which generated approximately 7% of our total revenue for the year ended December 31, 2022, and approximately 8% of our total revenue for the years ended December 31, 2021 and 2020.
+Added: Accordingly, if the sale of Kasamba is completed, our future financial results will be dependent solely on our business segment.
+Added: We may also reduce our opportunities with respect to certain markets, consumer products or revenue streams, as well as our ability to compete in such markets and product categories.
+Added: We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could adversely affect our business and results of operations.
+Added: As described in Item 9A, Controls and Procedures, we have identified certain control deficiencies that in the aggregate constitute a material weakness in our internal control over financial reporting as of December 31, 2022.
+Added: Such control deficiencies were identified in connection with the Company’s previously disclosed review of certain transactions related to its subsidiary WildHealth, which was acquired in February 2022, and primarily include a combination of ineffective operation of controls and inadequate controls related to:
+Added: formal review, approval, and evaluation of non-core, complex transactions as well as engagement with government agencies;
+Added: segregation of duties between accounting and contracting approval functions for non-core, complex transactions;
+Added: and formal review, approval and evaluation of manual journal entries.
+Added: As further described in Item 9A, Controls and Procedures, the identified control deficiencies are already in the process of being remediated, primarily through the development and implementation of new controls and enhanced procedures for formal review, approval, and evaluation of non-core, complex transactions as well as engagement with government agencies, enhanced accounting staff, enhanced procedures for segregation of duties between accounting and contracting approval functions for non-core, complex transactions, and additional procedures and information technology systems for formal review, approval and evaluation of manual journal entries.
+Added: However, we cannot guarantee that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness or that they will prevent or avoid potential future material weaknesses.
+Added: Implementing any further changes to our internal controls may distract our officers and employees and entail material costs to implement new processes and/or modify our existing processes.
+Added: Moreover, these changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could harm our business.
+Added: In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the price of our common stock.
Our services are subject to payment-related risks.
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If we were found to be in violation of applicable laws or regulations, we could be subject to civil and criminal penalties or forced to cease our payments services business.
−Removed: We may experience difficulties integrating e-bot7, VoiceBase and Tenfold, and may not realize expected business or financial benefits and our business could be adversely impacted.
+Added: We may experience difficulties integrating e-bot7, VoiceBase, Tenfold and WildHealth, and may not realize expected business or financial benefits and our business could be adversely impacted.
In the third quarter of 2021, we acquired e-bot7, a Conversational AI company.
In the fourth quarter of 2021, we acquired VoiceBase, a leader in real time speech recognition and conversational analytics and Tenfold, an advanced customer engagement platform for integrating communication systems with leading CRM and support systems.
−Removed: We intend to maintain the business operations of each of these companies while integrating and leveraging e-bot7’s self-service capabilities, Tenfold’s technology platform, and VoiceBase’s technology with our proprietary messaging and Conversational AI offerings.
−Removed: However, acquiring and integrating a technology company presents unique risks including difficulties in adapting and developing new software technologies and systems protocols, increased software integration expenses, and incompatibility of acquired technologies in addition to the risks discussed under “ If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
+Added: In the first quarter of 2022, we acquired WildHealth, which leverages advanced machine learning to combine DNA analysis, biometrics, microbiome testing and phenotypic data to provide people with a blueprint for truly optimized health and a maximized health span.
+Added: We intend to maintain the business operations of each of these companies while integrating and leveraging e-bot7’s self-service capabilities, Tenfold’s technology platform, VoiceBase’s technology and WildHealth’s data platform with our proprietary messaging and Conversational AI offerings.
+Added: However, acquiring and integrating a technology company presents unique risks
+Added: including difficulties in adapting and developing new software technologies and systems protocols, increased software integration expenses, and incompatibility of acquired technologies in addition to the risks discussed under “ If we do not successfully integrate past or potential future acquisitions, we may not realize the expected business or financial benefits and our business could be adversely impacted.
Our business of facilitating at-home rapid-testing solutions poses substantial risks.
−Removed: In the first quarter of 2021, our subsidiary Bella Health began to offer its corporate customers access to a digital mobile application that provides our customers’ employees with FDA-approved rapid-antigen COVID-19 tests (provided by a qualified third-party), guided self-administration, and access to experts through messaging and Conversational AI.
−Removed: The business of Bella Health poses certain risks, including our lack of experience operating in the healthcare industry and elevated risks related to compliance with federal, state, and local laws, rules and regulations pertaining to the healthcare and diagnostic testing industry.
−Removed: These risks include among other things, potential fines and other penalties for failure to protect the security of, and the unauthorized sharing of, health information, or our failure to comply with health care laws and regulations, for each of which we may not have sufficient insurance or indemnification rights.
−Removed: In addition, the revenue we generate from Bella Health may decrease due to reduced demand for COVID-19 testing if the number of COVID-19 infections continues to decrease, unless we are able to develop other product offerings that offset this decrease.
+Added: In the recent past, our subsidiaries Bella Health and WildHealth have offered COVID-19 testing solutions.
+Added: This business poses certain risks, including our lack of experience operating in the healthcare industry and elevated risks related to compliance with federal, state, and local laws, rules and regulations pertaining to the healthcare and diagnostic testing industry.
+Added: In addition, due to reduced demand for COVID-19 testing, the revenue generated from this service has decreased and is expected to cease entirely.
Our expansion into digital healthcare poses substantial new risks to which we have not previously been exposed.
−Removed: These risks include our lack of experience operating in the healthcare industry and elevated risks relating to compliance with certain U.S.
+Added: The digital healthcare market is new and unproven, and it may not sustain high levels of demand, consumer acceptance and market adoption.
+Added: Our success in digital healthcare will depend on the willingness of consumers to use our solutions.
+Added: Negative publicity about our solutions, or digital healthcare generally could limit market acceptance of our solutions.
+Added: Similarly, concerns or negative publicity regarding patient confidentiality and privacy in the context of digital healthcare could limit market acceptance of our healthcare offerings.
+Added: If any of these events occur, it could have a material adverse effect on our business, financial condition, and results of operations.
+Added: Our success is dependent upon our continued ability to maintain a network of qualified digital healthcare providers that leverage our technology offerings.
+Added: The failure to maintain or to secure new providers may result in a loss of or inability to grow our revenue base and higher costs.
+Added: Other risks include our lack of experience operating in the healthcare industry and elevated risks relating to compliance with certain U.S.
federal, state, and local healthcare laws, regulations, and rules in the heavily-regulated healthcare industry, including:
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state laws that prohibit general business corporations from practicing medicine, controlling physicians’ medical decisions, or engaging in certain practices, such as splitting fees with physicians;
−Removed: state law provisions relating to anti-kickback, self-referral, and false claims;
−Removed: provisions of, and regulations relating to the Health Insurance Portability and Accountability Act of 1996, as amended, and its accompanying regulations (“HIPAA”), including provisions relating to the confidentiality and security of individually identifiable health information;
+Added: federal and state law provisions relating to anti-kickback, self-referral, fraud and false claims;
+Added: provisions of, and regulations relating to the Health Insurance Portability and Accountability Act of 1996, as amended, and its accompanying regulations (“HIPAA”), including provisions relating to criminal healthcare fraud and the confidentiality and security of individually identifiable health information;
and federal and state laws relating to the provision of services by non-physician clinical providers (such as physician assistants or nurses);
and exposure to liability, which may include liabilities for failure to comply with healthcare laws, regulations, and rules for which we may not have sufficient insurance or indemnification rights.
−Removed: In addition, if we were to start accepting payments from third party payors, including, among others, private insurance companies or government payors (such as Medicaid or Medicaid), it would create additional compliance obligations, including:
−Removed: federal laws that prohibit entities from submitting false claims to Medicare, Medicaid, or other government programs;
+Added: In addition, we have in some instances begun to accept payments from third party payors, including, among others, private insurance companies and government payors (such as Medicaid or Medicaid), which has created additional compliance obligations, including:
+Added: federal laws that prohibit entities from submitting fraudulent or false claims to Medicare, Medicaid, or other government programs;
federal laws that prohibit the receipt of any form of remuneration in return for the referral of patients for items and services covered, in whole or in part, by federal healthcare programs;
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federal laws relating to failure to disclose or refund overpayments by a government payor;
−Removed: federal and state laws the prohibit healthcare providers from billing and receiving payment from Medicare or Medicaid for services, unless the services are medically necessary;
+Added: federal and state laws that prohibit healthcare providers from billing and receiving payment from Medicare or Medicaid for services, unless the services are medically necessary;
and federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs, or employing individuals who are excluded from participation in federally funded healthcare programs.
−Removed: Accordingly, to the extent they are or become applicable as and if we continue to grow in the digital healthcare space, we must monitor our compliance with applicable healthcare laws, regulations, and rules in every jurisdiction in which we operate,
−Removed: on an ongoing basis, and we cannot provide assurance that our activities and arrangements, if challenged, will be found to be in compliance.
+Added: Accordingly, to the extent they are applicable as and if we continue to grow in the digital healthcare space, we must monitor our compliance with applicable healthcare laws, regulations, and rules in every jurisdiction in which we operate, on an ongoing basis, and we cannot provide assurance that our activities and arrangements, if challenged, will be found to be in compliance.
Even if our activities and arrangements are found to be in compliance, investigations can be time- and resource-consuming and can divert management’s attention from the business.
Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
−Removed: Achieving and sustaining compliance with these laws may prove costly.
+Added: Achieving and sustaining compliance with these laws may prove
Compliance may require obtaining appropriate licenses or certificates, increasing our security measures and expending additional resources to monitor developments in applicable rules and ensure compliance.
+Added: We also may become subject to medical liability claims, which could cause us to incur significant expenses and may require us to pay significant damages if not covered by insurance.
Additionally, it is possible that the laws, regulations and rules governing the provision of healthcare services may change significantly in the future.
−Removed: Any new or changed healthcare laws, regulations or rules or any review of our business by judicial, law enforcement, regulatory or accreditation authorities could adversely affect our business, financial condition and results of operations.
+Added: Any new or changed healthcare laws, regulations or rules or any review of our business by judicial, law enforcement, regulatory or accreditation authorities or any successful medical liability claim could adversely affect our business, financial condition and results of operations.
Our reputation depends, in part, on factors which are partially or entirely outside of our control .
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We have in the past incurred, and we may in the future incur, losses and experience negative cash flow, either or both of which may be significant.
−Removed: We recorded net losses from inception through the year ended December 31, 2003.
−Removed: We recorded net income for the years ended December 31, 2004 through 2007 and 2009 through 2012, while we recorded net losses for the years ended December 31, 2008, and 2013 through 2021.
−Removed: W e recorded a net loss of $125.0 million for the year ended December 31, 2021.
−Removed: As of December 31, 2021, our accumulated deficit was approximately $516.9 million .
+Added: We recorded a net loss of $225.7 million for the year ended December 31, 2022, and as of December 31, 2022, our accumulated deficit was approximately $692.4 million .
We cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future.
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We have announced plans to migrate our technology infrastructure to the public cloud, and may in the future be unable to secure additional cloud hosting capacity on commercially reasonable terms or at all.
−Removed: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
+Added: If any of our public cloud providers increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships
+Added: with our competitors, or changes or interprets their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to another provider and may incur significant costs and experience service interruptions.
If we are unable to effectively operate on mobile devices, our business could be adversely affected.
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• customers that develop and manage their messaging solutions in-house.
−Removed: In addition, many of our current and potential competitors have substantial competitive advantages, such as greater brand recognition, significantly larger financial, marketing, and resource and development budgets, access to larger customer and/or
−Removed: consumer bases, larger and more established marketing and distribution relationships, and/or more diverse product and service offerings.
−Removed: As a result, these competitors may be able to respond more quickly and effectively than we can to any change in the general market acceptance of messaging services or any new or changing opportunities, technologies, standards, pricing strategies, or customer requirements.
+Added: In addition, many of our current and potential competitors have substantial competitive advantages, such as greater brand recognition, significantly larger financial, marketing, and resource and development budgets, access to larger customer and/or consumer bases, larger and more established marketing and distribution relationships, and/or more diverse product and service offerings.
+Added: As a result, these competitors may be able to respond more quickly and effectively than we can to any change in the general market acceptance of messaging services or any new or changing opportunities, technologies, standards, pricing
+Added: strategies, or customer requirements.
Also, because of these advantages, potential customers may select a competitor’s products and services, even if our services are more effective.
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In the event that industry conditions deteriorate in one or more of these industries, we could experience, among other things, cancellation or non-renewal of existing contracts, reduced demand for our products and reduced sales.
−Removed: It could be difficult to predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, either relating to the global economic environment or to the particular industries in which our sales are concentrated, which, in turn, could make it more challenging for us to forecast
−Removed: our operating results, make business decisions and identify risks that may adversely affect our business, sources and uses of cash, financial condition and results of operations.
+Added: It could be difficult to predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, either relating to the global economic environment or to the particular industries in which our sales are concentrated, which, in turn, could make it more challenging for us to forecast our operating results, make business decisions and identify risks that may adversely affect our business, sources and uses of cash, financial condition and results of operations.
Weak economic conditions may also cause our customers to experience difficulty in supporting their current operations and implementing their business plans.
−Removed: Our customers may reduce their spending on our services, may not be able to discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and marketing technology, including services such as ours.
+Added: Our customers may reduce their spending on our services, may not be able to
+Added: discharge their payment and other obligations to us, may experience difficulty raising capital, or may elect to scale back the resources they devote to customer service and/or sales and marketing technology, including services such as ours.
Economic conditions may also lead consumers and businesses to postpone spending, which may cause our customers to decrease or delay their purchases of our products and services.
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We have announced plans to move our technology infrastructure to the public cloud, which will require us to rely on third-party cloud providers to maintain appropriate safeguards.
−Removed: Additionally, in response to the COVID-19 pandemic, a majority of our office employees are working remotely.
−Removed: We currently expect this to continue for the foreseeable future, which may potentially further increase the risk of cyber incidents or data breaches.
+Added: Additionally, following the COVID-19 pandemic, we have elected to maintain a globally distributed, substantially remote workforce.
+Added: Remote working arrangements may potentially further increase the risk of cyber incidents or data breaches.
Any such breach or unauthorized access, or attempts by outside parties to fraudulently induce employees, users, vendors, or customers to disclose sensitive information in order to gain access to our data or data of our customers, users, experts, or consumers, including, but not limited to, individual personal information and financial credit or debit card data that is protected by law or contract, could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our products and services that could potentially have an adverse effect on our business.
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And while technological advancements enable more data and processes, such as mobile computing and mobile payments, they also increase the risk that cyber-attacks and other security incidents will occur.
−Removed: We engage third parties to review and assist in safeguarding our products and services from such threats.
−Removed: Those parties may identify vulnerabilities, some of which may not be immediately remedied.
+Added: Additionally, the global threat of cyber-attacks has increased in response to the Russia-Ukraine War.
A significant cyber-attack, or a security incident of any magnitude that is profiled in the media, involving our, our third-party service providers’ or our customers’ systems, could result in material harm to our brand and reputation, our ability to deliver our services or retain customers, and expose us to lawsuits, regulatory investigations, and significant damages, fines or penalties.
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Because we do not control the transmissions to customer-authorized third parties, or the processing of such data by customer authorized third parties, we cannot ensure the integrity or security of such transmissions or processing.
−Removed: Because our services are responsible for critical communication between our customers and consumers, any security failures, defects or errors in our components, materials or software or those used by our customers could have an adverse impact on us, on our customers and on the end users of their websites.
+Added: Because our services are responsible for critical communication between our customers and consumers, any security failures, defects or errors in our components, materials or software or those used by our customers could have an adverse impact on us, on our customers and on the end users of their websites and applications.
Such adverse impact could include a decrease in demand for our services, damage to our reputation and to our customer relationships, legal exposure, and other financial liability or harm to our business.
1 unchanged sentence
The dialogue transcripts of the text-based chats, email interactions and other interactions between our customers and their users may include information, such as personal contact and demographic information.
−Removed: Although we employ and continually
−Removed: test and update our security measures to protect this information from unauthorized access, it is still possible that our security measures could be breached and such a breach could result in unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information.
−Removed: Because the techniques employed by hackers to obtain unauthorized access or to sabotage systems change frequently and are becoming more sophisticated in circumventing security measures and avoiding detection, we may be unable to anticipate all techniques or to implement adequate preventative measures.
+Added: Although we employ and continually test and update our security measures to protect this information from unauthorized access, it is still possible that our security measures could be breached and such a breach could result in unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information.
+Added: Because the techniques employed by hackers to obtain unauthorized access or to sabotage systems change frequently and are becoming more sophisticated in circumventing security measures and avoiding detection, we may be unable to anticipate all techniques or to implement
+Added: adequate preventative measures.
Any security breach could result in disclosure of our trade secrets or disclosure of confidential customer, supplier or employee data.
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These providers may experience problems that result in slower than normal response times and/or interruptions in service.
−Removed: If we are unable to continue utilizing the third party services that support our web hosting and infrastructure or if our services experience interruptions or delays due to existing third party service providers or transition to new third party service providers, our reputation and business could be harmed, and we may be exposed to legal and reputational risk, and significant remediation costs.
−Removed: We also rely on the security of our third party service providers to protect our proprietary information and information of our customers.
+Added: If we are unable to continue utilizing the third-party services that support our web hosting and
+Added: infrastructure or if our services experience interruptions or delays due to existing third-party service providers or transition to new third-party service providers, our reputation and business could be harmed, and we may be exposed to legal and reputational risk, and significant remediation costs.
+Added: We also rely on the security of our third-party service providers to protect our proprietary information and information of our customers and their end users.
Information technology system failures, including a breach of our or our third-party service providers’ data security, could disrupt our ability to function in the normal course of business by potentially causing, among other things, an unintentional disclosure of customer information or loss of information.
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Although we intend to migrate our technology infrastructure to the public cloud, a substantial majority of our computer and communications infrastructure is running in our private cloud on hardware that is located at a limited number of facilities in the United States, Europe, and Australia.
−Removed: Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, hurricanes, other acts of nature, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, cyber-attacks or failures, pandemics or other public health crises, or similar events.
+Added: Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, hurricanes, other acts of nature, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, state-sponsored or other cyber-attacks or failures, pandemics or other public health crises, or similar events.
For example, a significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur.
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Although we have implemented security measures and disaster recovery capabilities, there can be no assurance that we will not suffer from business interruption, or unavailability or loss of data, as a result of any such events.
−Removed: As we rely heavily on our servers, computer and communications systems and the internet to conduct our business and provide
−Removed: high quality service to our customers, such disruptions could negatively impact our ability to run our business, result in loss of existing or potential customers and increased expenses, and/or have an adverse effect on our reputation and the reputation of our products and services, any of which would adversely affect our operating results and financial condition.
+Added: As we rely heavily on our servers, computer and communications systems and the internet to conduct our business and provide high quality service to our customers, such disruptions could negatively impact our ability to run our business, result in loss of existing or potential customers and increased expenses, and/or have an adverse effect on our reputation and the reputation of our products and services, any of which would adversely affect our operating results and financial condition.
Risks Related to Regulatory and Data Privacy Issues
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For example, the E.U.
−Removed: General Data Protection Regulation (“GDPR”), which became effective in May 2018, replacing the E.U.
−Removed: Data Protection Directive, imposes significantly greater compliance burdens on companies that control or process personal data of users primarily located in the E.U.
+Added: General Data Protection Regulation (“GDPR”) imposes significantly greater compliance burdens on companies that control or process personal data of users primarily located in the E.U.
and, for noncompliance, provides for considerable fines up to the higher of 20 million Euros or 4% of global annual revenue.
European regulators have issued numerous fines pursuant to the GDPR.
−Removed: One material change is that data processors (as that term is defined by applicable E.U.
−Removed: data protection law) have direct obligations, including implementing technical and organizational measures, and are subject to enhanced notification rules.
The GDPR also imposes certain technological requirements that may, from time to time, require us to make changes to our services to enable LivePerson and/or our customers to meet legal requirements and may impact how data protection is addressed in our customer and vendor agreements.
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Privacy Shield”) under which personal information could be transferred from the EEA to U.S.
−Removed: entities who had self-certified under the Privacy Shield program.
+Added: entities who had self-certified under the
+Added: Privacy Shield program.
Similarly, on September 8, 2020, the Swiss Data Protection Authority announced in a position statement that it no longer considers the Swiss-U.S.
Privacy Shield adequate for the purpose of transferring personal data from Switzerland to the United States.
−Removed: While the CJEU upheld the adequacy of E.U.-specified standard contractual clauses (“SCCs”) as an adequate personal information transfer mechanism, it made clear that reliance on them alone may not necessarily be sufficient in all circumstances and that their use must be assessed on a case-by-case basis taking into account the surveillance laws in and the right of individuals afforded by, the destination country.
+Added: While the CJEU upheld the adequacy of E.U.-specified standard contractual clauses (“SCCs”) as an adequate personal information transfer mechanism, it made clear that reliance on them alone is not sufficient and that their use must be assessed on a case-by-case basis taking into account the surveillance laws in and the right of individuals afforded by, the destination country.
The CJEU went on to state that, if the competent supervisory authority believes that the SCCs cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer unless the data exporter has already done so itself.
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Any changes to these laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.
−Removed: The updated SCCs apply only to the transfer of data outside of the EEA and not the U.K.
Although the European Commission adopted an adequacy decision for the U.K.
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Parties transferring personal data from the EEA to third countries with “inadequate data protection” such as the U.S.
−Removed: will have until December 27, 2022 to update any existing agreements, or any new agreements executed before September 27, 2021, that rely on SCCs.
−Removed: The new SCCs apply only to the transfer of data outside of the EEA and not the U.K., though on January 31, 2022, the U.K.’s Information Commissioner’s Officer announced that proposals for the U.K.’s own form of agreement and addendum to the E.U.
+Added: had until December 27, 2022 to update any existing agreements.
+Added: The new SCCs apply only to the transfer of data outside of the EEA and not the U.K., which issued its own form of agreement and an addendum to the E.U.
SCCs (the “U.K.
−Removed: SCCs”), which could be used for transfers for data from the U.K., have been laid before Parliament.
−Removed: If no objections are raised in Parliament and the proposals are approved, the U.K.
−Removed: SCCs will come into force on March 21, 2022 (subject to a grace period for implementation).
−Removed: The outcome of the consultation has yet to be published.
−Removed: As such, any transfers by us or our vendors of personal data from the E.U./U.K.
−Removed: may not comply with E.U./U.K.
−Removed: data protection laws, may increase our exposure to the GDPR’s/U.K.
−Removed: GDPR’s heightened sanctions for violations of their cross-border data transfer restrictions and may reduce demand for our products from companies subject to E.U./U.K.
−Removed: data protection laws.
−Removed: If we are unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results, and, until the legal uncertainties regarding how to legally continue transfers pursuant to the SCCs and other mechanisms are settled, we will continue to face uncertainty as to whether our efforts to comply with our obligations under the GDPR will be sufficient.
+Added: SCCs”), in March 2022 for transfers of data from the U.K.
+Added: Compliance with the SCCs and the U.K.
+Added: SCCs may require us to implement additional safeguards to further enhance the security of data transferred out of the EEA and the U.K., which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business.
+Added: If we are unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and could adversely affect our financial results, and, until the legal uncertainties regarding how to legally continue transfers pursuant to the SCCs and other mechanisms are settled, we will continue to face uncertainty as to whether our efforts to comply with our obligations under the GDPR and U.K.
+Added: GDPR will be sufficient.
Failure to comply with existing or new rules may result in significant penalties or orders to stop the alleged noncompliant activity.
In addition to the changing regulatory landscape in the E.U.
−Removed: and the U.K., in June 2018, the State of California legislature passed the California Consumer Privacy Act of 2018 (“CCPA”), which came into effect in January of 2020.
−Removed: The CCPA gives California residents new data privacy rights, allows consumers to opt out of certain data sharing with third parties, and provides a new private cause of action for data breaches.
−Removed: Moreover, a new privacy law, the California Privacy Rights Act (“CPRA”), which is scheduled to take effect on January 1, 2023 (with a lookback to January 1, 2022), will significantly modify the CCPA, and will impose additional data protection obligations on companies doing business in California, potentially resulting in further complexity and requiring us to incur additional costs and expenses in an effort to comply.
−Removed: Similarly, other states, such as
−Removed: Virginia and Colorado, have instituted privacy and data security laws, rules, and regulations, and many similar laws have been proposed at the federal and state level;
+Added: and the U.K., in June 2018, the State of California legislature passed the California Consumer Privacy Act of 2018 (“CCPA”), which gave California residents new data privacy rights, allowed consumers to opt out of certain data sharing with third parties, and provided a new private cause of action for data breaches.
+Added: The CCPA contained certain exemptions for personal information of employees and job applicants, and personal information collected in a “business-to-business” context, each of which expired as of January 1, 2023, expanding compliance obligations under the CCPA.
+Added: Moreover, the California Privacy Rights Act (“CPRA”), which took effect on January 1, 2023 (with a lookback to January 1, 2022), significantly expanded the CCPA, to include, among other changes, additional obligations such as data minimization and storage limitations;
+Added: formation of a dedicated privacy regulator in California, the California Privacy Protection Agency, to implement and enforce the law;
+Added: additional rights for consumers, such as correction of personal information and additional opt-out rights with respect to a new category of “sensitive information.” The CCPA marked the beginning of a trend toward more stringent state data privacy legislation in the United States, which may result in significant costs to our business, damage our reputation, require us to amend our business practices, and could adversely affect our business, especially to the extent the specific requirements vary from those and other existing laws.
+Added: For example, Virginia’s Consumer Data Protection Act took effect on January 1, 2023, and Colorado, Utah, and Connecticut have adopted new state data protection laws, which are set to take effect later in 2023.
+Added: Many similar laws have been proposed at the federal and state level;
accordingly, we also may be subject to additional compliance obligations as such legislation is considered and adopted, which may require us to modify our data processing practices and policies and incur substantial costs and expenses to comply.
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If, for example, the scope of the previously mentioned “spyware” legislation were changed to include web analytics, such legislation could apply to the technology we use and potentially restrict our ability to conduct our business.
+Added: Similarly, some U.S.
+Added: courts have interpreted certain two-party consent wiretap statutes, such as the California Invasion of Privacy Act, to require the collection of prior consent from consumers who engage in a dialogue with chatbots.
+Added: If the scope of such laws or newly enacted legislation were interpreted to apply to our services, we and/or our customers may be required to obtain the express consent of web visitors in order for our technology to perform its intended functions.
+Added: Requirements that a website must first obtain consent from its web visitors before using our technology could reduce the amount and value of the services we provide to customers, which might impede sales and/or cause some existing customers to discontinue using our services or could subject us to fines and/or proceedings by governmental agencies, regulatory bodies, and/or private litigation, which could materially and adversely affect our business, financial condition and results of operations.
+Added: There has been an increased focus on laws and regulations related to artificial intelligence, including the current U.S.
+Added: presidential administration, the U.S.
+Added: Congress, and U.S.
+Added: regulators, which cover, among other things, algorithm accountability and transparency.
+Added: The European Commission has also released its draft proposed regulations (i.e., the EU AI Act) that would establish requirements for the provision and use of products that leverage artificial intelligence, machine learning, and similar technologies, including chatbots.
+Added: The EU Act is expected to be adopted by Parliament in 2023, taking effect in 2024 or 2025.
+Added: Additionally, other countries are considering legal frameworks on artificial intelligence, which is a trend that may increase now that the European Commission has proposed the EU AI Act.
+Added: Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.
Further, various federal, state and foreign government bodies and agencies are highly focused on consumer protection initiatives, particularly in light of the increase in new technologies and services that incorporate or use bots, artificial intelligence and/or machine learning.
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The European Commission also recently published its proposal for a regulation implementing harmonized rules on AI and amending certain union legislative acts.
−Removed: The proposed regulation would impose additional restrictions and obligations on providers of AI systems, including increasing transparency so consumers know they are interacting with an AI system, requiring human oversight in AI,
−Removed: and prohibiting certain practices of AI that could lead to physical or psychological harm.
+Added: The proposed regulation would impose additional restrictions and obligations on providers of AI systems, including increasing transparency so consumers know they are interacting with an AI system, requiring human oversight in AI, and prohibiting certain practices of AI that could lead to physical or psychological harm.
Given the increased focus by the FTC and other regulators on the use of AI, it is possible that additional laws, regulations, and standards related to AI may be introduced in the future.
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Deficiencies such as these could cause us reputational harm and subject us to legal liability, including claims of product liability, breach of warranty, or negligence.
+Added: The scope of these laws and regulations is rapidly evolving, subject to differing interpretations, may be inconsistent among jurisdictions, or conflict with other rules and is likely to remain uncertain for the foreseeable future.
+Added: We also expect that there will continue to be new laws, regulations, and industry standards concerning artificial intelligence and machine learning proposed and enacted in various jurisdictions.
In addition, regulatory authorities and governments around the world are considering a number of legislative and regulatory proposals concerning privacy, collection and use of website visitor data, data storage, data protection, the “right to be forgotten,” content regulation, cybersecurity, government access to personal information, online advertising, email and other categories of electronic spam, and other matters that may be applicable to our business.
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This review may result in new laws or the promulgation of new regulations or guidelines that may apply to our products and services.
−Removed: For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to Do-Not-Track signals from Internet browsers, the ability to delete information of minors, and new data breach notification requirements.
+Added: For example, the State of California and other states have passed laws relating to disclosure of companies’ practices with regard to
+Added: Do-Not-Track signals from internet browsers, the ability to delete information of minors, and new data breach notification requirements.
Outside the E.U.
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Existing and proposed laws and regulations related to email and other categories of electronic spam could impact the delivery of commercial email and other electronic communications by us or on behalf of customers using our services.
−Removed: The Federal Trade Commission (“FTC”) in particular has aggressively investigated and brought enforcement actions against companies that fail to comply with their privacy or data security commitments to consumers, or fail to comply with regulations or statutes such as the Children’s Online Privacy Protection Act.
+Added: The FTC in particular has aggressively investigated and brought enforcement actions against companies that fail to comply with their privacy or data security commitments to consumers, or fail to comply with regulations or statutes such as the Children’s Online Privacy Protection Act.
Any investigation or review of our practices may require us to make changes to our products and policies, which could harm our business.
−Removed: Currently there are many proposals by lawmakers and industry groups in this area, both in the United States and overseas, which address the collection, maintenance and use of personal information, web browsing and geolocation data, and establish data security and breach notification
−Removed: requirements.
+Added: Currently there are many proposals by lawmakers and industry groups in this area, both in the United States and overseas, which address the collection, maintenance and use of personal information, web browsing and geolocation data, and establish data security and breach notification requirements.
Further, regulators and industry groups have also released self-regulatory principles and guidelines for various data privacy and security practices.
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Governmental regulation of encryption technology and regulation of exports of encryption products, or our failure to obtain required approval for our products, when applicable, could harm our international sales and adversely affect our revenue.
−Removed: Compliance with applicable regulatory requirements regarding the export of our products and provision of our services, including with respect to new releases of our products and services, may create delays in the introduction of our products and services in international markets, prevent our customers with international operations from deploying our products and using our services throughout their globally-distributed systems or, in some cases, prevent the export of our products or provision of our services to some countries altogether.
+Added: Compliance with applicable regulatory requirements regarding the export of our products and provision of our services, including with respect to new releases of our products and services, may create delays in the introduction of our products and services in international markets, prevent our customers with international operations from deploying our products and using our services throughout
+Added: their globally-distributed systems or, in some cases, prevent the export of our products or provision of our services to some countries altogether.
Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations, or interpretive positions could harm our business.
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If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our service where required, our business may be harmed and we may be unable to conduct business with customers in such industries.
−Removed: In addition, an inability to satisfy the standards of certain third-party certification bodies that our customers may expect, such as the PCI Data Security Standards,
−Removed: may have an adverse impact on our business.
+Added: In addition, an inability to satisfy the standards of certain third-party certification bodies that our customers may expect, such as the PCI Data Security Standards, may have an adverse impact on our business.
If we are unable in the future to achieve or maintain these industry-specific certifications or comply with other similar requirements or standards that are relevant to our customers, our business and our revenue may be adversely impacted.
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The adoption of any additional laws or regulations, or changes to existing laws or regulations, may decrease the expansion of the internet or smartphone usage.
−Removed: A decline in the growth of the Internet or smartphone usage, particularly as it relates to online communication, could decrease demand for our services and increase our costs of doing business, or otherwise harm our business.
+Added: A decline in the growth of the internet or smartphone usage, particularly as it relates to online
+Added: communication, could decrease demand for our services and increase our costs of doing business, or otherwise harm our business.
Any new legislation or regulations, application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or application of existing laws and regulations to the internet, mobile and other online services could increase our costs and harm our growth.
−Removed: We anticipate making investments in, and potentially holding, creating or managing blockchain-based assets, including cryptocurrency or other digital tokens and development of blockchain-based decentralized applications (“DApps”), which may subject us to exchange risk and additional tax and regulatory requirements.
+Added: We anticipate potentially making investments in, and potentially holding, creating or managing blockchain-based assets, including cryptocurrency or other digital tokens and development of blockchain-based decentralized applications (“DApps”), which may subject us to exchange risk and additional tax and regulatory requirements.
In the fourth quarter of 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.
−Removed: Under this policy, which was duly approved by our board of directors, we may invest a portion of such cash in investment instruments related to cryptocurrencies and other blockchain-based assets through a newly established subsidiary.
−Removed: Our subsidiary is expected to contract with providers to invest in funds and/or directly hold blockchain-based, assets including cryptocurrencies such as USD
−Removed: Coin, in order to engage in investment strategies such as yield farming, which involves lending or staking cryptocurrencies to generate returns in the form of transaction fees or interest.
+Added: Under this policy, we may invest a portion of such cash in investment instruments related to cryptocurrencies and other blockchain-based assets through a subsidiary, which would contract with providers to invest in funds and/or directly hold blockchain-based, assets including cryptocurrencies such as USD Coin, in order to engage in investment strategies such as yield farming, which involves lending or staking cryptocurrencies to generate returns in the form of transaction fees or interest.
The laws surrounding cryptocurrency and blockchain-based assets are uncertain and evolving.
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Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for cryptocurrency held by us.
−Removed: As intangible assets that may lack centralized issuers or governing bodies, cryptocurrencies’ and blockchain-based assets’ lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets.
+Added: As intangible assets that may lack centralized issuers or governing bodies, cryptocurrencies’ and blockchain-based assets’ lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of security breaches, cyber-attacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets.
As cryptocurrencies and blockchain-based assets have no physical existence beyond the record of transactions on a blockchain, a variety of technical factors related to blockchain technologies could also impact the price of cryptocurrencies and the stability of our investments.
For example, malicious attacks by cryptocurrency miners, inadequate mining fees to incentivize validation of transactions, hard “forks” of individual blockchains into multiple blockchains, and advances in digital computing, algebraic geometry, and quantum computing could undercut the integrity of blockchain technologies and negatively affect the price of cryptocurrencies and the stability of our investments.
−Removed: While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we or our counterparties create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed.
+Added: While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we or our counterparties create or implement to secure our digital
+Added: assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed.
Finally, blockchain is an emerging technology that offers new capabilities which are not fully proven through sustained widespread use in the marketplace.
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We rely on a combination of patent, copyright, trade secret, trademark and other common law protections in the United States and other jurisdictions, as well as confidentiality requirements and contractual provisions, to protect our proprietary technology, processes and other intellectual property.
−Removed: We own a portfolio of patents and patent applications in the U.S.
+Added: We own a portfolio of patents and
+Added: patent applications in the U.S.
and internationally and regularly file patent applications to protect intellectual property that we believe is important to our business, including intellectual property related to digital engagement technology, and/or web and mobile based consumer-facing services.
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Others may develop technologies that are similar or superior to our technology.
−Removed: We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees,
−Removed: consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we attempt to control access to and distribution of our software, documentation and other proprietary information.
+Added: We enter into confidentiality and other written agreements (including invention assignment agreements) with our employees, consultants, customers, potential customers, strategic partners, and other third parties, and through these and other written agreements, we attempt to control access to and distribution of our software, documentation and other proprietary information.
Despite our efforts to protect our proprietary rights, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology or otherwise develop a service with the same functionality as our services.
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or where enforcement of laws protecting proprietary rights is not common or effective.
−Removed: The unauthorized reproduction or other misappropriation of our intellectual property rights could enable third parties to benefit from our technology without paying us for it.
+Added: The unauthorized reproduction or other misappropriation of our intellectual property rights could enable third parties to benefit from our
+Added: technology without paying us for it.
If this occurs, our business, results of operations, and financial condition could be materially and adversely affected.
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As with many disruptive innovations, AI presents risks and challenges that could affect its adoption, and therefore our business.
−Removed: AI algorithms may be flawed.
−Removed: Datasets may be
−Removed: insufficient or contain biased information.
+Added: AI algorithms and models may be flawed.
+Added: Datasets may be insufficient or contain biased information.
Inappropriate or controversial data practices by us or others could impair the acceptance of AI solutions.
These deficiencies could undermine the decisions, predictions, or analysis AI applications produce, subjecting us to competitive harm, legal liability, and brand or reputational harm.
−Removed: Some AI scenarios present ethical issues.
+Added: Social and ethical issues relating to the use of new and evolving uses of AI that we may offer may result in reputational harm and liability and may cause us to incur additional research and development costs to resolve such issues.
If we enable or offer AI solutions that are controversial because of their impact on human rights, privacy, employment, or other social issues, we may experience a material adverse effect on our business, results of operations and cash flows.
+Added: Potential government regulation related to AI use and ethics may also increase the burden and cost of research and development in this area, and failure to properly remediate AI usage or ethics issues may cause public confidence in AI to be undermined, which could slow adoption of AI in our offerings.
+Added: The rapid evolution of AI will require the application of resources to develop, test and maintain our products and services to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.
We may be subject to legal liability and/or negative publicity for the services provided to consumers via our technology platforms.
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In addition to legislation and regulations relating to privacy and data security and collection, we may be subject to consumer protection laws that are enforced by regulators such as the FTC and private parties and include statutes that regulate the collection and use of information for marketing purposes.
−Removed: Any new legislation or regulations regarding the Internet, mobile devices, software sales or export and/or the cloud or SaaS industry, and/or the application of existing laws and regulations to the Internet, mobile devices, software sales
−Removed: or export and/or the cloud or SaaS industry, could create new legal or regulatory burdens on our business that could have a material adverse effect on our business, results of operations, and financial condition.
+Added: Any new legislation or regulations regarding the internet, mobile devices, software sales or export and/or the cloud or SaaS industry, and/or the application of existing laws and regulations to the internet, mobile devices, software sales or export and/or the cloud or SaaS industry, could create new legal or regulatory burdens on our business that could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, as we operate outside the U.S., the international regulatory environment relating to the internet, mobile devices, software sales or export, and/or the SaaS industry could have a material adverse effect on our business, results of operations, and financial condition.
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As we continue to expand our international operations we become more exposed to the effects of fluctuations in currency exchange rates.
+Added: For example, the New Israeli Shekel, British Pound, Euro, Australian Dollar, and Japanese Yen have all recently experienced declines in value in relation to the U.S.
+Added: Further, as geopolitical volatility around the world increases, there is increasing risk of the imposition of exchange or price controls, or other restrictions on the conversion of foreign currencies, which could have a material adverse effect on our business.
As a result of the expanding size and scope of our international operations, our currency rate fluctuation risk associated with the exchange rate movement of the U.S.
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agreed to a trade and cooperation agreement which took provisional effect from January 1, 2020, the longer term economic, legal, political and social implications for the U.K.
−Removed: remain unclear and may lead to ongoing political, regulatory and economic uncertainty and periods of exacerbated volatility in both the U.K.
+Added: remain unclear and may lead to ongoing political, regulatory and economic uncertainty and periods of exacerbated
+Added: volatility in both the U.K.
and in wider European markets for some time.
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In addition, we rely in part on third-party service providers with international operations.
−Removed: For example, we rely on a third-party service provider that utilizes approximately 100 engineers based in Ukraine for a portion of our engineering and software development initiatives.
−Removed: If this third party’s operations were disrupted or discontinued due to local instability or political, economic or military conditions, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected.
+Added: For example, we rely on a third-party service provider that utilizes approximately 100 engineers based in Ukraine for a portion of our engineering and
+Added: software development initiatives.
+Added: If this third party’s operations were disrupted or discontinued due to local instability or political, economic or military conditions or cyber-attacks, then our ability to provide services to some of our current customers and the development of new products or enhancement of existing products could be delayed, and our results of operations could be adversely affected.
Our current and any future international expansion plans will require management attention and resources and may be unsuccessful.
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Further, for the past several years, the OECD has had a specific focus on the taxation implications of e-commerce business, generally referred by the OECD as the “digital economy.” In the fourth quarter of 2019, the OECD released details on its proposed approach which would, among other changes, create a new right to tax certain “digital economy” income not necessarily based on traditional nexus concepts nor on the “arm’s length principle.” At this point, there is a lack of consensus among the key members, particularly the United States, with the latest OECD proposal.
−Removed: The United States has expressed that it would generally support a
−Removed: solution along the lines proposed by the OECD only if the solution was in the form of a “safe-harbor” rather than a mandatory requirement.
+Added: The United States has expressed that it would generally support a solution along the lines proposed by the OECD only if the solution was in the form of a “safe-harbor” rather than a mandatory requirement.
A failure to reach full consensus on an executable plan within the tight time frame under which the OECD is operating could result in individual jurisdictions legislating digital tax provisions in an uncoordinated and unilateral manner, and further result in greater or even double taxation that companies may not have sufficient means to remedy.
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Future changes in our stock ownership, some of which may be outside of our control, could result in an ownership change under Section 382 of the Code.
+Added: The use of NOLs from acquired businesses may also be limited under Section 382.
Federal NOLs generated in taxable years ending on or before December 31, 2017, are eligible to be carried forward for up to 20 tax years (and carried back up to two tax years) following their incurrence.
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federal taxable income.
−Removed: Since we do not know whether or when we will generate the U.S.
−Removed: federal taxable income necessary to utilize our remaining NOLs, our NOLs generated on or prior to December 31, 2017 could expire unused.
+Added: As a result of a change in the treatment of research and development expenses during the period ending December 31, 2022, the Company is required to capitalize and amortize amounts previously deducted currently.
+Added: This is resulting in U.S.
+Added: taxable income that is allowing the Company to utilize its pre-2018 NOLs.
+Added: The capitalized research and development costs will give rise to future deductions that could result in new NOLs being generated, which NOLs would be eligible to be carried forward indefinitely but would only be able to offset up to 80% of federal taxable income earned in a taxable year.
Political, economic, and military conditions in Israel could negatively impact our Israeli operations.
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The 2026 Notes do not bear any regular interest payments.
+Added: These obligations will need to be refinanced on or prior to their maturity.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our Notes or any additional future indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
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We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
−Removed: In addition, any of our future debt agreements may
−Removed: contain restrictive covenants that may prohibit us from adopting any of these alternatives.
+Added: In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives.
Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.
26 unchanged sentences
Application of the “if converted” method may reduce our reported diluted earnings per share.
−Removed: The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and early adoption is permitted.
+Added: We adopted this standard on January 1, 2022, using the modified retrospective standard.
+Added: As a result, the 2024 Notes and 2026 Notes are accounted for as a single liability and we use the “if-converted” method of calculating diluted earnings per share.
+Added: See Note 8 – Convertible Senior Notes, Net and Capped Call Transactions and Note 1 – Description of Business and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K for additional information.
We cannot be sure whether other changes may be made to the accounting standards related to the 2024 Notes and 2026 Notes, or otherwise, that could have an adverse impact on our financial statements.
42 unchanged sentences
If our officers, directors, and largest stockholders choose to act together, they may be able to significantly influence our management and operations, acting in their own best interest and not necessarily those of our other stockholders.
−Removed: As of December 31, 2021, our executive officers, directors and holders of 5% or more of our outstanding common stock and their affiliates in the aggregate beneficially owned approximately 40.8% of our outstanding common stock.
+Added: As of February 20, 2023, our executive officers, directors and holders of 5% or more of our outstanding common stock and their affiliates in the aggregate beneficially owned approximately 46.4% of our outstanding common stock.
As a result, these stockholders, acting together, have the ability to significantly influence all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions.
3 unchanged sentences
If we or our stockholders sell substantial amounts of our common stock, including shares issuable upon the exercise of outstanding options and warrants, or upon the conversion of the Notes, in the public market, or if the market perceives that these sales might occur, the market price of our common stock could fall.
−Removed: These sales also might make it more difficult for us to
−Removed: sell equity securities in the future at a time and price that we deem appropriate.
+Added: These sales also might make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate.
No prediction can be made as to the effect, if any, that market sales of our common stock will have on the market price of our common stock.
19 unchanged sentences
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.