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Item 1A. Risk Factors

2026-03-30 compared with 2025-03-31 · 429 added, 496 removed, 596 unchanged (61% of the section changed)

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deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

If any of the

following events occur, our business, financial condition and results of operations could be materially adversely affected.

In such case,

the value and trading price of our common stock could decline, and you may lose all or part of your investment.

If any of the following

events occur, our business, financial condition and results of operations could be materially adversely affected.

In such case, the value

and trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to our Business and Industry

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have not yet generated any revenues.

Our limited operating history makes evaluating the business and future

prospects difficult and may increase the risk of your investment.

We were incorporated in 2014, and since then there have been a limited

amount of downloads of the application.

Our limited operating history makes evaluating

the business and future prospects difficult and may increase the risk of your investment.

We were incorporated in 2014, and since then

there have been a limited amount of downloads of the application.

To date, we have minimal revenues.

As reflected in the accompanying consolidated financial statements,

for the years ended December 31, 2024 and 2023, we incurred a net loss of $5,025,007 and $8,404,970, respectively.

Additionally, for the

years ended December 31, 2024 and 2023, we used cash in operations of $4,388,385 and $6,529,277, respectively.

As of December 31, 2024,

we had working capital of $3,657,711.

We intend, in the long term, to derive revenues from advertisement sales, technology licensing,

and other forms of revenue.

The application is available for download on certain mobile platforms and we are developing compatibility

with other platforms.

As reflected in the accompanying

consolidated financial statements, for the years ended December 31, 2025 and 2024, we incurred a net loss of $3,040,119 and $5,025,007,

respectively.

Additionally, for the years ended December 31, 2025 and 2024, we used cash in operations of $4,267,074 and $4,811,145, respectively.

As of December 31, 2025, we had working capital of $3,045,399.

We intend, in the long term, to derive revenues from advertisement sales,

technology licensing, and other forms of revenue.

The application is available for download on certain mobile platforms and we are developing

compatibility with other platforms.

We also continue to develop and refine functions of the application.

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Maintaining and improving our platform will require significant capital.

We will also incur substantial accounting, legal and other overhead costs as a public company.

will also incur substantial accounting, legal and other overhead costs as a public company.

If our offerings to customers are unsuccessful,

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in an inability to gain new customers.

We may fail to develop new products or

may incur unexpected expenses or delays.

We may fail to develop new products or may

incur unexpected expenses or delays.

Although the application is currently available

for download, we may need to develop various new technologies, products and product features to remain competitive.

Due to the risks

inherent in developing new products and technologies, limited financing, loss of key personnel, and other factors, we may fail to develop

these technologies and products or may experience lengthy and costly delays in doing so.

Although we are able to license some of our

technologies in their current stage of development, we cannot assure that we will be able to develop new products or enhancements to

our existing products in order to remain competitive.

Due to the risks inherent

in developing new products and technologies, limited financing, loss of key personnel, and other factors, we may fail to develop these

technologies and products or may experience lengthy and costly delays in doing so.

Although we are able to license some of our technologies

in their current stage of development, we cannot assure that we will be able to develop new products or enhancements to our existing products

in order to remain competitive.

We are dependent on the services of certain

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we may not be able to grow effectively.

We depend on the services of a number of key

management personnel, employees, and advisors and our future performance will largely depend on the talents and efforts of such individuals.

We do not currently maintain “key person” life insurance on any of our employees.

We depend on the services of a number of key management

personnel, employees, and advisors and our future performance will largely depend on the talents and efforts of such individuals.

not currently maintain “key person” life insurance on any of our employees.

The loss of one or more of such key individuals,

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Our future success will also depend on our ability to identify, hire, develop, motivate and retain highly skilled personnel.

in our industry for qualified employees is intense, and our compensation arrangements may not always be successful in attracting new

employees and/or retaining and motivating our existing employees.

Future acquisitions by us may also cause uncertainty among our current

employees and employees of the acquired entity, which could lead to the departure of key individuals.

Such departures could have an adverse

impact on the anticipated benefits of an acquisition.

in our industry for qualified employees is intense, and our compensation arrangements may not always be successful in attracting new employees

and/or retaining and motivating our existing employees.

Future acquisitions by us may also cause uncertainty among our current employees

and employees of the acquired entity, which could lead to the departure of key individuals.

Such departures could have an adverse impact

on the anticipated benefits of an acquisition.

We may face intense competition and expect

competition to increase in the future, which could prohibit us from developing a customer base and generating revenue.

We are focused on the mobile application industry,

specifically the mobile messaging market, which is already saturated with established companies.

Many of these companies, including Apple

Inc., Alphabet Inc., Facebook, Inc., and Snap Inc., already have an established market in our industry.

Most of these companies have

significantly greater financial and other resources than us and have been developing their products and services longer than we have

been developing ours.

We are focused on the mobile application and social

sharing platform industries, which is already saturated with established companies.

Many of these companies, including Apple Inc., Alphabet

Inc., Facebook, Inc., Snap Inc., TikTok, iCloud Shared Photo, Pinterest, Google Photos, Amazon Drive, Photobucket and Shutterfly, already

have an established market in our industry.

Most of these companies have significantly greater financial and other resources than us and

have been developing their products and services longer than we have been developing ours.

The application is based on new and unproven

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the application may not gain market acceptance;

proprietary rights of third parties may preclude us from marketing

a new product or service;

the application may not receive the exposure required to obtain new

proprietary rights of third parties may preclude us from marketing a new product or service;

the application may not receive the exposure required to obtain new users;

third parties may market superior products or services.

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Our business would be harmed if:

Apple discontinues or limits access to its platform by us and other

application developers;

Apple modifies its terms of service or other policies, including fees

charged to, or other restrictions on, us or other application developers, or Apple changes how the personal information of its users

is made available to application developers on their respective platforms or shared by users;

Apple establishes more favorable relationships with one or more of

our competitors;

Apple limits our access to its application marketplace because our

application provides mobile messaging services similar to Apple;

Apple makes changes in its operating system or development platform

that are incompatible with our technology.

Apple discontinues or limits access to its platform by us and other application developers;

Apple modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or other application developers, or Apple changes how the personal information of its users is made available to application developers on their respective platforms or shared by users;

Apple establishes more favorable relationships with one or more of our competitors;

Apple limits our access to its application marketplace because our application provides mobile messaging services similar to Apple;

makes changes in its operating system or development platform that are incompatible with our technology.

We expect to benefit from Apple’s strong

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desire additional performance and functionality that the application, and the underlying technology, does not currently support.

success will depend, in part, on our ability to both internally develop leading technologies to enhance the application, develop new

mobile applications and services that address the increasingly sophisticated and varied needs of our customers, and respond to technological

advances and emerging industry standards and practices on a cost-effective and timely basis.

The development of our technology and other

proprietary technology involves significant technical and business risks.

We may fail to use new technologies effectively or to adapt

our proprietary technology and systems to customer requirements or emerging industry standards.

If we are unable to adapt to changing

market conditions, customer requirements or emerging industry standards, we may not be able to create revenue and expand our business.

will depend, in part, on our ability to both internally develop leading technologies to enhance the application, develop new mobile applications

and services that address the increasingly sophisticated and varied needs of our customers, and respond to technological advances and

emerging industry standards and practices on a cost-effective and timely basis.

The development of our technology and other proprietary

technology involves significant technical and business risks.

We may fail to use new technologies effectively or to adapt our proprietary

technology and systems to customer requirements or emerging industry standards.

If we are unable to adapt to changing market conditions,

customer requirements or emerging industry standards, we may not be able to create revenue and expand our business.

Defects in the application and the technology

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product redevelopment costs, loss of or delay in market acceptance of our products or claims by customers or others against us.

problems or claims may have a material and adverse effect on our business, prospects, financial condition and results of operations.

Such problems

or claims may have a material and adverse effect on our business, prospects, financial condition and results of operations.

If we fail to retain current users or add

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high, due to the lack of sufficient cellular based data networks, consumers rely heavily on Wi-Fi and may not access our products regularly.

There are many factors that could negatively

affect user retention, growth, and engagement, including if:

There are many factors that could negatively affect

user retention, growth, and engagement, including if:

users increasingly engage with competing products instead of ours;

our competitors may mimic our products and therefore harm our user

engagement and growth;

we fail to introduce new and exciting products and services or those

we introduce are poorly received;

our products fail to operate effectively on the iOS and Android mobile

operating systems;

we are unable to continue to develop products that work with a variety

of mobile operating systems, networks, and smartphones;

our competitors may mimic our products and therefore harm our user engagement and growth;

we fail to introduce new and exciting products and services or those we introduce are poorly received;

our products fail to operate effectively on the iOS and Android mobile operating systems;

we are unable to continue to develop products that work with a variety of mobile operating systems, networks, and smartphones;

we are unable to combat hostile or inappropriate usage of our products;

there are changes in user sentiment about the quality or usefulness

of the application;

there are concerns about the implications for privacy, safety, or security

of our products;

there are changes in our products that are mandated by legislation,

regulatory authorities, or litigation, including settlements or consent decrees that adversely affect the user experience;

technical or other problems frustrate the user experience, particularly

if those problems prevent us from delivering our products in a fast and reliable manner;

there are changes in user sentiment about the quality or usefulness of the application;

there are concerns about the implications for privacy, safety, or security of our products;

there are changes in our products that are mandated by legislation, regulatory authorities, or litigation, including settlements or consent decrees that adversely affect the user experience;

technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner;

we fail to provide adequate service to users;

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they have sent.

While we believe that the general public will recognize the value of our products and feel empowered to take control

of their privacy, it is possible that a great number of people have come to believe that their personal information cannot be protected

and that any attempt to do so would be ineffective.

As such, regardless of how effective our products might be, there is a risk that

the general public might deem our products to be unnecessary and will not be drawn to download and use the application.

While we believe that the general public will recognize the value of our products and feel empowered to take control of

their privacy, it is possible that a great number of people have come to believe that their personal information cannot be protected and

that any attempt to do so would be ineffective.

As such, regardless of how effective our products might be, there is a risk that the general

public might deem our products to be unnecessary and will not be drawn to download and use the application.

Users may not want to change the way that

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In addition, our user

experience may not be received positively, as some users might find it inconvenient to have two text bars appearing on the screen at

the same time when they go to send a text message.

experience may not be received positively, as some users might find it inconvenient to have two text bars appearing on the screen at the

same time when they go to send a text message.

The iMessage integration figure does not currently allow a user to remove the iMessage

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intended to send through the application, thereby defeating the data protection and privacy benefits that the application offers.

users do not adapt to seeing and typing messages with two texts bars displayed, our user retention may suffer.

do not adapt to seeing and typing messages with two texts bars displayed, our user retention may suffer.

The characteristics of the application,

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Such negative

publicity could also have an adverse effect on the size, engagement, and loyalty of our user base and, in turn, adversely affect our

business, results of operations and financial condition.

publicity could also have an adverse effect on the size, engagement, and loyalty of our user base and, in turn, adversely affect our business,

results of operations and financial condition.

We expect to derive substantially all of

our revenue from a limited number of products.

Currently, we expect to derive substantially

all of our revenue from a limited number of products and applications.

As such, the continued growth in market demand for and market

acceptance of the product or application is critical to our continued success.

Demand for our products or the applications is affected

by a number of factors, many of which are beyond our control, such as continued market acceptance;

the timing of development and release

of competing new products;

Currently, we expect to derive substantially all

of our revenue from a limited number of products and applications.

As such, the continued growth in market demand for and market acceptance

of the product or application is critical to our continued success.

Demand for our products or the applications is affected by a number

of factors, many of which are beyond our control, such as continued market acceptance;

the timing of development and release of competing

new products;

consumer preferences;

the development and acceptance of new features, integrations, and capabilities;

or product changes by us or our competitors;

price or product changes

by us or our competitors;

technological changes and developments within the markets we serve;

growth, contraction,

and rapid evolution of our market;

growth, contraction, and rapid evolution

of our market;

and general economic conditions and trends.

If we are unable to continue to meet the demands of our

users or trends in preferences or to achieve more widespread market acceptance of our products and applications, our business, results

of operations, and financial condition could be harmed.

Changes in preferences of users may have a disproportionately greater impact

on us than if we offered multiple products.

In addition, competitors may develop or acquire their own tools or software and people may

continue to rely on traditional tools and software, such as text message and email, which would reduce or eliminate the demand for our

products and applications.

If demand declines for any of these or other reasons, our business could be adversely affected.

The application depends on effectively

operating with mobile operating systems, hardware, networks, regulations, and standards that we do not control.

Changes in our products

or to those operating systems, hardware, networks, regulations, or standards may seriously harm our user growth, retention, and engagement.

Because the application is used primarily on

mobile devices, the application must remain interoperable with popular mobile operating systems, Android and iOS.

The owners of such

operating systems, Google and Apple, respectively, each provide consumers with products that compete with ours.

We have no control over

these operating systems or hardware, and any changes to these systems or hardware that degrade our products’ functionality, or

give preferential treatment to competitive products, could seriously harm DatChat usage on mobile devices.

Our competitors that control

the operating systems and related hardware the application runs on could make the interoperability of our products with those mobile

operating systems more difficult or display their competitive offerings more prominently than ours.

When introducing new products, it

takes time to optimize such products to function with these operating systems and hardware, impacting the popularity of such products,

and we expect this trend to continue.

If we are unable to continue to meet the demands of our users or trends in

preferences or to achieve more widespread market acceptance of our products and applications, our business, results of operations, and

financial condition could be harmed.

Changes in preferences of users may have a disproportionately greater impact on us than if we offered

multiple products.

In addition, competitors may develop or acquire their own tools or software and people may continue to rely on traditional

tools and software, such as text message and email, which would reduce or eliminate the demand for our products and applications.

declines for any of these or other reasons, our business could be adversely affected.

The application depends on effectively operating

with mobile operating systems, hardware, networks, regulations, and standards that we do not control.

Changes in our products or to those

operating systems, hardware, networks, regulations, or standards may seriously harm our user growth, retention, and engagement.

Because the application is used primarily on mobile

devices, the application must remain interoperable with popular mobile operating systems, Android and iOS.

The owners of such operating

systems, Google and Apple, respectively, each provide consumers with products that compete with ours.

We have no control over these operating

systems or hardware, and any changes to these systems or hardware that degrade our products’ functionality, or give preferential

treatment to competitive products, could seriously harm DatChat usage on mobile devices.

Our competitors that control the operating systems

and related hardware the application runs on could make the interoperability of our products with those mobile operating systems more

difficult or display their competitive offerings more prominently than ours.

When introducing new products, it takes time to optimize

such products to function with these operating systems and hardware, impacting the popularity of such products, and we expect this trend

Moreover, our products require high-bandwidth data capabilities.

If the costs of data usage increase,

our user growth, retention, and engagement may be seriously harmed.

If the costs of data usage increase, our user growth, retention,

and engagement may be seriously harmed.

We may not successfully cultivate relationships

with key industry participants or develop products that operate effectively with these technologies, systems, networks, regulations,

or standards.

If it becomes more difficult for our users to access and use the application on their mobile devices, if our users choose

not to access or use the application on their mobile devices, or if our users choose to use mobile products that do not offer access

to the application, our user growth, retention, and engagement could be seriously harmed.

with key industry participants or develop products that operate effectively with these technologies, systems, networks, regulations, or

If it becomes more difficult for our users to access and use the application on their mobile devices, if our users choose not

to access or use the application on their mobile devices, or if our users choose to use mobile products that do not offer access to the

application, our user growth, retention, and engagement could be seriously harmed.

Moreover, the adoption of any laws or regulations

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infrastructure, secure network connectivity, and other technology-related services provided by AWS.

We do not control the operations

of this third-party provider or own the equipment used to provide such services.

We do not control the operations of

this third-party provider or own the equipment used to provide such services.

Because we cannot easily switch our AWS-serviced operations

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control that could seriously harm our business, including:

discontinuing or limiting our access to its cloud platform

increasing pricing terms;

terminating or seeking to terminate our contractual relationship altogether;

establishing more favorable relationships or pricing terms with one

or more of our competitors;

modifying or interpreting its terms of service or other policies in

a manner that impacts our ability to run our business and operations.

● discontinuing

or limiting our access to its cloud platform

pricing terms;

● terminating

or seeking to terminate our contractual relationship altogether;

● establishing

more favorable relationships or pricing terms with one or more of our competitors;

or interpreting its terms of service or other policies in a manner that impacts our ability to run our business and operations.

Amazon has broad discretion to change and interpret

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effect on our business.

Our technology infrastructure is critical to

the performance of the application and customer satisfaction.

The application runs on a complex distributed system, or what is commonly

known as cloud computing.

Our technology infrastructure is critical to the

performance of the application and customer satisfaction.

The application runs on a complex distributed system, or what is commonly known

as cloud computing.

Some elements of this system are operated by third-parties that we do not control and which would require significant

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weather, terrorist acts, acts of war, cyber-attacks or other breaches of network or information technology security that affect third-party

networks, communications switches, routers, microwave links, cell sites or other third-party equipment on which we rely, could cause

major network failures and/or unusually high network traffic demands that could have a material adverse effect on our operations or our

ability to provide service to our customers.

These events could disrupt our operations, require significant resources to resolve, result

in a loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business,

networks, communications switches, routers, microwave links, cell sites or other third-party equipment on which we rely, could cause major

network failures and/or unusually high network traffic demands that could have a material adverse effect on our operations or our ability

to provide service to our customers.

These events could disrupt our operations, require significant resources to resolve, result in a

loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business,

prospects, results of operations and financial condition.

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a material adverse effect on our business, prospects, results of operations and financial condition.

In addition, with the growth of

wireless data services, enterprise data interfaces and Internet-based or Internet Protocol enabled applications, wireless networks and

devices are exposed to a greater degree to third-party data or applications over which we have less direct control.

As a result, the

network infrastructure and information systems on which we rely, as well as our customers’ wireless devices, may be subject to

a wider array of potential security risks, including viruses and other types of computer-based attacks, which could cause lapses in our

service or adversely affect the ability of our customers to access our service.

Such lapses could have a material adverse effect on our

business, prospects, results of operations and financial condition.

In addition, with the growth of wireless

data services, enterprise data interfaces and Internet-based or Internet Protocol enabled applications, wireless networks and devices

are exposed to a greater degree to third-party data or applications over which we have less direct control.

As a result, the network infrastructure

and information systems on which we rely, as well as our customers’ wireless devices, may be subject to a wider array of potential

security risks, including viruses and other types of computer-based attacks, which could cause lapses in our service or adversely affect

the ability of our customers to access our service.

Such lapses could have a material adverse effect on our business, prospects, results

of operations and financial condition.

If third parties claim that we infringe

their intellectual property, it may result in costly litigation.

We cannot assure you that third parties will

not claim our current or future products or services infringe their intellectual property rights.

We cannot assure you that third parties will not

claim our current or future products or services infringe their intellectual property rights.

Any such claims, with or without merit,

could cause costly litigation that could consume significant management time.

As the number of product and services offerings in the

mobile application market increases and functionalities increasingly overlap, companies such as ours may become increasingly subject

to infringement claims.

As the number of product and services offerings in the mobile

application market increases and functionalities increasingly overlap, companies such as ours may become increasingly subject to infringement

Such claims also might require us to enter into royalty or license agreements.

If required, we may not be able

to obtain such royalty or license agreements, or obtain them on terms acceptable to us.

If required, we may not be able to obtain such

royalty or license agreements, or obtain them on terms acceptable to us.

We may not be able to adequately protect

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mobile technology.

Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the

various jurisdictions in which we provide services.

Any failure or perceived failure to successfully manage the collection, use, disclosure,

or security of personal information or other privacy related matters, or any failure to comply with changing regulatory requirements

in this area, could result in legal liability or impairment to our reputation in the marketplace.

Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various

jurisdictions in which we provide services.

Any failure or perceived failure to successfully manage the collection, use, disclosure, or

security of personal information or other privacy related matters, or any failure to comply with changing regulatory requirements in this

area, could result in legal liability or impairment to our reputation in the marketplace.

Unauthorized breaches or failures in cybersecurity

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Our security systems are designed to maintain the security of our users’ confidential information, as well as our own proprietary

Accidental or willful security breaches or other unauthorized access by third parties or our employees, our information

systems or the systems of our third-party providers, or the existence of computer viruses or malware in our or their data or software

could expose us to risks of information loss and misappropriation of proprietary and confidential information, including information

relating to our products or customers and the personal information of our employees.

Accidental or willful security breaches or other unauthorized access by third parties or our employees, our information systems

or the systems of our third-party providers, or the existence of computer viruses or malware in our or their data or software could expose

us to risks of information loss and misappropriation of proprietary and confidential information, including information relating to our

products or customers and the personal information of our employees.

In addition, we could become subject to unauthorized

network intrusions and malware on our own IT networks.

Any theft or misuse of confidential, personal or proprietary information as a

result of such activities or failure to prevent security breaches could result in, among other things, unfavorable publicity, damage

to our reputation, loss of our trade secrets and other competitive information, difficulty in marketing our products, allegations by

our customers that we have not performed our contractual obligations, litigation by affected parties and possible financial obligations

for liabilities and damages related to the theft or misuse of such information, as well as fines and other sanctions resulting from any

related breaches of data privacy regulations, any of which could have a material adverse effect on our reputation, business, profitability

and financial condition.

Furthermore, the techniques used to obtain unauthorized access or to sabotage systems change frequently and

are often not recognized until launched against a target, and we may be unable to anticipate these techniques or to implement adequate

preventative measures.

Any theft or misuse of confidential, personal or proprietary information as a result

of such activities or failure to prevent security breaches could result in, among other things, unfavorable publicity, damage to our reputation,

loss of our trade secrets and other competitive information, difficulty in marketing our products, allegations by our customers that we

have not performed our contractual obligations, litigation by affected parties and possible financial obligations for liabilities and

damages related to the theft or misuse of such information, as well as fines and other sanctions resulting from any related breaches of

data privacy regulations, any of which could have a material adverse effect on our reputation, business, profitability and financial condition.

Furthermore, the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until

launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures.

We may be subject to stringent and changing

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likely have to change our business practices and potentially the services and features, integrations or other capabilities of the application.

In addition, these laws and regulations could impose significant costs on us and could constrain our ability to use and process data

in a commercially desirable manner.

In addition, these laws and regulations could impose significant costs on us and could constrain our ability to use and process data in

a commercially desirable manner.

In addition, if a breach of data security were to occur or be alleged to have occurred, if any violation

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privacy rights for California consumers and new operational requirements for covered companies.

Specifically, the CCPA mandates that

covered companies provide new disclosures to California consumers and afford such consumers new data privacy rights that include, among

other things, the right to request a copy from a covered company of the personal information collected about them, the right to request

deletion of such personal information, and the right to request to opt-out of certain sales of such personal information.

The California

Attorney General can enforce the CCPA, including seeking an injunction and civil penalties for violations.

The CCPA also provides a private

right of action for certain data breaches that is expected to increase data breach litigation.

Specifically, the CCPA mandates that covered

companies provide new disclosures to California consumers and afford such consumers new data privacy rights that include, among other

things, the right to request a copy from a covered company of the personal information collected about them, the right to request deletion

of such personal information, and the right to request to opt-out of certain sales of such personal information.

The California Attorney

General can enforce the CCPA, including seeking an injunction and civil penalties for violations.

The CCPA also provides a private right

of action for certain data breaches that is expected to increase data breach litigation.

Additionally, a new privacy law, the California

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and proposed in other states across the country, such as in Virginia, New Hampshire, Illinois and Nebraska.

This legislation may add

additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to

compliance programs, could impact strategies and availability of previously useful data and could result in increased compliance costs

and/or changes in business practices and policies.

This legislation may add additional

complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance

programs, could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes

in business practices and policies.

federal privacy laws are potentially

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requirements for data protection compliance programs by companies.

Among other requirements, the GDPR regulates

the transfer of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such

personal data, including the United States.

Recent legal developments in Europe have created complexity and uncertainty regarding such

Among other requirements, the GDPR regulates the

transfer of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal

data, including the United States.

Recent legal developments in Europe have created complexity and uncertainty regarding such transfers.

For instance, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S.

Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the European Economic

entities who had self-certified under the Privacy Shield scheme.

While the CJEU upheld the adequacy of the standard contractual

clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism and potential

alternative to the Privacy Shield), it made clear that reliance on such clauses alone may not necessarily be sufficient in all circumstances.

Use of the standard contractual clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable

in the destination country, including, in particular, applicable surveillance laws and rights of individuals, and additional measures

and/or contractual provisions may need to be put in place;

Privacy Shield

Framework (the “Privacy Shield”) under which personal data could be transferred from the European Economic Area to U.S.

who had self-certified under the Privacy Shield scheme.

While the CJEU upheld the adequacy of the standard contractual clauses (a standard

form of contract approved by the European Commission as an adequate personal data transfer mechanism and potential alternative to the

Privacy Shield), it made clear that reliance on such clauses alone may not necessarily be sufficient in all circumstances.

standard contractual clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination

country, including, in particular, applicable surveillance laws and rights of individuals, and additional measures and/or contractual

provisions may need to be put in place;

however, the nature of these additional measures is currently uncertain.

CJEU also states that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in

the destination country and that the required level of protection cannot be secured by other means, such supervisory authority is under

an obligation to suspend or prohibit that transfer.

Additionally, the GDPR greatly increased the

European Commission’s jurisdictional reach of its laws and added a broad array of requirements for handling personal data.

states are tasked under the GDPR to enact, and have enacted, certain implementing legislation that adds to and/or further interprets

the GDPR requirements and potentially extends our obligations and potential liability for failing to meet such obligations.

together with national legislation, regulations and guidelines of the EU member states a governing the processing of personal data, impose

strict obligations and restrictions on the ability to collect, use, retain, protect, disclose, transfer and otherwise process personal

In particular, the GDPR includes obligations and restrictions concerning the consent and rights of individuals to whom the personal

data relates, security breach notifications and the security and confidentiality of personal data.

Failure to comply with the GDPR could result

in penalties for noncompliance (including possible fines of up to the greater of €20 million and 4% of our global annual turnover

for the preceding financial year for the most serious violations, as well as the right to compensation for financial or non-financial

damages claimed by individuals under Article 82 of the GDPR).

The CJEU also states

that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in the destination country

and that the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend

or prohibit that transfer.

Additionally, the GDPR greatly increased the European

Commission’s jurisdictional reach of its laws and added a broad array of requirements for handling personal data.

EU member states

are tasked under the GDPR to enact, and have enacted, certain implementing legislation that adds to and/or further interprets the GDPR

requirements and potentially extends our obligations and potential liability for failing to meet such obligations.

The GDPR, together

with national legislation, regulations and guidelines of the EU member states a governing the processing of personal data, impose strict

obligations and restrictions on the ability to collect, use, retain, protect, disclose, transfer and otherwise process personal data.

In particular, the GDPR includes obligations and restrictions concerning the consent and rights of individuals to whom the personal data

relates, security breach notifications and the security and confidentiality of personal data.

Failure to comply with the GDPR could result in

penalties for noncompliance (including possible fines of up to the greater of €20 million and 4% of our global annual turnover for

the preceding financial year for the most serious violations, as well as the right to compensation for financial or non-financial damages

claimed by individuals under Article 82 of the GDPR).

In addition to the GDPR, the European Commission

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notified the European Council of its intention to leave the EU pursuant to Article 50 of the Treaty on European Union (“Brexit”).

The United Kingdom ceased to be an EU Member State on January 31, 2020, but enacted a Data Protection Act substantially implementing

the GDPR (“U.K.

GDPR”), effective in May 2018, which was further amended to align more substantially with the GDPR following

The United Kingdom ceased to be an EU Member State on January 31, 2020, but enacted a Data Protection Act substantially implementing the

GDPR”), effective in May 2018, which was further amended to align more substantially with the GDPR following Brexit.

It is unclear how U.K.

data protection laws or regulations will develop in the medium to longer term and how data transfers to

and from the United Kingdom will be regulated.

Some countries also are considering or have enacted legislation requiring local storage

and processing of data that could increase the cost and complexity of delivering our services.

Beginning in 2021 when the transitional

period following Brexit expired, we are required to comply with both the GDPR and the U.K.

GDPR, with each regime having the ability

to fine up to the greater of €20 million (in the case of the GDPR) or £17 million (in the case of the U.K.

GDPR) and 4% of

total annual revenue.

The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains

unclear, including, for example, how data transfers between EU member states and the United Kingdom will be treated and the role of the

United Kingdom’s Information Commissioner’s Office following the end of the transitional period.

These changes could lead

to additional costs and increase our overall risk exposure.

data protection laws or regulations will develop in the medium to longer term and how data transfers to and from

the United Kingdom will be regulated.

Some countries also are considering or have enacted legislation requiring local storage and processing

of data that could increase the cost and complexity of delivering our services.

Beginning in 2021 when the transitional period following

Brexit expired, we are required to comply with both the GDPR and the U.K.

GDPR, with each regime having the ability to fine up to the

greater of €20 million (in the case of the GDPR) or £17 million (in the case of the U.K.

GDPR) and 4% of total annual revenue.

The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains unclear, including,

for example, how data transfers between EU member states and the United Kingdom will be treated and the role of the United Kingdom’s

Information Commissioner’s Office following the end of the transitional period.

These changes could lead to additional costs and

increase our overall risk exposure.

Any failure or perceived failure by us to comply

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to lose trust in us, and otherwise materially and adversely affect our reputation and business.

Furthermore, the costs of compliance

with, and other burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our

users may limit the adoption and use of, and reduce the overall demand for, the application.

Further, public scrutiny of, or complaints

about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations,

may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory

requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

Any of the foregoing

could materially and adversely affect our business, financial condition and results of operations.

Furthermore, the costs of compliance with,

and other burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our users

may limit the adoption and use of, and reduce the overall demand for, the application.

Further, public scrutiny of, or complaints about,

technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may

lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements,

or to modify their enforcement or investigation activities, which may increase our costs and risks.

Any of the foregoing could materially

and adversely affect our business, financial condition and results of operations.

Online applications are subject to various

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Such new regulations, or changes to existing regulations, could increase the cost of our operations.

We may not be successful in our metaverse

strategy and investments, which could adversely affect our business, reputation, or financial results.

We believe the metaverse, an embodied internet

where people have immersive experiences beyond two-dimensional screens, is the next evolution in social technology.

In 2023, we launched

Habytat, a mobile based social metaverse.

Our development of Habytat involved the development of new and emerging technologies and collaboration

with other companies, developers, partners, and other participants.

However, the metaverse may not develop in accordance with our expectations,

and market acceptance of features, products, or services we built for Habytat is uncertain.

In addition, we have limited experience with

virtual and augmented reality technology, which may enable other companies to compete more effectively than us.

We may be unsuccessful

in our research and product development efforts, including if we are unable to develop relationships with key participants in the metaverse

or develop products that operate effectively with metaverse technologies, products, systems, networks, or standards.

Our metaverse efforts

divertrf resources and management attention from other areas of our business.

We ceased our development of the Habytat platform and are

evaluating ways to utilize the technology developed.

In addition, we may be subject to a variety of

existing or new laws and regulations in the United States and international jurisdictions, including in the areas of privacy, safety,

competition, content regulation, consumer protection, and e-commerce, which may delay or impede the development of our products and services,

increase our operating costs, require significant management time and attention, or otherwise harm our business.

As a result of these

or other factors, our metaverse strategy and investments may not be successful in the foreseeable future, or at all, which could adversely

affect our business, reputation, or financial results.

Myseum is currently under development and

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Myseum may not gain market acceptance;

proprietary rights of third parties may preclude us from marketing

a new product or service;

Mtseum may not receive the exposure required to obtain new users;

proprietary rights of third parties may preclude us from marketing a new product or service;

Myseum may not receive the exposure required to obtain new users;

third parties may market superior products or services.

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the risks associated with our planned social metaverse and advertising platforms.

Myseum may not be successful and may

expose us to legal, regulatory, and other risks.

Given the nascent and evolving nature of the metaverse, digital assets and blockchain

technology, we may be unable to accurately anticipate or adequately address such risks or the potential impact of such risks.

The occurrence

of any such risks could materially and adversely affect our business, financial condition, results of operations, reputation, and prospects.

Myseum may not be successful and may expose us

to legal, regulatory, and other risks.

Given the nascent and evolving nature of the metaverse, digital assets and blockchain technology,

we may be unable to accurately anticipate or adequately address such risks or the potential impact of such risks.

The occurrence of any

such risks could materially and adversely affect our business, financial condition, results of operations, reputation, and prospects.

It is difficult to predict how the legal and regulatory framework around such digital assets and services will develop and how such developments

will impact our business and our platforms.

The launch of Myseum subjects us to risks similar to those associated with any

new platform offering, including, but not limited to, our ability to accurately anticipate market demand and acceptance, our ability to

successfully launch these initiatives, technical issues with the operation of Myseum and legal and regulatory risks as discussed

If we fail to accurately anticipate or manage the risks associated

with Myseum or if we directly or indirectly become subject to disputes, liability, or other legal or regulatory issues in

connection with either of these initiatives, they may not be successful and our business, financial condition, results of operations,

reputation, and prospects could be materially harmed.

The launch of Myseum subjects us to risks similar to those associated with any new platform

offering, including, but not limited to, our ability to accurately anticipate market demand and acceptance, our ability to successfully

launch these initiatives, technical issues with the operation of Myseum and legal and regulatory risks as discussed above.

to accurately anticipate or manage the risks associated with Myseum or if we directly or indirectly become subject to disputes, liability,

or other legal or regulatory issues in connection with either of these initiatives, they may not be successful and our business, financial

condition, results of operations, reputation, and prospects could be materially harmed.

Our business is subject to risks generally

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or if our users decrease their level of engagement with Myseum, revenue, bookings, and operating results will be harmed.

Our business plan assumes that the demand

for social media offerings, specifically, the adoption of a platform for sharing and preserving of media.

However, if this market shrinks or grows more slowly than anticipated, or if demand for Myseum does not grow as quickly as we anticipate, whether as a result of competition, product

obsolescence, budgetary constraints of our developers, creators, and users, technological changes, unfavorable economic conditions,

uncertain geopolitical or regulatory environments or other factors, we may not be able to increase our revenue and bookings

sufficiently to ever achieve profitability and our stock price would decline.

The multitude of other social media

platforms, media sharing, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with

Myseum and seek other social media options.

These and other factors may lead users to switch to another entertainment option

rapidly, which can interfere with our ability to forecast usage and would negatively affect our user retention, growth, and

Falling user retention, growth, or engagement rates could harm our business.

Our business plan assumes that the demand for

social media offerings, specifically, the adoption of a platform for sharing and preserving of media.

However, if this market shrinks

or grows more slowly than anticipated, or if demand for Myseum does not grow as quickly as we anticipate, whether as a result of competition,

product obsolescence, budgetary constraints of our developers, creators, and users, technological changes, unfavorable economic conditions,

uncertain geopolitical or regulatory environments or other factors, we may not be able to increase our revenue and bookings sufficiently

to ever achieve profitability and our stock price would decline.

The multitude of other social media platforms,

media sharing, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with Myseum and seek

other social media options.

These and other factors may lead users to switch to another entertainment option rapidly, which can interfere

with our ability to forecast usage and would negatively affect our user retention, growth, and engagement.

Falling user retention, growth,

or engagement rates could harm our business.

We face intense competition for our products

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ways to support efforts to enter the social media business.

Additionally, social media has become more readily recognized as a

method of sharing media and as such, more competitors are seeking to enter this marketplace.

These technologies are subject

to rapidly changing technological developments, shifting organizational priorities and requirements, frequent introductions of new products

and services, and increased marketing and sales activities of other industry participants.

Many competitors exist in the overlapping

areas of social media and traditional digital marketing, data analytics, and digital transformation.

Many of our current and

potential competitors have a significantly larger market presence, greater name recognition, access to more potential customers and

substantially greater financial, technical, sales and marketing, management, support, and other resources than we have.

many of our competitors can respond more quickly than we can to new or changing opportunities and technologies, and may devote

greater resources to the marketing, promotion and sale of their products than we can.

Additionally, social media has become more readily recognized as a method

of sharing media and as such, more competitors are seeking to enter this marketplace.

These technologies are subject to rapidly changing

technological developments, shifting organizational priorities and requirements, frequent introductions of new products and services,

and increased marketing and sales activities of other industry participants.

Many competitors exist in the overlapping areas

of social media and traditional digital marketing, data analytics, and digital transformation.

Many of our current and potential competitors

have a significantly larger market presence, greater name recognition, access to more potential customers and substantially greater financial,

technical, sales and marketing, management, support, and other resources than we have.

As a result, many of our competitors can respond

more quickly than we can to new or changing opportunities and technologies, and may devote greater resources to the marketing, promotion

and sale of their products than we can.

Our costs are continuing to grow, and some

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Operating our business is costly, and we expect

our expenses to continue to increase in the future as we add users and broaden our user base, as users increase the amount and types

of content they consume and the data they share with us, for example as we continue to expand our technical infrastructure, as we continue

our expenses to continue to increase in the future as we add users and broaden our user base, as users increase the amount and types of

content they consume and the data they share with us, for example as we continue to expand our technical infrastructure, as we continue

to invest in new and unproven technologies, and as we continue our efforts to focus on privacy, safety, security, and content review.

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We must continually anticipate and adapt to emerging technologies and business models to stay competitive.

Forecasting the

financial impact these changing technologies and business models may have is inherently uncertain and volatile.

Supporting a new technology

or business model may require affiliating with a new business or technology vendor, and such affiliation may be on terms that are less

favorable to us than those for traditional technologies or business models.

If we invest in the development of content offerings that

incorporate a new technology or business model that does not achieve significant popularity, whether because of competition or otherwise,

we may not recover the often substantial costs of developing and marketing those content offerings, or recover the opportunity cost of

diverting company resources away from other content and product offerings.

In the near and longer term, we expect to take advantage of

broader trends such as the growth of the metaverse in the digital economy and the associated increase in importance of technologies such

as blockchains, virtual reality and augmented reality.

We may not be successful in allocating our resources to these new areas and may

not recover the costs and opportunity costs of investing in these opportunities instead of others.

Further, our competitors may adapt

to these or other emerging technologies or business models more quickly or effectively than we do.

Forecasting the financial

impact these changing technologies and business models may have is inherently uncertain and volatile.

Supporting a new technology or business

model may require affiliating with a new business or technology vendor, and such affiliation may be on terms that are less favorable to

us than those for traditional technologies or business models.

If we invest in the development of content offerings that incorporate a

new technology or business model that does not achieve significant popularity, whether because of competition or otherwise, we may not

recover the often substantial costs of developing and marketing those content offerings, or recover the opportunity cost of diverting

company resources away from other content and product offerings.

In the near and longer term, we expect to take advantage of broader trends

such as the growth of the metaverse in the digital economy and the associated increase in importance of technologies such as blockchains,

virtual reality and augmented reality.

We may not be successful in allocating our resources to these new areas and may not recover the

costs and opportunity costs of investing in these opportunities instead of others.

Further, our competitors may adapt to these or other

emerging technologies or business models more quickly or effectively than we do.

If, on the other hand, we elect not to pursue

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You should consider an investment in our common

stock and Series A Warrants to be risky, and you should invest in our common stock and Series A Warrants only if you can withstand a

significant loss and wide fluctuations in the market value of your investment.

Some factors that may cause the market price of our common

stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this Annual

Report on Form 10-K, are:

stock and Series A Warrants to be risky, and you should invest in our common stock and Series A Warrants only if you can withstand a significant

loss and wide fluctuations in the market value of your investment.

Some factors that may cause the market price of our common stock to

fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this Annual Report on

Form 10-K, are:

sale of our common stock by our shareholders, executives, and directors;

volatility and limitations in trading volumes of our shares of common

volatility and limitations in trading volumes of our shares of common stock;

our ability to obtain financing;

the timing and success of introductions of new products by us or our

competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors;

the timing and success of introductions of new products by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors;

our ability to attract new customers;

changes in our capital structure or dividend policy, future issuances

of securities, sales of large blocks of common stock by our shareholders;

changes in our capital structure or dividend policy, future issuances of securities, sales of large blocks of common stock by our shareholders;

our cash position;

announcements and events surrounding financing efforts, including debt

and equity securities;

announcements and events surrounding financing efforts, including debt and equity securities;

our inability to enter into new markets or develop new products;

reputational issues;

announcements of acquisitions, partnerships, collaborations, joint

ventures, new products, capital commitments, or other events by us or our competitors;

changes in general economic, political and market conditions in or

any of the regions in which we conduct our business;

announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors;

changes in general economic, political and market conditions in or any of the regions in which we conduct our business;

changes in industry conditions or perceptions;

analyst research reports, recommendation and changes in recommendations,

price targets, and withdrawals of coverage;

analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage;

departures and additions of key personnel;

disputes and litigations related to intellectual properties, proprietary

rights, and contractual obligations;

changes in applicable laws, rules, regulations, or accounting practices

and other dynamics;

disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations;

changes in applicable laws, rules, regulations, or accounting practices and other dynamics;

other events or factors, many of which may be out of our control.

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We may acquire other companies or technologies,

which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and

adversely affect our operating results.

which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and adversely

affect our operating results.

We may in the future seek to acquire or invest

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benefits from the acquired business due to a number of factors, including:

inability to integrate or benefit from acquired technologies or services

in a profitable manner;

inability to integrate or benefit from acquired technologies or services in a profitable manner;

unanticipated costs or liabilities associated with the acquisition;

difficulty integrating the accounting systems, operations and personnel

of the acquired business;

difficulties and additional expenses associated with supporting legacy

products and hosting infrastructure of the acquired business;

difficulty converting the customers of the acquired business onto our

platform and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired

diversion of management’s attention from

other business concerns;

adverse effects to our existing business relationships

with business partners and customers as a result of the acquisition;

difficulty integrating the accounting systems, operations and personnel of the acquired business;

difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

difficulty converting the customers of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company;

diversion of management’s attention from other business concerns;

adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;

the potential loss of key employees;

use of resources that are needed in other parts

of our business;

use of substantial portions of our available

cash to consummate the acquisition.

use of resources that are needed in other parts of our business;

use of substantial portions of our available cash to consummate the acquisition.

In addition, a significant portion of the purchase

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If research analysts do not publish research

about our business or if they issue unfavorable commentary or downgrade our common stock or Series A Warrants, our securities’

price and trading volume could decline.

about our business or if they issue unfavorable commentary or downgrade our common stock or Series A Warrants, our securities’ price

and trading volume could decline.

The trading market for our securities may depend

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all or any portion of such stockholder’s investment in the event of a dissolution or termination may be limited.

In the event of a dissolution or termination

of the Company, the proceeds realized from the liquidation of the assets of the Company or such subsidiaries will be distributed among

the stockholders, but only after the satisfaction of the claims of third-party creditors of the Company.

The ability of a stockholder

to recover all or any portion of such stockholder’s investment under such circumstances will, accordingly, depend on the amount

of net proceeds realized from such liquidation and the amount of claims to be satisfied therefrom.

There can be no assurance that the

Company will recognize gains on such liquidation, nor is there any assurance that Common Stock holders will receive a distribution in

We do not intend to pay cash dividends

on our shares of common stock so any returns will be limited to the value of our shares.

In the event of a dissolution or termination of

the Company, the proceeds realized from the liquidation of the assets of the Company or such subsidiaries will be distributed among the

stockholders, but only after the satisfaction of the claims of third-party creditors of the Company.

The ability of a stockholder to recover

all or any portion of such stockholder’s investment under such circumstances will, accordingly, depend on the amount of net proceeds

realized from such liquidation and the amount of claims to be satisfied therefrom.

There can be no assurance that the Company will recognize

gains on such liquidation, nor is there any assurance that Common Stock holders will receive a distribution in such a case.

We do not intend to pay cash dividends on

our shares of common stock so any returns will be limited to the value of our shares.

We currently anticipate that we will retain future

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We are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we have elected to take advantage of

certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth

companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley

Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from

the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments

not previously approved.

In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we have elected

to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised

accounting standards.

In other words, an “emerging growth company” can delay the adoption of certain accounting standards

until those standards would otherwise apply to private companies.

As such, our financial statements may not be comparable to companies

that comply with public company effective dates.

We cannot predict if investors will find our

common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result,

there may be a less active trading market for our common stock and our stock price may be more volatile.

We may take advantage of these

reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company”

until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more;

the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering;

date on which we have issued more than $1 billion in nonconvertible debt during the previous three years;

or (iv) the date on which we

are deemed to be a large accelerated filer under the rules of the SEC.

We may be at risk of securities class action

as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we have elected to take advantage of certain

exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”

including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced

disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements

of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously

In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we have elected to take advantage

of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards.

In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards

would otherwise apply to private companies.

As such, our financial statements may not be comparable to companies that comply with public

company effective dates.

We cannot predict if investors will find our common

stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result, there

may be a less active trading market for our common stock and our stock price may be more volatile.

We may take advantage of these reporting

exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until

the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more;

(ii) the last

day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering;

(iii) the date on

which we have issued more than $1 billion in nonconvertible debt during the previous three years;

or (iv) the date on which we are deemed

to be a large accelerated filer under the rules of the SEC.

We may be at risk of securities class action

In the past, small-cap issuers have experienced significant stock price volatility, particularly when associated with regulatory

requirements by governmental authorities, which our industry now increasingly faces.

If we face such litigation, it could result in substantial

costs and a diversion of management’s attention and resources, which could harm our business and results in a decline in the market

price of our common stock.

We may be at risk of securities class action litigation.

In the past, small-cap issuers have experienced significant stock price volatility, particularly when associated with regulatory requirements

by governmental authorities, which our industry now increasingly faces.

If we face such litigation, it could result in substantial costs

and a diversion of management’s attention and resources, which could harm our business and results in a decline in the market price

of our common stock.

Financial reporting obligations of being

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costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance

practices, including those under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) the Dodd-Frank Wall Street Reform and

Consumer Protection Act, and the listing requirements of the stock exchange on which our securities are listed.

These rules require the

establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting

and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain

compliance with.

Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will

make some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” In

addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability

Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these

requirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or

being delisted, among other potential problems.

practices, including those under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) the Dodd-Frank Wall Street Reform and Consumer

Protection Act, and the listing requirements of the stock exchange on which our securities are listed.

These rules require the establishment

and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in

corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance

Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some

activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” In addition,

we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance.

Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements

and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted,

among other potential problems.

If we fail to comply with the rules under

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We urge our shareholders

to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in

our common stock.

to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our

common stock.

We could issue “blank check”

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certain listing criteria including total number of shareholders:

minimum stock price, total value of public float, and in some cases

total shareholders’ equity and market capitalization.

Our failure to meet such applicable listing criteria could prevent us from

listing our common stock on the Nasdaq.

In the event we are unable to have our shares traded on Nasdaq, our common stock could potentially

trade on the OTCQX or the OTCQB, each of which is generally considered less liquid and more volatile than the Nasdaq.

Our failure to

have our shares traded on the Nasdaq could make it more difficult for you to trade our shares, could prevent our common stock trading

on a frequent and liquid basis and could result in the value of our Common Stock being less than it would be if we were able to list

our shares on the Nasdaq.

minimum stock price, total value of public float, and in some cases total

shareholders’ equity and market capitalization.

Our failure to meet such applicable listing criteria could prevent us from listing

our common stock on the Nasdaq.

In the event we are unable to have our shares traded on Nasdaq, our common stock could potentially trade

on the OTCQX or the OTCQB, each of which is generally considered less liquid and more volatile than the Nasdaq.

Our failure to have our

shares traded on the Nasdaq could make it more difficult for you to trade our shares, could prevent our common stock trading on a frequent

and liquid basis and could result in the value of our Common Stock being less than it would be if we were able to list our shares on the

Our principal stockholders and management

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Accordingly, these stockholders have and will continue to have significant influence over the outcome

of corporate actions requiring stockholder approval, including the election of directors, a merger, the consolidation or sale of all

or substantially all of our assets or any other significant corporate transaction.

The interests of these stockholders may not be the

same as or may even conflict with our other investors’ interests.

For example, these stockholders could delay or prevent a change

in control of us, even if such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity

of corporate actions requiring stockholder approval, including the election of directors, a merger, the consolidation or sale of all or

substantially all of our assets or any other significant corporate transaction.

The interests of these stockholders may not be the same

as or may even conflict with our other investors’ interests.

For example, these stockholders could delay or prevent a change in

control of us, even if such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity

to receive a premium for their Common Stock as part of a sale of the Company or our assets.

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may negatively impact the value of our Common Stock due to potential investors’ perception that conflicts of interest may exist

There are risks associated with the completion

of the proposed spin-off of our Habytat platform business.

As previously announced, we plan to spin-off

the Habytat platform business, which will operate independently as a publicly listed company.

There is no assurance we will be able to

successfully complete the proposed spin-off.

In the event the Company does not complete the spin-off, it could incur write-offs related

to the legal, tax and regulatory costs of the proposed transaction.

Our Articles of Incorporation, as amended,

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Penny stocks are generally equity securities with a price of less than $5.00,

other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation

systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange

If we do not obtain or retain a listing on the Nasdaq Capital Market or if the price of our common stock falls below $5.00,

our common stock will be deemed a penny stock.

The penny stock rules require a broker-dealer, before a transaction in a penny stock not

otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information.

the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer

must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s

other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems,

provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system.

If we do not obtain or retain a listing on the Nasdaq Capital Market or if the price of our common stock falls below $5.00, our common

stock will be deemed a penny stock.

The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise

exempt from those rules, to deliver a standardized risk disclosure document containing specified information.

In addition, the penny stock

rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make

a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s

written acknowledgment of the receipt of a risk disclosure statement;

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a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock”

rules described above, the Financial Industry Regulatory Authority, Inc.

(“FINRA”), has adopted rules that require that in

recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable

for that customer.

Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must

make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other

The FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock,

which may have the effect of reducing the level of trading activity in our common stock.

As a result, fewer broker-dealers may be willing

to make a market in our common stock, reducing a stockholder’s ability to resell shares, as well as overall liquidity, of our common

In addition to the “penny stock” rules

described above, the Financial Industry Regulatory Authority, Inc.

(“FINRA”), has adopted rules that require that in recommending

an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.

Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts

to obtain information about the customer’s financial status, tax status, investment objectives and other information.

requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the

effect of reducing the level of trading activity in our common stock.

As a result, fewer broker-dealers may be willing to make a market

in our common stock, reducing a stockholder’s ability to resell shares, as well as overall liquidity, of our common stock.

Our Amended and Restated Articles of Incorporation

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(i) any derivative action or proceeding brought

in the name or right of the Company or on its behalf, (ii) any action asserting a claim for breach of any fiduciary duty owed by any

director, officer, employee or agent of the Company to the Company or the Company’s stockholders, (iii) any action arising or asserting

a claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78 or 92A or any provision of the Company’s Amended

in the name or right of the Company or on its behalf, (ii) any action asserting a claim for breach of any fiduciary duty owed by any director,

officer, employee or agent of the Company to the Company or the Company’s stockholders, (iii) any action arising or asserting a

claim arising pursuant to any provision of Nevada Revised Statutes Chapters 78 or 92A or any provision of the Company’s Amended

and Restated Articles of Incorporation or Amended and Restated Bylaws or (iv) any action asserting a claim governed by the internal affairs

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States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities

Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation are deemed to

have notice of and consented to this provision.

As this provision applies to Securities Act claims, there may be uncertainty whether

a court would enforce such a provision.

These choice of forum provisions may limit a

stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors,

officers or other employees, which may discourage such lawsuits against the Company and its directors, officers and other employees.

Alternatively, if a court were to find our choice of forum provisions contained in either our Amended and Restated Articles of Incorporation

or Amended and Restated Bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with

resolving such action in other jurisdictions, which could harm its business, results of operations, and financial condition.

Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation are deemed to have

notice of and consented to this provision.

As this provision applies to Securities Act claims, there may be uncertainty whether a court

would enforce such a provision.

These choice of forum provisions may limit a stockholder’s

ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other

employees, which may discourage such lawsuits against the Company and its directors, officers and other employees.

Alternatively, if a

court were to find our choice of forum provisions contained in either our Amended and Restated Articles of Incorporation or Amended and

Restated Bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such

action in other jurisdictions, which could harm its business, results of operations, and financial condition.

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