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Risks Related to Our Business, Operations and Industry
−Removed: Our revenue has declined, we have a history of losses, we expect to continue to incur losses and we may not achieve or sustain profitability in the future.
+Added: We have a history of losses, we expect to continue to incur losses and we may not achieve or sustain profitability in the future.
We have incurred significant losses in each fiscal year since our inception.
We experienced a consolidated net loss for the years ended December 31, 2021 and December 31, 2020.
−Removed: These losses were due to both a reduction in revenue in 2019 and 2020, as compared to previous years, and the substantial investments we made to build our products and services, grow and maintain our business and acquire customers.
+Added: These losses were due to both a reduction in revenue in 2020 and 2021, as compared to previous years, and the substantial investments we made to build our products and services, grow and maintain our business, acquire customers and service our various debt obligations.
You should not consider our historical revenue levels or operating expenses prior to recent periods as indicative of our future performance.
−Removed: Key elements of our growth strategy include acquiring new customers and continuing to innovate and build our brand.
+Added: Key elements of our growth strategy include acquiring new customers and continuing to innovate and expand our product offerings.
As a result, our operating expenses may continue to increase in the future due to expected increased sales and marketing expenses, operations costs, research and development costs and general and administrative costs and, therefore, our operating losses may continue or even potentially increase for the foreseeable future.
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Our efforts to grow our business may be costlier than we expect and we may not be able to increase our revenue enough to offset our higher operating expenses.
−Removed: We may incur significant losses in the future for many reasons, including the other risks described in this Report and unforeseen expenses, difficulties, complications and delays and other unknown events.
+Added: We may incur significant losses in the future for many reasons, including the other risks described in this Annual Report and unforeseen expenses, difficulties, complications and delays and other unknown events.
You should not rely upon future bookings we may announce or revenue growth as indicative of our future performance.
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If we are ultimately unable to generate sufficient revenue to meet our financial targets, become profitable and have sustainable positive cash flows, investors could lose their investment.
−Removed: The novel coronavirus (“COVID-19”) outbreak could adversely affect our business, operating results, cash flow and financial condition.
−Removed: We are closely monitoring the impact of the 2019 novel coronavirus, or COVID-19, on all aspects of our business.
−Removed: In March 2020, the World Health Organization characterized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency.
−Removed: Since then, the COVID-19 pandemic has rapidly spread across the globe and has already resulted in significant volatility, uncertainty and economic disruption.
−Removed: The future impacts of the pandemic and any resulting economic impact are largely unknown.
−Removed: It is possible that the COVID-19 pandemic, the measures taken by local, state and national governments and the resulting economic impact may materially and adversely affect our business, results of operations, cash flow and financial condition.
−Removed: The COVID-19 pandemic may prevent us from conducting business activities at full capacity for an extended period of time, including due to spread of the disease or due to shutdowns that are requested or mandated by governmental authorities.
−Removed: For example, we have taken precautionary measures intended to help minimize the risk of the virus to our employees which may disrupt our operations, including implementing a work-from-home policy for our employees until we determine to reopen our offices, canceling marketing events and suspending travel.
−Removed: An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including, but not limited to, cybersecurity risks, prevent us from expanding or upselling our customer base, prevent the timely delivery of contracts in progress and impair our ability to effectively manage our business.
−Removed: In addition, any economic downturn or recession resulting from the COVID-19 pandemic will likely impact demand for our products and services and adversely affect our operations.
−Removed: We expect there to be volatility in customer demand and
−Removed: buying habits as the pandemic continues and the resulting economic impacts are felt, including the possibilities that our end customers delay, decrease or cancel their planned purchases, or are unable to pay amounts owed to us.
−Removed: The extent to which COVID-19 ultimately impacts our business, results of operations, cash flow and financial condition will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions taken by governments and authorities to contain the virus or treat its impact, and when and to what extent normal economic and operating conditions can resume.
−Removed: These uncertainties have resulted in volatility in securities and financial markets, which may prevent us from accessing the equity or debt capital markets on attractive terms or at all for a period of time, which could have an adverse effect on our liquidity position.
−Removed: Even after the COVID-19 pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including as a result of any recession that may occur.
−Removed: The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this “ Risk Factors ” section and elsewhere in this Annual Report on Form 10-K.
−Removed: For these reasons, the current level of uncertainty over the economic and operational impacts of COVID-19 means the impact on our business, results of operations, cash flows and financial position cannot be reasonably estimated at this time.
−Removed: Our recent reductions in workforce may prevent us from executing initiatives to improve the performance of our business effectively or at all.
−Removed: We have been and are currently implementing certain initiatives to improve the performance of our business, and our recent reduction in workforce could prevent us from engaging in certain initiatives we had previously considered, and could prevent us from executing such initiatives effectively.
−Removed: During 2019, we conducted two reductions in our workforce by a combined 44 persons.
−Removed: In response to the COVID-19 outbreak, we furloughed 37 persons, or approximately 42%, of our workforce in March 2020.
−Removed: These reductions in our workforce could prevent us from engaging in certain initiatives to improve the performance of our business, due to an insufficiency of workforce size or an insufficiency of certain required skills, and could prevent us from executing initiatives effectively, which could have a material adverse effect on our financial results, business and prospects.
−Removed: We have a concentration of sales with a key customer and any substantial reduction in sales to such customer would have a material adverse effect on our results of operations and financial condition.
−Removed: During the year ended December 31, 2020, one major customer accounted for approximately 32% of our net revenue During the year ended December 31, 2019, our sales were concentrated with Fox Networks Group (“Fox”), which accounted for 50% of our net sales.
+Added: We face ongoing risks related to the COVID-19 pandemic and those risks could continue to significantly disrupt or materially adversely affect our business and operating results.
+Added: The COVID-19 pandemic has had a significant adverse impact on global commercial activity and has created significant volatility in financial markets.
+Added: Many governmental authorities have instituted quarantines, work-from-home directives, social distancing mandates, travel restrictions, border closures, limitations on public gatherings, and closures of or operational limitations on non-essential businesses, which are adversely impacting a number of industries such as travel, leisure, hospitality, and retail, in which we serve.
+Added: In addition, hospitals, a major sector of business in which we operate, have implemented their own restrictions regarding onsite non-essential personnel during the pandemic.
+Added: There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the global economy and consumer confidence.
+Added: The COVID-19 pandemic could have a sustained adverse impact on economic and market conditions and trigger a period of prolonged global economic slowdown, which could decrease technology spending, adversely affect demand for our offerings, and harm our business and operating results.
+Added: We believe our revenues may be negatively impacted in future periods until the effects of the pandemic have fully subsided and the current macroeconomic environment has substantially recovered.
+Added: The uncertainty related to COVID-19 may also result in increased volatility in the financial projections we use as the basis for estimates and assumptions used in our financial statements.
+Added: In light of the uncertain and rapidly evolving situation relating to COVID-19, we have taken precautionary measures intended to reduce the risk of the virus to our employees, customers and communities in which we operate.
+Added: We have established remote working arrangements for our employees, limited non-essential business travel and cancelled or shifted our customer,
+Added: employee and industry events to a virtual-only format when necessary and available.
+Added: As a result of these precautionary measures, there could be a negative impact on our sales, marketing and customer success efforts, continued delays in our sales cycles, delays in the release or delivery of new or enhanced product and service offerings or unexpected changes to such offerings, or operational or other challenges, any of which could significantly disrupt our business and operating results.
+Added: For example, our shift to creating virtual customer and industry events may not be successful, and we may not be able to showcase our products as effectively or generate the same customer interest, opportunities and leads through virtual events as we have historically done through in-person events.
+Added: Considerable uncertainty still surrounds COVID-19, the evolution of its variants, its potential long-term economic effects, as well as the effectiveness of any responses taken by government authorities and businesses and of various efforts to inoculate the global population.
+Added: Although we continue to actively monitor the situation and may take further actions as may be required by government authorities or as more information and public health guidance become available, we may not be able to immediately respond to, meet or enforce all required health and safety measures in all of our locations, and the full extent to which COVID-19 impacts our business and operating results will depend on future developments, including the duration, spread, severity and potential recurrence of the COVID-19 pandemic, impact on our customers and our sales cycles, our ability to generate new business leads, impact on our customer, employee, and industry events and effect on our vendors, all of which are highly uncertain and cannot be predicted.
+Added: In addition, the effects of the COVID-19 pandemic may heighten many of the other risks described in this “ Risk Factors ” section.
Goodwill comprises a significant portion of our total assets.
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We will continue to review our goodwill for possible impairment.
−Removed: certain that a future downturn in our business, changes in market conditions or a longer-term decline in the quoted market price of our stock will not result in an impairment of goodwill and the recognition of resulting expenses in future periods, which could adversely affect our results of operations for those periods.
+Added: We cannot be certain that a future downturn in our business, changes in market conditions or a longer-term decline in the quoted market price of our stock will not result in an impairment of goodwill and the recognition of resulting expenses in future periods, which could adversely affect our results of operations for those periods.
Current and future litigation could adversely affect us.
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As a smaller company, the collective costs of litigation proceedings represent a drain on our cash resources, and require an inordinate amount of our management’s time and attention.
−Removed: An adverse ruling with respect to our current or any other litigation could have a material adverse effect on our results of operations and financial condition.
+Added: An adverse ruling with respect to our current or any other
+Added: litigation could have a material adverse effect on our results of operations and financial condition.
Negative publicity surrounding such legal proceedings may also harm our reputation and adversely impact our business and results.
−Removed: Moreover, as more fully described in Note 9 " Commitments and Contingencies" of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, in October 2020 the Company, including our Chief Executive Officer, settled its ongoing lawsuit with Uber Technologies, Inc.
−Removed: We must make total settlement payments to Uber of $4.5 million over the course of three equal installments with the final installment due September 30, 2021.
−Removed: These settlement payments will divert cash resources and could adversely impact our business, results of operations and financial condition.
−Removed: Our results of operations and ability to grow could be negatively affected if we cannot adapt and expand our technology offerings and services in response to ongoing market changes.
+Added: Our results of operations and ability to grow could be negatively affected if we cannot adapt and expand our technology and product and service offerings in response to ongoing market changes.
The collaboration and technology solutions business and markets are characterized by rapid technological change, evolving industry standards, changing customer preferences and new product and service introductions.
−Removed: Our success depends on our ability to continue to develop and implement technology offerings and services that anticipate or timely respond to rapid and continuing changes in technology and industry developments and offerings by new technology providers to serve the evolving needs of our customers.
+Added: Our success depends on our ability to continue to develop and implement technology, product and service offerings that anticipate or timely respond to rapid and continuing changes in technology and industry developments and offerings by new technology providers to serve the evolving needs of our customers.
Examples of areas of significant change in the industry include cloud, software defined infrastructure, virtualization, security, mobility, data analytics and IoT, the continued shift from maintenance to managed services and ultimately to cloud based services, as-a-service solutions, security and information technology automation.
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If we are unable to expand or renew sales to existing customers, or attract new customers, our growth could be slower than expected and our business may be harmed.
−Removed: Our future growth depends upon expanding sales and renewals of our technology offerings and services with existing customers.
−Removed: Our customers may not purchase our technology offerings and services, or our customers may reduce their purchase rate of services, if we do not demonstrate the value proposition for their investment and we may not be able to replace existing customers with new customers.
+Added: Our future growth depends upon expanding sales and renewals of sales of our technology and service offerings to existing customers and expansion of our personal computer offerings.
+Added: Our customers may not continue to purchase our technology offerings and services, or our customers may reduce their purchase rate of services, if we do not demonstrate the value proposition for their investment and we may not be able to replace existing customers with new customers.
In addition, our customers may not renew their contracts with us on the same terms, or at all, because of dissatisfaction with our product or service offerings.
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Additionally, increasing incremental sales to our current customer base may require increasingly sophisticated and costly sales efforts that are targeted at senior management.
−Removed: We plan to continue expanding our sales efforts but we may be
−Removed: unable to hire qualified sales personnel, may be unable to successfully train those sales personnel that we are able to hire and sales personnel may not become fully productive on the timelines that we have projected, or at all.
+Added: We plan to continue expanding our sales efforts but we may be unable to hire qualified sales personnel, may be unable to successfully train those sales personnel that we are able to hire and sales personnel may not become fully productive on the timelines that we have projected, or at all.
Additionally, although we dedicate significant resources to sales and marketing programs, these sales and marketing programs may not have the desired effect and may not expand sales.
−Removed: We cannot assure you that our efforts will increase sales to existing customers or generate additional revenue.
−Removed: If our efforts to upsell to our customers are not successful, our future growth may grow more slowly than expected, may not grow at all, or may decline.
+Added: We cannot provide assurance that our efforts will increase sales to existing customers or generate additional revenue.
+Added: If our efforts to upsell to our customers are not successful or we cannot find additional expansion opportunities, our future growth may grow more slowly than expected, may not grow at all, or may decline.
Our ability to achieve significant growth in revenue in the future will also depend upon our ability to attract new customers.
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If we fail to attract new customers and maintain and expand those customer relationships, our revenue may grow more slowly than expected, may not grow at all, or may decline and our business may be harmed.
−Removed: Demand for our technology offerings and services could be adversely affected by volatile, negative, or uncertain economic conditions, including, but not limited to those caused by the COVID-19 pandemic, and the effects of these conditions on our customers’ businesses.
−Removed: Our revenue and profitability depend on the demand for our technology offerings and services, which could be negatively affected by numerous factors, many of which are beyond our control.
+Added: Demand for our technology, product and service offerings could be adversely affected by volatile, negative, or uncertain economic conditions, including, but not limited to those caused by the COVID-19 pandemic, and the effects of these conditions on our customers’ businesses.
+Added: Our revenue and profitability depend on the demand for our technology, product and service offerings, which could be negatively affected by numerous factors, many of which are beyond our control.
Volatile, negative, or uncertain economic conditions, including those caused by the COVID-19 pandemic affect our customers’ businesses and the markets we serve.
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Changing demand patterns from economic volatility and uncertainty could have a significant negative impact on our business, results of operations, or financial condition.
−Removed: The actual market for our solutions could be significantly smaller than estimates of total potential market opportunity and if customer demand for our services does not meet expectations, our ability to generate revenue and meet our financial targets could be adversely affected.
+Added: If we fail to maintain the efficiency of our supply chain as we respond to changes in customer demand for our products, our business could be materially adversely affected.
+Added: Our ability to meet customer demand for our products depends, in part, on our ability to deliver the products our customers want on a timely basis.
+Added: Accordingly, we rely on our supply chain for the manufacturing, distribution and fulfillment of Lyte personal computers.
+Added: As we continue to grow Lyte, expand to international markets and acquire new customers, the efficiency of our supply chain will become increasingly important because many of our customers tend to have specific requirements for Lyte products, and specific time-frames in which they require delivery of these products.
+Added: If we are unable to consistently deliver the right personal computers to our customers on a timely basis in the right locations, our customers may not order from us, which could have a material adverse effect on our business.
+Added: Worldwide political conditions may adversely affect demand for our products.
+Added: Worldwide political conditions may create uncertainties that could adversely affect our business.
+Added: The United States has been and may continue to be involved in armed conflicts that could have a further impact on our sales and our supply chain related to acquiring necessary inventory to assemble Lyte computers.
+Added: The consequences of armed conflict, political instability or civil or military unrest are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us.
+Added: Terrorist attacks or other hostile acts may negatively affect our operations, or adversely affect demand for our products, and such attacks or related armed conflicts may impact our physical facilities or those of our suppliers or customers.
+Added: Furthermore, these attacks or hostile acts may make travel and the transportation of our products more difficult and more expensive, which could materially adversely affect us.
+Added: Any of these events could cause consumer spending to decrease or result in increased volatility in the United States economy and worldwide financial markets.
+Added: The actual market for our product solutions could be significantly smaller than estimates of total potential market opportunity and if customer demand for our services does not meet expectations, our ability to generate revenue and meet our financial targets could be adversely affected.
While we expect strong growth in the markets for our products, it is possible that the growth in some or all of these markets may not meet our expectations, or materialize at all.
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If any of these assumptions proves to be inaccurate, then the actual market for our solutions could be significantly smaller than our estimates of our total potential market opportunity.
−Removed: If the customer demand for our services or the adoption rate in our target markets does not meet our expectations, our ability to generate revenue from customers and meet our financial targets could be adversely affected.
+Added: If the customer demand for our products or services or the adoption rate in our target markets does not meet our expectations, our ability to generate revenue from customers and meet our financial targets could be adversely affected.
Substantial competition could reduce our market share and significantly harm our financial performance.
−Removed: The market in which we operate is highly competitive, with relatively low barriers to entry for some software or service organizations.
−Removed: Some customers may be hesitant to switch vendors or to adopt cloud-based software such as ours and prefer to maintain their existing relationships with their legacy software vendors.
+Added: The market in which we operate is highly competitive, with relatively low barriers to entry for some software, product or service organizations.
+Added: Some customers may be hesitant to switch vendors or to adopt cloud-based software such as ours and prefer to maintain their existing relationships.
Some of our competitors are larger and have greater name recognition, much longer operating histories, larger marketing budgets and significantly greater resources than we do.
−Removed: We also face competition from custom-built software vendors and from vendors of specific applications, some of which offer cloud-based solutions.
−Removed: We may also face competition from a variety of vendors of cloud-based and on-premise software products that address only a portion of our platform.
+Added: We also face competition from custom-built software vendors and from vendors of specific applications, some of which offer cloud-based solutions, as well as custom-built personal computer hardware vendors.
+Added: We may also face competition from a variety of vendors of software
+Added: and products that address only a portion of our platform.
In addition, other companies that provide cloud-based software in different target markets may develop software or acquire companies that operate in our target markets, and some potential customers may elect to develop their own internal software.
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Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources.
−Removed: If our platform does not become more accepted relative to our competitors’, or if our competitors are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capable than ours, then our revenues could be adversely affected.
+Added: If our technology offerings do not become more accepted relative to our competitors’, or if our competitors are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capable than ours, then our revenues could be adversely affected.
In addition, some of our competitors may offer their products and services at a lower price.
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In addition, large and complex projects may involve multiple engagements or stages and there is a risk that a customer may choose not to retain us for additional stages or may cancel or delay additional planned engagements.
−Removed: Such cancellations or delays may make it difficult to plan our project resource requirements and may result in lower profitability levels than we anticipated upon commencing engagements.
+Added: Such cancellations or
+Added: delays may make it difficult to plan our project resource requirements and may result in lower profitability levels than we anticipated upon commencing engagements.
Our business strategy is evolving.
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We continue to invest in new services and technologies, including adding additional vertical solutions to our product offerings and blockchain.
+Added: We also plan to expand Lyte internationally.
The complexity of these solutions, our learning curve in developing and supporting them and significant competition in the markets for these solutions could make it difficult for us to market and implement these solutions successfully.
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We may choose to expand by making additional acquisitions that could be material to our business.
−Removed: We have in the past made several acquisitions of complementary businesses, including acquisitions of Odyssey, Simplikate, Digby, Tapit!
+Added: We have in the past made several acquisitions of complementary businesses, including acquisitions of Odyssey, Simplikate, Digby, Tapit!, GoTV and our most recently completed acquisition of Lyte.
Acquisitions involve many risks, including the following:
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All revenue is recognized pursuant to applicable accounting standards.
−Removed: Our failure to meet all the obligations, or otherwise meet a customer’s expectations, may result in us having to record the cost related to the performance of services in the period that services were rendered, but delay the timing of revenue recognition to a future period in which all obligations have been met.
+Added: Our failure to meet all the obligations, or otherwise meet a customer’s
+Added: expectations, may result in us having to record the cost related to the performance of services in the period that services were rendered, but delay the timing of revenue recognition to a future period in which all obligations have been met.
Our financial results may be adversely affected by changes in accounting principles applicable to us.
−Removed: generally accepted accounting principles (“GAAP”) is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles.
+Added: generally accepted accounting principles (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles.
A change in these principles or interpretations could have a significant effect on our reported financial results for periods prior and subsequent to such change.
−Removed: For example, recent new standards issued by the FASB that could materially impact our financial statements include revenue from contracts with customers, costs of obtaining a contract and accounting for leases.
+Added: For example, recent new standards issued by the FASB that could materially impact our financial statements include standards regarding recognition of revenue from contracts with customers, costs of obtaining a contract and accounting for leases.
We may adopt one or more of these standards retrospectively to prior periods and the adoption may result in an adverse change to previously reported results.
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2016-02, Leases (Topic 842).
−Removed: Under this guidance, companies will be required to recognize all leases on their balance sheets by recording a lessee’s rights and obligations.
−Removed: When the rules are effective, we will be required to account for the leases as assets and liabilities on our balance sheet, where previously we accounted for such leases on an “off balance sheet” basis.
−Removed: We plan to implement this guidance the first quarter of our fiscal year 2021 on a modified retrospective basis.
−Removed: As a result, a significant amount of lease related assets and liabilities will be recorded on our balance sheet and we may be required to make other changes to the recording and classification of our lease related expenses.
−Removed: Though these changes will not have any direct impact on our overall financial condition, these changes could cause investors or others to believe that we are highly leveraged and could change the calculations of financial metrics, as well as third-party financial models regarding our financial condition.
+Added: Under this guidance, companies are required to recognize all leases on their balance sheets by recording a lessee’s rights and obligations.
+Added: We implemented this guidance in January 2021 on a modified retrospective basis and are required to account for the leases as assets and liabilities on our balance sheet, where previously we accounted for such leases on an “off balance sheet” basis.
+Added: As a result, a significant amount of lease related assets and liabilities were recorded on our balance sheet.
+Added: Though these changes did not have any direct impact on our overall financial condition, these changes could cause investors or others to believe that we are highly leveraged and could change the calculations of financial metrics, as well as third-party financial models regarding our financial condition.
To adopt new standards, we may have to implement new modules in our accounting system, hire consultants and increase our spending on audit fees, thereby increasing our general and administrative expense.
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• changes in spending on subscriptions, services and application transactions media offerings and services by our current or prospective customers;
+Added: • our ability to scale and expand Lyte;
• pricing our technology offerings and services effectively so that we are able to attract and retain customers without compromising our operating results;
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• customer renewal rates and the amounts for which agreements are renewed;
−Removed: • seasonality and its effect on customer demand;
+Added: • seasonality and its effect on customer demand for Lyte personal computers;
• awareness of our brand;
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We could be held liable for damages or our reputation could suffer from security breaches or disclosure of confidential information or personal data.
−Removed: We are dependent on technology networks and systems to process, transmit and securely store electronic information and to communicate among our locations and with our customers.
+Added: In the normal course of business as a seller of personal computers via the internet, we obtain large amounts of personal data, including credit and debit card information.
+Added: We are also dependent on technology networks and systems to process, transmit and securely store electronic information and to communicate among our locations and with our customers.
Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential loss or unauthorized disclosure of confidential information or data, including personal data.
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If any person, including any of our employees, negligently disregards or intentionally breaches controls or procedures with which we are responsible for complying with respect to such data, or otherwise mismanages or misappropriates that data, or if unauthorized access to or disclosure of data in our possession or control occurs, we could be subject to liability and penalties in connection with any violation of applicable privacy laws and/or criminal prosecution, as well as significant liability to our customers or our customers’ clients’ for breaching contractual confidentiality and security provisions or privacy laws.
−Removed: These risks will increase as we continue to grow our cloud-based product offerings and services and store and process increasingly large amounts of our customers’ confidential information and data and host or manage parts of our customers’ businesses, especially in industries involving particularly sensitive data such as the healthcare industry we serve.
+Added: These risks will increase as we continue to grow our cloud-based product offerings and services and store and process increasingly large amounts of our customers’ confidential information and data and host or manage parts of our customers’ businesses, especially in industries involving particularly sensitive data such as the healthcare industry which we serve.
The loss or unauthorized disclosure of sensitive or confidential customer or employee data, including personal data, whether through breach of computer systems, systems failure, employee negligence, fraud or misappropriation, or otherwise, could damage our reputation and cause us to lose customers.
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If we cause disruptions in our customers’ businesses or provide inadequate service, our customers may have claims for substantial damages against us, which could cause us to lose customers, have a negative effect on our corporate reputation and adversely affect our results of operations.
−Removed: If we make errors in the course of delivering services to our customers or fail to consistently meet our service-level obligations or other service requirements of our customers, these errors or failures could disrupt our customers' business, which could result in a reduction in our revenue or a claim for substantial damages against us.
+Added: If we make errors in the course of delivering services to our customers or fail to consistently meet our service-level obligations or other service requirements of our customers, such errors or failures could disrupt our customers' business, which could result in a reduction in our revenue or a claim for substantial damages against us.
In addition, a failure or inability by us to meet a contractual requirement could subject us to penalties, cause us to lose customers or damage our brand or corporate reputation and limit our ability to attract new business.
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Our technology offerings and services could infringe upon the intellectual property rights of others or we might lose our ability to use intellectual property of others.
−Removed: We cannot be sure that our brand, software solution product offerings and services do not infringe on the intellectual property rights of third parties, which could claim that we or our customers are infringing upon their intellectual property rights.
+Added: We cannot be sure that our brand, software solution and personal computing product offerings and services do not infringe upon the intellectual property rights of third parties, who could claim that we or our customers are infringing upon their intellectual property rights.
These claims could harm our reputation, cause us to incur substantial costs or prevent us from offering some products or services in the future, or require us to rebrand.
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In some instances, the amount of these indemnities could be greater than the revenue we receive from the customer.
−Removed: Any claims or litigation in this area, regardless of merit, could be time-consuming and costly, damage our reputation, and/or require us to incur additional costs to obtain the right to continue to offer a service or solution to our customers.
+Added: Any claims or litigation in this area, regardless of merit, could be time-consuming and costly, damage our reputation, and/or require us to incur additional costs to obtain the right to continue to offer a product, service or solution to our customers.
If we cannot secure this right at all or on reasonable terms, or, alternatively, substitute a non-infringing technology, our business, results of operations, or financial condition could be harmed.
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Our global operations are subject to complex risks, some of which might be beyond our control.
−Removed: Although international revenue currently represents a small portion of our revenue, our business from outside of the United States may expand in the future as we expand our international presence, including but not limited to our subscription, application transaction, services and digital currency offerings.
+Added: Although international revenue currently represents a small portion of our revenue, our business from outside of the United States may expand in the future as we expand our international presence, including but not limited to our subscription, application transaction, Lyte personal computing, services and digital asset offerings.
As a result, we may be subject to risks inherently associated with international operations, including risks associated with foreign currency exchange rate fluctuations, difficulties in enforcing intellectual property and/or contractual rights, the burdens of complying with a wide variety of foreign laws and regulations, potentially adverse tax consequences, tariffs, quotas and other barriers, potential difficulties in collecting accounts receivable, international hostilities, terrorism and natural disasters.
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As a result, we and our customers could find it extremely difficult to accurately forecast and plan future business activities.
−Removed: In addition, these conditions could cause our customers or prospective customers to reduce their marketing and sales budgets, which could decrease corporate spending on our product and service offerings, resulting in delayed and lengthened sales cycles, a decrease in new customer acquisition and/or loss of customers.
+Added: In addition, these conditions could cause our customers or prospective customers to reduce their information technology and individual household budgets, which could decrease corporate and individual spending on our product and service offerings, resulting in delayed and lengthened sales cycles, a decrease in new customer acquisition and/or loss of customers.
Furthermore, during challenging economic times, our customers may face issues with their cash flows and with gaining timely access to sufficient credit or obtaining credit on reasonable terms, which could impair their ability to make timely payments to us, impact customer renewal rates and adversely affect our revenue.
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business from existing customers on terms that would be favorable or comparable to prior periods, which could have an adverse effect on our revenue and growth.
−Removed: Because we recognize revenue from application development services as those obligations are transferred to customers and platform subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our operating results.
+Added: Because we recognize revenue from application development services as deliverables are transferred to customers and platform subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our operating results.
We recognize revenue related to application development services upon the transfer of control to the customer of those services.
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If we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.
−Removed: The lengthy sales cycle for the evaluation and implementation of our solutions, which typically extends for several months, may cause us to experience a delay between increasing operating expenses for such sales efforts, and, upon successful sales, the generation of corresponding revenue.
+Added: The lengthy sales cycle for the evaluation and implementation of our platform software and service solutions, which typically extends for several months, may cause us to experience a delay between increasing operating expenses for such sales efforts, and, upon successful sales, the generation of corresponding revenue.
Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of delays arising from these factors.
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• the timing of our customers’ budget cycles;
+Added: • the impact of the COVID-19 pandemic to our customers;
• the length and timing of customers’ approval processes.
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If we fail to detect or prevent fraudulent or other malicious activity, the affected advertisers may experience or perceive a reduced return on their investment and our reputation may be harmed.
−Removed: High levels of fraudulent or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, refund or future credit demands or withdrawal of future business.
−Removed: In addition, advertisers increasingly rely on third party vendors to measure campaigns against audience guarantee, viewability and other requirements and to detect fraud.
−Removed: If we are unable to successfully integrate our technology with such vendors, or our measurement and fraud detection differs from their findings, our customers could lose confidence in our solutions, we may not get paid for certain campaigns and
−Removed: our revenues could decrease.
+Added: High levels of fraudulent or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, prompt refund or future credit demands or withdrawal of future business.
+Added: In addition, advertisers increasingly rely on third party vendors to measure campaigns against audience guarantee, viewability and other requirements and to detect
+Added: If we are unable to successfully integrate our technology with such vendors, or our measurement and fraud detection differs from their findings, our customers could lose confidence in our solutions, we may not get paid for certain campaigns and our revenues could decrease.
Further, if we are unable to detect fraudulent or other malicious activities and advertisers demand fraud-free inventory, our supply could fall drastically, making it impossible to sustain our current business model.
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Also, advertisers may perceive any technical disruption or failure in ad performance on digital media partners’ platforms to be attributable to us and our reputation could similarly suffer, or advertisers may seek to avoid payment or demand future credits for disruptions or failures, any of which could harm our business and results of operations.
−Removed: If we are unable to deliver
−Removed: successful advertising campaigns, our ability to attract potential advertisers and retain and expand business with existing advertisers could be harmed and our business, financial condition and operating results could be adversely affected.
+Added: If we are unable to deliver successful advertising campaigns, our ability to attract potential advertisers and retain and expand business with existing advertisers could be harmed and our business, financial condition and operating results could be adversely affected.
We may be unable to deliver advertising in a context that is appropriate for mobile advertising campaigns, which could harm our reputation and cause our business to suffer.
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We do not monitor or have the ability to control whether our advertising customers’ advertising of their products and solutions complies with federal, state, local and foreign laws.
−Removed: Failure of our application transaction customers to comply with federal, state, local or foreign laws or our policies could damage our reputation and expose us to liability under these laws.
+Added: Failure of our application transaction customers to comply with federal, state, local or foreign laws or our policies could damage our reputation and expose us to liability under such laws.
We may also be liable to third parties for content in the ads we deliver if the content involved violates copyrights, trademarks or other intellectual property rights of third parties or if the content is defamatory, unfair and deceptive or otherwise in violation of applicable laws.
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Furthermore, advertisers may request that we discontinue using data obtained from their campaigns that have already been aggregated with other advertisers’ campaign data.
−Removed: It would be difficult, if not impossible, to comply with these requests and complying with
−Removed: these kinds of requests could cause us to spend significant amounts of resources.
+Added: It would be difficult, if not impossible, to comply with these requests and complying with these kinds of requests could cause us to spend significant amounts of resources.
Interruptions, failures or defects in our data collection, mining, analysis and storage systems, as well as privacy concerns and regulatory restrictions regarding the collection, use and processing of data, could also limit our ability to aggregate and analyze the data from our customers’ advertising campaigns.
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Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide revenue.
−Removed: While we have not collected data that is traditionally considered personal data, such as name, email address, physical address, phone numbers or social security numbers, we typically collect and store IP addresses, geo-location information and device or other persistent identifiers that are or may be considered personal data in some jurisdictions or otherwise may be the subject of legislation or regulation.
+Added: While we have not collected data that is traditionally considered personal data, such as name, email address, physical address, phone numbers or social security numbers, we typically collect and store IP addresses, geolocation information and device or other persistent identifiers that are or may be considered personal data in some jurisdictions or otherwise may be the subject of legislation or regulation.
For example, some jurisdictions in the EU regard IP addresses as personal data and certain regulators have advocated for including IP addresses, GPS-level geolocation data and unique device identifiers as personal data.
−Removed: Moreover, with the effectiveness of the CCPA in California on January 1, 2020, the use of geo-location gathering in California should be approached with care to ensure compliance.
+Added: Moreover, with the effectiveness of the CCPA in California on January 1, 2020, the use of geolocation gathering in California should be approached with care to ensure compliance.
Furthermore, the GDPR makes clear that online identifiers (such as IP addresses and other device identifiers) will be treated as “personal data” going forward and therefore subject to stricter data protection rules.
−Removed: Evolving definitions of personal data within the United States, European Union and elsewhere, especially relating to the classification of IP addresses, machine or device identifiers, geo-location data and other such information, may cause us to change our business practices, diminish the quality of our data and the value of our solution and hamper our ability to expand our offerings.
−Removed: Complying with any new regulatory requirements could force us to incur substantial costs or require us to change our business practices in a manner that could reduce our revenue or compromise our ability to effectively pursue our growth strategy.
+Added: Evolving definitions of personal data within the United States, European Union and elsewhere, especially relating to the classification of IP addresses, machine or device identifiers, geolocation data and other such information, may cause us to change our business practices, diminish the quality of our data and the value of our solution and hamper our ability to expand our offerings.
+Added: Complying with any new regulatory requirements could force us to incur substantial costs or require us to change our business practices in a manner that could reduce our revenue or compromise our ability to effectively pursue our growth
Our failure to comply with evolving interpretations of applicable laws and regulations, or to adequately protect personal data, could result in enforcement action against us or reputational harm, which could have a material adverse impact on our business, financial condition and results of operations.
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We may be limited in the portion of net operating loss carryforwards that we can use in the future to offset taxable income for U.S.
−Removed: Federal income tax purposes, including any limitations that may be imposed under Section 382 of the Code as a result of our past ownership changes or an ownership change in connection with the Business Combination.
−Removed: At December 31, 2020, we had federal net operating loss carryforwards of approximately $126.3 million, of which $40.6 million will never expire and $85.7 million will expire at various dates beginning in 2030.
−Removed: At December 31, 2020, we had state and local net operating loss carryforwards of approximately $60.9 million, with the majority beginning to expire in 2030 if not utilized.
+Added: Federal income tax purposes, including any limitations that may be imposed under Section 382 of the Code as a result of our past ownership changes or an ownership change in connection with our reverse merger and recapitalization on December 26, 2018.
+Added: As of December 31, 2021, we had federal net operating loss carryforwards of approximately $166.8 million, of which $81.2 million will never expire and $85.7 million will expire at various dates beginning in 2030.
+Added: December 31, 2021, we had state and local net operating loss carryforwards of approximately $79.5 million, with the majority beginning to expire in 2030 if not utilized.
We periodically assess the likelihood that we will be able to recover net deferred tax assets.
We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits.
−Removed: As a result of this analysis of all available evidence, both
−Removed: positive and negative, we concluded that a valuation allowance against our net U.S.
+Added: As a result of this analysis of all available evidence, both positive and negative, we concluded that a valuation allowance against our net U.S.
deferred tax assets should be applied as of December 31, 2021.
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Our large customers have substantial purchasing power and leverage in negotiating contractual arrangements with us.
−Removed: These customers may request us to develop additional features without providing us additional revenue, may require penalties for failure to deliver such features, may seek discounted product or service pricing and may seek more favorable contractual terms.
+Added: These customers may request for us to develop additional features without providing us additional revenue, may require penalties for failure to deliver such features, may seek discounted product or service pricing and may seek more favorable contractual terms.
As we sell more products and services to this class of customer, we may be required to agree to such terms and conditions.
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If we are unable to maintain sufficient insurance as a public company to cover liability claims made against our officers and directors, we may not be able to retain or recruit qualified officers and directors to manage our company, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: It may be difficult for us to retain or attract qualified officers and directors, which could adversely affect our business and our ability to maintain the listing of our common stock on the Nasdaq Capital Market.
−Removed: We may be unable to attract and retain qualified officers, directors and members of board committees required for publicly-held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on boards of directors.
−Removed: The perceived increased personal risk may deter qualified individuals from accepting these roles.
−Removed: Further, applicable rules and regulations of the SEC and Nasdaq Capital Market heighten the requirements for board or committee membership, particularly with respect to an individual’s independence from the corporation and level of experience in finance and accounting matters.
−Removed: We may have difficulty attracting and retaining directors with the requisite qualifications.
−Removed: If we are unable to attract and retain qualified officers and directors, our business and our ability to maintain the listing of our shares of common stock on Nasdaq Capital Market could be adversely affected.
The requirements of being a public company may strain our systems and resources, divert management’s attention and be costly.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of Nasdaq Capital Market.
−Removed: The requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, will make some activities more difficult, time consuming and costly and may also place undue strain on our personnel, systems and
+Added: The requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, will make some activities more difficult, time consuming and costly and may also place undue strain on our personnel, systems and resources.
The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations.
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As a result of these maintenance obligations, management’s attention may be diverted from other business concerns, which could adversely affect our business.
−Removed: Furthermore, we supplement our internal team with third party software and system providers to support our reporting obligations to achieve effective internal controls.
+Added: we supplement our internal team with third party software and system providers to support our reporting obligations to achieve effective internal controls.
To the extent we do not sufficiently manage third party service providers, and they fail to provide us with adequate service, we may not effectively manage our future growth which may result in ineffective internal controls over financial reporting and an increased cost of compliance.
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If such claims are successful, our business and results of operations could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the time and resources of our management and adversely affect our business and results of operations.
−Removed: We are an “emerging growth company” and a "smaller reporting company" and, because we have opted to use the reduced reporting requirements available to us, this may make our common stock less attractive to investors.
−Removed: We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act and a "smaller reporting company".
−Removed: For as long as we continue to be an emerging growth company, we may take advantage of 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 auditor attestation requirements of Section 404 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 stockholder approval of any golden parachute payments not previously approved.
−Removed: Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
−Removed: As permitted under the JOBS Act, we have irrevocably elected to delay adopting new or revised accounting standards until such time as those standards apply to private companies, unless an early adoption provision is available to private companies.
−Removed: We will cease being an emerging growth company on December 31, 2021.
−Removed: Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding to executive compensation in our period reports and proxy statements and we also may still qualify as a "non-accelerated filer" which provides for exemption from compliance with auditor attestation requirements of Section 404.
+Added: We are a "smaller reporting company" and, because we have opted to use the reduced reporting requirements available to us, our common stock may be less attractive to investors.
+Added: We are a "smaller reporting company" as defined by the SEC.
+Added: For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including not being required to comply with auditor attestation requirements of Section 404 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 stockholder approval of any golden parachute payments not previously approved.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
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We also have corporate offices in Texas and Florida, both of which are susceptible to floods, hurricanes and extreme temperatures.
+Added: Our Lyte operations are located in Illinois, an area that is vulnerable to heavy winds, ice, snow and tornadoes.
In addition, acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could cause disruptions in our or our advertisers’ businesses or the economy as a whole.
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We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting California, Texas or Florida.
−Removed: In late 2019, a strain of the coronavirus was reported to have surfaced and spread to the United States.
−Removed: The full extent to which COVID-19 may impact our results is unknown.
+Added: In late 2019, a strain of
+Added: the coronavirus was reported to have surfaced and spread to the United States.
+Added: The ongoing extent to which COVID-19 and its variants impact on our results is unknown.
As we rely heavily on our data centers, computer and communications systems and the internet to conduct our business and provide high-quality customer service, such disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt our customers’ business, which could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Capitalization Matters, Corporate Governance and Market Volatility
−Removed: A substantial number of shares of our common stock may be issued pursuant to the terms of our 2020 Convertible Notes and the exercise of the warrant, which could cause the price of our common stock to decline.
+Added: We have and may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders and impose restrictions or limitations on our business.
+Added: Future sales or issuances of our common stock, or the perception that such sales could occur, could depress the trading price of our common stock.
+Added: During 2021, we issued a significant amount common stock in various sales of our common stock via at-the-market offerings, as well as, issuances upon a partial exercise of an outstanding warrant.
+Added: Additional capital may be needed in the future to continue our planned operations, and we may seek additional funding through a combination of equity offerings, debt financings, strategic alliances, licensing and collaboration arrangements, or other third-party business arrangements.
+Added: These financing activities may have an adverse effect on our stockholders’ rights, the market price of our common stock and on our operations and may require us to relinquish rights to some of our technologies, intellectual property or products, issue additional equity or debt securities, or otherwise agree to terms unfavorable to us.
+Added: Further, in February 2022, we filed a Form S-3, which was subsequently declared effective by the SEC, pursuant to which we may issue up to $200 million in common stock, preferred stock, warrants and units, and contained therein was a prospectus supplement in which we may sell up to $100 million in sales of our common stock deemed to be an “at the market offering” as defined by the Securities Act.
+Added: Any sale or issuance of securities pursuant to a registration statement or otherwise may result in dilution to our stockholders and may cause the market price of our stock to decline, and new investors could gain rights superior to our existing stockholders.
+Added: In addition, any debt financings that we may enter into in the future may impose restrictive covenants or otherwise adversely affect the holdings or the rights of our stockholders, and any additional equity financings will be dilutive to our stockholders.
+Added: The perception that such sales or issuances may occur could also negatively impact the market price of our common stock.
+Added: Furthermore, additional equity or debt financing might not be available to us on reasonable terms, if at all.
+Added: Shares of our common stock may be issued pursuant to the terms of an outstanding warrant, which could cause the price of our common stock to decline.
On July 15, 2020 we issued a Series A Senior Convertible Note (a "Series A Note") and a Series B Senior Convertible Note (a "Series B Note," and together with the Series A Note, the "2020 Convertible Notes") to an institutional investor.
−Removed: As of December 31, 2020, the principal amount owed under the 2020 Convertible Notes was $6.1 million.
−Removed: The 2020 Convertible Notes are convertible into shares of our common stock at a conversion price of $2.25 per share, after taking into account an adjustment to the conversion price relating to our public offering of common stock that closed in February 2021.
−Removed: The noteholder may also exercise the warrant in connection therewith in full for 2,160,000 shares (without taking into account the limitations on the conversion of the 2020 Convertible Notes and exercise of the warrant) at an exercise price of $2.25 per share.
+Added: We paid the 2020 Convertible Notes in full in April 2021.
+Added: However, in connection with the issuance of the 2020 Convertible Notes, we issued a warrant to the holder.
+Added: As of December 31, 2021, 1,780,000 shares may be issued under the warrant at an exercise price of $2.25 per share.
The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline.
−Removed: Restrictive covenants under the 2020 Convertible Notes could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.
−Removed: The 2020 Convertible Notes and related ancillary agreements contain a number of affirmative and negative covenants regarding the incurrence of certain indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect to dividends, distributions or redemptions, and the transfer of assets among other matters.
−Removed: We are also subject to a financial covenant that requires us to maintain available cash in the amount of $500,000 at the end of each figure quarter, subject to a right of cure.
−Removed: Our ability to comply with these covenants may be adversely affected by events beyond our control, and we cannot assure you that we can maintain compliance with these covenants.
−Removed: The financial covenants could limit our ability to make needed expenditures or otherwise conduct necessary or desirable business activities.
−Removed: Our loans under the Paycheck Protection Program ("PPP") may not be forgiven or may subject us to challenges and investigations regarding qualification for the loan.
−Removed: On April 10, 2020, we received a loan under the PPP, which was established under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), in the aggregate principal amount of approximately $2.85 million.
−Removed: Pursuant to the CARES Act, we may apply for and be granted forgiveness for all or a portion of the PPP loan.
−Removed: Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for qualifying expenses, which include payroll costs, rent, and utility costs over the allowable measurement period following receipt of the loan proceeds.
−Removed: In addition to changes enacted by the U.S.
−Removed: Congress, the Small Business Administration (“SBA”) continues to develop and issue new and updated guidance regarding the PPP loan application process, including guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program.
−Removed: We continue to track the guidance as it is released and assess and re-assess various aspects of its application as necessary based on the guidance.
−Removed: However, given the evolving nature of the guidance and based on our projected ability to use the loan proceeds for qualifying expenses, we cannot give any assurance that the PPP loan will be forgiven in whole or in part, as anticipated.
−Removed: Additionally, the PPP loan application required us to certify that the current economic uncertainty made the PPP loan request necessary to support our ongoing operations.
−Removed: While we made this certification in good faith after analyzing, among other things, our financial situation and access to alternative forms of capital, and believe that we satisfied all eligibility criteria for the PPP loan and that our receipt of the PPP loan is consistent with the broad objectives of the PPP of the CARES Act, the certification described above does not contain any objective criteria and is subject to interpretation.
−Removed: In addition, the SBA has stated that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.
−Removed: The lack of clarity regarding loan eligibility under the program has resulted in significant media coverage and controversy with respect to public companies applying for and receiving loans.
−Removed: If, despite our good faith belief that we satisfied all eligibility requirements for the PPP loan, we are found to have been ineligible to have received the PPP loan or in violation of any of the laws or regulations that apply to us in connection with the PPP loan, including the False Claims Act, we may be subject to penalties, including significant civil, criminal and administrative penalties and could be required to repay the PPP loan.
−Removed: In the event that we seek forgiveness of all or a portion of the PPP loan, we will also be required to make certain certifications which will be subject to audit and review by governmental entities and could subject us to significant penalties and liabilities if found to be inaccurate.
−Removed: In addition, our receipt of the PPP loan may result in adverse publicity and damage to our reputation, and a review or audit by the SBA or other government entity or claims under the False Claims Act could consume significant financial and management resources.
−Removed: Any of these events could harm our business, results of operations and financial condition.
+Added: The SBA may review our Paycheck Protection Program (“PPP”) forgiveness application and if the SBA disagrees with our certification we could be subject to penalties and the repayment of our PPP loan, which could negatively impact our business, financial condition and results of operations and prospects.
+Added: During 2021, we received notification of forgiveness of our $2.85 million PPP loan received in calendar year 2020.
+Added: We must retain PPP loan documentation in our files for six years after the date of forgiveness.
+Added: We believe we met the SBA’s certification requirement based on our weakened business operations during the COVID-19 pandemic and small market value.
+Added: However, no assurance can be given as to the outcome if the SBA re-evaluates our loan certification.
+Added: The SBA could determine we did not qualify in whole or in part for loan forgiveness.
+Added: In addition, it is unknown what type of penalties could be assessed against us if the SBA disagrees with our certification.
+Added: We could be required to repay the PPP loan.
+Added: Any penalties in addition to the potential repayment of the PPP loan could negatively impact our business, financial condition and results of operations and prospects.
The price of our common stock and warrants has been, and may continue to be, volatile, and you could lose all or part of your investment.
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The trading price of our common stock and warrants might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.
−Removed: In the past, following periods of volatility in the trading price of a company’s securities, securities class action litigation has often been brought against that company.
+Added: In the past, following periods of
+Added: volatility in the trading price of a company’s securities, securities class action litigation has often been brought against that company.
If our stock price is volatile, we may become the target of securities litigation.
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• flash crashes,” “freeze flashes” or other glitches that disrupt trading on the securities exchange on which we are listed;
−Removed: • major catastrophic events in our domestic and foreign markets, such as, but not limited to, natural disasters, terrorist attacks, cyber attacks or disease outbreak, epidemic or pandemic.
−Removed: Furthermore, the trading price of our Common Stock has recently increased significantly.
−Removed: From January 4, 2021 through March 23, 2021 the last reporting closing price of our Common Stock on the Nasdaq Capital Market has ranged from a low of $1.11 per share to a high of $3.04 per share.
−Removed: We believe the increase in the trading price and price range of our Common Stock may be the result of a number of factors outside our control.
−Removed: The recent increase in the trading price of our Common Stock may not be sustained.
+Added: • major catastrophic events in our domestic and foreign markets, such as, but not limited to, natural disasters, terrorist attacks, cyber attacks or disease outbreak, epidemic or pandemic, including the ongoing effects of COVID-19 and its variants.
+Added: Furthermore, the trading price of our Common Stock has recently been volatile during relatively short time periods.
+Added: For example, on January 28, 2022 our Common Stock traded at an intraday low of $1.93, whereas on February 10, 2022 our Common Stock traded at an intraday high of $3.87.
+Added: We believe the volatility in the trading price and price range of our Common Stock may be the result of a number of factors, many of which are outside our control.
+Added: Any increase in the trading price of our Common Stock may not be sustained.
In the event of a rapid decrease in the trading price of our Common Stock, investors could lose a significant portion of their investment.
−Removed: Future sales or issuances of our common stock, or the perception that such sales could occur, could depress the trading price of our common stock.
−Removed: We filed a Registration Statement on Form S-3 (as amended), which was declared effective on February 11, 2021.
−Removed: As a result, we may sell up to $100 million of shares of our common stock, preferred stock, warrants, units or combinations thereof.
−Removed: On February 17, 2021, we consummated an offering of 11,761,111 shares of common stock at an offering price of $2.25 per share for which a final prospectus related to this offering was filed with the SEC on February 12, 2021.
−Removed: Proceeds from the offering were approximately $24.7 million, after deducting underwriting discounts, commissions and other estimated offering expenses.
−Removed: We cannot predict the effect, if any, that future sales of our common stock or other securities or the availability of our common stock or additional securities for future sale, will have on the market price of shares of our common stock.
−Removed: Future sales or issuances of our common stock may dilute the ownership interests of our existing stockholders.
−Removed: In addition, future sales or issuances of substantial amounts of our common stock may adversely impact the market price of our common stock and the terms upon which we may obtain additional equity financing in the future.
−Removed: The perception that such sales or issuances may occur could also negatively impact the market price of our common stock.
−Removed: Our executive officers and directors collectively beneficially own approximately 12% of the outstanding shares of our common stock and continue to have substantial control over us, which will limit your ability to influence the outcome of important transactions, including a change in control.
−Removed: As of December 31, 2020, our executive officers and directors and their affiliates, in the aggregate, beneficially own approximately 12% of the outstanding shares of our common stock.
−Removed: As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.
−Removed: They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.
−Removed: This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.
+Added: We have identified a material weakness in our internal control over financial reporting that, if not properly remediated or if we experience additional material weaknesses, could result in us being unable to provide required financial information in a timely and reliable manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
+Added: During the preparation of our quarterly report on Form 10-Q for the period ended September 30, 2021, our management identified a material weakness in our internal control over financial reporting related to the accounting for a certain adjustment provision that triggered in February 2021 pursuant to a warrant we issued in conjunction with our 2020 Convertible Notes.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: For further discussion of our internal control over financial reporting, a
+Added: description of the identified material weakness and a summary of the remediation efforts we are implementing, see Part II, Item 9A “ Controls and Procedures ” of this Report.
+Added: If we are not able to remediate the material weakness in a timely manner, or if additional material weaknesses in our internal control over financial reporting are discovered or occur in the future, we may be unable to provide required financial information in a timely and reliable manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
+Added: It may be difficult for us to retain or attract qualified officers and directors, which could adversely affect our business and our ability to maintain the listing of our common stock on the Nasdaq Capital Market.
+Added: We may be unable to attract and retain qualified officers, directors and members of our board committees required for publicly-held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on boards of directors.
+Added: Further, applicable rules and regulations of the SEC and Nasdaq Capital Market heighten the requirements for board or committee membership, particularly with respect to an individual’s independence from the corporation and level of experience in finance and accounting matters.
+Added: We may have difficulty attracting and retaining directors with the requisite qualifications.
+Added: We currently do not have an "audit committee financial expert" as defined by the SEC serving on our Audit Committee.
+Added: If we are unable to attract and retain qualified officers and directors, our business and our ability to maintain the listing of our shares of common stock on Nasdaq Capital Market could be adversely affected.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.
−Removed: The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors.
+Added: The trading market for our common stock may be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors.
We currently have a limited number of securities and industry analysts who publish research on us.
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We have never declared nor paid any cash dividends on our capital stock.
−Removed: We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any cash dividends in the foreseeable future.
+Added: We do not expect to declare or pay any cash dividends in the foreseeable future.
Any determination to pay dividends in the future will be at the discretion of our board of directors.
24 unchanged sentences
If a court were to find either exclusive-forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm its results of operations.
−Removed: Risks Related to our Token Offerings and Digital Currencies
−Removed: We have raised capital to fund a Token Generation Event, through an offering by our wholly-owned subsidiary, PhunCoin, Inc., of rights to receive future PhunCoin.
−Removed: Through our wholly-owned subsidiary, Phun Token International, we may also sell Phun tokens.
−Removed: There can be no assurance that PhunCoin or Phun will ever be issued and, any significant difficulties we, PhunCoin, Inc., or Phun Token International may experience with the offerings of PhunCoin or Phun could result in claims against us.
−Removed: Additionally, the Token Generation Event and the offerings of PhunCoin and Phun could subject us to various other business and regulatory uncertainties.
−Removed: In June 2018, PhunCoin, Inc.
−Removed: launched an offering to raise capital by offering investors the right to acquire PhunCoin ("Rights") pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act.
+Added: Risks Related to our Digital Asset Holdings
+Added: Our bitcoin acquisition strategy exposes us to various risks associated with bitcoin.
+Added: During the fourth quarter of 2021, our Board of Directors via a unanimous written consent approved certain purchases by the Company of bitcoin, which we currently hold.
+Added: We are continually examining the risks and rewards of our bitcoin acquisition strategy.
+Added: This strategy has not been tested over time or under various market conditions.
+Added: Some investors and other market participants may disagree with this strategy or actions we undertake to implement it.
+Added: If the price of bitcoin falls or our bitcoin acquisition strategy otherwise proves unsuccessful, it would adversely impact our financial condition, results of operations, and the market price of our common stock.
+Added: As of December 31, 2021, we held approximately 632 bitcoins that were acquired at an aggregate purchase price of approximately $37.0 million and an average purchase price of approximately $58,477 per bitcoin, inclusive of fees and expenses.
+Added: As part of our overall corporate strategy, we may purchase additional bitcoin in future periods, though we may also sell bitcoin in future periods as needed to generate cash assets for operating purposes.
+Added: While our bitcoin is currently owned directly by us, we may investigate other potential approaches to holding our bitcoin assets.
+Added: If we change the means by which we hold our bitcoin assets, the accounting treatment for our bitcoin may correspondingly change.
+Added: A change in the accounting treatment of our bitcoin holdings could have a material impact on our results of operations in future periods and could increase the volatility of our reported results of operations as well as affect the carrying value of our bitcoin on our balance sheet, which in turn could have a material adverse effect on our financial results and the market price of our common stock.
+Added: Bitcoin is a highly volatile asset that has traded below $30,000 per bitcoin and above $65,000 per bitcoin in the twelve months preceding the date of this Annual Report on Form 10-K.
+Added: Bitcoin does not pay interest or other returns and so our ability to generate cash from our bitcoin holdings depends on sales or implementing strategies that we may consider to create income streams or otherwise generate funds using our bitcoin holdings, including lending bitcoin to counterparties.
+Added: Furthermore, the impact of our bitcoin holdings on our financial results and the market price of our common stock may be impacted by the trading price of bitcoin at any given time.
+Added: The prices of digital currencies, including bitcoin and ethereum, may be influenced by regulatory, commercial, and technical factors that are highly uncertain, and fluctuations in the price of bitcoin are likely to influence our financial results and the market price of our common stock.
+Added: Fluctuations in the trading prices of digital assets are likely to influence our financial results and the market price of our common stock.
+Added: Our financial results and the market price of our common stock would be adversely affected and our business and financial condition could be negatively impacted if the price of bitcoin decreased substantially, including as a result of:
+Added: • decreased user and investor confidence in digital assets;
+Added: • investment and trading activities of highly active retail and institutional users, speculators, miners and investors;
+Added: • negative publicity or events relating to digital assets;
+Added: • negative or unpredictable media or social media coverage on digital assets;
+Added: • public sentiment related to the actual or perceived environmental impact of bitcoin, ethereum and related activities, including environmental concerns raised by private individuals and governmental actors related to the energy resources consumed in the bitcoin mining process;
+Added: • changes in consumer preferences and the perceived value of bitcoin or ethereum;
+Added: • competition from other crypto assets that exhibit better speed, security, scalability, or other characteristics, or that are backed by governments, including the U.S.
+Added: • the correlation between the prices of digital assets, including the potential that a crash in one digital asset or widespread defaults on one digital asset exchange or trading venue may cause a crash in the price of bitcoin, or a series of defaults by counterparties on bitcoin asset exchanges or trading venues;
+Added: • the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin, or the transfer of Satoshi’s bitcoin;
+Added: • interruptions in service or failures of the principal markets for bitcoin or ethereum;
+Added: • further reductions in mining rewards of bitcoin, including block reward halving events, which are events that occur after a specific period of time that reduce the block reward earned by “miners” who validate bitcoin and ethereum transactions;
+Added: • transaction congestion and fees associated with processing transactions on the bitcoin or ethereum network;
+Added: • changes in the level of interest rates and inflation, monetary policies of governments, trade restrictions, and fiat currency devaluations;
+Added: • developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography being used by digital assets becoming insecure or ineffective;
+Added: • national and international economic and political conditions.
+Added: In addition, bitcoin, ethereum and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their price.
+Added: The application of securities laws and other regulations to such assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may create new regulations or interpret laws in a manner that adversely affects the price of our digital assets holdings.
+Added: For example, foreign government authorities have recently expanded their efforts to restrict certain activities related to bitcoin and other digital assets.
+Added: In China, the People’s Bank of China and the National Development and Reform Commission have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal within the country.
+Added: In India, it has been reported that the Ministry of Corporate Affairs has circulated draft legislation that would prohibit mining, holding, selling, trading or using cryptocurrencies in the country.
+Added: Similarly, the Central Bank of the Russian Federation issued a report in January 2022 advocating for a wide-ranging ban on crypto-related activities including the issuance, exchange and mining of cryptocurrencies in Russian territory, citing threats to financial stability, citizens’ well-being and its monetary policy sovereignty.
+Added: Moreover, the risks of engaging in a bitcoin-focused treasury strategy are relatively novel and have created, and may create further, complications due to the lack of experience that third parties have with companies engaging in such a business, such as the unavailability of director and officer liability insurance on acceptable terms.
+Added: The growth of the digital assets industry in general, and the use and acceptance of bitcoin and ethereum in particular, may also impact the price of our digital asset holdings and is subject to a high degree of uncertainty.
+Added: The pace of worldwide growth in the adoption and use of bitcoin may depend, for instance, on public familiarity with digital assets, ease of buying and accessing bitcoin, institutional demand for bitcoin as an investment asset, consumer demand for bitcoin as a means of payment, and the availability and popularity of alternatives to bitcoin.
+Added: Even if growth in bitcoin adoption occurs in the near or medium-term, there is no assurance that bitcoin usage will continue to grow over the long-term.
+Added: Because bitcoin and ethereum have no physical existence beyond the record of transactions on their respective blockchains, a variety of technical factors related to the bitcoin blockchain could also impact the price of bitcoin.
+Added: For example, malicious attacks by miners, inadequate mining fees to incentivize validating of transactions, hard “forks” of the blockchain into multiple blockchains, and advances in digital computing, algebraic geometry and quantum computing could undercut the integrity of the blockchain and negatively affect the price of our digital asset holdings.
+Added: The liquidity of bitcoin and ethereum
+Added: may also be reduced and damage to the public perception of bitcoin and ethereum may occur, if financial institutions were to deny banking services to businesses that hold digital assets, provide digital asset-related services or accept digital assets as payment, which could also decrease the price of our digital asset holdings.
+Added: Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our digital asset holdings.
+Added: Our historical financial statements do not fully reflect the potential variability in earnings that we may experience in the future from holding, management or selling significant amounts of digital assets.
+Added: The prices of bitcoin and ethereum have historically been subject to dramatic price fluctuations and are highly volatile.
+Added: As explained more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2021 included in this Annual Report on Form 10-K, we determine the fair value of our digital assets based on quoted (unadjusted) prices.
+Added: We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices on an active exchange, indicate that it is more likely than not that any of our digital assets are impaired.
+Added: In determining if an impairment has occurred, we consider the lowest price of one digital asset quoted on an active exchange at any time since acquiring the specific asset.
+Added: If the carrying value exceeds that lowest price at any time during the quarter, an impairment loss is deemed to have occurred with respect to that digital asset in the amount equal to the difference between its carrying value and such lowest price, and subsequent increases in the price will not be adjusted upward.
+Added: Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses.
+Added: In determining the gain to be recognized upon sale, we calculate the difference between the sale price and carrying value of the specific digital asset sold immediately prior to sale.
+Added: As a result, any decrease in the fair value of our digital assets below their respective carrying value for such assets at any time since their acquisition requires us to incur an impairment charge, and such charge could be material to our financial results for the applicable reporting period, which may create significant volatility in our reported earnings and decrease the carrying value of our digital assets, which in turn could have a material adverse effect on the market price of our common stock.
+Added: As of December 31, 2021, we held $32.6 million of digital assets on our balance sheet and recognized $9.4 million digital asset impairment losses during the year ended December 31, 2021, which represented 18% of our net losses.
+Added: We may purchase additional digital assets or engage in other non-traditional treasury strategies in future periods.
+Added: As a result, the proportion of our total assets represented by digital asset holdings may increase in the future, and volatility in our earnings in future periods may be significantly more than what we experienced in prior periods.
+Added: Due to the unregulated nature and lack of transparency surrounding the operations of many digital asset trading venues, they may experience fraud, security failures or operational problems, which may adversely affect the value of our digital asset holdings.
+Added: Digital asset trading venues are relatively new and, in some cases, unregulated.
+Added: Furthermore, there are many trading venues which do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance.
+Added: As a result, the marketplace may lose confidence in these trading venues, including prominent exchanges that handle a significant volume of trading, in the event one or more trading venues experience fraud, security failures or operational problems.
+Added: Any actual or perceived false trading in the digital asset market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of our digital asset holdings.
+Added: Negative perception, a lack of stability in the broader digital asset markets and the closure or temporary shutdown of trading venues due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in digital assets and result in greater volatility of prices.
+Added: To the extent investors view our common stock as linked to the value of our digital asset holdings, these potential consequences of a trading venue’s failure could have a material adverse effect on the market price of our common stock.
+Added: The concentration of our digital asset holdings enhances the risks inherent in our digital asset treasury strategy.
+Added: As of December 31, 2021, the carrying value of our digital asset holdings represented approximately 33% of our total assets, a majority of which is held in bitcoin and ethereum.
+Added: We may purchase additional digital assets and increase our overall holdings of bitcoin and ethereum in the future, as well as, accept bitcoin and ethereum as payment for PhunToken and our products and services.
+Added: The concentration of our digital asset holdings limit the risk mitigation that we could take advantage of by purchasing a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent of a traditional treasury strategy.
+Added: If there is a significant decrease in the price of bitcoin or ethereum, we will experience a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
+Added: We may be required to access our digital asset holdings as a source of liquidity during a time of market volatility, which may result in selling our digital assets at a significant loss.
+Added: We have currently adopted bitcoin as our primary treasury reserve asset.
+Added: Historically, the digital asset markets have been characterized by more price volatility, a relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various other risks inherent in its entirely electronic, virtual form and decentralized network.
+Added: During times of market instability, we may not be able to sell our bitcoin or other digital asset holdings at reasonable prices or at all.
+Added: If we are unable to sell our digital assets, or if we are forced to sell our digital assets at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.
+Added: If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital asset holdings, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected.
+Added: Security breaches and cyberattacks are of particular concern with respect to digital assets.
+Added: Bitcoin, ethereum and other blockchain-based cryptocurrencies have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
+Added: A successful security breach or cyberattack could result in:
+Added: • a partial or total loss of our holdings in a manner that may not be covered by insurance or indemnity provisions of the custody agreement with a custodian who holds our bitcoin;
+Added: • harm to our reputation and brand;
+Added: • improper disclosure of data and violations of applicable data privacy and other laws;
+Added: • significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.
+Added: Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, whether or not we are directly impacted, could lead to a general loss of confidence in the broader blockchain ecosystem or in the use of networks to conduct financial transactions, which could negatively impact us.
+Added: Attacks upon systems across a variety of industries, including industries related to digital assets, are increasing in frequency, persistence and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors.
+Added: The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target.
+Added: These attacks may occur on our systems or those of our third-party service providers or partners.
+Added: We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities.
+Added: In particular, unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud.
+Added: Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage and insiders.
+Added: In addition, certain types of attacks could harm us even if our systems are left undisturbed.
+Added: For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures.
+Added: Further, there has been an increase in such activities as a result of the COVID-19 pandemic, and there could be additional breaches as a result of the recent conflict in Ukraine.
+Added: Any future breach of our operations or those of others in the digital asset industry, including third-party services on which we rely, could materially and adversely affect our business.
+Added: The loss or destruction of a private key required to access our digital asset wallets may be irreversible.
+Added: If we are unable to access our private keys or if we experience a cyberattack or other data loss relating to our digital asset holdings, our financial condition and results of operations could be materially adversely affected.
+Added: Our digital assets are controllable only by the possessor of both the unique public keys and private keys relating to the local or online digital wallets in which our digital assets are held.
+Added: While the blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the assets held in such wallet.
+Added: To the extent our private key is lost, destroyed, or otherwise compromised and no backup of the private key is accessible, we will be unable to access our digital assets held in the related digital wallet.
+Added: Furthermore, we cannot provide assurance that our digital wallets will not be compromised as a result of a cyberattack.
+Added: The blockchain ledger, as well as other cryptocurrencies and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.
+Added: Regulatory change reclassifying our digital assets as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of our digital asset holdings and the market price of our common stock.
+Added: While senior SEC officials have stated their view that bitcoin is not a “security” for purposes of the federal securities laws, the SEC has so far refused to permit the listing of any bitcoin-based ETFs, citing, among other things, concerns regarding bitcoin market integrity and custodial protections.
+Added: It is possible that the SEC could take a contrary position to the one taken by its senior officials or a federal court could conclude that bitcoin is a security.
+Added: Such a determination could lead to our classification as an “investment company” under the Investment Company Act of 1940, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and also may require us to substantially change the manner in which we conduct our business.
+Added: In addition, if bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of bitcoin and in turn adversely affect the market price of our common stock.
+Added: Risks Related to our Token Offerings
+Added: We have raised capital to fund a Token Generation Event of rights to receive future PhunCoin and, beginning in 2021 have sold PhunTokens.
+Added: There can be no assurance that PhunCoin will ever be issued and, any significant difficulties we may experience with the offerings of PhunCoin or sales of PhunToken could result in claims against us.
+Added: Additionally, the Token Generation Event and the offerings of PhunCoin and sales of PhunToken could subject us to various other business and regulatory uncertainties.
+Added: In June 2018, we raised capital by offering investors the right to acquire PhunCoin ("Rights") pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act.
In addition, in 2019, PhunCoin, Inc.
1 unchanged sentence
As of December 31, 2021, a total of $1.2 million has been raised in both Rights offerings.
−Removed: During the second quarter of 2019, Phunware announced the launch of a separate token, Phun, by its wholly owned subsidiary, Phun Token International, which enables consumers to participate in our planned blockchain-enabled data exchange and mobile loyalty ecosystem.
−Removed: As of December 31, 2020, no Phun has been sold.
−Removed: We will use our commercially reasonable efforts to cause PhunCoin, Inc.
−Removed: and Phun Token International to develop and issue PhunCoin and Phun, respectively, but there is no assurance that such efforts will be successful.
−Removed: The Token Generation Event, defined as the launch of the Token Ecosystem, may not be consummated or the sales of PhunCoin and Phun may not result in substantial proceeds.
−Removed: If the Token Generation Event is not consummated PhunCoin or Phun is not adopted commercially, we may have to reduce our planned expenditures.
−Removed: Also, any significant difficulties we may experience with the Token Generation Event or the development of PhunCoin or Phun could result in claims against us which could have a material adverse effect on the Company and its stockholders.
−Removed: Because there has been limited precedence set for financial accounting of digital assets, it is unclear how the Company will be required to account for digital assets transactions in the future.
−Removed: There has been limited precedent set for the financial accounting of digital assets, including accounting for the issuance of our digital assets, PhunCoin and Phun.
−Removed: It is unclear how the Company will be required to account for issuances of its own digital assets and the digital assets, such as Bitcoin, it may hold on its balance sheet.
−Removed: Furthermore, a change in
−Removed: regulatory or financial accounting standards could result in the necessity to restate the Company’s financial statements.
−Removed: Such a restatement could negatively impact the Company’s business, prospects, financial condition and results of operations.
−Removed: Such circumstances could have an effect on the Company's decision to pursue this segment at all, which could have a material adverse effect on the business, prospects or operations of the Company and potentially the value of any cryptocurrencies the Company holds or expects to acquire for its own account, including PhunCoin and Phun, to the detriment of the Company's stockholders.
+Added: During the second quarter of 2019, Phunware announced the launch of a separate token, PhunToken, by its wholly owned subsidiary, Phun Token International, which enables consumers to participate in our planned blockchain-enabled data exchange and mobile loyalty ecosystem.
+Added: As of December 31, 2021, we sold $1.1 million of PhunToken.
+Added: Upon sale of PhunToken to customers, we deliver PhunToken to the respective customer's Etherum-based wallet.
+Added: We will use our commercially reasonable efforts to develop the Token Ecosystem, deliver PhunCoin and PhunToken, respectively, but there is no assurance that such efforts will be successful.
+Added: If the Token Generation Event, defined as the launch of the Token Ecosystem, is not consummated, our sales of PhunCoin and additional sales of PhunToken may not result in substantial proceeds.
+Added: If the Token Generation Event is not consummated and/or PhunCoin or PhunToken is not adopted commercially, we may have to reduce our planned expenditures.
+Added: Also, any significant difficulties we may experience with the Token Generation Event, the delivery of PhunCoin or the continued sales and delivery of PhunToken could result in claims against us which could have a material adverse effect on the Company and its stockholders.
The further development and acceptance of blockchain networks, which are part of a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate.
−Removed: The slowing or stopping of the development or acceptance of blockchain networks and blockchain assets could have a material adverse effect on PhunCoin, Inc.'s and Phun Token International's business plans, which may have a material adverse effect on the Company and its stockholders.
−Removed: The growth of the blockchain industry in general, as well as the networks on which PhunCoin will rely to consummate the Token Generation Event, is subject to a high degree of uncertainty.
+Added: The slowing or stopping of the development or acceptance of blockchain networks and blockchain assets could have a material adverse effect on our business plans, which may have a material adverse effect on the Company and our stockholders.
+Added: The growth of the blockchain industry in general, as well as the networks on which we will rely to consummate the Token Generation Event, is subject to a high degree of uncertainty.
The cryptocurrency and cryptosecurities industries as a whole have been characterized by rapid changes and innovations and are constantly evolving.
−Removed: The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and blockchain assets may materially adversely affect our business plans to launch and maintain PhunCoin and Phun.
−Removed: For example, given the regulatory complexity with respect to cryptocurrency and related digital assets, complying with such regulations, which could change in the future or be subject to new interpretations, could have a material and adverse effect on our ability to develop, launch and continue to operate PhunCoin, Phun and the Token Ecosystem.
−Removed: In addition, the tax and accounting consequences to us of the Token Generation Event, PhunCoin and Phun are uncertain, which could lead to incorrect reporting, classification or liabilities.
−Removed: If the Token Generation Event occurs and PhunCoin and Phun are developed, the structural foundation of PhunCoin and Phun, and the software applications and other interfaces or applications upon which PhunCoin, Phun and the Token Ecosystem rely or on which PhunCoin, Phun and the Token Ecosystem may rely in the future, are and will be unproven.
−Removed: There can be no assurances that PhunCoin or Phun will be fully secure, which may result in impermissible transfers, a complete loss of users’ PhunCoin or Phun on the Token Ecosystem, or an unwillingness of users to access, adopt and utilize PhunCoin or Phun, whether through system faults or malicious attacks.
−Removed: Any such faults or attacks on PhunCoin or Phun may materially and adversely affect our business.
−Removed: Because our tokens and/or digital currency will be a digital asset built and transacted initially on top of existing third-party blockchain technology, Phunware is reliant on another blockchain network, and users could be subject to the risk of wallet incompatibility and blockchain protocol risks.
−Removed: Reliance upon another blockchain technology to create the Token Ecosystem subjects us and Token Ecosystem users to the risk of digital wallet incompatibility, or additional ecosystem malfunction, unintended function, unexpected functioning of, or attack on, the providers' blockchain protocol, which may cause PhunCoin or Phun to malfunction or function in an unexpected manner, including, but not limited to, slowdown or complete cessation in functionality of the Token Ecosystem.
+Added: The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and blockchain assets may materially adversely affect our business plans to launch and maintain PhunCoin and PhunToken.
+Added: For example, given the regulatory complexity with respect to cryptocurrency and related digital assets, complying with such regulations, which could change in the future or be subject to new interpretations, could have a material and adverse effect on our ability to develop, launch and continue to operate PhunCoin, PhunToken and the Token Ecosystem.
+Added: In addition, the tax and accounting consequences to us of the Token Generation Event, PhunCoin and PhunToken could lead to incorrect reporting, classification or liabilities.
+Added: If the Token Generation Event occurs and PhunCoin and PhunToken are developed, the structural foundation of PhunCoin and PhunToken, and the software applications and other interfaces or applications upon which PhunCoin, PhunToken and the Token Ecosystem rely or on which PhunCoin, PhunToken and the Token Ecosystem may rely in the future, are and will be unproven.
+Added: There can be no assurances that PhunCoin or PhunToken will be fully secure, which may result in impermissible transfers, a complete loss of users’ PhunCoin or PhunToken on the Token Ecosystem, or an unwillingness of users to access, adopt and utilize PhunCoin or PhunToken, whether through system faults or malicious attacks.
+Added: Any such faults or attacks on PhunCoin or PhunToken may materially and adversely affect our business.
+Added: Because our tokens will be a digital asset built and transacted initially on top of existing third-party blockchain technology, Phunware is reliant on another blockchain network, and users could be subject to the risk of wallet incompatibility and blockchain protocol risks.
+Added: Reliance upon another blockchain technology to create the Token Ecosystem subjects us and Token Ecosystem users to the risk of digital wallet incompatibility, or additional ecosystem malfunction, unintended function, unexpected functioning of, or attack on, the providers' blockchain protocol, which may cause PhunCoin or PhunToken to malfunction or function in an unexpected manner, including, but not limited to, slowdown or complete cessation in functionality of the Token Ecosystem.
The development and operation of the Token Ecosystem will likely require technology and intellectual property rights.
−Removed: The ability of the Company to develop and operate the Token Ecosystem that may be developed in the future may depend on technology and intellectual property rights that the Company may license from unaffiliated third parties.
−Removed: If for any reason the Company were to fail to comply with its obligations under any applicable license agreement, or were unable to provide or were to fail to provide the technology and intellectual property that the Token Ecosystem requires, it would be unable to operate, which would have a material adverse effect on the Company’s operations and financial condition and its ability to develop, enhance, and maintain the Token Ecosystem.
+Added: Our ability to develop and operate the Token Ecosystem may depend on technology and intellectual property rights that we may license from unaffiliated third parties.
+Added: If for any reason we were to fail to comply with our obligations under any applicable license agreement, or were unable to provide or were to fail to provide the technology and intellectual property that the Token Ecosystem requires, it would be unable to operate, which would have a material adverse effect on the Company’s operations and financial condition and its ability to develop, enhance, and maintain the Token Ecosystem.
Some of our code and protocols rely on open source code publicly available.
−Removed: The open-source structure of some of the Token Ecosystem protocols means that the Token Ecosystem may be susceptible to developments by users or contributors that could damage the Token Ecosystem and our reputation and could affect the utilization of the Token Ecosystem and PhunCoin.
−Removed: It is our intention that the Token Ecosystem will operate partially based on an open-source code maintained by the Company and other public contributors.
+Added: The open-source structure of some of the Token Ecosystem protocols means that the Token Ecosystem may be susceptible to developments by users or contributors that could damage the Token Ecosystem and our reputation and could affect the utilization of the Token Ecosystem, PhunCoin and PhunToken.
+Added: It is our intention that the Token Ecosystem will operate partially based on an open-source code maintained by us and other public contributors.
The open-source nature of the Token Ecosystem protocol will mean that it may be difficult for the Company or contributors maintain or develop the Token Ecosystem and the Company may not have adequate resources to address emerging issues or malicious programs that develop within the Token Ecosystem adequately or in a timely manner.
−Removed: Third parties not affiliated with the Company may introduce weaknesses or bugs into the core infrastructure elements of the Token Ecosystem and open-source code which may negatively impact the Token Ecosystem.
−Removed: Such events may result in a loss of trust in the security and operation of the Token Ecosystem and a decline in user activity and could negatively
−Removed: impact the PhunCoin.
−Removed: Our use of “open source” software could negatively affect our ability to offer the Token Ecosystem and subject us to possible litigation.
+Added: Third parties not affiliated with us may introduce weaknesses or bugs into the core infrastructure elements of the Token Ecosystem and open-source code which may negatively impact the Token Ecosystem.
+Added: Such events may result in a loss of trust in the security and operation of the Token Ecosystem and a decline in user activity and could negatively impact the acceptance and adoption of the Token Ecosystem, PhunCoin and PhunToken.
A substantial portion of the Token Ecosystem incorporates so-called “open source” software, and we may incorporate additional open source software in the future.
5 unchanged sentences
Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to change our products.
−Removed: The Token Ecosystem is designed to distribute PhunCoin or Phun to consumers in exchange for their agreement to provide certain personal information to us.
+Added: The Token Ecosystem is designed to distribute PhunCoin or PhunToken to consumers who provide certain personal information to us.
Providing this data exposes us to risks of privacy data breach and cybersecurity attacks.
3 unchanged sentences
We intend to implement detailed cybersecurity policies and procedures and an incident response plan designed to protect such information and prevent data loss and security breaches.
−Removed: There can be no assurances that PhunCoin, Phun or a user’s data will be fully secure, which may result in impermissible transfer, a complete loss of users’ PhunCoin, Phun or data on the Token Ecosystem or an unwillingness of users to access, adopt and utilize PhunCoin and Phun, whether through system faults or malicious attacks.
−Removed: Any such faults or attacks on PhunCoin, Phun or users’ data may materially and adversely affect PhunCoin, Phun and the Token Ecosystem.
+Added: There can be no assurances that PhunCoin, PhunToken or a user’s data will be fully secure, which may result in impermissible transfer, a complete loss of users’ PhunCoin, PhunToken or data on the Token Ecosystem, whether through system faults or malicious attacks, or an unwillingness of users to access, adopt and utilize PhunCoin and PhunToken.
+Added: Any such faults or attacks on PhunCoin, PhunToken or users’ data may materially and adversely affect PhunCoin, PhunToken and the Token Ecosystem.
There are a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data.
−Removed: Security compromises could harm the Token Ecosystem’s reputation, erode user confidence in the effectiveness of its security measures, negatively impact its ability to attract new users, or cause existing users to stop using the Token Ecosystem, PhunCoin and Phun.
+Added: Security compromises could harm the Token Ecosystem’s reputation, erode user confidence in the effectiveness of its security measures, negatively impact its ability to attract new users, or cause existing users to stop using the Token Ecosystem, PhunCoin and PhunToken.
We may be compelled to disclose personal information about a user or users of the Token Ecosystem to federal or state government regulators or taxation authorities.
Accordingly, certain information concerning users may be shared outside Phunware.
−Removed: The Token Ecosystem may be the target of malicious cyberattacks or may contain exploitable flaws in its underlying code, which may result in security breaches and the loss or theft of PhunCoin.
−Removed: If Token Ecosystem’s security is compromised or if the Token Ecosystem is subjected to attacks that frustrate or thwart our users’ ability to access the Token Ecosystem, their PhunCoin or the Token Ecosystem products and services, users may cut back on or stop using the Token Ecosystem altogether, which could seriously curtail the utilization of PhunCoin.
+Added: The Token Ecosystem may be the target of malicious cyberattacks or may contain exploitable flaws in its underlying code, which may result in security breaches and the loss or theft of PhunCoin or PhunToken.
+Added: If Token Ecosystem’s security is compromised or if the Token Ecosystem is subjected to attacks that frustrate or thwart our users’ ability to access the Token Ecosystem, their PhunCoin, PhunToken or the Token Ecosystem products and services, users may cease using the Token Ecosystem altogether.
The Token Ecosystem will use new technology.
There are no guarantees that such technology will be bug-free or accepted by the marketplace.
−Removed: Thus, even if the Token Ecosystem should become operational, PhunCoin may be subject to the risk of theft, loss, malfunction, or reputational risk, any of which can significantly degrade the potential use of PhunCoin.
−Removed: The Token Ecosystem structural foundation, the open-source protocols, the software application and other interfaces or applications built upon the Token Ecosystem are still in an early development stage and are unproven, and there can be no assurances that the Token Ecosystem and the creation, transfer or storage of the PhunCoin will be uninterrupted or fully secure which may result in a complete loss of users’ PhunCoin or an unwillingness of users to access, adopt and utilize the Token Ecosystem.
−Removed: Further, the Token Ecosystem may also be the target of malicious attacks seeking to identify and exploit weaknesses in the software or the Token Ecosystem which may result in the loss or theft of PhunCoin.
−Removed: For example, if PhunCoin and the Token Ecosystem are subject to unknown and known security attacks (such as double-spend attacks, 51% attacks, or other malicious attacks), such attacks may materially and adversely affect the Token Ecosystem.
−Removed: In any such event, if the System Launch does not occur or if the Token Ecosystem is not widely adopted, Purchasers may lose all of their investment.
+Added: Thus, even if the Token Ecosystem should become operational, our tokens may be subject to the risk of theft, loss, malfunction, or reputational risk, any of which can significantly degrade the potential use of PhunCoin and PhunToken.
+Added: The Token Ecosystem structural foundation, the open-source protocols, the software application and other interfaces or applications built upon the Token Ecosystem are still in an early development stage and are unproven, and there can be no assurances that the Token Ecosystem and the creation, transfer or storage of PhunCoin and PhunToken will be uninterrupted or fully secure which may result in a complete loss of users’ PhunCoin or PhunToken or an unwillingness of users to access, adopt and utilize the Token Ecosystem.
+Added: Further, the Token Ecosystem may also be the target of malicious attacks seeking to identify and exploit weaknesses in the software or the Token Ecosystem which may result in the loss or theft of PhunCoin or PhunToken.
+Added: For example, if our tokens and the Token Ecosystem are subject to unknown and known security attacks (such as double-spend attacks, 51% attacks, or other malicious attacks), such attacks may materially and adversely affect the Token Ecosystem.
+Added: In any such event, if the system launch does not occur or if the Token Ecosystem is not widely adopted, Purchasers of PhunCoin may lose all of their investment and customers of PhunToken may hold a coin for which there is no market to transact.
The Token Ecosystem is susceptible to mining attacks.
−Removed: As with other decentralized cryptographic tokens and cryptocurrencies, the blockchain used in connection with PhunCoin and the Token Ecosystem may be susceptible to mining attacks, including double-spend attacks, majority mining power attacks, selfish-mining attacks, and race condition attacks.
−Removed: Any successful attacks present a risk to the Token Ecosystem and PhunCoin.
−Removed: Despite the efforts of the Company team, the risk of known or novel mining attacks exists.
+Added: As with other decentralized cryptographic tokens and cryptocurrencies, the blockchain used in connection with PhunCoin, PhunToken and the Token Ecosystem may be susceptible to mining attacks, including double-spend attacks, majority mining power attacks, selfish-mining attacks, and race condition attacks.
+Added: Any successful attacks present a risk to the Token Ecosystem and our tokens.
+Added: Despite efforts by us, the risk of known or novel mining attacks exists.
Alternative platforms or networks may be established that compete with or are more widely used than the Token Ecosystem.
It is possible that alternative platforms or networks could be established that utilize the same or similar protocols underlying the Token Ecosystem or attempt to facilitate services that are materially similar to the Token Ecosystem’s services.
−Removed: The introduction of these alternative networks and the potential entry of new competitors into the market could harm our ability to increase sales, which could negatively impact the Token Ecosystem and PhunCoin.
−Removed: There is no existing trading market for our PhunCoin.
−Removed: Our PhunCoin is a new crypto asset for which there is no established public market and peer-to-peer transfers will not be permitted unless and until PhunCoin holders are notified otherwise by the Company and informed of the requirements and conditions to do so.
−Removed: Even if we register or qualify the PhunCoin under the Securities Act or under a comparable foreign regulatory regime, there can be no assurance that a secondary market will develop or, if a secondary market does develop, that it will provide the holders of our PhunCoin with liquidity of investment or that it will continue for the life of the PhunCoin.
−Removed: The liquidity of any market for our PhunCoin will depend on a number of factors, including, but not limited:
−Removed: (i) the number of holders of our PhunCoin;
−Removed: (ii) the performance of the PhunCoin;
+Added: The introduction of these alternative networks and the potential entry of new competitors into the market could harm our ability to increase sales, which could negatively impact the Token Ecosystem, PhunCoin and PhunToken.
+Added: There is no existing trading market for our tokens.
+Added: Our PhunCoin and PhunToken are new crypto assets for which there is no established public market and peer-to-peer transfers will not be permitted unless and until token holders are notified otherwise by us and informed of the requirements and conditions to do so.
+Added: There can be no assurance that a secondary market will develop or, if a secondary market does develop, that it will provide the holders of our PhunCoin and PhunToken with liquidity of investment or that it will continue for the life of the tokens.
+Added: The liquidity of any market for our tokens will depend on a number of factors, including, but not limited:
+Added: (i) the number of holders of our PhunCoin or PhunToken;
+Added: (ii) the performance of our tokens;
(iii) the market for similar crypto assets;
−Removed: (iv) the interest of traders in making a market in the PhunCoin;
+Added: (iv) the interest of traders in making a market PhunCoin and PhunToken;
(v) regulatory developments in the digital token or cryptocurrency industries and (vi) legal restrictions on transfer.
−Removed: In the event that the PhunCoins remain untradeable for a significant period of time or indefinitely, the value of the PhunCoins would be materially adversely affected.
−Removed: The regulatory regime governing blockchain technologies, cryptocurrencies, digital assets, utility tokens, security tokens and offerings of digital assets is uncertain, and new regulations or policies may materially adversely affect the development and the value of PhunCoin and Phun.
−Removed: Regulation of digital assets, like PhunCoin and Phun, cryptocurrencies, blockchain technologies and cryptocurrency exchanges, is currently undeveloped and likely to rapidly evolve as government agencies take greater interest in them.
+Added: In the event that our tokens remain untradeable for a significant period of time or indefinitely, their value could be materially adversely affected.
+Added: The regulatory regime governing blockchain technologies, cryptocurrencies, digital assets, utility tokens, security tokens and offerings of digital assets is uncertain, and new regulations or policies may materially adversely affect the development and the value of our tokens.
+Added: Regulation of digital assets, like PhunCoin and PhunToken, cryptocurrencies, blockchain technologies and cryptocurrency exchanges, is currently undeveloped and likely to rapidly evolve as government agencies take greater interest in them.
Regulation also varies significantly among international, federal, state and local jurisdictions and is subject to significant uncertainty.
Various legislative and executive bodies in the United States and in other countries may in the future adopt laws, regulations, or guidance, or take other actions, which may severely impact the permissibility of tokens generally and the technology behind them or the means of transaction or in transferring them.
−Removed: In addition, any violations of laws and regulations relating to the safeguarding of private information in connection with PhunCoin and Phun could subject us to fines, penalties or other regulatory actions, as well as to civil actions by affected parties.
−Removed: Any such violations could adversely affect the ability of Phunware to maintain PhunCoin and Phun, which could have a material adverse effect on our operations and financial condition.
+Added: In addition, any violations of laws and regulations relating to the safeguarding of private information in connection with PhunCoin and PhunToken could subject us to fines, penalties or other regulatory actions, as well as to civil actions by affected parties.
+Added: Any such violations could adversely affect the ability of us to maintain PhunCoin and PhunToken, which could have a material adverse effect on our operations and financial condition.
Failure by us to comply with any laws, rules and regulations, some of which may not exist yet or are subject to interpretation and may be subject to change, could result in a variety of adverse consequences, including civil penalties and fines.
1 unchanged sentence
Fluctuations in the price of digital assets and/or waning interest of investors in the cryptocurrency industry could materially and adversely affect our business.
−Removed: The prices of blockchain assets such as Bitcoin and Ether have historically been subject to dramatic fluctuations and are highly volatile.
−Removed: Several factors may influence the interest in cryptocurrency and blockchain asset investments such as PhunCoin, including, but not limited to:
+Added: The prices of blockchain assets such as bitcoin and ethereum have historically been subject to dramatic fluctuations and are highly volatile.
+Added: Several factors may influence the interest in cryptocurrency and blockchain asset investments such as PhunCoin and PhunToken, including, but not limited to:
• global blockchain asset supply;
−Removed: • Global blockchain asset demand, which can be influenced by the growth of retail merchants’ and commercial businesses’ acceptance of blockchain assets like cryptocurrencies as payment for goods and services, the security of online blockchain asset exchanges and digital wallets that hold blockchain assets, the perception that the use and holding of blockchain assets is safe and secure, and the regulatory restrictions on their use;
+Added: • businesses’ acceptance of blockchain assets like cryptocurrencies as payment for goods and services, the security of online blockchain asset exchanges and digital wallets that hold blockchain assets, the perception that the use and holding of blockchain assets is safe and secure, and the regulatory restrictions on their use;
• purchasers’ expectations with respect to the rate of inflation;
7 unchanged sentences
• monetary policies of governments, trade restrictions, currency devaluations and revaluations;
−Removed: • Regulatory measures that may affect the use of blockchain assets such as PhunCoin;
+Added: • regulatory measures that may affect the use of blockchain assets such as PhunCoin and PhunToken;
• the maintenance and development of the open-source software protocol of certain blockchain assets;
• global or regional political, economic or financial events and situations;
−Removed: • Expectations among the Token Ecosystem or other blockchain assets participants that the value and/or utility of other blockchain assets will soon change.
+Added: • expectations among the Token Ecosystem or other blockchain asset participants that the value and/or utility of other blockchain assets will soon change.
Unresolved Staff Comments.
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.