What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-03-31 compared with 2022-04-07 · 295 added, 259 removed, 597 unchanged (48% of the section changed)

10 unchanged sentences

We experienced a consolidated net loss for the years ended December 31, 2022 and December 31, 2021.

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.

These losses were due to both a decline in platform revenue in 2021 and 2022, as compared to previous years, losses related to our digital asset holdings 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.

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.

In addition, as a public company we incur significant legal, accounting and other expenses.

As a result, our operating expenses may continue to increase in the future due to expected increased sales and marketing expenses, operating 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.

In addition, as a public company we incur significant legal, accounting and other expenses, including, but not limited to additional costs in resolving our existing legal matters.

Furthermore, to the extent that we are successful in increasing our customer base, we may also incur increased expenses because costs associated with generating and supporting customer agreements are generally incurred up front.

5 unchanged sentences

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.

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.

The COVID-19 pandemic has had a significant adverse impact on global commercial activity and has created significant volatility in financial markets.

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.

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.

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.

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.

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.

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.

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.

We have established remote working arrangements for our employees, limited non-essential business travel and cancelled or shifted our customer,

employee and industry events to a virtual-only format when necessary and available.

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.

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.

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.

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.

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.

We assess goodwill for impairment at least annually, which could result in a material, non-cash write-down and could have a material adverse effect on our results of operations, financial condition and our future operating results.

Our consolidated financial statements include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

The notes accompanying our consolidated financial statements contain an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern due to our recurring losses from operations and substantial decline in our working capital.

If we are unsuccessful in our efforts to raise outside financing, we may be required to significantly reduce or cease operations.

The report of our independent registered public accounting firm on our audited financial statements for the year ended December 31, 2022 included a "going concern" explanatory paragraph.

We current have an effective registration statement on Form S-3 filed with the SEC.

We may use the shelf registration statement on Form S-3 to offer from time to time any combination of common stock, preferred stock, warrants and units.

Contained therein, is a prospectus supplement in which we may sell up to $100 million of our common stock in an “at the market" offering pursuant to a sales agreement we entered into with H.C.

Wainwright & Co., LLC on January 31, 2022.

As of the date of this Annual Report on Form 10-K, a total of $95.4 million of shares of our common stock remains issuable pursuant to the sales agreement.

There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all.

A “going concern” qualification could impair our ability to finance our operations through the sale of equity, to incur debt or to pursue other financing alternatives.

Our ability to continue as a going concern will depend upon the availability and terms of future funding, growth in revenue, improved operating margins and our ability to profitably meet our after-sale service

commitments with existing customers.

If we are unable to achieve these goals, our business could be jeopardized and may not be able to continue.

If we ceased operations, it is likely that all of our investors would lose their investment.

Our future performance will depend on the successful transition of our Chief Executive Officer (CEO).

In October 2022, our co-founder and CEO, Alan Knitowski, submitted notice of resignation to the Company effective upon the expiration of his employment contract on December 26, 2022.

In November 2022, we announced the hiring of Russell Buyse to serve as our Chief Executive Officer effective as of December 28, 2022.

If we are unable to execute a timely and orderly transition and successfully integrate our new CEO into our leadership team, revenue, operating results and our financial condition may be adversely impacted.

Our future performance also will continue to depend on the services and contributions of our other senior management and key employees to execute on our business plan and to identify and pursue new opportunities as well as service and product innovations.

These changes, and any future changes, in our operations and management team could be disruptive to our operations.

Further, if our new CEO formulates different or changed views, the future strategy and plans of our business may differ materially from those of the past.

We are currently operating in a period of significant macro-economic uncertainty, including supply-chain disruptions, COVID-related disruptions and inflationary pressures.

Weakened economic conditions may have an adverse impact on our business and results of operations.

Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations could materially adversely affect demand for our products and services.

Inflationary pressures and supply chain disruptions could impact the price at which we acquire components required in the assembly of Lyte computer systems.

Our principal operating expense is compensation related costs.

Inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in decreased demand for our products and services, increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital.

The effects of inflation on customer and consumer budgets could result in the reduction of our customers’ spending plans.

These and other economic factors could materially adversely affect our business, results of operations and financial condition.

In addition, the effects of macro-economic uncertainty, including, but not limited to the COVID-19 pandemic, may heighten many of the other risks described in this “ Risk Factors ” section.

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.

Our future growth depends upon expanding sales and renewals of sales of our technology, products and services to existing customers and expansion of our personal computer offerings.

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.

If our customers do not renew their contracts, our revenue may grow more slowly than expected, may not grow at all, or may decline.

Additionally, increasing incremental sales to our current customer base may require increasingly sophisticated and costly sales efforts that are targeted at senior management.

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.

We cannot provide assurance that our efforts will increase sales to existing customers or generate additional revenue.

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 and sell our technology, products and services to new customers.

This may be particularly challenging where an organization has already invested substantial personnel and financial resources to integrate competing technology, products and services.

An organization may be reluctant or unwilling to invest in new technology offerings and services.

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.

We have incurred a goodwill impairment charge and goodwill continues to comprise a significant portion of our total assets.

In the future, we could incur additional impairment charges, which could result in a material, non-cash write-down and could have a material adverse effect on our results of operations, financial condition and our future operating results.

The carrying value of our goodwill was $31.1 million, or approximately 57% of our total assets, as of December 31, 2022.

1 unchanged sentence

Goodwill is deemed to be impaired if the net book value of a reporting unit exceeds the estimated fair value.

We completed our annual goodwill impairment analysis as of September 30, 2021, and we concluded an impairment of goodwill was not necessary.

We further updated this analysis at December 31, 2021 and concluded an impairment was not necessary as of this date, as well.

Goodwill impairment analysis and measurement is a process that requires significant judgment.

Several factors could result in impairment of a material amount of our goodwill balance in future periods, including, but not limited to:

(i) A decline in our stock price and resulting market capitalization, if we determine that the decline is sustained and is indicative of a reduction in the fair value of any of our reporting units below its carrying value.

(ii) Weakening of the world-wide economy, weakness in the business in which we operate or failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows and reduce the estimated discounted cash flow value of our reporting units.

It is not possible at this time to determine if any such future impairment charge would result from these factors, or, if it does, whether such charge would be material.

We will continue to review our goodwill for possible impairment.

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.

We periodically review the carrying values of goodwill and intangible assets to determine whether such carrying values exceed their fair market values.

Declines in the profitability of the Company, due to economic or market conditions or otherwise, as well as adverse changes in financial, competitive and other conditions, could adversely affect the values of our reporting units, resulting in an impairment of goodwill or intangible assets.

In addition, adverse changes to the key valuation assumptions contributing to the fair value of our reporting units could result in an impairment of goodwill or intangible assets.

We completed our annual goodwill impairment analysis during the fourth quarter of 2022, and we concluded goodwill was impaired.

Goodwill impairment charges of $2.1 million were recorded during the year ended December 31, 2022.

For additional details, refer to Note 6 " Goodwill " of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on our goodwill impairment.

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 future impairments 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.

We, along with our executive officers and former and current board members, are parties to legal proceedings with Wild Basin Investments, LLC as further described on our Current Report on Form 8-K filed with the SEC on January 10, 2020.

We, along with certain of our former and current executive officers and certain former and current board members, are parties to litigation with Wild Basin Investments, LLC as further described on our Current Report on Form 8-K filed with the SEC on January 10, 2020.

We, along with our officers and directors, may also become subject to other legal proceedings in our ordinary course of business.

3 unchanged sentences

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.

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.

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.

Negative publicity surrounding such legal proceedings may also harm our reputation and adversely impact our business and results.

7 unchanged sentences

In addition, customers may delay spending under existing contracts and engagements and may delay entering into new contracts while they evaluate new technologies.

If we do not sufficiently invest in new technology, industry developments and our personnel, or evolve and expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our technology offerings and services, our results of operations and our ability to develop and maintain a competitive advantage and growth could be negatively affected.

If we do not sufficiently invest in new technology, industry developments and our personnel, or evolve and expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our technology, products and services, our results of operations and our ability to develop and maintain a competitive advantage and growth could be negatively affected.

In addition, if we are unable to keep up with changes in technology and new hardware, software and services offerings, for example, by providing the appropriate training to our customer solutions team, sales directors, program management team, channel partners and software development and product engineers to enable them to effectively sell and deliver such new offerings to customers, our business, results of operations, or financial condition could be adversely affected.

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.

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.

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.

If our customers do not renew their contracts, our revenue may grow more slowly than expected, may not grow at all, or may decline.

Additionally, increasing incremental sales to our current customer base may require increasingly sophisticated and costly sales efforts that are targeted at senior management.

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.

We cannot provide assurance that our efforts will increase sales to existing customers or generate additional revenue.

Our ability to achieve significant growth in revenue in the future will also depend upon our ability to attract new customers.

This may be particularly challenging where an organization has already invested substantial personnel and financial resources to integrate competing technology offerings and services.

An organization may be reluctant or unwilling to invest in new technology offerings and services.

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.

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.

8 unchanged sentences

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.

Accordingly, we rely on our supply chain for the manufacturing, distribution and fulfillment of Lyte personal computers.

For example, we rely on our supply chain for the manufacturing, distribution and fulfillment of Lyte personal computers.

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.

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.

Worldwide political conditions may adversely affect demand for our products.

Worldwide political conditions may create uncertainties that could adversely affect our business.

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 computers from us, which could have a material adverse effect on our business.

Global political conditions may adversely affect demand for our products.

Global political conditions may create uncertainties that could adversely affect our business.

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.

2 unchanged sentences

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.

Any of these events could cause consumer spending to decrease or result in increased volatility in the United States economy and worldwide financial markets.

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.

Any of these events could cause consumer spending to decrease or result in increased volatility in the United States economy and global financial markets.

The actual market for our products and services could be significantly smaller than estimates of total potential market opportunity and if customer demand for our products and services does not meet expectations, our ability to generate revenue and meet our financial targets could be adversely affected.

While we expect 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.

The methodology on which our estimate of our total potential market opportunity is based includes several key assumptions based on our industry knowledge and customer experience.

2 unchanged sentences

Substantial competition could reduce our market share and significantly harm our financial performance.

The market in which we operate is highly competitive, with relatively low barriers to entry for some software, product or service organizations.

The markets in which we operate are highly competitive, with relatively low barriers to entry for some software, product or service organizations.

Some customers may be hesitant to switch vendors or to adopt cloud-based software such as ours and prefer to maintain their existing relationships.

1 unchanged sentence

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.

We may also face competition from a variety of vendors of software

and products that address only a portion of our platform.

We may also face competition from a variety of vendors of software 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.

4 unchanged sentences

Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources.

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.

If our technology, products and services do not become more accepted relative to those of our competitors, or if our competitors are successful in bringing their products or services to market earlier than ours, or if the products or services of our competitors 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 lower prices.

If we are unable to achieve our target pricing levels, our operating results may be negatively affected.

9 unchanged sentences

Our profitability could suffer if we are not able to manage large and complex projects and complete fixed price, fixed timeframe contracts on budget and on time.

Our profitability and operating results are dependent on the scale of our projects and the prices we are able to charge for our technology offerings and services.

Our profitability and operating results are dependent on the scale of our projects and the prices we are able to charge for our technology, products and services.

We perform a significant portion of our work through fixed price contracts, in which we assume full control of the project team and manage all facets of execution.

11 unchanged sentences

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.

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.

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.

Our business strategy is evolving.

2 unchanged sentences

We continue to invest in new services and technologies, including adding additional vertical solutions to our product offerings and blockchain.

We also plan to expand Lyte internationally.

We have expanded our Lyte computer offerings into Canada and may plan additional international expansion.

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.

3 unchanged sentences

Our industry is undergoing significant change and our business strategy is continuing to evolve to meet these changes.

In order to profitably grow our business, we may need to expand into new lines of business beyond our current focus of mobile engagement analytics products, mobile application advertising and services, which may involve pursuing strategic transactions, including potential acquisitions of, or investments in, related or unrelated businesses.

In addition, we may seek divestitures of existing businesses or assets.

1 unchanged sentence

If we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives.

We may also dispose of a business at a price or on terms that are less desirable than we had anticipated.

We may also dispose of assets or a business at a price or on terms that are less desirable than we had anticipated.

In addition, we may experience greater dis-synergies than expected and the impact of the divestiture on our revenue may be larger than projected.

7 unchanged sentences

• an acquisition may result in a delay or reduction of customer purchases for both us and the company we acquired due to customer uncertainty about continuity and effectiveness of service from either company;

• we may encounter difficulties in, or may be unable to, successfully sell any acquired technology offerings or services;

• we may encounter difficulties in, or may be unable to, successfully sell any acquired technology, products or services;

• an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience or where competitors have stronger market positions;

8 unchanged sentences

We may not succeed in addressing these or other risks or any other problems encountered in connection with the integration of any acquired business.

The inability to integrate successfully the business, technologies, products, personnel or operations of any acquired business, or any significant delay in achieving integration, could harm our business, results of operations or financial condition.

The inability to integrate successfully the business, technologies, products, services, personnel or operations of any acquired business, or any significant delay in achieving integration, could harm our business, results of operations or financial condition.

We may not be able to recognize revenue in the period in which our services are performed, which may cause our margins to fluctuate.

2 unchanged sentences

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.

Our financial results may be adversely affected by changes in accounting principles applicable to us.

1 unchanged sentence

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.

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.

For example, in February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

Under this guidance, companies are required to recognize all leases on their balance sheets by recording a lessee’s rights and obligations.

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.

As a result, a significant amount of lease related assets and liabilities were recorded on our balance sheet.

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.

We may adopt changes in accounting standards retrospectively to prior periods and the adoption may result in an adverse change to previously reported results.

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.

4 unchanged sentences

In addition to the other risks described herein, factors that may affect our quarterly operating results include:

• the amount and timing of completion application development services and other service-related engagements;

• the amount and timing of completion of application development services and other service-related engagements;

• changes in spending on subscriptions, services and application transactions media offerings and services by our current or prospective customers;

• 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;

• our ability to scale and expand the Lyte business;

• pricing our technology, product, and services effectively so that we are able to attract and retain customers without compromising our operating results;

• one-time, non-recurring revenue events;

• attracting new customers and increasing our existing customers’ use of our technology offerings and services;

• the mix between new contracts and renewals;

• the mix between new contracts and renewals of existing contracts;

• customer renewal rates and the amounts for which agreements are renewed;

16 unchanged sentences

• general economic and political conditions.

We may not be able to accurately forecast the amount and mix of future technology offerings and services, size or duration of contracts, revenue and expenses and, as a result, our operating results may fall below our estimates.

We may not be able to accurately forecast the amount and mix of future technology, products and services, size or duration of contracts, revenue and expenses and, as a result, our operating results may fall below our estimates.

We could be held liable for damages or our reputation could suffer from security breaches or disclosure of confidential information or personal data.

3 unchanged sentences

In addition, many of our engagements involve projects that are critical to the operations of our customers’ businesses.

The theft and/or unauthorized use or publication of our, or our customers’, confidential information or other proprietary business information as a result of such an incident could adversely affect our competitive position and reduce marketplace acceptance of our services.

Any failure in the networks or computer systems used by us or our customers could result in a claim for substantial damages against us and significant reputational harm, regardless of our responsibility for the failure.

8 unchanged sentences

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.

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.

If we make errors in the course of delivering services to our customers or fail to consistently meet our service-level obligations to 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.

The services we provide are often critical to our customers’ businesses.

Certain of our customer contracts require us to comply with security obligations including maintaining network security and backup data, ensuring our network is virus free, maintaining business continuity planning procedures and ensuring our employees conduct their job functions with the a high level of integrity.

Any failure in a customer’s system, failure of our data center, cloud or other offerings, or breach of security relating to the services we provide to the customer could damage our reputation or result in a claim for substantial damages against us.

Any failure in a customer’s system, failure of our data center, cloud or other offerings, or breach of security relating to the services we provide to a customer could damage our reputation or result in a claim for substantial damages against us.

Any significant failure of our equipment or systems, or any major disruption to basic infrastructure in the locations in which we operate, such as power and telecommunications, could impede our ability to provide services to our customers, have a negative impact on our reputation, cause us to lose customers and adversely affect our results of operations.

5 unchanged sentences

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.

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.

We cannot be sure that our brand, software solution and personal computing products 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.

14 unchanged sentences

There is uncertainty concerning the scope of available intellectual property protection for software and business methods, which are fields in which we rely on intellectual property laws to protect our rights.

The validity and enforceability of any intellectual property right we obtain may be challenged by others and, to the extent we have enforceable intellectual property rights, those intellectual property rights may not prevent competitors from reverse engineering our proprietary information or independently developing technology offerings and services similar to or duplicative of us.

The validity and enforceability of any intellectual property rights we obtain may be challenged by others and, to the extent we have enforceable intellectual property rights, those intellectual property rights may not prevent competitors from reverse engineering our proprietary information or independently developing technology, products and services similar to or duplicative of us.

Further, the steps we take in this regard might not be adequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors, former employees or other third parties and we might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, our intellectual property rights.

Enforcing our rights might also require considerable time, money and oversight and we may not be successful in enforcing our rights.

Enforcing our intellectual property rights might also require considerable time, money and oversight and we may not be successful in enforcing our rights.

If we are unable to collect our receivables from, or bill our unbilled services to, our customers, our business, results of operations or financial condition could be adversely affected.

Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us for technology offerings sold or services performed.

Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us for products sold or services performed.

We typically evaluate the financial condition of our customers and usually bill and collect on relatively short cycles.

3 unchanged sentences

Macroeconomic conditions could also result in financial difficulties for our customers, including limited access to the credit markets, insolvency, or bankruptcy, and, as a result, could cause customers to delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us.

Timely collection of customer balances also depends on our ability to complete its contractual commitments and bill and collect our contracted revenue.

Timely collection of customer balances also depends on our ability to perform obligations to customers and bill and collect our contracted revenue.

If we are unable to meet our contractual requirements, we might experience delays in collection of and/or be unable to collect our customer balances and if this occurs, our business, results of operations, or financial condition could be adversely affected.

1 unchanged sentence

Increased costs of labor and employee health and welfare benefits may adversely impact our results of operations.

Labor related costs represent a significant portion of our expenses.

An increase in labor costs, for example, as a result of increased competition for skilled labor, or employee benefit costs, such as health care costs or otherwise, could adversely impact our business, results of operations or financial condition.

Labor related costs represent a significant portion of our expenses and we have experienced increases compensation related expenses.

Additional increases in labor costs, for example, as a result of increased competition for skilled labor, or

employee benefit costs, such as healthcare costs or otherwise, could further impact our business, results of operations or financial condition.

Our global operations are subject to complex risks, some of which might be beyond our control.

5 unchanged sentences

If we are unable to manage the risks of our global operations, our business, results of operations, or financial condition could be adversely affected.

Economic uncertainties or downturns in the general economy or the industries in which our customers operate could disproportionately affect the demand for our products and services solutions and negatively impact our operating results.

General worldwide economic conditions could experience a significant downturn causing market volatility widespread uncertainty.

Economic uncertainties or downturns in the global economy or the industries in which our customers operate could disproportionately affect the demand for our products and services solutions and negatively impact our operating results.

Global economic conditions could experience a significant downturn causing market volatility widespread uncertainty.

As a result, we and our customers could find it extremely difficult to accurately forecast and plan future business activities.

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.

In addition, these conditions could cause our customers or prospective customers to reduce their information technology and other 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.

2 unchanged sentences

We cannot predict the timing, strength or duration of any economic slowdown or recovery, whether global, regional or within specific markets.

If the conditions of the general economy or markets in which we operate worsen, our business could be harmed.

In addition, even if the overall economy does not worsen or improves, the market for product and service offerings may not experience growth or we may not experience growth.

If platform subscriptions renewal rates decrease, or we do not accurately predict subscription renewal rates, our future revenue and operating results may be harmed.

If the conditions of the global economy or markets in which we operate worsen, our business could be harmed.

In addition, even if the global economy does not worsen or improves, the market for product and service offerings may not experience growth or we may not experience growth.

If platform subscription renewal rates decrease, or we do not accurately predict subscription renewal rates, our future revenue and operating results may be harmed.

Our customers have no obligation to renew their subscriptions for our solutions after the expiration of their subscription period, which generally ranges from one to three years.

3 unchanged sentences

If our customers do not renew their subscriptions for our solutions or decrease the amount they spend with us, our revenue will decline and our business will suffer.

If we are unable to attract new customers or sell additional services and functionality to our existing customers, our revenue growth will be adversely affected.

To increase our revenue, we must add new customers, encourage existing customers to renew their subscriptions on terms favorable to us, increase their usage of our solutions and sell additional functionality and services to existing customers.

If we are unable to attract new customers or sell additional products or services to our existing customers, our revenue growth will be adversely affected.

As our industry matures, as interactive channels develop further, or as competitors introduce lower cost and/or differentiated products or services that are perceived to compete with ours, our ability to sell and renew based on pricing, technology and functionality could be impaired.

In addition, attracting, retaining and growing our relationship with customers may require us to effectively employ different strategies than we have historically used with current customers and we may face challenges in doing so.

As a result, we may be unable to renew our agreements with existing customers or attract new customers or new

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.

As a result, we may be unable to renew our agreements with existing customers or attract new customers or new 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.

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.

9 unchanged sentences

As a result, our operating results in future reporting periods may be significantly below the expectations of the public market, equity research analysts or investors, which could harm the price of our common stock.

The length and unpredictability of the sales cycle for our technology offerings and services could delay new sales and cause our revenue and cash flows for any given quarter to fail to meet our projections or market expectations.

The sales cycle between our initial contact with a potential customer and the signing of a contract to provide technology offerings and services varies.

As a result of the variability and length of the sales cycle, we have a limited ability to forecast the timing of sales.

The length and unpredictability of the sales cycle for our technology, products and services could delay new sales and cause our revenue and cash flows for any given quarter to fail to meet our projections or market expectations.

The sales cycle between our initial contact with a potential customer and the signing of a contract to provide technology, products and services varies.

As a result of the length and unpredictability of the sales cycle, we have a limited ability to forecast the timing of sales.

A delay in or failure to complete transactions could harm our business and financial results and could cause our financial results to vary significantly from quarter to quarter.

2 unchanged sentences

• the timing of our customers’ budget cycles;

• the impact of the COVID-19 pandemic to our customers;

• the impact of the COVID-19 pandemic and related disruptions on our customers;

• the length and timing of customers’ approval processes.

If we fail to detect advertising fraud or other actions that impact our advertising campaign performance, we could harm our reputation with advertisers or agencies, which could cause our revenue and business to suffer.

Our business relies on our ability to deliver successful and effective advertising campaigns.

Our advertising business relies on our ability to deliver successful and effective advertising campaigns.

Some of those campaigns may experience fraudulent and other invalid impressions, clicks or conversions that advertisers may perceive as undesirable, such as non-human traffic generated by machines that are designed to simulate human users and artificially inflate user traffic on websites.

These activities could overstate the performance of any given advertising campaign and could harm our reputation.

It may be difficult for us to detect fraudulent or malicious activity because we do not own content and rely in part on our digital media partners to control such activity.

It may be difficult for us to detect advertising-related fraud and other malicious activity because we do not own content and rely in part on our digital media partners to control such activity.

These risks become more pronounced as the digital video industry shifts to programmatic buying.

Both governmental and industry self-regulatory bodies have increased their scrutiny and awareness of and have taken recent actions to address advertising fraud and other malicious activity.

While we routinely review the campaign performance, such reviews may not detect or prevent fraudulent or malicious activity.

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.

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.

In addition, advertisers increasingly rely on third party vendors to measure campaigns against audience guarantee, viewability and other requirements and to detect

Both governmental and industry self-regulatory bodies have increased their scrutiny and awareness of and have taken recent actions to address advertising-related fraud and other malicious activity.

While we routinely review the campaign performance, such reviews may not detect or prevent advertising-related fraud or malicious activity.

If we fail to detect or prevent fraud or other malicious activity, the affected advertisers may experience or perceive a reduced return on their investment and our reputation may be harmed.

High levels of fraud or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, prompt refund or future credit demands or withdrawal of future business.

In addition, advertisers increasingly rely on third party vendors to measure campaigns against audience guarantee, viewability and other requirements and to detect fraud.

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.

If we fail to detect fraudulent or other malicious activities that impact the performance of our brand advertising campaigns, we could harm our reputation with our advertisers or agencies and our revenue and business could suffer.

If we fail to detect fraud or other

malicious activities that impact the performance of our brand advertising campaigns, we could harm our reputation with our advertisers or agencies and our revenue and business could suffer.

Further, if advertisers demand fraud-free inventory, our supply could fall drastically, making it impossible to sustain our current business model.

If we do not maintain and grow a critical mass of advertisers and distribution partners, the value of our services could be adversely affected.

22 unchanged sentences

Our revenue depends on the technological ability of our solutions to deliver ads and measure them.

Sustained or repeated system failures that interrupt our ability to provide solutions to customers, including security breaches and other technological failures affecting our ability to deliver ads quickly and accurately and to collect and process data in connection with these ads, could significantly reduce the attractiveness of our solutions to advertisers, negatively impact operations and reduce our revenue.

Sustained or repeated system failures that interrupt our ability to provide advertising campaigns and solutions to customers, including security breaches and other technological failures affecting our ability to deliver ads quickly and accurately and to collect and process data in connection with these ads, could significantly reduce the attractiveness of our solutions to advertisers, negatively impact operations and reduce our revenue.

Our systems are vulnerable to damage from a variety of sources, including telecommunications failures, power outages, malicious human acts and natural disasters.

1 unchanged sentence

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.

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 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.

5 unchanged sentences

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.

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.

Failure of our advertising 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.

16 unchanged sentences

Although our contracts with advertisers generally permit us to aggregate data from advertising campaigns, sometimes an advertiser declines to permit the use of this data, which limits the usefulness of the data that we collect.

Furthermore, advertisers may request that we discontinue using data obtained from their campaigns that have already been aggregated with other advertisers’ campaign data.

Furthermore, advertisers may request that we discontinue using data obtained from their campaigns that have already been aggregated with

other advertisers’ campaign data.

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.

7 unchanged sentences

In addition, it is possible that these requirements may be interpreted and applied in a manner that is new or inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

Any actual or perceived failure by us to comply with U.S.

federal, state or international laws, including laws and regulations regulating privacy, data, security or consumer protection, or disclosure or unauthorized access by third parties to this information, could result in proceedings or actions against us by governmental entities, competitors, private parties or others.

Any proceedings or actions against us alleging violations of consumer or data protection laws or asserting privacy-related theories could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, adversely affect the demand for our solutions and ultimately result in the imposition of monetary liability.

We may also be contractually liable to indemnify and hold harmless our customers from the costs or consequences of litigation resulting from using our solutions or from the disclosure of confidential information, which could damage our reputation among our current and potential customers, require significant expenditures of capital and other resources and cause us to lose business and revenue.

Any actual or perceived failure by us or our customers or partners to comply with U.S.

federal, state or international laws, including laws and regulations regulating privacy, data, security or consumer protection, or disclosure or unauthorized access by third parties to this information, could result in investigations, proceedings or actions against us by governmental entities, competitors, private parties or others.

Any investigations, proceedings or actions against us alleging violations of consumer or data protection laws or asserting privacy-related theories could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, adversely affect the demand for our solutions and ultimately result in the imposition of monetary liability.

We may also be contractually liable to indemnify and hold harmless our customers from the costs or consequences of litigation resulting from using our solutions or from the unauthorized disclosure of confidential information, which could damage our reputation among our current and potential customers, require significant expenditures of capital and other resources and cause us to lose business and revenue.

The regulatory framework for privacy issues is evolving worldwide.

4 unchanged sentences

Potential penalties for non-compliance with the GDPR include administrative fines of up to 4% of annual worldwide revenue.

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.

While we have not collected data that is traditionally considered identifiable 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 subject to applicable laws or regulations.

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.

2 unchanged sentences

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.

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.

In addition to compliance with government regulations, we voluntarily participate in trade associations and industry self-regulatory groups that promulgate best practices or codes of conduct addressing the provision of internet advertising.

Complying with any new legal requirements relating to privacy and data protection 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.

Our failure to comply with evolving interpretations of applicable laws and regulations relating to privacy and data protection, 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.

In addition to compliance with applicable laws and regulations, we voluntarily participate in trade associations and industry self-regulatory groups that promulgate best practices or codes of conduct addressing the provision of internet advertising.

We could be adversely affected by changes to these guidelines and codes in ways that are inconsistent with our practices or in conflict with the laws and regulations of U.S.

or international regulatory authorities.

For instance, new guidelines, codes, or interpretations, by self-regulatory organizations or government agencies, may require additional disclosures, or additional consumer consents, such as “opt-in” permissions to share, link or use data, such as health data from third parties, in certain ways.

If we fail to abide by, or are perceived as not operating in accordance with, industry best practices or any industry guidelines or codes with regard to privacy, our reputation may suffer and we could lose relationships with advertisers and digital media partners.

Our agreements with partners, employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

Our agreements with partners, employees and others may not adequately prevent disclosure of trade secrets and other proprietary technology and information.

We rely in part on confidentiality agreements and other restrictions with our customers, partners, employees, consultants and others to protect our proprietary technology and other proprietary information.

1 unchanged sentence

Despite our efforts to protect our proprietary technology, processes and methods, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them.

Moreover, policing unauthorized use of our technologies, products and intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where applicable laws may be less protective of intellectual property rights than those in the United States and where enforcement mechanisms for intellectual property rights may be weak.

Moreover, policing unauthorized use of our trade secrets, technologies, products, intellectual property and proprietary information is difficult, expensive and time-consuming, particularly in foreign countries where applicable laws may be less protective of intellectual property rights than those in the United States and where enforcement mechanisms for intellectual property rights may be weak.

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

2 unchanged sentences

We use significant judgment in evaluating our worldwide income-tax provision.

During the ordinary course of business, we conduct many transactions for which the ultimate tax determination is uncertain.

In the ordinary course of business, we conduct many transactions for which the ultimate tax determination is uncertain.

For example, our effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets and liabilities or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations.

3 unchanged sentences

Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results.

We do not collect sales and use, value-added or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are either not applicable or an exemption from such taxes applies.

We do not collect sales and use, value-added or similar taxes in all jurisdictions in which we have sales and for all products and services that we sell, based on our belief that such taxes are either not applicable or an exemption from such taxes applies.

Sales and use, value-added and similar tax laws and rates vary greatly by jurisdiction.

5 unchanged sentences

As of December 31, 2022, we had federal net operating loss carryforwards of approximately $195.0 million, of which $109.4 million will never expire and $85.7 million will expire at various dates beginning in 2030.

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.

At December 31, 2022, we had state and local net operating loss carryforwards of approximately $95.9 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.

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.

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.

24 unchanged sentences

As a result of these maintenance obligations, management’s attention may be diverted from other business concerns, which could adversely affect our business.

we supplement our internal team with third party software and system providers to support our reporting obligations to achieve effective internal controls.

Furthermore, 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.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

The Sarbanes-Oxley Act requires, among other things, that we maintain

effective disclosure controls and procedures and internal control over financial reporting.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.

9 unchanged sentences

We are a "smaller reporting company" as defined by the SEC.

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.

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 and reduced disclosure obligations regarding executive compensation and corporate governance in our periodic reports and proxy statements.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

4 unchanged sentences

We have an office and at least one data center located in California, a region known for earthquakes and mudslides.

A significant amount of our development and ad operations work is located in California.

We also have corporate offices in Texas and Florida, both of which are susceptible to floods, hurricanes and extreme temperatures.

Our Lyte operations are located in Illinois, an area that is vulnerable to heavy winds, ice, snow and tornadoes.

A significant amount of our development and ad operations work is also located in California.

We also have corporate offices in Texas and Florida, both of which are susceptible to floods, hurricanes and extreme temperatures and Texas is 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.

1 unchanged sentence

We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting California, Texas or Florida.

In late 2019, a strain of

the coronavirus was reported to have surfaced and spread to the United States.

In late 2019, a strain of the coronavirus was reported to have surfaced and spread to the United States.

The ongoing extent to which COVID-19 and its variants impact on our results is unknown.

3 unchanged sentences

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.

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.

In February 2022, we filed a registration statement on 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.

During 2022, we issued common stock in various sales of our common stock via at-the-market offerings.

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.

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.

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.

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.

8 unchanged sentences

The issuance of these shares will dilute our other equity holders, which could cause the price of our common stock to decline.

The failure of financial institutions or transactional counterparties could adversely affect our current and projected business operations and our financial condition and results of operations.

On March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp.

were each swept into receivership.

A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts.

However, there is no guarantee that the U.S.

Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions in a timely fashion or at all.

Although we do not have any funds deposited with SVB and Signature Bank, we regularly maintain cash balances with other financial institutions in excess of the FDIC insurance limit.

Access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures.

In addition, investor concerns regarding the U.S.

or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.

Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.

Furthermore, should our customers have relationships with financial institutions that fail, this may result in a delay of collecting outstanding receivables, if at all, which could have a material adverse affect on our business.

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.

13 unchanged sentences

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.

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.

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.

If our stock price is volatile, we may become the target of securities litigation.

5 unchanged sentences

• changes in how customers perceive the benefits of our products and future offerings;

• the addition or departure of key personnel;

• the addition or departure of key personnel, including, but not limited to the successful transition of our Chief Executive Officer;

• the public’s reaction to our press releases, other public announcements and filings with the SEC;

13 unchanged sentences

Furthermore, the trading price of our Common Stock has recently been volatile during relatively short time periods.

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.

For example, on December 28, 2022 our Common Stock traded at an intraday low of $0.75, whereas on February 2, 2023 our Common Stock traded at an intraday high of $1.15.

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.

1 unchanged sentence

In the event of a rapid decrease in the trading price of our Common Stock, investors could lose a significant portion of their investment.

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.

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.

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.

For further discussion of our internal control over financial reporting, a

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.

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.

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.

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.

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.

We may have difficulty attracting and retaining directors with the requisite qualifications.

We currently do not have an "audit committee financial expert" as defined by the SEC serving on our Audit Committee.

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.

Our failure to meet the continued listing requirements of the Nasdaq Capital Market could adversely affect our business and our ability to maintain the listing of our common stock on the Nasdaq Capital Market.

If we fail to satisfy the continued listing requirements of Nasdaq Capital Market, such as corporate governance requirements or the minimum bid requirement, Nasdaq may take steps to delist our common stock.

Such a delisting would likely have a negative effect on the price of our common stock and would impair our stockholders' ability to sell or purchase shares of our common stock when they wish to do so.

In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to be listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq listing requirements.

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.

35 unchanged sentences

Our bitcoin acquisition strategy exposes us to various risks associated with bitcoin.

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.

During the fourth quarter of 2021, our board of directors approved certain purchases by the Company of bitcoin, which we currently hold.

We are continually examining the risks and rewards of our bitcoin acquisition strategy.

3 unchanged sentences

As of December 31, 2022, we held approximately 605 bitcoins that were acquired at an aggregate purchase price of approximately $35 million and an average purchase price of approximately $57,804 per bitcoin, inclusive of fees and expenses.

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.

As part of our overall corporate strategy, we may purchase additional bitcoin in future periods, and may also sell bitcoin in future periods as needed to generate cash for operating purposes.

While our bitcoin is currently owned directly by us, we may investigate other potential approaches to holding our bitcoin assets.

1 unchanged sentence

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.

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.

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.

Bitcoin is a highly volatile asset that has traded below $16,000 and above $48,000 per bitcoin during 2022.

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.

8 unchanged sentences

• changes in consumer preferences and the perceived value of bitcoin or ethereum;

• competition from other crypto assets that exhibit better speed, security, scalability, or other characteristics, or that are backed by governments, including the U.S.

• 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;

• the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed bitcoin, or the transfer of Satoshi’s bitcoin;

• interruptions in service or failures of the principal markets for bitcoin or ethereum;

• competition from other crypto assets that are believed to exhibit better speed, security, scalability, or other characteristics, or that are backed by governments, including the U.S.

• correlations 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;

• the identification of Satoshi Nakamoto, the pseudonymous person or persons who purportedly developed bitcoin, or the transfer of Satoshi’s bitcoin;

• interruptions in service or failures of the principal markets for or market participants active in trading involving bitcoin, ethereum or other digital assets;

• 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;

3 unchanged sentences

• national and international economic and political conditions.

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.

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.

In addition, bitcoin, ethereum and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their prices.

The application of securities, commodities and other laws and other regulations to such assets is unclear in certain respects, and it is possible that new laws and regulations, or interpretations of existing laws and regulations, in the United States or foreign countries may adversely affect the price of our bitcoin, ethereum and other digital assets.

For example, foreign government authorities have recently expanded their efforts to restrict certain activities related to bitcoin and other digital assets.

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.

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.

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.

In India, based on statements made by government personnel, including the Finance Minister, one can conclude that cryptocurrency is illegal in the country.

In July 2022, Russia enacted a law banning payments in cryptocurrency for goods and services.

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.

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.

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.

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 or store of value, consumer demand for bitcoin as a means of payment or store of value, and the availability and popularity of alternatives to bitcoin.

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.

1 unchanged sentence

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.

The liquidity of bitcoin and ethereum

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.

The liquidity of bitcoin and ethereum 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.

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.

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.

Our historical financial statements do not fully reflect the potential variability in earnings that we may experience in the future from holding or selling significant amounts of digital assets.

The prices of bitcoin and ethereum have historically been subject to dramatic price fluctuations and are highly volatile.

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.

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.

As explained more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2022 included in this Annual Report on Form 10-K, as required by current accounting standards, we determine the fair value of our digital assets based on quoted (unadjusted) prices.

We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices of digital assets on an active exchange, indicate that it is more likely than not that any of our digital assets are impaired.

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.

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.

Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses.

Gains (if any) are not recorded until realized upon sale.

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.

1 unchanged sentence

As of December 31, 2022, we held $10.1 million of digital assets on our balance sheet and recognized $22.9 million digital asset impairment losses during the year ended December 31, 2022, which represented 45% of our net losses.

We may purchase additional digital assets or engage in other non-traditional treasury strategies in future periods.

We have purchased and may purchase from time to time additional digital assets, and we may engage in other non-traditional treasury strategies in future periods.

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.

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.

Digital asset trading venues are relatively new and, in some cases, unregulated.

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.

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.

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.

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.

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.

In the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof.

Digital asset trading venues are relatively new and, in some cases, unregulated or subject to regulatory uncertainty.

Furthermore, many digital asset trading venues do not provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance.

As a result, the marketplace may lose confidence in these trading venues, including prominent digital asset exchanges that handle a significant volume of trading, in the event one or more trading venues experience fraud, security failures or operational problems.

For example, in the first half of 2022, each of Celsius Network, Voyager Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly.

In November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly thereafter, FTX and its subsidiaries filed for bankruptcy.

In response to these events, the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital assets markets and in bitcoin.

If the liquidity of the digital assets markets continues to be negatively impacted by these events, digital asset prices (including the price of bitcoin) may continue to experience significant volatility and confidence in the digital asset markets may be further undermined.

These events are continuing to develop, and it is not possible to predict at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole.

A perceived lack of stability among digital asset exchanges and the closure or temporary shutdown of any significant digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud, may reduce

confidence in digital asset networks and result in greater volatility in digital asset values.

To the extent investors view our common stock as linked to the value of our digital asset holdings, particularly bitcoin, these potential consequences of a trading venue’s failure could have a material adverse effect on the market price of our common stock.

Furthermore, the treatment of bitcoins held by custodians that file for bankruptcy protection is uncharted territory in U.S.

Bankruptcy law.

We cannot say with certainty whether bitcoin held in custody by a bankrupt custodian would be treated as property of a bankruptcy estate and, accordingly, whether the owner of that bitcoin would be treated as a general unsecured creditor.

The concentration of our digital asset holdings enhances the risks inherent in our digital asset treasury strategy.

3 unchanged sentences

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.

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.

We have sold a portion of our bitcoin holdings as a source of liquidity and may be required to continue this in the future during a time of market volatility, which may result in selling our digital assets at a significant loss.

We have currently adopted bitcoin as our primary treasury reserve asset.

During 2022, we sold some of our bitcoin holdings as a source of liquidity to fund operations.

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.

3 unchanged sentences

Security breaches and cyberattacks are of particular concern with respect to digital assets.

Bitcoin, ethereum and other blockchain-based cryptocurrencies have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

Bitcoin, ethereum and other digital assets have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.

A successful security breach or cyberattack could result in:

• 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;

• a partial or total loss of our holdings in a manner that may not be covered by insurance;

• harm to our reputation and brand;

1 unchanged sentence

• significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure.

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.

Further, any actual or perceived security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks or exchanges, whether or not we are directly impacted, could lead to a general loss of confidence in the broader digital asset ecosystem or in the use of networks to conduct financial transactions, which could negatively impact us.

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.

3 unchanged sentences

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.

Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage and insiders.

Threats can come from a variety of sources, including criminal hackers,

hacktivists, state-sponsored intrusions, industrial espionage and insiders.

In addition, certain types of attacks could harm us even if our systems are left undisturbed.

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.

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.

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.

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 ongoing conflicts involving Ukraine and other countries.

Any future security 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 digital asset holding and financial condition.

The loss or destruction of a private key required to access our digital asset wallets may be irreversible.

4 unchanged sentences

Furthermore, we cannot provide assurance that our digital wallets will not be compromised as a result of a cyberattack.

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.

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.

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.

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.

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.

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.

Risks Related to our Token Offerings

We have raised capital to fund a Token Generation Event of rights to receive future PhunCoin and, beginning in 2021 have sold PhunTokens.

The blockchain ledger, as well as digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities.

A determination that bitcoin or any other digital asset is 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.

The SEC has stated that certain digital assets may be considered “securities” under the federal securities laws.

The test for determining whether a particular digital asset is a “security” is complex and the outcome is difficult to predict.

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 or any other digital assets we hold are securities.

Such a determination could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended (the "Investment Company Act"), which would subject us to significant additional regulatory controls, potential fines and regulatory charges, all of which 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.

In addition, if bitcoin or any other digital asset we hold are determined to be securities for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of bitcoin or such other digital assets and in turn adversely affect the market price of our common stock.

Risks Related to our Token Ecosystem and Tokens

We have raised capital to fund a Token Generation Event of rights to receive future PhunCoin, and beginning in 2021 we created and sold PhunToken.

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.

Additionally, the Token Generation Event and the offerings of PhunCoin and sales of PhunToken could subject us to various other business and regulatory uncertainties.

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 June 2018, we raised capital by offering investors rights 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, 2022, a total of $1.2 million has been raised in both Rights offerings.

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.

As of December 31, 2021, we sold $1.1 million of PhunToken.

During the second quarter of 2019, Phunware announced the launch of a separate token, PhunToken, by our wholly owned subsidiary, Phun Token International, which enables holders to participate in our blockchain-enabled data exchange and mobile loyalty engagement ecosystem.

As of December 31, 2022, we sold an aggregate of $2.6 million of PhunToken.

Upon sale of PhunToken to customers, we deliver PhunToken to the respective customer's Etherum-based wallet.

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.

We will use commercially reasonable efforts to develop the Token Ecosystem, deliver PhunCoin and PhunToken, respectively, but there is no assurance that such efforts will be successful.

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.

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.

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.

1 unchanged sentence

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.

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.

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.

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.

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.

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.

The digital asset and digital asset industries as a whole have been characterized by rapid changes and innovations and are constantly evolving.

The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and digital assets may materially adversely affect our business plans to launch and maintain PhunCoin, sell PhunToken and continue to develop the Token Ecosystem.

For example, given the regulatory complexity and uncertainty with respect to digital assets, complying with such laws and 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.

In addition, the tax and accounting consequences to us of the Token Generation Event, PhunCoin, PhunToken and the Token Ecosystem could lead to incorrect reporting, classification or liabilities.

If the Token Generation Event occurs and PhunCoin is launched and developed and PhunToken is further 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.

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, or an unwillingness of users to access, adopt and utilize PhunCoin or PhunToken or the Token Ecosystem, whether through system faults or malicious attacks.

Any such faults or attacks on PhunCoin or PhunToken may materially and adversely affect our business.

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.

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.

Because our tokens will be digital assets 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.

Reliance upon another blockchain technology to create, develop and maintain 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 additional technology and intellectual property rights.

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.

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.

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.

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.

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 could 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 Token Ecosystem code and protocols rely on open source code publicly available.

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 sale and utilization of PhunCoin, PhunToken and he Token Ecosystem.

The open-source nature of the Token Ecosystem protocol also means 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 or expand functionality of the Token Ecosystem adequately or in a timely manner.

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.

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.

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 sale and utilization of and development, acceptance and adoption of the Token Ecosystem, PhunCoin and PhunToken.

Open source software is generally freely accessible, usable and modifiable.

Certain open source licenses may, in certain circumstances, require us to offer the components of our system that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license.

If an author or other third party that distributes open source software we use

were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our system that contained the open source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software.

Certain open source licenses may, in certain circumstances, require us to offer the components of our Token Ecosystem that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license.

If an author or other third party that distributes open source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our Token Ecosystem that contained the open source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software.

We could also be subject to suits by parties claiming ownership of what we believe to be open source software.

5 unchanged sentences

The service providers used by us, may also use, store, and transmit such information.

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.

We intend to implement detailed privacy and cybersecurity policies and procedures and an incident response plan designed to protect such sensitive personal information and prevent data loss and security breaches.

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.

1 unchanged sentence

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.

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.

2 unchanged sentences

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.

The Token Ecosystem uses and will use new technology.

There are no guarantees that such technology will be bug-free or accepted by the marketplace.

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.

Thus, even if the Token Ecosystem is 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.

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.

1 unchanged sentence

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.

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.

In any such event, 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.

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.

As with other decentralized digital assets, 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.

Any successful attacks present a risk to the Token Ecosystem and our tokens.

1 unchanged sentence

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.

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 or strategies that are materially similar to the Token Ecosystem’s services or strategies.

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.

There is no existing trading market for our tokens.

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.

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.

The liquidity of any market for our tokens will depend on a number of factors, including, but not limited:

(i) the number of holders of our PhunCoin or PhunToken;

(ii) the performance of our tokens;

There is no trading market for PhunCoin.

There is no established public market for PhunCoin.

Peer-to-peer transfers will not be permitted unless and until rights holders are notified otherwise by us and informed of the requirements and conditions to do so.

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 the PhunCoin rights with liquidity of investment or that it will continue for the life of PhunCoin.

The liquidity of any market will depend on a number of factors, including, but not limited:

(i) the number of holders;

(ii) the performance of PhunCoin;

(iii) the market for similar crypto assets;

(iv) the interest of traders in making a market PhunCoin and PhunToken;

(iv) the interest of traders in making a market for PhunCoin;

(v) regulatory developments in the digital token or cryptocurrency industries and (vi) legal restrictions on transfer.

In the event that our tokens remain untradeable for a significant period of time or indefinitely, their value could be materially adversely affected.

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.

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.

In the event that PhunCoin remains untradeable for a significant period of time or indefinitely, their value could be materially adversely affected.

The delay, or perceived delay, in the full development of our Token Ecosystem may result in declines in PhunToken revenue.

PhunToken is intended to be used or consumed within our Token Ecosystem.

We can provide no assurance, as to when, or if, we will be able to successfully complete the development of the Token Ecosystem.

If we are unable to fully develop the Token Ecosystem, PhunToken customers or potential PhunToken customers may seek to find alternate methods to use, consume or transact their PhunToken.

Secondary markets, some of which we may not be aware of, may develop as a result.

The development of an alternative “marketplace” in which consumers can, or believe they can, purchase PhunToken at a price lower than our current sales price, may result in lower sales and harm our financial performance.

The regulatory regime governing blockchain technologies, digital assets, digital asset exchanges and offerings of and transactions in digital assets is uncertain, and new regulations or policies may materially adversely affect the development and the value of our tokens.

Regulation of digital assets, like PhunCoin and PhunToken, blockchain technologies and digital asset exchanges, is currently expanding and likely to rapidly evolve and increase as government agencies take greater interest in them.

Regulation also varies significantly among U.S.

federal, state and foreign jurisdictions and is subject to significant uncertainty at this time.

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.

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.

Any such violations could adversely affect our ability 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.

The prices of blockchain assets are extremely volatile.

Fluctuations in the price of digital assets and/or waning interest of investors in the cryptocurrency industry could materially and adversely affect our business.

The sale of PhunToken or the offerings of PhunCoin may subject us to additional regulatory requirements.

We will be adversely affected if we are, or any of our subsidiaries is, determined to have been subject to registration as an investment company under the Investment Company Act.

We are currently not deemed an “investment company” subject to regulation under the Investment Company Act.

There is no guarantee we will continue to be exempt from registration under the Investment Company Act and were we to be deemed to be an investment company under the Investment Company Act, and thus subject to regulation under the Investment Company Act, the increased reporting and operating requirements could have an adverse impact on our business, operating results and financial condition.

In addition, if the SEC or a court of competent jurisdiction were to find that we are in violation of the Investment Company Act for having failed to register as an investment company thereunder, possible consequences include, but are not limited to, the following:

(i) the SEC could apply to a district court to enjoin the violation;

(ii) we could be sued by investors in us and in our securities for damages caused by the violation;

and (iii) any contract to which we are a party that is made in, or whose performance involves a, violation of the Investment Company Act would be unenforceable by any party to the contract unless a court were to find that under the circumstances enforcement would produce a more equitable result than nonenforcement and would not be inconsistent with the purposes of the Investment Company Act.

Should we be subjected to any or all of the foregoing, our business would be materially and adversely affected.

The prices of digital assets are extremely volatile.

Fluctuations in the prices of digital assets and/or waning interest of investors in the digital asset markets could materially and adversely affect our business.

The prices of blockchain assets such as bitcoin and ethereum have historically been subject to dramatic fluctuations and are highly volatile.

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;

• 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;

Several factors may influence the interest in digital assets such as PhunCoin and PhunToken, including, but not limited to:

• global digital asset supply;

• businesses’ acceptance of digital assets like cryptocurrencies as payment for goods and services, the security of online digital asset exchanges and digital wallets that hold blockchain assets, the perception that the use and holding of digital assets is safe and secure, and the regulatory restrictions on their use;

• purchasers’ expectations with respect to the rate of inflation;

• changes in the software, software requirements or hardware requirements underlying the Token Ecosystem;

• changes in the rights, obligations, incentives, or rewards for the various participants in the Token Ecosystem;

• changes in the rights, obligations, incentives, or rewards for the users of and other participants in the Token Ecosystem;

• interest rates;

• currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies;

• fiat currency withdrawal and deposit policies of blockchain asset exchanges on which users may trade cryptocurrency and blockchain assets and liquidity on such exchanges;

• interruptions in service from or failures of major blockchain asset exchanges in which users may trade cryptocurrency and blockchain assets;

• investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in PhunCoin or other blockchain assets;

• fiat currency withdrawal and deposit policies of digital asset exchanges on which users may trade digital assets and liquidity on such exchanges;

• interruptions in service from or failures of major digital asset exchanges in which users may trade digital assets;

• investment and trading activities of large investors, including private and registered funds, that may directly or indirectly puchase PhunCoin or other digital assets;

• monetary policies of governments, trade restrictions, currency devaluations and revaluations;

• 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;

• expectations among the Token Ecosystem or other blockchain asset participants that the value and/or utility of other blockchain assets will soon change.

• regulatory measures that may affect the purchase or use of digital assets, including PhunCoin and PhunToken;

• the maintenance and development of the open-source software protocol of certain digital assets;

• global or regional political, economic or financial events and conditions;

• expectations among the Token Ecosystem or other digital asset market participants that the value and/or utility of certain digital 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.

What changed 10-K

Item 1A. Risk Factors