Rank One Computing Corp 10-K

Item 1A. Risk Factors. You should consider carefully the risks, uncertainties and other factors described below, in addition to the other information set forth in this Form 10-K, before making an investment decision. Any of these risks, uncertainties and other factors could materially and adversely affect our business, financial condition, results of operations, cash flows or prospects. In that case, the market price of our common stock could decline, and you may lose all or part of your investment in our common stock. See also “Cautionary Note Regarding Forward-Looking Statements.” Risks Related to Our Industry and Business We have a limited operating history as a public company, and our ability to execute our growth plans depends on maintaining adequate liquidity and capital resources. As disclosed in our Registration Statement on Form S-1, as amended (File No. 333-291913), which was declared effective by the SEC on January 30, 2026, management had previously concluded that substantial doubt existed about our ability to continue as a going concern as of September 30, 2025, primarily due to our limited cash resources, reliance on collections of concentrated accounts receivable, and outstanding indebtedness under our revolving line of credit. This substantial doubt was alleviated following the completion of our initial public offering in 2026, which raised net proceeds of approximately $21.5 million, including net proceeds from partial exercise of overallotment option. While the Company’s near-term liquidity position has improved significantly as a result of the initial public offering, we may require additional capital in the future to fund our growth strategy, including product development, expansion of our sales and marketing capabilities, potential acquisitions, and general working capital needs. Our ability to generate sufficient cash from operations depends on a number of factors, including the pace and scale of commercial adoption of our products, the timing of cash collections from customers, and our ability to manage operating expenses. If we are unable to generate adequate cash flows from operations or raise additional capital on acceptable terms when needed, we may need to delay, scale back, or discontinue certain planned initiatives, which could adversely affect our business, financial condition, and results of operations. 19 There can be no assurance that additional financing will be available on acceptable terms, or at all. Any equity financing may result in dilution to our existing stockholders, and any debt financing may involve restrictive covenants or other terms that limit our operational flexibility. As an early-stage company, our historic performance is not necessarily an indication of future performance. Since its inception, our business has expanded organically through the delivery of enhanced solutions and expanded product offerings to our customers. Due to our limited operating history and evolving business, our ability to forecast future results of operations is limited and subject to several uncertainties, including our ability to plan for and model future growth. Our historical revenue growth should not be considered indicative of our future performance. Further, in future periods, our revenue growth could slow. We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, and if our assumptions regarding these risks and uncertainties, which we use to plan our business, prove incorrect or we fail to address these risks effectively, our business could be adversely affected. We may not be able to sustain our revenue growth rate in the future. Although our revenue has increased in recent periods, there can be no assurances that it will continue to grow or do so at current rates, and past performance should not be seen as an indicator of future results. Our revenue growth rate may decline in future periods due to various factors, such as increased competition, slowing demand for our platforms from existing and new customers, our failure to capitalize on growth opportunities, terminations of existing contracts by our customers, and the maturation of our business, among others. If our revenue growth rate declines, our business, financial condition, and results of operations could be adversely affected. Historically, existing customers have expanded their relationships with us, which has resulted in a limited number of customers accounting for a substantial portion of our revenue. If existing customers do not make subsequent purchases or renew their contracts with us, or if our relationships with our largest customers are impaired or terminated, our revenue could decline, and our results of operations would be adversely impacted. We derive a significant portion of our revenue from existing customers that expand their relationships with us. Increasing the size and number of the deployments of our existing customers is a major part of our growth strategy. We may not be effective in executing this or any other aspect of our growth strategy. Our revenue reflects risks from customer concentration. As noted in the table below, we had two customers that accounted for 10% or more of our revenue as of December 31, 2025, accounting for 43% of total revenue, and one customer that accounted for 10% or more of annual revenue for the year ended December 31, 2024, accounting for 25% of 2024 annual revenue. % of Total Revenue Year ended 12/31/2025 Year ended 12/31/2024 Customer A 25 % - Customer B 18 % 25 % Total 43 % 25 % Certain of our customers, including customers that represent a significant portion of our business, have in the past reduced their spending with us or terminated their agreements with us, which has reduced our anticipated future payments or revenue from these customers, and which has required us to refund some previously paid amounts to these customers. We cannot predict future demand from our larger customers for our software and services. There are inherent risks when a large percentage of total revenues are concentrated with a limited number of customers, as this increases the risk of quarterly fluctuations in our operating results and heightens our sensitivity to any material adverse developments affecting those key customers. We cannot predict the future level of demand for our products that will be generated by these customers. The terms of our contracts with these significant customers generally allow them to unilaterally terminate the arrangement at any time, subject to notice and other provisions. The terms and conditions under which we do business generally do not include commitments by those customers to purchase any specific quantities of products from us or to renew their contracts after the initial period. Even when we enter into an arrangement under which a significant customer agrees to purchase an agreed portion of its product or service needs from us (provided we meet our contractual obligations), the arrangement often includes pricing schedules with substantial price concessions and does not guarantee expected purchase volumes. If any major customer faces declining or delayed sales due to market, economic, or competitive factors, we may be pressured to lower our prices or risk losing the customer. Any such development could have an adverse effect on our margins, financial position, sales, results of operations, and the trading price of our common stock. We cannot guarantee that our sales will not continue to be concentrated among a limited number of customers. 20 Our customers typically enter into shorter-term contracts, such as 12 months, which may not provide for automatic renewal and may require customer to opt-in to extend the term. Our customers are not obligated to renew, upgrade, or expand their agreements after expiration. In addition, many of our customer contracts allow termination with little or no notice. If our customers terminate their contracts with us, whether for convenience, breach, or other contractual reasons, as applicable; if our customers elect not to renew their contracts with us; if our customers renew their contractual arrangements with us for shorter contract lengths; or if our customers otherwise seek to renegotiate terms of existing agreements on terms less favorable to us, our business and results of operations could be adversely affected. This adverse impact would be even more pronounced for customers that represent a material portion of our revenue or business operations. Our results of operations are likely to fluctuate significantly on a quarterly basis in future periods and may not fully reflect the underlying performance of our business, which makes our future results difficult to predict and could cause our results of operations to fall below expectations. Our quarterly results of operations, including cash flows, have fluctuated significantly in the past and are likely to continue to do so in the future. Accordingly, the results of any one quarter should not be seen as indicative of future results. Our quarterly results, financial position, and operations are likely to fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result, may not fully reflect the underlying performance of our business. Fluctuations in quarterly results may negatively impact the value of our common stock. The timing of our sales cycles is unpredictable and is impacted by factors such as government budgeting and appropriation cycles, varying commercial fiscal years, and changing economic conditions. This can impact our ability to plan and manage margins and cash flows. Our sales cycles are often long, and it is difficult to predict exactly when, or if, we will make a sale with a potential customer. The loss or delay of one or more large sales transactions in a quarter would impact our results of operations and cash flow for that quarter and any future quarters in which revenue from that transaction is lost or delayed. In addition, downturns in new sales may not be immediately reflected in our revenue because we generally recognize revenue over the term of our contracts. The timing of customer billing and payment varies from contract to contract. A delay in the timing of receipt of such collections, or a default on a large contract, may negatively impact our liquidity for the period and in the future. Because a substantial portion of our expenses is relatively fixed in the short-term and requires time to adjust, our results of operations and liquidity would suffer if revenue falls below our expectations in a particular period. Other factors that may cause fluctuations in our quarterly results of operations and financial position include, without limitation, those listed below: ● The success of our sales and marketing efforts; ● Our ability to increase our contribution margins; ● The timing of expenses and revenue recognition; ● The timing and amount of payments received from our customers; ● Termination of one or more large contracts by customers, including for convenience; 21 ● The time and cost-intensive nature of our sales efforts and the length and variability of sales cycles; ● The amount and timing of operating expenses related to the maintenance and expansion of our business; ● The timing and effectiveness of new sales and marketing initiatives; ● Changes in our pricing policies or those of our competitors; ● The timing and success of new products, features, and functionality introduced by us or our competitors; ● Cyberattacks and other actual or perceived data or security breaches; ● Our ability to hire and retain employees, especially those in operations and maintenance of and the selling or marketing of our software, and to develop and retain talented sales personnel who are able to achieve desired productivity levels and provide sales leadership in growth areas; ● Changes in the way we operate and maintain our platforms; ● Changes in the competitive dynamics of our industry; ● The cost of and potential outcomes of existing and future claims or litigation, which could have a material adverse effect on our business; ● Changes in laws and regulations that impact our business, such as the Federal Acquisition Streamlining Act of 1994 (“FASA”); ● The timing of expenses related to any future acquisitions; and ● General economic, regulatory, and market conditions. In addition, our contracts generally contain termination for convenience provisions, which may require us to refund prepaid amounts or forgo anticipated revenue if we fail to provide future services as anticipated. These factors make it difficult for us to accurately predict financial metrics for future periods. The variability and unpredictability of our quarterly results of operations, cash flows, or other operating metrics could result in our failure to meet our expectations or those of analysts that may cover us or investors with respect to revenue or other key metrics for a particular period. If we fail to meet these expectations, our stock price may decline and we could face costly litigation, including securities class actions. Our software is complex and may have a lengthy implementation process, and any failure of our software to satisfy our customers or perform as desired could harm our business, results of operations, and financial condition. Our software and services are complex and are deployed in a wide variety of environments. Implementing our software can be a complex and lengthy process, as we often configure our software for each customer’s unique environment. The inability to meet the unique needs of our customers may result in customer dissatisfaction and/or damage to our reputation. Proper use of our software may also require customer training and ongoing technical support. In addition, if our customers do not use our software correctly or as intended, inadequate performance or outcomes may result. It is possible that our software may also be intentionally misused or abused by customers or their employees, or third parties. Similarly, our software is sometimes used by customers with smaller or less sophisticated IT departments, potentially resulting in sub-optimal performance at a level lower than anticipated by the customer. Because our customers rely on our software to address important business goals and challenges, the improper use or configuration of our software, lack of effective training, or inadequate implementation or maintenance support may result in contract terminations or non-renewals, reduced customer payments, negative publicity, or legal claims against us. Furthermore, if there is substantial turnover of the company or customer personnel responsible for procurement and use of our software, our software may go unused or be adopted less broadly, and our ability to make additional sales may be substantially limited, which could negatively impact our business, results of operations, and growth prospects. 22 If we do not successfully develop and deploy new technologies to address the needs of our customers, our business and results of operations could suffer. Our success has been based on our ability to design software that integrates large amounts of data to facilitate advanced data analysis, knowledge management, and decision support in real-time. We invest significant time and resources into developing new technologies and enhancing existing features to meet evolving customer needs. However, there is no guarantee that these enhancements or our new products will be compelling to our customers or gain market acceptance. If our research and development efforts do not align with customer demand or if we fail to develop our software in a timely and cost-effective manner, we may struggle to retain customers or drive new demand. The introduction of new products by competitors or the development of new technologies to replace existing offerings could make our software obsolete or adversely affect our business, financial condition, and results of operations. We may face difficulties in software development, design, or marketing that could delay the release of new software or features. There can be no assurance that new software, features, or capabilities will be released according to schedule. Any delays could result in adverse publicity, loss of revenue or market acceptance, or claims by customers brought against us, any of which could harm our business. Moreover, the design and development of new software or new features and capabilities to our existing software may require substantial investment, and we cannot ensure that such investments will be successful. If customers do not widely adopt our new software, experiences, features, and capabilities, we may not be able to realize a return on our investment. Our new and existing software and changes to our existing software could fail to attain sufficient market acceptance for many reasons, including: ● our failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion; ● product defects, errors, or failures, or our inability to satisfy customer service level requirements; ● negative publicity or negative private statements about the security, performance, or effectiveness of our software or product enhancements; ● delays in releasing to the market our new offerings or enhancements to our existing offerings; ● introduction or anticipated introduction of competing software or functionalities by our competitors; ● inability of our software or product enhancements to scale and perform to meet customer demands; ● receiving qualified or adverse opinions in connection with security or penetration testing, certifications, or audits, such as those related to IT controls and security standards and frameworks or compliance; ● poor business conditions for our customers, causing them to delay software purchases; ● reluctance of customers to purchase proprietary software products; and ● reluctance of customers to purchase products hosted by our vendors and/or service interruption from such providers. If we are not able to continue to identify challenges faced by our customers and develop, license, or acquire new features and capabilities to our software in a timely and cost-effective manner, or if such enhancements do not achieve market acceptance, our business, financial condition, results of operations, and prospects may suffer and our anticipated revenue growth may not be achieved. 23 If we fail to manage future growth effectively, our business could be harmed. Since our founding in 2015, we have experienced rapid growth. We operate in a growing market and have experienced, and may continue to experience significant expansion. This growth has strained our resources, including employees, management systems, and finances, as we manage larger, more complex deployments. We have increasingly managed larger and more complex deployments of our software and services with a broader base of government and commercial customers. As we continue to grow, we face challenges of integrating, developing, retaining, and motivating our expanding workforce. In the event of continued growth, our operational resources, including IT systems, employee base, and internal controls and procedures, may not be adequate to support our operations and deployments. Managing our growth may require significant investments and management efforts. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, financial condition, and results of operations would be harmed. Further, we may continue to find it increasingly difficult to maintain the benefits of our traditional company culture, such as our ability to respond quickly to customers and avoid delays associated with a formal corporate structure, which could negatively affect our business performance or ability to hire or retain personnel. In addition, our rapid growth may make it difficult to evaluate our future prospects. Our ability to forecast our future results of operations is subject to uncertainties, including our ability to effectively plan for and model future growth. We have encountered, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If we fail to achieve the necessary level of efficiency, or if we are not able to accurately forecast future growth, our business, financial condition, and results of operations would be harmed. If we are unable to hire, retain, train, and motivate qualified personnel and senior management and deploy our personnel and resources to meet customer demand around the world, our business could suffer. Our ability to compete in the highly competitive technology industry depends upon our ability to attract, motivate, and retain qualified personnel. We are highly dependent on the contributions of our management team, including their customer relationships, expertise in science and technology, business development experience, and innovative management in both public and private sectors. Some of our executive officers and key personnel are at-will employees and may terminate their employment relationship with us at any time. The loss of the services of our key personnel and other executive officers, and our inability to find suitable replacements, could result in a decline in sales, delays in product development, and harm to our business and operations. We have experienced and may continue to experience difficulty in hiring and retaining personnel with appropriate qualifications and may not be able to fill positions in a timely manner or at all. Potential candidates may not view our compensation package, including equity awards, as favorably as those hired before our listing. In addition, our recruiting strategies may need to adapt to a changing candidate pool, and we may not be able to make these adjustments quickly. We may also incur significant costs to attract and recruit skilled personnel, and we may lose new personnel before we realize the benefit of our investment in recruiting and training them. As we move into new geographies, we will need to attract and recruit skilled personnel in those geographic areas, but we may face challenges competing with traditional local employers for talent. In addition, certain personnel may be required to receive various security clearances and substantial training to work on certain customer engagements or to perform certain tasks. Necessary security clearances may be delayed or unsuccessful, which may negatively impact our ability to perform on our U.S. and non-U.S. government contracts in a timely manner or at all. Our success depends on our ability to effectively source and staff people with the right mix of skills and experience. If we are unable to effectively utilize our personnel on a timely basis to fulfill the needs of our customers, our business could suffer. We face intense competition for qualified personnel, especially software engineers and data scientists, in major U.S. markets, where a large portion of our personnel are based. We incur costs related to attracting, relocating, and retaining qualified personnel in these highly competitive markets, including leasing real estate in prime areas in these locations. Many of the companies with which we compete for qualified personnel have greater resources. If we fail to attract new personnel or to retain our current personnel, our business and operations could be harmed. We seek to retain and motivate existing personnel through our compensation practices, company culture, and career development opportunities. This may require significant investments in cash and equity, which we may never realize returns on these investments. If the perceived value of our equity awards declines, or if the mix of equity and cash compensation we offer is less attractive than that of our competitors, it may adversely affect our ability to recruit and retain highly skilled personnel. Employees may also be more likely to leave us if their stock or equity awards have either significantly appreciated or lost value. In addition, employees receiving substantial proceeds from selling our stock could become less motivated to stay. Any of these factors could harm our business, financial condition, and results of operations. 24 If we are unable to successfully deploy our marketing and sales organization in a timely manner, or at all, or to successfully hire, retain, train, and motivate our sales personnel, our growth could be adversely impacted. We currently have a growing, but limited, direct sales force, and our sales efforts have historically depended on the significant direct involvement of our senior management team. The successful execution of our strategy to increase our sales to existing customers, engage new customers, and enter new markets will depend, among other things, on our ability to build and expand our sales organization and operations. Recruiting, training, and managing sales personnel requires significant time, expense, and involvement from senior management and other key personnel, which could adversely impact our business, financial condition, and results of operations in the short and long term. In order to successfully scale our sales model, we must continue to increase the size of our direct sales force, both in the United States and outside of the United States, to generate additional revenue from new and existing customers while maintaining our culture and mission. If we do not hire enough qualified sales personnel, our future revenue growth and business could be adversely impacted. It may take a significant period of time before our sales personnel are fully trained and productive, and there is no guarantee we will be successful in adequately training and effectively deploying our sales personnel. In addition, we may need to invest significant resources to enable our sales organization to run effectively and efficiently, including supporting sales strategy planning, sales process optimization, data analytics and reporting, and administering incentive compensation arrangements. Furthermore, hiring personnel in new countries requires additional setup and upfront costs that we may not recover if those personnel fail to achieve full productivity in a timely manner. Our business would be adversely affected if our efforts to build, expand, train, and manage our sales organization are not successful. We periodically adjust our sales structure in response to market opportunities, competitive threats, management changes, product introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels, and other internal and external considerations, and any such sales organization changes may temporarily reduce productivity and negatively affect our rate of growth. Additionally, any changes in sales compensation structures may be disruptive or ineffective. If we are unable to attract, hire, develop, retain, and motivate qualified sales personnel, if our new sales personnel are unable to achieve sufficient sales productivity levels, if our marketing programs are not effective or if we are unable to effectively build, expand, and manage our sales organization and operations, our sales and revenue may grow more slowly than expected or materially decline, and our business may be significantly harmed. Our ability to sell our software to customers depends on the quality of our offerings, and our failure to maintain the quality of our offerings could have a material adverse effect on our sales and results of operations. Once our software is deployed and integrated with our customers’ existing information technology investments, our customers depend on our support to resolve any product-related issues. As our software becomes increasingly deployed in large-scale, complex technological environments, our future success will depend on our ability to increase sales of our products within these settings. Our ability to provide timely, efficient, and scalable support may depend in part on our customers’ environments and their ability to maintain and/or modernize their IT infrastructure. The number of our customers has grown significantly, and increased demand may strain our services teams, and we may not be able to scale quickly enough to meet short-term spikes in demand. In addition, as we continue to grow our operations and expand outside of the United States, we need to be able to provide efficient services that meet our customers’ needs globally at scale, and our services teams may face additional challenges, including those associated with operating the software and delivering support, training, and documentation in multiple languages and providing services across expanded time zones. Failing to do so may hinder our growth, we may need to hire additional service personnel, which could negatively impact our business, financial condition, and results of operations. Our customers often require proper training to fully realize the benefits and the full potential of our software. If we fail to effectively deploy, update, or upgrade our products, help our customers resolve post-deployment issues, and provide effective ongoing support, it could hinder our ability to sell additional products, damage our reputation, and lead to negative publicity. Many enterprises and government customers require higher levels of services than smaller customers, and failure to meet their requirements could impact our efforts to expand within this segment. As a result, our failure to maintain high-quality services may have a material adverse effect on our business, financial condition, results of operations, and growth prospects. 25 If we are not able to grow, maintain, and enhance our brand and reputation, along with the impact of inaccurate and damaging media coverage, our relationships with our customers, partners, and employees may be harmed, and our business and results of operations may be adversely affected. We believe that growing, maintaining, and enhancing our brand identity and reputation is essential to attracting and retaining customers, partners, investors, and employees. The successful promotion of our brand depends upon our ability to continue to offer high-quality software, maintain strong relationships with our customers, the community, and others, while successfully differentiating our software from that of our competitors. Unfavorable media coverage may adversely affect our brand and reputation. We anticipate that as our market becomes increasingly competitive, maintaining our brand may become more challenging and costly. Brand promotional activities may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses we incur in building our brand and reputation. If we fail to strengthen our brand or are unable to sell legacy products under our name, we may struggle to attract key stakeholders, grow our business, or maintain pricing power, all of which could adversely impact our business, financial condition, results of operations, and growth prospects. Additionally, despite our internal efforts to the contrary, we cannot guarantee that our customers will not ultimately use our software for purposes inconsistent with our company values, and such uses may harm our brand and reputation. Publicly available information regarding our business has historically been limited, in part due to the sensitivity of our work with customers or contractual restrictions that prevent public disclosure of certain customer relationships and activities. As our business and interest in the broader tech industry have grown, we may attract significant attention from news and social media outlets, including unfavorable coverage or unauthorized coverage. This coverage may include inaccurate or misleading reports about our leadership, employees, or the nature of our work, as well as unfounded speculation. If such coverage contains or relies on damaging or incomplete information, it could harm our reputation with customers, employees, and investors, and adversely affect our business, financial condition, results of operations, and growth prospects. In addition, our relationships with government customers and customers engaged in certain sensitive industries may result in public criticism, including political and social activists, and unfavorable coverage in the media. Criticism of such relationships could potentially engender dissatisfaction among potential and existing customers, investors, and employees with how we address political and social concerns in our business activities. Actions we take in response to the activities of our customers, such as terminating our contracts or refusing a particular product use case, could harm our brand and reputation. In either case, the resulting harm to our reputation could cause certain customers to cease doing business with us, impair our ability to attract new customers or expand our relationships with existing customers, diminish our ability to hire or retain employees, undermine our standing in professional communities, or prompt us to cease doing business with certain customers. Any of these factors could adversely impact our business, financial condition, and results of operations. Our pricing for our software and services may change to address market conditions. We expect that we may need to adjust our pricing model in response to general economic conditions, competitor pricing, customer budgets, pricing studies, or how customers use our products and services. Entering new markets may also require tailored pricing strategies. In addition, as competitors introduce new products or services or revise their pricing structures, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, as we continue to target selling our software to larger organizations, these larger organizations may demand substantial price concessions, and government contracts may require compliance with specific pricing guidelines. If we fail to modify or develop pricing strategies that are attractive to existing and prospective customers, while enabling us to significantly grow our sales and revenue relative to our associated costs and expenses, our business, financial condition, and results of operations may be adversely impacted. Certain estimates of market opportunity included in this Annual Report may prove to be inaccurate. This Annual Report includes our internal estimates of the addressable market for our software and services. These estimates, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions that may not prove to be accurate. The estimates in this Annual Report relating to the size of our target market, market demand and adoption, capacity to address this demand, and pricing may prove to be inaccurate. The addressable market we estimate may not materialize for many years, if ever, and even if the markets in which we compete meet the size estimates in this Annual Report, our business could fail to successfully compete in such markets. 26 We face intense competition in our markets, and we may lack sufficient financial or other resources to maintain or improve our competitive position. The markets for our software are very competitive, and we expect such competition to continue or increase in the future. A significant number of companies are developing products that currently, or in the future may, compete with some or all aspects of our proprietary software. We may not be successful in convincing our potential customers to deploy our software in lieu of existing software solutions or in-house software development projects preferred by internal IT teams or other competitors. In addition, our competitors include large enterprise software companies, government contractors, and system integrators, and we may face competition from emerging companies as well as established companies entering this market. To remain competitive, we may need to make substantial investments in our research, development, services, marketing, and sales functions in order to respond to competition, and there can be no assurance that we will be able to compete successfully in the future. Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as: ● greater name recognition, longer operating histories, and larger customer bases; ● larger sales and marketing budgets and resources, and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products; ● broader, deeper, or otherwise more established relationships with technology, channel, and distribution partners, and customers; ● wider geographic presence or greater access to larger potential customer bases; ● greater focus on specific geographies; ● lower labor and research and development costs; ● larger and more mature intellectual property portfolios; and ● substantially greater financial, technical, and other resources to provide services, to make acquisitions, and to develop and introduce new products and capabilities. In addition, some of our larger competitors have substantially broader and more diverse products and services, allowing them to leverage their relationships with distribution partners and customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages customers from purchasing our software, including by selling at zero or negative margins, product bundling, or offering closed technology platforms. Some customers may also prefer to purchase from their existing provider regardless of software performance or features. As a result, even if the features of our software offer unique advantages, customers may not purchase our software. If we are unable to sufficiently differentiate our software through functionality, performance, or value, we may see a decrease in demand for our offerings. Additionally, innovative start-up companies and larger companies investing heavily in research and development may introduce products that have greater performance or functionality, are easier to implement or use, incorporate new technological advances, or implemented or may invent similar or superior software that competes with our software. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions. As a result of such acquisitions, our current or potential competitors may be able to accelerate the adoption of new technologies, devote greater resources to bringing these products and services to market, initiate or withstand substantial price competition, or develop and expand their offerings more quickly than we do. These competitive market pressures, or our failure to compete effectively, may result in fewer orders, reduced revenue and margins, and loss of market share. It is also possible that industry consolidation may cause customers to question the viability of smaller or mid-sized software firms, making them less likely to purchase from us. 27 We may not compete successfully against our current or potential competitors. If we are unable to compete successfully, or if competing successfully requires costly actions, our business, financial condition, and results of operations could be adversely affected. In addition, our competitors may have an entirely different pricing or distribution model. Increased competition could result in fewer customer orders, price reductions, reduced margins, and loss of market share, any of which could harm our business and results of operations. We may not enter into relationships in select countries or with potential customers if their activities or objectives are inconsistent with our mission or values. We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies. Our decisions not to enter into these relationships may not produce the long-term financial benefits and results that we expect. Although we endeavor to do business with customers and governments that are aligned with our mission and values, we cannot predict how the activities and values of our government and private sector customers will evolve over time, and they may evolve in a manner inconsistent with our mission. Joint ventures, channel sales relationships, platform partnerships, strategic alliances, or subcontracting opportunities may have a material adverse effect on our business, results of operations, and prospects. We expect to continue to enter into joint ventures, channel sales relationships, platform partnerships, or strategic alliances as part of our long-term business strategy. Joint ventures, platform partnerships, strategic alliances, and other similar arrangements involve significant investments of both time and resources, and there can be no assurances that they will be successful. They may present significant challenges and risks, including that they may not advance our business strategy, we may get an unsatisfactory return on our investment or lose some or all of our investment, they may distract management and divert resources from our core business, they may expose us to unexpected liabilities, or we may choose a partner that does not cooperate as we expect them to and that fails to meet its obligations or that has economic, business, or legal interests or goals that are inconsistent with ours. Entry into these partnerships now or in the future may be subject to government regulation, including review by U.S. or foreign government entities related to foreign direct investment. Such regulatory review might limit our ability to enter into the desired strategic alliance and thus our ability to carry out our long-term business strategy. As our joint ventures, channel sales relationships, platform partnerships, and strategic alliances come to an end, we may be unable to renew or replace them on comparable terms, or at all. These partners may be required to undertake some portion of sales, marketing, implementation services, engineering services, or software configuration that we would otherwise provide. In such cases, our partner may be less successful than we would have otherwise been absent the arrangement. In the event we enter into an arrangement with a particular partner, we may be less likely or unable to work with one or more direct competitors of our partner with which we would have worked absent the arrangement. Our interests may not always align with those of our joint venture or strategic partners, which may affect our ability to successfully collaborate with a given partner. Similarly, one or more of our partners may independently suffer a bankruptcy or other economic hardship that negatively affects their ability to continue as a going concern or perform their obligations under the arrangement. In addition, customer satisfaction with our products provided in connection with these arrangements may be less favorable than anticipated, and some of our strategic partners may offer competing products and services or work with our competitors. As a result of these and other factors, many of the companies with which we have partnerships may choose to pursue alternative technologies and develop alternative products in addition to or in lieu of our platforms, either on their own or in collaboration with others, including our competitors. If we are unsuccessful in establishing or maintaining our relationships with these partners, our ability to compete in a given marketplace or to grow our revenue would be impaired, and our results of operations may suffer. Even if we are successful in establishing and maintaining these relationships with our partners, we cannot assure that these relationships will result in increased customer usage of our platforms or increased revenue, and any negative impact on a partner’s brand or products could affect our outcomes in those markets. In addition, some of our sales to government entities have been made, and in the future may be made, indirectly through our channel partners. For the years ended December 31, 2025 and 2024, channel partners accounted for 37.4% and 54.2% of overall revenue, respectively. In no period has any single channel partner accounted for 10% or more of overall corporate revenue. 28 Government entities may have statutory, contractual, or other legal rights to terminate contracts with our channel partners for convenience or due to a default, and, in the future, if the portion of government contracts that are subject to renegotiation or termination, our future results could be negatively impacted. In the event of such termination, it may be difficult for us to arrange for another channel partner to sell our products in a timely manner, and we could lose sales opportunities during the transition. Government entities routinely audit government contractors’ administrative processes, and any unfavorable audit could result in the government entity refusing to renew its subscription for our software, a reduction of revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities. Further, winding down joint ventures, channel sales relationships, platform partnerships, or other strategic alliances can result in additional costs, litigation, and negative publicity. Any of these events could adversely affect our business, financial condition, results of operations, and growth prospects. If we are not successful in executing our strategy to increase our sales to larger customers, our results of operations may suffer. An important part of our growth strategy is to increase sales of our software to large enterprises and government entities, which can involve greater risks than sales to small or mid-sized commercial customers. These risks may include greater leverage held by large customers in negotiating contractual arrangements with us, changes in key decision makers within these organizations that may negatively impact our ability to negotiate in the future, concerns from customers’ IT departments about losing internal control, and the potential for investing resources in prospects that do not convert. Large customers may also impose more stringent contract terms, including stricter service response times, increased penalties for non-compliance. In addition, we may face competition from larger competitors, such as defense contractors, system integrators, or large software companies that traditionally target large enterprises and government entities with existing commitments. Further, large enterprises and government entities often undertake a significant evaluation process that results in a lengthy sales cycle, requiring approvals of multiple management personnel and more technical personnel than would be typical of a smaller organization. Finally, large enterprises and government entities typically (i) have longer implementation cycles, (ii) require greater product functionality and scalability and a broader range of services, (iii) demand that vendors take on a larger share of risks, (iv) sometimes require acceptance provisions that can lead to a delay in revenue recognition, (v) typically have more complex IT and data environments, and (vi) expect greater payment flexibility from vendors. Customers, and sometimes we, may also engage third parties to be the users of our software, which may result in contractual complexities and risks, require additional investment in time and human resources to train the third parties, and allow them (who may be engaging in various competitive activities) to influence our customers’ perception of our software. All these factors can add further risk to business conducted with these customers. If sales expected from a large customer for a particular quarter are not realized in that quarter or at all, our business, financial condition, results of operations, and growth prospects could be materially and adversely affected. If the market for our software and services develops more slowly than we expect, our growth may slow or stall, and our business, financial condition, and results of operations could be harmed. The market for our software is rapidly evolving, and our future success will depend in large part on the growth and expansion of this market, which is difficult to predict and relies on a number of factors. Factors influencing this growth include customer adoption and demand, changing customer needs, competitive products, and customers’ willingness to invest in new software after significant prior investments in legacy data collection, storage, and processing software. The estimates used to calculate our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of the organizations covered by our market opportunity estimates will pay for our software at all or generate any particular level of revenue for us. Even if the market meets the size estimates and growth forecasts, we may not achieve expected growth due to factors beyond our control, including increased competition in our industry. Further, if we or other data management and analytics providers experience security incidents, loss of or unauthorized access to customer data, disruptions in delivery, or other problems, this market as a whole, including our software, may be negatively affected. If our solutions fail to achieve widespread adoption, or there is a reduction in demand caused by a lack of customer acceptance, technological challenges, weakening economic conditions, security or privacy concerns, competing products, decreases in corporate spending, or if the market develops but we are unable to continue to penetrate it due to the cost, performance, and perceived value associated with our software, our revenue and overall business performance could be adversely affected. 29 In the future, we may not be able to secure the financing necessary to operate and grow our business as planned, or to make acquisitions. In the future, we may seek to raise or borrow additional funds to expand our business development efforts, make acquisitions, or otherwise fund or grow our business and operations. As of December 31, 2025 and 2024, we had approximately $1.8 million and $0.4 million of indebtedness, respectively. Although we currently anticipate that our existing cash and cash equivalents will be sufficient to meet our cash needs for at least the next twelve months, additional funds may be required if our commercial sales do not develop as quickly as planned. If we require additional financing, we may not be able to obtain debt or equity financing on favorable terms, if at all. If we raise equity financing to fund operations or on an opportunistic basis, our stockholders may experience significant dilution of their ownership interests. If adequate funds are not available on acceptable terms, or at all, we may be unable to, among other things: ● develop new products, features, capabilities, and enhancements; ● continue to expand our product development, sales, and marketing organizations; ● hire, train, and retain employees; ● respond to competitive pressures or unanticipated working capital requirements; or ● pursue acquisition or other growth opportunities. Our inability to take any of these actions because adequate funds are not available on acceptable terms could have an adverse impact on our business, financial condition, results of operations, and growth prospects. We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to stockholders, restrict our operations, or adversely affect our ability to operate our business. Our ability to raise additional capital may be significantly affected by general market conditions, the market price of our common stock, our financial condition, uncertainty about the future commercial success of our products, regulatory developments, the status and scope of our intellectual property, any ongoing arbitration or litigation, our compliance with applicable laws and regulations and other factors, many of which are outside our control. If we are unable to obtain needed financing on acceptable terms, or otherwise, we may not be able to implement our business plan, which could have a material adverse effect on our business, financial condition, and results of operations, including a decline in the trading price of our common stock. Any additional equity financings could result in additional dilution to our then existing stockholders. In addition, we may enter into additional financings that restrict our operations or adversely affect our ability to operate our business, and if we issue equity, debt or other securities to raise additional capital or restructure or refinance our existing indebtedness, the new equity, debt or other securities may have rights, preferences and privileges senior to those of our existing stockholders. Our ability to pay interest and principal on any indebtedness and our ability to refinance all or a portion of our indebtedness or obtain additional financing depend on many factors beyond our control. Our ability to make scheduled payments on, or to refinance our obligations under, any indebtedness depends on our financial performance and prevailing economic conditions. Certain of these financial and business factors, many of which may be beyond our control, are described above. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, raise additional equity capital, or restructure our debt. There is no assurance that such alternative measures may be successful or permitted under the agreements governing our indebtedness, and, as a result, we may not be able to meet our scheduled debt service obligations. Even if successful, actions taken to improve short-term liquidity to meet our debt service and other obligations could harm our long-term business prospects, financial condition, and results of operations. In addition, we cannot guarantee that we will be able to refinance our indebtedness or obtain additional financing on satisfactory terms or at all, due to factors like existing asset guarantees, our level of indebtedness, and the debt incurrence restrictions imposed by the agreements governing our indebtedness. Changes in economic conditions or credit markets could further limit access to financing or increase its cost. 30 We may acquire or invest in companies and technologies, which may divert our management’s attention and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments. As part of our business strategy, we have engaged in strategic transactions in the past and expect to evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future. We may also enter into relationships with other businesses to expand our products or our ability to provide services. An acquisition, investment, or business relationship may result in unforeseen risks, operating difficulties, and expenditures, including the following: ● an acquisition may negatively affect our financial results by requiring us to take on significant debt or liabilities, incur changes, face adverse tax consequences or unfavorable accounting treatment, be exposed to third-party claims, or fail to generate sufficient financial return that justify the associated costs; ● costs and potential difficulties associated with the requirement to test and assimilate the internal control processes of the acquired business; ● we may encounter difficulties or unforeseen expenditures assimilating or integrating the businesses, technologies, infrastructure, products, personnel, or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us or if we are unable to retain key personnel, if their technology is not easily adapted to work with ours, or if we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise; ● we may not realize the expected benefits of the acquisition; ● an acquisition may disrupt our ongoing business, divert resources, increase our expenses, and distract our management; ● an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company; ● the potential impact on relationships with existing customers, vendors, and distributors as business partners as a result of acquiring another company or business that competes with or otherwise is incompatible with those existing relationships; ● the potential that our due diligence of the acquired company or business does not identify significant problems or liabilities, or that we underestimate the costs and effects of identified liabilities; ● exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of, an acquisition, including but not limited to claims from former employees, customers, or other third parties, which may differ from or be more significant than the risks our business faces; ● potential goodwill impairment charges related to acquisitions; ● we may encounter difficulties in, or may be unable to, successfully sell any acquired products; ● 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; ● an acquisition may require us to comply with additional laws and regulations, or to engage in substantial remediation efforts to cause the acquired company to comply with applicable laws or regulations, or result in liabilities resulting from the acquired company’s failure to comply with applicable laws or regulations; 31 ● our use of cash to pay for an acquisition would limit other potential uses for our cash; ● if we incur debt to fund such acquisition, such debt may subject us to material restrictions on our ability to conduct our business, as well as financial maintenance covenants; and ● to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted, and earnings per share may decrease. The occurrence of any of these risks could have a material adverse effect on our business, results of operations, and financial condition. Moreover, we cannot assure you that we would not be exposed to unknown liabilities. Unfavorable conditions in our industry or the global economy, or reductions in IT spending, could limit our ability to grow our business and negatively affect our results of operations. Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers. The revenue growth and potential profitability of our business depend on demand for our platform. Current or future economic uncertainties or downturns could adversely affect our business and results of operations. Negative conditions in the global economy or individual markets, including changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, natural catastrophes, warfare and terrorist attacks on the United States, Europe, Australia, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including spending on IT and negatively affect our business. Political and military events in Ukraine, including the ongoing tensions and state of war between Ukraine and Russia, poor relations between the United States and Russia, and sanctions by the international community against Russia or separatist areas of Ukraine, may also have an adverse impact on our employees, customers, partners, and vendors. In turn, any of these may adversely impact our ability to grow our business and negatively affect our results of operations. Significant political, trade, regulatory developments, and other circumstances beyond our control could have a material adverse effect on our financial condition or results of operations. Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico. Historically, tariffs have led to increased trade and political tensions between not only the U.S. and China, but also between the U.S. and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including, but not limited to, U.S. and China trade policies, could have a material adverse effect on our financial condition or results of operations. We develop and use AI in our business, and challenges with properly developing and managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. We develop and incorporate AI solutions into our platform, services, and features, and the development and use of these AI solutions are fundamental to our business and operations. Our competitors or other third parties may develop and incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that our AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected. Our use of AI and machine learning is subject to risks related to flaws in our algorithms and datasets that may be insufficient or contain biased information. The development of AI technologies is complex, and there are challenges associated with achieving the desired level of accuracy, efficiency, and reliability. The algorithms and models used in our AI systems may have limitations, including biases, errors, or an inability to handle certain data types or scenarios. There is a risk of system failures, disruptions, or vulnerabilities that could compromise the integrity, security, or privacy of our platform. These failures could result in reputational damage, legal liabilities, or loss of user confidence, which could materially affect our business. 32 AI also presents emerging ethical issues, and if our development and use of AI become controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test, and maintain our platform, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact. Legislative and governmental activity in the privacy area may result in new laws or regulations that are applicable to us and that may hinder our business, for example, by restricting use or sharing of patient data, limiting our ability to provide certain data to our customers, limiting our ability to develop or modify our AI systems, or otherwise regulating AI and machine learning, including the use of algorithms and automated processing in ways that could materially affect our business, or which may lead to significant increases in the cost of compliance. Risks Related to Intellectual Property, Information Technology, Data Privacy, and Security If our systems, our customers’ environments, or third-party systems we rely on are breached or if unauthorized access to sensitive data occurs, it could harm public perception of our software, result in business losses, and expose us to liability. Our success depends on maintaining strong data security for our software and services. Because our software is used by our customers to store, transmit, index, or otherwise process and analyze large data sets that often contain proprietary, confidential, and/or sensitive information (including in some instances personal or identifying information and personal health information), our software is perceived as an attractive target for attacks by computer hackers or others seeking unauthorized access, and our software faces threats of unintended exposure, exfiltration, alteration, deletion, or loss of data. Additionally, many customers rely on our software for mission-critical functions and have a low tolerance for security vulnerabilities, increasing the potential impact of any breach. We rely on third-party technology, infrastructure, and software applications to support certain key software features or functions of our business, including our cloud-based services, customer relationship management activities, billing and order management, and financial accounting services. Additionally, we rely on computer hardware to deliver our software and services. We do not have control over the operations of the facilities of the third parties that we use, and any disruptions, security issues, or performance deficiencies in these services could impair our systems and negatively impact our software performance, customer experience, and overall operations. We and the third-party vendors we rely on may in the future experience cybersecurity threats, including threats or attempts to disrupt our information technology infrastructure and unauthorized attempts to gain access to sensitive or confidential information. These threats may include cyberattacks (including computer viruses, malicious and destructive code, phishing attacks, and denial of service attacks), physical or electronic security breaches, natural disasters, fire, power loss, telecommunications failures, personnel misconduct, and human error. Such attacks or security breaches may be perpetrated by internal bad actors, such as employees or contractors, or by third parties (including traditional computer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors). Cybersecurity threats are constantly evolving and increasingly sophisticated, often involving social engineering and other complex techniques that are difficult to detect or defend against. Because the techniques used to obtain unauthorized access change frequently and generally are often identified only after an attack, we and our third-party vendors may be unable to anticipate these techniques or implement adequate preventative measures. Although prior cyberattacks directed at us have not had a material impact on our financial results, and we are continuing to bolster our threat detection and mitigation processes and procedures, we cannot guarantee that future cyberattacks, if successful, will not have a material impact on our business or financial results. While we have security measures in place to protect our information and our customers’ information and to prevent data loss and other security breaches, we have not always been able to do so and there can be no assurance that we will be able to anticipate or prevent security breaches or unauthorized access of our information technology systems or the information technology systems of the third-party vendors upon which we rely. Despite our implementation of network security measures and internal information security policies, data stored on personnel computer systems is also vulnerable to similar security breaches, unauthorized tampering, or human error. Many governments have enacted laws requiring companies to provide notice of data security incidents involving certain types of data, including personal data. In addition, most of our customers, including U.S. government customers, contractually require us to notify them of data security breaches. If an actual or perceived breach of security measures, unauthorized access to our system or the systems of the third-party vendors that we rely upon, or any other cybersecurity threat occurs, we may face direct or indirect liability, costs, contract termination, and reputational harm. Such events may also impact our ability to attract new customers and could materially and adversely affect our business, financial condition, and results of operations. 33 Unauthorized access to our or our third-party vendors’ information technology systems or data or other security breaches could result in the loss of information; significant remediation costs; litigation, disputes, regulatory action, or investigations that could result in damages, material fines, and penalties; indemnity obligations; interruptions in the operation of our business, including our ability to provide new product features, new software, or services to our customers; damage to our operation technology networks and information technology systems; and other liabilities. Remediation efforts may not be successful, and any or all of these perceived incidents could hinder our ability to obtain and maintain required or desirable cybersecurity certifications, and result in reputational damage, any of which could materially adversely affect our results of operations, financial condition, and future prospects. There can be no assurance that any limitations of liability provisions in our license arrangements with customers or in our agreements with vendors, partners, or others would be enforceable, applicable, or adequate or would otherwise protect us from any such liabilities or damages with respect to any claim. We maintain cybersecurity insurance and other types of insurance, subject to applicable deductibles and policy limits, but our insurance may not be sufficient to cover all costs, claims, or liabilities associated with a potential data security incident. In addition, our insurance may not protect us against all claims and losses related to our software or a data security incident due to specified exclusions, deductibles, and material change limitations, and it may be difficult to insure against certain risks. We also cannot be sure that our existing general liability insurance coverage and coverage for cyber liability or errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could harm our financial condition. Our software contains “open source” software, and any failure to comply with the terms of one or more of these open-source licenses could negatively affect our business. Our software is distributed with software licensed by its authors or other third parties under “open source” licenses. Some of which may require us to make available source code for modifications or derivative works and license these under the same terms, granting third parties certain rights of further use. If we combine our proprietary software with open-source software in certain ways, we may be required to release our proprietary source code under open-source licenses. In addition to risks related to license requirements, usage of open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide updates, warranties, support, indemnities, assurances of title, or controls on origin of the software. Additionally, some open-source projects may have known security vulnerabilities or architectural instabilities or are otherwise subject to security attacks due to their wide availability, and are provided on an “as-is” basis. Although we have established processes in place to mitigate these risks, including a review process for screening requests for the use of open-source software, we cannot guarantee that all open-source software is submitted for approval prior to use in our software or that such software tools will be effective. Open-source license terms may be ambiguous, and many associated risks cannot be eliminated, potentially negatively impacting our business if not properly addressed. If we were found to have inappropriately used open-source software, we may be required to re-engineer our software, release proprietary source code, or discontinue the sale of our software in the event re-engineering could not be accomplished on a timely basis. Such actions could divert resources and negatively impact our business, operations, financial condition, and growth prospects. In addition, if the open-source software we use is no longer maintained, it may be more difficult to make the necessary revisions to our software, including modifications to address security vulnerabilities, which could impact our ability to mitigate cybersecurity risks or fulfill contractual obligations to our customers. We may also face claims seeking to enforce open-source license terms, including demands to release the open-source software, derivative works, or proprietary source code developed using such software. Such claims, regardless of merit, could lead to costly litigation, divert resources, or require us to modify our software, potentially harming our business. Additionally, we have intentionally made certain proprietary software available on an open-source basis, both by modifying existing projects and by making certain internally developed tools available pursuant to open-source licenses, and we plan to continue to do so in the future. While we have established procedures in place to protect competitively sensitive code, we cannot guarantee consistent application. Even when applied, because any software source code we contribute to open-source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely, allowing potential competitors to sue it for competitive or unintended purposes. Many of these risks associated with the usage of open-source software could be difficult to eliminate or manage, and could, if not properly addressed, negatively affect the performance of our offerings and our business. 34 Real or perceived errors, failures, defects, or bugs in our software could adversely affect our results of operations and growth prospects. Given the complexity of our software, undetected issues may arise, especially with new features, versions, or infrastructure updates. Our software is often deployed in large-scale environments with diverse configurations, which may cause errors or failures in our software or may expose undetected errors, failures, or bugs in our software. Despite our testing, some defects may not be found in new software or releases until after commencement of commercial shipments. In the past, errors have affected the performance of our software and can also delay the development or release of new software or capabilities or new versions of software, adversely affect our reputation, and potentially reduce demand for our software. Many of our customers use our software in applications that are critical to their businesses or missions and may have a lower risk tolerance to defects in our software than to defects in other, less critical, software products. Delays or errors in releasing new software or versions, or allegations of poor performance, defects, or failures in released software, could result in revenue or market share loss, higher service costs, significant redesign expenses, loss of key customers, potential liability for damages, and diversion of resources. Any of these outcomes could materially and adversely impact our business, operating results, and financial condition. In addition, our software could be perceived to be ineffective for a variety of reasons outside of our control, such as hackers bypassing security measures or customers misusing our software, resulting in a security breach or perceived product failure. Any real or perceived errors, failures, or bugs in our software and services, or dissatisfaction with our services and outcomes, could result in customer terminations and/or claims by customers for losses sustained. In such an event, we may need, for customer relations or other reasons, to invest additional resources to address these issues. While our customer agreements contain limitation of liability provisions, they may not always be enforceable or sufficient in some circumstances. The sale and support of our products carry risks of product liability claims. Although we maintain insurance to protect against certain claims associated with the use of our software and services, our insurance coverage may not adequately cover all claims and liabilities. In addition, our insurance may not protect us against all losses due to specified exclusions, deductibles, and material change limitations, and it may be difficult to insure against certain risks. Even claims that ultimately are unsuccessful could divert resources and management time. Further, our software integrates a wide variety of other elements and must successfully interoperate with products from other vendors and our customers’ internally developed software, which can make it difficult to identify the source of issues when problems arise. We may be blamed for security or compliance failures caused by other vendors’ and customers’ systems. The occurrence of software errors in data, whether or not caused by our software, could delay or reduce market acceptance of our software and have an adverse effect on our business and financial performance, and any necessary revisions may incur significant expenses. If an actual or perceived breach occurs in one of our customers’ systems, regardless of whether the breach is attributable to our software, the market perception of the effectiveness of our software could be harmed. Alleviating any of these problems could require significant expenditures of our capital and other resources and could cause interruptions, delays, or cessation of our product licensing, which could cause us to lose existing or potential customers and could adversely affect our business, financial condition, results of operations, and growth prospects. Issues in the development and use of artificial intelligence in our software may result in reputational harm or liability. Our core business consists of the development and use of AI in our software products. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed. Datasets may be insufficient, of poor quality, or contain biased information. Inappropriate or controversial data practices by data scientists, engineers, and end-users of our systems could impair the acceptance of AI solutions. If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient or inaccurate, we could be subjected to competitive harm, potential legal liability, and brand or reputational harm. Some AI scenarios present ethical issues. Though our technologies and business practices are designed to mitigate many of these risks, if we enable or offer AI solutions that are controversial because of their purported or real impact on human rights, privacy, employment, or other social issues, we may experience brand or reputational harm. Our policies regarding confidential customer information and support for individual privacy and civil liberties could cause us to experience adverse business and reputational consequences. We strive to protect our customers’ confidential information and individuals’ privacy consistently in accordance with applicable laws. Government entities may occasionally request customer information or modifications to our software to enable access or monitoring. In light of our confidentiality and privacy commitments, we may legally challenge such requests to uphold our privacy commitments. To the extent that we do not provide assistance to or comply with requests from government entities, or if we challenge those requests publicly or in court, we may experience adverse political, business, and reputational consequences among certain customers or portions of the public. Conversely, to the extent that we do provide such assistance or do not challenge those requests publicly in court, we may experience adverse political, business, and reputational consequences from other customers or portions of the public arising from concerns over privacy or the government’s activities. 35 Failure to adequately obtain, maintain, protect, and enforce our intellectual property and other proprietary rights could adversely affect our business. Our success and ability to compete depend in part on our ability to protect our proprietary methods and technologies in the United States and other jurisdictions outside the United States. Despite our efforts, third parties may attempt to disclose, obtain, copy, or use our intellectual property or other proprietary information or technology without our authorization, and our efforts to protect our intellectual property and other proprietary rights may not prevent such unauthorized disclosure or use, misappropriation, infringement, reverse engineering or other violation of our intellectual property or other proprietary rights. We have devoted substantial resources to the development of our proprietary software. To protect our proprietary technologies and processes, we rely in part on trade secret laws and confidentiality agreements with our employees, consultants, and third parties. These agreements may not effectively prevent unauthorized disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets, in which case we would not be able to assert trade secret rights or develop similar technologies and processes. We rely on the availability of third-party technology license, and if we are unable to maintain or secure them on reasonable terms, it could lead to errors or delays in our software and service implementation. Our software may include intellectual property licensed from third parties, and we may need to renew or seek new licenses for existing or new software in the future. There can be no assurance that the necessary licenses would be available on commercially acceptable terms, if at all. Third parties may choose to terminate or renew them for a variety of reasons, including actual or perceived failures or breaches of security or privacy, or reputational concerns. In addition, we may be subject to liability if third-party software that we license is found to infringe, misappropriate, or otherwise violate the intellectual property or privacy rights of others. The inability to obtain certain third-party licenses or the need to engage in litigation regarding these matters could result in product roll-backs, delays in product releases until equivalent technology can be identified, licensed, or developed and integrated into our software, and may have a material adverse effect on our business, financial condition, and results of operations. Moreover, the use of nonexclusive third-party components may limit product differentiation and our ability to maintain service levels. In addition, any data that we license from third parties for potential use in our software may contain errors or defects, which could negatively impact the analytics that our customers perform on or with such data. This may have a negative impact on how our software is perceived by our customers and could materially damage our reputation. Changes in or the loss of third-party licenses could lead to our software becoming inoperable or the performance of our software being materially reduced, resulting in our potentially needing to incur additional research and development costs to ensure continued performance of our software or a material increase in the costs of licensing, and we may experience decreased demand for our software. We may in the future be subject to intellectual property rights claims, which are extremely costly to defend, could require us to pay significant damages, and could limit our ability to use certain technologies. Our success depends on operating without infringing, misappropriating, or otherwise violating the intellectual property or other proprietary rights of third parties. The software industry frequently faces intellectual property litigation, and many companies, including our competitors and patent assertion entities, hold extensive intellectual property portfolios and have aggressively enforced their rights. Such litigation may also involve non-practicing patent assertion entities who use their patents to extract license fees by threatening costly litigation or that have minimal operations or relevant product revenue, and against whom our patents may provide little or no deterrence or protection. Further, laws in certain jurisdictions may afford little or no trade secret protection, and any changes in, or unexpected interpretations of, the intellectual property laws in any jurisdiction in which we operate may compromise our ability to enforce our rights. Enforcing our proprietary rights may require costly litigation, and inadequate protection could diminish the value of our software, brand, and intangible assets. We may also face intellectual property infringement claims, which could be expensive and time-consuming, divert management’s attention, and result in significant liability or the need to rebrand our software. While we have not received any notices to date, we may receive notices in the future that claim we have infringed, misappropriated, misused, or otherwise violated other parties’ intellectual property rights. As we become exposed to greater visibility, we face a higher risk of being the subject of intellectual property infringement, misappropriation, or other violation claims, which is not uncommon with respect to software technologies. There may be third-party intellectual property rights, including patents and trademarks, that cover significant aspects of our technologies, business methods, or the products and services we offer in certain regions. We may face increased risk of intellectual property claims due to acquisitions or the integration of open source and other third-party software, as we have less visibility into the development process and safeguards against infringement or misappropriation risks. In addition, former employers of our current, former, or future employees may assert claims that such employees have improperly disclosed to us confidential or proprietary information of these former employers. Any intellectual property claims, with or without merit, are difficult to predict, could be time-consuming and expensive to settle or litigate, could divert our management’s attention and other resources, and may not be covered by our insurance. They may result in significant liability for damages, potentially including treble damages if we are found to have willfully infringed a third party’s intellectual property rights. These claims could also result in our having to stop using technology, branding, or marks found to be in violation of a third party’s rights, and any necessary rebranding could result in the loss of goodwill. If we can’t secure necessary licenses or develop alternative technology for any infringing aspect of our business, we would be forced to limit or stop sales of one or more of our software or features, we could lose existing customers, and we may be unable to compete effectively. 36 Further, some of our agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of third-party claims of intellectual property infringement, misappropriation, or other violations of intellectual property rights, damages caused by us to property or persons, or other liabilities relating to or arising from our software, services, or other contractual obligations. Large indemnity payments could harm our business, financial condition, and results of operations. Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other existing customers and new customers and harm our business and results of operations. Risks Related to Regulation and Compliance Our business is subject to complex and evolving U.S. and non-U.S. laws and regulations regarding privacy, data protection and security, biometrics, artificial intelligence, technology protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or otherwise harm our business. We are subject to a variety of local, state, national, and international laws and directives and regulations in the United States and abroad that involve matters central to our business, including privacy and data protection, data security, data storage, retention, transfer, and deletion, biometrics, artificial intelligence, technology protection, and personal information. Foreign data protection, data security, privacy, biometrics, artificial intelligence, and other laws and regulations can impose different obligations or be more restrictive than those in the United States. These U.S. federal and state and foreign laws and regulations, which, depending on the regime, may be enforced by private parties or government entities, are constantly evolving and can be subject to significant change, and they are likely to remain uncertain for the foreseeable future. In addition, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the new and rapidly evolving software and technology industry in which we operate, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices. The California state legislature passed the California Consumer Privacy Act (the “ CCPA ”) in 2018 and took effect January 1, 2020. The CCPA requires covered businesses that process personal information of California residents to disclose their data collection, use, and sharing practices. Further, the CCPA provides California residents with new data privacy rights (including the ability to opt out of certain disclosures of personal data), imposes new operational requirements for covered businesses, provides for civil penalties for violations as well as a private right of action for data breaches and statutory damages (which is expected to increase data breach class action litigation and result in significant exposure to costly legal judgements and settlements). Aspects of the CCPA and its interpretation and enforcement remain uncertain. In addition, the California Privacy Rights Act of 2020 (the “CPRA”), which took effect January 1, 2023, expanded the CCPA. The CPRA, among other things, gives California residents the ability to limit use of certain sensitive personal information, further restricts the use of cross-contextual advertising, establishes restrictions on the retention of personal information, expands the types of data breaches subject to the CCPA’s private right of action, provides for increased penalties for CPRA violations concerning California residents under the age of 16, and establishes a new California Privacy Protection Agency to implement and enforce the CPRA. The CCPA and other similar laws could impact our business activities depending on how they are interpreted. New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally. For example, Virginia recently passed its Consumer Data Protection Act, and Colorado recently passed the Colorado Privacy Act, both of which differ from the CPRA and became effective in 2023. Additional states, including Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas and Utah, have since also passed comprehensive privacy laws with additional obligations and requirements on businesses. Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive, and personal information than federal, international, or other state laws, and such laws may differ from each other, which may complicate compliance efforts. Additionally, all U.S. states and the District of Columbia have enacted breach notification laws that may require us to notify customers, employees, or regulators in the event of unauthorized access to or disclosure of personal or confidential information experienced by us or our service providers. These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly. Moreover, states have been frequently amending existing laws, requiring attention to changing regulatory requirements. We also may be contractually required to notify customers of a security breach. U.S. and non-U.S. laws and regulations related to biometric technology and products are at a maturing stage of development and still evolving. The effects of such laws and regulations may impose limitations and add uncertainties to the development and operation of our biometric-related business. For example, the European Union’s General Data Protection Regulation (the “GDPR”) classifies biometric data as “sensitive data” which is subject to heightened protection and its processing is generally prohibited unless specific legal grounds, like explicit consent, are met. As another example, the Illinois BIPA prohibits the collection of biometric data without individualized notice and consent. Laws and regulations focused on the collection, use, and processing of biometric data could result in monetary penalties or other regulatory actions. Several states and municipalities are considering enacting or have already enacted statutes and regulations specifically concerning the collection, use and processing of biometric data, including those focused on consumer privacy and consumer protection. In addition, state data privacy laws and foreign data privacy laws often include heightened protections for biometric data, which may include individualized notice and/or consent requirements. These federal, state, municipal and foreign laws and regulations may impact our ability to deploy biometric software products in certain markets, and may increase our compliance costs. 37 U.S. and non-U.S. laws and regulations related to AI technology and products are at an early stage of development and still evolving. The effects of such laws and regulations remain unclear and may add uncertainties to the development and operation of our AI-related business. For example, the EU AI Act became effective on August 1, 2024 and will be fully applicable after a two-year transitional period (although certain obligations will take effect at an earlier or later time). The EU AI Act introduces various requirements for AI systems and models placed on the market or put into service in the EU and may impact our ability to train, deploy, or release AI models in the EU. Among other limitations, the EU AI Act prohibits marketing and use of “AI systems that create or expand facial recognition databases through the untargeted scraping of facial images from the internet or CCTV footage.” Laws and regulations focused on the development, use, and provision of AI technologies could result in monetary penalties or other regulatory actions. In the U.S., there is increasing uncertainty as to the federal government’s approach to AI regulation going forward, as the continued applicability of the White House’s 2023 Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which lays out a framework for the U.S. government, among other things, to monitor private sector development of certain foundation models, remains subject to regulatory development. Several states are considering enacting or have already enacted statutes and regulations concerning the use of AI technologies, including those focused on consumer protection, and depending on the scope of AI regulation at the federal level, some states may move to regulate AI model development and deployment. As an example, the Colorado AI Act is scheduled to go into effect on June 30, 2026, which introduces various requirements for “high-risk” AI systems that make or significantly influence consequential decisions involving education, employment, financial services, housing, health care or legal services. Several other U.S. states are considering enacting or have already enacted regulations concerning AI technologies, which may impact our ability to train, deploy, or release AI models and our software products, and increase our compliance costs. Further, at the federal and state level, there have been various proposals (and in some cases laws enacted) addressing “deepfakes” and other AI-generated synthetic media. We cannot yet fully predict the impact of these regulations on our business or operations, but developments regarding these privacy and data protection laws and regulations around the world may require us to modify our data processing practices and incur substantial costs in an effort to maintain compliance on an ongoing basis. Outside of the United States, virtually every jurisdiction in which we operate has established its own legal framework relating to privacy, data protection, and information security matters with which we and/or our customers must comply. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, retention, disclosure, security, transfer, and other processing of data that identifies or may be used to identify or locate an individual. Some countries and regions, including the European Union, are considering or have passed legislation that imposes significant obligations in connection with privacy, data protection, and information security that could increase the cost and complexity of delivering our software and services, including the GDPR which took effect in May 2018. Complying with the GDPR or other data protection laws and regulations as they emerge may cause us to incur substantial operational costs or require us to modify our data handling practices. Non-compliance with the GDPR specifically may result in administrative fines or monetary penalties of up to 4% of worldwide annual revenue in the preceding financial year or €20 million (whichever is higher) for the most serious infringements and could result in proceedings against us by governmental entities or other related parties and may adversely impact our business, financial condition, and results of operations. In addition to government regulation, self-regulatory and industry standards may legally or contractually apply to us, be argued to apply to us, or we may elect to comply with such standards or to facilitate our customers’ compliance with such standards. Because privacy, data protection, and information security are critical competitive factors in our industry, we may make public statements about our data security measures and our compliance with, or our ability to facilitate our customers’ compliance with, these standards. We expect continued developments in privacy and data protection laws, and we cannot determine the impact of future laws, regulations, and standards, or re-interpretations of existing laws and regulations, industry standards, or other obligations may have on our business. Compliance with existing laws and regulations, industry standards, and contractual and other obligations may require additional costs and could restrict our business operations. As these legal regimes continue to evolve, they may result in ever-increasing public scrutiny and escalating levels of enforcement and sanctions. Furthermore, uncertainty in how these laws and obligations are interpreted and applied may result in alleged or actual non-compliance with our practices or product features. If so, in addition to the possibility of fines, lawsuits, and other claims, we could be required to fundamentally change our business practices or modify our software, which could have an adverse effect on our business. We may be unable to make such changes and modifications in a commercially reasonable manner or at all, and our ability to fulfill existing obligations, make enhancements, or develop new software and features could be limited. These existing and proposed laws and regulations can be costly to comply with and can make our software and services less effective or valuable, delay or impede the development of new products, result in negative publicity, increase our operating costs, require us to modify our data handling practices, limit our operations, impose substantial fines and penalties, require significant management time and attention, or put our data or technology at risk. Any failure or perceived failure by us or our software to comply with applicable laws, regulations, directives, policies, industry standards, or legal obligations or any security incident involving unauthorized access to or use of sensitive data, could lead to government investigations, enforcement actions, private litigation, contractual liabilities, fines, business restrictions, reputational harm, and other significant costs and adverse effects on our business and operations. 38 Failure to comply with governmental laws and regulations could harm our business, and we may be the subject of legal and regulatory inquiries, which may result in monetary payments or may otherwise negatively impact our reputation, business, and results of operations. Our business is subject to regulation by various federal, state, local, and foreign governments in which we operate. Non-compliance with applicable regulations or requirements could subject us to investigations, administrative proceedings, sanctions, enforcement actions, disgorgement of profits, fines, damages, litigation, civil and criminal penalties, termination of contracts, exclusion from sales channels or sales opportunities, injunctions, or other consequences. Such matters may include claims, disputes, allegations, or investigations related to alleged violations of laws or regulations relating to anti-corruption requirements, lobbying or conflict-of-interest requirements, export or other trade controls, data privacy or data protection requirements, or laws or regulations relating to employment, procurement, cybersecurity, securities, or antitrust/competition requirements. The effects of imposed and proposed actions are uncertain because of the dynamic nature of governmental action and responses. We may be subject to government inquiries that drain our time and resources, tarnish our brand reputation, prevent us from doing business with certain customers or markets, including government customers, affect our ability to hire and maintain qualified employees, or require us to take remedial action or pay penalties. We may receive formal and informal inquiries from government agencies and regulators regarding our compliance relating to our business or transactions. Any negative outcome from such investigations or failure to prevail in any possible civil or criminal litigation could adversely affect our business, financial condition, and results of operations. We may face legal, regulatory, and administrative inquiries and proceedings, and unfavorable outcomes in litigation or other matters could negatively impact our business, financial conditions, and results of operations. We may be, from time to time, involved in and subject to litigation or proceedings for a variety of claims or disputes, or regulatory inquiries related to employment, discrimination, intellectual property, contracts, data privacy, securities laws, antitrust, or other matters. Derivative claims, lawsuits, and proceedings, which may, from time to time, be asserted against our directors by our stockholders, could involve breach of fiduciary duty, failure of oversight, corporate waste claims, and other matters. In addition, our business and results may be adversely affected by the outcome of currently pending and any future legal, regulatory, and/or administrative claims or proceedings, including monetary damages or injunctive relief. Additionally, if customers fail to pay us under the terms of our agreements, we may be adversely affected due to the cost of enforcing our contract terms through litigation. Litigation or other proceedings can be expensive and time consuming, and can divert our resources and attention from our primary business operations. The results of our litigation also cannot be predicted with certainty. If we are unable to prevail in litigation, we could incur payments of substantial monetary damages or fines, or undesirable changes to our software or business practices. Furthermore, if we accrue a loss contingency for pending litigation and determine that it is probable, any disclosures, estimates, and reserves we reflect in our financial statements about these matters may not reflect the ultimate disposition or financial impact of litigation or other such matters. These proceedings could also result in negative publicity, which could harm customer and public perception of our business, regardless of the validity of the claims or the outcome. Failure to comply with anti-bribery and anti-corruption laws could subject us to adverse consequences. Since we may operate and sell our software around the world, we will be subject to the United States Foreign Corrupt Practices Act (“FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, and other anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we currently or may do business, both domestic and abroad, including potentially the U.K. Bribery Act. These laws and regulations generally prohibit improper payments or offers of improper payments to government officials, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage. Corruption issues pose a risk in every country and jurisdiction, but in many countries, particularly in countries with developing economies, it may be more common for businesses to engage in practices that are prohibited by the FCPA or other applicable laws and regulations, and our activities in these countries pose a heightened risk of unauthorized payments or offers of payments by one of our employees or third-party business partners, representatives, and agents that could be in violation of various laws including the FCPA. The FCPA and other applicable anti-bribery and anti-corruption laws also may hold us liable for acts of corruption and bribery committed by our third-party business partners, representatives, and agents. We and our third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies, or state-owned or affiliated entities, and we may be held liable for the corrupt or other illegal activities of our employees or such third parties, even if we do not explicitly authorize such activities. The FCPA or other applicable laws and regulations also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent improper payments. While we have implemented policies and procedures to address compliance with such laws, we cannot assure you that our employees or other third parties working on our behalf will not engage in conduct in violation of our policies or applicable law for which we might ultimately be held responsible. Violations of the FCPA and other applicable anti-corruption laws may result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, as well as severe criminal or civil sanctions, including suspension or debarment from U.S. government contracting, and we may be subject to other liabilities and adverse effects on our reputation, which could negatively affect our business, results of operations, financial condition, and growth prospects. In addition, responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant legal defense costs, and other professional fees. 39 Governmental trade controls, including export and import controls, sanctions, customs requirements, and related regimes, may subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets. Our offerings are subject to U.S. export controls, including with respect to encryption technology incorporated into certain of our offerings. Certain of our controlled software offerings and the underlying technology may be exported outside of the United States or accessed by non-U.S. persons (wherever located) only with the required export authorizations, which may include license requirements in some circumstances. Additionally, our current or future products or services may be classified under the Export Administration Regulations (“EAR”) administered by the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) or as defense articles subject to the International Traffic in Arms Regulations (“ITAR”) administered by the U.S. Department of State, Directorate of Defense Trade Controls. In July 2024, the BIS published proposed rulemaking that exports of facial recognition systems and technology would require an export license for certain countries and that export license requirements would expand for fingerprint and voice biometric technologies. If a product, or component of a product, is classified under the ITAR, or is ineligible for an encryption license exception under the EAR, then the product or component could be exported outside the United States (or accessed by non-U.S. persons) only if we obtain the applicable export license or qualify for a different license exception. In certain contexts, the services we provide might be classified as defense services subject to the ITAR separately from the products we provide. Compliance with the EAR, ITAR, and other applicable regulatory requirements regarding the export or deemed export of our products, including new releases of our products and/or the performance of services, may create delays in or increase the cost of the introduction of our products in non-U.S. markets, prevent our customers with non-U.S. operations from deploying our products throughout their global systems or, in some cases, prevent the export of our products to some countries altogether. Our activities are also subject to the economic sanctions laws and regulations administered by the U.S. Department of the Treasury, Office of Foreign Assets Control, and U.S. Department of State, and other jurisdictions. Such controls prohibit the shipment or transfer of certain products and services without the required export authorizations or export to countries, governments, and persons targeted by applicable sanctions. We take precautions to prevent our offerings from being exported in violation of these laws, including: (i) seeking to proactively classify our software and obtain authorizations for the export and/or import of our software where appropriate, (ii) implementing certain technical controls and screening practices to reduce the risk of violations, and (iii) requiring compliance with U.S. export control and sanctions obligations in customer and vendor contracts. However, we cannot guarantee the precautions we take will prevent violations of export control and sanctions laws. As discussed above, if we misclassify a product or service, export or provide access to a product or service in violation of applicable export control or sanctions laws or regulations or otherwise fail to comply with export or sanctions laws or regulations, we may be denied export privileges or subjected to significant per violation fines or other penalties, and our software may be denied entry into other countries. Any decreased use of our software or limitation on our ability to export or sell our software would likely adversely affect our business, results of operations, and financial condition. Violations of U.S. sanctions or export control laws can result in fines or penalties, including civil penalties of up to $300,000 or twice the value of the transaction, whichever is greater, per EAR violation and a civil penalty that could exceed $1,000,000 for ITAR violations, depending on the circumstances of the violation or violations. In the event of criminal knowing and willful violations of these laws, fines of up to $1,000,000 per violation and possible incarceration for responsible employees and managers could be imposed. We also note that if we or our business partners or counterparties, including licensors and licensees, prime contractors, subcontractors, sub-licensors, vendors, customers, contractors, or agents fail to obtain appropriate import, export, or re-export licenses or permits, notwithstanding regulatory requirements or contractual commitments to do so, or if we fail to secure such contractual commitments where necessary, we may also be adversely affected, through reputational harm as well as other negative consequences, including government investigations and penalties. For instance, violations of U.S. sanctions or export control laws can result in fines or penalties, including significant civil and criminal penalties per violation, depending on the circumstances of the violation or violations. Negative consequences for violations or apparent violations of trade control laws or regulations may include the absolute loss of the right to sell our software or services to the government of the United States, or to other public bodies, or a reduction in our ability to compete for such sales opportunities. Further, complying with export control and sanctions regulations for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Many countries, in addition to the United States, regulate the import and export of certain encryption and other dual-use or defense technology or services, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our software or could limit our customers’ abilities to implement our software in those countries. Any such new restrictions, changes in economic sanctions, or shifting approaches in the enforcement of existing regulations, or in the countries, persons, or technologies targeted by such regulations, could result in decreased use of our software by existing customers with non-U.S. operations, declining adoption of our software by new customers with non-U.S. operations, and limitation of our expansion into new markets. 40 Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects. We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“ GAAP ”). We make certain estimates and assumptions related to the adoption and interpretation of these principles, including the recognition of our revenue and the accounting of our stock-based compensation expense with respect to our financial statements. If these assumptions turn out to be incorrect, our financial results and position could materially differ from our expectations and could be materially adversely affected. A change in any of these principles or guidance, or in their interpretations or application to us, may have a significant effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results or our forecasts, which may negatively impact our financial statements. We could be subject to additional tax liabilities. We are subject to federal, state, and local income taxes in the United States. Determining our provision for income taxes requires significant management judgment, and the ultimate tax outcome may be uncertain. Our provision for income taxes is subject to volatility and could be adversely affected by many factors, such as changes to our operating or holding structure, changes in the amounts of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in U.S. tax laws. Tax authorities may disagree with our calculation of research and development tax credits, cross-jurisdictional transfer pricing, or other matters and assess additional taxes, interest, or penalties. While we regularly assess the likely outcomes of these examinations to determine the adequacy of our provision for income taxes and we believe that our financial statements reflect adequate reserves to cover such contingencies, there can be no assurance that the outcomes of such examinations will not have a material impact on our results of operations and cash flows. If tax authorities change applicable tax laws, our overall taxes could increase, and our financial condition or results of operations may be adversely impacted. In addition, there is a risk that certain U.S. state tax authorities, where we do not currently file a state income tax return, could assert that we are liable for state and local income taxes based upon income or gross receipts allocable to such states. States are becoming increasingly aggressive in asserting a nexus for state income tax purposes. If a state tax authority successfully asserts that our activities give rise to a nexus, we could be subject to state and local taxation, including penalties and interest attributable to prior periods, which may adversely impact our results of operations. Our results of operations may be harmed if we are required to collect sales or other related taxes for our license arrangements in jurisdictions where we have not historically done so. States and some local taxing jurisdictions have differing rules and regulations governing sales and use taxes, and these rules and regulations are subject to varying interpretations that may change over time. We collect and remit U.S. sales and use tax, value-added tax (“VAT”), and goods and services tax (“GST”) in several jurisdictions. It is possible, however, that we could face sales tax, VAT, or GST audits and that our liability for these taxes could exceed our estimates, as state tax authorities could still assert that we are obligated to collect additional tax amounts from our customers and remit those taxes to those authorities. We could also be subject to audits for which we have not accrued tax liabilities. Jurisdictions may seek to impose incremental or new sales, use, or other tax collection obligations on us or may determine that such taxes should have, but have not been, paid by us. Risks Related to Our Relationships and Business with the Public Sector A significant portion of our business depends on sales to the public/government sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business. We derive a significant portion of our revenue from contracts with the federal government and government agencies, and we believe that the growth of our business will continue to depend on our successful procurement of government contracts. For example, we have historically derived, and expect to continue to derive, a significant portion of our revenue from sales to agencies of the U.S. federal government, either directly by us or through other government contractors. Our perceived relationship with the U.S. government could adversely affect our business prospects in certain non-U.S. geographies or with certain non-U.S. governments. Sales to government agencies are subject to a number of challenges and risks. The process can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without guaranteed sales. We must also comply with laws and regulations relating to the formation, administration, and performance of contracts, which grant public sector customers rights not typically found in commercial agreements. Governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and may be less favorable than terms agreed with private sector customers. These government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts. For instance, most U.S. government agencies include provisions that allow the government to unilaterally terminate contracts, in whole or in part, for convenience, and in that event, the counterparty to the contract may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered supplies or services from another source. Government entities also tend to require shorter subscription terms, longer implementation cycles, more complex IT and data environments, and may include acceptance provisions that delay revenue recognition. Contracts with governmental entities may include preferential pricing terms, including, but not limited to, “most favored customer” pricing. Even if we are awarded a government contract, such an award may be subject to appeals, disputes, or litigation, including but not limited to bid protests by unsuccessful bidders. 41 In addition, government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits and investigations regarding our compliance with government contract requirements. In addition, if we fail to comply with government contracting laws, regulations and contract requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under our contracts, the Federal Civil False Claims Act (including the possibility of treble damages and significant penalties), or criminal law. In particular, the False Claims Act’s “whistleblower” provisions also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results. Accordingly, our business, financial condition, results of operations, and growth prospects may be adversely affected by certain events or activities, including, but not limited to: ● changes in fiscal or contracting policies or decreases in available government funding; ● changes in government programs or applicable requirements; ● restrictions in the grant of personnel security clearances to our employees; ● ability to maintain facility clearances required to perform on classified contracts for U.S. federal government agencies; ● changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting changes in policy or priorities and resultant funding; ● changes in the government’s attitude towards our capabilities, especially in the areas of national defense, cybersecurity, and critical infrastructure like financial, energy, telecommunications, and healthcare sectors; ● changes in the government’s attitude towards us as a company or our software as a viable or acceptable software solution; ● appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government; ● the adoption of new laws or regulations or changes to existing laws or regulations; ● budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies; ● influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers; ● changes in political or social attitudes with respect to security or data privacy issues; ● potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the COVID-19 outbreak; and ● increased or unexpected costs or unanticipated delays caused by other factors outside of our control, such as performance failures of our subcontractors. Any such event or activity, among others, could cause governments and governmental agencies to delay or refrain from purchasing our software and services, reduce the size or payment amounts of purchases from existing or new government customers, or have an adverse effect on our business, results of operations, and financial condition. We have contracts with government agencies that involve classified programs, which may limit investor insight into portions of our business. We derive a portion of our revenue from programs with government agencies that are subject to security restrictions (e.g., contracts involving classified information, classified contracts, and classified programs), which preclude the dissemination of information and technology under applicable law and regulation. In general, access to classified information, technology, facilities, or programs requires appropriate personnel security clearances, is subject to additional contract oversight and potential liability, and may also require appropriate facility clearances and other specialized infrastructure. In the event of a security incident involving classified information, technology, facilities, or programs or personnel holding clearances, we may be subject to legal, financial, operational, and reputational harm. We are limited in our ability to provide specific information about these classified programs, their risks, or any disputes or claims relating to such programs. As a result, investors have less insight into our classified programs than our other businesses and therefore have less ability to fully evaluate the risks related to our classified business or our business overall. However, historically, the business risks associated with our work on classified programs have not differed materially from those of our other government contracts. 42 Government contracts differ materially from standard commercial contracts, involve competitive bidding and may be subject to cancellation or delay without penalty. Government contracts frequently include provisions that are not standard in private commercial transactions and are subject to laws and regulations that give the U.S. Government rights and remedies not typically found in commercial contracts, including provisions permitting the U.S. Government to: ● terminate our existing contracts; ● reduce potential future income from our existing contracts; ● modify some of the terms and conditions in our existing contracts; ● suspend or permanently prohibit us from doing business with the U.S. Government or with any specific government agency; ● impose fines and penalties; ● subject us to criminal prosecution; ● suspend work under existing multiple year contracts and related task orders if the necessary funds are not appropriated by Congress; ● decline to exercise an option to extend an existing multiple year contract; and ● claim rights in technologies and systems invented, developed, or produced by us. In addition, government contracts are frequently awarded only after formal competitive bidding processes, which have been and may continue to be protracted and typically impose provisions that permit cancellation in the event that necessary funds are unavailable to the government agency. Competitive procurements impose substantial costs and managerial time and effort in order to prepare bids and proposals for contracts that may not be awarded to us. In many cases, unsuccessful bidders for government contracts are provided the opportunity to formally protest certain contract awards through various agencies, administrative, and judicial channels. The protest process may substantially delay a successful bidder’s contract performance, result in cancellation of the contract award entirely, and distract management. We may not be awarded contracts for which we bid, and substantial delays or cancellation of purchases may follow our successful bids as a result of such protests. Certain of our government contracts also may contain “organizational conflict of interest” clauses that could limit our ability to compete for certain related follow-on contracts. While we actively monitor our contracts to avoid these conflicts, we cannot guarantee that we will be able to avoid all organizational conflicts of interest issues. If we fail to establish and maintain important relationships with government agencies and prime contractors, our ability to successfully maintain and develop new business may be adversely affected. Our reputation and relationship with the U.S. Government are key factors in maintaining and developing new business opportunities. In addition, we often act as a subcontractor or in “teaming” arrangements in which we and other contractors bid together on particular contracts or programs for the U.S. Government or government agencies. We expect to continue to depend on relationships with other prime contractors for a portion of our revenue for the foreseeable future. Negative press reports regarding conflicts of interest, poor contract performance, employee misconduct, information security breaches, or other aspects of our business, regardless of accuracy, could harm our reputation. Additionally, as a subcontractor or team member, we often lack control over fulfillment of a contract, and poor performance on the contract could tarnish our reputation, even when we perform as required. As a result, we may be unable to successfully maintain our relationships with government agencies or prime contractors, and any failure to do so could adversely affect our ability to maintain our existing business and compete successfully for new business. Our business could be adversely affected if our employees cannot obtain and maintain required personnel security clearances, or we cannot establish and maintain the required facility security clearance. Certain government contracts may require our employees to maintain various levels of security clearances and may require us to maintain a facility security clearance to comply with U.S. and international government agency requirements. Obtaining and maintaining security clearances for employees typically involves a lengthy process, and it can be difficult to identify, recruit, and retain employees who already hold security clearances. If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain their clearances or terminate employment with us, then we may be unable to comply with relevant requirements, or our customers requiring classified work could choose to terminate or decide not to renew one or more contracts. To the extent we are not able to obtain or maintain a facility security clearance, we may not be able to bid on or win new classified contracts, and existing contracts requiring a facility security clearance could be terminated, either of which would have an adverse impact on our business, financial condition, and results of operations. 43 Most of our customer contracts may be terminated by the customer at any time for convenience and may contain other provisions permitting the customer to discontinue contract performance, and if terminated contracts are not replaced, our results of operations may differ materially and adversely from those anticipated. Most of our contracts, including government contracts, contain termination for convenience provisions. Customers who terminate such contracts may be entitled to a pro rata refund of the amount of the customer deposit for the period of time remaining in the contract term after the applicable termination notice period expires. Government contracts often contain provisions and are subject to laws and regulations that provide government customers with additional rights and remedies not typically found in commercial contracts. These rights and remedies allow government customers, among other things, to: ● terminate existing contracts for convenience with short notice; ● reduce orders under or otherwise modify contracts; ● for contracts subject to the Truth in Negotiations Act, reduce the contract price or cost where it was increased because a contractor or subcontractor furnished cost or pricing data during negotiations that was not complete, accurate, and current; ● for some contracts, (i) demand a refund, make a forward price adjustment, or terminate a contract for default if a contractor provided inaccurate or incomplete data during the contract negotiation process and (ii) reduce the contract price under triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated; ● cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable; ● decline to exercise an option to renew a multi-year contract or issue task orders in connection with indefinite delivery/indefinite quantity contracts; ● claim rights in solutions, systems, or technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services, and disclose such work-product to third parties, including other government agencies and our competitors, which could harm our competitive position; ● prohibit future procurement awards with a particular agency due to a finding of organizational conflicts of interest based upon prior related work performed for the agency that would give a contractor an unfair advantage, or the existence of conflicting roles that might bias a contractor’s judgment; ● subject the award of contracts to protest by competitors, which may require the contracting federal agency to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction, or modification of the awarded contract; ● suspend or debar us from doing business with the applicable government agency; and ● control or prohibit the export of our services. If a customer were to unexpectedly terminate, cancel, or decline to exercise an option to renew with respect to one or more of our significant contracts, or if a government were to suspend or debar us from doing business with such government, our business, financial condition, and results of operations would be materially harmed. Evolving government procurement policies and increased emphasis on cost over performance could adversely affect our business. Federal, state, local, and foreign governments and government agencies may adopt procurement policies that negatively impact our profitability. Changes favoring more non-commercial purchases, different pricing, or evaluation criteria, or government contract negotiation offers based upon the customer’s view of what our pricing should be, may affect the predictability of our margins on such contracts or make it more difficult to compete on certain types of programs. Governments and government agencies are continually evaluating their contract pricing and financing practices, and we have no assurance regarding the full scope and recurrence of any study and what changes will be proposed, if any, and their impact on our financial position, cash flows, or results of operations. The U.S. government may procure non-commercial developmental services rather than commercial products, which could materially impact our future U.S. government business and revenue. U.S. government agencies, including our customers, often award large developmental item and service contracts to build custom software rather than firm fixed-price contracts for commercial products. The U.S. government is required to procure commercial items and services to the maximum extent practicable in accordance with FASA, 10 U.S.C. § 2377; 41 U.S.C. § 3307, and the U.S. government may instead decide to procure non-commercial developmental items and services if commercial items and services are not practicable. In order to challenge a government decision to procure developmental items and services instead of commercial items and services, we would be required to file a bid protest at the agency level and/or with the Government Accountability Office. This can result in contentious communications with government agency legal and contracting offices and may escalate to litigation in federal court. The results of any future challenges or potential litigation cannot be predicted with certainty, however, and any dispute or litigation with the U.S. government may not be resolved in our favor; moreover, whether or not it is resolved in our favor, such disputes or litigation could result in significant expense and divert the efforts of our technical and management personnel. These proceedings could adversely affect our reputation and relationship with government customers and could also result in negative publicity, which could harm customer and public perception of our business. Any change in or repeal of FASA, or a contrary interpretation of FASA by a court of competent jurisdiction, could adversely affect our competitive position for U.S. federal government contracts. 44 General Risk Associated with Our Company Adverse economic conditions or reduced technology spending may adversely impact our business. Our business depends on the economic health of current and prospective customers and overall demand for technology. Purchasing decisions for our software and services are often discretionary and require significant investments. A further downturn in economic conditions, global political and economic uncertainty, a lack of availability of credit, a reduction in business confidence and activity, the curtailment of government or corporate spending, public health concerns or emergencies, financial market volatility, and other factors have in the past and may in the future lead to delayed or canceled purchases, extended sales cycles, and pricing pressure from competitors. We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery. While such events may present some opportunities, their overall impact could be materially negative. If economic conditions worsen, our business, financial condition, and results of operations could be adversely affected. Compliance with the laws and regulations affecting public companies could adversely affect our business, results of operations, and financial condition. As a public company, we are subject to the reporting requirements of the Exchange Act, the Nasdaq listing standards, and other applicable securities rules and regulations. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems, and resources. The complexity of complying with these rules may divert management’s attention from other business matters, potentially harming our operations and financial results. Although we have hired additional employees to assist with compliance, we may need to hire more or engage consultants in the future, further increasing our operating expenses. Additionally, changing laws, regulations, and governance standards, which are subject to varying interpretations, are creating uncertainty for public companies, which may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed. Also, being a public company may make it more expensive for us to obtain director and officer liability insurance, which may result in reduced coverage or higher premiums, and may make it more difficult to attract and retain qualified directors and officers. Public disclosures required as a public company may increase our exposure to actual or threatened litigation from competitors and other third parties. Even if these claims do not result in litigation or are resolved in our favor, the time and resources spent on resolving them could harm our business. Failure to establish and maintain effective internal control in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual assessment of our internal controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, our first formal internal control assessment under Section 404 will be required after our first full fiscal year as a public company. Establishing and maintaining effective internal controls is critical. However, we may face challenges in doing so. Without robust internal controls, we may be unable to reliably gather and report financial information, which could impair our ability to detect errors or prevent fraud. Moreover, we do not expect that disclosure control or internal control over financial reporting, even if established, will prevent all error and all fraud. Because of the inherent limitations in the control system, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be detected. Failure of our control system to prevent error or fraud could materially adversely impact us. Natural disasters and other events beyond our control could harm our business. Our operations are vulnerable to disruption from natural disasters, climate-related events, cyberattacks, pandemics, geopolitical instability, and other events beyond our control. While we maintain crisis and disaster response plans, such events could hinder our ability to deliver services, reduce customer demand, or impair customers’ ability to meet contractual obligations. These disruptions may result in significant costs, data loss, operational delays, and potential legal liabilities. Our insurance coverage may not fully offset these impacts, which could adversely affect our financial condition and results of operations. 45 Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations. We are subject to income taxes in the United States and other jurisdictions, and our tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: ● changes in the valuation of our deferred tax assets and liabilities; ● expected timing and amount of the release of any tax valuation allowances; ● tax effects of stock-based compensation; ● changes in tax laws, regulations or interpretations thereof; or ● lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates. In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations. We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment. We may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in losses. Even though these charges may be non-cash items, the fact that we report charges of this nature could lead to negative market perceptions and make it more difficult to obtain future financing on favorable terms or at all. We may incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations. As a public company, we may incur significant legal, accounting, and compliance costs associated with the Exchange Act, Sarbanes-Oxley Act, Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulations subsequently implemented by the SEC. These requirements may increase our legal and financial compliance costs and may make some activities more time-consuming and costly. Our management and other personnel may need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We may also need to hire additional staff with accounting and financial staff with appropriate public company expertise. Operating as a public company may make it more expensive for us to obtain director and officer liability insurance, and we may face challenges attracting and retaining qualified directors and executives. Once we no longer qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), we expect to incur additional management time and cost to comply with the more stringent reporting requirements, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We are in the early stages of preparing necessary systems and documentation and may not complete this work in a timely fashion. The full extent and timing of these added costs remain uncertain. We are an “emerging growth company,” and the reduced reporting and disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors. We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from reporting requirements. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have also elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to those of other public companies, which may make our common stock less attractive to investors. If we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards. We are a “smaller reporting company,” and the reduced reporting and disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors. We are a “smaller reporting company,” as defined in Section 12 of the Exchange Act. 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 the auditor attestation requirements of Section 404 of Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding non-binding advisory votes on executive compensation, and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 46 If we fail to introduce or acquire new products or services that achieve broad market acceptance on a timely basis, we will not be able to compete effectively. We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop or acquire and introduce new products and services that achieve broad market acceptance. Because we have a limited operating history and the market for our products, including newly acquired or developed products, is rapidly evolving, it is difficult to predict our operating results, particularly with respect to any new products that it may introduce. Our future success will depend in large part upon our ability to identify demand trends in the market in which we operate and quickly develop or acquire, and design, manufacture and sell, products and services that satisfy these demands in a cost-effective manner. To stay competitive, we will need to increase focus and capital investment in research and development. If our current or new offerings fail to gain market acceptance or if we miss opportunities in the market, our growth and financial performance could be materially adversely affected. It is also challenging to predict the impact of new products or services on existing sales, and we may not be able to quickly respond to competitors’ product announcements with competitive offerings. In addition, we may acquire companies and technologies in the future. In these circumstances, the combined company may not be able to successfully manage integration of the new product and service lines with the combined company’s existing suite of products and services. Failure to effectively develop or integrate these new product and service lines could hinder our ability to grow sales or maintain margins. The occurrence of one or more of the foregoing factors may result in lower quarterly revenue than expected, and we may in the future experience product or service introductions that fall short of our projected rates of market adoption. If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected. Our success will depend on our ability to develop and market products that are recognized and accepted as reliable, enabling and cost-effective. Our potential customers may already use products similar to what we currently offer and similar to what we may offer in the future and may be reluctant to replace those products with what we currently offer or which we may offer in the future. Market acceptance of our products and technology will depend on many factors, including our ability to convince potential customers that our products and technology are an attractive alternative to existing products and technology. Prior to adopting our products and technology, some potential customers may need to devote time and effort to testing and validating our systems. Any failure of our systems to meet these customer benchmarks could result in potential customers choosing to retain their existing systems or to purchase systems other than the Company’s. Risks Related to Our Securities The trading price of our common stock may be volatile, and you could lose all or part of your investment. The trading price of our common stock is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our common stock as you might be unable to sell your shares at or above the price you paid. Factors that could cause fluctuations in the trading price of our common stock include the following: ● price and volume fluctuations in the overall stock market from time to time; ● volatility in the trading prices and trading volumes of technology stocks; ● changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; ● sales of shares of our common stock by us or our stockholders; ● failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; 47 ● announcements by us or our competitors of new products, features, or services; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● rumors and market speculation involving us or other companies in our industry; ● actual or anticipated changes in our results of operations or fluctuations in our results of operations; ● actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; ● litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; ● developments or disputes concerning our intellectual property or other proprietary rights; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● changes in accounting standards, policies, guidelines, interpretations, or principles; ● any significant change in our management; and ● general economic conditions and slow or negative growth of our markets. In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance. If the market price of shares of our common stock does not ever exceed the price you paid for your shares, you may not realize any return on your investment in us and may lose some or all of your investment. In addition, in the past, following periods of volatility in the overall market and in the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention. Certain companies with public floats comparable to our public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our common stock. In addition to the risks addressed above in “ Risks Related to Our Securities — The trading price of our common stock may be volatile, and you could lose all or part of your investment ,” our common stock may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s underlying performance. Although the specific cause of such volatility is unclear, our public float may amplify the impact the actions taken by a few stockholders have on the price of our common stock, which may cause the price of our common stock to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should our common stock experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of our common stock. In addition, investors of shares of our common stock may experience losses, which may be material, if the price of our common stock declines or if such investors purchase shares of our common stock prior to any price decline. 48 If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. Future sales of our common stock or securities convertible into our common stock may depress our stock price. Sales of a substantial number of shares of our common stock or securities convertible into our common stock in the public market, or the perception that these sales could occur, could adversely affect the market price of our common stock and impair our ability to raise capital through equity offerings in the future. Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. We cannot assure you that our securities will continue to be listed on Nasdaq. In order to maintain our listing, we will be required to comply with certain Nasdaq continuing listing rules, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, corporate governance and various additional requirements. If we are unable to satisfy Nasdaq criteria for maintaining our listing, our securities could be subject to delisting. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you 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 become 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’s listing requirements. An investment in our company may involve tax implications, and you are encouraged to consult your own advisors as neither we nor any related party is offering any tax assurances or guidance on our company or your investment. An investment in our company generally involves complex federal, state and local income tax considerations. Neither the Internal Revenue Service nor any state or local taxing authority has reviewed the transactions described herein and may take different positions than the ones contemplated by management. You are strongly urged to consult your own tax and other advisors prior to investing, as neither we nor any of our officers, directors or related parties is offering you tax or similar advice, nor are any such persons making any representations and warrants regarding such matters. Anti-takeover provisions in Colorado law could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock. Some of the provisions of Colorado law may have the effect of delaying, deferring or discouraging another person from acquiring control of our company or removing our incumbent officers and directors. These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection against an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging such proposals. Our executive officers, directors, and principal stockholders have substantial control over our company, which could limit your ability to influence the outcome of key transactions, including a change of control. As of the date of this Annual Report, our executive officers, directors and principal stockholders and their affiliates beneficially own an aggregate of 17,110,162 shares of our common stock, or approximately 75.7% of the outstanding shares of our common stock. As a result, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree, which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock. 49 We have never paid dividends on our capital stock, and we do not anticipate to pay for the foreseeable future. We have never declared or paid any cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future. The payment of dividends, if any, in the future is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition and other relevant facts. We currently intend to retain all future earnings, if any, to finance the development and growth of our business. Accordingly, you must rely on the sale of your common stock after price appreciation, which may never occur, as the only way to realize any future gain on your investment.