What changed in this filing

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Item 1A. Risk Factors

2023-12-27 compared with 2022-12-20 · 466 added, 293 removed, 899 unchanged (46% of the section changed)

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also affect our business and results of operations.

of Risk Factors:

following list provides a summary of risk factors discussed in further detail below:

Related to Our Financial Position and Need for Capital, including:

have incurred net losses and may never achieve profitability.

ability to continue as a going concern may depend upon our ability to raise additional capital

and such capital may not be available on acceptable terms, or at all.

we can raise additional funding, we may be required to do so on terms that are dilutive to

our stockholders.

Related to Our Business and Results of Operations, including:

depend significantly upon the continued involvement of our present management and on our

ability to attract and retain talented employees.

products and services face significant competition in our markets.

face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other

resources to maintain or improve our competitive position.

If we are unable to develop new and enhanced products and services, or if

we are unable to continually improve the performance, features, and reliability of our existing products and services, our competitive

position would weaken, and our business and operating results could be adversely affected.

operating results may vary significantly from period to period and have been unpredictable,

which has and might continue to cause the market price of our common stock to be volatile.

future revenue and operating results will depend significantly on our ability to retain clients

and customers and the ability to add new clients and customers.

network or data security incident may allow unauthorized access to our or our end users’

network or data, harm our reputation, create additional liability and adversely impact our

financial results.

services, products, systems, and website and the related data may be subject to

intentional disruption that could materially harm our reputation and future sales.

products are complex and operate in a wide variety of environments, systems and configurations,

which could result in failures of our products to function as designed.

or problems with systems and infrastructure supplied by third-parties could negatively affect

our business, financial condition and financial results.

global financial conditions have been characterized by increased volatility, which could

negatively impact our business, prospects, liquidity and financial condition.

we experience delays and/or defaults in payments, we could be unable to recover all expenditures.

Related to Our Industry, including:

face intense competition.

in product development schedules may adversely affect our revenues.

we do not accurately predict, prepare for, and respond promptly to rapidly evolving technological

and market developments, our competitive position, financial results and prospects will be

● Actual, possible, or perceived defects or vulnerabilities in our products or services could harm our

reputation and divert resources.

Related to Our Intellectual Property, including:

proprietary rights may be difficult to enforce.

our end users experience data losses, our brand, reputation and business could be harmed.

by others that we infringe their proprietary technology could harm our business.

rely on the availability of third-party licenses.

use of open-source software could negatively affect us.

Related to Cyberattacks, including:

● Cyberattacks

and security vulnerabilities could lead to reduced revenue, increased costs, liability claims,

or harm to our reputation or competitive position.

of our information technology may be threatened.

of our products, services, devices, and customers’ data may be breached.

● Development

and deployment of defensive measures are ongoing.

and misuse of personal data could result in liability and harm our reputation.

Related to Our Common Stock, including:

market price for our common stock has been volatile and our common stock is thinly traded.

● Substantial

sales of our common stock, or the perception that such sales might occur, could depress the

market price of our common stock.

of our common stock have a risk of potential dilution.

anti-dilutive rights of certain warrants could result in significant dilution to our existing

stockholders.

common stock is subject to restrictions on sales by broker-dealers and penny stock rules.

common stock is not listed on a national exchange.

Related to Regulations and Our Compliance with Such Regulations, including:

previously identified material weaknesses in our disclosure controls and procedures and internal

control over financial reporting, which have not yet been remediated by us.

are subject to changing laws and regulations.

Related to Our Contractual Agreements, including:

accounting treatment of the proposed exchange offer of our issued warrants could have a material adverse impact

on our financial statements and reduce our net income.

purchase agreement related to our 2021 private placement includes customary covenants that

we must comply with, or we may suffer potential monetary and other penalties.

Risk Factors, including:

charter allows us to issue “blank check” preferred stock and establish its terms,

conditions, rights, powers and preferences without stockholder approval.

will continue to incur increased costs as a result of being a reporting company and, given

our limited capital resources, such additional costs may have an adverse impact on our profitability.

to adequately manage our planned aggressive growth strategy may harm our business or increase

our risk of failure.

may apply working capital and future funding to uses that ultimately do not improve our operating

results or increase the market price of our securities.

websites may encounter technical problems and service interruptions.

have never paid or declared any dividends on our common stock.

Related to Our Financial Position and Need for Capital

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in connection with development of a new business enterprise.

Our accumulated deficit as of September 30, 2022 was $11.9 million.

our most recent fiscal year, we incurred one-time charges of $11.9 million related to the Business Combination which is comprised of

$6.2 million of acquisition related expenses and $5.7 million of goodwill impairment.

Excluding these one-time charges, our accumulated

deficit as of September 30, 2022 would have been $0.

Our accumulated deficit as of September 30, 2023, was $18.9 million primarily driven by $11.9 million of one-time charges related to the Business Combination, which closed on July 1,

2022 and the $4.9 million of intangible asset impairment charge during the year ended September 30, 2023.

cannot assure you that that any of our new products and services currently under development will be successfully commercialized, and

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on acceptable terms, or at all.

currently believe that our cash available will allow us to fund our operations into fiscal year 2024.

Nevertheless, we may need to raise

additional funds in order to support expansion, develop new or enhanced products and services, hire employees, respond to competitive

pressures, acquire technologies or respond to unanticipated events or requirements before then.

Our management’s plans include

attempting to improve our profitability and our ability to generate sufficient cash flow from operations to meet our operating needs

on a timely basis, obtaining additional working capital funds through equity and debt financing arrangements, and restructuring on-going

operations to eliminate inefficiencies to reduce our expenses.

However, we cannot assure you that these plans and arrangements will be

sufficient to fund our ongoing capital expenditures, working capital, and other requirements.

The outcome of these matters cannot be

predicted at this time.

There can be no assurance that any additional financings will be available to us on satisfactory terms and conditions,

If adequate funds are not available on acceptable terms, we may be unable to develop or enhance our products and services,

take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, any of which could have a material

adverse effect on our business, financial condition and operating results.

If we raise additional funds through the issuance of equity

securities, or convertible debt, the percentage ownership of our stockholders will be reduced, and holders may experience dilution in

net book value per share.

currently believe that our available cash will allow us to fund our operations through at least December 2024.

Nevertheless, we may

need to raise additional capital to fund operating losses, support future expansion, develop new or enhanced products and services,

hire employees, respond to competitive pressures, acquire technologies, or respond to unanticipated events or requirements before

Our management’s plans include attempting to improve our profitability and our ability to generate sufficient cash flow

from operations to meet our operating needs on a timely basis, obtaining additional working capital funds through equity and debt

financing arrangements, and restructuring on-going operations to eliminate inefficiencies and reduce our expenses.

However, we are not assured that these plans and arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other

requirements.

The outcome of these actions cannot be predicted at this time.

There can be no assurance that any additional

financings will be available to us on satisfactory terms and conditions, if at all.

If adequate funds are not available on

acceptable terms, we may be unable to develop or enhance our products and services, take advantage of future opportunities or

respond to competitive pressures or unanticipated requirements, any of which could have a material adverse effect on our business,

financial condition and operating results.

If we raise additional funds through the issuance of equity securities, or convertible

debt, the percentage ownership of our stockholders will be reduced, and holders may experience dilution in net book value per

amount of capital we may need depends on many factors, including the progress, timing, scope and market acceptance of our product development

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Related to Our Business and Results of Operations

pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, has materially affected, and may in the future materially

and adversely affect, our business and operations.

2021 and into 2022, the COVID-19 pandemic has interrupted our sales and marketing activities and restricted face-to-face interaction

between our representatives and our potential partners, clients and customers.

This slowed the pace of our product and service development,

and the expansion of our list of prospective customers.

Government actions related to any further acceleration of illness in the COVID-19

pandemic, or the emergence of a new viral outbreak, may negatively impact the adjustments we, our customers (if any), the customers of

our licensees and resellers, and our other business partners have made to resume business under the new protocols.

We depend significantly upon the continued involvement of our present management and on our ability to attract and retain talented employees.

Inflation and geo-political events increase the risk that we are unable to achieve and maintain profitable operations.

Inflation may cause our costs to increase, which we may not be able to pass onto customers.

Inflation may also impact

our customers’ profitability and the budgets they have available to spend on cybersecurity and other products we offer.

The wars in Ukraine

and the Middle East and tensions between China and the US could have impacts on many variables that impact our business or our customers’

depend significantly upon the continued involvement of our present management and on our ability to attract and retain talented employees.

success depends significantly upon our present management, who are involved in our strategic planning and operations.

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products and services face significant competition in our markets, and if they do not compete successfully, our business will suffer.

current and proposed products and services face, and will continue to face, intense competition from larger and smaller companies, as

well as from academic and research institutions.

current and proposed products and services face, and will continue to face, intense competition from larger and smaller companies,

as well as from academic and research institutions.

We compete in an industry that is characterized by:

(i) rapid technological change,

(ii) evolving industry standards, (iii) emerging competition, and (iv) new service and product introductions.

Our competitors have existing

products and technologies that will compete with our products and technologies and may develop and commercialize additional products

and technologies that will compete with our products and technologies.

Some of these new products and services may have functionality

that ours do not have.

Because many competing companies and institutions have greater financial resources than us, they may be able to:

(i) provide broader services and product lines, (ii) make greater investments in research and development, and (iii) carry on larger

research and development initiatives.

Our competitors also generally have greater development capabilities than we do and have greater

experience in undertaking testing of products, obtaining regulatory approvals, and manufacturing and marketing their products.

have greater name recognition and better access to customers, clients, licensees, and resellers than we do.

Our chief competitors include

companies such as Optiv, NCC, Coalfire, PwC, EY, Deloitte, and GuidePoint.

(i) rapid technological

change, (ii) evolving industry standards, (iii) emerging competition, and (iv) new service and product introductions.

competitors have existing products and technologies that will compete with our products and technologies and may develop and

commercialize additional products and technologies that will compete with our products and technologies.

Some of these new products

and services may have functionality that ours do not have.

Because many competing companies and institutions have greater financial

resources than us, they may be able to:

(i) provide broader services and product lines, and (ii) fully develop and deploy new products faster than we can with their larger and broader resources.

Our competitors also generally have

greater development capabilities than we do and have greater experience in undertaking testing of products, obtaining regulatory

approvals, and manufacturing and marketing their products.

They also have greater name recognition and better access to customers,

clients, licensees, and resellers than we do.

Our chief services competitors include companies such as Optiv, NCC, Coalfire, PwC,

EY, Deloitte, and GuidePoint.

Our primary product competitors for Enclave are companies such as Perimeter 81, Zscaler, Palo Alto,

we are unable to develop new and enhanced products and services, or if we are unable to continually improve the performance, features,

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If we are unable to anticipate or react to competitive challenges or if existing or new competitors gain market

share in any of our markets, our competitive position would weaken, and we could experience a decline in our revenues and net income,

if any, which could adversely affect our business and operating results.

share in any of our markets, our competitive position would weaken, and we could experience a decline in our revenues and net income, which could adversely affect our business and operating results.

Additionally, we must continually address the challenges of

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and challenges, including but not limited to:

Lengthy development cycles;

Evolving industry and regulatory

standards and technological developments by our competitors and customers (if any), and the customers of our licensees and resellers;

Rapidly changing customer

preferences and needs;

Evolving platforms, operating

systems, and hardware products, such as mobile devices, and related product and service interoperability challenges;

Entering into new or unproven

Executing new product and

service strategies.

development cycles;

industry and regulatory standards and technological developments by our competitors and customers

(if any) and the customers of our licensees and resellers;

changing customer preferences and needs;

platforms, operating systems, and hardware products, such as mobile devices, and related

product and service interoperability challenges;

into new or unproven markets;

new product and service strategies.

we are not successful in managing these risks and challenges, or if our new or improved products and services are not technologically

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control and may be difficult to predict, including:

our ability to attract

and retain customers (if any), and/or the ability of our licensees and resellers to retain customers or sell products and services;

the budgeting cycles, seasonal

buying patterns, and purchasing practices of potential customers and customers of our licensees and resellers;

price competition;

the timing and success

of our new product and service introductions by us or our competitors or any other change in the competitive landscape of our industry,

including consolidation among our competitors, licensees, resellers, clients, or customers, and strategic relationships entered into

by and between our competitors;

changes in the mix of our

services, products and support;

changes in the growth rate

of the cybersecurity technology market;

the timing and costs related

to the development or acquisition of technologies or businesses or strategic partnerships;

lack of synergy, or the

inability to realize expected synergies, resulting from any acquisitions or strategic partnerships;

our inability to execute,

complete or integrate efficiently any acquisitions that we have or may hereafter undertake;

increased expenses, unforeseen

liabilities, or write-downs and any impact on our operating results from any acquisitions we may consummate;

our ability to create sizeable

and productive distribution channels for our proprietary software;

decisions by potential

customers, or the customers of our licensees and resellers, to purchase cybersecurity solutions from larger, more established cybersecurity

software and service vendors, or from their sales channel partners;

timing of revenue recognition

from the delivery of existing and future statements of work;

Insolvency or credit difficulties

confronting customers (if any), our licensees and resellers, or the customers of our licensees and resellers, which could adversely

affect their ability to purchase or pay for our products and services and offerings;

the cost and potential

outcomes of any litigation, which could have a material adverse effect on our business;

seasonality or cyclical

fluctuations in our markets due to holiday schedules, industry events, or customer funding policies that may impact our ability to

secure new clients or deliver services to existing clients;

future accounting pronouncements

or changes in our accounting policies, including the potential impact of the adoption and implementation of the Financial Accounting

Standards Board’s new standard regarding revenue recognition;

general macroeconomic conditions,

in some or all regions in which we operate.

ability to attract and retain customers (if any) and/or the ability of our licensees and

resellers to retain customers or sell products and services;

budgeting cycles, seasonal buying patterns, and purchasing practices of potential customers

and customers of our licensees and resellers;

timing and success of our new product and service introductions by us or our competitors

or any other change in the competitive landscape of our industry, including consolidation

among our competitors, licensees, resellers, clients, or customers, and strategic relationships

entered into by and between our competitors;

in the mix of our services, products, and support;

in the growth rate of the cybersecurity technology market;

timing and costs related to the development or acquisition of technologies or businesses

or strategic partnerships;

of synergy, or the inability to realize expected synergies, resulting from any acquisitions

or strategic partnerships;

inability to execute, complete or integrate efficiently any acquisitions that we have or

may hereafter undertake;

expenses, unforeseen liabilities, or write-downs and any impact on our operating results

from any acquisitions we may consummate;

ability to create sizeable and productive distribution channels for our proprietary software;

by potential customers, or the customers of our licensees and resellers, to purchase cybersecurity

solutions from larger, more established cybersecurity software and service vendors, or from

their sales channel partners;

of revenue recognition from the delivery of existing and future statements of work;

or credit difficulties confronting customers (if any), our licensees and resellers, or the

customers of our licensees and resellers, which could adversely affect their ability to purchase

or pay for our products and services and offerings;

cost and potential outcomes of any litigation, which could have a material adverse effect

on our business;

● seasonality

or cyclical fluctuations in our markets due to holiday schedules, industry events, or customer

funding policies that may impact our ability to secure new clients or deliver services to

existing clients;

accounting pronouncements or changes in our accounting policies, including the potential

impact of the adoption and implementation of the Financial Accounting Standards Board’s

new standard regarding revenue recognition;

macroeconomic conditions including interest rates, inflation and increasing labor costs, in some or all regions in which we operate.

one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in

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Our main competitors fall into three categories:

companies that incorporate security or encryption features in their services and products, such as Google’s Cloud Platform,

Amazon’s AWS services, and Microsoft’s Azure, or those that have acquired, or may acquire, cybersecurity services, products

or technologies and have the technical and financial resources to bring competitive solutions to the market;

companies that incorporate security or encryption features in their services and products,

such as Google’s Cloud Platform, Amazon’s AWS services, and Microsoft’s

Azure, or those that have acquired, or may acquire, cybersecurity services, products, or technologies

and have the technical and financial resources to bring competitive solutions to the market;

● independent

security vendors, such as Optiv and Coalfire, that offer cybersecurity products;

and large companies that offer cybersecurity technologies that compete with some of the features proposed for our services and products.

and large companies that offer cybersecurity services and technologies that compete with our services and products.

of our existing competitors have, and some of our potential competitors may have, substantial competitive advantages such as:

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sales and marketing budgets and resources;

distribution and established relationships with distributors and customers (if any), or the customers of our licensees and resellers;

distribution and established relationships with distributors and customers (if any), or the

customers of our licensees and resellers;

customer support resources;

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Our retention rates may decline or fluctuate due to a variety of factors, including the following:

our clients and customers’

levels of satisfaction or dissatisfaction with our products and services;

the quality, breadth, and

prices of our products and services;

our general reputation

and events impacting that reputation;

the products and services

and related pricing offered by our competitors;

disruption by new services

or changes in law or regulations that impact the need for or efficacy of our products and services;

our customer service activities

and responsiveness to any customer issues;

customer dissatisfaction

if they do not receive the full benefit of our services due to their failure to provide all relevant data;

customer dissatisfaction

with the methods or sufficiency of our remediation services;

changes in target customers’

planned spending levels as a result of general economic conditions or other factors such as inflation.

clients’ and customers’ levels of satisfaction or dissatisfaction with our products

and services;

quality, breadth, and prices of our products and services;

general reputation and events impacting that reputation;

products and services and related pricing offered by our competitors;

by new services or changes in law or regulations that impact the need for or efficacy of

our products and services;

customer service activities and responsiveness to any customer issues;

dissatisfaction if they do not receive the full benefit of our services due to their failure

to provide all relevant data;

dissatisfaction with the methods or sufficiency of our remediation services;

in target customers’ planned spending levels as a result of general economic conditions

or other factors such as inflation.

we do not retain our existing clients and customers, or add new clients and customers, we may not generate revenue and/or our revenue

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proprietary information or cause interruptions of our services.

This risk may be increased during the current COVID-19 pandemic as more

This risk has increased as more

individuals are working from home and utilize home networks for the transmission of sensitive information.

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or technologies obsolete or noncompetitive.

possible or perceived defects or vulnerabilities in our products or services, the failure of our products or services to detect or prevent

Actual, possible, or perceived defects or vulnerabilities in our products or services, the failure of our products or services to detect or prevent

a security breach or the misuse of our products could harm our reputation and divert resources.

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could result in:

the expenditure of significant

financial and development resources in efforts to analyze, correct, eliminate or work around errors or defects or to address and

eliminate vulnerabilities;

the loss of potential clients,

customers, licensees, resellers, or distribution partners;

delayed or lost revenue;

delay or failure to attain

market acceptance;

negative publicity and

harm to our reputation;

litigation, regulatory

inquiries or investigations that may be costly and harm our reputation and, in some instances, subject us to potential liability

that is not contractually limited.

expenditure of significant financial and development resources in efforts to analyze, correct,

eliminate or work around errors or defects or to address and eliminate vulnerabilities;

loss of potential clients, customers, licensees, resellers, or distribution partners;

or lost revenue;

or failure to attain market acceptance;

publicity and harm to our reputation;

● litigation,

regulatory inquiries, or investigations that may be costly and harm our reputation and, in

some instances, subject us to potential liability that is not contractually limited.

Related to Our Intellectual Property

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Moreover, the inclusion in our products

of software or other intellectual property licensed from third parties on a non-exclusive basis or the inclusion in our products of opensource

or software or other intellectual property licensed from third-parties on a non-exclusive basis or the inclusion in our products of opensource

software may limit our ability to differentiate our products from those of our competitors.

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use of open-source software in our products could negatively affect our ability to sell our products and subject us to possible litigation.

current products, and/or those under development, contain software modules licensed to or used by us from third-party authors under “open

source” licenses.

current products, and/or those under development, contain software modules licensed to or used by us from third-party authors under “open-source” licenses.

Some open-source licenses contain requirements that we make available applicable source code for modifications

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but we cannot be sure that our processes for controlling our use of open-source software in our products will be effective.

and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive

of our information technology may be threatened.

to IT security can take a variety of forms.

Individual and groups of hackers and sophisticated organizations, including state-sponsored

organizations or nation-states, continuously undertake attacks that pose threats to our customers and our IT.

These actors may use a

wide variety of methods, which may include developing and deploying malicious software or exploiting vulnerabilities or intentionally

designed processes in hardware, software, or other infrastructure in order to attack our products and services or gain access to our

networks and datacenters, using social engineering techniques to induce our employees, users, partners, or customers to disclose passwords

or other sensitive information or take other actions to gain access to our data or our users’ or customers’ data, or acting

in a coordinated manner to launch distributed denial of service or other coordinated attacks.

Nation-state and state-sponsored actors

can deploy significant resources to plan and carry out attacks.

Nation-state attacks against us, our customers, or our partners may intensify

during periods of intense diplomatic or armed conflict, such as the ongoing conflict in Ukraine.

Inadequate account security or organizational

security practices may also result in unauthorized access to confidential data.

For example, system administrators may fail to timely

remove employee account access when no longer appropriate.

Employees or third-parties may intentionally compromise our or our users’

security or systems or reveal confidential information.

Malicious actors may employ the IT supply chain to introduce malware through

software updates or compromised supplier accounts or hardware.

are constantly evolving and becoming increasingly sophisticated and complex, increasing the difficulty of detecting and successfully

defending against them.

We may have no current capability to detect certain vulnerabilities or new attack methods, which may allow them

to persist in the environment over long periods of time.

Cyberthreats can have cascading impacts that unfold with increasing speed across

our internal networks and systems and those of our partners and customers.

Breaches of our facilities, network, or data security could

disrupt the security of our systems and business applications, impair our ability to provide services to our customers and protect the

privacy of their data, result in product development delays, compromise confidential or technical business information harming our reputation

or competitive position, result in theft or misuse of our intellectual property or other assets, subject us to ransomware attacks, require

us to allocate more resources to improve technologies or remediate the impacts of attacks, or otherwise adversely affect our business.

We are also subject to supply chain cyberattacks where malware can be introduced to a software provider’s customers, including

us, through software updates.

addition, our internal IT environment continues to evolve.

Often, we are early adopters of new devices and technologies.

We embrace new

ways of sharing data and communicating internally and with partners and customers using methods such as social networking and other consumer-oriented

technologies.

Increasing use of generative AI models in our internal systems may create new attack methods for adversaries.

policies and internal security controls may not keep pace with these changes as new threats emerge, or emerging cybersecurity regulations

in jurisdictions worldwide.

of our products, services, devices, and customers’ data may be breached.

security of our products and services is important in our customers’ decisions to purchase or use our products or services.

threats are a significant challenge to companies like us whose business is providing technology products and services to others.

to our own IT infrastructure can also affect our customers.

Customers using our cloud-based services rely on the security of our infrastructure,

including hardware and other elements provided by third-parties, to ensure the reliability of our services and the protection of their

Adversaries tend to focus their efforts on the most popular operating systems, programs, and services, including many of ours,

and we expect that to continue.

In addition, adversaries can attack our customers’ cloud environments, sometimes exploiting previously

unknown vulnerabilities, Vulnerabilities in these or any product could persist if the attackers exploited the vulnerabilities with the

installation of additional malware, to further compromise customers’ systems.

Customers using our products will continue to get

attacked as they move through their digital transformation projects.

Inadequate account security practices may also result in unauthorized

access, and user activity may result in ransomware or other malicious software impacting a customer’s use of our products or services.

We are increasingly incorporating open-source software into our products.

There may be vulnerabilities in open-source software

that may make our products susceptible to cyberattacks.

customers operate complex IT systems with third-party hardware and software from multiple vendors that may include systems acquired over

They expect our products and services to support all these systems and products, including those that no longer incorporate

the strongest current security advances or standards.

As a result, we may not be able to discontinue support in our services for a product,

service, standard, or feature solely because a more secure alternative is available.

Failure to utilize the most current security advances

and standards can increase our customers’ vulnerability to attack.

Further, customers of widely varied size and technical sophistication

use our technology, and consequently may still have limited capabilities and resources to help them adopt and implement state of the

art cybersecurity practices and technologies.

In addition, we must account for this wide variation of technical sophistication when defining

default settings for our products and services, including security default settings, as these settings may limit or otherwise impact

other aspects of IT operations and some customers may have limited capability to review and reset these defaults.

may adversely impact our customers even if our product services are not directly compromised.

We are committed to notifying our customers

whose systems have been impacted as we become aware and have actionable information for customers to help protect themselves.

also committed to providing guidance and support on detection, tracking, and remediation.

We may not be able to detect the existence

or extent of these attacks for all of our customers or have information on how to detect or track an attack, when we may have no or limited

visibility into our customers’ computing environments.

and deployment of defensive measures are ongoing.

defend against security threats to our internal IT systems, our cloud-based services, and our customers’ systems, we must continuously

engineer more secure products and services, enhance security, threat detection, and reliability features, improve the deployment of software

updates to address security vulnerabilities in our own products as well as those provided by others, develop mitigation technologies

that help to secure customers from attacks even when software updates are not deployed, maintain the digital security infrastructure

that protects the integrity of our network, products, and services, and provide security tools such as firewalls, anti-virus software,

and advanced security and information about the need to deploy security measures and the impact of doing so.

Customers in certain industries

such as financial services, health care, and government may have enhanced or specialized requirements to which we must engineer our products

and services.

cost of measures to protect products and customer-facing services could reduce our operating margins.

If we fail to do these things well,

actual or perceived security vulnerabilities in our products and services, data corruption issues, or reduced performance could harm

our reputation and lead customers to reduce or delay future purchases of products or subscriptions to services, or to use competing products

Customers may also spend more on protecting their existing computer systems from attack, which could delay adoption of additional

products or services.

Customers, and third-parties granted access to their systems, may fail to update their systems, continue to run

software or operating systems we no longer support, or may fail timely to install or enable security patches, or may otherwise fail to

adopt adequate security practices.

Any of these could adversely affect our reputation and revenue.

Actual or perceived vulnerabilities

may lead to claims against us.

Our license agreements typically contain provisions that eliminate or limit our exposure to liability,

but there is no assurance these provisions will withstand legal challenges.

At times, to achieve commercial objectives, we may enter

into agreements with larger liability exposure to customers.

products operate in conjunction with and are dependent on products and components across a broad ecosystem of third-parties.

is a security vulnerability in one of these components, and if there is a security exploit targeting it, we could face increased costs,

liability claims, reduced revenue, or harm to our reputation or competitive position.

and misuse of personal data could result in liability and harm our reputation.

we continue to grow the number, breadth, and scale of our cloud-based offerings, we store and process increasingly large amounts of personal

data of our customers and users.

The continued occurrence of high-profile data breaches provides evidence of an external environment

increasingly hostile to information security.

Despite our efforts to improve the security controls across our business groups and geographies,

it is possible our security controls over personal data, our training of employees and third-parties on data security, and other practices

we follow may not prevent the improper disclosure or misuse of customer or user data we or our vendors store and manage.

third-parties who have limited access to our customer or user data may use this data in unauthorized ways.

Improper disclosure or misuse

could harm our reputation, lead to legal exposure to customers or users, or subject us to liability under laws that protect personal

data, resulting in increased costs or loss of revenue.

Our software products and services also enable our customers and users to store

and process personal data on-premises or, increasingly, in a cloud-based environment we host.

Government authorities can sometimes require

us to produce customer or user data in response to valid legal orders.

and elsewhere, we advocate for transparency concerning

these requests and appropriate limitations on government authority to compel disclosure.

Despite our efforts to protect customer and

user data, perceptions that the collection, use, and retention of personal information is not satisfactorily protected could inhibit

sales of our products or services and could limit adoption of our cloud-based solutions by consumers, businesses, and government entities.

Additional security measures we may take to address customer or user concerns, or constraints on our flexibility to determine where and

how to operate datacenters in response to customer or user expectations or governmental rules or actions, may cause higher operating

expenses or hinder growth of our products and services.

Related to Our Common Stock

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section and elsewhere are:

sale of our common stock

by our stockholders, executives, and directors;

volatility in price and

level of trading volumes of our shares of common stock;

our ability to obtain financings

to conduct and complete research and development activities and other business activities;

the timing and success

of introductions of new products and services by us or our competitors or any other change in the competitive dynamics of our industry,

including consolidation among competitors;

Our ability to attract

new customers, clients, licensees, and resellers;

changes in the development

status of our products and services;

changes in our capital

structure, future issuances of securities, sales of large blocks of common stock by our stockholders;

our cash position;

announcements and events

surrounding financing efforts, including debt and equity securities;

our inability to enter

into new markets or develop new products and services;

reputational issues;

announcements of acquisitions,

partnerships, collaborations, joint ventures, new products and services, capital commitments, or other events by us or our competitors;

changes in industry conditions

or perceptions;

our ability to attract

analyst to initiate research coverage and once obtained, having such analysts issue research reports, recommendations and any changes

in recommendations, price targets, and withdrawals of coverage;

departures and additions

of key personnel;

disputes and litigations

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

changes in applicable laws,

rules, regulations, or accounting practices and other dynamics;

other events or factors,

many of which may be out of our control.

of our common stock by our stockholders, executives, and directors;

in price and level of trading volumes of our shares of common stock;

ability to obtain financings to conduct and complete research and development activities

and other business activities;

timing and success of introductions of new products and services by us or our competitors

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

among competitors;

ability to attract new customers, clients, licensees, and resellers;

in the development status of our products and services;

in our capital structure, future issuances of securities, and sales of large blocks of common

stock by our stockholders;

cash position;

● announcements

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

inability to enter into new markets or develop new products and services;

● reputational

● announcements

of acquisitions, partnerships, collaborations, joint ventures, new products and services,

capital commitments, or other events by us or our competitors;

in industry conditions or perceptions;

ability to attract analyst to initiate research coverage and once obtained, having such analysts

issue research reports, recommendations and any changes in recommendations, price targets,

and withdrawals of coverage;

and additions of key personnel;

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

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

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

addition, if the market for stock of companies in our industry or industries related to our industry, or the stock market in general,

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exercise of outstanding options and warrants to purchase our common stock will dilute existing stockholders’ ownership

We currently have outstanding warrants to purchase 87,628,920 shares of our common stock, with a weighted average

exercise price of $0.56.

On September 13, 2021, our stockholders approved an employee stock option plan authorized by our Board of

Directors under which we may issue options to purchase or grant up to an aggregate of 8,000,000 shares of common stock plus annual

increases on the first day of each calendar year beginning with the first January 1 following May 12, 2021 and ending with the last

January 1, 2031 up to five percent (5%) of the fully diluted shares outstanding.

Annual increases are subject to the approval by the

Board of Directors.

In the future, we may grant additional stock options, warrants, preferred stock or convertible securities.

exercise or conversion of stock options, warrants, preferred stock, or convertible securities will dilute the ownership percentage

of our then existing stockholders.

The dilutive effect of the exercise or conversion of these securities may adversely affect our

ability to obtain additional capital.

The holders of these securities may be expected to exercise or convert their securities when

we are able to obtain additional equity capital on terms more favorable than these securities.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

On November 7, 2023, we offered to exchange certain outstanding warrants for shares of common stock and new warrants.

We closed the November 7 Offer to Exchange on December 26, 2023, resulting

in the issuance of 7,270,958 shares of common stock and 17,415,437 new warrants.

On September 13, 2021, our stockholders approved an employee stock option

plan authorized by our Board of Directors under which we may issue equity awards that may increase the number of outstanding shares of common stock.

In the future, we may grant additional stock options, warrants, preferred stock or

convertible securities.

The exercise or conversion of stock options, warrants, preferred stock, or convertible securities will

dilute the ownership percentage of our then existing stockholders.

The dilutive effect of the exercise or conversion of these

securities may adversely affect our ability to obtain additional capital.

The holders of these securities may be expected to

exercise or convert their securities when we are able to obtain additional equity capital on terms more favorable than these

anti-dilutive rights of certain warrants could result in significant dilution to our existing stockholders and/or require us to issue

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of September 30, 2023, no anti-dilution triggers have occurred.

August 22, 2023, the Company commenced a Tender Offer for the 69,281,020 Warrants subject to our Offer to Exchange consisting

of (i) warrants to purchase an aggregate of 5,398,966 Shares issued to certain designees of Paulson Investment Company, LLC (“Paulson”)

in 2018 with a ten-year term and with an exercise price of $1.00 (“2018 Paulson Warrants”), (ii) warrants to purchase an

aggregate of 8,332,439 Shares that were issued to certain designees of Paulson in 2021 with a ten-year term and that had an exercise

price of $0.18 (“2021 Paulson Warrants”);

and (iii) warrants to purchase an aggregate of 55,549,615 Shares issued to certain

investors in 2021 with a five-year term and with an exercise price of $0.36 (“2021 Investor Warrants”).

The 2018 Paulson Warrants and the 2021 Paulson Warrants are collectively

referred to as the “Paulson Warrants.” Under the Offer to Exchange, the holders of the Paulson Warrants were entitled to receive

one (1) share of Common Stock for each four (4) Paulson Warrants exchanged (“Paulson Exchange Ratio”), and (ii) the holders

of the Investor Warrants were entitled to receive one (1) share of Common Stock for each six (6) Investor Warrants exchanged (“Investor

Exchange Ratio”).

This Offer to Exchange was withdrawn by the Company on November 1, 2023 after deciding that the 24,008,341 warrants

that had been validly tendered into and not validly withdrawn, represented 42.3% of the warrant subject to the Offer to Exchange, were

insufficient to close the Offer to Exchange.

A new Tender Offer (“Offer to Exchange”) was filed on November 7, 2023.

The November 7, 2023 Tender Offer contained two

material differences from the Tender Offer filed on August 22, 2023:

November 7, 2023, Offer to Exchange excluded the 2018 and 2021 Paulson Warrants (the Paulson Warrants”);

November 7, 2023, Offer to Exchange offered the 2021 Investor Warrant holders one (1) additional Warrant for every 2.5 Warrants

exchanged from the 2021 Investor Warrants.

The New Warrant includes the following features:

$0.18 exercise price;

a five (5) year

exercise term;

a cashless exercise option;

and an automatic conversion at $0.36.

The New Warrant excludes the anti-dilution rights

in the 2021 Investor Warrants.

55,549,615 2021 Investor Warrants were subject to the November 7, 2023, Offer to Exchange.

We closed the November 7 Offer to Exchange on December 26, 2023, resulting

in the issuance of 7,270,958 shares of common stock and 17,415,437 new warrants in exchange for 43,538,501 2021 Investor Warrants.

common shares are thinly traded, and in the future may continue to be thinly traded, and you may be unable to sell your shares at or

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If all 69,281,020 warrants are exercised in full for cash, then they would represent 24.5% of the total shares outstanding.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

Sales of a significant number of shares of our common stock in the public market, or the potential or expectation of such

sales, could harm the market price of our common stock.

As large numbers of our common stock are sold, it would increase the supply of

our common stock, which would thereby cause a decrease in its price.

addition, the shares of our common stock that have been registered for resale and/or are issuable upon exercise of the warrants issued

in the private placement may represent an overhang that may also adversely affect the market price of our common stock.

Overhang occurs

when there is a greater supply of a company’s stock in the market than there is demand for that stock.

When this happens, the price

of a company’s stock will decrease, and any additional shares that stockholders attempt to sell in the market will only further

decrease the share price.

The exercise price of our outstanding warrants may be less than the trading price of our common stock or may

create an artificial ceiling on the price of our common stock.

In the event of such overhang, the holders of those warrants will have

an incentive to sell their common stock as quickly as possible.

If the share volume of our common stock cannot absorb the new shares

issuable upon exercise of those warrants or made available for sale pursuant to the registration statement, then the value of our common

stock will likely decrease.

of a significant number of shares of our common stock in the public market, or the potential or expectation of such sales, could harm

the market price of our common stock.

As large numbers of our common stock are sold, it would increase the supply of our common stock,

which would thereby cause a decrease in its price.

sales and issuances of our securities could result in additional dilution of the percentage ownership of our stockholders and could cause

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common stock is subject to restrictions on sales by broker-dealers and penny stock rules, which may be detrimental to investors.

common stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act, which impose certain sales practice requirements on broker-dealers

who sell our common stock to persons other than established customers and “accredited investors” (as defined in Rule 501(a)

of the Securities Act).

For transactions covered by this rule, a broker-dealer must make a special suitability determination for the

purchaser and receive the purchaser’s written consent to the transaction prior to the sale.

This rule adversely affects the ability

of broker-dealers to sell our common stock and holders of our common stock to sell their shares of our common stock.

common stock is subject to Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),

which impose certain sales practice requirements on broker-dealers who sell our common stock to persons other than established customers

and “accredited investors” (as defined in Rule 501(a) of the Securities Act of 1933, as amended (the “Securities Act”)).

For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and receive the

purchaser’s written consent to the transaction prior to the sale.

This rule adversely affects the ability of broker-dealers to

sell our common stock and holders of our common stock to sell their shares of our common stock.

Additionally,

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provisions included in the warrant agreements.

stockholders are subject to significant dilution upon the occurrence of certain events which could result in a decrease in our stock

of the date of this report, we had approximately 87,628,920 shares of our common stock reserved or designated for future issuance upon

the exercise of outstanding warrants.

Further, we may from time to time make an offer to our warrant holders to exchange their outstanding

warrants for shares of our common stock, a fewer number of warrants with more favorable terms, or a combination thereof, subject to applicable

rules and requirements.

warrants issued in the recent private placement contain provisions that, subject to certain exceptions, reset the exercise price of such

warrants if at any time while such warrants are outstanding we sell or issue (or are deemed to sell or issue) shares of our common stock

or rights, warrants, options or other securities or debt convertible, exercisable or exchangeable for shares of our common stock at a

price below the then current exercise price per share for such warrants ($0.36 per share for the warrants issued to investors and $0.18

per share for the warrants issued to the placement agent).

Any future resets to the exercise price of those warrants will have a further

dilutive effect on our existing stockholders and could result in a decrease in our stock price.

As of September 30, 2022 no resets of

warrant exercise prices has occurred.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

purchase agreement related to our 2021 private placement includes customary covenants that we must comply with, or we may suffer potential

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our common stock to decrease.

July 1, 2022, 100 shares of Series A Preferred Stock were issued to five (5) individuals with a Board Designation Right in the Series

A Preferred Stock Designation that entitles the holders of a majority of the Series A Preferred Stock (i) present and voting at a meeting

at which a quorum of the Series A Preferred Stock is present, or (ii) executing a written Series A Preferred Stock Consent in Lieu of

a Meeting, to elect for (4) members of our Board of Directors, and if the number of directors on our Board of Directors is increased

above a total of six (6), then the holders of the series A Preferred Stock shall be entitled to elect a majority of the members of our

Board of Directors.

will continue to incur increased costs as a result of being a reporting company and, given our limited capital resources, such additional

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are a reporting company to the Securities and Exchange Commission, or SEC.

The rules and regulations under the Exchange Act require reporting

companies to provide periodic reports with interactive data files, which require that we engage legal, accounting and auditing professionals,

and eXtensible Business Reporting Language (XBRL) and EDGAR (Electronic Data Gathering, Analysis, and Retrieval) service providers.

engagement of such services can be costly, and we may continue to incur additional financial losses, which may adversely affect our ability

to continue as a going concern.

In addition, the Sarbanes Oxley Act of 2002, as well as a variety of new related and unrelated rules

implemented by the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of

public companies.

For example, as a result of being a reporting company, we are required to file periodic and current reports and other

information with the SEC, and we are adopting and revising policies regarding disclosure controls and procedures, internal control over

financial reporting.

The rules and regulations under the Exchange Act require

reporting companies to provide periodic reports with interactive data files, which require that we engage legal, accounting and

auditing professionals, and XBRL (eXtensible Business Reporting Language) and EDGAR (Electronic Data Gathering, Analysis, and

Retrieval) service providers.

The engagement of such services can be costly, and we may continue to incur additional financial

losses, which may adversely affect our ability to continue as a going concern.

In addition, the Sarbanes Oxley Act of 2002, as well

as a variety of new related and unrelated rules implemented by the SEC, have required changes in corporate governance practices and

generally increased the disclosure requirements of public companies.

For example, as a result of being a reporting company, we are

required to file periodic and current reports and other information with the SEC, and we are adopting and revising policies

regarding disclosure controls and procedures, including internal controls over financial reporting.

additional costs we continue to incur in connection with being a reporting company (expected to be approximately seven to eight hundred

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This will require us to, among other things:

implement additional management

information systems;

further develop our operating,

administrative, legal, financial, and accounting systems and controls;

hire additional personnel;

develop additional levels

of management within our company;

locate additional office

maintain close coordination

among our engineering, operations, legal, finance, sales and marketing, and client service and support organizations.

additional management information systems;

develop our operating, administrative, legal, financial, and accounting systems and controls;

additional personnel;

additional levels of management within our company;

additional office space;

close coordination among our engineering, operations, legal, finance, sales and marketing,

and client service and support organizations.

a result, we may lack the resources to deploy our services on a timely and cost-effective basis.

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Furthermore, if we enter into

negotiations that are not ultimately consummated, those negotiations would result in diversion of management time and significant out-of-pocket

negotiations that are not ultimately consummated, those negotiations will result in diversion of management time and significant out-of-pocket

Even if we are able to complete such acquisitions, we may additionally expend significant amounts of cash or incur substantial

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We cannot predict the effect any expansion may have on our core business.

of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and

of whether we are successful in closing an acquisition, the negotiations could disrupt our ongoing business, distract our management and

employees and increase our expenses.

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including, without limitation, the following:

the difficulty of integrating

acquired products, services or operations;

the potential disruption

of the ongoing businesses and distraction of our management and the management of any acquired companies;

difficulties in maintaining

uniform standards, controls, procedures and policies;

the potential impairment

of relationships with employees, licensees, resellers, clients, and customers as a result of any integration of new management personnel;

the potential inability

or failure to achieve additional sales and enhance our client, customer, licensee, and reseller base through cross-marketing of the

products to new and existing clients, customers, licensees and resellers;

the effect of any government

regulations which we are unfamiliar with that relate to the business acquired;

potential unknown liabilities

associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the

marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful, resulting from

actions of the acquired company prior to our acquisition;

potential expenses under

the labor, environmental and other laws of various jurisdictions.

difficulty of integrating acquired products, services or operations;

potential disruption of the ongoing businesses and distraction of our management and the

management of any acquired companies;

● difficulties

in maintaining uniform standards, controls, procedures and policies;

potential impairment of relationships with employees, licensees, resellers, clients, and

customers as a result of any integration of new management personnel;

potential inability or failure to achieve additional sales and enhance our client, customer,

licensee, and reseller base through cross-marketing of the products to new and existing clients,

customers, licensees and resellers;

effect of any government regulations which we are unfamiliar with that relate to the business

unknown liabilities associated with acquired businesses or product lines, or the need to

spend significant amounts to retool, reposition or modify the marketing and sales of acquired

products or operations, or the defense of any litigation, whether or not successful, resulting

from actions of the acquired company prior to our acquisition;

expenses under the labor, environmental and other laws of various jurisdictions.

business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems

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There were equity distributions to

LLC members of $210,000 in 2021 and $461,000 in 2022.

LLC members of $461,000 in 2022 and zero ($0) in 2023.

do not anticipate paying, in the near future, dividends or distributions on our common stock.

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our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

all of the foregoing reasons and others set forth herein, an investment in our securities involves a high degree of risk.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors