What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-31 compared with 2024-04-15 · 181 added, 91 removed, 711 unchanged (28% of the section changed)

41 unchanged sentences

piracy, unauthorized copying, and other forms of intellectual property infringement.

Risks Relating to our Indebtedness

We have incurred a significant amount of indebtedness, and may incur additional indebtedness in the future, which could impair our liquidity and harm our business, results of operations and financial condition;

If we incur additional debt, it could further increase the risks associated with our leverage and exacerbate the risks described herein;

restrictive covenants in the agreements governing our indebtedness may limit our financial and operational flexibility, and our indebtedness is secured by a first-priority lien against substantially all of our assets;

we may not generate sufficient cash to service our indebtedness;

repayment of our indebtedness is dependent in part on cash flow generated by our subsidiaries;

we may be unable to refinance our indebtedness, and if we do, such terms may not be favorable to us.

Governance Risks and Risks Related to Our Common Stock

Pursuant to notices received by Nasdaq, our common stock may be delisted from the Nasdaq Capital Market, and if our Common Stock is delisted, such event is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing;

provisions of Delaware law and our certificate of incorporation and bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us;

2 unchanged sentences

our policy of not paying cash dividends on our common stock;

lessened disclosure requirements due to our status as an emerging growth company;

lessened disclosure requirements due to our status as an smaller reporting company;

ineffective internal controls could have a material adverse effect on our business, financial conditions, and results of operations;

increased share-based compensation expense due to granted equity awards.

Risks Related to Artificial Intelligence and Machine Learning

Integration of artificial intelligence (“AI”) into our operations could adversely affect our business;

issues in the use of AI or machine learning (“ML”) in our operations may result in reputational harm or liability;

we currently do not incorporate AI or ML into our products, although some of our competitors do, which could adversely affect our business and profitability;

issues relating to the use of AI and/or ML may result in increased regulation and costs to comply with such regulations.

General Risk Factors

5 unchanged sentences

We have incurred significant losses since our inception, and we may continue to experience losses in the future.

The Company incurred net losses of $30.3 million and $85.5 million during the year ended December 31, 2023 (“Fiscal Year 2023”) and the year ended December 31, 2022 (“Fiscal Year 2022”, and collectively with Fiscal Year 2023, “Fiscal Years 2023 and 2022”), respectively.

The Company incurred net losses as disclosed in the accompanying consolidated statements of operations for the periods presented.

Fiscal Years 2024 and 2023 included noncash stock compensation, amortization and impairment charges totaling $3.8 million and $17.3 million, respectively.

17 unchanged sentences

If we fail to achieve and sustain profitability, then we may not be able to achieve our business plan, fund our business or continue as a going concern.

We are experiencing a severe cash shortage and without sufficient additional financing we may not be able to execute our business strategy and may be required to cease operations .

As of December 31, 2024, our cash and cash equivalents amounted to $1.3 million.

Our revenue for the three-month period ended December 31, 2024, was approximately $3.5 million, and we have been reliant upon proceeds from prior financings (in addition to the revenue from our operations) to fund our operations.

If we do not continue to raise capital until we generate sufficient cash flow from operations to fund our operations and cover our working capital deficit, we may be required to discontinue or further substantially modify our business.

We cannot be certain that additional proceeds from any offering or other financings that we may undertake will be available to us when required, if at all.

The failure to raise necessary funds will have a material adverse effect on our business, financial condition, operating results and prospects.

Our auditors have included an explanatory paragraph in their opinion regarding our ability to continue as a going concern.

If we are unable to continue as a going concern, our securities will have little or no value.

WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal year ended December 31, 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the year ended December 31, 2023, indicating that our recurring losses from operations and negative cash flows from operations raises substantial doubt about our ability to continue as a going concern.

WithumSmith+Brown, PC, our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023, has included an explanatory paragraph in their opinion that accompanies our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, indicating that our recurring losses from operations and negative cash flows from operations raises substantial doubt about our ability to continue as a going concern.

If we are unable to obtain profitability or improve our liquidity position, we may not be able to continue as a going concern.

39 unchanged sentences

Failure to adequately identify and adapt to these competitive pricing pressures could negatively impact our business.

We may not be able to sustain our rapid growth, effectively manage our anticipated future growth or implement our business strategies.

We have a limited operating history as a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms and have experienced substantial growth during the periods presented herein due, in large part, to the acquisitions we completed during Fiscal Year 2023 and the year ending December 31, 2021 (“Fiscal Year 2021”).

We may not be able to sustain our growth, effectively manage our anticipated future growth or implement our business strategies.

We have a limited operating history as a leading creator and publisher of content experiences and media solutions across the world’s largest immersive platforms and have experienced growth during certain of the periods presented herein due, in large part, to the acquisitions we completed during Fiscal Year 2023 and Fiscal Year 2021.

However, recent growth rates may not be indicative of our future performance due to our limited operating history and the rapid evolution of our business model.

2 unchanged sentences

This level of significant growth may not be sustainable or achievable at all in the future.

We believe that our continued growth will depend on many factors, including our ability to develop new sources of revenues, diversify monetization methods including our direct to consumer offerings, attract and retain competitive gamers and creators, increase engagement, continue developing innovative technologies, and experiences in response to shifting demand in open world gaming, increase brand awareness, and expand into new markets.

We believe that our future growth will depend on many factors, including our ability to develop new sources of revenues, diversify monetization methods including our direct to consumer offerings, attract and retain competitive gamers and creators, increase engagement, continue developing innovative technologies, and experiences in response to shifting demand in open world gaming, increase brand awareness, and expand into new markets.

We cannot assure you that we will achieve any of the above, and our failure to do so may materially and adversely affect our business and results of operations.

1 unchanged sentence

Many elements of our business are unique, evolving and relatively unproven.

Our business and prospects depend on the continuing development of leading position as a creator and publisher of content experiences and media solutions across the world’s largest immersive platforms.

Our business and prospects depend on the continuing development of a leading position as a creator and publisher of content experiences and media solutions across the world’s largest immersive platforms.

The market for gaming-related content has grown significantly in recent years and continues to rapidly develop, which may present significant challenges.

5 unchanged sentences

If we fail to attract more advertisers and sponsors to our platform, or if advertisers or sponsors are less willing to advertise with or sponsor us, our revenues may be adversely affected.

We generate a growing portion of our revenues from advertising on existing digital platforms and within our owned and operated platforms, which we expect to further develop and expand in the near future as online viewership across platforms continues to expand.

We generate a significant portion of our revenues from advertising on existing digital platforms and within our owned and operated platforms, which we expect to further develop and expand in the near future as online viewership across platforms continues to expand.

Our revenues from advertising and sponsorship partly depend on the continual development of the online advertising industry and advertisers’ willingness to allocate budgets to online advertising in the gaming and content streaming industry.

10 unchanged sentences

The loss of or a substantial reduction in activity by one or more of our largest customers and/or vendors could materially and adversely affect our business, financial condition and results of operations.

For Fiscal Years 2023 and 2022, one customer accounted for 14% and one customer accounted for 8% of revenue, respectively.

For Fiscal Years 2024 and 2023, two customers accounted for 20% and one customer accounted for 14% of revenue, respectively.

At December 31, 2024, three customers accounted for 45% of accounts receivable.

1 unchanged sentence

At December 31, 2024, two vendors accounted for 21% of accounts payable.

At December 31, 2022, one vendor accounted for 10% of accounts payable.

At December 31, 2023, two vendors accounted for 37% of accounts payable.

Our marketing and advertising efforts may fail to resonate with gamers and creators.

Our service offerings are marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with our user community including via email, blogs and other electronic means.

Our service offerings are or may be marketed through a diverse spectrum of advertising and promotional programs such as online and mobile advertising, marketing through websites, event sponsorship and direct communications with our user community including via email, blogs and other electronic means.

An increasing portion of our marketing activity is taking place on social media platforms that are either outside, or not totally within, our direct control.

15 unchanged sentences

Game publishers on our platform, including those who have entered into license agreements with us, may leave us for other gaming platforms which may offer better competition, and terms and conditions than we do.

Furthermore, we may lose our licenses with certain game publishers if we fail to generate the number of gamers and creators to our amateur tournaments and competitions expected by such publishers.

In addition, if popular game publishers cease to license their games to us, or our live streams fail to attract gamers and creators, we may experience a decline in gamer traffic, direct to consumer opportunities and engagement, which may have a material and adverse impact on our results of operations and financial conditions.

Furthermore, we may lose our licenses with certain game publishers if we fail to generate the number of gamers and creators expected by such publishers.

In addition, if popular game publishers cease to license their games to us, or our activities fail to attract gamers and creators, we may experience a decline in gamer traffic, direct to consumer opportunities and engagement, which may have a material and adverse impact on our results of operations and financial conditions.

Platforms on which we operate may modify or restrict our access to their platforms.

If we fail to license multiple additional “hit” games or any of our existing licensed game publishers with which we currently have a license decide to breach the license agreement or choose not to continue with us once the term of the license agreement expires, or if platforms on which we operate modify or restrict our access, the popularity of our experiences and content generated across platforms may decline and the number of our users and creators may decrease, which could materially and adversely affect our results of operations and financial condition.

If we fail to license “hit” games or any of our existing licensed game publishers with which we currently have a license decide to breach the license agreement or choose not to continue with us once the term of the license agreement expires, or if platforms on which we operate modify or restrict our access, the popularity of our experiences and content generated across platforms may decline and the number of our users and creators may decrease, which could materially and adversely affect our results of operations and financial condition.

We have not entered into definitive license agreements with certain game publishers or platforms that we currently have relationships with, and we may never do so.

14 unchanged sentences

The success of our business is driven in part by the commercial success and adequate supply of third-party mass media channels for which we may distribute our content, including Twitch, YouTube and ESL.tv.

Our success also depends on our ability to accurately predict which channels and platforms will be successful with the online gaming community, our ability to develop commercially successful content and distribute via SLG.TV, which is presently available on Twitch, amateur tournaments and competition for these channels and gaming platforms and our ability to effectively manage the transition of our users and creators from one generation or demographic to the next.

Our success also depends on our ability to accurately predict which channels and platforms will be successful with the online gaming community, our ability to develop commercially successful content and distribute such content, and our ability to effectively manage the transition of our users and creators from one generation or demographic to the next.

Additionally, we may enter into certain exclusive licensing arrangements that affect our ability to deliver or market our live and on-demand content on certain channels and platforms.

147 unchanged sentences

Any future growth would add complexity to our organization and require effective coordination across our organization, and an inability to do so would adversely affect our business, financial conditions and results of operations.

We provide access to offerings within our platform that are subscription-based.

We may provide access to offerings within our platform that are subscription-based.

While we intend for these efforts to generate increased recurring revenues from our existing user base, they may cause users to decrease their overall spend on our platform.

Our ability to continue to attract and retain users of our paid subscription services will depend in part on our ability to consistently provide our subscribers with a quality experience.

Our ability to attract and retain users of paid subscription services will depend in part on our ability to consistently provide subscribers with a quality experience.

If our users do not perceive these offerings to be of value, or if we introduce new or adjust existing features or pricing in a manner that is not favorably received by them, we may not be able to attract and retain subscribers or be able to convince users to become subscribers of such additional service offerings, and we may not be able to increase the amount of recurring revenue from our user base.

10 unchanged sentences

the introduction of new experiences on our platform, higher market penetration rates, and competition from a variety of entertainment sources for our users and their time could also cause our growth rates to fluctuate.

For example, while our KPIs have grown sequentially on a quarterly basis for the last several years, there have been months where they have not or have grown at a slower pace, often due to seasonal or other factors.

For example, while our KPIs have grown on a quarterly basis for the last several years, there have been months where they have not or have grown at a slower pace, often due to seasonal or other factors.

Seasonal factors may have been impacted by the COVID-19 pandemic and we expect that seasonality could again cause user activity to decrease, including below historical levels as the impacts of the COVID-19 pandemic moderate.

43 unchanged sentences

Historically, our business has been highly seasonal, with the highest percentage of our revenues occurring in the second half of the fiscal year, with the fourth quarter typically representing our highest revenue quarter each year, when advertising spending is typically strongest due to the holiday seasons, and we expect this trend to continue.

For example, our revenue for the quarters ending September 30, 2023 and December 31, 2023 represented approximately 29% and 38% of our bookings for Fiscal Year 2023, respectively.

We may also experience fluctuations due to factors that may be outside of our control that affect user, developer, or creator engagement with our Platform.

32 unchanged sentences

Furthermore, it generally takes several months after the closing of an acquisition to finalize the purchase price allocation.

Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which would affect our balance sheet and could significantly harm our business.

Acquisitions or other strategic transactions may also result in our recording of significant additional expenses to our results of operations and recording of substantial finite-lived intangible assets on our balance sheet upon closing.

Therefore, it is possible that our valuation of an acquisition may change and result in unanticipated write-offs or charges, impairment of our goodwill, or a material change to the fair value of the assets and liabilities associated with a particular acquisition, any of which would affect our consolidated balance sheet and could significantly harm our business.

Any of these factors may adversely affect our financial condition or results of operations.

We may experience difficulties in integrating the operations of Melon into our business and in realizing the expected benefits of the Melon Acquisition.

The success of the Melon Acquisition will depend in part on our ability to realize the anticipated business opportunities from combining the operations of the Melon Assets with our business in an efficient and effective manner.

The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties, or our ability to achieve the anticipated benefits of the Melon Acquisition, and could harm our financial performance.

If we are unable to successfully or timely integrate the operations of the Melon Assets with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the Melon Acquisition, and our business, results of operations and financial condition could be materially and adversely affected.

The Melon Acquisition will present challenges associated with integrating operations, personnel, and other aspects of the companies and the potential assumption of liabilities that may exist and which may be known or unknown by the Company.

The results of the Company following the Melon Acquisition will depend in part upon the Company’s ability to integrate Melon’s business with the Company’s business in an efficient and effective manner.

The Company’s attempt to integrate Melon’s assets into the Company, two companies that have previously operated independently, may result in significant challenges, and the Company may be unable to accomplish the integration smoothly or successfully.

In particular, the necessity of coordinating geographically dispersed organizations and addressing possible differences in corporate cultures and management philosophies may increase the difficulties of integration.

The integration may require the dedication of significant management resources, which may temporarily distract management’s attention from the day-to-day operations of the businesses of the Company.

In addition, the Company may adjust the way in which Melon or the Company has conducted its operations and utilized its assets, which may require retraining and development of new procedures and methodologies.

The process of integrating operations and making such adjustments after the Melon Acquisition could cause an interruption of, or loss of momentum in, the activities of one or more of Company’s or Melon’s businesses and the loss of key personnel.

Employee uncertainty, lack of focus, or turnover during the integration process may also disrupt the business of the Company.

Any inability of management to integrate the operations of the Company and Melon successfully could have a material adverse effect on the business and financial condition of the combined company.

In addition, the Melon Acquisition will subject the Company to contractual or other obligations and liabilities associated with the Melon Assets, some of which may be unknown.

Although the Company and its legal and financial advisors have conducted due diligence on Melon and its business, there can be no assurance that the Company is aware of all obligations and liabilities of Melon related to the Melon Assets.

These liabilities, and any additional risks and uncertainties related to Melon’s business and to the Melon Acquisition not currently known to the Company or that the Company may currently be aware of, but that prove to be more significant than assessed or estimated by the Company, could negatively impact the business, financial condition, and results of operations of the combined company following consummation of the Melon Acquisition.

We may not be able to successfully integrate our acquisitions and we may incur significant costs to integrate and support the companies we acquire.

152 unchanged sentences

Finally, in addition to those who may claim priority, any of our pending patent and trademark applications may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

Risks Relating to our Indebtedness

We have a significant amount of fixed obligations and indebtedness and we have incurred, and may incur in the future, significant additional debt, that could impair our liquidity and thereby harm our business, results of operations and financial condition.

As of December 31, 2024, we have an aggregate principal amount of indebtedness of approximately $4.7 million, which consists of borrowings under (i) that certain Business Loan and Security Agreement with Agile Capital Funding, LLC, and Agile Lending, LLC (the “Agile Agreement”), (ii) that certain Note Purchase Agreement with a non-employee member of the board of directors of the Company (the “Director Agreement”), (iii) that certain unsecured promissory note issued by the Company to the Founders (as defined at Note 5, “Acquisitions” elsewhere herein) in connection with the remaining Super Biz Second Earn Out Period accrued contingent consideration outstanding and (iv) that certain Financing and Security Agreement with SLR Digital Finance, LLC (the “SLR Agreement”, and collectively with the Agile Agreement and Director Agreement, the “ Loan Agreements ”).

In addition, we have entered into additional debt agreements as described at Note 12 to the consolidated financial statements.

Our ability to pay the fixed and other costs associated with our contractual obligations will depend on our operating performance, cash flow and our ability to secure adequate financing, which will in turn depend on, among other things, the success of our current business strategy, market volatility, weakening or improvement in the U.S.

economy, as well as general economic and political conditions and other factors that are beyond our control.

From time to time and subject to market conditions and any applicable contractual requirements, we may refinance portions of our debt, including our debt maturing in 2025, which, at current interest rates and market conditions, may negatively impact our interest expense or result in higher dilution.

The amount of our fixed obligations, our obligations under our other debt arrangements, and the related need to obtain financing could have a material adverse effect on our business, results of operations and financial condition and could:

require a substantial portion of cash flow from operations for payments of principal and interest on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

limit our ability to access the capital markets to raise capital on favorable terms or to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate or other expenses, or to refinance existing indebtedness;

make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues could cause us to have insufficient cash flows from operations to make our scheduled payments, increasing our vulnerability to downturns and adverse developments;

reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with fewer fixed payment obligations or which are subject to fewer limitations or restrictions;

limit our ability to pay dividends and repurchase shares.

A failure to pay our debt and other fixed cost obligations or a breach of our contractual obligations could result in a variety of adverse consequences, including the exercise of remedies by our creditors.

In such a situation, it is unlikely that we would be able to cure our breach, fulfill our obligations, make required lease or debt payments or otherwise cover our fixed costs, which would have a material adverse effect on our business, results of operations and financial condition.

Despite our current indebtedness levels, we may incur additional indebtedness in the future, which could further increase the risks associated with our leverage and exacerbate the risks described above, especially in the current interest rate environment.

We may be able to incur substantial additional indebtedness in the future, subject to compliance with certain covenants in the Loan Agreements.

While our debt agreements do prohibit us from incurring additional unsecured indebtedness or certain secured indebtedness (subject to certain carve-outs as specified in the underlying agreements), our creditors can waive such prohibitions.

If our creditors agree to waive such prohibitions and such additional indebtedness is incurred in the future, our debt service obligations will increase.

The more leveraged we become, the more we will be exposed to the risks created by our current substantial indebtedness.

To the extent that the terms of our current or future debt agreements would prevent us from incurring additional indebtedness, we may be able to obtain amendments to those agreements that would allow us to incur such additional indebtedness, and such additional indebtedness could be material.

Should we incur additional debt or such other obligations, the risks associated with our substantial debt described herein, including our possible inability to service and meet our debt or other obligations, would increase.

Changing interest rates may have unpredictable effects on markets, may result in heightened market volatility and may detract from our performance to the extent we are exposed to such interest rates and/or volatility.

In periods of rising interest rates, such as the current interest rate environment, to the extent we borrow money subject to a floating interest rate, our operating costs would increase, which could reduce our net income.

For additional information, refer to Note 6, “Debt” elsewhere herein.

Restrictive covenants in our Loan Agreements may limit our financial and operating flexibility, which may adversely affect our business and liquidity.

Furthermore, the Loan Agreements provide our lenders with a first-priority lien against substantially all of our assets which, in the event of a default, would adversely affect our results of operations

The Loan Agreements governing our indebtedness contain certain restrictions, which may have adverse effects on our business, financial condition or results of operations.

Such restrictions include a number of covenants that limit our and our subsidiaries’ ability to, among other things, incur additional indebtedness, materially change our business, convey, sell, lease, transfer or dispose of the business or our property, except under certain circumstances, merge or consolidate with other companies or acquire other companies, create or incur liens, pay any dividends on our common stock, make certain investments and engage in certain other activities.

As a result of these restrictions, we may be limited in how we conduct our business, in our ability to compete effectively or in our ability to implement changes or take advantage of business opportunities-including by making strategic acquisitions, investments or alliances, restructuring our organization or financing capital needs-that would be in our interest.

We may also be unable to raise additional indebtedness or equity financing to operate during general economic or business downturns.

While we were in compliance with our debt covenants as of December 31, 2024, we may not be able to maintain compliance with the covenants in the future.

A failure by us to comply with the covenants or payment requirements specified in the Loan Agreements could result in an event of default under the agreement, which would give the lender the right to declare any and all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.

In addition, the lender would have the right to proceed against the collateral in which we granted a security interest to them, which consists of substantially all our assets.

If the debt under our Loan Agreements were to be accelerated, we will likely not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which would adversely affect our cash flows, business, results of operations and financial condition.

Further, the terms of any new or additional financing may be on terms that are more restrictive or on terms that are less desirable to us.

Any of the foregoing actions could have a material adverse effect on our business, financial condition, results of operations and liquidity.

We have substantial indebtedness and may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy the obligations under our indebtedness, which may not be successful.

Our earnings and cash flow could vary significantly from year to year due to the nature of our industry.

As a result, the amount of debt that we can manage in some periods may not be appropriate for us in other periods.

Additionally, our future cash flow may be insufficient to meet our debt obligations and other commitments at that time.

Any insufficiency could negatively impact our business.

A range of economic, competitive, business and industry factors will affect our future financial performance, and, as a result, our ability to generate cash flow from operations and to pay our debt obligations.

Many of these factors, such as access to capital, economic and financial conditions in our industry and the global economy and initiatives of our competitors, are beyond our control as discussed in this “ Risk Factors ” section.

We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

Payment of interest on, and repayment of principal of, our indebtedness is dependent in part on cash flow generated by our subsidiaries.

Payment of interest on, and repayment of, principal of our indebtedness will be dependent in part upon cash flow generated by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment, or otherwise.

Our subsidiaries may not be able to, or be permitted to, make distributions to enable us to make payments in respect of our indebtedness.

Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.

In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

In addition, any payment of interest, dividends, distributions, loans, or advances by our subsidiaries to us could be subject to restrictions on dividends or repatriation of distributions under applicable local law, monetary transfer restrictions, and foreign currency exchange regulations in the jurisdictions in which the subsidiaries operate or under arrangements with local partners.

Furthermore, the ability of our subsidiaries to make such payments of interest, dividends, distributions, loans, or advances may be contested by taxing authorities in the relevant jurisdictions.

We may be unable to refinance our debt on terms favorable to us or at all, which would negatively impact our business and financial condition.

We are subject to risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest.

While we may refinance all or some of our indebtedness before it matures, there can be no assurance that we will be able to refinance any maturing indebtedness, that such refinancing will be on terms as favorable to us as the terms of the maturing indebtedness or, if the indebtedness cannot be refinanced, that we will be able to otherwise obtain funds by selling assets or raising equity to make required payments on our maturing indebtedness.

Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase.

If we are unable to refinance our indebtedness at or before maturity or otherwise meet our payment obligations, our business and financial condition will be negatively impacted, and we may be in default under our indebtedness.

Any default under our Loan Agreements would permit lenders to foreclose on our assets, which may also result in the acceleration of that indebtedness.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

Governance Risks and Risks Related to our Common Stock

We received a notice from Nasdaq that our common stock may be delisted from trading on the Nasdaq Capital Market if we fail to comply with the continued listing requirements, including the minimum bid price requirement.

A delisting of our common stock is likely to reduce the liquidity of our common stock and may inhibit or preclude our ability to raise additional financing.

1 unchanged sentence

If we fail to maintain compliance with any of those requirements, our common shares could be delisted from Nasdaq.

On October 4, 2022, we received a letter (the “Notice”) from the Listing Qualifications Staff of Nasdaq, indicating that, based upon the closing bid price of our common stock for the prior 30 consecutive business days, were not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for 10 consecutive business days (the “Minimum Bid Price Requirement”) during the 180-day period from October 4, 2022 to April 3, 2023.

On April 4, 2023, we received a letter (the “Extension Notice”) from Nasdaq notifying us that Nasdaq granted the Company a 180-day extension, or until October 2, 2023 to regain compliance with the Minimum Bid Price Requirement.

On September 7, 2023, the Company effected a reverse stock split of the Company’s issued and outstanding shares of common stock, at a ratio of 1-for-20 (the “ Reverse Split ”).

As a result of the Reverse Split, the Company regained compliance with the Minimum Bid Price Requirement.

On September 25, 2023, we received a written notice from Nasdaq informing the Company that it has regained compliance with the Minimum Bid Price Requirement for continued listing on the Nasdaq Capital Market.

On January 2, 2025, we received a letter (the “ Bid Price Letter ”) from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of the Company’s Common Stock, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

On January 3, 2025, the Company received a letter (the “ Annual Meeting Letter ”) from Nasdaq indicating that the Company no longer complies with Listing Rule 5620(a) (the “ Annual Meeting Rule ”) since it did not hold an annual meeting of stockholders within twelve months of the end of the Company’s fiscal year ended December 31, 2023.

The Company intends to monitor the closing bid price of its Common Stock.

To regain compliance with Nasdaq Listing Rule 5550(a)(2), the closing bid price of the Company's Common Stock must be at least $1.00 per share for 10 consecutive business days during the 180-day period from January 2, 2025 to July 1, 2025.

If the Company does not regain compliance with the minimum bid price requirement by July 1, 2025, Nasdaq may grant the Company a second 180-day period to regain compliance.

To qualify for this additional 180-day compliance period, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, other than the minimum bid price requirement.

In addition, the Company would also be required to notify Nasdaq of its intent to cure the minimum bid price deficiency by effecting a reverse stock split, if necessary.

If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company's Common Stock will be subject to delisting.

The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.

To regain compliance with the Annual Meeting Rule, the Company prepared and submitted a plan of compliance (due within 45 calendar days from receipt of the formal notice) to Nasdaq of which we are awaiting a response from Nasdaq.

There is no guaranty that Nasdaq will accept our plan of compliance.

If, for any reason, Nasdaq should delist our common stock from trading on its exchange and we are unable to obtain listing on another national securities exchange or take action to restore our compliance with the Nasdaq continued listing requirements, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our stockholders:

59 unchanged sentences

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.

The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our Board may consider relevant.

If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

4 unchanged sentences

Our issuance of additional shares of preferred stock could adversely affect the market value of our common stock, dilute the voting power of common stockholders and delay or prevent a change of control.

Our board of directors have the authority to cause us to issue, without any further vote or action by the stockholders, up to an additional 9,960,875 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.

Our Board has the authority to cause us to issue, without any further vote or action by the stockholders, up to an additional 9,958,018 shares of preferred stock in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series.

As of March 28, 2025, we had the following shares of Preferred Stock outstanding:

(i) 440 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”);

(ii) 463 shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred”);

(iii) 315 shares of Series A-3 Convertible Preferred Stock, par value $0.001 per share (the “Series A-3 Preferred”);

(iv) 476 shares of Series A-4 Convertible Preferred Stock, par value $0.001 per share (the “Series A-4 Preferred”);

(v) 780 shares of Series A-5 Convertible Preferred Stock, par value $0.001 per share (the “Series A-5 Preferred”), (vi) 4,491 shares of Series AA Convertible Preferred Stock, par value $0.001 per share (the “Series AA Preferred”);

(i) zero shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred”);

(ii) zero shares of Series A-2 Convertible Preferred Stock, par value $0.001 per share (the “Series A-2 Preferred”);

(iii) zero shares of Series A-3 Convertible Preferred Stock, par value $0.001 per share (the “Series A-3 Preferred”);

(iv) zero shares of Series A-4 Convertible Preferred Stock, par value $0.001 per share (the “Series A-4 Preferred”);

(v) zero shares of Series A-5 Convertible Preferred Stock, par value $0.001 per share (the “Series A-5 Preferred”), (vi) 3,699 shares of Series AA Convertible Preferred Stock, par value $0.001 per share (the “Series AA Preferred”);

(vii) zero shares of Series AA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AA-2 Preferred”);

3 unchanged sentences

and (xii) 3,148 shares of Series AAA-2 Convertible Preferred Stock, par value $0.001 per share (the “Series AAA-2 Preferred”);

and, collectively with the Series A Preferred, Series A-2 Preferred, Series A-3 Preferred, Series A-4 Preferred, Series A-5 Preferred, Series AA Preferred, Series AA-2 Preferred, Series AA-3 Preferred, Series AA-4 Preferred, Series AA-5 Preferred, Series AAA Preferred, and Series AAA-2 Preferred (the “Preferred Stock”).

(xiii) 365 shares of Series AAA Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA JR Preferred”);

(xiv) 441 shares of Series AAA-2 Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA-2 JR Preferred”);

(xv) 697 shares of Series AAA-3 Junior Convertible Preferred Stock, par value $.001 per share (the “Series AAA-3 JR Preferred”);

and (xvi) 399 shares of Series AAA-4 Junior Convertible Preferred Stock, par value $0.001 per share (the “Series AAA-4 JR Preferred”, and, collectively with the Series A Preferred, Series A-2 Preferred, Series A-3 Preferred, Series A-4 Preferred, Series A-5 Preferred, Series AA Preferred, Series AA-2 Preferred, Series AA-3 Preferred, Series AA-4 Preferred, Series AA-5 Preferred, Series AAA Preferred, Series AAA-2 Preferred, Series AAA JR Preferred, Series AAA-2 JR Preferred, Series AAA-3 JR Preferred, and Series AAA-4 JR Preferred (the “Preferred Stock”).

The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive.

2 unchanged sentences

The issuance of shares of preferred stock may also have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.

The holders of Series A Preferred Stock are entitled to vote on an as-converted to common stock basis and have rights to approve certain actions.

The holders of Preferred Stock are entitled to vote on an as-converted basis to common stock basis and have rights to approve certain actions.

From November 2022 to December 2024, we issued an aggregate of 41,982 shares of our Preferred Stock to a group of accredited investors (collectively, the “Investors”), pursuant to certain placement agency agreements.

2 unchanged sentences

As a result, the holders of Preferred Stock may in the future have the ability to influence the outcome of certain matters affecting our governance and capitalization.

As of April 1, 2024, there were approximately 2,474 shares of our Series A Preferred, 5,947 shares of our Series AA Preferred, and 13,657 shares of our Series AAA Preferred outstanding, which are convertible without payment of additional consideration, into approximately 11.4 million shares of our common stock, subject to certain ownership limitations.

The conversion of the outstanding shares of our Series A Stock into common stock would be substantially dilutive to existing stockholders.

As of March 28, 2025, there were approximately 16,669 shares of our Preferred Stock outstanding, which are convertible without payment of additional consideration, into approximately 10.0 million shares of our common stock, subject to certain ownership limitations.

The conversion of the outstanding shares of our Preferred Stock into common stock would be substantially dilutive to existing stockholders.

Any dilution or potential dilution may cause our stockholders to sell their shares, which may contribute to a downward movement in the stock price of our common stock.

5 unchanged sentences

Holders of our common stock must bear the risk that any such future offerings we conduct or borrowings we make may adversely affect the level of return they may be able to achieve from an investment in our common stock.

We are an “ emerging growth company, ” and a “ smaller reporting company ” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies will make an investment in us less attractive to investors.

We are a “ smaller reporting company ” and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies will make an investment in us less attractive to investors.

In particular, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.

We are an “emerging growth company” as defined in the JOBS Act.

We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (ii) the date on which we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period, and (iv) the end of the year in which the five-year anniversary of the initial public offering of our common stock occurs in the future, if applicable.

We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, and generally requires in the same report a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting.

Under the JOBS Act, our independent registered public accounting firm will not be engaged to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company.”

In addition, we are also a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act.

In the event that we are still considered a smaller reporting company at such time as we cease being an emerging growth company, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an emerging growth company or a smaller reporting company.

Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

We are a “smaller reporting company” as defined in in Rule 12b-2 under the Exchange Act (“Rules 12b-2”).

Rule 12b-2 defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

had a public float of less than $250 million;

had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available and either had no public float or a public float of less than $700 million.

Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings, and have certain other decreased disclosure obligations in their SEC filings, including, among other things, being required to provide only two years of audited financial statements in annual reports.

To the extent we take advantage of some or all of the reduced reporting requirements applicable to emerging growth companies or smaller reporting companies, an investment in our company may be less attractive to investors.

We have identified a material weakness in our internal controls over financial reporting as of December 31, 2023, related solely to the accounting for the noncash value of the effect of a down round feature that was triggered on preferred stock during the three months ended September 30, 2023.

For a discussion of management’s consideration of the material weakness identified related to our accounting for a non-standard and complex transaction related to the noncash value of the effect of a down round feature that was triggered on our Series AA preferred stock, see Note 12, as well as Part II, Item 9A:

“Controls and Procedures” elsewhere herein.

On March 26, 2024, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”), based upon the recommendation of management, concluded that the Company’s previously filed Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the “Third Quarter 10-Q”), as filed with the SEC on November 14, 2023, and any reports, related earnings releases, investor presentations or similar communications of the Company’s Third Quarter 10-Q should no longer be relied upon, as described below.

The determination resulted from an error made in the Company's unaudited consolidated financial statements for the three and nine months ended September 30, 2023, as previously filed in the Third Quarter 10-Q, arising from the exclusion of the calculated noncash value of the effect of the down round feature triggered in August of 2023 on the Company’s Series AA Convertible Preferred Stock, which should have been recorded as a noncash charge directly to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share.

In connection with the Company’s year-end 2023 closing procedures, management reassessed the guidance set forth in ASC 260, “Earnings Per Share” and determined that the value of the effect of a down round feature that is triggered on preferred stock should be recognized as a noncash charge to accumulated deficit and a noncash reduction to income available to common stockholders in the computation of earnings per share in the period that the down round feature is triggered.

(i) management noted an error affecting additional paid in capital and accumulated deficit, with no impact on total equity, and a noncash error with respect to the computation of loss per share as reported in the Third Quarter 10-Q; and (ii) in connection with the Company’s 2023 year-end closing procedures, on March 26, 2024, due to the material error to loss per share originally reported in the Third Quarter 10-Q, the Company’s management and the Audit Committee determined that the Company's Third Quarter 10-Q should be restated to reflect the modifications described above.

None of the above changes had any impact on total assets, total liabilities, total equity, revenues, cost of revenues, operating expense, net loss, or cash flows as reported for the three and nine months ended September 30, 2023 in the Company’s Third Quarter 10-Q.

No financial statements or disclosures prior to the financial statements for the quarterly periods ended September 30, 2023 were affected by the issue described above.

The Company has not amended its previously filed Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023.

The financial information that has been previously filed or otherwise reported for the quarterly period ended September 30, 2023 is superseded by the information in this Annual Report (refer to Note 12), and the financial statements and related financial information for the quarterly period ended September 30, 2023 contained in such previously filed report should no longer be relied upon.

The Company’s management concluded that, in light of the error described above, a material weakness existed in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective for the applicable quarterly period.

The Company’s remediation plan with respect to such material weakness is described below under Part II, Item 9A:

“Controls and Procedures.”

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud, and a material weakness could result in us being unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors losing confidence in our financial reporting, our securities price declining or us facing litigation as a result of the foregoing.

We have taken steps to remediate the material weakness identified, including a review of the accounting practices for non-standard and complex transactions in consultation with accounting and legal experts.

These remediation measures may be time consuming and costly, and we cannot provide assurance that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

Limitations on Effectiveness of Controls and Procedures.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud.

Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met.

The design of a control system must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

“Smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings;

are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting;

and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.

To the extent we take advantage of some or all of the reduced reporting requirements applicable to smaller reporting companies, an investment in our company may be less attractive to investors.

Ineffective internal controls could have a material adverse effect on our business, financial conditions, and results of operations .

Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, failure or interruption of information technology systems, the circumvention or overriding of controls, or fraud.

Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.

If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC could be adversely affected.

This could cause our financial reporting to be unreliable and potentially result in a restatement of our financial statements, which in turn could lead to a loss of investor confidence and a decline in the trading price of our common stock, and could subject us to investigation or sanctions by the SEC.

Any such consequence or other negative effect could have a material adverse effect on our business, financial condition, and results of operations.

We have granted, and may continue to grant, share incentive awards, which may result in increased share-based compensation expenses.

12 unchanged sentences

Although we believe the assumptions we used in testing for impairment are reasonable, significant changes in any one of our assumptions could produce a significantly different result.

Risks Related to Artificial Intelligence and Machine Learning

Integration of artificial intelligence into our operations could result in reputational or competitive harm, legal liability, and other adverse effects on our business.

We have integrated, and plan to further integrate, AI in our operations.

Such integration and use of AI may become more important in our operations over time.

These AI-related initiatives, whether successful or not, could cause us to incur substantial costs and could result in delays in our product and service offerings.

Our competitors or other third parties may incorporate AI into their products or operations more quickly or more successfully than we do, which could impair our ability to compete effectively.

Additionally, AI algorithms may be flawed and datasets underlying AI algorithms may be insufficient or contain biased information.

If the AI tools we use in our operations produce analyses or recommendations that are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be adversely affected.

Other companies have experienced cybersecurity incidents that implicate confidential and proprietary company data and/or the personal data of end users of AI applications integrated into their product offerings or used in their operations.

If we were to experience a cybersecurity incident related to our use of AI applications in our operations, our business and results of operations could be adversely affected.

AI also presents various emerging legal, regulatory and ethical issues, and the use of AI applications in our operations could require us to expend significant resources in developing, testing and maintaining our product and service offerings and may cause us to experience brand, reputational, or competitive harm, or incur legal liability.

On October 30, 2023, the Biden administration issued an Executive Order to, among other things, establish extensive new standards for AI safety and security.

Other jurisdictions may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging.

These restrictions may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our business practices, or prevent or limit our use of AI.

Issues in the use of AI or machine learning in our operations may result in reputational harm or liability.

Our employees and personnel may use AI, including generative AI, and machine learning (“ML”, and collectively with AI, “AI/ML” technologies) technologies to perform their work.

AI/ML is a potentially growing element of our business.

The development and use of AI/ML present various privacy and security risks that may impact our business.

AI/ML technologies are subject to privacy and data security laws, as well as increasing regulation and scrutiny.

Several jurisdictions around the globe, including Europe and certain U.S.

states, have proposed enacted, or are considering laws governing the development and use of AI/ML, such as the EU’s AI Act.

We expect other jurisdictions will adopt similar laws.

AI/ML models such as those used in our employees and personnel’s performance of their work may create flawed, incomplete, or inaccurate outputs, some of which may appear correct.

This may happen if the inputs that the model relied on were inaccurate, incomplete or flawed (including if a bad actor “poisons” the model with bad inputs or logic), or if the logic of the model is flawed (a so-called “hallucination”).

We or our customers may also use AI/ML outputs to make certain decisions.

Due to these potential inaccuracies or flaws, the model could be biased and could lead us or our customers to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits or decisions that are otherwise harmful.

If such AI-based outputs are deemed to be biased or otherwise harmful, we could face adverse consequences, including exposure to reputational and competitive harm, customer loss, and legal liability.

Additionally, any sensitive information (including confidential, competitive, proprietary, or personal data) that we input into our own or third-party generative AI/ML models or platforms could be leaked or disclosed to others.

Where AI/ML models ingest personal data or other sensitive information and make connections using such data, those technologies may reveal other personal or sensitive information generated by the model.

Certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making in ways that may be incompatible with our use of AI/ML.

These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML models, or prevent or limit our use of AI/ML technologies.

For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws.

If we cannot develop or use AI/ML or such activities are restricted, our business may be less efficient, or we may be at a competitive disadvantage.

The use of AI/ML to assist us or our customers in making certain decisions may also be regulated by certain privacy laws.

For additional information on risks that privacy and data protection obligations could pose to our business, see the Risk Factor titled “ The laws and regulations concerning data privacy are continually evolving.

Failure to comply with these laws and regulations could harm our business.

We operate in an intensely competitive industry, and our competitors are developing products and solutions that incorporate AI and ML.

We currently do not incorporate AI/ML into our products, which could adversely affect our business and profitability.

Our competitors may be larger, more diversified, better funded, and have access to more advanced technology, including AI and ML.

These competitive advantages may enable our competition to innovate their products and solutions faster or better than we can, or to provide increased competition on quality and price, which could adversely affect our business and profitability.

Burgeoning interest in AI/ML may increase competition and disrupt the Company’s business model.

AI/ML may lower barriers to entry in our industry and the Company may be unable to effectively compete with the products or services offered by new competitors.

Changes to the products and services we offer related to AI and ML may affect customer expectations, requirements, or tastes in ways that the Company cannot adequately anticipate or adapt to, causing its business to lose revenues.

General Risk Factors

23 unchanged sentences

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