−Removed: In the course of conducting our business operations, we are exposed to a variety of risks, some of which are inherent in our industry and others of which are more specific to our own businesses.
−Removed: The risk factors summarized below could materially harm our business, operating results and/or financial condition, impair our future prospects and/or cause the price of our common stock to decline.
−Removed: These risks are discussed more fully following this summary.
−Removed: Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, the following:
−Removed: ● We have a limited operating history, which makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment;
−Removed: ● Our revenue is tied to the effectiveness and performance of our responsive acquisition marketing platform, or RAMP;
−Removed: ● A meaningful portion of our revenue is attributable to our agreements with Google, and therefore is subject to their practices;
−Removed: ● We rely on large-scale acquisition marketing channels, such as Google, Facebook and Taboola, as well as our network partners, for a significant portion of our consumer internet traffic;
−Removed: ● Efforts designed to drive visitors to our various brands and businesses or those of our advertisers may not be successful or cost-effective;
−Removed: ● We rely on third parties for our marketing efforts;
−Removed: if the pricing, terms, operations or policies of these third parties change we may not be able to maintain the effectiveness of such efforts;
−Removed: ● If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of our securities may decline.
−Removed: ● A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future.
−Removed: Resales of the shares of Common Stock included in the Merger Consideration could depress the market price of our Common Stock.
−Removed: ● We have entered into, and may in the future enter into, credit facilities which may contain operating and financial covenants that restrict our business and financing activities;
−Removed: ● We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs, which may in turn impair our growth;
−Removed: ● Our tax liabilities may be greater than anticipated;
−Removed: ● The market for programmatic advertising is extremely competitive, and we may not be able to compete successfully with our current or future competitors;
−Removed: ● We have identified material weaknesses in our internal control over financial reporting.
−Removed: If we are unable to remediate the material weaknesses, or if other material weaknesses are identified, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports as a public company in a timely manner.
+Added: Investing in our Class A common stock involves a high degree of risk.
+Added: You should consider carefully the risks and uncertainties described below, together with all of the other information contained in this Annual Report on Form 10-K, including the consolidated financial statements and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, before making investment decisions related to our Class A common stock.
+Added: If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
+Added: In that event, the market price of our Class A common stock could decline and you could lose part or all of your investment.
Risks Related to Our Business Strategy and Industry Generally
We have a limited operating history, which makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment.
−Removed: S1 Holdco was incorporated in 2013 and, as a result, have only a limited operating history upon which our business and prospects may be evaluated.
+Added: S1 Holdco was formed in 2013 and, as a result, has only a limited operating history upon which our business and prospects may be evaluated.
Although we have experienced substantial revenue growth in our limited operating history, we may not be able to sustain this rate of growth or maintain our current revenue levels.
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• distinguish ourselves from competitors;
−Removed: ● develop, offer, maintain and continually improve a competitive customer acquisition marketing platform that meet the evolving needs of our consumers and platform customers;
+Added: • develop, offer, maintain and continually improve a competitive customer acquisition marketing platform that meets the evolving needs of our consumers and platform customers;
• scale our business efficiently to keep pace with demand for services such as RAMP and other digital media and advertising technology offerings;
−Removed: ● create new revenue opportunities through acquiring new business and successfully integrate and meaningfully grow those businesses;
+Added: • create new revenue opportunities through acquiring new businesses and successfully integrate and meaningfully grow those businesses;
• respond to evolving industry standards and the enactment of government regulations that impact our business, particularly in the areas of data collection and consumer privacy;
• prevent or mitigate failures or breaches of data security and our technology infrastructure;
−Removed: ● expand our businesses internationally; and
+Added: • expand our businesses internationally;
• hire and retain qualified and motivated employees.
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If we are unable to do so, our business may suffer, our revenue and operating results may decline and we may not be able to achieve further growth or sustain profitability.
−Removed: Our revenue is tied to the effectiveness and performance of our responsive acquisition marketing platform (RAMP).
+Added: Our revenue is tied to the effectiveness and performance of our Responsive Acquisition Marketing Platform.
If RAMP does not acquire users with the relevant commercial intent to our websites via acquisition marketing channels, we may not be able to profitability monetize users.
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In exchange for making our search traffic available to Google, we receive a share of the revenue generated by the paid listings supplied to us, as well as other search related services.
+Added: For the period January 27, 2022 through December 31, 2022, 68% of our total revenue was attributable to our agreements with Google.
The amount of revenue we receive from Google depends on a number of factors outside of our control, including the amount Google charges third parties for the display or delivery of advertisements, the efficiency of Google’s system in attracting advertisers and serving up paid listings in response to search queries and parameters established by Google regarding the time period for and scope of chargebacks or credits sought by advertisers on the basis of fraudulent and/or low quality clicks, clawbacks for bad traffic brought by our network partners, and placement of paid listings displayed in response to search queries that are not contextually relevant to the applicable search query.
Changes to the amount Google charges advertisers, the efficiency of Google’s paid listings network, Google’s judgment about the relative attractiveness to advertisers of clicks on paid listings from our websites or to the parameters applicable to the display of paid listings generally could result in a decrease in the amount of revenue we receive from Google, which would adversely affect our business, financial condition and results of operations.
−Removed: Such changes could by driven by a number of factors, including general market conditions, competition or policy and operating decisions made by Google.
+Added: Such changes could be driven by a number of factors, including general market conditions, competition or policy and operating decisions made by Google.
Our agreements with Google also require that we comply with certain guidelines for the use of Google brands and services, which govern whether our platform may access Google services or be distributed through its Chrome Web Store, and the manner in which Google’s paid listings are displayed within search results across various third party platforms and products (including our websites).
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For example, unauthorized parties could steal our users’ names, email addresses, physical addresses, phone numbers and other information that we collect when providing referrals.
−Removed: While we use encryption and authentication technology
−Removed: licensed from third parties designed to effect secure transmission of such information, we cannot guarantee the security of the transfer and storage of the personal information we collect from advertisers.
−Removed: Like all information and technology systems, our websites and information systems may be subject to computer viruses, break-ins, phishing and/or impersonation attacks, attempts to overload our servers with denial-of-service or other hacking attacks, ransomware and similar incidents or disruptions from unauthorized use of our computer systems, as well as unintentional incidents causing data leakage, any of which could lead to interruptions, delays or website shutdowns, or could cause loss of critical data or the unauthorized disclosure, access, acquisition, alteration or use of personal or other confidential information.
−Removed: Although we have a chief technology officer who coordinates our cybersecurity measures, policies and procedures, and our chief technology officer regularly reports to our board of directors regarding these matters, we cannot be certain that our efforts will be able to prevent breaches of the security of our information systems and technology.
−Removed: If we experience compromises to the security of our information and technology
−Removed: infrastructure that result in websites performance or availability problems, the complete shutdown of our websites or the loss or unauthorized disclosure, access, acquisition, alteration or use of confidential information, consumers and advertisers may lose trust and confidence in us, and consumers may decrease the use of our websites and software products or stop using our websites and software products entirely.
+Added: While we use encryption and authentication technology licensed from third parties designed to effect secure transmission of such information, we cannot guarantee the security of the transfer and storage of the personal information we collect from advertisers.
+Added: Our websites and information systems are vulnerable to computer viruses, break-ins, phishing and/or impersonation attacks, attempts to overload our servers with denial-of-service or other hacking attacks, ransomware and similar incidents or disruptions from unauthorized use of our computer systems, as well as unintentional incidents causing data leakage, any of which could lead to interruptions, delays or website shutdowns, or could cause loss of critical data or the unauthorized disclosure, access, acquisition, alteration or use of personal or other confidential information.
+Added: The security measures we use internally, which are designed to detect unauthorized activity and prevent or minimize security breaches, may not function as expected or may not be sufficient to protect against certain attacks.
+Added: Additionally, we may face delays in identifying or responding to security breaches or other security incidents.
Further, outside parties may attempt to fraudulently induce employees, consumers or advertisers to disclose sensitive information in order to gain access to our information or consumers’ or advertisers’ information.
−Removed: Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until launched against a target, and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate preventative measures.
Any or all of the issues above could adversely affect our ability to attract new users and increase engagement by existing users, cause existing users to curtail or stop use of our software products and/or visit our portfolio of websites, cause existing advertisers to stop using our platform and cancel their contracts or subject us to governmental or third-party lawsuits, investigations, regulatory fines or other actions or liability.
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With respect to search results in particular, even when search engines announce the details of their methodologies, their parameters may change from time to time, be poorly defined or be inconsistently interpreted.
−Removed: We rely on third parties for our marketing efforts; if the pricing, terms, operations or policies of these third parties change we may not be able to maintain the effectiveness of such efforts.
−Removed: Our ability to market our brands and businesses on any given property or channel is subject to the policies of the relevant third party seller, publisher, platform (including search engines and social media platforms with high levels of traffic and numbers of users or subscribers) or marketing affiliate.
−Removed: As a result, we cannot assure you that these parties will not limit or prohibit us from purchasing advertising (including the purchase of advertising with preferential placement or for certain of our products and services) and/or using one or more current or prospective marketing channels in the future.
−Removed: If a significant marketing channel took any such adverse or limiting action for a significant period of time and/or on a recurring basis, our business, financial condition and results of operations could be adversely affected.
−Removed: If we fail to comply with the policies of third party sellers, publishers, platforms and/or marketing affiliates, our advertisements could be removed without notice and/or our accounts could be suspended or terminated, any of which could adversely affect our business, financial condition and results of operations.
+Added: If we are unable to develop new and enhanced subscription solutions, or if we are unable to continually improve the performance, features, and reliability of our existing subscription solutions, our business and operating results could be adversely affected.
+Added: Our continued and future success depends on our ability to effectively respond with new and improved products that address evolving threats to consumers, as well as competitive technological developments and industry changes, by developing or introducing new and enhanced subscription solutions on a timely basis.
+Added: We have in the past incurred, and will continue to incur, significant research and development expenses as we focus on organic growth through internal innovation and development.
+Added: We believe that we also must continue to dedicate time and resources to our research and development efforts to decrease our reliance on third parties, including parties from which we license some of our subscription solutions.
+Added: If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.
+Added: Additionally, we must regularly address the challenges of dynamic and accelerating market trends and competitive developments, including shifting consumer preferences and managing multiple marketing channels.
+Added: Customers may require features and capabilities that our current solutions do not have.
+Added: Our failure to develop new solutions and improve our existing solutions to satisfy these customer preferences and effectively compete with other market offerings in a timely and cost-effective manner may harm our ability to retain our customers and attract new customers.
+Added: A loss of customers for our subscription solutions would adversely impact our business and operating results.
+Added: The development and introduction of new subscription solutions involve a significant commitment of time and resources, and are subject to a number of risks and challenges, including, but not limited to:
+Added: • Lengthy development cycles;
+Added: • Continually evolving industry and regulatory standards and technological developments by our competitors;
+Added: • Rapidly changing customer preferences;
+Added: • Evolving platforms, operating systems, and hardware products, such as the proliferation and rapid improvements of mobile devices;
+Added: • Product and service interoperability challenges with customer’s multi-device technology needs and third-party vendors;
+Added: • The integration of products or solutions from newly acquired offerings;
+Added: • Entering into new or unproven markets and product verticals;
+Added: • Executing against new product, service and marketing strategies.
+Added: In addition, third parties, including operating systems, mobile applications and Internet browser companies, may take steps to further limit the interoperability of our solutions across our customers' devices with their own products and services, in some cases to promote their own offerings.
+Added: This could delay the development of our solutions or our solutions may be unable to operate effectively.
+Added: This could also result in decreased demand for our subscription solutions and harm our reputation in a competitive marketplace, any of which would adversely affect our business, financial condition, results of operations, and cash flows.
+Added: If we are not successful in managing these risks and challenges, or if our new or improved subscription solutions are not technologically competitive or do not achieve market acceptance, our business and operating results could be adversely affected.
+Added: Our marketing efforts may not be successful.
We currently rely on performance marketing channels that must deliver against certain return on investment with respect to metrics that are selected by our advertisers and are subject to change at any time.
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If our advertisers do not perceive our metrics to be accurate, or if we discover material inaccuracies in our metrics, it could adversely affect our online marketing efforts and business.
−Removed: Our failure to respond successfully to rapid and frequent changes in the operating and pricing dynamics of search engine marketing efforts, as well as changing policies and guidelines applicable to keyword advertising (which may be unilaterally updated by search engines without advance notice), could adversely affect our search engine marketing efforts.
−Removed: Specifically, such changes could adversely affect paid listings (both their placement and pricing), as well as the ranking of links to websites offering our products and services within search results, any or all of which could increase our marketing costs (particularly if free traffic is replaced with paid traffic) and adversely affect the effectiveness of our digital marketing efforts overall.
−Removed: If the third parties we currently employ for our marketing efforts are unable to renew existing (and/or enter into new) arrangements with us, sales and marketing costs as a percentage of revenue would increase over the long-term, which could adversely affect our business, financial condition and results of operations.
−Removed: In addition, the quality and convertibility of traffic and leads generated through third party arrangements are dependent on many factors, most of which are outside of our control.
−Removed: If the quality and/or convertibility of traffic and leads do not meet the expectations of the brands and advertisers who utilize our various products and services or other paid listings providers, our business, financial condition and results of operations could be adversely affected.
−Removed: We have entered into, and may in the future enter into, credit facilities which may contain operating and financial covenants that restrict our business and financing activities.
+Added: We have entered into, and may in the future enter into, credit facilities which contain operating and financial covenants that restrict our business and financing activities.
We have entered into, and may in the future enter into, credit facilities which contain restrictions that limit our flexibility in operating our business.
−Removed: Our credit facility contains, and any future credit facility may contain, various covenants that limit our ability to engage in specified types of transactions.
+Added: Our credit facilities contain various covenants that limit our ability to engage in specified types of transactions.
Subject to limited exceptions, these covenants limit our ability to, among other things:
4 unchanged sentences
• make specified investments;
−Removed: ● engage in transactions with our affiliates; and
+Added: • engage in transactions with our affiliates;
• make payments in respect of subordinated debt.
Our obligations under our credit facilities are collateralized by a pledge of substantially all of our assets, including accounts receivable, deposit accounts, intellectual property, and investment property and equipment.
−Removed: The covenants in our credit facilities may limit our ability to take actions and, in the event that we breach one or more covenants, our lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate the commitment to extend further credit and foreclose on the collateral granted to them to collateralize such indebtedness, which includes our intellectual property.
+Added: The covenants in our credit facilities may limit our ability to take actions and, in the event that we breach one or more covenants (including the timely delivery of financial statements), our lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate the commitment to extend further credit and foreclose on the collateral granted to them to collateralize such indebtedness, which includes our intellectual property.
In addition, if we fail to meet the required covenants, we will not have access to further draw-downs under our credit facilities.
+Added: Our ability to continue as a going concern is dependent upon our ability to comply with, or obtain a waiver or modification of, certain of our debt covenants from our lenders.
+Added: Our Credit and Guaranty Agreement, dated as of January 27, 2022 (the "Credit Agreement"), among S1 Holdco, Orchid Merger Sub II, LLC, the other guarantors and each lender from time to time party thereto and Bank of America, N.A.
+Added: ("BofA"), as the administrative agent, contains affirmative and negative covenants which, among other things, require us to timely deliver audited financial statements for the fiscal year ended December 31, 2022.
+Added: On June 1, 2023, we had not delivered the audited financial statements for the fiscal year ended December 31, 2022 to BofA as required by the Credit Agreement.
+Added: The failure to timely deliver the audited financial statements is an event of default under the Credit Agreement and provides BofA the ability to immediately call the outstanding principal balances of the Term Loan and Revolving Facility of $430,000, as of the date of this filing, at the request of, or with the consent of, the required majority of lenders until such time that the audited financial statements are delivered to BofA.
+Added: We do not have sufficient liquidity to settle the outstanding principal balances should they be called, nor has the Company identified sufficient alternative sources of capital.
+Added: As a result, this matter raises substantial doubt about our ability to continue as a going concern.
+Added: Upon delivery of the audited financial statements by us, the event of default will be remediated and, once remediated, BofA would no longer have the ability to call the outstanding principal balances of the Term Loan and Revolving Facility.
+Added: However, there can be no assurance that we will be able to deliver the audited financial statements for the fiscal year ended December 31, 2022 before BofA decides to immediately call the outstanding principal balances, or that we will be able to secure a waiver or forbearance in the future to prevent such an acceleration, which would raise substantial doubt about our ability to continue as a going concern.
We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs, which may in turn impair our growth.
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In addition, in the absence of sufficient cash flows from operations, we might be unable to meet our obligations under our credit facility, and we may therefore be at risk of default thereunder.
−Removed: If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
+Added: If we raise additional funds through future issuances
+Added: of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
If we are unable to secure additional funding on favorable terms, or at all, when we require it, our ability to continue to grow our business to react to market conditions could be impaired and our business may be harmed.
−Removed: Our tax liabilities may be greater than anticipated.
−Removed: tax laws applicable to our business activities are subject to interpretation and are changing.
−Removed: We are subject to audit by the IRS and by taxing authorities of the state, local and foreign jurisdictions in which we operate.
−Removed: Our tax obligations are based in part on our corporate operating structure, including the manner in which we develop, value, and use our intellectual property,
−Removed: the jurisdictions in which we operate, how tax authorities assess revenue-based taxes such as sales and use taxes, the scope of our international operations and the value we ascribe to our intercompany transactions.
−Removed: Taxing authorities may challenge, and have challenged, our tax positions and methodologies for valuing developed technology or intercompany arrangements, as well as our positions regarding the collection of sales and use taxes and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes.
−Removed: Any adverse outcomes of such challenges to our tax positions could result in additional taxes for prior periods, interest and penalties, as well as higher future taxes.
−Removed: In addition, our future tax expense could increase as a result of changes in tax laws, regulations or accounting principles, or as a result of earning income in jurisdictions that have higher tax rates.
−Removed: An increase in our tax expense could have a negative effect on our financial position and results of operations.
−Removed: Moreover, the determination of our provision for income taxes and other tax liabilities requires significant estimates and judgment by management, and the tax treatment of certain transactions is uncertain.
−Removed: Although we believe we will make reasonable estimates and judgments, the ultimate outcome of any particular issue may differ from the amounts previously recorded in our consolidated financial statements and any such occurrence could materially affect our financial position and results of operations.
−Removed: We identified material weaknesses in our internal control over financial reporting.
−Removed: If we are unable to remediate the material weaknesses, or if other material weaknesses are identified, we may not be able to report our financial results accurately, prevent misstatements due to fraud or file our periodic reports as a public company in a timely manner.
−Removed: We have identified material weaknesses in our internal control over financial reporting.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
−Removed: The material weaknesses identified for S1 Holdco and Protected are as follows:
−Removed: ● We did not design and maintain an effective control environment commensurate with our financial reporting requirements.
−Removed: Specifically, we lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately.
−Removed: Additionally, the limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.
−Removed: ● We did not design and maintain effective controls in response to the risks of material misstatement.
−Removed: Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.
−Removed: These material weaknesses contributed to the following additional material weaknesses:
−Removed: ● We did not design and maintain effective controls to timely analyze and record the financial statement effects from acquisitions.
−Removed: Specifically, we did not design and maintain effective controls over the (i) application of U.S.
−Removed: GAAP to such transactions, (ii) review of the inputs and assumptions used in the discounted cash flow analysis to value acquired intangible assets at an appropriate level of precision, (iii) the tax impacts of acquisitions to the consolidated financial statements, and (iv) conforming of U.S.
−Removed: GAAP and accounting policies of acquired entities to that of the Company.
−Removed: In addition, we did not design and maintain effective controls relating to the oversight and ongoing recording of the financial statement results of the acquired businesses.
−Removed: ● We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over (i) the preparation and review of business performance reviews, account reconciliations and journal entries, and (ii) maintaining appropriate segregation of duties.
−Removed: Additionally, we did not design and maintain controls over the classification and presentation of accounts and disclosures in the consolidated financial statements.
−Removed: ● We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements.
−Removed: Specifically, we did not design and maintain:
−Removed: (i) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;
−Removed: (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications,
−Removed: programs, and data to appropriate Company personnel;
−Removed: (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored, and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements.
−Removed: These IT deficiencies did not result in a material misstatement to the consolidated financial statements;
−Removed: however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.
−Removed: Accordingly, we have determined these IT deficiencies in the aggregate constitute a material weakness.
−Removed: These material weaknesses resulted in immaterial misstatements to substantially all of the S1 Holdco, LLC accounts, which were recorded prior to the issuance of the consolidated financial statements as of December 31, 2021, 2020, 2019 and 2018 and for the years then ended and as of March 31, 2021 and 2020 and for three-months periods then ended, as of June 30, 2021 and 2020 and for the six months periods then ended, as of September 30, 2021 and 2020 and for the nine months periods then ended.
−Removed: Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
−Removed: Trebia identified material weaknesses in internal controls related to the accounting for complex financial instruments.
−Removed: This material weakness resulted in a material misstatement of the Trebia Warrant liabilities, change in the fair value of the Trebia Warrant liabilities, Forward Purchase Agreement liabilities, change in the fair value of the Forward Purchase Agreement liabilities, classification of Redeemable Shares of Class A common stock issued in connection with Trebia's initial public offering, additional paid-in-capital, accumulated deficit, Earnings Per Share, and related financial disclosures as of December 31, 2020 and for the period from February 11, 2020 (inception) through December 31, 2020, as of September 30, 2020 and for three month period ended September 30, 2020 and for the period from February 11, 2020 (inception) through September 30, 2020, as of June 30, 2020 and for three month period ended June 30, 2020 and for the period from February 11, 2020 (inception) through June 30, 2020, as of March 31, 2021 and for three month period ended March 31, 2021.
−Removed: Our remediation plan consists primarily of the following:
−Removed: ● Hiring additional senior level accounting personnel to bolster our financial reporting and technical accounting capabilities.
−Removed: ● Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing controls over segregation of duties.
−Removed: ● Engaging a third party to assist in identifying risks of material misstatement and designing and implementing controls to address the identified risks of material misstatement.
−Removed: ● Designing and implementing controls related to accounting for acquisitions and other technical accounting and financial reporting matters, including controls over the preparation and review of accounting memoranda addressing these matters, valuations and key assumptions utilized in the valuations, tax impacts, and ongoing recording of the financial statement results of the acquired businesses.
−Removed: ● Designing and implementing formal accounting policies, procedures and controls supporting our period-end financial reporting process, including controls over the preparation and review of account reconciliations and journal entries, business performance reviews, foreign exchange gains/losses for intercompany transactions, and classification and presentation of accounts and disclosures.
−Removed: ● Designing and implementing controls related to accounting for complex financial instruments.
−Removed: ● Designing and implementing IT general controls, including controls over change management, the review and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing.
−Removed: We have begun to hire additional senior and staff accounting personnel, engaged third party resources to assist us with identifying risks of material misstatement and designing and implementing internal controls to address the identified risks of material misstatement, implemented an enhanced enterprise resource planning software for automation and enforcing segregation of duties across the organization, and engaged third party experts as necessary to assist with technical accounting and valuations associated with business combinations related to potential future acquisitions.
−Removed: The material weaknesses will not be considered remediated until management completes the design and implementation of the processes and controls described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.
−Removed: We are working to remediate the material weaknesses as efficiently and effectively as possible.
−Removed: At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan;
−Removed: however, these remediation measures will be time consuming, will result in incurring significant costs, and will place significant demands on our financial and operational resources.
−Removed: While we believe that these efforts will improve our internal control over financial reporting, the implementation of these procedures is ongoing and will require testing of the design and operating effectiveness of internal control over financial reporting over a sustained period of financial reporting cycles.
−Removed: We cannot be certain that these measures will successfully remediate the material weaknesses or that other material weaknesses will not be discovered in the future.
−Removed: If our efforts are not successful or other material weaknesses are identified in the future, we may be unable to report our financial results accurately on a timely basis or prevent and detect fraud or errors that may be material, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence or delisting and cause the market price of our shares to decline.
Operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems, may adversely affect our business, financial condition and operating results.
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Our failure to prevent outages or security breaches resulting from API use could result in government enforcement actions against us, claims for damages by consumers and other affected individuals, costs associated with investigation and remediation damage to our reputation and loss of goodwill, any of which could harm our business, financial condition and operating results.
−Removed: The market for programmatic advertising is extremely competitive, and we may not be able to compete successfully with our current or future competitors.
+Added: The market for paid traffic is extremely competitive, and we may not be able to compete successfully with our current or future competitors.
Our digital advertising business operates in a highly competitive and rapidly changing industry.
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We operate in intensely competitive markets that experience frequent technological developments, changes in industry and regulatory standards, changes in customer requirements and preferences, and frequent new product introductions and improvements by our competitors.
+Added: Our future success also depends on our ability to effectively respond to evolving threats to consumers, as well as competitive technological developments and industry changes, by developing or introducing new and enhanced solutions on a timely basis.
We must constantly innovate and make investment decisions regarding offerings and technology to meet client demand and evolving industry standards.
2 unchanged sentences
To compete successfully, we must maintain an innovative research and development effort to develop new solutions and enhance our existing solutions, effectively adapt to changes in the technology or product rights held by our competitors, appropriately respond to competitive strategies, and effectively adapt to technological changes and changes in the ways that our information is accessed, used, and stored by our customers.
+Added: We have in the past incurred, and will continue to incur, research and development expenses as we focus on organic growth through internal innovation.
+Added: We believe that we also must continue to dedicate a significant amount of resources to our research and development efforts to decrease our reliance on third parties.
+Added: If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.
+Added: Additionally, we must continually address the challenges of dynamic and accelerating market
+Added: trends and competitive developments.
+Added: Customers may require features and capabilities that our current solutions do not have.
+Added: Our failure to develop new solutions and improve our existing solutions to satisfy customer preferences and effectively compete with other market offerings in a timely and cost-effective manner may harm our ability to retain our customers and attract new customers.
+Added: A loss of customers would adversely impact our business and operating results.
The diversity of our websites means that we are competitive in many different verticals.
1 unchanged sentence
Because we compete in so many different verticals, if any of our competitors gain market share in some markets, it would make it more difficult for us to sell our advertising and could result in increased pricing pressure, increase sales and marketing expenses and loss of market share, which would cause our revenue to decline.
−Removed: Our websites compete in a highly competitive market, and pressure from existing and new companies may adversely affect our business and operating results.
−Removed: We face significant competition from companies that provide product information and services designed to help consumers find relevant information and shop for products comparable to those offered through our websites, and to enable advertisers to reach these consumers.
−Removed: Our competitors offer various products and services that compete with us.
−Removed: Some of these competitors include:
−Removed: ● companies that operate, or could develop, consumer finance search websites, educational / career enhancement search websites, automotive search websites, points of interest websites, general how-to websites and other comparison search type websites in the verticals in which we compete our operated and owned search engines;
−Removed: ● media sites, including websites dedicated to celebrity news, fitness news, interactive quizzes and general acts about the world;
−Removed: ● internet search engines.
−Removed: We compete with these and other companies for a share of advertisers’ overall budget for online media marketing and lead-generation referral spend.
−Removed: To the extent that advertisers view alternative marketing and media strategies to be superior to our websites or RAMP, we may not be able to maintain or grow the number of advertisers using, and advertising on, our websites and through RAMP, and our business and financial results may be harmed.
−Removed: We also expect that new competitors will enter the industries in which we operate with websites, products and services, which could have an adverse effect on our business and financial results.
−Removed: Our competitors could significantly impede our ability to maintain or expand the number of consumers and advertisers using our websites.
−Removed: Our competitors also may develop and market new technologies that render our websites less competitive, unmarketable or obsolete.
−Removed: In addition, if our competitors develop websites with similar or superior functionality to ours, and our web traffic declines, we may need to decrease our referral and advertising fees that we charge to advertisers.
−Removed: If we are unable to maintain our current pricing structure due to competitive pressures, our revenue would likely be reduced and our financial results would be adversely affected.
−Removed: Our existing and potential competitors may have significantly more financial, technical, marketing and other resources than we have, and the ability to devote greater resources to the development, promotion and support of their websites and advertising platforms, and related products and services.
−Removed: In addition, they may have more extensive industry relationships than we have, longer operating histories and greater name recognition.
−Removed: As a result, these competitors may be able to respond more quickly with new technologies and to undertake more extensive marketing or promotional campaigns than we can.
−Removed: In addition, to the extent that any of our competitors have existing relationships with advertisers for marketing or data analytics solutions, those advertisers may be unwilling to partner with us.
−Removed: If we are unable to compete with these competitors, the demand for our websites and related products and services could substantially decline.
−Removed: In addition, if one or more of our competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively.
−Removed: We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our business and financial results.
−Removed: We compete with other media for advertising spend from our advertisers, and if we are unable to maintain or increase our share of the advertising spend of our advertisers, our business could be harmed.
+Added: We compete for advertising spend from our advertisers, and if we are unable to maintain or increase our share of the advertising spend of our advertisers, our business could be harmed.
We compete for advertising spend with traditional offline media such as television, billboards, radio, magazines and newspapers, as well as online sources such as websites, social media and websites dedicated to providing information comparable to that provided in our websites.
16 unchanged sentences
We expect our results of operations to fluctuate on a quarterly and annual basis.
−Removed: Our revenue and results of operations could vary significantly from period to period and may fail to match expectations as a result of a variety of factors, many of which are outside of our control.
−Removed: If our quarterly financial results or our predictions of future financial results fail to meet our expectations or the expectations of securities analysts and investors, the trading price of our outstanding securities could be negatively affected.
−Removed: Volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue acquisitions.
−Removed: Factors associated with our industry, the operation of our business, and the markets for our solutions may cause our quarterly financial results to fluctuate, including but not limited to:
−Removed: ● fluctuations in digital advertising demand and costs;
−Removed: ● disruptions in our business operations or target markets caused by, among other things, cyber-security incidents, terrorism or other intentional acts, outbreaks of disease, such as the COVID-19 pandemic, or earthquakes, floods, or other natural disasters;
−Removed: ● entry of new competition into our markets;
−Removed: ● our ability to achieve targeted operating income and margins and revenues;
−Removed: ● the number, severity, and timing of threat outbreaks and cyber security incidents;
−Removed: ● the loss of customers or strategic partners;
−Removed: ● changes in the mix or type of subscriptions sold and changes in consumer retention rates;
−Removed: ● the rate of adoption of new technologies and new releases of operating systems, and new business processes;
−Removed: ● consumer confidence and spending changes;
−Removed: ● the impact of litigation, regulatory inquiries, or investigations;
−Removed: ● the impact of acquisitions and divestitures and our ability to achieve expected synergies or attendant cost savings;
−Removed: ● fluctuations in foreign currency exchange rates and interest rates;
−Removed: ● changes in tax laws, rules, and regulations;
−Removed: ● changes in consumer privacy and data protection laws and regulations.
+Added: Our revenue and results of operations could vary significantly from period to period and may fail to match expectations as a result of a variety of factors, some of which are outside of our control, including seasonality,
+Added: fluctuations in digital advertising demand and costs and the number, severity, and timing of threat outbreaks and cyber security incidents.
+Added: As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may not be meaningful and the results of any one period should not be relied on as an indication of future performance.
+Added: In addition, our results of operations may not meet our expectations or the expectations of securities analysts and investors, which may adversely affect the trading price of our outstanding securities and may make it more difficult for us to raise capital in the future or pursue acquisitions.
As our costs increase, we may not be able to generate sufficient revenue to sustain profitability.
11 unchanged sentences
Consequently, as our costs increase, we may not be able to generate sufficient revenue to maintain or increase our historical profitability levels.
−Removed: Mobile devices are increasingly being used to access the Internet, and RAMP may not operate or be as effective when utilized across these devices, which could harm our business.
−Removed: We offer our network partners and advertisers the ability to access RAMP across a variety of operating systems and device types.
−Removed: Historically, we designed RAMP for use on a desktop or laptop computer;
−Removed: however, mobile devices, such as smartphones and tablets, are increasingly being used as the primary means for accessing the Internet and conducting e-commerce.
−Removed: We are dependent on the interoperability of RAMP with third-party mobile devices and mobile operating systems, as well as web browsers that we do not control.
−Removed: Further, screen space tends to be limited on mobile devices, and less space for text and images combined with the necessity of scrolling limits our ability to deploy RAMP as effectively.
−Removed: Any changes in such devices, systems or web browsers that degrade the functionality of our products or give preferential treatment to competitive products could adversely affect usage of our products.
−Removed: In addition, because a growing number of our clients access our products through mobile devices, we are dependent on the interoperability of our products and services with mobile devices and operating systems.
−Removed: Improving mobile functionality is integral to our long-term product development and growth strategy.
−Removed: In the event that our customers have difficulty accessing and using our products on mobile devices, our customer growth, business and operating results could be adversely affected.
Our advertising business is dependent on advertisers buying mobile, display and video advertising.
17 unchanged sentences
Our products and services depend on the ability of users to access the Internet.
−Removed: Currently, this access is provided by companies that have significant market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers.
−Removed: Laws or regulations that adversely affect the growth, popularity or use of the Internet, including changes to laws or regulations impacting Internet neutrality, could decrease the demand for our products or offerings, increase our operating costs, require us to alter the manner in which we conduct our business and/or otherwise adversely affect our business.
−Removed: We could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise negatively affect our business.
−Removed: For example, paid prioritization could enable Internet service providers, or ISPs, to impose higher fees and otherwise adversely impact our business.
−Removed: Internationally, government regulation concerning the Internet, and in particular, network neutrality, may be developing or non-existent.
−Removed: Within such a regulatory environment, we could experience discriminatory or anti-competitive practices that could impede both our and our customers’ domestic and international growth, increase our costs or adversely affect our business.
−Removed: Unfavorable global economic conditions, including as a result of health and safety concerns related to the COVID-19 pandemic, could adversely affect our business, financial condition or results of operations.
−Removed: Our results of operations could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the impact of ongoing health and safety concerns from the current COVID-19 pandemic.
−Removed: The most recent global financial crisis caused by the global pandemic has resulted in extreme volatility and disruptions in the capital and credit markets.
−Removed: A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for our software products, RAMP and related products and services or delays in advertiser payments.
−Removed: A weak or declining economy could also strain our media supply channels.
−Removed: Additionally, our business relies heavily on people, and adverse events such as health-related concerns about working in our offices, the inability to travel and other matters affecting the general work environment could harm our business.
−Removed: In the event of a major disruption, we may lose the services of a number of our employees or experience system interruptions, which could lead to diminishment of our regular business operations, inefficiencies and reputational harm.
−Removed: We are also unsure what actions our advertisers and other partners may take in response to the disruption.
−Removed: For example, to the extent our advertisers shift their workforces from offices to remote locations, we may see a decrease in demand while they relocate these operations.
−Removed: Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current global health crisis and financial market conditions could adversely impact our business.
−Removed: If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations.
+Added: Currently, this access is provided by companies that have significant market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers any of whom could take actions that degrade, disrupt or increase the cost of user access to our products, which would, in turn, negatively impact our business.
+Added: In addition, third parties, including operating systems and Internet browser companies, may take steps to further limit the interoperability of our solutions with their own products and services, in some cases to promote their own offerings.
+Added: This could delay the development of our solutions or our solutions may be unable to operate effectively.
+Added: This could also result in decreased demand for our solutions, decreased revenue, and harm to our reputation, and adversely affect our business, financial condition, results of operations, and cash flows.
+Added: Furthermore, the adoption of laws or regulations that adversely affect the growth, popularity or use of the Internet and mobile networks, including laws impacting Internet neutrality, could decrease the demand for our products or offerings, increase our operating costs, require us to alter the manner in which we conduct our business and/or otherwise adversely affect our business.
+Added: Unfavorable global economic conditions, including as a result of political or social conflict or unrest or health and safety concerns related to a global pandemic, could adversely affect our business, financial condition or results of operations.
+Added: Our business, financial condition or results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of our control, such as the impact of ongoing health and safety concerns from a pandemic.
+Added: For example, the recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets, and, in recent months, the global economy has been impacted by increasing interest rates and inflation.
+Added: Likewise, the capital and credit markets may be adversely affected by the recent conflict between Russia and Ukraine, and the possibility of a wider European or global conflict, and global sanctions imposed in response thereto.
+Added: A severe or prolonged economic downturn could result in a variety of risks to our business, including diminished liquidity, weakened demand for our software products, RAMP and related products and services or delays in advertiser payments.
+Added: A weak or declining economy could also strain our media supply channels and reduce the demand for or rates paid for advertising by brands and marketers.
+Added: Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current global economic crisis and financial market conditions could adversely impact our business.
+Added: We identified material weaknesses in our internal control over financial reporting.
+Added: If we are unable to remediate the material weaknesses, or if other material weaknesses are identified, we may not be able to report our financial results accurately, prevent or detect material misstatements due to fraud or error, or file our periodic reports as a public company in a timely manner.
+Added: We have identified material weaknesses in our internal control over financial reporting as of December 31, 2022.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: The material weaknesses identified were as follows:
+Added: • We did not design and maintain an effective control environment commensurate with our financial reporting requirements.
+Added: Specifically, we lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately.
+Added: Additionally, the limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.
+Added: • We did not design and maintain effective controls in response to the risks of material misstatement.
+Added: Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.
+Added: These material weaknesses contributed to the following additional material weaknesses:
+Added: • We did not design and maintain effective controls to timely analyze and record the financial statement effects from acquisitions.
+Added: Specifically, we did not design and maintain effective controls over the (i) application of U.S.
+Added: GAAP to such transactions, including accounting for post-combination compensation arrangements, (ii) review of the inputs and assumptions used in the measurement of assets acquired and liabilities assumed, including discounted cash flow analysis to value acquired intangible assets at an appropriate level of precision, (iii) the tax impacts of acquisitions to the financial statements, and (iv) conforming of U.S.
+Added: GAAP and accounting policies of acquired entities to that of the Company.
+Added: In addition, we did not design and maintain effective controls relating to the oversight and ongoing recording of the financial statement results of the acquired businesses.
+Added: • We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over (i) the preparation and review of business performance reviews, account reconciliations and journal entries, and (ii) maintaining appropriate segregation of duties.
+Added: Additionally, we did not design and maintain controls over the classification and presentation of accounts and disclosures in the consolidated financial statements, including the statement of cash flows.
+Added: • We did not design and maintain effective controls over the completeness and accuracy of accrued liabilities, stock-based compensation and equity transactions.
+Added: • We did not design and maintain effective controls over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment.
+Added: These material weaknesses resulted in the restatement of the Company's condensed consolidated financial statements:
+Added: as of March 31, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor period from January 27, 2022 to March 31, 2022;
+Added: as of June 30, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor periods for the three months ended June 30, 2022 and from January 27, 2022 to June 30, 2022;
+Added: and as of September 30, 2022 and for the predecessor period from January 1, 2022 to January 26, 2022 and for the successor periods for the three months ended September 30, 2022 and from January 27, 2022 to September 30, 2022.
+Added: These material weaknesses also resulted in immaterial misstatements to substantially all of the S1 Holdco, LLC accounts, which were recorded prior to the issuance of the
+Added: consolidated financial statements as of December 31, 2021, 2020, 2019 and 2018 and for the years then ended;
+Added: as of March 31, 2021 and 2020 and for the three-month periods then ended;
+Added: as of June 30, 2021 and 2020 and for the six-month periods then ended;
+Added: and as of September 30, 2021 and 2020 and for the nine-month periods then ended.
+Added: • We did not design and maintain effective controls over the accounting for complex financial instruments, including the impact of these instruments on earnings per share.
+Added: This material weakness also resulted in a material misstatement of the Trebia warrant liabilities, change in the fair value of the Trebia warrant liabilities, forward purchase agreement liabilities, change in the fair value of the forward purchase agreement liabilities, classification of redeemable shares of Class A common stock issued in connection with Trebia’s initial public offering, additional paid-in-capital, accumulated deficit, earnings per share, and related financial disclosures of Trebia Acquisition Corp.
+Added: as of December 31, 2020 and for the period from February 11, 2020 (inception) through December 31, 2020, as of September 30, 2020 and for three month period ended September 30, 2020 and for the period from February 11, 2020 (inception) through September 30, 2020, as of June 30, 2020 and for three month period ended June 30, 2020 and for the period from February 11, 2020 (inception) through June 30, 2020, as of March 31, 2021 and for three month period ended March 31, 2021.
+Added: This material weakness also resulted in material adjustments relating to the Trebia forward purchase agreement liabilities and repurchases of common stock impacting the accumulated deficit and additional paid-in capital in the opening balance sheet as of January 27, 2022 and the earnings per share computations for the quarter ended June 30, 2022 of the Company.
+Added: Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
+Added: • We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements.
+Added: Specifically, we did not design and maintain:
+Added: program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;
+Added: user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel;
+Added: computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored;
+Added: testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements.
+Added: These IT deficiencies did not result in a material misstatement to the financial statements;
+Added: however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.
+Added: Accordingly, we have determined these IT deficiencies in the aggregate constitute a material weakness.
+Added: Our remediation plan consists of the following:
+Added: • Hiring additional senior level accounting personnel with applicable technical accounting knowledge, training and experience in accounting matters, supplemented by third-party resources;
+Added: • Designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing controls over segregation of duties;
+Added: • Engaging an accounting advisory firm to assist with the documentation, evaluation, remediation and testing of our internal control over financial reporting based on the criteria established in Internal Control
+Added: - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission;
+Added: • Engaging third-party experts to assist with the preparation of technical accounting analyses and valuations associated with business combinations;
+Added: • Designing and implementing controls related to accounting for acquisitions and other technical accounting and financial reporting matters, including controls over the preparation and review of accounting memoranda addressing these matters, valuations and key assumptions utilized in the valuations, tax impacts, and ongoing recording of the financial statement results of the acquired businesses;
+Added: • Designing and implementing formal accounting policies, procedures and controls supporting our period-end financial reporting process, including controls over the preparation and review of account reconciliations and journal entries, business performance reviews, foreign exchange gains/losses for intercompany transactions, and classification and presentation of accounts and disclosures, including the statement of cash flows;
+Added: • Designing and implementing controls over the completeness and accuracy of accrued liabilities, stock-based compensation and equity transactions;
+Added: • Designing and implementing controls related to accounting for complex financial instruments, including the earnings per share impacts;
+Added: • Designing and implementing controls over the accuracy and valuation of goodwill, including the allocation of goodwill to reporting units and the identification and measurement of goodwill impairment;
+Added: • Implementing an enhanced enterprise resource planning software for automation and enforcing segregation of duties across the organization;
+Added: • Designing and implementing IT general controls, including controls over change management, the review and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing.
+Added: The material weaknesses will not be considered remediated until management completes the design and implementation of the processes and controls described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.
+Added: We are working to remediate the material weaknesses as efficiently and effectively as possible.
+Added: At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan;
+Added: however, these remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.
+Added: This remediation will extend beyond December 31, 2023.
+Added: While we believe that these efforts will improve our internal control over financial reporting, the implementation of these procedures is ongoing and will require testing of the design and operating effectiveness of internal control over financial reporting over a sustained period of financial reporting cycles.
+Added: We cannot be certain that these measures will successfully remediate the material weaknesses or that other material weaknesses will not be identified in the future.
+Added: If our efforts are not successful or other material weaknesses are identified in the future, we may be unable to report our financial results accurately on a timely basis or prevent and detect fraud or errors that may be material, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence or delisting and cause the market price of our shares to decline.
+Added: If we fail to maintain effective internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations.
If our internal control over financial reporting is not effective, it may adversely affect investor confidence in us and the price of our common stock.
−Removed: As a public company in the United States, we are subject to the reporting obligations under the U.S.
+Added: As a public company, we are subject to the reporting obligations under the U.S.
securities laws.
−Removed: The SEC, as required under Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring every public company to include a report of management on the effectiveness of such company’s internal control over financial reporting in its annual report.
−Removed: In prior years, management has identified material weaknesses in our internal control over financial reporting.
−Removed: If any of our prior material weaknesses recurs, or if we identify additional weaknesses or fail to timely and successfully implement new or improved controls, our ability to assure timely and accurate financial reporting may be adversely affected, and we could suffer a loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the trading price of our shares of Common Stock, result in lawsuits being filed against us by our stockholders, or otherwise harm our reputation.
−Removed: If material weaknesses are identified in the future, it could be costly to remediate such material weaknesses, which may adversely affect our results of operations.
−Removed: In addition, our auditor is not required to attest to the effectiveness of our internal controls over financial reporting due to our status of qualifying as a smaller reporting company.
−Removed: As a result, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our share price.
+Added: The SEC, as required under Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring certain public companies to include a report of management on the effectiveness of such company’s internal control over financial reporting in its annual report.
+Added: Management has identified material weaknesses in our internal control over financial reporting.
+Added: While the material weaknesses identified remain unremediated, or if we identify additional weaknesses or
+Added: fail to timely and successfully implement new or improved controls, our ability to assure timely and accurate financial reporting may be adversely affected, and we could suffer a loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the trading price of our shares of common stock, result in lawsuits being filed against us by our stockholders, or otherwise harm our reputation.
+Added: If additional material weaknesses are identified in the future, it could be costly to remediate such material weaknesses, which may adversely affect our results of operations.
+Added: A significant portion of our assets consists of other intangible assets, the value of which may be reduced if we determine that those assets are impaired.
+Added: As of December 31, 2022, the net carrying value of other intangible assets represented $1,008.3 million, or 87% of our total assets.
+Added: Indefinite-lived intangible assets, such as goodwill, are evaluated for impairment annually, or more frequently if circumstances indicate impairment may have occurred.
+Added: Finite-lived intangible assets totaling $492.7 million are amortized up to 10 years.
+Added: Due to adverse macroeconomic conditions and a broad weakening of consumer demand starting in Q3 2022, the Company recorded goodwill impairment charges of $340.1 million during the third quarter of 2022.
+Added: The Company recorded an additional impairment charge of $26.2 million in connection with its annual goodwill impairment test as of December 31, 2022.
+Added: If future operating performance were to fall below current projections or if there are material changes to management’s assumptions, we could be required to recognize additional non-cash charges to operating earnings for other intangible asset impairment, which could be significant.
We may experience outages and disruptions on RAMP, our websites and other software products if we fail to maintain adequate security and supporting infrastructure as we scale RAMP, websites and other software products, which may harm our reputation and negatively impact our business, financial condition and operating results.
4 unchanged sentences
The steps we take to increase the reliability, integrity and security of our platform, our software products, and our websites as they scale are expensive and complex, and our execution could result in operational failures and increased vulnerability to cyber and ransomware attacks.
−Removed: Such cyber and ransomware attacks could include denial-of-service attacks impacting service availability (including the ability to deliver ads) and reliability, tricking company employees into releasing control of their systems to a hacker, or
−Removed: the introduction of computer viruses or malware into our systems with a view to steal confidential or proprietary data.
+Added: Such cyber and ransomware attacks could include denial-of-service attacks impacting service availability (including the ability to deliver ads) and reliability, tricking company employees into releasing control of their systems to a hacker, or the introduction of computer viruses or malware into our systems with a view to steal confidential or proprietary data.
Cyber-attacks of increasing sophistication may be difficult to detect and could result in the theft of our intellectual property and data from our platform or other software products.
We are also vulnerable to unintentional errors or malicious actions by persons with authorized access to our systems that exceed the scope of their access rights, distribute data erroneously, or, unintentionally or intentionally, interfere with the intended operations of our platform, websites and other software products.
−Removed: Moreover, we could be adversely impacted by outages and disruptions in the online platforms of our inventory and data suppliers, such as real-time advertising exchanges.
−Removed: Outages and disruptions of our platform, websites and other software products, including due to cyber-attacks, may harm our reputation and negatively impact our business, financial condition and results of operations.
+Added: Moreover, we could be adversely impacted by outages and disruptions in the online platforms of our inventory and data suppliers, such as real-time advertising exchanges, which may harm our reputation and negatively impact our business, financial condition and results of operations.
If we fail to build and maintain our brands, our ability to expand the use of our websites and software products by advertisers and consumers, respectively, may be adversely affected.
1 unchanged sentence
A failure by us to build our brands and maintain consumer expectations of our brands could harm our reputation and damage our ability to attract and retain consumers, which could adversely affect our business.
−Removed: If consumers do not perceive portfolio websites or our software products offer a better user experience or offer good value for the services, or if advertisers do not perceive RAMP as a more effective platform, our reputation and the strength of our brand may be adversely affected.
+Added: If consumers do not perceive our portfolio websites or our software products offer a better user experience or offer good value for the services, or if advertisers do not perceive RAMP as a more effective platform, our reputation and the strength of our brand may be adversely affected.
Some of our competitors have more resources than we do and can spend more advertising their brands and technology solutions.
As a result, we are required to spend considerable capital and other resources to create brand awareness and build our reputation.
−Removed: Should the need or competition for top-of-mind awareness and brand preference increase, we may not be able to build brand awareness, and our efforts at building, maintaining and enhancing our reputation could fail.
−Removed: Even if we are successful in our branding efforts, such efforts may not be cost-effective.
If we are unable to maintain or enhance consumer awareness of our brand cost-effectively, our business, results of operations and financial condition could be materially adversely affected.
15 unchanged sentences
• long payment cycles;
−Removed: ● potential complications in enforcing contracts and collections;
+Added: • potential complications enforcing contracts and collections;
• increased financial accounting and reporting burdens and complexities;
22 unchanged sentences
• diversion of management time and focus from operating our business to addressing acquisition integration challenges;
−Removed: ● retention of employees from the acquired company;
+Added: • retention of key employees from the acquired company;
• cultural challenges associated with integrating employees from the acquired company into our organization;
11 unchanged sentences
We rely on the leadership, knowledge and experience that our executive officers and key employees provide.
−Removed: They foster our corporate culture, which has been instrumental to our ability to attract and retain new talent.
We also rely on employees in our product development, support and sales teams to attract and keep key clients.
−Removed: The market for talent in our key areas of operations, including California, Washington, Ontario, Canada and Great Britain, United Kingdom where we have offices, is intensely competitive.
+Added: The market for talent in our key areas of operations, including California, Washington, Ontario, Canada and Great Britain, United Kingdom where we have offices, is competitive.
As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards.
−Removed: New employees often require significant training and, in many cases, take significant time before they achieve full productivity, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them.
−Removed: Our account managers, for instance, need to be trained quickly on the features of our platform since failure to offer high-quality support may adversely affect our relationships with our clients.
−Removed: Additionally, as we continue to expand outside of the U.S., we may face additional challenges in attracting and retaining international employees that differ from the challenges we have experienced domestically.
Employee turnover, including any potential future changes in our management team, could disrupt our business.
−Removed: For instance, in 2021, we replaced both of Chief Executive Officer and Chief Technology Officer.
+Added: For instance, in 2021, we replaced both Chief Executive Officer and Chief Technology Officer.
Our employees are at-will employees and may terminate their employment with us at any time.
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Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies.
−Removed: As a public company following completion of the Business Combination, we will be subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations.
+Added: As a public company following completion of the Merger, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations.
These obligations and scrutiny will require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.
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Any such changes may reduce revenue and margins and could adversely affect our financial results.
−Removed: Our business could be negatively affected as a result of shareholder activism, and such activism could impact the trading value of our securities.
−Removed: In recent years, U.S.
−Removed: companies listed on securities exchanges in the United States have been faced with governance-related demands from activist shareholders, unsolicited tender offers and proxy contests.
−Removed: Shareholder activists frequently propose to involve themselves in the governance, strategic direction, and operations of companies.
−Removed: In addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal fees and proxy solicitation expenses.
−Removed: In addition, actions of activist shareholders may cause significant fluctuations in our share price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.
From time to time we are a party to lawsuits and investigations, which typically require significant management time and attention and result in significant legal expenses.
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Any adverse publicity resulting from actual or potential litigation may also materially and adversely affect our reputation, which in turn could adversely affect our results.
−Removed: We depend on search engines, display advertising, social media, email, content-based online advertising and other online sources to attract consumers to our websites and convert them into sales for our advertisers, our business and financial results may be harmed.
+Added: We depend on search engines, display advertising, social media, email, content-based online advertising and other online sources to attract consumers to our websites and convert them into sales for our advertisers.
+Added: If we are unable to drive traffic cost-effectively, our business and financial results may be harmed.
Our success depends, in part, on our ability to attract online consumers to our portfolio websites and to convert those consumers into sales for our advertisers.
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If one or more of the search engines or other online sources on which we rely for purchased listings modifies or terminates its relationship with us, our expenses could rise, we could lose consumer traffic to our websites and marketplaces, and a decrease in consumer traffic to our websites and marketplaces, for any reason, could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Consumer traffic to our websites and marketplaces and the volume of sales generated by consumer traffic varies and can decline from to time.
+Added: Consumer traffic to our websites and marketplaces and the volume of sales generated by consumer traffic varies and can decline from time to time.
Additionally, even if we are successful in generating traffic to our websites, we may not be able to convert these visits into consumer sales.
−Removed: We currently compete with numerous other online marketing companies, and we expect that competition will intensify.
−Removed: Some of these existing competitors may have more capital or complementary products or services than we do, and they may leverage their greater capital or diversification in a manner that adversely affects our competitive position.
−Removed: In addition, other newcomers, including major search engines and content aggregators, may be able to leverage their existing products and services to our disadvantage.
−Removed: We may be forced to expend significant resources to remain competitive with current and potential competitors.
−Removed: If any of our competitors are more successful than we are at attracting and retaining consumers, or if we are unable to effectively convert visits into consumer sales, our business, financial condition and results of operations could be materially adversely affected.
We depend on third-party website publishers for a significant portion of our visitors, and any decline in the supply of media available through these websites or increase in the price of this media could cause our revenue to decline or our cost to reach visitors to increase.
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In some instances, website publishers may change the advertising inventory they make available to us at any time and, therefore, impact our revenue.
−Removed: In addition, website publishers may place restrictions on our offerings.
−Removed: These restrictions may prohibit advertisements from specific clients or specific industries, or restrict the use of certain creative content.
−Removed: If a website publisher decides not to make advertising inventory available to us, or decides to demand a higher revenue share or places significant restrictions on the use of such inventory, we may not be able to find advertising inventory from other websites that satisfy our requirements in a timely and cost-effective manner.
+Added: In addition, website publishers may place restrictions on our offerings, which may prohibit advertisements from specific clients or specific industries, or restrict the use of certain creative content.
+Added: If a website publisher decides not to make advertising inventory available to us, or decides to demand a higher revenue share or places significant restrictions on the use of such inventory, we may not be able
+Added: to find advertising inventory from other websites that satisfy our requirements in a timely and cost-effective manner.
In addition, the number of competing online marketing service providers and advertisers that acquire inventory from websites continues to increase.
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If any of the foregoing occurs, our revenue could decline or our operating costs may increase.
−Removed: Failure to comply with industry self-regulation could harm our brand, reputation and business.
−Removed: We adhere to many of the regulatory principles issued by the Network Advertising Alliance’s Code of Conduct, the Interactive Advertising Bureau, including its Transparency & Consent Framework, and the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising in the U.S., as well as similar self-regulatory principles in Europe and Canada adopted by the local Digital Advertising Alliance.
−Removed: Our efforts to comply with these self-regulatory principles include offering Internet users notice and transparency when advertising is served to them based, in part, on browsing data recorded by cookies.
−Removed: We also offer Internet users the ability to opt-out of receiving interest-based advertisements.
−Removed: If we, or our clients or partners, make mistakes in the implementation of these principles, or if self-regulatory bodies expand these guidelines or government authorities issue different guidelines regarding Internet-based advertising, or our opt-out mechanisms fail to work as designed, or if Internet users misunderstand our technology or our commitments with respect to these principles, we may, as a result, be subject to negative publicity, government investigation, government or private litigation, or investigation by self-regulatory bodies or other accountability groups.
−Removed: Any such action against us, or investigations, even if meritless, could be costly and time consuming, require us to change our business practices, cause us to divert management’s attention and our resources and be damaging to our brand, reputation and business.
−Removed: In addition, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us.
−Removed: We cannot yet determine the impact such future standards may have on our business.
Our failure to meet content and inventory standards and provide services that our advertisers and inventory suppliers trust could harm our brand and reputation and negatively impact our business, financial condition and operating results.
We do not provide or control the content of the advertisements that are displayed by content providers we work with, including those provided by Google or Microsoft.
−Removed: Both advertisers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal and they are hesitant to spend money without guaranteed brand security.
−Removed: Additionally, advertisers may seek to display advertising campaigns in jurisdictions that do not permit such advertising
−Removed: (for example, pharmaceutical advertising is not permitted in many countries).
+Added: Advertisers and inventory suppliers are concerned about being associated with content they consider inappropriate, competitive or inconsistent with their brands, or illegal and they are hesitant to spend money without guaranteed brand security.
Consequently, our reputation depends in part on providing services that advertisers and inventory suppliers trust, and we have contractual obligations to meet content and inventory standards.
Despite such efforts, our clients may inadvertently purchase inventory that proves to be unacceptable for their campaigns, in which case, we may not be able to recoup the amounts paid to inventory suppliers.
−Removed: Further, perpetrators of fraudulent impressions and malware frequently change their tactics and may become more sophisticated over time, requiring both us and our competitors or others in our industry to improve processes for assessing the quality of advertisers’ inventory and controlling fraudulent activity.
−Removed: Preventing and combating fraud is an industry-wide issue that requires constant vigilance, and we cannot guarantee that we will be fully successful in doing so.
−Removed: There are other means we could use, such as human review of content we serve, that some of our competitors undertake, but because our platform is self-service, and because such means are cost-intensive, we do not utilize all means available to decrease this risk.
−Removed: We may provide access to inventory that is objectionable to our advertisers or we may serve advertising that contains malware or objectionable content to our inventory suppliers, which could harm our or our clients’ brand and reputation, and negatively impact our business, financial condition and operating results.
+Added: Preventing and combating fraud is an industry-wide issue that requires constant vigilance, and we cannot guarantee that we will be successful in doing so.
+Added: Our clients could intentionally run campaigns that do not meet the standards of our inventory suppliers or attempt to use illegal or unethical targeting practices or seek to display advertising in jurisdictions that do not permit such advertising or in which the regulatory environment is uncertain, in which case our supply of ad inventory from such suppliers could be jeopardized.
+Added: some of our competitors undertake human review of content, but because our platform is self-service, and because such means are cost-intensive, we do not utilize all means available to decrease this risk.
+Added: We may provide access to inventory that is objectionable to our advertisers, serve advertising that contains malware, objectionable content or is based on questionable targeting criteria to our inventory suppliers, or be unable to detect and prevent non-human traffic, any one of which could harm our or our clients’ brand and reputation, and negatively impact our business, financial condition and operating results.
If the non-proprietary technology, software, products and services that we use are unavailable, have future terms we cannot agree to, or do not perform as we expect, our business, financial condition and operating results could be harmed.
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Having to replace any third-party providers or their technology, products or services could result in outages or difficulties in our ability to provide our services.
−Removed: In the event that these third-party providers experience any interruption in operations or cease business for any reason, or if we are unable to agree on satisfactory terms for continued hosting relationships, we would be forced to enter into a relationship with other service providers or assume some hosting responsibilities ourselves.
−Removed: In addition, even a disruption as brief as a few minutes could have a negative impact on our websites and could result in a loss of revenue.
If we are unsuccessful in establishing or maintaining our relationships with our third-party providers or otherwise need to replace them, internal resources may need to be diverted and our business, financial condition and operating results could be harmed.
−Removed: We face potential liability and harm to our business based on the nature of our business and the content on our platform.
−Removed: Advertising often results in litigation relating to copyright or trademark infringement, public performance royalties or other claims based on the nature and content of advertising that is distributed through our platform.
−Removed: Though we contractually require advertisers and content providers to represent to us that they have the rights necessary to serve advertisements through our platform, we do not independently verify whether we are permitted to deliver, or review the content of, such advertisements.
−Removed: If any of these representations are untrue, we may be exposed to potential liability and our reputation may be damaged.
−Removed: While our clients are typically obligated to indemnify us, such indemnification may not fully cover us, or we may not be able to collect.
−Removed: In addition to settlement costs, we may be responsible for our own litigations costs, which can be extensive.
Legal and Compliance Risks
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In addition, such changes in laws could increase our costs of doing business, subject our business to increased liability for non-compliance or prevent us from delivering our services over the Internet or in specific jurisdictions, thereby materially harming our business and results of operations.
−Removed: Our businesses are subject to laws relating to digital media and content.
−Removed: We are, and may in the future become, subject to a variety of international, federal, state, and local laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business.
−Removed: Our activities are subject to regulation under the laws of the United States and its various states and the other jurisdictions in which we operate.
−Removed: We are currently subject to a variety of, and may in the future become subject to additional, international, federal, state and local laws that are continuously evolving and developing, including laws regarding internet-based businesses and other businesses that rely on advertising, as well as privacy and consumer protection laws, including the CAN-SPAM Act, the Digital Millennium Copyright Act, the Children’s Online Privacy Protected Act and the Communications Decency Act.
−Removed: In addition, there is increasing attention by state and other jurisdictions to regulation in this area.
−Removed: These laws are complex and can be costly to comply with, require significant management time and effort, and could subject us to claims, government enforcement actions, civil and criminal liability or other remedies, including suspension of business operations.
−Removed: These laws may conflict with each other, further complicating compliance efforts.
−Removed: If we are alleged not to comply with these laws or regulations, we may be required to modify affected products and services, which could require a substantial investment and loss of revenue, or cease providing the affected product or service altogether.
−Removed: If we are found to have violated laws or regulations, we may be subject to significant fines, penalties and other losses.
We assess customer needs, and sometimes collect customer contact information to provide other product offerings, which results in us receiving personally identifiable information.
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In the event those interpretations eventually prove different from the interpretations of regulatory authorities, we may be penalized or precluded from carrying on our previous activities.
−Removed: Litigation could distract management, increase our expenses or subject us to material money damages and other remedies.
+Added: Litigation could distract management, increase our expenses or subject us to material monetary damages and other remedies.
We may be involved from time to time in various additional legal proceedings, including, but not limited to, actions relating to breach of contract, breach of federal and state privacy laws, and intellectual property infringement that might necessitate changes to our business or operations.
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Bribery Act 2010 and Proceeds of Crime Act 2002, and possibly other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities.
−Removed: Anti-corruption laws have been enforced with great rigor in recent years and are interpreted broadly and prohibit companies and their employees and their agents from making or offering improper payments or other benefits to government officials and others in the private sector.
+Added: Anti-corruption laws have been enforced with great rigor in recent years and are interpreted broadly and prohibit companies and their employees and their agents from making or offering improper payments or other benefits to government officials
+Added: and others in the private sector.
As we increase our international sales and business, particularly in countries with a low score on the CPI by Transparency International, and increase our use of third parties, particularly internationally based network partners, our risks under these laws will increase.
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We typically collect and store IP addresses, other device identifiers (such as unique mobile application identifiers) and email addresses, which are or may be considered personal data or personal information in some jurisdictions or otherwise may be the subject of regulation.
−Removed: Recently, the State of California adopted two laws broadly regulating businesses’ processing of personal information, the California Consumer Privacy Act of 2018, or CCPA, and the California Privacy Rights Act, or CPRA.
−Removed: The CCPA, which went into effect January 1, 2020, defines “personal information” broadly enough to include online identifiers provided by individuals’ devices, applications, and protocols (such as IP addresses, mobile application identifiers and unique cookie identifiers) and individuals’ location data, if there is potential that individuals can be identified by such data.
−Removed: The CCPA establishes a new privacy framework for covered businesses by, among other requirements, establishing new data privacy rights for consumers in the State of California (including rights to deletion of and access to personal information), imposing special rules on the collection of consumer data from minors, creating new notice obligations and new limits on the “sale” of personal information (interpreted by many observers to include common advertising technology practices), and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
−Removed: The CCPA also offers the possibility for a consumer to recover statutory damages for certain violations and could open the door more broadly to additional risks of individual and class-action lawsuits even though the statute’s private right of action is limited in scope.
−Removed: The California Attorney General issued final regulations implementing the CCPA that became enforceable recently.
−Removed: Additional modifications to the regulations were proposed in October 2020.
−Removed: In addition, a new ballot initiative that passed in November 2020, the CPRA, would impose additional notice and opt out obligations on the digital advertising space, including an obligation to provide an opt-out for behavioral advertising.
−Removed: When the CPRA goes into full effect in January 2023, it will cause us to incur additional compliance costs and may impose additional restrictions on us and on our partners.
−Removed: Although we have attempted to mitigate certain risks posed by the CCPA and CPRA through contractual and platform changes, we cannot predict with certainty the effect of the CCPA and CPRA and their implementing regulations on our business.
−Removed: Responding to requirements under these laws and the related regulations will continue to affect our operations and those of our partners.
−Removed: Laws governing the processing of personal data in Europe (including the European Union and European Economic Area, or EEA, and the countries of Iceland, Liechtenstein, and Norway) also continue to impact us and continue to evolve.
+Added: In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
+Added: For example, the California Consumer Privacy Act of 2018, or CCPA, requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
+Added: The CCPA defines “personal information” broadly enough to include online identifiers provided by individuals’ devices, applications, and protocols (such as IP addresses, mobile application identifiers and unique cookie identifiers) and individuals’ location data, if there is potential that individuals can be identified by such data and provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
+Added: In addition, the California Privacy Rights Act of 2020, or CRPA, which became operative January 1, 2023, expands the CCPA’s requirements, including applying to personal information of business representatives and employees and establishing a new regulatory agency to implement and enforce the law.
+Added: Laws governing the processing of personal data in Europe (including the U.K., European Union and European Economic Area, or EEA, and the countries of Iceland, Liechtenstein, and Norway) also continue to impact us and continue to evolve.
The General Data Protection Regulation, or GDPR, which applies to us, came into effect on May 25, 2018.
−Removed: Like the CCPA, the GDPR defines “personal data” broadly, and it enhances data protection obligations for controllers of such data and for service providers processing the data.
+Added: Like the laws passed in California and other states, the GDPR defines “personal data” broadly, and it enhances data protection obligations for controllers of such data and for service providers processing the data.
It also provides certain rights, such as access and deletion, to the individuals about whom the personal data relates.
−Removed: The digital advertising industry has collaborated to create a user-facing framework for establishing and managing legal bases under the GDPR and other EU privacy laws including ePrivacy (discussed below).
+Added: The digital advertising industry has collaborated to create a user-facing framework for establishing and managing
+Added: legal bases under the GDPR and other EU privacy laws including ePrivacy (discussed below).
Although the framework is actively in use, we cannot predict its effectiveness over the long-term.
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Non-compliance with the GDPR can trigger steep fines of up to the greater of €20 million or 4% of total worldwide annual revenue.
−Removed: Continuing to maintain compliance with the GDPR’s requirements,
−Removed: including monitoring and adjusting to rulings and interpretations that affect our approach to compliance, requires significant time, resources and expense, as will the effort to monitor whether additional changes to our business practices and our backend configuration are needed, all of which may increase operating costs, or limit our ability to operate or expand our business.
−Removed: Regulatory investigations and enforcement actions could also impact us.
−Removed: In the U.S., the Federal Trade Commission, or FTC, uses its enforcement powers under Section 5 of the Federal Trade Commission Act (which prohibits “unfair” and “deceptive” trade practices) to investigate companies engaging in online tracking.
−Removed: Other companies in the advertising technology space have been subject to government investigation by regulatory bodies, including, in Europe, a 2016 inquiry into Criteo’s compliance with French data privacy laws.
−Removed: Advocacy organizations have also filed complaints with data protection authorities against advertising technology companies, arguing that certain of these companies’ practices do not comply with the GDPR.
−Removed: In response to these complaints, the Belgian Data Protection Authority recently issued a report questioning the legal validity of an industry framework to process personal data for targeted advertising purposes.
−Removed: We cannot avoid the possibility that one of these investigations or enforcement actions will require us to alter our practices.
−Removed: Further, our legal risk depends in part on our clients’ or other third parties’ adherence to privacy laws and regulations and their use of our services in ways consistent with end user expectations.
−Removed: We rely on representations made to us by clients that they will comply with all applicable laws, including all relevant privacy and data protection regulations.
−Removed: Although we make reasonable efforts to enforce such representations and contractual requirements, we do not fully audit our clients’ compliance with our recommended disclosures or their adherence to privacy laws and regulations.
−Removed: If our clients fail to adhere to our expectations or contracts in this regard, we and our clients could be subject to adverse publicity, damages, and related possible investigation or other regulatory activity.
−Removed: Adapting our business to the CCPA, the CPRA and their implementing regulations and to the enhanced and evolving privacy obligations in the EU and elsewhere could continue to involve substantial expense and may cause us to divert resources from other aspects of our operations, all of which may adversely affect our business.
−Removed: Further, adaptation of the digital advertising marketplace requires increasingly significant collaboration between participants in the market, such as publishers and advertisers.
−Removed: Failure of the industry to adapt to changes required for operating under laws including the CCPA, CPRA and the GDPR and user response to such changes could negatively impact inventory, data, and demand.
−Removed: We cannot control or predict the pace or effectiveness of such adaptation, and we cannot currently predict the impact such changes may have on our business.
−Removed: Uncertainty caused by lack of uniformity among laws to which we are or may become subject and instability in the global legal landscape may cause us to incur additional or unexpected costs and legal risk, increase our risk of reputational harm, or cause us to change RAMP or business model.
−Removed: We cannot predict the future of the regulatory landscape regarding the protection of personal information.
−Removed: (state and federal) and foreign governments are considering enacting additional legislation related to privacy and data protection and we expect to see an increase in, or changes to, legislation and regulation in this area.
−Removed: For example, in the U.S., a federal privacy law is the subject of active discussion and several bills have been introduced.
−Removed: Additionally, industry groups in the U.S.
−Removed: and their international counterparts have self-regulatory guidelines that are subject to periodic updates to which we have agreed to adhere.
−Removed: High profile incidents involving breaches of personal information or misuse of consumer information may increase the likelihood of new U.S.
−Removed: federal, state, or international laws or regulations in addition to those set out above, and such laws and regulations may be inconsistent across jurisdictions.
+Added: Relatedly, following the United Kingdom’s withdrawal from the EEA and the European Union, and the expiry of the transition period, we must comply with both the GDPR and the United Kingdom Data Protection Act 2018, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.
+Added: Continuing to maintain compliance with the requirements of the GDPR and the United Kingdom Data Protection Act 2018, including monitoring and adjusting to rulings and interpretations that affect our approach to compliance, requires significant time, resources and expense, as will the effort to monitor whether additional changes to our business practices and our backend configuration are needed, all of which may increase operating costs, or limit our ability to operate or expand our business.
In addition to laws regulating the processing of personal information, we are also subject to regulation with respect to political advertising activities, which are governed by various federal and state laws in the U.S., and national and provincial laws worldwide.
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Changes in data residency and cross-border transfer restrictions also impact our operations.
−Removed: For the transfer of personal data from the EU to the U.S., like many U.S.
−Removed: and European companies, we have relied upon, and are currently certified under the EU-U.S.
+Added: For the transfer of personal data from the EU to the United States, like many U.S.
+Added: and European companies, we have relied upon, and were certified under the EU-U.S.
and Swiss-U.S.
Privacy Shield Frameworks.
−Removed: The Privacy Shield Framework, however, was struck down in July 2020 by the EU Court of
−Removed: Justice as an adequate mechanism by which EU companies may pass personal data to the US.
−Removed: The EU had previously pledged that it would minimize business impact if this occurred, so we may see bridging conditions put in place to a new US-EU agreement, or other guidance from EU authorities (which they have promised).
−Removed: Other EU mechanisms for adequate data transfer, such as the standard contractual clauses, were also questioned by the Court of Justice and whether and how standard contractual clauses can be used to transfer personal data to the U.S.
−Removed: is in question.
−Removed: If there is no interim agreement or guidance from the EU and standard clauses also cannot be used, we could be left with no reasonable option for the lawful cross-border transfer of personal data.
−Removed: If successful challenges leave us with no reasonable option for the lawful cross-border transfer of personal data, and if we nonetheless continue to transfer personal data from the EU to the US, that could lead to governmental enforcement actions, litigation, fines and penalties or adverse publicity, which could have an adverse effect on our reputation and business or cause us to need to establish systems to maintain certain data in the EU, which may involve substantial expense and cause us to divert resources from other aspects of our operations, all of which may adversely affect our business.
+Added: The Privacy Shield Framework, however, was struck down in July 2020 by the EU Court of Justice (a decision referred to as “Schrems II”) as an adequate mechanism by which EU companies may pass personal data to the United States, and other EU mechanisms for adequate data transfer, such as the standard contractual clauses, were questioned by the Court of Justice and whether and how standard contractual clauses can be used to transfer personal data to the United States is in question.
+Added: In June 2021, the European Commission published revised standard contractual clauses, and shortly thereafter the European Data Protection Board promulgated guidance on implementation of the new clauses.
+Added: In October 2022, the White House released an executive order implementing a new EU-U.S.
+Added: data transfer mechanism, the Trans-Atlantic Data Privacy Framework (“DPF”).
+Added: The DPF aims to address the concerns raised by the court in Schrems II relating to perceived risks of transferring personal data to the United States by putting in place a new set of “commercial principles” similar to the old Privacy Shield Framework together with new rules governing U.S.
+Added: intelligence authorities and redress for EU individuals.
+Added: The European Commission launched an assessment of the DPF’s adequacy, which is expected to be completed in 2023.
+Added: If granted, an adequacy determination would reduce the legal uncertainty of cross-border transfers of personal data.
+Added: However, until an adequacy determination is granted, the validity of the standard contractual clauses as a transfer mechanism remains uncertain.
+Added: If all or some jurisdictions within the EU or the United Kingdom determine that the new standard contractual clauses also cannot be used to transfer personal data to the United States and if the DPF is not ultimately adopted, we could be left with no reasonable option for the lawful cross-border transfer of personal data.
+Added: If left with no reasonable option for the lawful cross-border transfer of personal data, and if we nonetheless continue to transfer personal data from the EU to the United States, that could lead to governmental enforcement actions, litigation, fines and penalties or adverse publicity, which could have an adverse effect on our reputation and business or cause us to need to establish systems to maintain certain data in the EU, which may involve substantial expense and cause us to divert resources from other aspects of our operations, all of which may adversely affect our business.
Other jurisdictions have adopted or are considering cross-border or data residency restrictions, which could reduce the amount of data we can collect or process and, as a result, significantly impact our business.
−Removed: It remains unclear how the withdrawal of the United Kingdom, or U.K., from the European Union, referred to as Brexit, will affect transborder data flows, regulators’ jurisdiction over our business, and other matters related to how we do business and how we comply with applicable data protection laws.
−Removed: Accordingly, we cannot predict the additional expense, impact on revenue, or other business impact that may stem from Brexit.
+Added: Regulatory investigations and enforcement actions could also impact us.
+Added: In the U.S., the Federal Trade Commission, or FTC, uses its enforcement powers under Section 5 of the Federal Trade Commission Act (which prohibits “unfair” and “deceptive” trade practices) to investigate companies engaging in online tracking.
+Added: Other companies in the advertising technology space have been subject to government investigation by regulatory bodies;
+Added: advocacy organizations have also filed complaints with data protection authorities against advertising technology companies, arguing that certain of these companies’ practices do not comply with the GDPR.
+Added: We cannot avoid the possibility that one of these investigations or enforcement actions will require us to alter our practices.
+Added: Further, our legal risk depends in part on our clients’ or other third parties’ adherence to privacy laws and regulations and their use of our services in ways consistent with end user expectations.
+Added: We rely on representations made to us by clients that they will comply with all applicable laws, including all relevant privacy and data protection regulations.
+Added: Although we make reasonable efforts to enforce such representations and contractual requirements, we do not fully audit our clients’ compliance with our recommended disclosures or their adherence to privacy laws and regulations.
+Added: If our clients fail to adhere to our expectations or contracts in this regard, we and our clients could be subject to adverse publicity, damages, and related possible investigation or other regulatory activity.
+Added: Adapting our business to privacy laws enacted at the state level and their implementing regulations and to the enhanced and evolving privacy obligations in the EU and elsewhere could continue to involve substantial expense and may cause us to divert resources from other aspects of our operations, all of which may adversely affect our business.
+Added: Additionally, as the advertising industry evolves, and new ways of collecting, combining and using data are created, governments may enact legislation in response to technological advancements and changes that could result in our having to re-design features or functions of our platform, therefore incurring unexpected compliance cost.
+Added: Further, adaptation of the digital advertising marketplace requires increasingly significant collaboration between participants in the market, such as publishers and advertisers.
+Added: Failure of the industry to adapt to changes required for operating under existing and future data privacy laws and user response to such changes could negatively impact inventory, data, and demand.
+Added: We cannot control or predict the pace or effectiveness of such adaptation, and we cannot currently predict the impact such changes may have on our business.
Additionally, as the advertising industry evolves, and new ways of collecting, combining and using data are created, governments may enact legislation in response to technological advancements and changes that could result in our having to re-design features or functions of RAMP, therefore incurring unexpected compliance costs.
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We use device identifiers to record such information as when an Internet user views an ad, clicks on an ad, or visits one of our advertiser’s websites or applications.
−Removed: We use device identifiers to help us achieve our advertisers’ campaign goals, including to limit the instances that an Internet user sees the same advertisement, report information to our advertisers regarding the performance of their advertising campaigns, and detect and prevent malicious behavior and invalid traffic throughout our network of inventory.
+Added: We use device identifiers to help us achieve our advertisers’ campaign goals, including to limit the
+Added: instances that an Internet user sees the same advertisement, report information to our advertisers regarding the performance of their advertising campaigns, and detect and prevent malicious behavior and invalid traffic throughout our network of inventory.
We also use data associated with device identifiers to help our clients decide whether to bid on, and how to price, an opportunity to place an advertisement in a specific location, at a given time, in front of a particular Internet user.
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When we utilize or deploy cookies and similar tracking or recording means, they are usually first-party cookies, which are cookies deployed by the Company on its own and operated websites or other domains which we operate through RAMP.
−Removed: We rely on the first party data provided to us by consumers and advertisers to improve our product and service offerings and to feed the RAMP data loop in
−Removed: particular, and if we are unable to maintain or grow such data we may be unable to provide consumers with an experience that is relevant, efficient and effective, which could adversely affect our business.
+Added: We rely on the first party data provided to us by consumers and advertisers to improve our product and service offerings and to feed the RAMP data loop in particular, and if we are unable to maintain or grow such data we may be unable to provide consumers with an experience that is relevant, efficient and effective, which could adversely affect our business.
Our business relies on the first party data provided to us by consumers and advertisers through using websites and RAMP.
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These developments may result in decreased reliance on implied consent mechanisms that have been used to meet requirements of the Cookie Directive in some markets.
−Removed: A replacement for the Cookie Directive is currently under discussion by EU member states to complement and bring electronic communication services in line with the GDPR and force a harmonized approach across EU member states.
+Added: A replacement for the Cookie Directive is currently under discussion by EU member states to complement and bring electronic communication services in line with the GDPR and force a harmonized approach across EU
+Added: member states.
Like the GDPR, the proposed ePrivacy Regulation has extra-territorial application as it applies to businesses established outside the EU who provide publicly available electronic communications services to, or gather data from the devices of, users in the EU.
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If a “Do Not Track,” “Do Not Sell,” or similar control is adopted by many Internet users or if a “Do Not Track” standard is imposed by state, federal, or foreign legislation (such as the proposed ePrivacy Regulation or CCPA regulations), or is agreed upon by standard setting groups, we may have to change our business practices, our clients may reduce their use of RAMP, and our business, financial condition, and results of operations could be adversely affected.
−Removed: Increased transparency into the collection and use of data for digital advertising introduced both through features in browsers and devices and regulatory requirements, such as the GDPR, the CCPA, “Do Not Track”, and ePrivacy, as well as compliance with such
−Removed: requirements, may create operational burdens to implement and may lead more users to choose to block the collection and use of data about them.
+Added: Increased transparency into the collection and use of data for digital advertising introduced both through features in browsers and devices and regulatory requirements, such as the GDPR, the CCPA, “Do Not Track”, and ePrivacy, as well as compliance with such requirements, may create operational burdens to implement and may lead more users to choose to block the collection and use of data about them.
Adapting to these and similar changes has in the past and may in the future require significant time, resources and expense, which may increase our cost of operation or limit our ability to operate or expand our business.
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For example, perception that our practices involve an invasion of privacy, whether or not such practices are consistent with current or future laws, regulations, or industry practices, may subject us to public criticism, private class actions, reputational harm, or claims by regulators, which could disrupt our business and expose us to increased liability.
−Removed: The growing awareness of our users of data privacy and protection laws and regulations could limit the use and adoption of our services, limit the user data we process for our marketing activities and adversely affect our business.
−Removed: In general, data privacy concerns are becoming more widely acknowledged and data privacy laws are being enacted and enforced by a growing number of states and countries as time passes.
−Removed: Such data privacy laws restrict our storage, use, processing, disclosure, and transfer of personal information, including credit card data obtained in relation to our registered users of our software products.
−Removed: Many of these laws require us to maintain an online privacy policy and terms of use that disclose our practices regarding the collection, processing, and disclosure of personal information.
−Removed: This could lead to the loss of current or prospective users or other business relationships and may cause our users to resist providing the personal information necessary to allow them to use RAMP effectively and consumers may also resist providing personal information to our advertisers due to data privacy and security concerns.
−Removed: Additionally, the GDPR, the CCPA, new and expanding ‘Do Not Track’ regulations and other legal and regulatory changes are making it easier for individuals to opt-out of having their personal data collected through an opt-out button, and to choose whether or not to be tracked online, which could result in higher rates of opting out or prevention of our online tracking which can impact our operation and decrease the demand for our products and services due to users’ resistance towards providing their personal data and digital tracking.
−Removed: We expect that third-party intermediaries will emerge that offer services involving individuals opting out of their personal data being collected at scale (i.e., from all platforms, including ours).
−Removed: Such limitations may impair our ability to grow our business and to continue to process and store the information we need for our marketing analysis, and our results of operations and financial condition could suffer.
−Removed: We have implemented certain measures to protect personal information, including data of our users, but these measures may not adequately address all potential data privacy concerns and security threats and may fail to meet the expectations of our users, and their users, or other stakeholders, which could thereby reduce the demand for our services.
−Removed: Furthermore, our users or service providers may respond to this data protection and privacy regulatory framework by requesting that we undertake certain privacy or data related contractual commitments that we are unable or unwilling to make, all of which can harm our business and our financial results.
−Removed: states and/or other jurisdictions in which we conduct our business may seek to impose state and local business taxes and sales/use taxes and current value added taxes on Internet sales in Europe and elsewhere and the tax policies and regulations imposed by other jurisdictions in which we operate may change, all of which may affect our tax rates and increase our tax liabilities.
−Removed: There is a risk that U.S.
−Removed: states could assert that we or our subsidiaries are liable for U.S.
−Removed: state and local business activity taxes based upon income or gross receipts or for the collection of U.S.
−Removed: local sales/use taxes.
−Removed: This risk exists regardless of whether we and our subsidiaries are subject to U.S.
−Removed: federal income tax.
−Removed: States are becoming increasingly aggressive in asserting a nexus for business activity tax purposes and imposing sales/use taxes on products and services provided over the Internet.
−Removed: We and our subsidiaries could be subject to U.S.
−Removed: state and local taxation if a state tax authority asserts that our activities or the activities of our subsidiaries give rise to a nexus.
−Removed: We and our subsidiaries could also be liable for the collection of U.S.
−Removed: state and local sales/use taxes if a state tax authority asserts that distribution of our products over the Internet is subject to sales/use taxes.
−Removed: Multiple U.S.
−Removed: states have enacted related legislation relating to the taxation of e-commerce and other states are now considering such legislation.
−Removed: Furthermore, the U.S.
−Removed: Supreme Court held in 2018
−Removed: in South Dakota v.
−Removed: Wayfair that a U.S.
−Removed: state may require an online retailer to collect sales taxes imposed by that state, even if the retailer has no physical presence in that state, thus permitting a wider enforcement of such sales tax collection requirements.
−Removed: Such legislation could require us to incur substantial costs in order to comply, including costs associated with legal advice, tax calculation, collection, remittance and audit requirements, which could make selling in such markets less attractive and could adversely affect our business.
−Removed: Further, if a state tax authority asserts that distribution of our products or services is subject to such sales/use taxes, our premium subscribers could also be subjected to sales/use taxes, which may decrease the likelihood that such registered users would purchase or continue to renew their premium subscriptions.
−Removed: Additionally, sales of our solutions subject to value-added tax, or VAT, at the applicable rate in each jurisdiction, may increase and cause either our prices to increase or our collections and revenues to decline.
−Removed: New obligations to collect or pay taxes of any kind could substantially increase our cost of doing business.
−Removed: Furthermore, the base erosion and profit shifting, or BEPS, initiative undertaken by the Organization for Economic Cooperation and Development, or OECD, which contemplates changes to numerous international tax principles, as well as national tax incentives, may have adverse consequences on our tax liabilities.
−Removed: It is difficult to assess to what extent these changes may be implemented in the jurisdictions in which we conduct our business or may impact the way in which we conduct our business or our effective tax rate, due to the unpredictability and interdependency of these potential changes.
−Removed: We therefore cannot predict at this stage the magnitude of the effect of such rules on our financial results.
Risks Related to Intellectual Property
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Some open source licenses require users who distribute software containing open source to make available all or part of such software, which in some circumstances could include valuable proprietary code of the user.
−Removed: While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are often ambiguous.
+Added: While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code
+Added: or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are often ambiguous.
Any requirement to disclose our proprietary source code or pay damages for breach of contract could be harmful to our business, results of operations or financial condition, and could help our competitors develop services that are similar to or better than ours.
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While we were engaged in active discussions and correspondence with the Demanding Group to resolve the matter, the Demanding Group filed a lawsuit in the United States District Court for the Southern District of New York on September 27, 2021 (the “Infringement Suit”) alleging (i) trademark infringement, (ii) false designation of origin, (iii) unfair competition and (iv) certain violations of New York business laws, seeking, among other things, an injunction, disgorgement of profits, actual damages and attorneys’ fees and costs.
−Removed: On January 14, 2022, we filed a motion to dismiss the Infringement Suit, which is currently pending.
+Added: In November 2021, we filed a motion to dismiss the Infringement Suit, which was granted in part (without prejudice) and denied in part.
+Added: As a result of the court’s ruling on the motion to dismiss, the Demanding
+Added: Group filed an Amended Complaint in October 2022, which matter remains pending.
We intend to vigorously defend our rights in the Infringement Suit.
No lawsuit has been filed in the United Kingdom, and we do not believe that our activities infringe any rights of the Demanding Group in the United Kingdom because, among other defenses, we do not offer services to customers using the SYSTEM1 name and mark in the United Kingdom.
+Added: The parties to the Infringement Suit have been negotiating a mediated settlement and co-existence agreement, which is still in process and the terms of which have yet to be finalized, while the matter remains outstanding.
Our success also depends on the continual development of RAMP.
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Additional shares of our Common Stock may also be issued upon exercise of outstanding stock options and Warrants.
−Removed: The issuance by us of additional shares of our Common Stock, Warrants or
−Removed: other securities convertible into our Common Stock would dilute your ownership interest in us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our Common Stock and Warrants.
+Added: The issuance by us of additional shares of our Common Stock, Warrants or other securities convertible into our Common Stock would dilute your ownership interest in us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our Common Stock and Warrants.
Subject to the satisfaction of vesting conditions and the expiration of our lock-up, shares issuable upon exercise of options will be available for resale immediately in the public market without restriction.
1 unchanged sentence
Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of our Common Stock and Warrants, or both.
−Removed: Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.
+Added: Debt securities convertible into
+Added: equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion.
Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Common Stock.
1 unchanged sentence
As a result, holders of our Common Stock and Warrants bear the risk that our future offerings may reduce the market price of our Common Stock and Warrants and dilute their percentage ownership.
−Removed: Future sales, or the perception of future sales, of our Common Stock and Warrants by us or our existing securityholders in the public market could cause the market price for our Common Stock and Warrants to decline.
−Removed: The sale of substantial amounts of shares of our Common Stock or Warrants in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Common Stock and Warrants.
−Removed: These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
−Removed: In connection with the Business Combination, System1 stockholders are subject to certain restrictions on transfer with respect to the shares of Common Stock issued as part of the merger consideration beginning at Closing and ending on the date that is six months after the completion of the Business Combination, subject to certain price- and time-based releases.
−Removed: Upon the expiration or waiver of the lock-up provisions described above, shares held by certain of our stockholders will be eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations under Rule 144.
−Removed: As restrictions on resale end, the market price of shares of our Common Stock and Warrants could drop significantly if the holders of these shares or Warrants sell them or are perceived by the market as intending to sell them.
−Removed: These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Common Stock or other securities.
−Removed: In addition, the shares of our Common Stock reserved for future issuance under the 2022 Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up provisions and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.
−Removed: The number of shares reserved for future issuance under the 2022 Incentive Plan is equal to the sum of (i) 7% of our fully-diluted shares of Common Stock outstanding as of the effective date of the Business Combination and after taking into account the grant of replacement RSUs in connection with unvested Value Creation Units and (ii) an annual increase on January 1 of each calendar year (commencing with January 1, 2023 and ending on and including January 1, 2032) of a number of shares equal to 2.5% of the aggregate shares outstanding as of December 31 of the immediately preceding calendar year (or such lesser number of shares as is determined by the board of directors), subject to adjustment by the plan administrator in the event of certain changes in our corporate structure.
−Removed: We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of our Common Stock or securities convertible into or exchangeable for shares of our Common Stock issued pursuant to our equity incentive plans.
−Removed: Any such Form S-8 registration statements will automatically become effective upon filing.
−Removed: Accordingly, shares registered under such registration statements will be available for sale in the open market.
−Removed: Delaware law and provisions in our Charter and Bylaws could make a takeover proposal more difficult.
−Removed: Our organizational documents are governed by Delaware law.
−Removed: Certain provisions of Delaware law and of our Charter and Bylaws could discourage, delay, defer or prevent a merger, tender offer, proxy contest or other change of control transaction that a stockholder
−Removed: might consider in its best interest, including those attempts that might result in a premium over the market price for the shares of Common Stock.
−Removed: These provisions include the ability of our Board to designate the terms of and issue new series of preference shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
−Removed: These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
−Removed: As a result, stockholders of the Company may be limited in their ability to obtain a premium for their shares.
−Removed: If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our Common Stock and Warrants.
−Removed: These provisions could also discourage proxy contests and make it more difficult for stockholders of the Company to elect directors of their choosing and to cause us to take other corporate actions that stockholders of the Company desire.
−Removed: See “Description of Capital Stock.”
We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our Common Stock and Warrants less attractive to investors.
−Removed: We qualify as an “emerging growth company” within the meaning of the 1933 Act, as modified by the JOBS Act.
+Added: We qualify as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act.
We have taken advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies or smaller reporting companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on certain executive compensation matters and reduced reporting periods.
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This may make comparison of us with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
−Removed: Our certificate of incorporation and our bylaws provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders, which limits our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
−Removed: Our Charter and Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the (a) Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for:
−Removed: (i) any derivative action, suit or proceeding brought on our behalf;
−Removed: (ii) any action, suit or proceeding asserting a breach of fiduciary duty owed by any current or former director, officer, stockholder or employee of the company to the company or
−Removed: its stockholders;
−Removed: (iii) any action, suit or proceeding asserting a claim against the Company arising under the DGCL, its certificate of incorporation or its bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware;
−Removed: (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (v) any action, suit or proceeding asserting a claim against the Company or any current or former director, officer or stockholder governed by the internal affairs doctrine, and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to (A) the personal jurisdiction of the state and federal courts within Delaware and (B) service of process on such stockholder’s counsel.
−Removed: The provision of the Charter described in the immediately preceding sentence does not apply to (i) suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction and (ii) any action arising under the Securities Act, as to which the federal district court for the United States of America shall have exclusive jurisdiction.
−Removed: The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees.
−Removed: Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
−Removed: Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
−Removed: As noted above, our certificate of incorporation and our bylaws provide that the federal district courts of the United States shall have jurisdiction over any action arising under the Securities Act.
−Removed: Accordingly, there is uncertainty as to whether a court would enforce such provision.
−Removed: Our stockholders will not be deemed to have waived our compliance with the federal securities laws and therules and regulations thereunder.
The market price of our Common Stock and Warrants may be volatile or may decline regardless of our operating performance.
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You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in this section and the following:
−Removed: ● the impact of the COVID-19 pandemic on our financial condition and the results of operations;
• our operating and financial performance and prospects;
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We are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
−Removed: The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.
+Added: The Exchange Act requires that we file annual, quarterly and other current reports with respect to our business and financial condition.
The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over financial reporting.
−Removed: As a result, we will incur increased legal, accounting and other expenses that S1 Holdco prior to the Business Combination did not previously incur.
+Added: As a result, we have experienced an increase in legal, accounting and other expenses compared to that S1 Holdco incurred prior to the Merger, and we expect to incur these increased costs while we remain a public company.
Our entire management team and many of our other employees will need to devote substantial time to compliance and may not effectively or efficiently manage our transition into a public company.
6 unchanged sentences
These rules and regulations result in our incurring legal and financial compliance costs and will make some activities more time-consuming and costly.
−Removed: For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher
−Removed: costs to obtain the same or similar coverage.
+Added: For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board of Directors, on our board committees or as executive officers.
−Removed: As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting.
−Removed: If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results or report them in a timely manner.
−Removed: We are subject to the rules and regulations established from time to time by the SEC and the NYSE.
−Removed: These rules and regulations require, among other things that we establish and periodically evaluate procedures with respect to our internal control over financial reporting.
−Removed: Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
−Removed: In addition, as a public company, we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting.
We do not intend to pay dividends on our Common Stock for the foreseeable future.
3 unchanged sentences
You may only be able to exercise the Public Warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Common Stock from such exercise than if you were to exercise such Warrants for cash.
−Removed: The Warrant Agreement provides that in the following circumstances holders of Warrants who seek to exercise their Warrants will not be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act:
−Removed: (i) if the shares of Common Stock issuable upon exercise of the Warrants are not registered under the Securities Act in accordance with the terms of the Warrant Agreement;
+Added: The Warrant Agreement provides that in the following circumstances holders of Warrants who seek to exercise their Warrants will not be permitted to do so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act:
+Added: (i) if the shares of Common Stock issuable upon exercise of the Warrants are not registered under the Securities Act in accordance with the terms of the Warrant
(ii) if we have so elected and the shares of Common Stock are at the time of any exercise of a Warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act;
7 unchanged sentences
The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision or adding or changing any other provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem not to adversely affect the interest of the holders of the Warrants.
−Removed: amendments require the approval by the holders of at least 65% of the then-outstanding Public Warrants, including any change that adversely affects the rights of the registered holders of Public Warrants.
+Added: All other amendments require the approval by the holders of at least 65% of the then-outstanding Public Warrants, including any change that adversely affects the rights of the registered holders of Public Warrants.
Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder of Public Warrants if holders of at least 65% of the then outstanding Public Warrants approve of such amendment.
9 unchanged sentences
District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our Warrants, such holder shall be deemed to have consented to:
−Removed: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such Warrant holder in any such enforcement action by service upon such Warrant holder’s counsel in the foreign action as agent for such Warrant holder.
+Added: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
+Added: action”), and (y) having service of process made upon such Warrant holder in any such enforcement action by service upon such Warrant holder’s counsel in the foreign action as agent for such Warrant holder.
This choice-of-forum provision may limit a Warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us, which may discourage such lawsuits.
Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.
−Removed: We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.
−Removed: We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, (a) at a price of $0.01 per Warrant, provided that (i) the last reported sales price of the Class A ordinary shares for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which notice of the redemption is given (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) and (ii) there is an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in the Warrant Agreement), or (b) provided that (i) the Reference Value equals or exceeds $10.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) and (ii) if the Reference Value is less than $18.00 per (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants.
+Added: We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worth less than what you paid for them.
+Added: We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, (a) at a price of $0.01 per Warrant, provided that (i) the last reported sales price of the Class A ordinary shares for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which notice of the redemption is given (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) and (ii) there is an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in the Warrant Agreement), or (b) provided that the Reference Value equals or exceeds $10.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like)
If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of the outstanding Warrants could force you to (i) exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants or (iii) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants.
−Removed: None of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsors or its permitted transferees.
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.