Item 1B. Unresolved Staff Comments
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk
Management and Strategy
Our cybersecurity measure
is primarily focused on ensuring the security and protection of computer systems and networks. We primarily utilize an in-house IT service
provider, as well as external resources as a supplement, to monitor and, as appropriate, respond to cybersecurity risks. We maintain various
protections designed to safeguard against cyberattacks, including firewalls and virus detection software. We also periodically scan our
environment for any vulnerabilities and perform penetration testing. In addition, to promote security awareness, we provide cybersecurity
risk training to all employees at least annually.
Oversight
responsibility for information security matters is shared by the Board, Chief Financial Officer (“CFO”), management team and our internal information technology (“IT”) resources. Our
CFO and management team oversee our cybersecurity risk management, including appropriate risk mitigation strategies, systems,
processes, and controls, and receives quarterly updates from IT and the third-party IT service provider on cybersecurity and
information security matters. The CFO
communicates with the Board periodically regarding the state of our cybersecurity risk management, current and evolving threats and
recommendations for changes.
We have also implemented a cyber incident response plan that provides a protocol to report certain incidents to the CFO with the
goal of timely assessment of such incidents, determining applicable disclosure requirements and communicating with the Board for timely
and accurate reporting of any material cybersecurity incident.
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On December 13, 2024, we experienced
a cybersecurity incident involving unauthorized access to one of our management systems. The findings indicated that the unauthorized
access incurred due to leaked credentials of an employee from our partner studio. We assessed the incident as having immaterial impact
and this unauthorized access did not result in significant data leaks. The jeopardized content was limited to a few in-house created assets,
specifically storyboard animatics from the pre-production stage. The amount and type of information involved a few storyboard files related
to the production. The nature of the leak was user-driven, which made an instant identification challenging and the leak was detected
a few days after it occurred. We immediately dispatched our Security Incident Response Team and identified the steps to be taken to mitigate
future risks: including the urgent need to review Two Factor Authentication protocols and enhance our security controls. Although our
broader network is protected by industry-standard cybersecurity tools, we concluded that some of our software as a Service (SaaS) platforms
require additional security improvements. We have decided to invest approximately an additional $0.2 million in cybersecurity enhancements
to strengthen the security of our SaaS platforms (such as review and purchase of additional licenses) and to implement additional protective
measures across our systems. One of our top priorities is safeguarding our assets while maintaining and protecting client trust through
robust security measures and risk management practices.
As of the date of this Annual
Report, we are not aware of any material risks from cybersecurity threats, that have materially affected or are reasonably likely to materially
affect us, including our business strategy, results of operations, or financial condition.