What changed in this filing

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Item 1A. Risk Factors

2025-03-12 compared with 2024-02-22 · 160 added, 169 removed, 488 unchanged (40% of the section changed)

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Risks Related to Our Business

• We have made, and expect to continue to make, acquisitions as a primary component of our growth strategy.

We may not be able to identify suitable acquisition candidates or consummate acquisitions on acceptable terms, or we may be unable to successfully integrate acquisitions, which could disrupt our operations and adversely impact our business and operating results.

• We face various risks associated with operating as a multinational corporation and our growth depends on our ability to retain existing customers and secure additional subscriptions and cross-sell opportunities from existing customers.

• Failure to maintain, expand and enhance our sales organization may negatively impact our revenue growth.

• Our business strategy includes plans for organic growth, and our financial condition and results of operations could be adversely affected if we fail to grow or fail to manage our growth effectively.

• Our growth depends on our ability to retain existing customers and secure additional subscriptions and cross-sell opportunities from existing customers.

• We depend on our senior management team and the loss of one or more key personnel, or an inability to attract and retain highly skilled personnel may impair our ability to grow our business.

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• Our sales cycles can be lengthy and variable, which may cause changes in our operating results.

• The failure to timely and accurately implement AI, and other new technologies, successfully in our product offerings could have a material adverse effect on our business, competitive position, results of operations, financial condition and prospects, and also result in reputational harm or liability.

• We continually assess the strategic fit of our existing businesses and may sunset and/or divest of certain underperforming or non-strategic assets that are deemed not to fit with our strategic plan or are not achieving the desired return on investment, and we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected.

• In the past, we have made acquisitions a primary component of our growth strategy.

As we have shifted to a focus on organic growth, we will continue to be opportunistic in our review of suitable acquisition candidates, but may not be able to find or consummate acquisitions on acceptable terms, or we may be unable to successfully integrate acquisitions, which could disrupt our operations and adversely impact our business and operating results.

• The failure to timely and accurately implement Artificial Intelligence (“AI”), and other new technologies, successfully in our product offerings could have a material adverse effect on our business, competitive position, results of operations, financial condition and prospects, and also result in reputational harm or liability.

• Perpetual license revenue is unpredictable, and a material increase or decrease in perpetual license revenue from period to period can produce substantial variation in the total revenue and earnings we recognize in a given period.

• We may be forced to change the prices we charge for our applications or the pricing models upon which they are based.

• Any disruption of service at the data centers that house our equipment and deliver our applications or with our hosting service provider could harm our business.

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• The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be adversely affected.

• Mergers of, or other strategic transactions by, our competitors could weaken our competitive position or reduce our revenue.

• Our quarterly operating results may fluctuate in the future.

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Financial Risks

• We may need financing in the future, and any additional financing may result in restrictions on our operations or substantial dilution to our stockholders.

We may seek to renegotiate or refinance our loan facility, and we may be unable to do so on acceptable terms or at all.

• Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

• Our loan facility contains operating and financial covenants that may restrict our business and financing activities.

• Our loan facility matures in August 2026.

We expect to renegotiate or refinance our loan facility, and we may be unable to do so on acceptable terms or at all and any additional financing may result in restrictions on our operations or substantial dilution to our stockholders.

• Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations and interest expense to increase significantly.

• Our Credit Facility contains operating and financial covenants that may restrict our business and financing activities.

• Fluctuations in the exchange rate of foreign currencies could result in losses on currency transactions.

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• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

• We may be required to record charges to future earnings if our Goodwill or Intangible Assets become impaired.

• In the past we have recorded, and in the future we may be required to record, charges to future earnings if our goodwill or intangible assets become impaired.

• We may be adversely affected by the effects of inflation.

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• New laws and increasing levels of regulation in the areas of privacy and protection of user data could harm our business.

• Any failure to comply with governmental export and import control laws and regulations could adversely affect our business.

Risks Related to Ownership of Our Common Stock

• If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, if they publish negative evaluations of our stock, or if we fail to meet the expectations of analysts, the price of our stock and trading volume could decline.

• Because we do not expect to pay any dividends on our common stock for the foreseeable future, our investors may never receive a return on their investment.

• Anti-takeover provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our board of directors or management and, therefore, depress the trading price of our common stock.

• Pursuant to the terms of the Purchase Agreement (as defined herein), we have issued shares of our Series A Preferred Stock that ranks senior to our common stock in priority of distribution rights and rights upon our liquidation, dissolution or winding up and has additional corporate governance rights.

• The fundamental change redemption feature of our Series A Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company.

• Our Board has adopted a Tax Benefit Preservation Plan, which may not protect the future availability of the Company’s tax assets in all circumstances and which could delay or discourage takeover attempts that some shareholders may consider favorable.

• We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.

General Risks

• An epidemic, pandemic or contagious disease and measures intended to prevent the spread of such an event could adversely affect our business, results of operations and financial condition.

• Adverse economic conditions may reduce our customers’ ability to spend money on information technology or software, or our customers may otherwise choose to reduce their spending on information technology or software, which may adversely impact our business.

• The market price of our common stock may be volatile, which could result in substantial losses for investors.

• We have entered into the 2024 Tax Benefit Preservation Plan, which may not protect the future availability of the Company’s tax assets in all circumstances and which could delay or discourage takeover attempts that some shareholders may consider favorable.

Risks Related to Our Business

We have made, and expect to continue to make, acquisitions as a primary component of our growth strategy.

A primary component of our growth strategy has been to acquire complementary businesses to grow our company.

We have completed 31 acquisitions in the 12 years ending December 31, 2023.

We intend to continue to pursue acquisitions of complementary technologies, products, and businesses as a primary component of our growth strategy to enhance the features and functionality of our applications, expand our customer base, provide access to new markets, and increase benefits of scale.

Acquisitions involve certain known and unknown risks that could cause our actual growth or operating results to differ from our expectations.

Generally, our acquisition activity presents three areas of risk to our business, risks related to:

identifying the correct candidates for acquisition, completing the acquisition of identified targets, and integrating acquired companies following closing of the acquisition.

Acquisition Candidate Identification

As we seek to find the best candidates for acquisition:

• we may not be able to identify suitable acquisition candidates or to consummate acquisitions on acceptable terms;

• we may pursue international acquisitions, which inherently pose more risks than domestic acquisitions;

• we compete with others to acquire complementary products, technologies, and businesses, which may result in decreased availability of, or increased price for, suitable acquisition candidates;

• we may not be able to obtain the necessary financing, on favorable terms, including as a result of rising interest rates, or at all, to finance any or all of our potential acquisitions;

• we may ultimately fail to consummate an acquisition even if we announce that we plan to acquire a technology, product, or business;

• acquired technologies, products, or businesses may not perform as we expect, and we may fail to realize anticipated revenue and profits.

In addition, our acquisition strategy may divert management’s attention away from our existing business, resulting in the loss of key customers or employees, and expose us to unanticipated problems or legal liabilities, including responsibility as a successor for undisclosed or contingent liabilities of acquired businesses or assets.

Consummation of Targeted Acquisitions

If we fail to adequately conduct due diligence on our potential targets effectively, we may not identify problems at target companies or fail to recognize incompatibilities or other obstacles to successful integration.

Additionally, the consummation of acquisition transactions involves the coordination of multiple personnel within Upland and at the third party partners that assist our acquisition strategy.

If we are unable to properly coordinate amongst these groups and individuals, our ability to effectively manage our acquisition activity may be compromised.

Further, in the course of acquiring companies, we may:

• issue common stock that would dilute our current stockholders’ ownership percentage;

• use a substantial portion of our cash resources;

• increase our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an acquisition;

• assume liabilities for which we do not have indemnification from the former owners;

further, indemnification obligations may be subject to dispute or concerns regarding the creditworthiness of the former owners;

• record goodwill and non-amortizable intangible assets that are subject to impairment testing and potential impairment charges;

• experience volatility in earnings due to changes in contingent consideration related to acquisition earnout liability estimates;

• incur amortization expenses related to certain intangible assets;

• lose existing or potential contracts as a result of conflict of interest issues;

• become subject to adverse tax consequences or deferred compensation charges;

• incur large and immediate write-offs;

• become subject to litigation.

Integration of Acquired Companies

Our inability to successfully integrate future acquisitions could impede us from realizing all of the benefits of those acquisitions and could severely weaken our business operations.

The integration process may disrupt our business and, if new technologies, products, or businesses are not implemented effectively, may preclude the realization of the full benefits expected by us and could harm our results or operations.

In addition, the overall integration of new technologies, products, or businesses may result in unanticipated problems, expenses, liabilities, and competitive responses.

The difficulties of integrating an acquisition include, among other things:

• issues in integrating the target company’s technologies, products, or businesses with ours;

• incompatibility of marketing and administration methods;

• maintaining employee morale and retaining key employees;

• integrating the cultures of both companies;

• preserving important strategic customer relationships;

• consolidating corporate and administrative infrastructures and eliminating duplicative operations;

• coordinating and integrating geographically separate organizations.

In addition, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings, or growth opportunities that we expect.

These benefits may not be achieved within the anticipated time frame, or at all.

We face various risks associated with operating as a multinational corporation and our growth depends on our ability to retain existing customers and secure additional subscriptions and cross-sell opportunities from existing customers.

Our business strategy includes plans for organic growth, and our financial condition and results of operations could be adversely affected if we fail to grow or fail to manage our growth effectively .

As part of our current general growth strategy, we expect to continue to primarily pursue organic growth, while also secondarily continuing to evaluate potential acquisitions and expansion opportunities that we believe provide a strategic or geographic fit with our business.

We may be unable able to grow our business organically in the future.

We believe that our future organic growth will depend on competitive factors and on the ability of our senior management to continue to maintain a robust system of internal controls and procedures and manage a growing number of customer relationships through our sales organization.

We sell our applications primarily through a direct sales organization comprised of inside sales and field sales personnel.

In addition, we have an indirect sales organization that sells through alliances with strategic partners that can leverage our applications with their complementary services and technologies.

Growing sales to both new and existing customers is, in part, dependent on our ability to maintain, expand and enhance our sales force.

Identifying, recruiting and training additional sales personnel requires significant time, expense, and attention.

It can take several quarters or longer before our sales representatives are fully-trained and productive.

Our business may be adversely affected if our efforts to expand and train our sales organization do not generate a corresponding increase in revenue.

In particular, if we are unable to hire, develop, and retain sales personnel, or if our new sales personnel are unable to achieve expected sales productivity levels in a reasonable period of time or at all, our revenue may grow more slowly than expected or decline and our business may be harmed.

Our growth strategy may divert management from our existing business and may require us to incur additional expenditures to expand our administrative and operational infrastructure and, if we are unable to effectively manage our growth, including to the satisfaction of our regulators, we could be materially and adversely affected.

In addition, acquiring other companies may involve risks such as exposure to potential asset quality issues, disruption to our normal business activities and diversion of management’s time and attention due to integration and conversion efforts.

Consequently, continued organic growth, if achieved, may place a strain on our administrative and operational infrastructure, which could have a material adverse effect on our financial condition and results of operations.

Our growth depends on our ability to retain existing customers and secure additional subscriptions and cross-sell opportunities from existing customers.

In order to improve our operating results, it is important that our customers renew or upgrade their agreements with us when the applicable contract term expires, and also purchase additional applications from us.

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However, we may not be able to increase our penetration within our existing customer base as anticipated, and we may not otherwise retain subscriptions from existing customers.

Failure to maintain, expand and enhance our sales organization may negatively impact our revenue growth.

We sell our applications primarily through a direct sales organization comprised of inside sales and field sales personnel.

In addition, we have an indirect sales organization, which sells to distributors and value-added resellers.

Growing sales to both new and existing customers is, in part, dependent on our ability to maintain, expand and enhance our sales force.

Identifying, recruiting and training additional sales personnel requires significant time, expense, and attention.

It can take several quarters or longer before our sales representatives are fully-trained and productive.

Our business may be adversely affected if our efforts to expand and train our sales organization do not generate a corresponding increase in revenue.

We depend on our senior management team and the loss of one or more key personnel, or an inability to attract and retain highly skilled personnel may impair our ability to grow our business.

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As our operations have expanded, we have established and currently maintain offices in the United States, Australia, Canada, France, Germany, India, Ireland, Israel, Malaysia, Netherlands, Romania and the United Kingdom.

For the year ended December 31, 2023, we generated approximately 30% of our total revenue from customers outside of the U.S.

For the year ended December 31, 2024, we generated approximately 29% of our total revenue from customers outside of the United States.

As a result, we are subject to a number of risks, including:

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• international and regional economic, political and labor conditions, including any instability or security concerns abroad, such as uncertainty caused by economic sanctions, trade disputes, armed conflicts and wars, including the Russia-Ukraine and Israeli-Hamas wars;

• tax laws (including U.S.

• changes to tax laws (including U.S.

taxes on foreign subsidiaries);

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Delays inherent to our sales cycles could cause significant variability in our revenue and operating results for any particular period.

We continually assess the strategic fit of our existing businesses and may sunset and/or divest of certain underperforming or non-strategic assets that are deemed not to fit with our strategic plan or are not achieving the desired return on investment, and we cannot be certain that our business, operating results and financial condition will not be materially and adversely affected.

To successfully sunset or end-of-life an asset depends on ramping down customer and vendor contracts, product and labor spend, and development.

A successful divestiture depends on various factors, including reaching an agreement with potential buyers on terms we deem attractive, as well as our ability to effectively transfer liabilities, contracts, facilities, and employees to any purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to retain, reduce fixed costs previously associated with the divested assets or business, and collect the proceeds from any divestitures.

These efforts to sunset or divest require varying levels of management resources, which may divert our attention from other business operations.

If we do not realize the expected benefits of any sunset or divestiture transaction, our consolidated financial position, results of operations and cash flows could be negatively impacted.

In addition, sunsetting products and divestitures of businesses involve a number of risks, including significant costs and expenses, the loss of customer relationships and a decrease in revenues and earnings associated with the sunset asset or divested business.

Furthermore, divestitures potentially involve significant post-closing separation activities, which could involve the expenditure of material financial resources and significant employee resources.

Any sunset product or divestiture may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the loss of revenue associated with the divestiture, as well as significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.

In the past, we have made acquisitions a primary component of our growth strategy.

Previously, our growth strategy was focused on the acquisition of complementary businesses to grow our company.

For example, we have completed 31 acquisitions since February 2012.

We intend to continue to review acquisitions of complementary technologies, products, and businesses to enhance the features and functionality of our applications, expand our customer base, provide access to new markets, and increase benefits of scale, while focusing on our organic growth strategy.

Acquisitions involve certain known and unknown risks that could cause our actual growth or operating results to differ from our expectations.

Generally, our acquisition activity presents three areas of risk to our business, risks related to:

identifying the correct candidates for acquisition, completing the acquisition of identified targets, and integrating acquired companies following closing of the acquisition.

We may not be able to identify suitable candidates for acquisition, or if we do identify suitable candidates in the future, we may not be able to complete transactions with such partners on commercially favorable terms, or at all.

We may pursue international acquisitions, which inherently pose more risks than domestic acquisitions, and we may compete with others to acquire complementary products, technologies, and businesses, which may result in decreased availability of, or increased price for, suitable acquisition candidates.

Additionally, we may not be able to obtain the necessary financing, on favorable terms, including as a result of rising interest rates, or at all, to finance any or all of our potential acquisitions, and we may realize that acquired technologies, products, or businesses may not perform as we expect, and we may fail to realize anticipated revenue and profits.

Acquisitions involve various inherent risks, such as:

our ability to assess accurately the value, strengths, weaknesses, internal controls, contingent and other liabilities and potential profitability of acquisition candidates;

difficulties in integrating acquired businesses, our potential inability to achieve identified financial, operating and other synergies anticipated to result from an acquisition, and integration issues associated with internal controls of acquired businesses;

the diversion of management’s attention from our existing businesses;

the potential impairment of assets;

potential unknown liabilities associated with a business that we acquire or in which we invest, including environmental liabilities;

and production delays associated with consolidating acquired facilities and manufacturing operations.

Any past or future acquisition could also result in such risks.

Due diligence performed prior to closing acquisitions may not uncover certain risks or liabilities that could materially impact our business, financial condition and results of operations.

In addition, any acquisition strategy may divert management’s attention away from our existing business, resulting in the loss of key customers or employees, and expose us to unanticipated problems or legal liabilities, including responsibility as a successor for undisclosed or contingent liabilities of acquired businesses or assets.

Additionally, the consummation of acquisition transactions involves the coordination of multiple personnel within Upland and at the third party partners that assist those acquisitions.

If we are unable to properly coordinate amongst these groups and individuals, our ability to effectively manage our acquisition activity may be compromised.

We may not successfully integrate business, operational, and financial activities such as internal controls, the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) compliance, cyber security measures, the GDPR and similar privacy laws and other corporate governance and regulatory matters, operations, personnel or products related to acquisitions we may make in the future.

Our inability to successfully integrate future acquisitions could impede us from realizing all of the benefits of those acquisitions and could severely weaken our business operations.

In addition, the overall integration of new technologies, products, or businesses may result in unanticipated problems, expenses, liabilities, and competitive responses.

These benefits may not be achieved within the anticipated time frame, or at all.

The failure to timely and accurately implement Artificial Intelligence (“AI”), and other new technologies, successfully in our product offerings could have a material adverse effect on our business, competitive position, results of operations, financial condition and prospects, and also result in reputational harm or liability.

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If we are unable to develop and commercialize product offerings that are compatible with new technologies or competitors are successful in developing compatible technologies more quickly or efficiently than we can, our business, competitive position, results of operations, financial condition and prospects may be materially and adversely affected.

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges.

Additionally, leveraging AI capabilities to potentially improve internal functions and operations presents

further risks and challenges.

While we aim to use AI ethically and attempt to identify and mitigate ethical or legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.

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We generally recognize the license fee portion of the arrangement at the time of delivery.

Perpetual licenses of our workflow automation and enterprise content management applications are sold through third-party resellers, and as such, the timing of sales of perpetual licenses is difficult to predict with the timing of recognition of associated revenue unpredictable.

Perpetual licenses of our workflow automation and enterprise content management applications are primarily sold through third-party resellers, and as such, the timing of sales of perpetual licenses is difficult to predict with the timing of recognition of associated revenue unpredictable.

A material increase or decrease in the sale of perpetual licenses from period to period could produce substantial variation in the revenue we recognize.

Accordingly, comparing our perpetual license revenue on a period to period basis may not be a meaningful indicator of a trend or future results.

We may be forced to change the prices we charge for our applications or the pricing models upon which they are based.

As the markets for our applications mature, or as competitors introduce products or services that compete with ours, including bundling competing offerings with additional products or services, we may be unable to attract new customers at the same price or based on the same pricing models as we have used historically.

As a result, in the future we may be required to reduce our prices, which could adversely affect our financial performance.

In addition, we may offer volume price discounts based on the number of seats purchased by a customer or the number of our applications purchased by a customer, which would effectively reduce the prices we charge for our applications.

Also, we may be unable to renew existing customer agreements or enter into new customer agreements at the same prices or upon the same terms that we have historically, which could have a material adverse effect on our financial position.

Any disruption of service at the data centers that house our equipment and deliver our applications or with our hosting service providers could harm our business.

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These systems may be subject to damage or interruption from earthquakes, adverse weather conditions, other natural disasters, terrorist attacks, power loss, telecommunications failures, vendor limitations, computer viruses, computer denial of service attacks, or other attempts to harm these systems.

Supply chain disruptions stemming from the Russia-Ukraine or Israeli-Hamas wars may harm our customers and suppliers and further complicate existing supply chain constraints.

Supply chain disruptions stemming from the Russia-Ukraine conflict or the conflicts in the Middle East may harm our customers and suppliers and further complicate existing supply chain constraints.

Interruptions in these systems, or with the internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver application data to our customers.

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Any security breaches, unauthorized access, unauthorized usage, virus, or similar breach or disruption could result in loss of confidential information, damage to our reputation, early termination of our contracts, litigation, regulatory investigations, indemnity obligations, or other liabilities.

If our security measures or those of our third-party software providers and data centers are breached as a result of third-party action, employee error, malfeasance or otherwise, resulting in unauthorized access to customer data, our reputation will be damaged, our business may suffer, and we could incur significant liability.

If our security measures or those of our third-party software providers and data

centers are breached as a result of third-party action, employee error, malfeasance or otherwise, resulting in unauthorized access to customer data, our reputation will be damaged, our business may suffer, and we could incur significant liability.

Unauthorized parties may attempt to misappropriate or compromise our confidential information or that of third parties, create system disruptions, product or service vulnerabilities or cause shutdowns.

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In addition, an increasing number of individuals within organizations are utilizing devices other than personal computers, such as mobile phones, tablets and other handheld devices, to access the internet and corporate resources and to conduct business.

If we cannot effectively make our applications available on these devices, we may experience difficulty attracting and retaining customers.

Our use of open source software could negatively affect our ability to sell our applications and subject us to possible litigation.

If we cannot effectively make our applications available on these devices or be able to offer or integrate different messaging capabilities, we may experience difficulty attracting and retaining customers.

Our use of open source software could negatively affect the performance of our applications and our ability to sell our applications and subject us to possible litigation.

A portion of our applications incorporate open source software, and we expect to continue to incorporate open source software in the future.

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In addition, seasonality may be difficult to observe in our financial results during periods in which we acquire businesses, as such results typically are most significantly impacted by such acquisitions.

We expect this seasonality

to continue, or possibly increase in the future, which may cause fluctuations in our operating results and financial metrics.

We expect this seasonality to continue, or possibly increase in the future, which may cause fluctuations in our operating results and financial metrics.

If our quarterly operating results or outlook fall below the expectations of research analysts or investors, the price of our common stock could decline substantially.

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If we sue to enforce our rights or are sued by a third-party that claims that our applications infringe its rights, the litigation could be expensive and could divert our management resources.

Moreover, our acquisition strategy could expose us to additional risk of intellectual property litigation as we acquire new businesses with diverse software offerings and intellectual property assets.

Moreover, future acquisitions could expose us to additional risk of intellectual property litigation as we acquire new businesses with diverse software offerings and intellectual property assets.

In addition, in most instances, we have agreed to indemnify our customers against claims that our applications infringe the intellectual property rights of third parties.

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Third parties may challenge the validity or ownership of our intellectual property, and these challenges could cause us to lose our rights, in whole or in part, to such intellectual property or narrow its scope such that it no longer provides meaningful protection.

We will not be able to

protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.

We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property.

Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.

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The intensity and nature of our competition varies significantly across our family of software applications.

Many of our competitors and potential competitors are larger and have greater brand name recognition, longer operating histories, larger marketing budgets, and significantly greater resources than we do.

Many of our competitors and potential competitors are larger and have greater brand name recognition,

longer operating histories, larger marketing budgets, and significantly greater resources than we do.

Some of our smaller competitors may offer applications on a stand-alone basis at a lower price than our price due to lower overhead or other factors, while some of our larger competitors may offer applications at a lower price in an attempt to cross-sell additional products in the future or retain a customer using a different application.

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If our competitors’ products, service, or technologies become more accepted than our software applications, if they are successful in bringing their products or services to market earlier than ours, or if their products or services are more technologically capable than ours, our revenues could be adversely affected.

Our quarterly operating results may fluctuate in the future.

As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline, and you may lose part or all of your investment.

Our quarterly operating results may fluctuate as a result of a variety of factors, many of which are outside of our control.

Accordingly, the results of any one quarter may not fully reflect the underlying performance of our business and should not be relied upon as an indication of future performance.

If our quarterly operating results or outlook fall below the expectations of research analysts or investors, the price of our common stock could decline substantially.

Mergers of, or other strategic transactions by, our competitors could weaken our competitive position or reduce our revenue.

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Disruptions in our business caused by these events could reduce our revenue.

Our quarterly operating results may fluctuate in the future.

As a result, we may fail to meet or exceed the expectations of research analysts or investors, which could cause our stock price to decline, and you may lose part or all of your investment.

Our quarterly operating results may fluctuate as a result of a variety of factors, many of which are outside of our control.

Accordingly, the results of any one quarter may not fully reflect the underlying performance of our business and should not be relied upon as an indication of future performance.

If our quarterly operating results or outlook fall below the expectations of research analysts or investors, the price of our common stock could decline substantially.

Financial Risks

We may need financing in the future, and any additional financing may result in restrictions on our operations or substantial dilution to our stockholders.

We may seek to renegotiate or refinance our loan facility, and we may be unable to do so on acceptable terms or at all.

Our loan facility matures in August 2026.

We expect to need to renegotiate the terms of our loan facility as our Credit Facility will terminate on August 6, 2026, and our lender may be unwilling to do so, or may agree to such changes subject to additional restrictive covenants on our operations and ability to raise capital.

We have funded our operations since inception primarily through equity financings, cash from operations, and cash available under our loan facility.

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For example, our Series A Preferred Stock contains a number of restrictive covenants.

See " —Risks Related to Our Common Stock .” Additionally, we may need to renegotiate the terms of our loan facility, and our lender may be unwilling to do so, or may agree to such changes subject to additional restrictive covenants on our operations and ability to raise capital.

See " —Risks Related to Our Common Stock .”

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations and interest expense to increase significantly.

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Interest rates may remain at existing levels or may further increase in the near term which could cause our debt service obligations and interest expense to increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, could correspondingly decrease.

We have floating-to-fixed interest rate swap agreements in order to reduce interest rate volatility in connection with $258.5 million of the outstanding term debt on our Credit Facility, but $223.5 million of our outstanding term debt and all our $60.0 million Revolver (as defined herein), which remains undrawn, are not currently subject to any interest rate instruments.

We have floating-to-fixed interest rate swap agreements in order to reduce interest rate volatility in connection with $255.8 million of the outstanding term debt on our Credit Facility, but $37.9 million of our outstanding term debt is not currently subject to any interest rate instruments.

Our Credit Facility contains operating and financial covenants that may restrict our business and financing activities.

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• Prepay indebtedness or make changes to certain agreements.

Furthermore, the Credit Facility requires us and our subsidiaries to comply with certain financial covenants if greater than 35% of revolving credit facility is drawn.

The operating and other restrictions and covenants in the Credit Facility, and in any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in certain business activities, or expand or fully pursue our business strategies, or otherwise limit our discretion to manage our business.

Furthermore, the operating and other restrictions and covenants in the Credit Facility, and in any future financing arrangements that we may enter into, may restrict our ability to finance our operations, engage in certain business activities, or expand or fully pursue our business strategies, or otherwise limit our discretion to manage our business.

Our ability to comply with these restrictions and covenants may be affected by events beyond our control, and we may not be able to meet those restrictions and covenants.

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We have identified material weaknesses in our internal controls over financial reporting in the past and if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis, and our financial statements may be materially misstated.

For example, in 2024 we identified a material weakness in our internal control over financial reporting

related to a management review control over prospective financial information used in the Company’s goodwill impairment assessment, and specifically, not sufficiently performing and documenting the reasonableness of significant assumptions used therein.

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 and corrected on a timely basis.

We may need additional finance and accounting personnel with certain skill sets to assist us with the reporting requirements we will encounter as a public company and to support our anticipated growth.

In addition, implementing internal controls may distract our officers and employees, entail substantial costs to modify our existing processes, and take significant time to complete.

If we identify material weaknesses in our internal controls over financial reporting, if we are unable to assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports;

the market price of our common stock could be negatively affected;

and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

For additional information, see "Item 9A.

Controls and Procedures—Remediation of Prior Material Weakness in Internal Control Over Financial Reporting."

Effective internal controls are necessary to provide reliable financial reporting and prevent fraud.

If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or regulatory investigations.

If we do not successfully remediate any material weakness, or if other material weaknesses or other deficiencies arise in the future, we may be unable to accurately report our financial results, specifically potential goodwill impairments, which could cause our financial results to be materially misstated.

In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which could adversely affect investor confidence in us, our business, results of operations and financial condition, the trading price of our common stock, and our ability to remain listed on Nasdaq.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

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federal and foreign net operating loss carryforwards, respectively.

$138.8 million of the U.S.

federal net operating loss carryforwards are related to year prior to 2018 and begin to expire in 2025.

The remaining $61.9 million carryforward without expiration in accordance with provisions of the Tax Act (as described below in the risk factor titled " Tax laws, regulations, and compliance practices are evolving and may have a material adverse effect on our results of operations, cash flows and financial position.

$43.9 million of foreign net operating loss carryforwards carry forward indefinitely, and the remainder, if any, will expire beginning in 2041.

In addition, as of December 31, 2024, the Company had research and development credit carryforwards of approximately $4.1 million.

federal net operating loss and credit carryforwards will expire beginning in 2025, if not utilized.

The annual limitation will result in the expiration of approximately $155.0 million of U.S.

federal net operating losses and $4.0 million of credit carryforwards before utilization.

$48.0 million of foreign net operating loss carryforwards carry forward indefinitely, and the remainder will expire beginning in 2041.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited.

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Based on analysis of acquired net operating losses and credits, utilization of our net operating losses and research and development credits will be subject to annual limitations.

annual limitation will result in the expiration of $155.0 million of federal net operating losses and $4.0 million of research and development credit carryforwards before utilization.

The annual limitation will result in the expiration of $155.0 million of federal net operating losses and $4.1 million of research and development credit carryforwards before utilization.

In the event that it is determined that we have in the past experienced additional ownership changes, or if we experience one or more ownership changes as a result of future transactions in our stock, then we may be further limited in our ability to use our net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that we earn.

Any such limitations on the ability to use our net operating loss carryforwards and other tax assets could adversely impact our business, financial condition, and operating results.

As noted below, we entered into a Tax Benefit Preservation Plan in an effort to preserve our net operating loss carryforwards but cannot ensure that the plan will provide for full or partial utilization of our net operating losses.

We may be required to record charges to future earnings if our Goodwill or Intangible Assets become impaired.

As noted below, we entered into the 2024 Tax Benefit Preservation Plan with Broadridge Corporate Issuer Solutions, LLC, as Rights Agent (the “2024 Tax Benefit Preservation Plan”) in an effort to preserve our net operating loss carryforwards but cannot ensure that the plan will provide for full or partial utilization of our net operating losses.

In the past we have recorded, and in the future we may be required to record, charges to future earnings if our goodwill or intangible assets become impaired.

Accounting principles generally accepted in the United States of America (“GAAP”) require us to assess goodwill for impairment at least annually.

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Depending on the results of our review, we could be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or intangible assets were determined, negatively impacting our results of operations.

See “ Note 5.

Goodwill and Other Intangible Assets ” in the notes to our consolidated financial statements for more information regarding our first quarter 2023 and fourth quarter 2022 Goodwill impairments.

As a result of the decline of our stock price impacting our market capitalization during the quarters ended March 31, 2024, March 31, 2023 and December 31, 2022, we performed quantitative impairment evaluations, which resulted in goodwill impairments of $87.2 million, $128.8 million and $12.5 million during the quarters ended March 31, 2024, March 31, 2023

and December 31, 2022, respectively.

We will continue to evaluate goodwill for impairment in 2025 and future impairments of goodwill could occur if our stock price declines.

We may be adversely affected by the effects of inflation.

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Tax Cuts and Jobs Act (the “Tax Act”) was enacted in December 2017 and significantly affected U.S.

tax law by changing how the United States imposes income tax on multinational corporations.

tax law by changing how the United States imposes income tax on multinational corporations, and although it is understood that the U.S.

Congress has been considering legislation that would extend certain provisions of the TCJA due to expire, the possibility that this will happen and the consequences of any resulting legislation are uncertain.

Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we will apply the law and impact our results of operations.

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These revisions could materially affect our results of operations, cash flow and financial position.

Further, the Inflation Reduction Act of 2022 was enacted in August 2022, which contained provisions effective January 1,

2023, including a 15% corporate alternative minimum tax and a 1% excise tax on certain stock repurchases by public corporations, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows.

Further, the Inflation Reduction Act of 2022 was enacted in August 2022, which contained provisions effective January 1, 2023, including a 15% corporate alternative minimum tax and a 1% excise tax on certain stock repurchases by public corporations, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows.

While we do not anticipate these changes to be significant, these revisions could materially affect our results of operations, cash flow and financial position.

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The EC and OECD have also been evaluating new rules on the taxation of the digital economy to provide greater taxing rights to jurisdictions where customers or users are located and to address additional base erosion and profits shifting issues.

In addition, many countries have recently introduced new laws or proposals to tax digital transactions.

In addition, many countries have recently introduced new laws or

proposals to tax digital transactions.

These developments in tax laws and regulations, and compliance with these rules, could have a material adverse effect on our operating results, financial position and cash flows.

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If we are subject to an investigation or litigation or suffer a breach of security of personal data, we may incur costs or be subject to forfeitures and penalties that could reduce our profitability.

In addition, compliance

with these laws may restrict our ability to provide services to our customers that they may find to be valuable.

In addition, compliance with these laws may restrict our ability to provide services to our customers that they may find to be valuable.

For example, the General Data Protection Regulation (“GDPR”) became effective in May 2018.

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Actions required to comply with these obligations depend in part on how particular and strict regulators interpret and apply them.

If we fail to comply with the GDPR, or if regulators assert we have failed to comply with the GDPR, we may be subject to, for example, regulatory enforcement actions, that can result in monetary penalties of up to 4% of our annual worldwide revenue or EUR 20 million (whichever higher), private lawsuits, class actions, regulatory orders to stop processing and delete data, and reputational damage.

If we fail to comply with the GDPR, or if regulators assert we have failed to comply with the GDPR, we may be subject to, for example, regulatory enforcement actions, that can result in monetary penalties of up to 4% of our annual worldwide revenue or EUR 20 million (whichever is higher), private lawsuits, class actions, regulatory orders to stop processing and delete data, and reputational damage.

In June 2021, the European Commission published new versions of the Standard Contractual Clauses, which are used as a legal cross-border mechanism allowing companies to transfer/allow access to personal data outside the European Economic Area.

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We must incur costs and expenses to comply with the new requirements, which may impact the cross-border transfer of personal data throughout our organization and to/from third parties.

In the United States, at least thirteen states have adopted generally applicable and comprehensive privacy laws.

These new and developing state laws provide a number of new privacy rights for residents of these states and impose corresponding obligations on organizations doing business in these states.

Not only do these laws require that we make new disclosures to consumers, business contacts, employees, job applicants and others about our data collection, use and sharing practices, but they also require that we provide new rights, such as the rights to access, delete and correct personal data.

While the California Consumer Privacy Act (the “CCPA”) became effective in 2020, it has already been amended significantly, and compliance with the amended law, the California Privacy Protection Act (the “CPRA”) was required as of January 2023.

Compliance with the other states’ laws will be required at different times during 2023.

In addition, a number of other U.S.

states are considering adopting laws and regulations imposing obligations regarding the handling of personal data.

Further, states continue to adopt new laws or amending existing laws related to data privacy, requiring attention to frequently changing regulatory requirements.

For example, the California Consumer Privacy Act of 2018 (“CCPA”) require businesses to provide specific disclosures in their privacy notices and honor residents' privacy rights.

The CCPA 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.

Although the CCPA does not apply to certain data that we process in the context of clinical trials, efforts to comply with the CCPA may increase our annual compliance costs and subject us to potential liability with respect to other personal information we may maintain about California residents.

In addition, the California Privacy Rights Act of 2020 (“CPRA”), which came into effect on January 1, 2023, expanded the CCPA's requirements, extending it to cover personal information of business representatives and employees and the CPRA established a new regulatory agency to implement and enforce the law.

Other states, such as Virginia, Nevada, Connecticut, Utah, Texas and Colorado, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels, which impose similar obligations to those in the CCPA.

These laws may increase our potential liability related to our data processing activities, complicate our compliance efforts, and increase both legal risk and compliance costs for us and the third parties upon whom we rely.

Compliance with the GDPR, the new state laws, and other current and future applicable U.S.

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Complying with these varying requirements could cause us to incur substantial costs and/or require us to change our business practices in a manner adverse to our business.

Violations of data and privacy-related laws can result in significant penalties.

Violations of applicable data and privacy-related laws can result in significant penalties that could adversely affect our business, financial condition, reputation, and results of our operations.

Furthermore, conflicting requirements across applicable privacy and data security laws would complicate our compliance efforts and increase both legal risk and compliance costs for us and the third parties upon whom we rely.

Australia recently amended its Privacy Act, increasing the maximum penalties available for serious or repeated data breaches from AUS 2.2 million to the greater of:

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or (iii) 30% of a company’s adjusted turnover in the relevant period.

In addition to the influx of privacy and data protection law, AI has become a topic of discussion across the United States and globe.

In the United States, states have either passed laws or have utilized existing laws to implement policies and rules governing the use of AI as it relates to the personal data of individuals and decision making.

For example, the California Privacy Protection Agency, has proposed regulations governing automated decision-making technologies pursuant to the authority granted under the CCPA.

At the federal level, the United States government has affirmed its ability to regulate AI through, but not limited to, existing laws such as the Federal Trade Commission Act, the federal rule making process through various federal agencies, and Presidential Executive Orders.

In addition, the United States Congress is actively and continuously introducing laws governing AI and data protection with the expectation that such laws will be passed in 2025 to regulate AI systems while providing protection for individuals within the United States.

Globally, countries have been proactive in implementing laws and regulations concerning AI.

For example, the EU AI Act was passed by the European Union entered into force on August 1, 2024, which provides for a compliance centered around a risk-based approach taking into account the implementation and use of the AI system.

Other countries, such as Canada, Australia, the United Kingdom, have either proposed laws or provided guidance under existing law governing the use of AI.

Compliance with the ever-changing AI landscape could result in substantial costs or require changes in business practices, with violations resulting in significant penalties.

We also may be bound by additional, more stringent contractual obligations relating to our collection, use and disclosure of personal data or may find it necessary or desirable to join industry or other self-regulatory bodies or other privacy or security related organizations that require compliance with their rules pertaining to privacy and data protection.

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Exports of our applications must be made in compliance with these laws and regulations.

If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including:

If we fail to comply with these laws and regulations, we and certain of our employees could be subject

to substantial civil or criminal penalties, including:

the possible loss of export or import privileges;

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and, in extreme cases, the incarceration of responsible employees or managers.

Obtaining the necessary authorizations, including any required license, for a particular sale may be time-

consuming, is not guaranteed, and may result in the delay or loss of sales opportunities.

Obtaining the necessary authorizations, including any required license, for a particular sale may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities.

In addition, changes in our applications or changes in applicable export or import regulations may create delays in the introduction and sale of our applications in international markets, prevent our customers with international operations from deploying our applications, or, in some cases, prevent the export or import of our applications to certain countries, governments, or persons altogether.

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Anti-takeover provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our board of directors or management and, therefore, depress the trading price of our common stock.

Provisions in our certificate of incorporation and bylaws, as amended and restated, will contain provisions that may depress the market price of our common stock by acting to discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock.

These provisions may also prevent or frustrate attempts by our stockholders to replace or

remove members of our board of directors or our management.

your shares of our common stock.

These provisions may also prevent or frustrate attempts by our stockholders to replace or remove members of our board of directors or our management.

These provisions include the following:

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On July 14, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Ulysses Aggregator, LP (the “Purchaser”), an affiliate of HGGC, LLC, to issue and sell at closing 115,000 shares of Series A Preferred Stock of the Company, par value $0.0001 per share, at a price of $1,000 per share (the “Initial Liquidation Preference”) for an aggregate purchase price of $115.0 million.

As of December 31, 2023, we had 115,000 shares of newly designated Series A Preferred Stock outstanding.

As of December 31, 2024, we had 115,000 shares of designated Series A Preferred Stock outstanding.

The holders of the Series A Preferred Stock are entitled to dividends payable quarterly in arrears, which may be paid, at our option, in cash or by increasing the Liquidation Preference (as defined below) of each share of Series A Preferred Stock by the amount of the applicable dividend.

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Although we have the ability to redeem the shares of Series A Preferred Stock beginning on the date that is seven years from the Closing date, we may be unable to do so at that time, and we will be forced to pay the higher dividend rate of 7% per annum until the time that the holders of Series A Preferred Stock convert their shares into shares of common stock or we obtain sufficient capital to redeem the Series A Preferred Stock.

The Series A Preferred Stock ranks senior to our common stock with respect to distribution rights and rights upon our

liquidation, dissolution or winding up, on parity with any class or series of our capital stock expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights and rights upon our upon liquidation, dissolution or winding up, junior to any class or series of our capital stock expressly designated as ranking senior to the Series A Preferred Stock with respect to distribution rights and rights upon our upon liquidation, dissolution or winding up and junior in right of payment to our existing and future indebtedness.

The Series A Preferred Stock ranks senior to our common stock with respect to distribution rights and rights upon our liquidation, dissolution or winding up, on parity with any class or series of our capital stock expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights and rights upon our upon liquidation, dissolution or winding up, junior to any class or series of our capital stock expressly designated as ranking senior to the Series A Preferred Stock with respect to distribution rights and rights upon our upon liquidation, dissolution or winding up and junior in right of payment to our existing and future indebtedness.

Further, upon our liquidation, dissolution or winding up, holders of our Series A Preferred Stock will receive a distribution of our available assets before common stockholders in an amount equal to (i) the Initial Liquidation Preference, plus (ii) any accrued and unpaid dividends on such share of Series A Preferred Stock to, but excluding, the date of payment of such amounts (the “Liquidation Preference”).

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The mandatory redemption option conferred to holders of our Series A Preferred Stock upon certain events constituting a Fundamental Change (involving a change of control) under the Series A Preferred Stock, may have the effect of discouraging a third party from making an acquisition proposal for our company or of delaying, deferring or preventing certain change of control transactions of our company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests.

Our Board has adopted a Tax Benefit Preservation Plan, which may not protect the future availability of the Company’s tax assets in all circumstances and which could delay or discourage takeover attempts that some shareholders may consider favorable.

We have entered into the 2024 Tax Benefit Preservation Plan, which may not protect the future availability of the Company’s tax assets in all circumstances and which could delay or discourage takeover attempts that some shareholders may consider favorable.

As of December 31, 2024, we had approximately $244.5 million of NOLs as well as other tax attributes that could be available in certain circumstances to reduce future U.S.

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state and local jurisdictions.

However, with respect to the substantial majority of our Tax Assets, while we have in recent years experienced significant changes in the ownership of our stock, we do not believe we have undergone an “ownership change” that would limit our ability to use these Tax Assets.

However, with respect to the substantial majority of our Tax Assets potentially available for use (as described in the risk factor above " Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

"), while we have in recent years experienced significant changes in the ownership of our stock, we do not believe we have undergone an “ownership change” that would limit our ability to use these Tax Assets.

However, there can be no assurance that the Internal Revenue Service will not challenge this position.

On May 2, 2023, our Board of Directors authorized and declared a dividend of one preferred stock purchase right for each outstanding share of Common Stock.

As part of the 2024 Tax Benefit Preservation Plan, our Board declared a dividend of one preferred stock purchase right for each outstanding share of Common Stock payable as of June 15, 2024.

See “ Note 13.

Stockholders' Equity" for additional information on the terms and

operation of the Plan.

By adopting the Plan, the Board of Directors is seeking to protect the Company’s ability to use its NOLs and other tax attributes to offset potential future income tax liabilities.

The Company’s ability to use such NOLs and other tax attributes would be substantially limited if the Company experiences an “ownership change,” as defined in Section 382.

The Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.9% or more of the outstanding shares of stock without the approval of the Board of Directors.

However, there can be no assurance that the Plan will prevent an “ownership change” from occurring for purposes of Section 382, and events outside of our control and which may not be subject to the Plan, such as sales of our stock by certain existing shareholders, may result in such an “ownership change” in the future.

While we currently have a full valuation allowance against our NOLs and other historic Tax Assets for financial accounting purposes, if we have undergone or in the future undergo an ownership change that applies to our Tax Assets, our ability to use these Tax Assets could be substantially limited after the ownership change, and this limit could have a substantial adverse effect on our cash flows and financial position.

The Plan will expire on May 1, 2024, but we may adopt a new tax benefit preservation plan after the expiration of the Plan.

While the Plan is not,and a future tax benefit preservation plan will not be, principally intended to prevent a takeover, it may have an anti-takeover effect because an “acquiring person” thereunder may be diluted upon the occurrence of a triggering event.

Accordingly, the Plan or a future tax benefit preservation plan may complicate or discourage a merger, tender offer, accumulations of substantial blocks of our stock, or assumption of control by a substantial holder of our securities.

The Plan or a future tax benefit preservation plan should not interfere with any merger or other business combination approved by the Board of Directors.

Because the Board of Directors may consent to certain transactions, the Plan gives, and a future tax benefit preservation plan is expected to give, our Board of Directors significant discretion to act in the best interests of shareholders.

We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.

On September 1, 2023 and October 31, 2023, the Board of Directors authorized the Stock Repurchase Plan (as defined in Note 13.

Stockholders' Equity ) in the aggregate amount of up to $15,000,000 and $10,000,000, respectively, for a total of $25,000,000 authorized, which allows the Company to repurchase shares of its issued and outstanding Common Stock, from time to time in the open market or otherwise including pursuant to a Rule 10b5-1 trading plan and in compliance with Rule10b-18 under the Exchange Act.

Our repurchase program does not have an expiration date and we are not obligated to repurchase a specified number or dollar value of shares.

Further, our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

Even if fully implemented, our stock repurchase program may not enhance long-term stockholder value.

In addition, the Inflation Reduction Act, signed into law on August 16, 2022, imposes an excise tax of 1% (potentially increasing to 4% under certain U.S.

tax proposals) on certain corporate stock repurchases.

As of December 31, 2023, we have repurchased 3,245,100 shares of our common stock for a total cost of $14.2 million, inclusive of commissions and excise tax.

Stockholders' Equity" for additional information on the terms and operation of the 2024 Tax Benefit Preservation Plan.

By adopting the 2024 Tax Benefit Preservation Plan, we are seeking to protect our ability to use our NOLs and other tax attributes to offset potential future income tax liabilities.

Our ability to use such NOLs and other tax attributes would be substantially limited if we experience an “ownership change,” as defined in Section 382.

the 2024 Tax Benefit Preservation Plan is intended to make it more difficult for us to undergo an ownership change by deterring any person from acquiring 4.9% or more of the outstanding shares of stock without the approval of our Board.

However, there can be no assurance that the 2024 Tax Benefit Preservation Plan will prevent an “ownership change” from occurring for purposes of Section 382, and events outside of our control and which may not be subject to the 2024 Tax Benefit Preservation Plan, such as sales of our stock by certain existing shareholders, may result in such an “ownership change” in the future.

While we currently have a full valuation allowance against our NOLs and other historic Tax Assets for financial accounting purposes, if we have undergone or in the future undergo an ownership change that applies to our Tax Assets, our ability to use those Tax Assets could be substantially limited after the ownership change, and this limit could have a substantial adverse effect on our cash flows and financial position.

The 2024 Tax Benefit Preservation Plan will expire on June 4, 2027, unless earlier terminated.

While the 2024 Tax Benefit Preservation Plan is not, and a future tax benefit preservation plan will not be, principally intended to prevent a takeover, it may have an anti-takeover effect because an “acquiring person” thereunder may be diluted upon the occurrence of a triggering event.

Accordingly, the 2024 Tax Benefit Preservation Plan or a future tax benefit preservation plan may complicate or discourage a merger, tender offer, accumulations of substantial blocks of our stock, or assumption of control by a substantial holder of our securities.

The 2024 Tax Benefit Preservation Plan or a future tax benefit preservation plan should not interfere with any merger or other business combination approved by the Board of Directors.

Because the Board of Directors may consent to certain transactions, the 2024 Tax Benefit Preservation Plan gives, and a future tax benefit preservation plan is expected to give, our Board of Directors significant discretion to act in the best interests of shareholders.

General Risks

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If worldwide economic conditions become unstable, including as a result of protectionism and nationalism, other unfavorable changes in economic conditions, such as inflation, rising interest rates, a U.S.

government default on its obligations or a recession, and other events beyond our control, such as economic sanctions, natural disasters, results of global epidemics, pandemics, or contagious diseases, political instability, and armed conflicts and wars, such as the Russia-Ukraine and Israeli-Hamas wars, then our existing customers and prospective customers may re-

evaluate their decision to purchase our applications.

government default on its obligations or a recession, and other events beyond our control, such as economic sanctions, natural disasters, results of global epidemics, pandemics, or contagious diseases, political instability, and armed conflicts and wars, such as the Russia-Ukraine conflicts and the conflicts in the Middle East, then our existing customers and prospective customers may re-evaluate their decision to purchase our applications.

Weak global economic conditions or a reduction in information technology or software spending by our customers could harm our business in a number of ways, including longer sales cycles and lower prices for our applications.

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

What changed 10-K

Item 1A. Risk Factors