ITEM 1A. RISK FACTORS
Our business, financial condition, results of operations, prospects and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the factors discussed below. You should carefully consider the risk factors set forth below and elsewhere in this Annual Report on Form 10-K, together with all the other information included in this Annual Report on Form 10-K. The risks and uncertainties described in this Annual Report on Form 10-K or in any document incorporated by reference herein are not the only risks and uncertainties that we face. Additional risks that are not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. If any of the following risks and uncertainties develop into actual events, our business, financial condition, results of operations, prospects or the prevailing market price and performance of our common stock could be materially adversely affected, and you could lose your entire investment in our Company.
Summary of Principal Risk Factors
Risks Relating to Our Financial Condition and Indebtedness
We have a history of losses.
We may not be able to refinance, extend or repay our substantial indebtedness owed to Centre Lane Partners ("Centre Lane") which would have a material adverse effect on our financial condition and ability to continue as a going concern.
Our secured indebtedness may impair our ability to operate our business.
We have depended upon sales of equity securities and borrowings under the Centre Lane Senior Secured Credit Facility to provide operating capital.
Our economic performance has raised substantial doubt about our ability to continue as a going concern.
We are continuing to remediate significant deficiencies in our internal controls, and if we fail to establish and maintain adequate internal control over our financial and management system, our ability to accurately and timely report our financial results could be adversely affected, resulting in errors in our financial reporting, which could cause a loss of investor confidence.
We depend upon a substantial portion of our revenues from a limited number of customers.
We are subject to seasonal fluctuations in our revenues in future periods.
Our cash could be adversely affected if the financial institutions in which we hold our cash fail.
Risks Related to Our Operations
Past acquisitions and any future acquisitions, joint ventures, strategic alliances or similar transactions may not perform as expected.
The acquisition of new businesses is costly, and these acquisitions may not enhance our financial condition.
If we fail to detect advertising fraud or other actions that impacts our advertising campaign performance, we could harm our reputation with advertisers or agencies, which would cause our revenue and business to suffer.
If advertising on the internet loses its appeal, our revenue could decline.
Our success is dependent in part upon our ability to effectively expand and manage our relationships with our publishers.
Online security breaches or other disruptions of our information technology systems could harm our business.
We must generate high quality content in order to attract and retain users, advertisers and strategic buyers.
We may expend significant resources to protect our content or to defend claims of infringement by third parties, and if we are not successful, we may lose the rights to use material or be required to pay significant fees.
Failure to protect our intellectual property rights or claims by others that we infringe their intellectual property rights could substantially harm our business.
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Developing and implementing new and updated applications, features and services for our websites may be more difficult than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the costs.
If we are unable to obtain or maintain key website addresses, our ability to operate and grow our business may be impaired.
If we are unable to respond to rapid technological change, our products and services could become obsolete, and our reputation could suffer.
Our ability to deliver our content depends upon the quality, availability, policies and prices of certain third-party service providers.
We may be held liable for content or third-party links on our website or content distributed to third parties, and our general liability insurance may not be adequate to compensate us for all liabilities to which we are exposed.
We depend on our senior management team and other key employees, and the loss of any of them could harm our business.
We must hire, integrate and/or retain qualified personnel to support our business.
We deliver advertisements to users from third-party advertising services, which exposes our users to content and functionality over which we do not have ultimate control.
Our services may be interrupted if we experience problems with our network infrastructure.
Our systems may fail due to natural disasters, telecommunications failures and other events, any of which would limit user traffic.
We are unable to predict the impacts of any potential pandemic or outbreak of disease on our business.
Privacy violations could impair our business.
We are subject to several regulatory risks, and any failure to comply with various regulations could adversely impact our business.
Litigation is both costly and time-consuming, and there is no certainty of a favorable result.
Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed.
We may be adversely affected by the effects of inflation.
Our platform relies on third-party open source software components.
The effectiveness of certain services we offer depends on our ability to collect and use online data.
The rejection of digital advertising by consumers, through opt-in, opt-out or ad-blocking technologies or other means or the restriction on the use of third party-cookies, mobile device identifiers or other tracking technologies, could adversely affect our business, results of operations, and financial condition.
If ad formats and digital device types develop in ways that prevent advertisements from being delivered to consumers, our business, results of operations, and financial condition may be adversely affected.
Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
We could experience a decline in renewals or demand for our subscription-based research services.
We may be unable to develop and offer new research products and services.
Our creative advertising services division may not be able to remain competitive or retain key clients.
Rapid changes in technology, including advancements in artificial intelligence, and intense competition in our markets could adversely affect our business.
Risks Related to the Ownership of Our Securities
There is a limited public market for our common stock and such market may become more limited if our common stock is moved to the OTCID Basic Market tier of the OTC Markets Group.
We have outstanding options and warrants to purchase approximately 6% of our outstanding common stock, which will have a dilutive effect on our existing shareholders if converted or exercised.
The concentration of stock ownership and control by Centre Lane, and our debt transaction with Centre Lane, may cause conflicts of interests that may adversely affect us.
Some provisions of our charter documents and Florida law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.
Our Company has a concentration of stock ownership and control, which may have the effect of delaying, preventing or deterring a change of control.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
We may issue additional shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.
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RISKS RELATING TO OUR FINANCIAL CONDITION AND INDEBTEDNESS
We have a history of losses.
We incurred significant net losses for the years ended December 31, 2025, and 2024, and at December 31, 2025, we had a significant accumulated deficit. There is substantial doubt that we will be able to significantly increase our revenues and gross profit to a level which supports profitable operations and provides sufficient funds to pay our operating expenses and other obligations as they become due. The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors. The Company is currently exploring all strategic alternatives, including restructuring or refinancing its debts, seeking additional debt, such as borrowings under the Centre Lane Senior Secured Credit Facility or seeking equity capital. The ability to access the capital market is also dependent on the stock volume and market price of the Company's stock, which cannot be assured. The Company may need to pursue other measures including reducing or delaying certain business activities, reducing general and administrative expenses, and reducing its headcount.
We may not be able to refinance, extend or repay our substantial indebtedness owed to Centre Lane, which would have a material adverse effect on our financial condition and ability to continue as a going concern.
We anticipate that we will need a significant amount of cash in the near future in order to repay the portion of our outstanding debt obligations owed under the Centre Lane Senior Secured Credit Facility as and when they mature. As of December 31, 2025, we owed Centre Lane $86.1 million under the Centre Lane Senior Secured Credit Facility. Of this amount, $1.8 million is due on March 31, 2026, $1.4 million is due on June 30, 2026, and $1.4 million is due on September 30, 2026. The remaining balance of $81.5 million is due on December 20, 2026. If we have insufficient cash to pay these amounts, and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default. We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations. Upon a default in the Centre Lane Senior Secured Credit Facility, Centre Lane would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets. Accordingly, a default would have a material effect on our business and, if Centre Lane exercises its rights and remedies, we would likely be to seek protection.
Our secured indebtedness may impair our ability to operate our business.
As of December 31, 2025, and 2024, we had $86.1 million and $78.8 million in outstanding secured indebtedness under the Centre Lane Senior Secured Credit Facility, respectively. The instruments governing our existing secured indebtedness may inhibit our ability to incur additional debt and require significant payments from the proceeds of any debt or equity sale without the consent of the lender. In addition, we have additional covenants and obligations under the secured indebtedness which may limit our ability to operate our business. Our ability to repay the indebtedness may require us to dedicate a substantial portion of our cash flow for operations to payment of debt service and principal thereby reducing funds available to implement our business strategy. Our level of indebtedness could also provide limits in our ability to adjust to changing market conditions and vulnerability in the event of a downturn in economic conditions in the businesses in which we operate and impair our ability to obtain additional financing for our business strategy. If we are unable to meet our obligations under the secured indebtedness, the lender may call a default and our business could be foreclosed upon.
We have depended upon sales of equity securities and borrowings under the Centre Lane Senior Secured Credit Facility to provide operating capital.
Historically, we have not generated sufficient gross profit to pay our operating expenses, and we reported a net loss for the years ended December 31, 2025, and 2024. During 2025 and 2024, we were dependent on borrowings under the Amended and Restated Centre Lane Senior Secured Credit Facility (the "Centre Lane Senior Secured Credit Facility") to support our working capital needs. We are not currently a party to any binding agreements to raise additional capital and there are no assurances we will be able to raise any additional third-party capital. Although we recently improved our gross profit substantially and became cash flow positive, there can be no assurance that this trend will continue, and if it does not continue, and we are unable to raise sufficient additional working capital as needed, we may be unable to grow our Company, and we may not be able to pay our liabilities as they come due.
The Company’s economic performance has raised substantial doubt about our ability to continue as a going concern.
Our audited consolidated financial statements have been prepared assuming we will continue as a going concern. We have experienced substantial and recurring losses from operations, which losses have caused an accumulated deficit of $180.3 million at December 31, 2025. Our independent registered public accounting firm’s report on our audited consolidated financial statements includes an explanatory paragraph related to substantial doubt about the Company’s ability to continue as a going concern. Our audited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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If we fail to establish and maintain adequate internal control over our financial and management system, our ability to accurately and timely report our financial results could be adversely affected, resulting in errors in our financial reporting, which could cause a loss of investor confidence.
We must maintain effective financial and management systems and internal controls to meet our public company reporting obligations. Moreover, the Sarbanes-Oxley ("SOX") requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We have previously identified material weaknesses and significant deficiencies in our internal controls over financial reporting and have been working to remediate them. The existence of these deficiencies means that we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. Effective internal controls are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to remediate these deficiencies and maintain effective financial and management systems and internal controls could result in in our financial reporting, us being subject to regulatory action and a of investor confidence in the reliability of our financial statements.
We depend upon a substantial portion of our revenues from a limited number of customers.
For the year ended December 31, 2025, two customers represented 13.6% and 11.9% of our revenue, respectively, and for the year ended December 31, 2024, one customer represented 12.2% of our revenue. The loss of these customers could have a material adverse impact on our results of operations in future periods. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our services that will be generated by these customers. In addition, revenues from these customers may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. If these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services, or we could lose major customers. These customers have the option to cancel their agreements with us by providing advance written notice with the time period required for the advance notice being not longer than 30 days. Any such development could have an adverse effect on our margins and financial position and would affect our revenue, results of operations and/or the trading price of our common stock.
We are subject to seasonal fluctuations in our revenues in future periods.
Typically, advertising technology companies report a material portion of their revenues during the fourth calendar quarter as a result of holiday-related advertising spending. Our experience has been consistent with this trend. Because of seasonal fluctuations, there can be no assurance that the results of any particular quarter will be indicative of results for the full year or for future years or quarters.
Our cash could be adversely affected if the financial institutions in which we hold our cash fail.
The Company maintains domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks. The domestic bank deposit balances may exceed the FDIC insurance limits. Also, in the foreign markets we serve, we also maintain cash deposits in foreign banks, some of which are not insured or partially insured by the FDIC or other similar agency. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets.
RISKS RELATED TO OUR OPERATIONS
Past acquisitions and any future acquisitions, joint ventures, strategic alliances or similar transactions may not perform as expected.
We have consummated and may continue to consummate acquisitions, joint ventures and strategic alliances in order to provide increased capabilities to our existing products, supply new products and services or enhance our distribution channels. We may make strategic acquisitions of and investments in other businesses that offer complementary products, services and technologies, augment our market segment coverage and geographic locations, or enhance our technological capabilities. We may also enter into strategic alliances or joint ventures to achieve these goals. If we fail to integrate acquired businesses successfully into our existing businesses, or if these businesses fail to perform as well as we had anticipated, we could incur unanticipated expenses and losses, and the costs of the acquisition could exceed the benefits either in the short term or the long term.
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Risks that could have a material adverse effect on our business, results of operations or financial condition include, without limitation:
the inability of the acquired business to meet the sales and operating projections provided to us;
the difficulty of assimilating the operations and personnel of acquired businesses;
the unexpected loss of customers of the acquired business;
the diversion of management time and resources and the potential disruption of our ongoing business;
the potential inability of management to maximize our financial and strategic position as a result of an acquisition or investment;
the potential for costs and delays in implementing, and the potential difficulty in maintaining, uniform standards, controls, procedures and policies, including the integration of different information systems;
unexpected costs and time associated with upgrading the acquired business's internal accounting systems as well as educating each of its staff as to the proper methods of collecting and recording financial data;
the risk of entering market segments in which we have no or limited direct prior experience and where competitors in such market segments have stronger market segment positions;
potential unknown liabilities associated with acquired businesses;
the risk that there could be deficiencies in the internal controls of any acquired company or investments that could result in a material weakness in our overall internal controls taken as a whole; and
the potential loss of key employees of an acquired company.
We cannot assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions and other strategic transactions. These risks may prevent us from realizing the expected benefits from acquisitions and could result in the failure to realize the full economic value of a strategic transaction or the impairment of goodwill and/or intangible assets recognized at the time of an acquisition. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a short period of time.
The acquisition of new businesses is costly, and these acquisitions may not enhance our financial condition.
An element of our growth strategy has been to acquire companies which complement our business. The process to undertake a potential acquisition can be time-consuming and costly. We have expended and expect to continue to expend significant resources to undertake business, financial and legal due diligence on potential acquisition targets. In addition, there is no guarantee that we will acquire the company after completing due diligence. The process of identifying and consummating an acquisition could result in the use of substantial amounts of cash and exposure to undisclosed or potential liabilities of acquired companies. In some instances, we may be required to provide historic audited financial statements for up to two years for acquisition targets in compliance with the rules and regulations of the SEC. The necessity to provide these audited financial statements will increase the costs to us of consummating an acquisition or, if it is determined that the target company cannot obtain the requisite audited financials, we may be unable to pursue an acquisition which might otherwise be accretive to our business. In addition, even if we are successful in acquiring additional companies, there are no assurances that the operations of these businesses will enhance our future financial condition. To the extent that a business we acquire does not meet the performance criteria used to establish a purchase price, some or all of the goodwill related to that acquisition could be charged our future earnings, if any.
If we fail to detect advertising fraud or other actions that impacts our advertising campaign performance, we could harm our reputation with advertisers or agencies, which would cause our revenue and business to suffer.
Some campaigns may experience fraudulent and other invalid impressions, clicks or conversions that advertisers may perceive as undesirable, such as non-human traffic generated by machines that are designed to simulate human users and artificially inflate user traffic on websites. These activities could overstate the performance of any given advertising campaign and could harm our reputation. It may be difficult for us to detect fraudulent or malicious activity on websites where we do not own content and rely in part on our customers to control such activity. If we fail to detect or prevent fraudulent or other malicious activity, the affected advertisers may experience or perceive a reduced return on their investment and our reputation may be harmed. High levels of or activity could lead to with our solutions, to pay, demands for refunds or future credit or withdrawal of future business.
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If advertising on the internet loses its appeal, our revenue could decline.
Our business model may not continue to be effective in the future for a number of reasons, including:
a decline in the rates that we can charge for advertising and promotional activities;
our inability to create applications for our customers;
the fact that internet advertisements and promotions are, by their nature, limited in content relative to other media;
companies may be reluctant or slow to adopt online advertising and promotional activities that replace, limit or compete with their existing direct marketing efforts;
companies may prefer other forms of Internet advertising and promotions that we do not offer;
the quality or placement of transactions, including the risk of non-screened, non-human inventory and traffic, could cause a loss in customers or revenue; and
regulatory actions may negatively impact our business practices.
If the number of companies who purchase online advertising and promotional services from us does not grow, our revenue could decline.
Our success is dependent in part upon our ability to effectively expand and manage our relationships with our publishers.
Outside our owned and operated websites, our AdTech business is dependent upon our publishing partners to provide the media it sells. Our AdTech business depends on these publishers to make their respective media inventories available to it to use in connection with the campaigns that it manages, creates, or markets. Our AdTech business's growth depends, in part, on its ability to expand and maintain its publisher relationships within its network and to have access to new sources of media inventory such as new partner websites and Facebook pages that offer attractive demographics, innovative and quality content, and growing Web user traffic volume. Our AdTech business's ability to attract new publishers to its networks and to retain Web publishers currently in its networks will depend on various factors, some of which are beyond our control. These factors include, but are not limited to, our AdTech business's ability to introduce new and innovative products and services, its pricing policies, and the cost-efficiency to Web publishers of outsourcing their advertising sales. In addition, the number of competing intermediaries that purchase media inventory from Web publishers continues to increase. In the event our AdTech business is not able to maintain effective relationships with its publishers, its ability to distribute advertising campaigns will be which will reduce the value of its services and impact its results of operations in future periods.
Online security breaches or other disruptions of our information technology systems could harm our business.
The efficient operation of our business depends on our information technology systems. We collect, process, store, and share high volumes of personal information which is regulated by various laws. We rely on encryption and authentication technology to effect secure transmission of such information. These systems may be susceptible to damage, disruptions or shutdowns due to attacks by computer hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events. We may need to expend significant resources to protect against security breaches or to address problems caused by .
While we are unaware of any security breaches to date, experienced programmers or “hackers” could penetrate sectors of our systems. Because a hacker who is able to penetrate network security could misappropriate proprietary information or cause interruptions in our services, we may have to expend significant capital and resources to protect against or to alleviate problems caused by hackers. We frequently update and improve our information security environment and assess and adopt new methods, devices, and technologies, but our policies and information security controls may not keep pace with emerging threats. Additionally, we may not have a timely remedy against a hacker who is able to penetrate our network security. Threats to information security evolve constantly and are increasingly sophisticated and complex, which makes detecting and successfully them more . may in our network environment over long periods of time and could come from or spread to the networks and systems of our suppliers and customers. Such security could materially affect our operations, our reputation and us to risk of or . In addition, the transmission of computer viruses resulting from hackers or otherwise could us to significant liability. Our insurance policies may not be adequate to reimburse us for caused by security . We also face risks associated with security affecting third parties with whom we have relationships. In addition, government regulators may impose , , and other civil or consequences for security and information security.
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We must generate high quality content in order to attract and retain users, advertisers and strategic buyers.
The success of the Wild Sky Media brand depends largely on its ability to provide high quality content which is of interest to its users. If its users do not perceive its existing content to be of high quality, or if we introduce new content or enter into new business ventures that are not favorably perceived by users, we may not be successful in promoting and maintaining the Wild Sky Media brand. Any change in the focus of our operations as a result of the content we provide creates a risk of diluting our brand, confusing users and decreasing the value of our website traffic base to advertisers. If we are unable to maintain or grow the Wild Sky Media brand, our business could be harmed.
We may expend significant resources to protect our content or to defend claims of infringement by third parties, and if we are not successful, we may lose the rights to use material or be required to pay significant fees.
Our success and ability to compete are dependent on our proprietary content. We rely on copyright law to protect our content. While we actively take steps to protect our proprietary rights, these steps may not be adequate to prevent the infringement or misappropriation of our content, which could harm our business. In addition to content written by our employees, we also acquire content from various freelance providers and other third-party content providers. While we attempt to ensure that such content may be freely used by us, other parties may assert claims of infringement against us relating to such content. We may need to obtain licenses from others to refine, develop, market and deliver new content or services. We may not be able to obtain any such licenses on commercially reasonable terms or at all or rights granted pursuant to any licenses may not be valid and enforceable.
Failure to protect our intellectual property rights or claims by others that we infringe their intellectual property rights could substantially harm our business.
Our website domain names are crucial to our business. However, as with phone numbers, we do not have and cannot acquire any property rights in an internet address. The regulation of domain names in the U.S. and in other countries is also subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business. We also rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated. Others may independently discover our trade secrets and proprietary information, and in such cases, we could not assert any trade secret rights such parties. and time-consuming could be necessary to enforce and determine the scope of our intellectual property rights. Therefore, in certain jurisdictions, we may be to protect our technology and designs third-party use, which could affect our ability to compete.
Developing and implementing new and updated applications, features and services for our websites may be more difficult than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the costs.
Attracting and retaining users of our websites requires us to continue to provide quality, targeted content and to continue to develop new and updated applications, features and services for our websites. If we are unable to do so on a timely basis or if we are unable to implement new applications, features and services without disruption to our existing ones, our ability to continue to expand our website traffic will be in jeopardy. The costs of development of these enhancements may negatively impact our ability to achieve profitability. There can be no assurance that the revenue opportunities from expanded website content, or updated technologies, applications, features or services will justify the amounts ultimately spent by us.
If we are unable to obtain or maintain key website addresses, our ability to operate and grow our business may be impaired.
Our website addresses, or domain names, are critical to our business. We currently own more than 142 domain names. However, the regulation of domain names is subject to change, and it may be difficult for us to prevent third parties from acquiring domain names that are similar to ours, that infringe our trademarks or that otherwise decrease the value of our brands. If we are unable to obtain or maintain key domain names for the various areas of our business, our ability to operate and grow our business may be impaired.
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If we are unable to respond to rapid technological change, our products and services could become obsolete, and our reputation could suffer.
The markets for our products and services are characterized by rapidly changing technology, evolving industry standards and increasingly sophisticated customer requirements. The introduction of products embodying new technology and the emergence of new industry standards can negatively impact the marketability of our existing products and can exert price pressures on existing products. Additionally, if our websites or services do not work as intended, or if we are unable to upgrade the functionality of our websites or services as needed to keep up with the rapid evolution of technology , our websites or services may not operate properly or as efficiently as those of our competitors, which could harm our business. It is critical to our success that we are able to anticipate and react quickly to changes in technology or in industry standards and to successfully develop, introduce, and achieve market acceptance of new, enhanced and competitive products and services on a timely basis and cost- basis. Software product design, development and involve , expense and the use of new development tools and learning processes. in software development processes are common, as are project , and either factor could our business. There can be no assurance that we will develop new products and services or and our existing products and services, that new products and services and and existing products and services will market acceptance or that the introduction of new products and services or existing products and services by others will not impact us. Our to develop products and services that are competitive in technology and price and that meet end-user needs could have a material effect on our business, financial condition or results of operations.
Our ability to deliver our content depends upon the quality, availability, policies and prices of certain third-party service providers.
We rely on third parties to provide website hosting services. In certain instances, we rely on a single service provider for some of these services. In the event the providers were to terminate our relationship or stop providing these services, our ability to operate our websites could be impaired. Our ability to address or mitigate these risks may be limited. The failure of all or part of our website hosting services could result in a loss of access to our websites which would harm our results of operations.
We may be held liable for content or third-party links on our website or content distributed to third parties, and our general liability insurance may not be adequate to compensate us for all liabilities to which we are exposed.
As a publisher and distributor of content over the internet, including links to third-party websites that may be accessible through our websites, or content that includes links or references to a third-party’s website, we face potential liability for defamation, negligence, copyright, patent or trademark infringement and other claims based on the nature, content or ownership of the material that is published on or distributed from our websites. These types of claims have been brought, sometimes successfully, against online services, websites and print publications in the past. Other claims may be based on errors, or false or misleading information provided on linked websites, including information deemed to constitute professional advice such as legal, medical, financial or investment advice. Although we carry general liability insurance, our insurance may not be adequate to indemnify us for all liabilities imposed. Any liability that is not covered by our insurance or is in excess of our insurance coverage could our financial condition and business. Implementing measures to reduce our exposure to these forms of liability may require us to spend substantial resources and limit the of our websites to users.
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We depend on our senior management team and other key employees, and the loss of any of them could harm our business.
We rely on our leadership team and other key employees. From time to time, there are changes in our management team resulting from the hiring or departure of executives or other key employees, which could disrupt our business. Although some of our senior management are parties to an employment contract with us, some of our senior management and key employees are employed on an at will basis, which means that they could terminate their employment with us at any time. The loss of one or more of our executive officers or key employees could have a material adverse effect on our business.
We must hire, integrate and/or retain qualified personnel to support our business.
Our success also depends on our ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense, and we may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we fail to attract and retain qualified personnel, our business may suffer.
We deliver advertisements to users from third-party advertising services, which exposes our users to content and functionality over which we do not have ultimate control.
We display pay-per-click, banner, cost per acquisition (“CPM”), direct, and other forms of advertisements to users that come from third-party advertising services. We do not control the content and functionality of such third-party advertisements and, while we provide guidelines as to what types of advertisements are acceptable, there can be no assurance that such advertisements will not contain content or functionality that is harmful to users. Our inability to monitor and control what types of advertisements get displayed to users could negatively impact our reputation and have a material adverse effect on our business, financial condition and results of operations.
Our services may be interrupted if we experience problems with our network infrastructure.
Various risks could interrupt access to our primary network infrastructure or data, exposing us to significant costs and other liabilities. Our revenue depends on technology for critical business operations, providing services to our clients, delivering and measuring advertising impressions, operating our ad exchange, and impression placement. That technology further depends on our IT systems' continuing and uninterrupted performance. Our IT infrastructure operates on cloud-based service providers, Software as a Service ("SaaS") providers), and managed services housed in third-party commercial data centers, including primary and secondary locations, which are regionally dispersed to mitigate the impact of a localized event. This infrastructure relies on multiple internet service providers ("ISPs"), content delivery networks ("CDNs"), domain name systems ("DNS providers"), and mobile networks for operations. In addition, our systems interact with the systems of buyers and sellers and their contractors.
Any damage to, or failure of, these systems could result in interruptions to the availability or functionality of our service. Moreover, the failure of our data center hosting facilities or any other third-party providers to meet our capacity requirements or dramatically increased costs of such resources, could result in interruptions in the availability or functionality of our solutions or impede our ability to scale our operations. All of these providers and systems are vulnerable to disruption and/or damage from several sources, many of which are beyond our control, including without limitation: (i) loss of adequate power or cooling and telecommunications failures, (ii) fire, flood, earthquake, hurricane, and other natural disasters, (iii) software and hardware errors, , or crashes, (iv) financial , and (v) computer viruses, malware, hacking, terrorism, and similar .
Cyberattacks present a severe threat because they are difficult to prevent and remediate, are constantly evolving and improving, and can be used to defraud our buyers and sellers and their clients to steal confidential or proprietary data from us, our clients, or their users. Artificial intelligence has the potential to exacerbate cybersecurity threats, increasing their frequency and sophistication. Malfunctions or failure of our systems or systems that interact with our systems, or inaccessibility or corruption of data, could disrupt our operations and negatively impact our business. This could impact our business operations to a level in excess of any applicable business interruption insurance, result in potential liability to buyers and sellers, and affect our reputation and ability to sell our solution.
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Our systems may fail due to natural disasters, telecommunications failures and other events, any of which would limit user traffic.
Our websites are hosted by third-party providers. Any disruption of the computing platform at these third-party providers could result in a service outage. Fire, floods, earthquakes, power loss, telecommunications failures, break-ins, supplier failures to meet commitments and similar events could damage these systems and cause interruptions in the hosting of our websites or services. Computer viruses, electronic break-ins or other similar disruptive problems could cause users to stop visiting our website and could cause advertisers to terminate their agreements with us. In addition, we could lose advertising revenues during these interruptions and user satisfaction could be impacted if the service is or . If any of these circumstances occurred, our business could be . Our insurance policies may not compensate us for that may occur due to any of or in our systems.
Our websites and other services must accommodate high volumes of traffic and deliver frequently updated information. While we have not experienced any systems failures to date, it is possible that we may experience systems failures in the future and that such failures could have a material adverse effect on our business. In addition, our users and clients depend on internet service providers, online service providers and other website operators for access to our websites and services. Many of these providers and operators have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems and outside of our control. Any of these system failures could harm our business, financial condition and results of operations.
We are unable to predict the impacts of any potential pandemic or outbreak of disease on our business.
Our business and operations could be adversely affected by future health pandemics or outbreaks of disease, impacting the markets and communities in which we, our third-party vendors and customers operate. Because our Company operates in the digital advertising industry, unlike a brick and mortar-based company, predicting the impact of future health pandemics on our Company is difficult.
In addition, we cannot predict the impact any future pandemic or outbreak of a disease, or a catastrophic event will have on our business partners and third-party vendors, and we may be adversely impacted as a result of the adverse impact our third-party vendors suffer. We maintain long-standing relationships with Google and others that provide access to hundreds of thousands of advertisers from which most of our real-time bidding and digital publishing revenue originates. Any adverse impact on the operations of those companies would have a correspondingly adverse impact on our revenues in future periods. To the extent a pandemic or other catastrophic event adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. Any of the foregoing factors, or other cascading effects of the pandemic that are not currently foreseeable, could adversely impact our business, financial performance and condition, and results of operations.
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Privacy violations could impair our business.
We have a policy against using personally identifiable information obtained from users of our websites without the user’s permission. In the past, the Federal Trade Commission has investigated companies that have used personally identifiable information without permission or in violation of a stated privacy policy. If we use personal information without permission or in violation of our policy, we may face potential liability for invasion of privacy for compiling and providing information to our corporate customers and electronic commerce merchants. In addition, legislative or regulatory requirements may heighten these concerns if businesses must notify internet users that the data may be used by marketing entities to direct product promotion and advertising to the user. For example, California has adopted the California Consumer Privacy Act (the “CCPA”), as amended by the California Privacy Rights Act (the “CPRA”), which is intended to protect consumer privacy rights, and, among other things, provide California residents with the ability to know what information companies collect about them, to request, in certain circumstances, the deletion of such information, and to affirmatively opt out of the sale or “sharing” of their personal information. Eighteen other states have passed comprehensive privacy laws similar to the CCPA and the CPRA, and a federal consumer privacy law has also been proposed. Similar laws may be implemented in other jurisdictions that we do business in and in ways that may be more restrictive than the CCPA or the CPRA, increasing the cost of compliance, as well as the risk of , on our business. Other countries and political entities, such as the EU, have also adopted such legislation or regulatory requirements. If consumer privacy are not addressed, our business, financial condition and results of operations could be materially .
We are subject to several regulatory risks, and any failure to comply with various regulations could adversely impact our business.
We are subject to a number of domestic and, to the extent our operations are conducted outside the U.S., foreign laws and regulations that affect companies conducting business on the internet and through other electronic means, many of which are still evolving and could be interpreted in ways that could harm our business. U.S. and foreign regulations and laws potentially affecting our business are evolving frequently. We currently have not developed our internal compliance program, nor do we have policies in place to monitor compliance. Instead, we rely on the policies of our publishing partners. If we are unable to identify all regulations to which our business is subject and implement effective means of compliance, we could be subject to enforcement actions, lawsuits and penalties, including but not limited to fines and other monetary liability or injunction that could prevent us from operating our business or certain aspects of our business. In addition, the evolving and at times overlapping regulatory regimes to which the Company is subject may change at any time. Any changes to existing laws or regulations, or the adoption of new laws or regulations, may require changes to our products or services, restrict or impose additional costs upon the conduct of our business or cause users to material aspects of our services. Any such action could have a material effect on our business, results of operations and financial condition.
Litigation is both costly and time-consuming, and there is no certainty of a favorable result.
We may be involved in lawsuits and regulatory actions, both in and outside the ordinary course of our business, with customers, employees and others. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract management’s attention from core business operations and impact operating results, particularly if a lawsuit results in an unfavorable outcome, or could harm the Company’s reputation with customers, employees, investors and others. Litigation is both costly and time-consuming and often results in the diversion of management time and resources. All or a portion of our costs may not be covered by insurance, and there can be no assurance that we will prevail in any such matter.
Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed.
Our industry is intensely competitive. To sustain and grow our revenue, we must continuously respond to the different trends driving our industry. We generally have flexible master services agreements in place with our customers. Such agreements allow our customers to change the amount of spend through our platform or terminate our services with limited notice. As a result, the introduction of new entrants or technology that are superior to or that achieve greater market acceptance than our products and solutions could negatively impact our revenue. In such an event, we may experience a reduction in market share and may have to respond by reducing our prices, resulting in lower profit margins for us. There has also been rapid evolution and consolidation in the marketing technology industry, and we expect this trend to continue. Larger companies typically have more assets to purchase emerging companies or technologies, which gives them a competitive edge. If we are not able to effectively compete with these consolidated companies, we may not be able to maintain our market share and may experience a reduction in our revenue.
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We may be adversely affected by the effects of inflation.
Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices, we charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.
Our platform relies on third-party open source software components.
Failure to comply with the terms of the underlying open source software licenses could expose us to liabilities, and the combination of open source software with code that we develop could compromise the proprietary nature of our platform. Our platform utilizes software licensed to us by third-party authors under “open source” licenses and we expect to continue to utilize open source software in the future. The use of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. To the extent that our platform depends upon the successful operation of the open source software we use, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay new solution introductions, result in a of our platform and our reputation. For example, or in open source software could render it to or security attacks, and, in conjunction, make our systems more to data . Furthermore, some open source licenses require that proprietary source code combined with, linked to or distributed with such open source software be released to the public, and may also prohibit charging fees for the use of the software. If we combine, link or distribute our proprietary software with open source software in a specific manner, we could, under some open source licenses, be required to release the source code of our proprietary software to the public. This could also us from charging license fees. This would allow our competitors to create similar solutions with lower development effort and time and ultimately put us at a competitive .
The effectiveness of certain services we offer depends on our ability to collect and use online data.
New tools used by consumers to limit data collection, regulatory restrictions and potential changes to web browsers and mobile operating systems affect our ability to collect such data, which could harm our operating results and financial condition. The ability of our AdTech business to deliver high quality solutions to its customers is based on its technology’s capability to derive relevant, actionable insights from the data that it ingests into its systems and its ability to execute marketing programs across digital channels. The future of digital data collection practices is evolving, with some prominent companies in the industry recently announcing that they will implement their own individual data collection tools and phase out others. This approach may or may not be compatible with our current operations in those channels and platforms. It is yet to be determined if there will be an industry-wide framework for targeting consumers in a digital environment. Furthermore, regulatory and legislative actions may influence which data collection tools are permitted in various jurisdictions and may further restrict our data collection efforts. Without this incremental data, we may not have sufficient insight into the consumer’s activity to provide some of our current tools, products, and services, which may impact our capacity to execute our customers’ programs efficiently and effectively. Various digital tracking tools may be deleted or blocked by consumers. The most commonly used internet browsers also allow consumers to modify their browser settings to block first-party cookies (placed directly by the publisher or website owner that the consumer intends to interact with), which are not affected by changes from web browsers and operating systems, or third-party cookies (placed by parties that do not have direct relationship with the consumer), which some browsers may block by . Mobile devices using Android and iOS operating systems limit the ability of cookies, or similar technology, to track consumers while they are using applications other than their web browser on the device. Even if cookies and ad blockers do not ultimately have an effect on our business, investor about the utility and robustness of these tracking technologies could limit demand for our stock and cause its price to . We also partner with third-party data suppliers and publishers. When we purchase or license from third-party data suppliers, we are dependent upon our ability to obtain such data on commercially reasonable terms and in compliance with applicable regulations. If a substantial number of data suppliers were to withdraw or withhold their data from us, or if we had to our ties with data suppliers either due to commercial or regulatory reasons, our ability to provide products to our customers could be materially impacted, which could result in decreased revenues and operating results. We cannot provide assurance that we will be in maintaining our relationships with these external data source providers or that we will be to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be to obtain data from alternative sources if our current sources become .
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The rejection of digital advertising by consumers, through opt-in, opt-out or ad-blocking technologies or other means or the restriction on the use of third party-cookies, mobile device identifiers or other tracking technologies, could adversely affect our business, results of operations, and financial condition.
Our AdTech division, research division, and publishing division use, in various ways, “cookies,” or small text files placed on consumer devices when an Internet browser is used, as well as mobile device identifiers, to gather data in connection with certain of their products and offerings. These cookies and mobile device identifiers may record information such as when a consumer views or clicks on an advertisement, when a consumer visits a website, the consumer’s location, and browser or other device information. Third party vendors may also share their information about consumers’ interests with us or give us permission to use their cookies and mobile device identifiers. We use data from cookies, mobile device identifiers, and other tracking technologies for various purposes, including—for our AdTech division—helping advertisers decide whether to bid on, and how to price, an ad impression in a certain location, at a given time, for a particular consumer. Without cookies, mobile device identifiers, and other tracking technology data: (i) transactions processed through our AdTech division would be executed with less insight into consumer activity, reducing the precision of advertisers' decisions about which impressions to purchase for an advertising campaign, which could make placement identifiers advertising through our platform less valuable, and harm our revenue; (ii) we might no longer be able to continue to provide certain products we currently offer, such as certain audience segments; (iii) vendors who help us monetize our advertising inventory on our owned and operated websites might face in monetizing that inventory. If our ability to use cookies, mobile device identifiers or other tracking technologies is limited, we may be required to develop or obtain additional applications and technologies to compensate for the of cookies, mobile device identifiers and other tracking technology data, which could be time consuming or to develop, less , and subject to additional regulation. Additionally, consumers can, with increasing ease, implement technologies that limit our ability to collect and use data to deliver advertisements or provide services or products. Cookies may be deleted or blocked by consumers. The most commonly used Internet browsers allow consumers to modify their browser settings to block first-party cookies (placed directly by the publisher or website owner that the consumer intends to interact with) or third-party cookies (placed by parties, like us, that have no direct relationship with the consumer), and some browsers block third-party cookies by . Some prominent technology companies, including Google, have also announced intentions to the use of cookies, and to develop alternative methods and mechanisms for tracking consumers. As companies replace cookies, it is possible that such companies may rely on proprietary algorithms or statistical methods to track consumers without cookies, or may utilize log-in credentials entered by consumers into other web properties owned by these companies, such as their email services, to track web usage, including usage across multiple devices. Alternatively, such companies may build different and potentially proprietary consumer tracking methods into their widely-used web browsers. Although we believe it is possible for our businesses to adapt and continue to provide their services and products without cookies, this transition could be more , , or more expensive than we currently anticipate, and could materially affect our ability to serve our customers, and our business, results of operations, and financial condition could be affected. Mobile devices using Android and iOS operating systems limit the ability of cookies to track consumers while they are using applications other than their web browser on the device. As a consequence, fewer cookies may be set in browsers or be accessible in mobile devices, which could affect our business. Some consumers also download “ad blocking” software on their computers or mobile devices, not only for privacy reasons, but also to counteract the effect advertisements can have on the consumer experience, including increased load times, data consumption, and screen overcrowding. Ad-blocking technologies and other global privacy controls may prevent some third-party cookies, or other tracking technologies, from being stored on a consumer's computer or mobile device. If more consumers adopt these measures, it could reduce the volume or effectiveness and value of advertising, which could affect our business, results of operations, and financial condition. Even if ad blockers do not ultimately have an effect on our business, investor about ad blockers could cause our stock price to .
If ad formats and digital device types develop in ways that prevent advertisements from being delivered to consumers, our business, results of operations, and financial condition may be adversely affected.
Our AdTech division depends upon the ability of its platform to provide advertising for a variety of digital devices, and the major operating systems or Internet browsers that run on them. The design of digital devices and operating systems or browsers is controlled by third parties that may also introduce new devices and operating systems or modify existing ones, and our access to content on certain devices may be limited. If our platform cannot operate effectively with popular devices, operating systems, or internet browsers, our business, results of operations, and financial condition could be adversely affected.
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Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
We rely upon a combination of trade secrets, third-party confidentiality and non-disclosure agreements, additional contractual restrictions on disclosure and use, and trademark, copyright, patent, and other intellectual property laws to establish and protect our proprietary technology and intellectual property rights. We currently rely on copyright laws to protect computer programs related to our platform and our proprietary technologies, although to date we have not registered for statutory copyright protection. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. Historically, we have prioritized keeping our technology architecture, trade secrets, and engineering roadmap private, and as a general matter, have not patented our proprietary technology. As a result, we cannot look to patent enforcement rights to protect much of our proprietary technology. Any issued patents may be challenged, invalidated, or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be to all necessary or patent applications at a reasonable cost or in a timely manner. While it is our policy to protect and our rights to our intellectual property, we cannot predict whether steps taken by us to protect our intellectual property will be adequate to prevent , , dilution, or other of our intellectual property rights. Third parties may or our intellectual property rights, third parties may intellectual property rights held by us, and pending and future trademark and patent applications may not be approved. These may result in restrictions on our use of our intellectual property or the conduct of our business. In any of these cases, we may be required to expend significant time and expense to prevent or to enforce our rights. We also cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. parties may also attempt to copy or obtain and use our technology to develop applications with the same functionality as our solutions, and policing use of our technology and intellectual property rights is and may not be . In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those of the United States, and mechanisms for enforcement of our intellectual property rights in such countries may be . If we are to protect our intellectual property rights (including in particular, the proprietary aspects of our platform) we may find ourselves at a competitive to others who have not incurred the same level of expense, time and effort to create, and protect their intellectual property. Our customer agreements generally restrict the use of our confidential information solely to such customer’s use in connection with their use of our services. In spite of such , reverse engineering our software or the theft or of our confidential information could occur by customers or other third parties who have access to our technology. We also endeavor to enter into agreements with our employees and contractors in order to limit access to and disclosure of our confidential information, as well as to clarify rights to intellectual property and technology associated with our business. These agreements may not effectively grant all necessary rights to any that may have been developed by the employees or consultants party thereto. In addition, these agreements may not effectively prevent use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of use or disclosure of our confidential information, intellectual property, or technology. Furthermore, protecting our intellectual property is particularly after our employees or our contractors end their relationship with us, and, in some cases, decide to work for our competitors. Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be without discovery or adequate remedies.
We could experience a decline in renewals or demand for our subscription-based research services.
The success of our insights business depends in part upon retaining (on both a client company and dollar basis) and enriching existing client relationships for our research products and services and for consulting services. Future declines in client retention or failure to generate demand for and new sales of our research services due to competition, changes in our offerings, or otherwise, could have an adverse effect on our results of operations and financial condition. Consulting engagements generally are project-based and non-recurring. A decline in our ability to fulfill existing or generate new consulting engagements could have an adverse effect on our results of operations and financial condition.
We may be unable to develop and offer new research products and services.
The future success of our insights business will depend in part on our ability to offer new products and services. These new products and services must successfully gain market acceptance by anticipating and identifying changes in client requirements and changes in the technology industry and by addressing specific industry and business organization sectors. The process of internally researching, developing, launching, and gaining client acceptance of a new product or service, or assimilating and marketing an acquired product or service, is risky and costly. We may not be able to introduce new, or assimilate acquired, products or services successfully. Our failure to do so would adversely affect our ability to maintain a competitive position in our market and continue to grow our business.
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Our creative advertising services division may not be able to remain competitive or retain key clients.
Clients periodically review and change their advertising, marketing and corporate communications requirements and relationships. If we are unable to remain competitive or retain key clients, our business, results of operations and financial position may be adversely affected. We operate in a highly competitive industry. Key competitive considerations for retaining existing clients and winning new clients include our ability to develop solutions that meet client needs in a rapidly changing environment, the quality and effectiveness of our services and our ability to serve clients efficiently. From time to time, clients may put their advertising, marketing and corporate communications business up for competitive review. To the extent that we are not able to remain competitive or retain key clients, our revenue may be adversely affected, which could have a material adverse effect on our business, results of operations and financial position.
Rapid changes in technology, including advancements in artificial intelligence, and intense competition in our markets could adversely affect our business.
We face intense competition in the marketplace and are confronted by rapidly changing technology, including advancements in artificial intelligence (“AI”), evolving industry standards and consumer needs, and the frequent introduction of new solutions by our competitors to which we must adapt and respond. Our future success will depend in part upon our ability to enhance our existing solutions and to develop and introduce new products and services in a timely manner with features and pricing that meet changing client and market requirements. If we fail to effectively adopt AI technologies in our products or operations, we may be at a competitive disadvantage relative to companies that are able to more effectively leverage such technologies.
Advancements in artificial intelligence present both opportunities and risks to our business, particularly within the context of the open internet and digital advertising. AI-driven platforms, especially those integrated with large technology platforms or closed ecosystems, have the potential to alter the competitive dynamics of digital advertising by changing the way users access information and content on the open internet. This shift could reduce advertiser reliance on the open internet and create challenges for independent publishers, which in turn could negatively impact our business model and the demand for our advertising solutions.
In addition, the increasing use of AI-powered search tools and generative AI services may allow users to obtain information directly from AI-generated responses rather than visiting publisher websites. This shift could reduce traffic to our publishing platforms, decrease user engagement and negatively affect advertising revenue generated from those properties. The rapid evolution of AI technologies could also change advertiser demand, reduce demand for traditional display advertising or shift advertising budgets to new formats and approaches. If we are unable to respond to these technological developments, adapt our products and services, or compete effectively with AI-driven platforms and ecosystems, our business, financial condition and results of operations could be adversely affected
RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES
There is a limited public market for our common stock and our shares may be quoted on a lower tier of the OTC Markets.
Our shares of common stock, par value $0.01 per share, (the "common stock") are currently quoted for trading on the OTCQB Market. There is a limited trading market for our shares of common stock and a robust trading market for our securities may not develop in the foreseeable future. If no market develops, it may be difficult or impossible for you to sell your shares if you should desire to do so. There is extremely limited and sporadic trading of our common stock, and no assurance can be given, when, if ever, an active trading market will develop or, if developed, that it will be sustained. In addition, if we fail to maintain the continued eligibility requirements for the OTCQB Market, including the minimum bid price requirement, our common stock may be removed from the OTCQB Market and quoted on a lower tier of the OTC Markets. Any such downgrade could further reduce the visibility, liquidity and trading activity of our common stock.
We have outstanding options and warrants to purchase approximately 6% of our outstanding common stock, which will have a dilutive effect on our existing shareholders if converted or exercised.
As of December 31, 2025, we had 181,032,929 shares of common stock outstanding, with options and warrants outstanding to purchase an aggregate of 10,528,233 shares of common stock. The conversion or possible exercise of the preferred notes, warrants and/or options, would increase the total outstanding shares of common stock by approximately 6% at December 31, 2025, which will have a dilutive effect on our existing shareholders.
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The concentration of stock ownership and control by Centre Lane, and our debt transaction with Centre Lane, may cause conflicts of interests that may adversely affect us.
We have entered into and may, in the future, enter into various debt transactions and agreements with Centre Lane, including the Centre Lane Senior Secured Credit Facility. Centre Lane may not have any fiduciary duty to make decisions in our best interest. Centre Lane generally is entitled to vote our common stock in accordance with its own interests, which may be contrary to our and your interests and Centre Lane is not obligated to offer us business opportunities or to offer to loan additional amounts to us. We believe that the debt transactions and agreements that we have entered into with Centre Lane are on terms that are at least as favorable as could reasonably have been obtained at such time from third parties. However, these relationships could create, or appear to create, potential conflicts of interest when our board of directors is faced with decisions that could have different implications for us and Centre Lane. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public’s perception of us, as well as our relationship with other companies and our ability to enter into new relationships in the future, which could have a material effect on our ability to do business. In addition, of interest may arise between us and Centre Lane. Centre Lane may favor its own interests over our and your interests.
Some provisions of our charter documents and Florida law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.
Provisions in our amended and restated articles of incorporation, as amended (the "Articles of Incorporation") and our amended and restated bylaws (the "Bylaws"), as well as provisions of Florida law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our shareholders, or remove our current management. These include provisions that:
permit our Board to issue up to 20,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;
provide that all vacancies on our Board, including as a result of newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
provide that shareholders seeking to present proposals before a meeting of shareholders or to nominate candidates for election as directors at a meeting of shareholders must provide advance notice in writing, and also satisfy requirements as to the form and content of a shareholder’s notice;
not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election; and
provide that special meetings of our shareholders may be called only by the Board or by the holders of at least 40% of our securities entitled to notice of and to vote at such meetings.
These provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our Board, who are responsible for appointing the members of our management. Section 607.0902 of the Florida Business Corporation Act provides provisions which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or beneficial to our shareholders. As permitted under Florida law, we have elected not to be governed by this statute. Any provision of our Articles of Incorporation, our Bylaws or Florida law that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their shares of common stock or warrants, and could also affect the price that some investors are willing to pay for our shares of common stock or warrants.
Our Company has a concentration of stock ownership and control, which may have the effect of delaying, preventing or deterring a change of control, or, in the case of ownership of our common stock by Centre Lane, causing a change of control.
Our common stock ownership is highly concentrated. As of December 31, 2025, Mr. W. Kip Speyer, our former Chairman of the Board, beneficially owned approximately 16.6% of our common stock. In addition, 10th Lane Partners LP, an affiliate of Centre Lane, beneficially owns approximately 26.1% of our common stock (which amount includes the holdings of two other Centre Lane affiliates) and an individual shareholder owns an additional 5.9% of our common stock. As a result of the concentrated ownership of the Company's stock, these people collectively, or Centre Lane individually, may be able to control all matters requiring shareholder approval, including the election of directors and approval of mergers and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our Company, or, in the case of Centre Lane, causing a change of control to benefit Centre Lane. It could also deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our Company, and it may affect the market price of our common stock.
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We do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. In addition, any future loan arrangements we enter into may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Therefore, there can be no assurance that any dividends on our common stock will ever be paid. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
We may issue additional shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.
Pursuant to our Articles of Incorporation, the aggregate number of shares of capital stock which we are authorized to issue is 344,000,000 shares, of which 324,000,000 shares are common stock, and 20,000,000 shares are “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our Board. Our Board is empowered, without shareholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stock shareholders. As of the filing of this Annual Report on Form 10-K, there is no outstanding preferred stock.
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ITEM 1B. UNRESOL VED STAFF COMMENTS
None .
ITEM 1C. CYBERSECURITY
Risk management and strategy
Cybersecurity is a critical aspect of our operations, and our board of directors and management prioritize safeguarding our digital assets and ensuring the integrity and confidentiality of sensitive information to protect our assets, customers, and stakeholders. Our cybersecurity program is managed by our Global IT Director and overseen by our executive leadership team and board of directors. It encompasses risk management, a management framework, governance, education and training across the organization, SOC2 compliance, and an incident response protocol.
We employ a proactive risk management strategy to identify, assess, track, and mitigate cybersecurity risks. Our risk assessment process involves continuous monitoring of our IT infrastructure, external vulnerability assessments, and reviews of our third-party relationships. We prioritize risks based on their potential impact on our operations and implement targeted controls and safeguards to mitigate identified threats.
Our Cybersecurity management framework is aligned with the Cybersecurity Framework (CSF) developed by the National Institute of Standards and Technology (NIST) and COBIT 2019. This framework provides a structured approach to managing our policies, standards, and processes, improving our cybersecurity posture. Additionally, we maintain SOC2 compliance, demonstrating our adherence to industry-recognized security standards and best practices.
Our board of directors and executive leadership team, through our Information Security Executive Charter, oversees our risk management program, of which cybersecurity represents an important component. Our Global IT Director is responsible for managing our risk management program, including our cybersecurity strategies and initiatives and the periodic review of our policies, standards, and risks. Our Global IT Director has over 25 years of experience in technology and security.
Our board of directors and executive leadership approves cybersecurity strategies, initiatives, and investments to ensure alignment with business objectives and risk tolerance.
In the event of a cybersecurity incident, we would follow an incident response protocol that includes procedures for incident tracking, escalation, containment, eradication, and recovery. As part of our incident response process, we would adhere to SEC reporting requirements related to cybersecurity incidents, providing timely and transparent disclosures as necessary.
Cybersecurity threats, and their evolving nature, pose a risk to us and our strategy, results of operations, and financial condition in the future. Our risk factors include further detail about the cybersecurity risks we face. To date, cybersecurity threats or incidents have not materially affected us or our operations. Our focus on risk management, governance, compliance, and incident response is intended to mitigate the potential harm posed by evolving cyber threats and challenges.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement. An addendum to the lease dated June 14, 2022, sets a lease renewal term of five years beginning upon completion of improvements to the office space by the landlord, which were completed on September 12, 2022. The annual base rent as of the beginning of this renewal term is approximately $143,000, with a provision for a 3% increase on each anniversary of the rent commencement date. The Company has the option to renew the lease for one additional five-year term.
During the year ended December 31, 2024, the Company entered into two sublease agreements for its Boca Raton corporate office suites. The subleases will continue for the remaining term on the initial lease agreement of three years with no option to extend. The aggregate minimum annual rental income under the subleases is approximately $137,000 with 3% escalations per annum. The Company retains the ability to use the address as its mailing address.
As of December 31, 2025, all the Company's employees work remotely. We periodically review our facility requirements and may acquire new facilities based on evolving business needs.
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