UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-39642
CXApp Inc.
(Exact name of registrant as specified in its charter)
Four Palo Alto Square, Suite 200 3000 El Camino Real Palo Alto, CA 94306
(Address of Principal Executive Offices) (Zip Code)
(650) 785-7171
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Warrants to purchase Class A common stock CXAIW The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
The aggregate market value of the Registrant’s shares of Class A common stock outstanding, other than shares held by persons who may be deemed affiliates of the Registrant, computed as of June 30, 2025 (the last business day of the Registrant’s most recently completed second fiscal quarter) was approximately $22,942,043.
As of March 24, 2026, there were 57,115,772 shares of the Registrant’s Class A common stock, par value $0.0001 per share, issued and outstanding.
CXAPP INC.
FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
Page
Part I. 1
Item 1. Business. 1
Item 1A. Risk Factors. 8
Item 1B. Unresolved Staff Comments. 33
Item 1C. Cybersecurity. 33
Item 2. Properties. 35
Item 3. Legal Proceedings. 35
Item 4. Mine Safety Disclosures. 35
Part II. 36
Item 6. [Reserved]. 36
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 56
Item 8. Consolidated Financial Statements and Supplementary Data. 56
Item 9A. Controls and Procedures. 57
Item 9B. Other Information. 58
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 58
Part III. 59
Item 10. Directors, Executive Officers and Corporate Governance. 59
Item 11. Executive Compensation. 66
Item 14. Principal Accountant Fees and Services. 72
Part IV. 73
Item 15. Exhibits, Financial Statement Schedules. 73
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This Annual Report on Form 10-K contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts, and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
A Glossary of Terms can be found in the next page for further information.
The forward-looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
The following summarizes the risks and uncertainties that could materially adversely affect our business, financial condition, results of operation and stock price. You should read this summary together with the more detailed description of each risk factor contained below. Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us,” or “our” refer to the business of CXApp.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
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Glossary of Terms
Unless otherwise stated in this Annual Report or the context otherwise requires, reference to:
● “Board” refers to the board of directors of CXApp;
● “Bylaws” refers to the existing bylaws of CXApp currently in effect;
● “Closing” refers to the closing of the Merger;
● “CXApp” refers to CXApp Inc., a Delaware Corporation;
● “DGCL” refers to the General Corporation Law of the State of Delaware;
● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
● “Incentive Plan” refers to the CXApp Inc. 2023 Equity Incentive Plan;
● “Inpixon” refers to Inpixon, a Nevada corporation;
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● “IRS” refers to the U.S. Internal Revenue Service;
● “JOBS Act” refers to the Jumpstart Our Business Startups Act of 2012;
● “KINS” refers to KINS Technology Group Inc., a Delaware corporation;
● “Merger Sub” refers to KINS Merger Sub Inc.;
● “Nasdaq” refers to the Nasdaq Capital Market;
● “Sarbanes-Oxley Act” refers to the Sarbanes-Oxley Act of 2002;
● “Securities Act” refers to the Securities Act of 1933, as amended;
● “SEC” refers to the United States Securities and Exchange Commission;
● “Sponsor” refers to KINS Capital, LLC, a Delaware limited liability company;
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PART I.
References in this Annual Report on Form 10-K (this “Annual Report”) to “we,” “us,” “our,” the “Company” or “CXApp” are to CXApp Inc., a Delaware corporation, and its subsidiaries. References to our “management” or our “management team” refer to our officers and directors.
Item 1. Business.
Overview
CXApp Inc. (“CXApp” or the “Company”) is a leading provider of AI-powered employee experience solutions, delivering enterprise-grade software that enhances workplace engagement, productivity, and operational efficiency. Our cloud-based, mobile-first platform integrates artificial intelligence, automation, and real-time analytics to streamline workplace interactions across people, spaces, and technology. By leveraging advanced mapping, location intelligence, and digital workplace tools, CXApp enables organizations to optimize hybrid work environments and foster meaningful employee experiences.
As businesses continue adapting to the evolving nature of work, CXApp is positioned as a strategic enabler of digital transformation, helping enterprises navigate the complexities of workspace utilization, employee engagement, and intelligent automation. Our commitment to innovation and customer success has allowed us to establish a strong presence in key industries, including technology, financial services, healthcare, and corporate real estate.
Products and Services
Our employee experience solution is a vertical software-as-a-service (or SaaS) platform for enterprise customers. Our technology platform delivers the following core components that work in combination to deliver an incredible experience for companies around the world.
Our flagship product, the CXAI Platform (pronounced “Sky”), provides a comprehensive suite of tools designed to empower employees and enable organizations to create smarter workplaces. Key components of the platform include:
The
CXAI Platform is offered through subscription-based licensing arrangements and is available for deployment through major cloud service
providers, including Amazon Web Services, Google Cloud Platform, and Microsoft Azure. The Company also provides implementation, configuration,
and ongoing support services in connection with customer deployments.
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Business Model
CXApp’s workplace solution is an AI-powered SaaS platform designed to meet the dynamic needs of enterprise organizations by providing a mobile-first approach to workplace management. Our platform empowers employees with a seamless, intelligent employee experience by integrating AI-driven insights, automation, and real-time analytics, ensuring a more efficient and engaging work environment. The CXApp platform delivers a comprehensive, cloud-based content management system (CMS), enabling customers to autonomously and dynamically configure workplace settings based on real-time data and evolving organizational needs. Our intelligent automation capabilities allow for personalized experiences, operational efficiency, and optimized space utilization at scale.
Our pricing structure consists of recurring software fees as well as a professional service fee to setup and deploy a new location or campus, including digitized maps and configurations at the global and regional level.
Technology Overview
CXApp’s platform is a
comprehensive employee experience solution that introduced a mobile-first mindset to everyday interactions and business needs to
help customers drive engagement across their global workforce. We bring employee experience initiatives together in one simple and
comprehensive system, so customers don’t have to host, manage, support or maintain one of their own. We
believe this results in low cost, low overhead and easy maintenance.
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Industry Background
Since 2009, digital transformation initiatives have steadily reshaped the corporate workplace, introducing advancements such as conference room signage, desk booking systems, next-generation intranets, and transparent communications. These technologies provided enterprises with an efficient way to integrate and automate key workplace functions. The shift toward flexible work models, including hot-desking and occupancy sensors, gained momentum in the late 2010s. However, the COVID-19 pandemic in 2020 accelerated the adoption of remote and hybrid work strategies. Organizations rapidly deployed workplace technology solutions to address immediate challenges, enabling employees to work efficiently from distributed locations. This period saw the rapid proliferation of third-party workplace applications, leading to increasingly siloed data and fragmented experiences. In the years following the pandemic, organizations have sought to balance flexibility with operational efficiency. By 2024, return-to-office initiatives gained traction, with companies refining their hybrid models and investing in AI-powered employee experience platforms to enhance employee engagement, productivity, and space utilization. As more tools and systems connect, comprehensive workplace analytics will become crucial for job roles such as corporate real estate, facilities, and even human resources as they’ll be able to glean cross-platform, actionable insights that impact spaces, technology, and the people that use them.
Trends
The Evolving Return-to-Office Landscape: Technology’s Role in Shaping the Future of Work
The workplace is undergoing a fundamental transformation as companies strive to balance operational efficiency with employee expectations. While many organizations are pushing for a return-to-office model of 3-5 days per week, many employees remain disengaged, uncertain about in-office benefits, and wary of rigid mandates. To bridge this gap, companies must rethink how they optimize space, foster engagement, and create an office environment that truly enhances productivity and collaboration.
A major challenge in today’s workplace is the lack of clarity and purpose behind the office experience. Employees question why they need to be physically present, struggle with unpredictable attendance from colleagues, and face inequities in hybrid work arrangements. Without clear value propositions for in-office work, attendance policies alone are not enough. Instead, businesses must focus on creating dynamic, tech-enabled workplaces that support both in-office and hybrid employees.
The Role of Technology in Reinventing Workplace Engagement
To successfully transition into this new era, organizations must adopt smarter workplace technologies that remove friction, improve collaboration, and provide real-time insights into how space is utilized. Key areas of focus include:
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Why We Believe Mobile is the Future of Workplace Connectivity
As companies continue phased re-entry strategies, mobile-first solutions are increasingly more critical. A workplace app serves as the central hub for booking resources, finding colleagues, receiving updates, and staying connected across distributed teams. The ability to manage workspaces, navigate changing office environments, and engage with real-time data is key to empowering employees and driving office attendance organically.
At CXApp we are leading
this transformation through our state-of-the-art employee experience platform, backed by 37 filed patents, including 17 which have
been granted. Our solutions are designed to help organizations navigate the complexities of modern work environments, optimize
office space, and foster a workplace that employees want to return to.
The Future of Work is Hybrid, Connected, and Intelligent
We believe the
future of the return-to-office model is not about rigid mandates — it’s about creating an office experience that
employees choose to be part of. We believe companies that invest in automation, real-time insights, and seamless digital experiences
will successfully bridge the gap between attendance goals and employee expectations. With the right technology in place,
organizations can transform the office into a hub of innovation, engagement, and productivity, setting the foundation for long-term
workplace success.
Competition
The market for our products and services is highly competitive, rapidly evolving, and subject to changing technology trends and customer demands. As a provider of AI-driven employee experience solutions, we operate in a new and emerging category of vertical SaaS that redefines traditional approaches to workplace management. Our innovative platform represents a shift in how organizations engage with their employees and optimize physical spaces, offering a new way to integrate digital workplace tools with physical environments. As a result, we face competition not only from established enterprise software vendors but also from emerging cloud-based providers and niche solution providers specializing in employee experience and workplace optimization.
Our primary competitors include:
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Research and Development Expenses
Our research and development
(R&D) activities have primarily been focused on enhancing our workplace app and mapping platform with additional features and capabilities
to strengthen the total offering of our workplace solutions. In addition, we have allocated development resources to integrating our
recently acquired technologies with our existing solutions, such as integrating our mapping and app platform, and incorporating “on
device” positioning and analytics capabilities within our platform. Our management believes that we must continue to dedicate a
significant number of resources to research and development efforts to maintain a competitive position in the market. Our products intersect
many emerging fields including AI, the metaverse, augmented reality and space management, and we plan to continue to innovate and patent
new methods to solve problems for our customers. While our R&D expenses have historically exceeded our revenues, we anticipate R&D
expenses will grow at a slower rate than our revenue, however, we may need additional funding to support our planned R&D activities
after the next 12 months or if we decide to accelerate the time to availability for planned development activities to grow faster or
meet customer demand.
Sales and Marketing
We utilize direct sales and marketing through sales representatives, who are compensated with a base salary and, in certain instances, may participate in incentive plans such as commissions or bonuses. To generate demand for our products and services, we utilize account-based marketing initiatives, lead gen and demand gen programs, tradeshows, webinars and other direct and indirect marketing activities to reach our target audience. Additionally, we have dedicated resources to support and grow our business through strategic channel and technology partner opportunities.
Our products are primarily sold on a recurring SaaS license model along with one-time implementation costs (for professional services). The SaaS model is typically for a multi-year contract and includes maintenance upgrades. It is common for our customers to expand our products to additional locations as well as implement new features resulting in additional revenue potential.
Customers
We believe in a unified workplace where employees have on-demand access to real-time communications, collaboration and contextual experiences in one app — from employee to employee, building to building, campus to campus. Customers use the CXApp platform to streamline operations in a single mobile app platform to deliver the best possible experience to employees whether they are onsite, in-person and everywhere in between.
We believe our unique approach to workplace apps offers customers a feature-rich, white label experience allowing the in-app experience to reflect each customer’s distinct business goals and brand identity. We go beyond point-solutions, offering a robust product that serves multiple uses backed by native applications, technology partner integrations and workplace analytics that help employees and operations make data-informed decisions.
Our customers include Fortune 1000 enterprises primarily in the United States with deployments globally across industries, including, but not limited to software/technology, financial services, next-gen auto manufacturing, entertainment and life science companies. A list of customers is available on our website at www.cxapp.com.
Intellectual Property
To establish and protect our proprietary rights, we rely on a combination of patents, trademarks, copyrights and trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements and other contractual rights. We do not believe that our proprietary technology is dependent on any single patent or copyright or groups of related patents or copyrights. We believe the duration of our patents is adequate relative to the expected lives of our products. Our patent portfolio offers protections including detecting objects and positioning in a 3D environment, indoor navigation with sensor fusion, wireless signal fingerprinting, source-based anonymity and time synchronization methods.
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In connection with the
terms of the Separation and Distribution Agreement, each of Inpixon and CXApp have granted the other party (the
“Licensee”) a limited worldwide, non-exclusive, irrevocable, royalty free, fully paid up, perpetual, non-exclusive
license to use, practice and otherwise exploit such intellectual property (with certain exceptions)
that is owned, controlled or purported to be owned or controlled by the other party (the “Licensor”) to the extent used,
practiced or otherwise exploited in the business of the Licensee during the twelve (12) months prior to the Distribution Time or is
reasonably anticipated to be used after the Distribution Time based on the written business or product plans existing as of the
Distribution Time, solely for the conduct of any business of the Licensee as conducted on or prior to the Distribution Time and
reasonably anticipated extension or evolutions thereof that are not substitutes for any product or service of the Licensor as of the
Distribution Time.
As of this time, and notwithstanding the license granted under the Separation and Distribution Agreement, we do not anticipate that any of our products and technologies will require reliance on any intellectual property retained by Inpixon.
Government Regulation
In general, we are subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employment and labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal and disclosure control obligations, securities regulation and anti-competition.
In general, we are subject to various federal, state, local and foreign laws and regulations and related enforcement, including those relating to data privacy, security and protection, intellectual property, employment and labor, anti-bribery, import and export controls, federal securities and tax. Additional laws and regulations relating to these areas likely will be passed in the future, and these or existing laws and regulations may be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on ways we operate our business. New and evolving laws and regulations, and changes in their enforcement and interpretation, may require changes to our products and services, or to our business practices and relationships generally, and may significantly increase our compliance costs and otherwise adversely affect our business and results of operations. As our business expands to include additional products and services, and our operations continue to expand internationally, our compliance requirements and costs may increase, and we may be subject to increased regulatory scrutiny.
Violations of one or more of these diverse legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations. To date, compliance with these regulations has not been financially burdensome.
Human Capital
Our success depends on our
ability to attract, develop, and retain top talent across our organization. We are committed to building an inclusive, and a high-performing
workforce aligned with our mission to “redefine the employee experience through intelligent space management.”
Workforce Demographics
As of March 24, 2026, we
employed approximately 35 full-time employees. Our workforce includes professionals in software engineering, product development, sales,
customer success, and corporate functions. A portion of our workforce is located outside the U.S., particularly in Canada and the Philippines.
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Compensation and Benefits
We offer competitive compensation packages, including base salary, performance-based bonuses, stock-based awards, and comprehensive benefits. Our equity program aligns employees with shareholder value creation.
We also provide flexible work arrangements, including hybrid and remote options, to support work-life balance.
Corporate History
CXApp Inc. was incorporated in Delaware on July 20, 2020, as KINS Technology Group Inc, our predecessor. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company was not limited to a particular industry or sector for purposes of consummating a Business Combination.
The registration statement for the Company’s Initial Public Offering became effective on December 14, 2020. On December 17, 2020, the Company consummated the Initial Public Offering of 27,600,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 3,600,000 Units, at $10.00 per Unit, generating gross proceeds of $276,000,000. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 10,280,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to KINS Capital LLC (the “Sponsor”) and certain funds and accounts managed by BlackRock, Inc. (the “Direct Anchor Investors” and which the Direct Anchor Investors, together with the Sponsor, are the “initial stockholders”).
The Company has one wholly
owned subsidiary, KINS Merger Sub Inc., which was incorporated in the State of Delaware on September 16, 2022 (“Merger Sub”).
Merger Sub had no activity from it’s date of incorporation, September 16, 2022, through March 14, 2023.
At the end of business on March 14, 2023, pursuant to the Merger Agreement, a business combination between KINS and Legacy CXApp was effectuated through the merger of Merger Sub with and into Legacy CXApp, with Legacy CXApp surviving as the surviving company and as a wholly owned subsidiary of KINS. KINS subsequently changed its name to CXApp, and shares of CXApp Class A common stock began trading on the Nasdaq on March 15, 2023.
Legacy CXApp was incorporated under the laws of the State of Delaware on September 19, 2022, specifically for the purpose of effecting the Separation and was a wholly owned subsidiary of Inpixon. Legacy CXApp has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions. Pursuant to the Separation and Distribution Agreement, (i) Inpixon undertook a series of internal reorganization and restructuring transactions to effect the transfer of its (direct or indirect) ownership of the Enterprise Apps Business to Legacy CXApp in the Separation and (ii) immediately prior to the Merger and after the Separation, Inpixon distributed 100% of the outstanding shares of CXApp common stock to Inpixon securityholders in the Distribution.
Corporate Information
We have four operating
subsidiaries: (i) Legacy CXApp, a Delaware corporation, 100% of the capital stock of which is owned by CXApp, (ii) CXApp US, Inc.
(formerly as Design Reactor Inc.), a California corporation (“CXApp US”), 100% of the capital stock of which is owned by
Legacy CXApp; (iii) CXApp Canada, Inc. (formerly as Inpixon Canada), a British Columbia corporation, based in Coquitlam, British
Columbia (“CXApp Canada”), 100% of the capital stock of which is owned by CXApp US; and (iv) CXApp Philippines, Inc.
(formerly as Inpixon Philippines, Inc.), a Philippines corporation (“CXApp Philippines”), 99.97% of the capital stock of
which is owned by CXApp US.
Our principal executive offices are located at Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, CA 94306. Our Canadian subsidiary maintains offices in Toronto, Ontario and our Philippines subsidiary maintains offices in Manila, Philippines. Our Internet website is www.cxapp.com. The information on, or that can be accessed through, our website is not part of this report, and you should not rely on any such information in making any investment decision relating to our common stock.
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Item 1A. Risk Factors.
In addition to the other information contained in this Annual Report, the following risks have the potential to impact the business and operations of CXApp. An investment in our securities involves a high degree of risk. You should carefully consider all the risks described in this Annual Report, together with the other information contained in this Annual Report. These risk factors are not exhaustive, and all investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of CXApp. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe are immaterial could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risk Factor Summary
Risks Relating to our Operations.
Risks Relating to our Growth
Risks Relating to our Personnel
Risks Relating to our Intellectual Property
Risks Related to Ownership of our Securities
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Risks Related to our Accounting Policies
Risks Related to Cybersecurity Threats
Risks Related to our Industry
Risks Related to External Factors and Third Parties
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Risks Relating to our Operations
We have a history of operating losses and there is no assurance that we will ever be able to earn sufficient revenue to achieve profitability or raise additional financing to successfully operate our business plan.
We have a history of operating
losses and may not earn sufficient revenue to support our operations. We have incurred recurring net losses of approximately $13,473
thousand and $19,408 thousand for the fiscal years ended 2025 and 2024, respectively. Our continuation is dependent upon attaining and
maintaining profitable operations and raising additional capital as needed, but there can be no assurance that we will be able to raise
any further financing.
Our ability to generate positive
cash flow from operations is dependent on implementing certain cost reductions and generating sufficient revenues. Based on our current
business plan, we may need additional capital to support our operations, which may be satisfied by additional debt or equity financings.
Future financings through equity offerings will be dilutive to existing stockholders. In addition, the terms of securities we may issue
in future capital transactions may be more favorable to new investors than our current investors. Newly issued securities may include
preferences, superior voting rights, and the issuance of warrants or other derivative securities. We may also issue incentive awards under
our equity incentive plans, which may have additional dilutive effects. We may also be required to recognize non-cash expenses in connection
with certain securities we may issue in the future such as convertible notes and warrants, which would adversely impact our financial
condition and results of operations. Our ability to obtain needed financing may be impaired by certain factors, including the condition
of the economy and capital markets, both generally and specifically in our industry, and the fact that we are not profitable, which could
affect the availability or cost of future financing. If the amount of capital we are able to raise from financing activities, together
with our revenues from operations, is not sufficient to satisfy our capital needs, we may need to reduce our operations by, for example,
selling certain assets or business segments.
Failure to manage or protect growth may be detrimental to our business because our infrastructure may not be adequate for expansion.
Our corporate strategy contemplates
potential future acquisitions and to the extent we acquire other businesses, we will also need to integrate and assimilate new operations,
technologies and personnel. The integration of new personnel will continue to result in some disruption to ongoing operations. The ability
to successfully manage growth in a rapidly evolving market requires effective planning and management processes. We will need to continue
to improve operational, financial, and managerial controls, reporting systems and procedures, and will need to continue to expand, train
and manage our workforce. There can be no assurance that we would be able to accomplish such an expansion on a timely basis. If we are
unable to affect any required expansion and are unable to perform our contracts on a timely and satisfactory basis, our reputation and
eligibility to secure additional contracts in the future could be damaged. The failure to perform could also result in contract terminations
and significant liability. Any such result would adversely affect our business and financial condition.
Insurance and contractual protections may not always cover lost revenue, increased expenses, or liquidated damages payments, which could adversely affect our financial results.
Although we maintain insurance and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and attempt, where feasible, to pass risks we cannot control to our customers, the proceeds of such insurance or the warranties, performance guarantees or risk sharing arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the future.
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Adverse judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results, and cash flows.
We may be a party to claims
that arise from time to time in the ordinary course of our business, which may include those related to, for example, contracts, sub-contracts,
protection of confidential information or trade secrets, adversarial proceedings arising from customer bankruptcies, employment of our
workforce and immigration requirements or compliance with any of a wide array of state and federal statutes, rules or regulations that
pertain to different aspects of our business. We may also be required to initiate expensive litigation or other proceedings to protect
our business interests. There is a risk that we will not be successful or otherwise be able to satisfactorily resolve any such claims
or litigation. In addition, litigation and other legal claims are subject to inherent uncertainties. Those uncertainties include, but
are not limited to, litigation costs and attorneys’ fees, unpredictable judicial or jury decisions and the differing laws and judicial
proclivities regarding damage awards among the states in which we operate. Unexpected outcomes in such legal proceedings, or changes in
management’s evaluation or predictions of the likely outcomes of such proceedings (possibly resulting in changes in established
reserves), could have a material adverse effect on our business, financial condition, results of operations and cash flows. Due to recurring
losses and net capital deficiency, our current financial status may increase our default and litigation risks and may make us more financially
vulnerable in the face of threatened litigation.
Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our business, financial condition or operating results.
If we are successful in consummating acquisitions, those acquisitions could subject us to a number of risks, including, but not limited to:
We cannot assure you that, following any acquisition, our continued business will achieve sales levels, profitability, efficiencies or synergies that justify the acquisition or that the acquisition will result in increased earnings for us in any future period. These factors could have a material adverse effect on our business, financial condition and operating results.
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The growth of our business is dependent on increasing sales to our existing customers and obtaining new customers, which, if unsuccessful, could limit our financial performance.
Our ability to increase revenues from existing customers by identifying additional opportunities to sell more of our products and services and our ability to obtain new customers depends on a number of factors, including our ability to offer high quality products and services at competitive prices, the strength of our competitors and the capabilities of our sales and marketing departments. If we are not able to continue to increase sales of our products and services to existing customers or to obtain new customers in the future, we may not be able to increase our revenues and could suffer a decrease in revenues as well.
If we are unable to sell additional products and services to our customers and increase our overall customer base, our future revenue and operating results may suffer.
Our future success depends, in part, on our ability to expand the deployment of technologies with existing customers and finding new customers to sell our products and services to. This may require increasingly sophisticated and costly sales efforts and may not result in additional sales. In addition, the rate at which our customers purchase additional products and services, and our ability to attract new customers, depends on a number of factors, including the perceived need for indoor mapping products and services, as well as general economic conditions. If our efforts to sell additional products and services are not successful, our business may suffer.
We may need additional cash financing and any failure to obtain cash financing, could limit our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges.
While we believe that we have sufficient cash funds to satisfy our working capital needs for the next 12 months, we expect that we may need to raise funds to continue our operations and implement our plans to grow our business. However, if we decide to seek additional capital, we may be unable to obtain financing on terms that are acceptable to us or at all. If we are unable to raise the required cash, our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges could be limited.
If we cannot collect our receivables or if payment is delayed, our business may be adversely affected by our inability to generate cash flow, provide working capital, or continue our business operations.
Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us for products received from us and any work performed by us. The timely collection of our receivables allows us to generate cash flow, provide working capital and continue our business operations. Our customers may fail to pay or delay the payment of invoices for several reasons, including financial difficulties resulting from macroeconomic conditions or lack of an approved budget. An extended delay or default in payment relating to a significant account will have a material and adverse effect on the aging schedule and turnover days of our accounts receivable. If we are unable to timely collect our receivables from our customers for any reason, our business and financial condition could be adversely affected.
Defects, errors, or vulnerabilities in our products or services or the failure of such products or services to prevent a security breach, could harm our reputation and adversely affect our results of operations.
Because our location-based products and services are complex, they have contained and may contain design or manufacturing defects or errors that are not detected until after their commercial release and deployment by customers. Defects may cause such products to be vulnerable to advanced persistent threats (“APTs”) or security attacks, cause them to fail to help secure information or temporarily interrupt customers’ networking traffic. Because the techniques used by hackers to access sensitive information change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques and provide a solution in time to protect customers’ data. In addition, defects or errors in our subscription updates or products could result in a failure to effectively update customers’ hardware products and thereby leave customers vulnerable to APTs or security attacks.
Any defects, errors or vulnerabilities in our products could result in:
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● delayed or lost revenue;
● loss of existing or potential customers or partners;
Our current research and development efforts
may not produce successful products or features that result in significant revenue, cost savings or other benefits in the near future.
If we do not realize significant revenue from our research and development efforts, our business and results of operations may be adversely
affected.
Developing products and related enhancements in our field is expensive. Investments in research and development may not result in significant design improvements, marketable products or features or may result in products that are more expensive than anticipated. We may not achieve the cost savings or the anticipated performance improvements expected, and we may take longer to generate revenue from products in development or generate less revenue than expected.
Our future plans include significant investments in research and development and related product opportunities. Our management believes that we must continue to dedicate a significant amount of resources to research and development efforts to maintain a competitive position. However, we may not receive significant revenue from these investments in the near future, or these investments may not yield the expected benefits, either of which could adversely affect our business and operating results.
Risks Relating to our Growth
We will need to increase the size of our organization, and we may experience difficulties in managing growth, which could hurt our financial performance.
In order to manage our future growth, we will need to continue to improve our management, operational and financial controls and our reporting systems and procedures. All of these measures will require significant expenditures and will demand the attention of management. If we do not continue to enhance our management personnel and our operational and financial systems and controls in response to growth in our business, we could experience operating inefficiencies that could impair our competitive position and could increase our costs more than we had planned. If we are unable to manage growth effectively, our business, financial condition and operating results could be adversely affected.
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Risks Relating to our Personnel
Our business depends on experienced and skilled personnel, and if we are unable to attract and integrate skilled personnel, it will be more difficult for us to manage our business and complete contracts.
The success of our business depends on the skill of our personnel. Accordingly, it is critical that we maintain, and continue to build, a highly experienced management team and specialized workforce, including those who create software programs and sales professionals. Competition for personnel with skill sets specific to our industry is high, and identifying candidates with the appropriate qualifications can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy given our anticipated hiring needs, or we may need to provide higher compensation or more training to our personnel than we currently anticipate.
Our business is labor intensive, and our success depends on our ability to attract, retain, train and motivate highly skilled employees, including employees who may become part of our organization in connection with our acquisitions. The increase in demand for consulting, technology integration and managed services has further increased the need for employees with specialized skills or significant experience in these areas. Our ability to expand our operations will be highly dependent on our ability to attract a sufficient number of highly skilled employees and to retain our employees and the employees of companies that we have acquired. We may not be successful in attracting and retaining enough employees to achieve our desired expansion or staffing plans. Furthermore, the industry turnover rates for these types of employees are high and we may not be successful in retaining, training or motivating our employees. Any inability to attract, retain, train and motivate employees could impair our ability to adequately manage and complete existing projects and to accept new customer engagements. Such inability may also force us to increase our hiring of independent contractors, which may increase our costs and reduce our profitability on customer engagements. We must also devote substantial managerial and financial resources to monitoring and managing our workforce. Our future success will depend on our ability to manage the levels and related costs of our workforce.
In the event we are unable to attract, hire and retain the requisite personnel and subcontractors, we may experience delays in completing contracts in accordance with project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation and cause us to curtail our pursuit of new contracts. Further, any increase in demand for personnel may result in higher costs, causing us to exceed the budget on a contract, which in turn may have an adverse effect on our business, financial condition and operating results and harm our relationships with our customers.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
We may be subject to claims
that we and our employees may have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of former
employers or competitors. Litigation may be necessary to defend against these claims. We may be subject to unexpected claims of infringement
of third-party intellectual property rights, either for intellectual property rights of which we are not aware, or for which we believe
are invalid or narrower in scope than the accusing party. Even if we are successful in defending against these claims, litigation could
result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying money damages,
we may lose valuable intellectual property rights or personnel or be enjoined from selling certain products or providing certain services.
A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain products, which could
severely harm our business.
The loss of key personnel may adversely affect our operations.
Our success depends to a significant extent upon the operation, experience, and continued services of certain of our officers, and other key personnel. While our key personnel are employed under employment contracts, there is no assurance we will be able to retain their services. The loss of our key personnel could have an adverse effect on us. If certain of our executive officers were to leave, we would face substantial difficulty in hiring a qualified successor and could experience a loss in productivity while any successor obtains the necessary training and experience. Furthermore, we do not maintain “key person” life insurance on the lives of any executive officer and their death or incapacity would have a material adverse effect on us. The competition for qualified personnel is intense, and the loss of services of certain key personnel could adversely affect our business.
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Risks Relating to our Intellectual Property
If we do not adequately protect our intellectual property rights, we may experience a loss of revenue, and our operations and growth prospects may be materially harmed.
We have not registered copyrights on any of the software we have developed, and while we may register copyrights in the software if needed before bringing suit for copyright infringement, such registration can introduce delays before suit of over three years and can constrain damages for infringement. We rely upon confidentiality agreements signed by our employees, consultants and third parties to protect our intellectual property. We cannot assure you that we can adequately protect our intellectual property or successfully prosecute actual or potential infringement of our intellectual property rights. In addition, we cannot assure you that others will not assert rights in, or ownership of, trademarks and other proprietary rights of ours or that we will be able to successfully resolve these types of conflicts to our satisfaction. Our failure to protect our intellectual property rights may result in a loss of revenue and could materially adversely affect our operations and financial condition.
In addition, any patents issued in the future may not provide us with any competitive advantages, and our patent applications may never be granted. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Even if issued, there can be no assurance that these patents will adequately protect our intellectual property, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are complex and often uncertain and are subject to change that can affect validity of patents issued under previous legal standards, particularly with respect to the law of subject matter eligibility. Our inability to protect our property rights could adversely affect our financial condition, operating results and growth prospects.
Our proprietary software is
protected by common law copyright laws, as opposed to registration under copyright statutes. We have not registered copyrights on any
of the proprietary software we have developed. Our performance and ability to compete are dependent to a significant degree on our proprietary
technology. Common law protection may be narrower than that which we could obtain under registered copyrights. As a result, we may experience
difficulty in enforcing our copyrights against certain third-party infringements. As part of our confidentiality-protection procedures,
we generally enter into agreements with our employees and consultants and limit access to, and distribution of, our software, documentation
and other proprietary information. There can be no assurance that the steps we have taken will prevent misappropriation of our technology
or that agreements entered into for that purpose will be enforceable. The laws of other countries may afford us little or no protection
of our intellectual property. We also rely on a variety of technology that we license from third parties. There can be no assurance that
these third-party technology licenses will continue to be available to us on commercially reasonable terms, if at all. The loss of or
inability to maintain or obtain upgrades to any of these technology licenses could result in delays in completing software enhancements
and new developments until equivalent technology can be identified, licensed or developed and integrated. Any such delays would materially
and adversely affect our business.
We could incur substantial cost in protecting our proprietary software technology and if we fail to protect our technology, we could incur material harm to our business.
We rely principally on a combination of contract provisions and copyright, trademark, patent and trade secret laws to protect our proprietary technology. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Policing unauthorized use of our products is difficult. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits. The steps we take to protect our proprietary rights may be inadequate to prevent misappropriation of our technology; moreover, others could independently develop similar technology.
We could be subject to claims that we infringe intellectual property rights of others, which could harm our business, financial condition, results of operations or cash flows.
Third parties could assert infringement claims in the future with respect to our products and technology, and such claims might be successful. Litigation relating to any such claims could result in substantial costs and diversion of resources, whether or not we ultimately prevail on the merits. Any such litigation could also result in our being prohibited from selling one or more of our products, unanticipated royalty payments, reluctance by potential customers to purchase our products, or liability to our customers and could have a material adverse effect on our business, financial condition, operating results and cash flows.
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Risks Relating to Ownership of our Securities
The market price of our common stock may be volatile and fluctuate substantially, which could cause the value of your investment to decline.
The trading price of our common stock, as well as our warrants, is likely to be volatile. The stock market has experienced extreme volatility in the past and may experience similar volatility moving forward. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors including the following:
● results of operations that vary from those of our competitors;
● price and volume fluctuations in the market prices of stocks generally;
● strategic actions by us or our competitors;
● changes in how enterprises perceive the benefits of our platform and products;
● any significant change in our management or departures of key personnel;
● future sales of our common stock or other securities;
● actions by institutional or activist stockholders;
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These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
In the past, following periods
of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation,
it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome
of such litigation.
We do not intend to pay dividends on our common stock, so any returns will be substantially limited to the value of our common stock.
We have no current plans to pay any cash dividends on our common stock. The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our board. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends from future earnings for the foreseeable future. Our board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on our or our subsidiaries’ payment of dividends to our stockholders and such other factors as our board may deem relevant. In addition, our ability to pay dividends is limited by our indebtedness and may be limited by covenants of any future indebtedness we incur. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
If securities analysts do not publish research or reports about our business or if they publish inaccurate or unfavorable research about our common stock, the stock price and trading volume of our common stock could decline.
The trading market for our common stock will rely, in part, on the research and reports that industry or financial analysts publish about us or our business. In addition, some financial analysts may have limited expertise with our model and operations. Furthermore, if one or more of the analysts who do cover us downgrade their evaluations of our common stock, the price of our common stock could decline. If one or more of these analysts ceases to cover us, we could lose visibility in the market for our common stock, which in turn could cause our stock price or trading volume to decline.
Any future sales or offerings of our common stock may cause substantial dilution to stockholders and could cause the price of our common stock to decline.
The sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
Pursuant to the Insider Letter (as defined in the Sponsor Support Agreement), during the Founder Shares Lock-Up Period (as defined in the Insider Letter), KINS’ directors and executive officers will not, subject to the exceptions noted therein, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of any shares of our common stock, or any stock options, restricted stock units, or other equity awards outstanding as of immediately following the Closing in respect of our awards outstanding immediately following the Closing. Following the expiration or waiver of the Lockup Period, such shares will be eligible for resale, subject to volume, manner of sale and other limitations under Rule 144. Sales of substantial amounts of our common stock in the public market, or the perception that such sales will occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future.
If the stockholders to the Registration Rights Agreement, dated as of December 14, 2020, that was entered into by KINS, the Sponsor and the other parties thereto in connection with the KINS initial public offering, exercise their registration rights, the market price of shares of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our common stock or other securities.
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In addition, the shares of our common stock reserved for future issuance under our equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable.
In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our stockholders.
A sustained depression in the market price of our common stock has happened (from October to December 2023) and could in the future happen, which could also reduce our market capitalization below the book value of net assets, which could increase the likelihood of recognizing goodwill or indefinite-lived intangible asset impairment losses that could negatively affect our financial condition and results of operations.
Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Certain provisions of our
Charter and Bylaws have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt
or other change of control transaction that a stockholder might consider in their best interest, including those attempts that might result
in a premium over the market price for the shares held by our stockholders.
These provisions provide for, among other things:
● certain limitations on convening special stockholder meetings;
● limiting the ability of stockholders to act by written consent;
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
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Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our Charter provides that,
subject to limited exceptions, any (1) derivative action, suit or proceeding brought on behalf of us, (2) action, suit or proceeding asserting
a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or our stockholders, (3) action, suit
or proceeding arising pursuant to any provision of the DGCL or the Charter or the Bylaws (as either may be amended from time to time),
(4) action, suit or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (5) action,
suit or proceeding asserting a claim against us or any current or former director, officer or stockholder governed by the internal affairs
doctrine of the State of Delaware shall, to the fullest extent permitted by applicable law, be exclusively brought in the Court of Chancery
of the State of Delaware or, if such court lacks subject matter jurisdiction thereof, another state or federal court located within the
State of Delaware; provided that, (i) unless we consent in writing to the selection of an alternative forum, the federal district courts
of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any
complaint asserting a cause of action arising under the Securities Act and (ii) such exclusive forum provision shall not apply to claims
or causes of action brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts
of the United States have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our
capital stock shall be deemed to have notice of and to consent to the provisions of the Charter. This choice of forum provision may limit
a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers
or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court
were to find these provisions of the Charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions
or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect
our business and financial condition.
The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the Nasdaq stock exchange, require significant resources, increase our costs and distract our management, and we may be unable to comply with these requirements in a timely or cost-effective manner. We have incurred increased costs as a result of operating as a public company and our management has devoted substantial time to compliance initiatives.
Legacy CXApp has previously operated as a privately-owned company and we expect to incur additional legal, regulatory, finance, accounting, investor relations and other administrative expenses as a result of having publicly traded common stock. In addition, we are required under the Sarbanes-Oxley Act, as well as rules adopted by the SEC and Nasdaq to implement specified corporate governance practices that previously did not apply to Legacy CXApp as a private company.
As a public company with equity
securities listed on Nasdaq, we must comply with rules and regulations of the SEC and the requirements of Nasdaq. Complying with these
rules, regulations and requirements occupies a significant amount of the time of our board of directors and management and significantly
increases our costs and expenses. Furthermore, if any issues in complying with those requirements are identified (for example, if the
auditors identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional
costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it.
In addition, as a public company we incur substantial costs to obtain director and officer liability insurance policies. These factors
could make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit
committee.
We are required to ensure that we have the ability to prepare financial statements on a timely basis that fully comply with all SEC reporting requirements and maintain effective internal controls over financial reporting. The additional demands associated with being a public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue producing activities to management and administrative oversight, adversely affecting our ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing our businesses. In addition, failure to comply with any laws or regulations applicable to us as a public company may result in legal proceedings and/or regulatory investigations and may cause reputational damage. Any of these effects could harm our business, financial condition and results of operations.
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If we fail to meet the continued listing standards of Nasdaq, our common stock may be delisted, which could have a material adverse effect on the liquidity and market price of our common stock and expose the Company to litigation.
Our
common stock is currently traded on the Nasdaq Capital Market. The Nasdaq Stock Market LLC (“Nasdaq”) has requirements that
a company must meet in order to remain listed. For example, on September 11, 2025, the Company received a letter from Nasdaq notifying
the Company that, because the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required
for continued listing on Nasdaq, the Company no longer complied with Nasdaq Listing Rule 5550(a)(2) (the “Nasdaq Minimum Bid Price
Requirement”), which requires that the closing bid price of the Company’s common stock meet or exceed $1.00 per share for
a minimum of ten consecutive trading days. The Company initially had 180 calendar days, or until March 10, 2026, to regain compliance
with the Nasdaq Minimum Bid Price Requirement. The Company was unable to regain compliance with the Nasdaq Minimum Bid Price Requirement
by March 10, 2026.
On
March 11, 2026, the Company received a letter (the “Extension Notice”) from Nasdaq notifying the Company that it has been
provided an additional compliance period of 180 calendar days, or until September 7, 2026, to regain compliance with the Nasdaq Minimum
Bid Price Requirement. The Extension Notice has no immediate effect on the listing of the Common Stock, and the Common Stock will continue
to trade on The Nasdaq Capital Market.
If
at any time before September 7, 2026, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum
of 10 consecutive business days, Nasdaq will notify the Company that it is in compliance with the Nasdaq Minimum Bid Price Requirement.
However, if compliance with the Nasdaq Minimum Bid Price Requirement cannot be demonstrated by September 7, 2026, Nasdaq will notify
the Company that its Common Stock will be delisted from Nasdaq, at which time, the Company may appeal Nasdaq’s determination to
a Hearings Panel.
The
Company will continue to monitor the bid price of the Common Stock and consider its available options to regain compliance with the Nasdaq
Minimum Bid Price Requirement. However, there can be no assurance that the Company will be able to regain compliance with the Nasdaq
Minimum Bid Price Requirement.
If
our common stock were to be delisted, the liquidity of our common stock would be adversely affected, and the market price of our common
stock could decrease. In addition, the failure to meet the Nasdaq Minimum Bid Price Requirement could expose the Company to risk of litigation
concerning any impact upon the Company’s price of the Company’s common stock. Any such litigation could distract management
from day-to-day operations and further adversely affect the market price of our common stock.
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Risks Relating to our Accounting Policies
Changes in accounting principles and guidance, or their interpretation or implementation, may materially adversely affect our reported results of operations or financial position.
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) These principles are subject to interpretation by the SEC and various bodies formed to create and interpret appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results, as well as our processes and related controls.
Revenue forecasting is uncertain, and the failure to meet our forecasts could result in a decline in our stock price.
Our revenues, particularly new software license revenues or economic impacts from M&A activities, are difficult to forecast. We use a pipeline system to forecast revenues and trends in our business. Our pipeline estimates may prove to be unreliable either in a particular quarter or over a longer period of time, in part because the conversion rate of the pipeline into contracts can be difficult to estimate and requires management judgment. A variation in the conversion rate could cause us to plan or budget incorrectly and result in a material adverse impact on our business or our planned results of operations. Furthermore, most of our expenses are relatively fixed, including costs of personnel and facilities. Thus, an unexpected reduction in our revenue, or failure to achieve the anticipated rate of growth or realize synergies from M&A activity, would have a material adverse effect on our profitability. If our operating results do not meet our publicly stated guidance or the expectations of investors or analysts, our stock price may decline.
If our goodwill or amortizable intangible assets become impaired, we have been and may be required to record a significant charge to earnings.
We review our goodwill for
impairment at least annually and when events or changes in circumstances indicate that the carrying value may not be recoverable. As
discussed in Note 5 – “Goodwill and Intangible Assets, net” in the Notes to the Consolidated Financial Statements under
Item 15 of this Annual Report, we incurred a goodwill impairment loss of $2,148 thousand, resulting in a negative impact on our results
of operations for the year ended December 31, 2025.
As required by current accounting standards, we review intangible assets for impairment either annually or whenever changes in circumstances indicate that the carrying value may not be recoverable. The risk of impairment to goodwill is higher during the early years following an acquisition. This is because the fair values of these assets align very closely with what we paid to acquire the reporting units to which these assets are assigned. When impairment charges are triggered, they tend to be material due to the size of the assets involved. Our business could be adversely affected, and impairment of goodwill could be triggered, if any of the following were to occur: higher attrition rates than planned as a result of the competitive environment or our inability to provide products and services that are competitive in the marketplace, lower-than-planned adoption rates by customers, higher-than-expected expense levels to provide services to customers, sustained declines in our stock price and related market capitalization and changes in our business model that may impact one or more of these variables.
If we fail to maintain effective internal control over financial
reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect
the Company’s business and share price.
The
Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rule 13a-15(f) under the Exchange Act. As disclosed in our Annual Report on Form 10-K for the fiscal year ended December
31, 2024, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or
combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of its annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
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During
the year ended December 31, 2025, management implemented enhanced controls and processes to address each of these material weaknesses,
including the engagement of external consultants to support the tax provision process, the implementation of a formalized month-end close
checklist, and the development of a revised process for identifying and evaluating new and amended contracts for derivative features
and fair value considerations. Based on the steps taken and the testing performed as of December 31, 2025, management has concluded that
each of these previously reported material weaknesses has been fully remediated and no longer exists as of December 31, 2025
Although
we have undertaken remediation efforts to address the material weaknesses previously identified, we cannot provide assurance that such
measures will be sufficient to avoid potential future material weaknesses. Remediation measures are time-consuming on the Company’s
financial and operational resources. In order to improve the effectiveness of its internal control over financial reporting, the Company
will need to continue to expend resources, including accounting-related costs and management oversight. The effectiveness of our internal
control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making,
assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If we are unable to remediate
the material weaknesses or identify additional material weakness in the future, our ability to record, process and report financial information
accurately, and to prepare financial statements within the time periods required by the SEC, could be adversely affected which, in turn,
may adversely affect our reputation and business and the market price of the Company’s Class A Common Stock. In addition, any such
failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting
of our securities and harm to our reputation and financial condition, or diversion of financial and management resources from the operation
of our business.
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Risks Relating to Cybersecurity Threats
Internal system or service failures could disrupt our business and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability.
Any system or service disruptions, on our hosted cloud infrastructure or those caused by ongoing projects to improve our information technology systems and the delivery of services, if not anticipated and appropriately mitigated, could have a material adverse effect on our business including, among other things, an adverse effect on our ability to bill our customers for work performed on our contracts, collect the amounts that have been billed and produce accurate financial statements in a timely manner. We are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cyber security threats, natural disasters, power shortages, terrorist attacks or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our future results could be adversely affected.
Any failures or interruptions in our services or systems could damage our reputation and substantially harm our business and results of operations.
Our success depends in part on our ability to provide reliable remote services, technology integration and managed services to our customers. The operations of our cloud-based applications and analytics are susceptible to damage or interruption from human error, fire, flood, power loss, telecommunications failure, terrorist attacks and similar events. We could also experience failures or interruptions of our systems and services, or other problems in connection with our operations, as a result of:
● damage to or failure of our computer software or hardware or our connections;
● errors in the processing of data by our systems;
● computer viruses or software defects;
● errors by our employees or third-party service providers.
Any production interruptions for any reason, such as a natural disaster, epidemic, capacity shortages, or quality problems, at one of our manufacturing partners would negatively affect sales of product lines manufactured by that manufacturing partner and adversely affect our business and operating results.
Any interruptions in our systems or services could damage our reputation and substantially harm our business and results of operations. While we maintain disaster recovery plans and insurance with coverage we believe to be adequate, claims may exceed insurance coverage limits, may not be covered by insurance or insurance may not continue to be available on commercially reasonable terms.
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Digital threats such as cyber-attacks, data protection breaches, computer viruses or malware may disrupt our operations, harm our operating results and damage our reputation, and cyber-attacks or data protection breaches on our customers’ networks, or in cloud-based services provided by or enabled by us, could result in liability for us, damage our reputation or otherwise harm our business.
Despite our implementation
of network security measures, the products and services we sell to customers, and our servers, data centers and the cloud-based solutions
on which our data, and data of our customers, suppliers and business partners are stored, are vulnerable to cyber-attacks, data protection
breaches, computer viruses, and similar disruptions from unauthorized tampering or human error, any of which could be enhanced or facilitated
by artificial intelligence. Any such event could compromise our networks or those of our customers, and the information stored on our
networks or those of our customers could be accessed, publicly disclosed, lost or stolen, which could subject us to liability to our customers,
business partners and others, and could have a material adverse effect on our business, operating results, and financial condition and
may cause damage to our reputation. Efforts to limit the ability of malicious third parties to disrupt the operations of the Internet
or undermine our own security efforts may be costly to implement and met with resistance and may not be successful. Breaches of network
security in our customers’ networks, or in cloud-based services provided by or enabled by us, regardless of whether the breach is
attributable to a vulnerability in our products or services, could result in liability for us, damage our reputation or otherwise harm
our business.
Integration of artificial intelligence into our product offerings and our use of artificial intelligence in our operations could result in reputational or competitive harm, legal liability, and other adverse effects on our business.
We have integrated, and plan to further integrate, AI capabilities into components of our product offerings, and we expect to use AI in our operations. Such integration and use of AI may become more important in our product offerings and operations over time. These AI-related initiatives, whether successful or not, could cause us to incur substantial costs and could result in delays in our software release cadence. Our competitors or other third parties may incorporate AI into their products or operations more quickly or more successfully than we do, which could impair our ability to compete effectively. Additionally, AI algorithms may be flawed and datasets underlying AI algorithms may be insufficient or contain biased information. If the AI tools integrated into our products or those we use in our operations produce analyses or recommendations that are or are alleged to be deficient, inaccurate, or biased, our reputation, business, financial condition, and results of operations may be adversely affected. Other companies have experienced cybersecurity incidents that implicate confidential and proprietary company data and/or the personal data of end users of AI applications integrated into their software offerings or used in their operations. If we were to experience a cybersecurity incident, whether related to the integration of AI capabilities into our product offerings or our use of AI applications in our operations, our business and results of operations could be adversely affected. AI also presents various emerging legal, regulatory and ethical issues, and the incorporation of AI into our product offerings and our use of AI applications in our operations could require us to expend significant resources in developing, testing and maintaining our product offerings and may cause us to experience brand, reputational, or competitive harm, or incur legal liability. Jurisdictions that we operate in may decide to establish extensive new standards for AI safety and security or adopt similar or more restrictive legislation that may render the use of such technologies challenging. These restrictions may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our product offerings or business practices, or prevent or limit our use of AI.
We intend to use and leverage open-source technology which may create risks of security weaknesses.
Some parts of our technology may be based on open-source technology. There is a risk that the development team or other third parties may intentionally or unintentionally introduce weaknesses or bugs into the core infrastructure elements of our technology solutions interfering with the use of such technology or causing loss to us.
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Risks Relating to our Customers
A delay in the completion of our customers’ budget processes could delay purchases of our products and services and have an adverse effect on our business, operating results and financial condition.
We rely on our customers to purchase products and services from us to maintain and increase our earnings, and customer purchases are frequently subject to budget constraints, multiple approvals and unplanned administrative, processing and other delays. If sales expected from a specific customer are not realized when anticipated or at all, our results could fall short of public expectations and our business, operating results and financial condition could be materially adversely affected.
We rely on a limited number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect our operating results.
Our top three customers accounted
for approximately 40% and 24% of our gross revenue during the year ended December 31, 2025 and the year ended December 31, 2024, respectively.
One customer accounted for 16% of our gross revenue in 2025, and a separate customer accounted for 10% of our gross revenue in 2024;
however, each of these customers may or may not continue to be a significant contributor to revenue in 2026. The loss of a significant
amount of business from one of our major customers would materially and adversely affect our results of operations until such time, if
ever, as we are able to replace the lost business. Significant customers or projects in any one period may not continue to be significant
customers or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced
by that customer to the extent that such risks impede the customer’s ability to stay in business and make timely payments to us.
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Risks Relating to our Industry
Our competitiveness depends significantly on our ability to keep pace with the rapid changes in our industry. Failure to anticipate and meet our customers’ technological needs could adversely affect our competitiveness and growth prospects.
We operate and compete in an industry characterized by rapid technological innovation, changing customer needs, evolving industry standards and frequent introductions of new products, product enhancements, services and distribution methods. Our success depends on our ability to develop expertise with these new products, product enhancements, services and distribution methods and to implement solutions that anticipate and respond to rapid changes in technology, the industry, and customer needs. The introduction of new products, product enhancements and distribution methods could decrease demand for current products or render them obsolete. Sales of products and services can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material adverse effect on our net sales if we fail to adapt to such changes in a timely manner.
There can be no assurances that consumer or commercial demand for our future products will meet, or even approach, our expectations. In addition, our pricing and marketing strategies may not be successful. Lack of customer demand, a change in marketing strategy and changes to our pricing models could dramatically alter our financial results. Unless we are able to release location-based products that meet a significant market demand, we will not be able to improve our financial condition or the results of our future operations.
We operate in a highly competitive market, and we may be required to reduce the prices for some of our products and services to remain competitive, which could adversely affect our results of operations.
Our industry is developing rapidly, and related technology trends are constantly evolving. In this environment, we face, among other things, significant price competition from our competitors. As a result, we may be forced to reduce the prices of the products and services we sell in response to offerings made by our competitors and may not be able to maintain the level of bargaining power that we have enjoyed in the past when negotiating the prices of our products and services.
Our profitability is dependent on the prices we are able to charge for our products and services. The prices we are able to charge for our products and services are affected by a number of factors, including:
● introduction of new products or services by us or our competitors;
● our competitors’ pricing policies;
● procurement practices of our customers; and
● general economic and political conditions.
If we are not able to maintain favorable pricing for our products and services, our results of operations could be adversely affected.
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If our products fail to satisfy customer demands or to achieve increased market acceptance our results of operations, financial condition and growth prospects could be materially adversely affected.
The market acceptance of our products is critical to our continued success. Demand for our products is affected by a number of factors beyond our control, including continued market acceptance, the timing of development and release of new products by competitors, technological change, and growth or decline in the mobile device management market. We expect the proliferation of mobile devices to lead to an increase in the data security demands of our customers, and our products may not be able to scale and perform to meet those demands. If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of these products, our business operations, financial results and growth prospects will be materially and adversely affected.
There is also a possibility of future tariffs, trade protection measures, import or export regulations or other restrictions imposed on our products or on our customers by the United States, China or other countries that could have a material adverse effect on our business. A significant trade disruption or the establishment or increase of any tariffs, trade protection measures or restrictions could result in lost sales adversely impacting our reputation and business. A trade war, other governmental action related to tariffs or international trade agreements, changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently do business or any resulting negative sentiments towards the United States could adversely affect our supply chain economics, consolidated revenue, earnings and cash flow.
We may not be able to develop new products or enhance our product to keep pace with our industry’s rapidly changing technology and customer requirements.
The industry in which we operate is characterized by rapid technological changes, new product introductions, enhancements, and evolving industry standards. Our business prospects depend on our ability to develop new products and applications for our technology in new markets that develop as a result of technological and scientific advances, while improving performance and cost-effectiveness. New technologies, techniques or products could emerge that might offer better combinations of price and performance than the artificial intelligence technology solutions that are being developed by us. It is important that we anticipate changes in technology and market demand. If we do not successfully innovate and introduce new technology into our anticipated technology solutions or effectively manage the transitions of our technology to new product offerings, our business, financial condition and results of operations could be harmed.
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Risks Relating to External Factors and Third Parties
We may enter into joint ventures, teaming and other arrangements, and these activities involve risks and uncertainties. A failure of any such relationship could have material adverse results on our business and results of operations.
We may enter into joint ventures, teaming and other arrangements. These activities involve risks and uncertainties, including the risk of the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for guarantees and other commitments, the challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements. A failure of our business relationships could have a material adverse effect on our business and results of operations.
Our business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our business.
We are subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employment and labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal control and disclosure control obligations, securities regulation and anti-competition. Compliance with diverse and changing legal requirements is costly, time-consuming and requires significant resources. We are also focused on expanding our business in certain identified growth areas, such as health information technology, energy and environment, which are highly regulated and may expose us to increased compliance risk. Violations of one or more of these diverse legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations.
Global
events and other general economic factors may impact our results of operations.
Global
events and other general economic factors that are beyond our control may impact our results of operations. These factors can include
interest rates; economic downturn; recession; inflation; unemployment trends; the threat or possibility of war, terrorism or other global
or national unrest; political or financial instability; and other matters that influence our customers spending. Increasing volatility
in financial markets and changes in the economic climate could adversely affect our results of operation. The impact that these global
events will have on general economic conditions is continuously evolving and the ultimate impact that they will have on our results of
operations continues to remain uncertain. There are no assurances that we will be able to experience growth or not be materially adversely
affected.
Our
businesses, results of operations and financial condition could be adversely affected by ongoing international conflicts and related
disruptions in the global economy.
The
global economy has been negatively impacted by the military conflict between Russia and Ukraine, and the ongoing conflicts in the Middle
East (including the conflict between Iran and Israel and the United States’ military actions against Iran)
has caused political, economic, and military instability in Israel and surrounding regions. While we have no operations in Russia, Ukraine,
Iran, Israel, Palestine, or surrounding areas, our business may be indirectly adversely affected by this conflict and its effects, including
as a result of financial and economic sanctions imposed by governments in the U.S., United Kingdom and European Union, among others,
on certain industry sectors and parties in Russia.
We are unable to predict
the impact of either the ongoing conflicts in the Middle East (including the conflict between Iran and Israel and the United
States’ military actions against Iran) or the Russia-Ukraine conflict on our business or the global economy. The impact
of further escalation of geopolitical tensions related to these conflicts, including increased trade barriers or restrictions on global
trade, is unknown and could result in, among other things, heightened cybersecurity threats, protracted or further increased inflation,
lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in financial markets, any of which
could adversely affect our businesses, results of operations and financial condition.
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Our international business exposes us to geo-political and economic factors, legal and regulatory requirements, public health and other risks associated with doing business in foreign countries.
We provide our products and services to customers worldwide. These risks differ from and potentially may be greater than those associated with our domestic business.
Our international business is sensitive to changes in the priorities and budgets of international customers and geo-political uncertainties, which may be driven by changes in threat environments and potentially volatile worldwide economic conditions, various regional and local economic and political factors, risks and uncertainties, as well as U.S. foreign policy.
Our international sales are also subject to local government laws, regulations and procurement policies and practices, which may differ from U.S. Government regulations, including regulations relating to import-export control, investments, exchange controls and repatriation of earnings, as well as to varying currency, geo-political and economic risks. Our international contracts may include industrial cooperation agreements requiring specific in-country purchases, manufacturing agreements or financial support obligations, known as offset obligations, and provide for penalties if we fail to meet such requirements. Our international contracts may also be subject to termination at the customer’s convenience or for default based on performance and may be subject to funding risks. We also are exposed to risks associated with using foreign representatives and consultants for international sales and operations and teaming with international subcontractors, partners and suppliers in connection with international programs. As a result of these factors, we could experience award and funding delays on international programs and could incur losses on such programs, which could negatively affect our results of operations and financial condition.
We are also subject to a number of other risks including:
● multiple and possibly overlapping and conflicting tax laws;
● restrictions on movement of cash;
● the burdens of complying with a variety of national and local laws;
● political instability;
● currency fluctuations;
● longer payment cycles;
● restrictions on the import and export of certain technologies;
● price controls or restrictions on exchange of foreign currencies; and
● trade barriers.
In addition, our international operations (or those of our business partners) could be subject to natural disasters such as earthquakes, tsunamis, flooding, typhoons, and volcanic eruptions that disrupt manufacturing or other operations. There may be conflict or uncertainty in the countries in which we operate, including public health issues, avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents or general economic or political factors. With respect to political factors, the United Kingdom’s 2016 referendum, commonly referred to as “Brexit,” has created economic and political uncertainty in the European Union. Also, the European Union’s General Data Protection Regulation imposes significant new requirements on how we collect, process and transfer personal data, as well as significant fines for non-compliance. Any of the above risks, should they occur, could result in an increase in the cost of components, production delays, general business interruptions, delays from difficulties in obtaining export licenses for certain technology, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business.
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Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations, and we do not expect these conditions to improve in the near future.
Our results of operations are materially affected by conditions in the global capital markets and the economy generally, both in the U.S. and elsewhere around the world. Weak economic conditions generally, sustained uncertainty about global economic conditions, or a prolonged or further tightening of credit markets could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business, results of operations or cash flows. Concerns over inflation, energy costs, geopolitical issues and the availability of credit in the U.S. have contributed to increased volatility and diminished expectations for the economy and the markets going forward. These factors, combined with volatile oil prices and wavering business and consumer confidence, have precipitated an economic slowdown and uncertain global outlook. Domestic and international equity markets have been experiencing heightened volatility and turmoil. These events and the continuing market upheavals may have an adverse effect on our business. In the event of extreme prolonged market events, such as the global economic recovery, we could incur significant losses.
Changes in U.S. administrative policy, including changes to existing trade agreements and any resulting changes in international relations, could adversely affect our financial performance and supply chain economics.
As a result of changes to
U.S. administrative policy, among other possible changes, there may be (i) changes to existing trade agreements; (ii) greater restrictions
on free trade generally; and (iii) significant increases in tariffs on goods imported into the United States, particularly those manufactured
in China. China is currently a leading global source of hardware products, including the hardware products that we use. Since 2018, the
United States and China have been engaged in a prolonged trade dispute that has resulted in several rounds of escalating tariffs imposed