{"url_path":"/sec/fatn/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-18","source_url":"https://www.sec.gov/Archives/edgar/data/1993400/0001493152-26-024184-index.html","accession_number":"0001493152-26-024184","cik":"0001993400","ticker":"FATN","issuer_name":"Fatpipe Inc/UT","edgar_url":"https://www.sec.gov/Archives/edgar/data/1993400/0001493152-26-024184-index.html","primary_entity_key":"0001993400","primary_entity_name":"Fatpipe Inc/UT"},"word_count":14213,"has_tables":true,"body_markdown":"**ITEM 1A. RISK FACTORS**\n\n \n\n*Below\nis a summary of the principal factors that make an investment in our securities speculative or risky. This summary does not address all\nof the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can\nbe found below under the heading “Risk Factors” and should be carefully considered, together with other information in this\nAnnual Report on Form 10-K and our other filings with the SEC, before making an investment decision regarding our securities.*\n\n \n\n●Our\noperating results are likely to vary significantly and be unpredictable.\n\n   \n\n●We\nrely heavily on our reselling partners and our ability to work with suitable partners may\nimpact our growth plans.\n\n   \n\n●If\nwe are unable to develop and introduce new solutions and improve existing solutions in a\ncost-effective and timely manner, then our competitive position may be negatively impacted\nand our business, results of operations, and financial condition may be adversely affected.\n\n   \n\n●We\ninvest significantly in research and development (“R&D”), and to the extent\nour R&D efforts are unsuccessful, our competitive position may be negatively impacted\nand our business, results of operations, and financial condition may be adversely affected.\n\n   \n\n●We\noperate in a highly competitive market.\n\n   \n\n●Increases\nin costs of the materials and other components that we use in our solutions would adversely\naffect our business, results of operations, and financial condition.\n\n   \n\n●Adverse\neconomic conditions, such as a possible recession and possible impacts of inflation or stagflation,\nincreasing or decreasing interest rates, reduced information technology spending or any economic\ndownturn or recession, may adversely impact our business.\n\n   \n\n●Our\nbillings, revenue and free cash flow growth may slow or may not continue, and our operating\nmargins may decline.\n\n   \n\n●We\nare dependent on the continued services and performance of our senior management, the loss\nof any of whom could adversely affect our business, operating results and financial condition.\n\n   \n\n●If\nwe are unable to attract, retain, and motivate key employees, then our business, results\nof operations, and financial condition would be adversely affected.\n\n   \n\n●We\nmay need to raise additional capital in the future, which may not be available on terms acceptable\nto us, or at all.\n\n   \n\n●If\nwe do not increase the effectiveness of our sales organization, we may have difficulty adding\nnew end-customers or increasing sales to our existing end-customers and our business may\nbe adversely affected.\n\n   \n\n●Unless\nwe continue to develop better market awareness of our company and our software solutions,\nand to improve lead generation and sales enablement, our revenue may not continue to grow.\n\n   \n\n●We\nface competition in our market and we may not maintain or improve our competitive position.\n\n   \n\n●If\nour new software solutions and enhancements do not achieve sufficient market acceptance,\nour results of operations and competitive position will suffer.\n\n   \n\n●Demand\nfor our software solutions may be limited by market perception that individual software solutions\nfrom one vendor that provide multiple layers of security protection in one offering are inferior\nto point solution network security solutions from multiple vendors.\n\n   \n\n●If\nfunctionality similar to that offered by our software solutions is incorporated into our\ncompetitors’ existing network infrastructures, our customers may decide against adding\nour appliances to their network, which would have an adverse effect on our business.\n\n   \n\n●Because\nsome of the key components in our network server come from limited sources of supply, we\nare susceptible to supply shortages, long or uncertain lead times for components, and supply\nchanges, each of which could disrupt or delay our scheduled software deliveries to our customers,\nresult in inventory shortage, cause loss of sales and customers or increase component costs\nresulting in lower gross margins and free cash flow.\n\n \n\n16\n\n \n\n \n\n●The\nsales prices of our hardware and software solutions may decrease, which may reduce our gross\nprofits and operating margin and may adversely impact our financial results and the trading\nprice of our common stock.\n\n   \n\n●The\nnetwork security market is rapidly evolving and the complex technologies incorporated in\nour software solutions make them difficult to develop. If we do not accurately predict, prepare\nfor and respond promptly to technological and market developments and changing end-customer\nneeds, our competitive position and prospects may be harmed.\n\n   \n\n●Our\nability to sell our software solutions is dependent on our quality control processes and\nthe quality of our technical support services, and our failure to offer high-quality technical\nsupport services could have a material adverse effect on our sales and results of operations.\n\n   \n\n●Our\nbusiness is subject to the risks of warranty claims, product liability and product defects.\n\n   \n\n●Our\nhistorical financial information may not be representative of our results as a public company.\n\n   \n\n●If\nour internal enterprise IT networks, on which we conduct internal business and interface\nexternally, our operational networks, through which we connect to customers, vendors and\npartners systems and provide services, or our R&D networks, our back-end labs and cloud\nstacks hosted in our data centers, colocation vendors or public cloud providers, through\nwhich we research, develop and host software solutions are compromised, public perception\nof our offerings may be harmed, our customers may be breached and harmed, we may become subject\nto liability, and our business, operating results and stock price may be adversely impacted.\n\n   \n\n●Our\nproprietary rights may be difficult to enforce and we may be subject to claims by others\nthat we infringe their propriety technology.\n\n   \n\n●Claims\nby others that we infringe their proprietary technology or other litigation matters could\nharm our business.\n\n   \n\n●Failure\nto comply with laws and regulations applicable to our business could subject us to fines\nand penalties and could also cause us to lose end-customers in the public sector or negatively\nimpact our ability to contract with the public sector.\n\n   \n\n●We\nare subject to governmental export and import controls that could subject us to liability\nor restrictions on sales, and that could impair our ability to compete in international markets.\n\n   \n\n●Investors’\nexpectations of our performance relating to environmental, social and governance factors\nmay impose additional costs and expose us to new risks.\n\n   \n\n●We\nhave incurred indebtedness and may incur other debt in the future, which may adversely affect\nour financial condition and future financial results.\n\n   \n\n●If\nour estimates or judgments relating to our critical accounting policies are based on assumptions\nthat change or prove to be incorrect, our operating results could fall below expectations\nof securities analysts and investors, resulting in a decline in our stock price.\n\n   \n\n●We\nare affected by fluctuations in currency exchange rates, including those in connection with\nrecent inflationary trends in the United States.\n\n   \n\n●We\ncould be subject to changes in our tax rates, the adoption of new U.S. or international tax\nlegislation, exposure to additional tax liabilities or impacts from the timing of tax payments.\n\n   \n\n●Forecasting\nour estimated annual effective tax rate is complex and subject to uncertainty, and there\nmay be material differences between our forecasted and actual tax rates.\n\n   \n\n●As\na public company, we will be subject to compliance initiatives that will require substantial\ntime from our management and result in significantly increased costs that may adversely affect\nour operating results and financial condition.\n\n   \n\n●If\nsecurities or industry analysts stop publishing research or publish inaccurate or unfavorable\nresearch about our business, our stock price and trading volume could decline.\n\n   \n\n●Global\neconomic uncertainty, an economic downturn, the possibility of a recession, inflation, rising\ninterest rates, weakening software demand caused by political instability, changes in trade\nagreements and conflicts such as the war in Ukraine, could adversely affect our business\nand financial performance.\n\n   \n\n●Changes\nin financial accounting standards may cause adverse unexpected fluctuations and affect our\nreported results of operations.\n\n \n\n17\n\n \n\n \n\n**Risks\nRelated to Our Business and Financial Position**\n\n \n\n**Our\noperating results are likely to vary significantly and be unpredictable.**\n\n \n\nOur\noperating results have historically varied from period to period, and we expect that they will continue to do so as a result of a number\nof factors, many of which are outside of our control or may be difficult to predict, including:\n\n \n\n●Economic\nconditions, including macroeconomic and regional economic challenges resulting, for example,\nfrom a recession or other economic downturn, increased inflation or possible stagflation\nin certain geographies, rising interest rates, the war in Ukraine, tensions between China\nand Taiwan, or other factors;\n\n   \n\n●our\nability to attract and retain new end-customers or sell additional platform solutions to\nour existing end-customers;\n\n   \n\n●component\nshortages, including chips and other components, and product inventory shortages, including\nthose caused by factors outside of our control, such as epidemics and pandemics, supply chain\ndisruptions, inflation and other cost increases, international trade disputes or tariffs,\nnatural disasters, health emergencies, power outages, civil unrest, labor disruption, international\nconflicts, terrorism, wars, such as rising tensions between China and Taiwan, and critical\ninfrastructure attacks;\n\n   \n\n●the\nlevel of demand for our software solutions may render forecasts inaccurate;\n\n   \n\n●supplier\ncost increases and any lack of market acceptance of our price increases designed to help\noffset any supplier cost increases;\n\n   \n\n●the\nimpact to our business, the global economy, disruption of global supply chains and creation\nof significant volatility and disruption of the financial markets due to factors such as\nincreased inflation or possible stagflation in certain geographies, fluctuating interest\nrates, rising tensions between China and Taiwan and other factors;\n\n   \n\n●any\nactual or perceived vulnerabilities in our software solutions, and any actual or perceived\nbreach of our network or our customers’ networks;\n\n   \n\n●increased\nexpenses, unforeseen liabilities or write-downs and any negative impact on results of operations\nfrom any acquisition or equity investment consummated, as well as accounting risks, integration\nrisks related to software plans and software solutions and risks of negative impact by such\nacquisitions and equity investments on our financial results;\n\n   \n\n●investors’\nexpectations of our performance relating to environmental, social and governance (“ESG”)\nand commitment to carbon neutrality;\n\n   \n\n●certain\ncustomer agreements which contain service-level agreements, under which we guarantee specified\navailability of our platform and solutions;\n\n   \n\n●data\nsecurity requirements that may be enforced inconsistently in certain jurisdictions;\n\n   \n\n●any\ndecreases in demand by customers, including any such decreases caused by factors outside\nof our control such as natural disasters and health emergencies, including earthquakes, droughts,\nfires, power outages, typhoons, floods, pandemics or epidemics and manmade events such as\ncivil unrest, labor disruption, international trade disputes, international conflicts, terrorism,\nwars, such as the war in Ukraine, and critical infrastructure attacks;\n\n   \n\n●the\neffectiveness of our sales organization, generally or in a particular geographic region,\nincluding the time it takes to hire sales personnel, the timing of hiring and our ability\nto hire and retain effective sales personnel, as well as our efforts to align our sales capacity\nand market demand;\n\n   \n\n●sales\nexecution risk related to effectively selling to all segments of the market, including small-\nand medium-sized businesses, government organizations and service providers, and risks associated\nwith the complexity and distraction in selling to all segments, such as increased competition,\nthe unpredictability closing larger enterprise and large organization deals, and the risk\nthat our sales representatives do not effectively sell our software solutions;\n\n \n\n18\n\n \n\n \n\n●execution\nrisk associated with our efforts to capture the opportunities related to our identified growth\ndrivers, such as our ability to capitalize on the convergence of networking and security,\nvendor consolidation of various cyber security solutions, SD-WAN, infrastructure security,\nsecurity operations, SASE and other cloud security solutions, endpoint protection, Internet\nof Things (“IoT”) and security opportunities;\n\n   \n\n●the\ntiming and degree of our investments in sales and marketing, and the impact of such investments\non our operating expenses, operating margin and the productivity, capacity, tenure and effectiveness\nof execution of our sales and marketing teams;\n\n   \n\n●the\ntiming of revenue recognition for our sales, including any impacts resulting from extension\nof payment terms to distributors and fluctuations in backlog levels, which could result in\nmore variability and less predictability in our quarter-to-quarter revenue and operating\nresults;\n\n   \n\n●the\nlevel of perceived threats to network security, which may fluctuate from period-to-period;\n\n   \n\n●changes\nin the requirements, market needs or buying practices and patterns of our distributors, resellers\nor customers;\n\n   \n\n●changes\nin the growth rates of the network security market in particular and other security and networking\nmarkets, such as SD-WAN, IoT, switches, access points, security operations, SASE and other\ncloud solutions for which we and our competitors sell software solutions;\n\n   \n\n●the\ntiming and success of new software solutions or enhancements by us or our competitors, or\nany other change in the competitive landscape of our industry, including consolidation among\nour competitors, partners or customers;\n\n   \n\n●the\ndeferral of orders from distributors, resellers or end-customers in anticipation of new software\nsolutions or enhancements announced by us or our competitors, price decreases or changes\nin our registration policies, or the acceleration of orders in response to our announced\nor expected price list increases;\n\n   \n\n●increases\nor decreases in our billings, revenue and expenses caused by fluctuations in foreign currency\nexchange rates or a strengthening of the U.S. dollar, as a portion of our expenses is incurred\nand paid in currencies other than the U.S. dollar and the impact such fluctuations may have\non the actual prices that our partners and customers are willing to pay for our software\nsolutions and services;\n\n   \n\n●compliance\nwith existing laws and regulations;\n\n   \n\n●our\nability to obtain and maintain permits, clearances and certifications that are applicable\nto our ability to conduct business with the U.S. federal government, other international\nand local governments and other industries and sectors;\n\n   \n\n●potential\nlitigation, litigation fees and costs, settlements, judgments and other equitable and legal\nrelief granted related to litigation;\n\n   \n\n●the\nimpact of cloud-based security solutions on our billings, revenue, operating margins and\nfree cash flow;\n\n   \n\n●decisions\nby potential end-customers to purchase network security solutions from newer technology providers,\nfrom larger, more established security vendors or from their primary network equipment vendors;\n\n   \n\n●price\ncompetition and increased competitiveness in our market, including the competitive pressure\ncaused by software refresh cycles;\n\n   \n\n●our\nability to both increase revenue and manage and control operating expenses in order to maintain\nor improve our operating margins;\n\n   \n\n●changes\nin customer renewal rates or attach rates for our software solutions;\n\n   \n\n●changes\nin the timing of our billings, collection for our contracts or the contractual term of the\nsoftware solutions sold;\n\n   \n\n●changes\nin our estimated annual effective tax rates and the tax treatment of R&D expenses and\nthe related impact of cash from operations;\n\n   \n\n●changes\nin circumstances and challenges in business conditions, including decreased demand, which\nmay negatively impact our channel partners’ ability to sell the current inventory they\nhold and negatively impact their future purchases of software solutions from us;\n\n   \n\n●increased\ndemand for cloud-based services and the uncertainty associated with transitioning to providing\nsuch services;\n\n \n\n19\n\n \n\n \n\n●our\npartners having insufficient financial resources to withstand changes and challenges in business\nconditions;\n\n   \n\n●disruptions\nin our channel or termination of our relationship with important partners, including as a\nresult of consolidation among distributors and resellers of security solutions;\n\n   \n\n●insolvency,\ncredit or other difficulties confronting our key channel partners, which could affect their\nability to purchase or pay for our software solutions;\n\n   \n\n●policy\nchanges and uncertainty with respect to immigration laws, trade policy and tariffs, including\nincreased tariffs applicable to countries where we manufacture our hardware, foreign imports\nand tax laws related to international commerce;\n\n   \n\n●future\naccounting pronouncements or changes in our accounting policies as well as the significant\ncosts that may be incurred to adopt and comply with these new pronouncements; and\n\n   \n\n●legislative\nor regulatory changes, such as with respect to privacy, information and cybersecurity, exports,\nthe environment, regional component bans, and requirements for local manufacture.\n\n \n\nAny\none of the factors above or the cumulative effect of some of the factors referred to above may result in significant fluctuations in\nour quarterly financial and other operating results. This variability and unpredictability could result in our failing to meet our internal\noperating plan or the expectations of securities analysts or investors for any period. If we fail to meet or exceed such expectations\nfor these or any other reasons, the market price of our shares could fall substantially and we could face costly lawsuits, including\nsecurities class action suits. Accordingly, in the event of revenue shortfalls, we are generally unable to mitigate the negative impact\non margins in the short term.\n\n \n\n**We\nrely heavily on our reselling partners and our ability to work with suitable partners may impact our growth plans.**\n\n \n\nWithin\nour partner network, our three and two largest reselling partners accounted for over 53.8% of our total revenues in our fiscal year ended\nMarch 31, 2025, and 49.5% of our total revenues in our fiscal year ended March 31, 2024, respectively. To reduce this risk, we continue\nto engage with new partners and expand our existing relationships to mitigate customer concentration risk. Additionally, we are in discussions\nwith multiple potential partners in Southeast Asia to address the Southeast Asia market and there are no assurances we will find a suitable\nqualified partners.\n\n \n\n**If\nwe are unable to develop and introduce new software solutions and improve existing software solutions in a cost-effective and timely\nmanner, then our competitive position may be negatively impacted and our business, results of operations, and financial condition may\nbe adversely affected.**\n\n \n\nIf\nwe are unable to adapt to rapidly evolving technological advancements and market demands within the enterprise network software sector,\nour competitive position could be undermined, leading to adverse effects on our business, results of operations, and financial condition.\nThe network software industry is characterized by swift changes in customer preferences, emerging security threats, and evolving performance\nexpectations. Failing to anticipate and address these shifts could result in our solutions becoming outdated or less effective, which\nmay cause customers to seek alternatives from our competitors. Additionally, the complex nature of SD-WAN, SASE, and SIEM solutions demand\ncontinuous R&D efforts to ensure compatibility with new networking protocols, hardware platforms, and cloud architectures. Delays\nor inefficiencies in the development processes could hinder our ability to capture new market opportunities and retain existing customers.\nTherefore, our inability to proactively develop and introduce innovative solutions, as well as enhance our existing offerings, could\nweaken our competitive stance and negatively impact our overall business prospects.\n\n \n\n**We\ninvest significantly in research and development, and to the extent our research and development efforts are unsuccessful, our competitive\nposition may be negatively impacted and our business, results of operations, and financial condition may be adversely affected.**\n\n \n\nOur\nsuccess depends heavily on our ability to attract and retain highly skilled and experienced R&D personnel. The network software industry\nis marked by rapid technological advancements, evolving market trends, and intense competition. If we fail to effectively recruit and\nretain top-tier R&D personnel, our capacity to innovate, develop new solutions, and enhance existing software solutions may be compromised.\nCompetition for skilled engineers and developers is strong, and an inability to assemble a proficient R&D team could hinder our ability\nto respond promptly to market demands and stay ahead of technological shifts. Though we mitigate this with our robust talent development\npipeline, a shortage of qualified candidates may negatively impact our performance. Furthermore, if key R&D personnel were to leave\nor if we encounter challenges in maintaining a collaborative and innovative work environment, our research outcomes might suffer, negatively\nimpacting the quality and speed of our software development. In such scenarios, our competitive standing could weaken, potentially leading\nto a decline in market share, revenue, and overall business performance.\n\n \n\n20\n\n \n\n \n\n**We\noperate in a highly competitive market.**\n\n \n\nThe\nintense competition within our market poses a risk to our business operations, financial performance, and overall market position. Our\nindustry is comprised of a number of players, including both established companies and emerging startups. As a result, we face pressure\nto differentiate our offerings, maintain competitive pricing, and consistently deliver high-quality solutions. If we fail to navigate\nthis competitive landscape, we could experience challenges in acquiring new customers, expanding our market share, and retaining existing\ncustomers. Furthermore, the emergence of new competitors or the rapid advancement of alternative technologies could disrupt our current\nbusiness model. Therefore, our ability to successfully compete is critical to our long-term success.\n\n \n\n**Increases\nin costs of the materials and other components that we use in our solutions would adversely affect our business, results of operations,\nand financial condition.**\n\n \n\nFluctuations\nor increases in the costs of materials and components to our hardware or software solutions pose a risk to our business. When customers\ncannot host our software solutions, we procure hardware components to deploy to customer sites. Any significant rise in these costs,\nwhether due to supply chain disruptions, market volatility, or external factors, could lead to elevated production expenses and impact\nour profit margins or customer demand if the cost is passed on. Failure to manage and mitigate these cost pressures could impact profitability\nor revenue. Additionally, if we are unable to adapt to changing cost dynamics, it could impede our ability to invest in R&D or expansion\nefforts, further limiting our growth prospects. Therefore, our capability to effectively manage material and component costs is a factor\nin our operational resilience and long-term financial success.\n\n \n\n**Adverse\neconomic conditions, such as a possible recession and possible impacts of inflation or stagflation, increasing or decreasing interest\nrates, reduced information technology spending or any economic downturn or recession, may adversely impact our business.**\n\n \n\nOur\nbusiness depends on the overall demand for information technology and on the economic health of our current and prospective customers.\nIn addition, the purchase of our software solutions is often discretionary and may involve a significant commitment of capital and other\nresources. Weak global and regional economic conditions, fluctuating spending environments, a potential recession, the effects of ongoing\nor increased inflation, possible stagflation in certain geographies, variable interest rates, geopolitical instability and uncertainty,\na reduction in information technology spending regardless of macroeconomic conditions, the effects of epidemics and pandemics, and the\nimpact of the war in Ukraine each could have a material adverse impact on our financial condition, results of operations, and our business.\nOur inability to mitigate any of the foregoing events may result in longer sales cycles, a decrease in prices of our software solutions,\nincreased component costs, higher default rates among our channel partners, reduced unit sales, or a decline in growth.\n\n \n\nThe\nexistence of inflation in certain economies has resulted in, and may continue to result in, increasing or decreasing interest rates and\ncapital costs, increased component or shipping costs, increased costs of labor, weakening exchange rates and other similar effects. We\nmay not be able to successfully mitigate these risks in a timely manner. These economic challenges may also adversely impact spending\npatterns by our distributors, resellers and end-customers.\n\n \n\n**Our\nbillings, revenue and free cash flow growth may slow or may not continue, and our operating margins may decline.**\n\n \n\nWe\nmay experience slowing growth or a decrease in billings, revenue, operating margin and free cash flow for a number of reasons, including\na slowdown in demand for our hardware or software solutions, a shift in demand from hardware to software solutions, decrease in revenue\ngrowth, increased competition, worldwide or regional economic challenges based on inflation or possible stagflation, a regional or global\nrecession, rising interest rates, the war in Ukraine, a decrease in the growth of our overall market or softness in demand in certain\ngeographies or industry verticals, such as the service provider industry, changes in our strategic opportunities, execution risks, lower\nsales productivity and our failure for any reason to continue to capitalize on sales and growth opportunities due to other risks identified\nin the risk factors described in this prospectus. Our expenses, as a percentage of total revenue, may be higher than expected if our\nrevenue is lower than expected. If our investments in sales and marketing and other functional areas do not result in expected billings\nand revenue growth, we may experience margin declines. In addition, we may not be able to sustain profitability in future periods if\nwe fail to increase billings, revenue or deferred revenue, and do not appropriately manage our cost structure, free cash flow, or encounter\nunanticipated liabilities. As a result, any failure by us to maintain profitability and margins and continue our billings, revenue and\nfree cash flow growth could cause the price of our common stock to materially decline.\n\n \n\n21\n\n \n\n \n\n**We\nare dependent on the continued services and performance of our senior management, the loss of any of whom could adversely affect our\nbusiness, operating results and financial condition.**\n\n \n\nOur\nfuture performance depends on the continued services and continuing contributions of our senior management to execute on our business\nplan and to identify and pursue new opportunities and software solutions. The loss of services of members of senior management, or of\nany of our senior sales leaders or functional area leaders, could significantly delay or prevent the achievement of our development and\nstrategic objectives. The loss of the services or the distraction of our senior management for any reason could adversely affect our\nbusiness, financial condition and results of operations.\n\n \n\nDr.\nBhaskar and Ms. Datta are the primary inventors of our Company’s technology and have been instrumental in developing key partnerships.\nWhile our management team also supports the continuing operations, our two founders continue to play a key role in the company and in\ndeveloping new ideas and building new partnerships. FatPipe is developing middle management to help reduce senior management risk.\n\n \n\n**If\nwe are unable to attract, retain, and motivate key employees, then our business, results of operations, and financial condition would\nbe adversely affected.**\n\n \n\nHiring\nand retaining qualified executives, developers, engineers, technical staff, and sales representatives are critical to our business. The\ncompetition for highly skilled employees in our industry is increasingly intense. Competitors for technical talent increasingly may seek\nto hire our employees. Changes in the interpretation and application of employment-related laws to our workforce practices may also result\nin increased operating costs and less flexibility in how we meet our changing workforce needs. To help attract, retain, and motivate\nqualified employees, we intend to use employee incentives such as share-based awards. Our employee hiring and retention also depend on\nour ability to build and maintain a diverse and inclusive workplace culture and be viewed as an employer of choice. If our share-based\nor other compensation programs and workplace culture cease to be viewed as competitive, our ability to attract, retain, and motivate\nemployees would be weakened, which would harm our results of operations. Equity compensation has been, and will continue to be, an important\npart of our future compensation strategy and a significant component of our future expenses, which we expect to increase over time. Moreover,\nsustained declines in our stock price can reduce the retention value of our share-based awards. If we do not effectively hire, onboard,\nretain, and motivate key employees, then our business, results of operations, and financial condition would be adversely affected.\n\n \n\nChanges\nin our management team can also disrupt our business. Our management and senior leadership team has significant industry experience,\nand their knowledge and relationships would be difficult to replace. Leadership changes may occur from time to time, and we cannot predict\nwhether significant resignations will occur or whether we will be able to recruit qualified personnel.\n\n \n\n**We\nmay need to raise additional capital in the future, which may not be available on terms acceptable to us, or at all.**\n\n \n\nA\nmajority of our operating expenses are for sales and marketing, and R&D activities. Our capital requirements will depend on many\nfactors, including, but not limited to:\n\n \n\n●technological\nadvancements;\n\n   \n\n●market\nacceptance of our solutions and solution enhancements, and the overall level of sales of\nour software solutions;\n\n   \n\n●R&D\nexpenses;\n\n   \n\n●our\nrelationships with our customers and partners;\n\n   \n\n●our\nability to control costs;\n\n   \n\n●sales\nand marketing expenses;\n\n \n\n22\n\n \n\n \n\n●enhancements\nto our infrastructure and systems and any capital improvements to our facilities;\n\n   \n\n●working\ncapital for inventory;\n\n   \n\n●potential\nacquisitions of businesses and product lines; and\n\n   \n\n●general\neconomic conditions, including, inflation, rising interest rates, and international conflicts\nand their impact on the tech industry in particular.\n\n \n\nIf\nour capital requirements are materially different from those currently planned, we may need additional capital sooner than anticipated.\nIf additional funds are raised through the issuance of equity or convertible debt securities, our stockholders may be diluted. Additional\nfinancing may not be available on favorable terms, on a timely basis, or at all. If adequate funds are not available or are not available\non acceptable terms, we may be unable to continue our operations as planned, develop or enhance our solutions, expand our sales and marketing\nprograms, take advantage of future opportunities, or respond to competitive pressures.\n\n \n\n**Risks\nRelated to Our Sales and End-Customers**\n\n \n\n**If\nwe do not increase the effectiveness of our sales organization, we may have difficulty adding new end-customers or increasing sales to\nour existing end-customers and our business may be adversely affected.**\n\n \n\nAlthough\nwe have a channel sales model, sales in our industry are complex and members of our sales organization often engage in direct interaction\nwith our prospective end-customers, particularly for larger deals involving larger end-customers. Therefore, we continue to be substantially\ndependent on our sales organization to obtain new end-customers and sell additional software solutions and services to our existing end-customers.\nThere is significant competition for sales personnel with the skills and technical knowledge that we require, including experienced enterprise\nsales employees and others. Our ability to grow our revenue depends, in large part, on our success in recruiting, training and retaining\nsufficient numbers of sales personnel to support our growth and on the effectiveness of our sales strategy, sales execution, and sales\npersonnel selling successfully in different contexts, each of which has its own different complexities, approaches and competitive landscapes,\nsuch as managing and growing the channel business for sales to small businesses and more actively selling to the end-customer for sales\nto larger organizations. New hires require substantial training and may take significant time before they achieve full productivity.\nOur recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient\nnumbers of qualified individuals in the markets where we do business or plan to do business. Furthermore, hiring sales personnel in new\ncountries requires additional setup and upfront costs that we may not recover if the sales personnel fail to achieve full productivity.\nSales effectiveness has a ramp up period which we must carefully account for before we see full impact on additional headcount revenues.\nIf we are unable to hire and train sufficient numbers of effective sales personnel, the sales personnel are not successful in obtaining\nnew end-customers or increasing sales to our existing customer base or sales personnel do not effectively sell our Enhanced Platform\nTechnology software solutions, our business, operating results and prospects may be adversely affected. If we do not hire properly qualified\nand effective sales employees and organize our sales team effectively to capture the opportunities in the various customer segments we\nare targeting, our growth and ability to effectively support growth may be harmed.\n\n \n\nIn\naddition, in light of macroeconomic trends and in the event of sales execution challenges for any reason, we may face excess sales capacity,\nlow sales productivity generally, and a decline in productivity in our sales organization. If we are not able to align our sales capacity\nand market demand, or if the productivity of our sales organization decreases, our operating results and financial condition could be\nharmed.\n\n \n\n**Unless\nwe continue to develop better market awareness of our company and our software solutions, and to improve lead generation and sales enablement,\nour revenue may not continue to grow.**\n\n \n\nIncreased\nmarket awareness of our capabilities and software services and increased lead generation are essential to our continued growth and our\nsuccess in all of our markets, particularly the market for sales to large businesses, service providers and government organizations.\nWhile we have increased our investments in sales and marketing, it is not clear that these investments will continue to result in increased\nrevenue. If our investments in additional sales personnel or our marketing programs are not successful in continuing to create market\nawareness of our company and software solutions or increasing lead generation, in growing billings for our broad software solutions or\nif we experience turnover and disruption in our sales and marketing teams, we may not be able to achieve sustained growth, and our business,\nfinancial condition and results of operations may be adversely affected.\n\n \n\n23\n\n \n\n \n\n**Risks\nRelated to Our Industry, Customers, Software and Services**\n\n \n\n**We\nface competition in our market and we may not maintain or improve our competitive position.**\n\n \n\nThe\nmarket for network security software solutions is competitive and dynamic and we expect to face competitors across different cybersecurity\nmarkets.\n\n \n\nSome\nof our existing and potential competitors enjoy competitive advantages such as:\n\n \n\n●greater\nname recognition and/or longer operating histories;\n\n   \n\n●larger\nsales and marketing budgets and resources;\n\n   \n\n●broader\ndistribution and established relationships with distribution partners and end-customers;\n\n   \n\n●access\nto larger customer bases;\n\n   \n\n●greater\ncustomer support resources;\n\n   \n\n●greater\nresources to make acquisitions;\n\n   \n\n●stronger\nU.S. government relationships;\n\n   \n\n●lower\nlabor and development costs; and\n\n   \n\n●substantially\ngreater financial, technical and other resources.\n\n \n\nIn\naddition, certain of our larger competitors have broader product offerings, and leverage their relationships based on other products\nor incorporate functionality into existing products in a manner that discourages customers from purchasing our software solutions. These\nlarger competitors often have broader product lines and market focus, and are in a better position to withstand any significant reduction\nin capital spending by end-customers in these markets. Therefore, these competitors will not be as susceptible to downturns in a particular\nmarket. Also, many of our smaller competitors that specialize in providing protection from a single type of security threat are often\nable to deliver these specialized security products to the market more quickly than we can.\n\n \n\nConditions\nin our markets could change rapidly and significantly as a result of technological advancements or continuing market consolidation. Our\ncompetitors and potential competitors may also be able to develop products or services, and leverage new business models, that are equal\nor superior to ours, achieve greater market acceptance of their products and services, disrupt our markets, and increase sales by utilizing\ndifferent distribution channels than we do. In addition, current or potential competitors may be acquired by third parties with greater\navailable resources, and new competitors may arise pursuant to acquisitions of network security companies or divisions. As a result of\nsuch acquisitions, competition in our market may continue to increase and our current or potential competitors might be able to adapt\nmore quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their products and services,\ninitiate or withstand substantial price competition, take advantage of acquisition or other opportunities more readily, or develop and\nexpand their product and service offerings more quickly than we do. In addition, our competitors may bundle products and services competitive\nwith ours with other products and services. Customers may accept these bundled products and services rather than separately purchasing\nour software solutions and services. As our customers refresh the security products bought in prior years, they may seek to consolidate\nvendors, which may result in current customers choosing to purchase products from our competitors on an ongoing basis. Due to budget\nconstraints or economic downturns, organizations may be more willing to incrementally add solutions to their existing network security\ninfrastructure from competitors than to replace it with our solutions. These competitive pressures in our market or our failure to compete\neffectively may result in price reductions, fewer customer orders, reduced revenue and gross margins and loss of market share.\n\n \n\n**If\nour new software solutions and enhancements do not achieve sufficient market acceptance, our results of operations and competitive position\nwill suffer.**\n\n \n\nWe\nspend substantial amounts of time and money to internally develop software solutions and enhance versions of our software in order to\nincorporate additional features, improved functionality or other enhancements in order to meet our customers’ rapidly evolving\ndemands for network security in our highly competitive industry. When we develop a software solution, or an enhanced version of an existing\nsoftware, we typically incur expenses and expend resources upfront to market, promote and sell the new offering. Therefore, when we develop\nand introduce new or enhanced software solutions, they must achieve high levels of market acceptance in order to justify the amount of\nour investment in developing and bringing them to market.\n\n \n\n24\n\n \n\n \n\nOur\nnew hardware, software solutions or enhancements could fail to attain sufficient market acceptance for many reasons, including:\n\n \n\n●delays\nin releasing our new hardware, software solutions or enhancements to the market;\n\n   \n\n●failure\nto accurately predict market demand in terms of hardware and software functionality and to\nsupply hardware and software solutions that meet this demand in a timely fashion;\n\n   \n\n●failure\nto have the appropriate R&D expertise and focus to make our top strategic software solutions\nsuccessful;\n\n   \n\n●failure\nof our sales force and partners to focus on selling new hardware and software solutions;\n\n   \n\n●inability\nto interoperate effectively with the networks or applications of our prospective end-customers;\n\n   \n\n●inability\nto protect against new types of attacks or techniques used by hackers;\n\n   \n\n●actual\nor perceived defects, vulnerabilities, errors or failures;\n\n   \n\n●negative\npublicity about their performance or effectiveness;\n\n   \n\n●introduction\nor anticipated introduction of competing products and services by our competitors;\n\n   \n\n●poor\nbusiness conditions for our end-customers, causing them to delay IT purchases;\n\n   \n\n●changes\nto the regulatory requirements around security; and\n\n   \n\n●reluctance\nof customers to purchase software solutions that incorporate open-source software.\n\n \n\nIf\nour new hardware, software solutions or enhancements do not achieve adequate acceptance in the market, our competitive position will\nbe impaired, our revenue will be diminished and the effect on our operating results may be particularly acute because of the significant\nresearch, development, marketing, sales and other expenses we incurred in connection with our offerings.\n\n \n\n**Demand\nfor our software solutions may be limited by market perception that individual software solutions from one vendor that provide multiple\nlayers of security protection in one offering are inferior to point solution network security solutions from multiple vendors.**\n\n \n\nSales\nof many of our software solutions depend on increased demand for incorporating broad security functionality into one application. If\nthe market for these solutions fails to grow as we anticipate, our business will be negatively impacted. Target customers may view “all-in-one”\nnetwork security solutions as inferior to security solutions from multiple vendors based on their perception that security functions\nfrom one vendor restrict users from choosing amongst the wide range of dedicated security applications available. Target customers might\nalso perceive that, by combining multiple security functions into a single platform, our solutions create a “single point of failure”\nin their networks, which means that an error, vulnerability or failure of our offerings may place the entire network at risk. In addition,\nthe market perception that “all-in-one” solutions may be suitable only for small and medium-sized businesses because such\nsolution lacks the performance capabilities and functionality of other solutions may harm our sales to large businesses, service provider\nand government organization end-customers. If the foregoing concerns and perceptions become prevalent, even if there is no factual basis\nfor these concerns and perceptions, or if other issues arise with our market in general, demand for multi-security functionality software\nsolutions could be severely limited, which would limit our growth and harm our business, financial condition and results of operations.\nFurther, a successful and publicized targeted attack against us, exposing a “single point of failure”, could significantly\nincrease these concerns and perceptions and may harm our business and results of operations.\n\n \n\n**If\nfunctionality similar to that offered by our software solutions is incorporated into our competitors’ existing network infrastructure\nproducts, our customers may decide against adding our appliances to their network, which would have an adverse effect on our business.**\n\n \n\nLarge,\nwell-established providers of networking equipment and may continue to introduce, network security features that compete with our software\nsolutions, either in standalone security products or as additional features in their network infrastructure products. The inclusion of,\nor the announcement of an intent to include, functionality perceived to be similar to that offered by our security solutions that are\nalready generally accepted as necessary components of network architecture may have an adverse effect on our ability to market and sell\nour software solutions. Furthermore, even if the functionality offered by network infrastructure providers is more limited than our software\nsolutions, a significant number of customers may elect to accept such limited functionality in lieu of adding appliances from an additional\nvendor such as us. Many organizations have invested substantial personnel and financial resources to design and operate their networks\nand have established deep relationships with other providers of networking products, which may make them reluctant to add new components\nto their networks, particularly from other vendors such as us. If organizations are reluctant to add additional network infrastructure\nfrom new vendors or otherwise decide to work with their existing vendors, our business, financial condition and results of operations\nwill be adversely affected.\n\n \n\n25\n\n \n\n \n\n**Because\nsome of the key components in our hardware come from limited sources of supply, we are susceptible to supply shortages, long or uncertain\nlead times for components, and supply changes, each of which could disrupt or delay our scheduled software deliveries to our customers,\nresult in inventory shortage, cause loss of sales and customers or increase component costs resulting in lower gross margins and free\ncash flow.**\n\n \n\nOur\ncontract manufacturers currently purchase several key parts and components for our hardware from limited sources of supply. We are therefore\nsubject to the risk of shortages or uncertain lead times in the supply of these components and the risk that component suppliers may\ndiscontinue or modify components used in our software. We have in the past experienced uncertain lead times for certain components. The\nintroduction by component suppliers of new versions of their products, particularly if not anticipated by us or our contract manufacturers,\ncould require us to expend significant resources to incorporate these new components into our solutions. In addition, if these suppliers\nwere to discontinue production of a necessary part or component, we would be required to expend significant resources and time in locating\nand integrating replacement parts or components from another vendor. Qualifying additional suppliers for limited source parts or components\ncan be time-consuming and expensive.\n\n \n\nIf\nwe are unable to obtain sufficient quantities of hardware, we may have to find alternate sources. This could result in a delay and cancellation\nof orders, lost sales, reduced gross margins or damage to our end-customer relationships, which would adversely impact our business,\nfinancial condition, results of operations and prospects. Additionally, if actual demand does not directly match with our demand forecasts,\ndue to our purchase order commitments, we could be required to accept or pay for components and finished goods. This may result in us\ndiscounting our hardware or excess or obsolete inventory, which we would be required to write down to its estimated realizable value,\nwhich in turn could result in lower gross margins. Our reliance on a limited number of suppliers involves several additional risks, including:\n\n \n\n●a\npotential inability to obtain an adequate supply of required parts or components when required;\n\n   \n\n●financial\nor other difficulties faced by our suppliers;\n\n   \n\n●infringement\nor misappropriation of our intellectual property (“IP”);\n\n   \n\n●price\nincreases;\n\n   \n\n●failure\nof a component to meet environmental or other regulatory requirements;\n\n   \n\n●failure\nto meet delivery obligations in a timely fashion;\n\n   \n\n●failure\nin component quality; and\n\n   \n\n●inability\nto deliver software on a timely basis.\n\n \n\nThe\noccurrence of any of these events would be disruptive to us and could seriously harm our business. Any interruption or delay in the supply\nof any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices\nand within a reasonable amount of time, would harm our ability to meet our scheduled hardware deliveries to our distributors, resellers\nand end-customers. This could harm our relationships with our channel partners and end-customers and could cause delays in the installation\nof our software solutions and adversely affect our results of operations. In addition, increased component costs could result in lower\ngross margins.\n\n \n\n**The\nsales prices of our hardware and software solutions may decrease, which may reduce our gross profits and operating margin and may adversely\nimpact our financial results and the trading price of our common stock.**\n\n \n\nThe\nsales prices for our software solutions may decline for a variety of reasons or the mix of our offerings may change, resulting in lower\ngrowth and margins based on a number of factors, including competitive pricing pressures, discounts or promotional programs we offer,\na change in our available offerings and anticipation of the introduction of new software solutions. We have recently conducted such price\ndecreases. Competition continues to increase in the market segments in which we participate, and we expect competition to further increase\nin the future, thereby leading to increased pricing pressures. Larger competitors with more diverse product offerings may reduce the\nprice of products and services that compete with ours in order to promote the sale of other products or services or may bundle them with\nother products or services. Additionally, although we price our software solutions and services worldwide in U.S. dollars, currency fluctuations\nin certain countries and regions have in the past, and may in the future, negatively impact actual prices that partners and customers\nare willing to pay in those countries and regions. Furthermore, we anticipate that the sales prices and gross profits for our hardware\nand software solutions will decrease over product life cycles. We cannot ensure that we will be successful in developing and introducing\nnew offerings with enhanced functionality on a timely basis, or that those offerings, if introduced, will enable us to maintain our prices,\ngross profits and operating margin at levels that will allow us to maintain profitability.\n\n \n\n26\n\n \n\n \n\n**The\nnetwork security market is rapidly evolving and the complex technology incorporated in our software solutions make them difficult to\ndevelop. If we do not accurately predict, prepare for and respond promptly to technological and market developments and changing end-customer\nneeds, our competitive position and prospects may be harmed.**\n\n \n\nThe\nnetwork security market is expected to continue to evolve rapidly. Moreover, many of our end-customers operate in markets characterized\nby rapidly changing technologies and business plans, which require them to add numerous network access points and adapt increasingly\ncomplex networks, incorporating a variety of hardware, software applications, operating systems and networking protocols. In addition,\ncomputer hackers and others who try to attack networks employ increasingly sophisticated techniques to gain access to and attack systems\nand networks. The technology in our software solutions is especially complex because it needs to effectively identify and respond to\nnew and increasingly sophisticated methods of attack, while minimizing the impact on network performance. Additionally, some of our new\nofferings and enhancements may require us to develop new hardware architectures that involve complex, expensive and time-consuming R&D\nprocesses. Although the market expects rapid introduction of new software solutions and to respond to new threats, the development of\nthese solutions is difficult, the timetable for their commercial release and availability is uncertain, and there can be long time periods\nbetween releases and availability of new software solutions. We have in the past and may in the future experience unanticipated delays\nin the availability of new offerings and fail to meet previously announced timetables for such availability. If we do not quickly respond\nto the rapidly changing and rigorous needs of our end-customers by developing, releasing and making available on a timely basis new software\nsolutions or enhancements that can respond adequately to new security threats, our competitive position and business prospects may be\nharmed.\n\n \n\n**Our\nability to sell our software solutions is dependent on our quality control processes and the quality of our technical support services,\nand our failure to offer high-quality technical support services could have a material adverse effect on our sales and results of operations.**\n\n \n\nOnce\nour software solutions are deployed within our end-customers’ networks, our end-customers depend on our technical support services,\nas well as the support of our partners and other third parties, to resolve any issues relating to our software. If we, our partners,\nor other third-parties do not effectively assist our customers in planning, deploying and operating our software, successfully help our\ncustomers resolve post-deployment issues, or provide effective ongoing support, our ability to sell additional software solutions to\nexisting customers may be adversely affected and our reputation with potential customers could be damaged. Many large end-customers,\nand service providers or government organization end-customers, require higher levels of support than smaller end-customers because of\ntheir more complex deployments and more demanding environments and business models. If we, our channel partners or other third parties\nfail to meet the requirements of our larger end-customers, it may be more difficult to execute on our strategy to increase our penetration\nwith large businesses, service providers and government organizations. Our failure to maintain high-quality support services could have\na material adverse effect on our business, financial condition and results of operations and may subject us to litigation, reputational\ndamage, loss of customers and additional costs.\n\n \n\n**Our\nbusiness is subject to the risks of warranty claims, product returns, product liability and software defects.**\n\n \n\nOur\nsoftware solutions are complex and, despite testing prior to their release, have contained and may contain undetected defects or errors,\nespecially when first introduced or when new versions are released. Software errors have affected the performance and effectiveness of\nour software solutions and could delay the development or release of new offerings or new versions of our software. This may adversely\naffect our reputation and our end-customers’ willingness to buy software from us, result in litigation and disputes with customers,\nand adversely affect market acceptance or perception of our software solutions. Any such errors or delays in releasing new software solutions\nor new versions of our software or allegations of unsatisfactory performance could cause us to lose revenue or market share, increase\nour service costs, cause us to incur substantial costs in redesigning our software, cause us to lose significant end-customers, subject\nus to litigation, litigation costs and liability for damages and divert our resources from other tasks, any one of which could materially\nand adversely affect our business, results of operations and financial condition. Our software solutions must successfully interoperate\nwith products from other vendors. As a result, when problems occur in a network, it may be difficult to identify the sources of these\nproblems. The occurrence of hardware and software errors, whether or not caused by our offerings, could delay or reduce market acceptance\nof our software solutions and have an adverse effect on our business and financial performance, and any necessary revisions may cause\nus to incur significant expenses. The occurrence of any such problems could harm our business, financial condition, and results of operations.\n\n \n\n27\n\n \n\n \n\nAlthough\nwe generally have limitation of liability provisions in our standard terms and conditions of sale and back-to-back warranty from our\nhardware vendors, they may not fully or effectively protect us from claims if exceptions apply or if the provisions are deemed unenforceable,\nand in some circumstances, we may be required to indemnify a customer in full, without limitation, for certain liabilities, including\nliabilities that are not contractually limited. The sale and support of our software solutions also entail the risk of product liability\nclaims. We maintain insurance to protect against certain claims associated with the use of our software, but our insurance coverage may\nnot adequately cover any claim asserted against us, if at all, and in some instances may subject us to potential liability that is not\ncontractually limited. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation\nand divert management’s time and other resources.\n\n \n\n**Our\nhistorical financial information may not be representative of our results as a public company.**\n\n \n\nThe\nhistorical combined financial information included in this prospectus may not necessarily reflect our results of operations, financial\nposition, and cash flows in the future or what they would have been had we been a public company during the fiscal years presented. Our\nhistorical financial data presented in this prospectus includes costs of our business, which may not, however, reflect the expenses we\nwould have incurred as a public company for the fiscal years presented. Actual costs that may have been incurred if we had operated as\na public company would depend on a number of factors, including the chosen organizational structure, the outsourcing of certain functions,\nand other strategic decisions.\n\n \n\n**Risks\nRelated to Our Systems and Technology**\n\n \n\n**If\nour internal enterprise IT networks, on which we conduct internal business and interface externally, our operational networks, through\nwhich we connect to customers, vendors and partners systems and provide services, or our research and development networks, our back-end\nlabs and cloud stacks hosted in our data centers, colocation vendors or public cloud providers, through which we research, develop and\nhost software solutions are compromised, public perception of our offerings may be harmed, our customers may be breached and harmed,\nwe may become subject to liability, and our business, operating results and stock price may be adversely impacted.**\n\n \n\nOur\nsuccess depends on the market’s confidence in our ability to provide effective network security protection. Despite our efforts\nand processes to prevent breaches of our internal networks, systems and websites, we are still vulnerable to computer viruses, break-ins,\nphishing attacks, ransomware attacks, attempts to overload our servers with denial-of-service, vulnerabilities in vendor hardware and\nsoftware that we leverage, advanced persistent threats from sophisticated actors and other cyber-attacks and similar disruptions from\nunauthorized access to our internal networks, systems or websites. Our security measures may also be breached due to employee error,\nmalfeasance or otherwise, which breaches may be more difficult to detect than outsider threats, and the existing programs and trainings\nwe have in place to prevent such insider threats may not be effective or sufficient. Third parties may also attempt to fraudulently induce\nour employees to transfer funds or disclose information in order to gain access to our networks and confidential information. Third parties\nmay also send our customers or others malware or malicious emails that falsely indicate that we are the source, potentially causing lost\nconfidence in us and reputational harm. We cannot guarantee that the measures we have taken to protect our networks, systems and websites\nwill provide adequate security. Moreover, because we provide network security software, we may be a more attractive target for attacks\nby computer hackers and any security breaches and other security incidents involving us may result in more harm to our reputation and\nbrand than companies that do not sell network security solutions. Hackers and malicious parties may be able to develop and deploy viruses,\nworms, ransomware and other malicious software programs that attack our software and customers’ data and privacy, that impersonate\nour update servers in an effort to access customer networks and negatively impact customers, or otherwise exploit any security vulnerabilities\nof our software, or attempt to fraudulently induce our employees, customers or others to disclose passwords or other sensitive information\nor unwittingly provide access to our internal networks, systems or data.\n\n \n\n28\n\n \n\n \n\nAlthough\nwe take numerous measures and implement multiple layers of security to protect our networks, we cannot guarantee that our security software,\nprocesses and services will secure against all threats. Further, we cannot be sure that third parties have not been, or will not in the\nfuture be, successful in improperly accessing our systems and our customers’ systems, which could negatively impact us and our\ncustomers. An actual breach could significantly harm us and our customers, and an actual or perceived breach, or any other actual or\nperceived data security incident, threat or vulnerability, that involves our supply chains, networks, systems or websites and/or our\ncustomers’ supply chains, networks, systems or websites could adversely affect the market perception of our software and services\nand investor confidence in our company. We could also be subject to liability and litigation and reputational harm and our partners and\nend-customers may be harmed, lose confidence in us and decrease or cease using our software solutions and services. Any breach of our\ninternal networks, systems or websites could have an adverse effect on our business, operating results and stock price.\n\n \n\n**Our\nbusiness and operations have experienced growth in recent periods, and if we do not effectively manage any future growth or are unable\nto improve our systems, processes, and controls, our operating results could be adversely affected.**\n\n \n\nWe\nhave experienced growth and increased demand for our software solutions and subscriptions since 2020. As we have grown, our number of\nend-customers has increased, and we have managed more complex deployments of our software solutions and subscriptions with larger end-customers.\nThe growth and expansion of our business and software, subscriptions, and support offerings places a significant strain on our management,\noperational, and financial resources. To manage any future growth effectively, we must continue to improve and expand our information\ntechnology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount,\ncapital, and processes in an efficient manner.\n\n \n\nWe\nmay not be able to successfully implement, scale, or manage improvements to our systems, processes, and controls in an efficient or timely\nmanner, which could result in material disruptions of our operations and business. In addition, our existing systems, processes, and\ncontrols may not prevent or detect all errors, omissions, or fraud. We may also experience difficulties in managing improvements to our\nsystems, processes, and controls, or in connection with third-party software licensed to help us with such improvements. Any future growth\nwould add complexity to our organization and require effective coordination throughout our organization. Failure to manage any future\ngrowth effectively could result in increased costs, disrupt our existing end-customer relationships, reduce demand for or limit us to\nsmaller deployments of our software, or materially harm our business performance and operating results.\n\n \n\n**Risks\nRelated to Our Intellectual Property**\n\n \n\n**Our\nproprietary rights may be difficult to enforce and we may be subject to claims by others that we infringe their propriety technology.**\n\n \n\nWe\nrely primarily on patent, trademark, copyright and trade secrets laws and confidentiality procedures and contractual provisions to protect\nour technology. Valid patents may not issue from our pending applications, and the claims eventually allowed on any patents may not be\nsufficiently broad to protect our technology or software. Any issued patents may be challenged, invalidated or circumvented, and any\nrights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Patent applications\nin the United States are typically not published until at least 18 months after filing, or, in some cases, not at all, and publications\nof discoveries in industry-related literature lag behind actual discoveries. We cannot be certain that we were the first to make the\ninventions claimed in our pending patent applications or that we were the first to file for patent protection. Additionally, the process\nof obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent\napplications at a reasonable cost or in a timely manner. In addition, recent changes to the patent laws in the United States may bring\ninto question the validity of certain software patents and may make it more difficult and costly to prosecute patent applications. As\na result, we may not be able to obtain adequate patent protection or effectively enforce our issued patents.\n\n \n\n29\n\n \n\n \n\nDespite\nour efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our software or obtain and use information\nthat we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants, vendors\nand customers, and generally limit access to and distribution of our proprietary information. However, we cannot guarantee that the steps\ntaken by us will prevent misappropriation of our technology. Policing unauthorized use of our technology or software is difficult. In\naddition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States,\nand many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States. From\ntime to time, legal action by us may be necessary to enforce our patents and other IP rights, to protect our trade secrets, to determine\nthe validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation\ncould result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial\ncondition. If we are unable to protect our proprietary rights (including aspects of our software protected other than by patent rights),\nwe may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to\ncreate the innovative software that have enabled us to be successful to date.\n\n \n\nFurther,\nour ability to compete effectively depends in part on our ability to develop and maintain the proprietary aspects of our technology.\nOur policy is to obtain appropriate proprietary rights protection for any potentially significant new technology acquired or developed\nby us. We hold 13 U.S. patents, and provisional patent filings.\n\n \n\nIn\naddition to patent laws, we rely on copyright and trade secret laws to protect our proprietary rights. We attempt to protect our trade\nsecrets and other proprietary information through agreements with channel partners, distributors, other customers and suppliers, proprietary\ninformation agreements with our employees and consultants, and other similar measures. Our primary trademarks are for our name and software\nnames. We cannot be certain that we will be successful in protecting our proprietary rights. While we believe our patents, patent applications,\nsoftware and other proprietary know-how have value, changing technology makes our future success dependent principally upon our ability\nto successfully achieve continuing innovation.\n\n \n\nLitigation\nmay be necessary in the future to enforce our proprietary rights, to determine the validity and scope of the proprietary rights of others,\nor to defend us against claims of infringement or invalidity by others. An adverse outcome in such litigation or similar proceedings\ncould subject us to significant liabilities to third parties, require disputed rights to be licensed from others or require us to cease\nmarketing or using certain software, any of which could have a material adverse effect on our business, financial condition, and results\nof operations. In addition, the cost of addressing any IP litigation claim, both in legal fees and expenses, as well as from the diversion\nof management’s resources, regardless of whether the claim is valid, could be significant and could have a material adverse effect\non our business, financial condition, and results of operations.\n\n \n\n**Claims\nby others that we infringe their proprietary technology or other litigation matters could harm our business.**\n\n \n\nPatent\nand other IP disputes are common in the software related technology industry. As the number of products and competitors in our market\nincreases and overlaps occur, infringement claims may increase. Any claim of infringement by a third party, even those without merit,\ncould cause us to incur substantial costs defending against the claim and could distract our management from our business. In addition,\nlitigation may involve patent holding companies, non-practicing entities or other adverse patent owners who have no relevant product\nrevenue and against whom our own patents may therefore provide little or no deterrence or protection.\n\n \n\nAlthough\nthird parties may offer a license to their technology, the terms of any offered license may not be acceptable, and the failure to obtain\na license or the costs associated with any license could cause our business, financial condition and results of operations to be materially\nand adversely affected. In addition, some licenses may be non-exclusive and, therefore, our competitors may have access to the same technology\nlicensed to us.\n\n \n\nAlternatively,\nwe may be required to develop non-infringing technology, which could require significant time, effort and expense, and may ultimately\nnot be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from providing\ncertain software solutions that requires us to pay substantial damages (including treble damages if we are found to have willfully infringed\nsuch claimant’s patents or copyrights), royalties or other fees. Any of these events could seriously harm our business, financial\ncondition and results of operations.\n\n \n\n30\n\n \n\n \n\n**Other\nRisks Related to Our Business and Financial Position**\n\n \n\n**Failure\nto comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose\nend-customers in the public sector or negatively impact our ability to contract with the public sector.**\n\n \n\nOur\nbusiness is subject to regulation by various federal, state, regional, local and foreign governmental agencies, including agencies responsible\nfor monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery\nlaws, data privacy laws, import and export controls, federal securities laws and tax laws and regulations. In certain jurisdictions,\nthese regulatory requirements may vary from those in the United States. Non-compliance with applicable regulations or requirements could\nsubject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages and civil and criminal penalties\nor injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our\nbusiness, operating results and financial condition could be adversely affected. In addition, responding to any action will likely result\nin a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and\nsanctions could harm our business, operating results and financial condition.\n\n \n\nSelling\nour solutions to the U.S. government, whether directly or through channel partners, also subjects us to certain regulatory and contractual\nrequirements, government permit and clearance requirements and other risks. Failure to comply with these requirements or to obtain and\nmaintain government permits and clearances required to do certain business, by either us or our channel partners, could subject us to\ninvestigations, fines, suspension, limitations on business or debarment from doing business with the U.S. government or one of its divisions,\nas well as other penalties, damages and reputational harms, which could have an adverse effect on our business, operating results, financial\ncondition and prospects. Any violations of regulatory and contractual requirements could result in us being suspended or debarred from\nfuture government contracting. Any of these outcomes could have an adverse effect on our revenue, operating results, financial condition\nand prospects.\n\n \n\nThese\nlaws, regulations and other requirements impose added costs on our business, and failure to comply with these or other applicable regulations\nand requirements, including non-compliance in the past, could lead to claims for damages from our channel partners, penalties, termination\nof contracts, loss of exclusive rights in our IP and temporary suspension, permanent debarment from government contracting, or other\nlimitations on doing business. Any such damages, penalties, disruptions or limitations in our ability to do business with the public\nsector could have an adverse effect on our business and operating results.\n\n \n\n**We\nare subject to governmental export and import controls that could subject us to liability or restrictions on sales, and that could impair\nour ability to compete in international markets.**\n\n \n\nBecause\nwe incorporate encryption technology into our software solutions, certain of our software are subject to U.S. export controls and may\nbe exported outside the United States only with the required export license or through an export license exception, or may be prohibited\naltogether from export to certain countries. If we were to fail to comply with U.S. export laws, U.S. Customs regulations and import\nregulations, U.S. economic sanctions and other countries’ import and export laws, we could be subject to substantial civil and\ncriminal penalties, including fines for the company and incarceration for responsible employees and managers, and the possible loss of\nexport or import privileges. In addition, if our partners fail to obtain appropriate import, export or re-export licenses or permits\n(e.g., for stocking orders placed by our partners), we may also be adversely affected through reputational harm and penalties and we\nmay not be able to provide support related to appliances shipped pursuant to such orders. Obtaining the necessary export license for\na particular sale may be time-consuming and may result in the delay or loss of sales opportunities.\n\n \n\nFurthermore,\nU.S. export control laws and economic sanctions prohibit the shipment of certain products to U.S. embargoed or sanctioned countries,\ngovernments and persons, such as the sanctions and trade restrictions that have been implemented against Russia and Belarus. Even though\nwe take precautions to prevent our hardware from being shipped to U.S. sanctioned targets, our hardware could be shipped to those targets\nby our partners, despite such precautions. Any such shipment could have negative consequences including government investigations and\npenalties and reputational harm. In addition, various countries regulate the import of certain encryption technology, including import\npermitting and licensing requirements, and have enacted laws that could limit our ability to distribute our software or could limit our\ncustomers’ ability to implement our software solutions in those countries. Changes in our hardware and software or changes in export\nand import regulations may create delays in the introduction of our hardware and software solutions in international markets, or, in\nsome cases, prevent the export or import of our software to certain countries, governments or persons altogether. Any change in export\nor import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change\nin the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our software solutions\nby, or in our decreased ability to export or sell our software solutions to, existing or potential customers with international operations.\nAny decreased use of our hardware and software or limitation on our ability to export or sell our hardware and software would likely\nadversely affect our business, financial condition and results of operations.\n\n \n\n31\n\n \n\n \n\n**Investors’\nexpectations of our performance relating to environmental, social and governance factors may impose additional costs and expose us to\nnew risks.**\n\n \n\nThere\nis an increasing focus from certain investors, employees, customers and other stakeholders concerning corporate responsibility, specifically\nrelated to ESG matters. Some investors may use these non-financial performance factors to guide their investment strategies and, in some\ncases, may choose not to invest in us if they believe our policies and actions relating to corporate responsibility are inadequate. The\ngrowing investor demand for measurement of non-financial performance is addressed by third-party providers of sustainability assessment\nand ratings on companies. The criteria by which our corporate responsibility practices are assessed may change due to the constant evolution\nof the sustainability landscape, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy\nsuch new criteria. If we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies and/or actions\nwith respect to corporate social responsibility are inadequate. We may face reputational damage in the event that we do not meet the\nESG standards set by various constituencies.\n\n \n\nIf\nwe fail to satisfy the expectations of investors, customers, employees, and other stakeholders or our initiatives are not executed as\nplanned, our reputation and business, operating results and financial condition could be adversely impacted. In addition, the SEC has\nalso proposed a draft rule that requires climate disclosures in financial filings. To the extent the SEC proposal becomes effective for\nour Company, we will be required to establish additional internal controls, engage additional consultants and incur additional costs\nrelated to evaluating, managing and reporting on our environmental impact and climate-related risks and opportunities. If we fail to\nimplement sufficient oversight or accurately capture and disclose on environmental matters, our reputation, business, operating results\nand financial condition may be materially adversely affected.\n\n \n\n**We\nhave incurred indebtedness and may incur other debt in the future, which may adversely affect our financial condition and future financial\nresults.**\n\n \n\nAs\nof March 31, 2026, we incurred an aggregate of $4.6 million of indebtedness outstanding under the Fortis Bank replacement loan.\n\n \n\nUnder\nthe agreements governing our indebtedness, we are permitted to incur additional debt. This debt, and any debt that we may incur in the\nfuture, may adversely affect our financial condition and future financial results by, among other things:\n\n \n\n●increasing\nour vulnerability to downturns in our business, competitive pressures, and adverse economic\nand industry conditions;\n\n   \n\n●requiring\nthe dedication of a portion of our expected cash from operations to service our indebtedness,\nthereby reducing the amount of expected cash flow available for other purposes, including\ncapital expenditures, share repurchases and acquisitions; and\n\n   \n\n●limiting\nour flexibility in planning for, or reacting to, changes in our businesses and our industries;\n\n \n\nIf\nwe are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required, among other things,\nto seek additional financing in the debt or equity markets, refinance or restructure all or a portion of our indebtedness, sell selected\nassets or reduce or delay planned capital, operating or investment expenditures. Such measures may not be sufficient to enable us to\nservice our debt.\n\n \n\nThe\nrepayment obligations under the outstanding debt may have the effect of discouraging, delaying or preventing a takeover of our company.\nIf we were required to pay the note prior to their scheduled maturity, it could have a negative impact on our cash position and liquidity\nand impair our ability to invest financial resources in other strategic initiatives.\n\n \n\nIn\naddition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of our debt, as well as affect\nour ability to obtain additional financing in the future and may negatively impact the terms of any such financing.\n\n \n\n32\n\n \n\n \n\n**Risks\nRelated to Finance, Accounting and Tax Matters**\n\n \n\n**If\nour estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect,\nour operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.**\n\n \n\nThe\npreparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates\nand assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our\nestimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided\nin the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical\nAccounting Policies and Estimates.” Our operating results may be adversely affected if our assumptions change or if actual circumstances\ndiffer from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and\ninvestors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our condensed consolidated\nfinancial statements include those related to revenue recognition, deferred contract costs and commission expense, accounting for business\ncombinations, contingent liabilities and accounting for income taxes.\n\n \n\n**We\nare affected by fluctuations in currency exchange rates, including those in connection with recent inflationary trends in the United\nStates.**\n\n \n\nWe\nare exposed to both adverse and advantageous movements in currency exchange rates. Our functional currency is the U.S. dollar, and we\nincur financial expenses in connection with fluctuations in value due to foreign exchange differences between our monetary assets and\nliabilities denominated in United States dollars and, to a much lesser extent, the Indian Rupee, and other currencies. Although most\nof our sales occur in U.S. dollars, and our financial results are reported in U.S. dollars, a portion of our payroll and other operating\nexpenses are accrued in Indian Rupees. An increase in the value of the dollar will increase the real cost to our customers of our solutions\nin those markets outside the U.S. where we sell in dollars. Changes in exchange rates would adversely affect our business, results of\noperations, and financial condition.\n\n \n\n**We\ncould be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, exposure to additional tax liabilities\nor impacts from the timing of tax payments.**\n\n \n\nWe\nare subject to taxes in the United States and other foreign jurisdictions. Our provision for income taxes is subject to volatility and\ncould be adversely affected by several factors, many of which are outside of our control. These include:\n\n \n\n●the\nmix of earnings in countries with differing statutory tax rates or withholding taxes;\n\n   \n\n●changes\nin the valuation of our deferred tax assets and liabilities;\n\n   \n\n●transfer\npricing adjustments;\n\n   \n\n●increases\nto corporate tax rates;\n\n   \n\n●changes\nin availability of tax credits and/or tax deductions;\n\n   \n\n●the\ntiming of tax payments;\n\n   \n\n●tax\ncosts related to intercompany realignments;\n\n   \n\n●tax\nassessments resulting from income tax audits or any related tax interest or penalties that\ncould significantly affect our provision for income taxes for the period in which the settlement\ntakes place; and\n\n   \n\n●changes\nin accounting principles, court decisions, tax rulings, and interpretations of or changes\nto tax laws, and regulations by international, federal or local governmental authorities.\n\n \n\nSignificant\njudgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation\nallowance, we consider all available evidence, including past operating results, estimates of future taxable income and the feasibility\nof tax planning strategies. In the event that we change our determination as to the amount of deferred tax assets that can be realized,\nwe will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination\nis made.\n\n \n\n33\n\n \n\n \n\n**Forecasting\nour estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted\nand actual tax rates.**\n\n \n\nForecasts\nof our income tax position and effective tax rate are complex, subject to uncertainty and periodic updates because our income tax position\nfor each year combines the effects of a mix of profits earned and losses incurred by us in various tax jurisdictions with a broad range\nof income tax rates, as well as changes in the valuation of deferred tax assets and liabilities, the impact of various accounting rules\nand changes to these rules and tax laws, the results of examinations by various tax authorities, and the impact of any acquisition, business\ncombination or other reorganization or financing transaction. To forecast our global tax rate, we estimate our pre-tax profits and losses\nby jurisdiction and forecast our tax expense by jurisdiction. If the mix of profits and losses, our ability to use tax credits or our\neffective tax rate in a given jurisdiction differs from our estimate, our actual tax rate could be materially different than forecasted,\nwhich could have a material impact on our results of business, financial condition and results of operations. Additionally, our actual\ntax rate may be subject to further uncertainty due to potential changes in U.S. and foreign tax rules.\n\n \n\nThe\nOrganization for Economic Co-operation and Development (the “OECD”), an international association comprised of 38 countries,\nincluding the United States, has issued and continues to issue guidelines and proposals that change various aspects of the existing framework\nunder which our tax obligations are determined in many of the countries in which we do business. Due to our extensive international business\nactivities, any changes in the taxation of such activities could increase our tax obligations in many countries and may increase our\nworldwide effective tax rate.\n\n \n\n**Risks\nRelated to Ownership of Our Common Stock**\n\n \n\n**As\na public company, we are subject to compliance initiatives that will require substantial time from our management and result in significantly\nincreased costs that may adversely affect our operating results and financial condition.**\n\n \n\nThe\nSarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), Dodd-Frank and other rules implemented by the SEC and The Nasdaq Stock Market\nimpose various requirements on public companies, including requiring changes in corporate governance practices. These requirements, as\nwell as proposed corporate governance laws and regulations under consideration, may further increase our compliance costs. If compliance\nwith these various legal and regulatory requirements diverts our management’s attention from other business concerns, it could\nhave a material adverse effect on our business, financial condition and results of operations. Sarbanes-Oxley requires, among other things,\nthat we assess the effectiveness of our internal control over financial reporting annually, and of our disclosure controls and procedures\nquarterly. Although our most recent assessment, testing and evaluation resulted in our conclusion that, as of March 31, 2024, our internal\ncontrols over financial reporting were effective, we cannot predict the outcome of our testing in 2025 or future periods and there can\nbe no assurance that, in the future, our internal controls over financial reporting will be effective or deemed effective. The Company\nhas put in place internal procedures to conduct secondary reviews of financial statements and enhanced internal controls. We may incur\nadditional expenses and commitment of management’s time in connection with further evaluations, both of which could materially\nincrease our operating expenses and accordingly reduce our operating results.\n\n \n\n**If\nsecurities or industry analysts stop publishing research or publish inaccurate or unfavorable research about our business, our stock\nprice and trading volume could decline.**\n\n \n\nThe\ntrading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about\nus or our business. If we do not maintain adequate research coverage, if one or more of the analysts who cover us downgrades our stock\nor publishes inaccurate or unfavorable research about our business or if our results or forecasts fail to meet the expectations of research\nanalysts and investors, our stock price could decline. If one or more of these analysts ceases coverage of our company or fails to publish\nreports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. If securities\nanalysts publish inaccurate positive information, stockholders could buy our stock and the stock price may later decline.\n\n \n\n34\n\n \n\n \n\n**General\nRisks**\n\n \n\n**Global\neconomic uncertainty, an economic downturn, the possibility of a recession, inflation, rising interest rates, weakening product demand\ncaused by political instability, changes in trade agreements and conflicts such as the war in Ukraine, could adversely affect our business\nand financial performance.**\n\n \n\nEconomic\nuncertainty in various global markets caused by political instability and conflict, such as the war in Ukraine, and economic challenges\ncaused by the economic downturn, any resulting recession, inflation or rise in interest rates has resulted, and may continue to result,\nin weakened demand for our software solutions and difficulty in forecasting our financial results. Political developments impacting government\nspending and international trade, including potential government shutdowns and trade disputes and tariffs may negatively impact markets\nand cause weaker macroeconomic conditions. The effects of these events may continue due to potential U.S. government shutdowns and the\ntransition in administrations, and the United States’ ongoing trade disputes with Russia, China and other countries. The continuing\neffect of any or all of these events could adversely impact demand for our software solutions, harm our operations and weaken our financial\nresults.\n\n \n\nIn\naddition, the U.S. capital markets have experienced and continue to experience extreme volatility and disruption. Inflation rates in\nthe United States significantly increased in 2023 resulting in federal action to increase interest rates, adversely affecting capital\nmarkets activity. Further deterioration of the macroeconomic environment and regulatory action may adversely affect our business, operating\nresults and financial condition. Moreover, there has been recent turmoil in the global banking system. For example, in March 2023, Silicon\nValley Bank (“SVB”) was put into receivership by the Federal Deposit Insurance Corporation and subsequently sold. Other banks\nat risk of failure have been subsequently sold, including First Republic Bank in May 2023, and there is concern that more banks could\nbe at risk of the same fate. Continued instability in the global banking system may negatively impact us or our customers, including\nour customers’ ability to pay for our platform, and adversely impact our business and financial condition. Moreover, events such\nas the closure of SVB, in addition to global macroeconomic conditions discussed above, may cause further turbulence and uncertainty in\nthe capital markets and economy.\n\n \n\n**Changes\nin financial accounting standards may cause adverse unexpected fluctuations and affect our reported results of operations.**\n\n \n\nA\nchange in accounting standards or practices, and varying interpretations of existing or new accounting pronouncements, as well as significant\ncosts incurred or that may be incurred to adopt and to comply with these new pronouncements, could have a significant effect on our reported\nfinancial results or the way we conduct our business. If we do not ensure that our systems and processes are aligned with the new standards,\nwe could encounter difficulties generating quarterly and annual financial statements in a timely manner, which could have an adverse\neffect on our business, our ability to meet our reporting obligations and compliance with internal control requirements.\n\n \n\nManagement\nwill continue to make judgments and assumptions based on our interpretation of new standards. If our circumstances change or if actual\ncircumstances differ from our assumptions, our operating results may be adversely affected and could fall below our publicly announced\nguidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. Further,\nmarketable equity investments are required to be measured at fair value (with subsequent changes in fair value recognized in net income),\nwhich may increase the volatility of our earnings.\n\n \n\n35"}