Global Interactive Technologies (GITS) risk factors, FY2024 10-K

RISKS RELATED TO OUR BUSINESS

1. 01We have incurred significant losses since our inception, and we intend to continue to invest in our business. As a result, we may continue to experience losses in the future
2. 02Our auditor has included an explanatory paragraph in their opinion regarding our ability to continue as a going concern. If we are unable to continue as a going concern, our securities will have little or no value
3. 03To continue as a going concern, we will require significant additional capital, which we may be unable to obtain
4. 04We are a development stage company, and we may not be able to sustain our rapid growth, effectively manage our anticipated future growth or implement our business strategies
5. 05We are subject to risks associated with operating in a rapidly developing industry and a relatively new market
6. 06Our dependence on third-party relationships with content producers and distribution channels to develop and distribute entertainment content is critical to the success of the FANING Platform
7. 07Our decision not to provide products and services and to restrict user access in China (including Hong Kong and Macau) will limit our total addressable market and may limit our ability to grow our business
8. 08If our content streaming initiatives are unsuccessful, our business, financial condition or results of operations could be adversely affected
9. 09We are dependent on the continued services and on the performance of key third party content contributors, the loss of which could adversely affect our business
10. 10Substantial and increasingly intense competition in the social media platform and content creation industry may harm our business
11. 11Systems failures, interruptions, delays in service, catastrophic events, and resulting interruptions in the availability of our products or services could harm our business and our brand, and subject us to substantial liability
12. 12Our success depends largely on the continued service and availability of key personnel
13. 13From time to time, we may become involved in legal proceedings
14. 14The preparation of our financial statements involves the use of good faith estimates, judgments and assumptions, and our financial statements may be materially affected if such good faith estimates, judgments or good faith assumptions prove to be inaccurate

RISKS RELATED TO GOVERNMENT REGULATION

1. 15Our business is subject to regulation, and changes in applicable regulations may negatively impact our business
2. 16Actions by governments that restrict access to FANING in their countries, or that otherwise impair our ability to sell advertising in their countries, could substantially harm our business and financial results
3. 17Payment transactions may subject us to additional regulatory requirements and other risks that could be costly and difficult to comply with or that could harm our business
4. 18Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations
5. 19Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business

RISKS RELATED TO DOING BUSINESS IN KOREA

1. 20Fluctuations in exchange rates could result in foreign currency exchange losses to us
2. 21Tensions with North Korea could have an adverse effect on our business, financial condition, and results of operations, and the price per share of our common stock
3. 22Faning Korea,LLC’s transactions with its subsidiaries and affiliates may be restricted under Korean fair trade regulations
4. 23Our Korean subsidiary, Faning Korea, LLC, may be designated as an affiliated group under Korean law, in which case the group of companies would be required to make certain disclosures and implement additional corporate governance requirements
5. 24Faning Korea, LLC is subject to certain requirements and restrictions under Korean law that may, in certain circumstances, require it to act in a manner that may not be in our or our stockholders’ best interest
6. 25Faning Korea, LLC’s transactions with related parties are subject to close scrutiny by the Korean tax authorities, which may result in adverse tax consequences
7. 26If we are deemed to have a “place of effective management” in Korea, we will be treated as a Korean company for the purpose of Korean corporate income tax with regards to our worldwide income
8. 27If we are deemed to have a “permanent establishment” in Korea, we will be subject to Korean corporate income tax with regards to any Korean source income attributable to or effectively connected with such permanent establishment
9. 28A focus on regulating copyright and patent infringement by the Korean government subjects us to extra scrutiny in our operations and could subject us to sanctions, fines, or other penalties, which could adversely affect our business and operations in Korea
10. 29Our business may be adversely affected by developments that negatively impact the Korean economy and uncertainties in economic conditions that impact spending patterns of our customers in Korea
11. 30New legislative proposals may expose our business to additional risks from litigation, regulation, and government investigations
12. 31As Faning Korea, LLC is incorporated in Korea, it may be more difficult to enforce judgments obtained in courts outside Korea

RISKS RELATED TO OUR TECHNOLOGY

1. 32Technology changes rapidly in our business and if we fail to anticipate or successfully implement new technologies or adopt new business strategies, technologies or methods, the quality and competitiveness of our service offerings may suffer
2. 33There may be losses or unauthorized access to or releases of confidential information, including personally identifiable information (“PII”), that could subject the Company to significant reputational, financial, legal and operational consequences
3. 34While the Company maintains insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise
4. 35Growth of our client base depends upon effective interoperability with mobile operating systems, networks, mobile devices and standards that we do not control
5. 36Security breaches, improper access to or disclosure of our data or user data, other hacking and phishing attacks on our systems, or other cyber incidents could harm our reputation and adversely affect our business
6. 37We anticipate that our ongoing efforts related to privacy, safety, security, and content review will identify instances of misuse of user data or other undesirable activity by third parties on our platform
7. 38Our products and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in our systems, could adversely affect our business

RISKS RELATED TO DIGITAL ASSETS

1. 39Regulatory changes or actions may restrict the use of digital assets in a manner that adversely affects our business, prospects or operations
2. 40Users of FANING are issued FP for engaging and transacting within the Company’s ecosystem. FP may be subject to various regulations in South Korea that restrict or limit the use of FP on FANING
3. 41We may have security laws exposure relating to the previous issuances of Kingdom Coin

RISKS RELATED TO INTELLECTUAL PROPERTY

1. 42We may be subject to claims of infringement of third-party intellectual property rights
2. 43Our technology, content and brands are subject to the threat of piracy, unauthorized copying and other forms of intellectual property infringement
3. 44We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position
4. 45GOVERNANCE RISKS AND RISKS RELATED TO OUR COMMON STOCK
5. 46Our stock price may be volatile, and you could lose all or part of your investment
6. 47If securities industry analysts do not publish research reports on us, or publish unfavourable reports on us, then the market price and market trading volume of our common stock could be negatively affected
7. 48You will experience dilution as a result of future equity offerings
8. 49We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment will likely be limited to the value of our common stock
9. 50Since we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, stock price appreciation, if any, will be your sole source of gain
10. 51We may need to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to satisfy new reporting requirements
11. 52We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors
12. 53We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
13. 54Because of our status as an emerging growth company, you will not be able to depend on any attestation from our independent registered public accounting firm as to our internal control over financial reporting for the foreseeable future
14. 55If our shares become subject to the penny stock rules, it would become more difficult to trade our shares
15. 56FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock
16. 57We will incur increased costs as a result of operating as a listed public company and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices
17. 58We may be considered a smaller reporting company and will be exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors
18. 59Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our common stock for return on your investment
19. 60Substantial future sales or perceived potential sales of our common stock in the public market could cause the price of our common stock to decline
20. 61Our certificate of incorporation designates a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us
21. 62Inconsistencies in legal filings related to the reverse stock split, caused by former legal counsel, may expose the Company to compliance or reputational risks