Intelligent Protection Management (IPM) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We could be adversely affected by information security breaches or cyber security attacks
2. 02We rely on third-party license agreements with the owners of the Data Centers to operate our secure private cloud which, if terminated, could have an adverse material effect on our business
3. 03We operate in a highly competitive industry in which technological change can be rapid
4. 04We rely on a limited number of customers for a material portion of our revenues and income
5. 05Our technology solutions business depends on the efficient and uninterrupted operation of our Data Centers and computer and communications hardware systems and infrastructure
6. 06Failure to have reliable Internet, telecommunications and fiber optic network connectivity and capacity from third-party providers may adversely affect our results of operations
7. 07Real or perceived errors, failures or bugs in our customer solutions, software or technology could adversely affect our business, financial condition and results of operations
8. 08If we are unable to attract new customers, retain existing customers and sell additional services at comparable gross margins to customers, our revenue and results of operations could be adversely affected
9. 09Our business depends on Microsoft Corporation and others for the licenses to use software and other intellectual property in the managed technology solutions business
10. 10If we fail to hire and retain qualified employees and management personnel, our strategies and our business could be harmed
11. 11Our future success is dependent, in part, on the performance and continued service of our executive officers. Without their continued service, we may be forced to interrupt or eventually cease our operations
12. 12Because we recognize revenue from subscriptions over the term of the subscription, the full impact of downturns or upturns in subscription sales may not be immediately reflected in our results of operations or financial condition
13. 13Our business is affected by general economic conditions, including inflation, and uncertainties affecting markets in which we operate, and economic volatility could adversely impact our business
14. 14We may need additional capital to execute our business plan. If we are not able to obtain additional financing, it could have a material adverse effect on our business, results of operations or financial condition
15. 15We may make or attempt to make acquisitions in the future, which could require significant management attention, disrupt our business, dilute our stockholders and significantly harm our business

Risks Related to the Transactions

1. 16Shares issuable upon conversion of the Series A Preferred Stock, could depress our stock price
2. 17We may not be able to effectively integrate the businesses of NTS or realize the anticipated benefits and synergies expected from the Acquisition
3. 18Through the Acquisition, we are entering a new line of business which is highly competitive
4. 19We may record goodwill and other intangible assets that could become impaired and result in material non-cash charges to our results of operations in the future
5. 20NTS historically relied on Newtek for managerial, financial and accounting support and benefitted from Newtek’s referral network, and we expect to rely on Newtek’s referral network in the future
6. 21Newtek historically accounted for a material portion of NTS’s revenue and income

Legal and Regulatory Risks

1. 22Customers could potentially expose us to lawsuits for their lost profits or damages, which could impair our results of operations
2. 23As a technology service provider to U.S. financial institutions, we are subject to regulation, supervision, and enforcement authority of numerous governmental and regulatory bodies in the jurisdictions in which we operate, which includes banking regulators
3. 24Government regulation is continuously evolving and, depending on its evolution, may adversely affect our business, financial condition and results of operations

Risks Related to Our Intellectual Property

1. 25If we are unable to protect our intellectual property rights, we may be unable to compete with competitors developing similar technologies
2. 26Intellectual property infringement claims against us could cause us to incur significant expenses, pay substantial damages or royalties and prevent us from offering our products and solutions

Risks Related to Ownership of Our Common Stock

1. 27Our common stock is historically thinly traded, stockholders may be unable to sell at or near ask prices or at all and the price of our common stock may be volatile
2. 28The ownership of our common stock is significantly concentrated in a small number of investors, some of whom are affiliated with our Board and management, which could prevent stockholders from having input on the course of our operations or otherwise lead to actual or potential conflicts of interest
3. 29Our results of operations are volatile and difficult to predict, and our stock price may decline if we fail to meet the expectations of stockholders
4. 30Investor relations activities, nominal “float” and supply and demand factors may affect the price of our common stock
5. 31If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our securities