Newsmax (NMAX) risk factors, FY2024 10-K

Risks Related to Our Business, Operations and Our Industry

1. 01We have incurred losses in prior periods, may not be profitable in the future, and our plans to maintain and increase liquidity may not be successful
2. 02Changes in consumer behavior and evolving technologies and distribution platforms may adversely affect the Company’s business, financial condition and results of operations
3. 03Declines in advertising expenditures could cause the Company’s revenues and operating results to decline significantly in any given period or in specific markets
4. 04The market for OTT advertising campaigns is relatively new and evolving and if this market develops slower or differently than we expect, it could adversely affect our advertising revenues
5. 05Advertising revenue is largely dependent on audience measurement, which can be difficult to measure
6. 06Seasonal fluctuations in advertising activity could have a material impact on our revenue, cash flow and operating results
7. 07Because Newsmax Media derives a significant portion of its revenues from a limited number of distributors, the failure to enter into or renew affiliation and carriage agreements on favorable terms, or at all, could have a material adverse effect on the Company’s business, financial condition or results of operations
8. 08Changes to Newsmax Media’s existing content and services could fail to attract traffic, viewers and advertisers or fail to generate revenue
9. 09Newsmax Media’s businesses operate in a highly competitive industry
10. 10The levels of our traffic and engagement with our brands and content are critical to Newsmax Media’ success
11. 11The inability to renew programming rights on sufficiently favorable terms, or at all, could cause Newsmax Media’s advertising and affiliate fee revenues to decline significantly in any given period or in specific markets
12. 12Acceptance of Newsmax Media’s content by the public is difficult to predict, which could lead to fluctuations in revenues
13. 13Damage to our brand or reputation could have a material adverse effect on our business, financial condition and results of operations
14. 14The Company’s strategic investments in new businesses, products, services and technologies presents many risks, and the Company may not realize the financial and strategic goals it had contemplated, which could adversely affect its business, financial condition and results of operations
15. 15We face risks, such as unforeseen costs and potential liability in connection with content we acquire, produce, license and/or distribute through our service
16. 16Newsmax Media’s future growth depends in part on the acceptance and growth of OTT advertising and OTT advertising platforms
17. 17If the rate of decline in the number of subscribers to traditional MVPD services increases or these subscribers shift to other services or bundles that do not include Newsmax TV, there may be a material negative effect on Newsmax Media’s affiliation revenues once established
18. 18The Company’s success depends on its ability to improve and scale its technical and data infrastructure and respond and adapt to changes in technology and consumer behavior
19. 19Newsmax Media relies on a number of partners to make its service available on their devices
20. 20Newsmax Media’s traffic growth, engagement, and monetization depend in part upon effective operation within and compatibility with operating systems, networks, devices, web browsers and standards, including mobile operating systems, networks, and standards that it does not control
21. 21New technologies have been developed that are able to block certain online advertisements or impair Newsmax Media’s ability to serve advertising, which could harm its operating results
22. 22A financial crisis or deterioration in general economic, business or industry conditions could materially adversely affect our results of operations and financial condition
23. 23The Company’s ability to continue as a going concern requires that we obtain sufficient funding to finance our operations
24. 24The loss of key personnel, including talent, could disrupt the management or operations of the Company’s business and adversely affect its revenues
25. 25The Company could suffer losses due to asset impairment charges for up-front costs related to programming
26. 26Adverse publicity or negative public perception regarding particular ingredients or products or the nutraceuticals industry in general could adversely affect the financial performance of those portions of the Company’s nutraceuticals business, Medix Health
27. 27The nutraceuticals industry is highly competitive, and Medix Health’s failure to compete effectively could adversely affect its market share, financial condition, and future growth
28. 28Any interruption to Medix Health’s distribution channels for its planned products or in its warehousing facilities could adversely affect its sales and results of operations
29. 29The purchase of many of Medix Health’s nutraceutical products are discretionary and may be negatively impacted by adverse trends in the general economy and make it more difficult for Medix Health to generate revenues
30. 30Newsmax Inc.’s principal asset is its ownership interest in Newsmax Media and the revenue generated by such asset may not be sufficient to pay our expenses or dividends or make distributions or loans to enable us to pay dividends on our capital stock
31. 31We invest our cash on hand in various financial instruments which are subject to risks that could adversely affect our business, results of operations, liquidity and financial condition

Risks Related to Cybersecurity, Piracy, Privacy and Data Protection

1. 32The degradation, failure or misuse of the Company’s network and information systems and other technology could cause a disruption of services or improper disclosure of personal data or other confidential information, resulting in increased costs, liabilities or loss of revenue
2. 33Technological developments may increase the threat of content piracy and signal theft and limit the Company’s ability to protect their intellectual property rights
3. 34The Company is subject to complex laws, regulations, rules, industry standards, and contractual obligations related to privacy and personal data protection, which are evolving, inconsistent and potentially costly
4. 35Security breaches and other network and information systems disruptions could affect our ability to conduct our business effectively and damage our reputation
5. 36The Company is subject to payment processing risk
6. 37Defects, delays or interruptions in the cloud-based hosting services we utilize could adversely affect the Company’s reputation and operating results

Risks Related to Legal and Regulatory Matters

1. 38Changes in U.S. communications laws or other regulations, including restrictions on programming and content, may have an adverse effect on the Company’s business, financial condition and results of operations
2. 39The Company could be subject to significant tax liabilities and our ability to use our net operating loss (“NOL”) carryforwards and certain other tax attributes may be limited
3. 40An “ownership change” could limit our ability to utilize tax loss and credit carryforwards to of set future taxable income
4. 41Newsmax Media and its other Subsidiaries may be, and in the past have been, subject to unfavorable litigation that could require it to pay significant amounts, lead to onerous operating procedures or have a material adverse effect on the Company’s financial position, results of operations and cash flows
5. 42While Newsmax Media is vigorously defending the Dominion suit, an unfavorable outcome in the matter could have a material adverse effect on the Company’s financial position, results of operations and cash flows
6. 43Management believes the settlement with Smartmatic will, subject to the payment of all consideration in a timely manner, eliminate future legal expenses the Company would have expected to bear related to this suit, which could have included costly appellate legal actions and other matters
7. 44Failures to comply with or changes in U.S. or foreign laws or regulations may have an adverse effect on the Company’s business, financial condition or results of operations

Risks Related to Intellectual Property

1. 45The Company’s business may suffer if the Company cannot protect its intellectual property
2. 46The Company has been, and may be in the future, subject to claims of intellectual property infringement that could adversely affect its business
3. 47The Company’s business involves risks of liability claims for content of material, which could adversely affect its business, results of operations and financial condition

Risks Related to our Securities

1. 48Investing in the our securities is a highly speculative investment and could result in the loss of your entire investment
2. 49No active trading market for the Shares currently exists, and an active trading market may not develop
3. 50Future sales and issuances of our securities could result in dilution of the percentage ownership of our stockholders
4. 51There is no guarantee you will have a positive return on your investment
5. 52Newsmax Inc. does not intend to pay cash dividends on its capital stock in the foreseeable future
6. 53Newsmax Inc. may issue shares of preferred stock that would have a liquidation preference to its common stock
7. 54A majority of Newsmax Inc.’s voting stock is owned by a small number of owners
8. 55We cannot predict the effect our dual-class structure may have on the price of our securities
9. 56Newsmax Inc. is a “controlled company” within the meaning of the rules of the NYSE and, as a result, qualifies for and relies on exemptions from certain corporate governance requirements
10. 57. In order to continue listing the Shares on NYSE, we must maintain certain financial, distribution and stock price levels and must maintain a minimum number of holders of Shares
11. 58The market price of our Class B Common Stock may be volatile and fluctuate substantially, which could result in substantial losses
12. 59We have previously granted anti-dilution rights in the form of preemptive rights to certain holders of our capital stock
13. 60We intend to register additional shares of our Class B Common Stock, which may result in diminution to the value of the Shares offered hereby
14. 61Future sales of our Class B Common Stock may cause the market price of our Class B Common Stock to drop significantly, even if our business is doing well
15. 62Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline
16. 63voting power of all the then-outstanding shares of capital stock of the Company, to call a special meeting of the stockholders; and
17. 64If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and trading volume may decline
18. 65We will incur increased costs as a result of being a public reporting company, and our board of directors will be required to devote substantial time to oversight of new compliance requirements and corporate governance practices
19. 66We currently have limited accounting personnel and IT personnel focused on cybersecurity with the background in public company accounting, reporting and compliance. We will have to add personnel and devote personnel and financial resources to meet our reporting and disclosure obligations as a publicly listed company