Financial Performance - The company incurred a net loss of approximately $33.7 million and $11.7 million for the years ended December 31, 2024 and 2023, respectively, resulting in an accumulated deficit of approximately $47.0 million as of December 31, 2024[83]. - The company has a history of losses and may struggle to achieve consistent profitability in the future[83]. - The company's quarterly results are likely to fluctuate significantly, making future performance difficult to predict[90]. - The company anticipates substantial increases in operating expenses as it enhances offerings and expands its customer base, which may not be offset by revenue growth[83]. - Increased competition may lead to fewer customer orders, price reductions, and reduced operating margins, adversely affecting financial results[119]. Customer Dependence and Market Risks - The company expects to depend on a limited number of customers and end markets, which poses a risk of significant revenue decline if any major customer is lost[81]. - A significant portion of the company's revenues may come from a few major customers, and losing business from these customers could substantially reduce revenues and harm the business[123]. - The company relies on maintaining close relationships with major customers, but revenue from these customers may vary year to year, impacting financial stability[124]. - Customer retention and subscription renewals are critical for revenue growth, with potential fluctuations due to various factors including customer satisfaction and economic conditions[106]. Operational Challenges - The company has identified material weaknesses in its internal control over financial reporting, which could adversely affect the accuracy of financial statements[95]. - The company has failed to properly account for its merger with Datum Point Labs, specifically regarding the historical value of the patent portfolio acquired[101]. - The company has not invested necessary resources into accounting and reporting functions to prepare US GAAP compliant financial statements on a timely basis[101]. - The company may face challenges in integrating acquired businesses and technologies, which could divert management's attention and resources[81]. - The company may face challenges in achieving revenue growth due to difficulties in hiring, training, and retaining effective sales personnel, which are critical for obtaining new customers and driving additional sales[122]. Competition and Market Position - The company faces intense competition from established players with greater resources, which could impact its market position and growth rate[114]. - The company relies on channel partners for growth, and failure to establish successful relationships with them could adversely affect business and financial condition[108]. - The total addressable market for the company's products may be significantly smaller than estimated, which could limit growth potential[87]. Legal and Regulatory Risks - The company has filed a lawsuit against a commercial partner, which could result in significant financial liabilities if resolved unfavorably[88]. - The company faces risks related to compliance with evolving laws and regulations, which could increase operational costs and impact competitive position[144]. - Regulatory restrictions on AI technologies may limit product offerings and negatively impact business and financial results[145]. - Legal and regulatory inquiries may result in unfavorable outcomes that could harm the company's financial condition and operations[148]. Cybersecurity and Data Privacy - Cybersecurity threats and catastrophic occurrences could lead to significant operational disruptions and negatively impact the company's reputation[159]. - The company relies on third-party cloud-based infrastructure, and disruptions in these services could adversely affect operations and financial results[156]. - Cybersecurity threats have become increasingly complex, with significant risks including ransomware attacks that can disrupt operations and lead to reputational harm[179]. - Compliance with evolving data privacy and security laws, such as the California Consumer Privacy Act, may lead to increased legal risks and compliance costs[197]. Growth and Investment Strategies - The company plans to invest significantly in sales and marketing initiatives, but failure to generate anticipated revenue increases could harm business operations[120]. - The company is in the process of acquiring Cataneo for an aggregate purchase price of $19.5 million, which includes a minimum cash payment of $9 million[135]. - The company may pursue acquisitions or investments, which could divert management's attention and lead to stockholder dilution[141]. Stock and Market Compliance - The company does not intend to pay dividends for the foreseeable future, relying on stock price appreciation for shareholder gains[207]. - The company has received a notice from Nasdaq indicating that the closing bid price for its Common Stock has been below the minimum $1.00 per share for 30 consecutive business days[233]. - If Nasdaq delists the company's Common Stock, it may face significant adverse consequences, including reduced liquidity and potential classification as a "penny stock"[210][211]. - The company may issue and sell up to $50 million of shares of Common Stock under the SEPA, with $1,825,518 sold as of March 28, 2025[238].
DHC Acquisition (DHCA) - 2024 Q4 - Annual Report