Dissolution or Winding Up. It is possible that, due to any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of cryptographic and fiat currencies, our inability to maintain a viable SocialFlow UAT System, the failure of commercial relationships, or intellectual property ownership challenges, we may be forced to cease operations or take actions that result in a liquidation, dissolution or winding up. We face intense competition and are confronted by rapidly changing technology, evolving user needs and the frequent introduction by our competitors of new and enhanced services. We compete for digital advertising spending against a variety of competitors, including Google and Facebook. We also compete for supply of digital advertising inventory against a variety of competitors, including Google and Outbrain. Some of our existing and potential competitors are better established, benefit from greater name recognition, and have significantly more financial, technical, sales and marketing resources than we have. In addition, some competitors, particularly those with a more diversified revenue base, have greater flexibility than we have to compete aggressively on the basis of price and other contract terms. Our business may suffer to the extent that our customers purchase and sell digital advertising inventory through intermediaries other than us. In addition, as a result of services and offerings introduced by us or our competitors in the rapidly evolving and fluid digital advertising and eCommerce markets, our business will experience disruptions and changes in business models, which may result in our loss of customers. New competitors may emerge through acquisitions or through development of disruptive technologies. Strong and evolving competition could lead to a loss of our market share or compel us to reduce our pricing and could make it more difficult to grow our business profitably. While display advertising has been used successfully for many years, marketing online via brand direct focused messaging, is not as well established. The future growth of our business could be constrained by the level of acceptance and expansion of emerging digital advertising channels, as well as the continued use and growth of more established channels, such as desktop websites, and more established formats such as display advertising. In addition, as we push for the expansion and adoption of data science and blockchain technologies in the digital advertising industry, it will be important to the success of any such expansion for our customers’ personnel to adopt our technology platform in lieu of today’s standard programmatic digital advertising platforms. It is difficult to predict adoption rates, demand for our services, the future growth rate and size of the digital advertising services market or the entry of competitive services. Any expansion of the market for digital advertising services depends on a number of factors, including the growth of mobile, social media and video as advertising channels and the cost, performance and perceived value associated with digital advertising services. If the digital advertising market and the adoption of our current platform does not achieve or sustain widespread adoption, our competitive position will be weakened and our revenue and results of operations will decline. We depend on sellers of advertising inventory to supply us with advertising inventory for our customers that buy advertising inventory through our marketplace. The sellers that supply advertising inventory to us typically do so on a non-exclusive basis and are not required to provide any minimum amounts of advertising inventory to us, or provide us with a consistent supply of advertising inventory. Sellers may seek to change the terms at which they offer inventory to us, or they may elect to make advertising inventory available to our competitors who are able to monetize their advertising inventory on more favorable terms. Supply of advertising inventory is also limited for some sellers, and sellers may request higher prices, fixed price arrangements or guarantees. In addition, sellers sometimes place significant restrictions on the sale of their advertising inventory. These restrictions may include security requirements, prohibitions on advertisements from specific advertisers or specific industries, or restrictions on the use of specified creative content or format. If sellers do not make advertising inventory available to us, increase the price of inventory, or place significant restrictions on the sale of their advertising inventory, we may not be able to replace their inventory with inventory from other sellers that satisfies our requirements in a timely and cost-effective manner. In addition, significant sellers in the industry may enter into exclusivity arrangements with our competitors, which could limit our access to a meaningful supply of advertising inventory. Finally, some of our biggest competitors, such as Google and Facebook, own significant advertising inventory which is not or may not continue to be available to us on favorable terms, or at all. If any of this happens, the value of our technology platform, enterprise products and marketplace to buyers of advertising inventory could decrease and our revenue could decline or our cost of acquiring inventory could increase, lowering our operating margins. We depend on demand for advertising inventory to attract and allow customers that sell advertising inventory to sell through our marketplace. Our customers who buy advertising inventory through us typically do so on a non- exclusive basis and are not required to buy any minimum amounts of advertising inventory through us. Buyers may seek to change the terms at which they bid and purchase inventory through us, or they may elect to buy advertising inventory from our competitors who are able to provide them with advertising inventory on more favorable terms. Some buyers may have limited demand for advertising inventory. In addition, buyers sometimes place significant restrictions on their demand for advertising inventory. These restrictions may include restrictive security requirements, prohibitions on advertising on specific inventory or restrictions on the use of specified channels or formats. If buyers do not purchase advertising inventory through us or place significant restrictions on their demand for advertising inventory, we may not be able to find other buyers that satisfy our sellers’ requirements in a timely and cost-effective manner. In addition, significant buyers in the industry may enter into exclusivity arrangements with our competitors, which could limit our access to the demand for advertising inventory. Finally, some of our biggest competitors, such as Google and Facebook, receive a significant demand for advertising inventory which may not be available to us on the same or favorable terms, or at all. If any of this happens, the value of our technology platform, enterprise products and marketplace to sellers of advertising inventory could decrease and our revenue could decline, lowering our operating margins. The tax characterization of the SAFE and the SocialFlow Tokens is uncertain. Transactions involving the SAFE or the SocialFlow Tokens that may be taxable to you include the purchase of the SAFE for consideration other than U.S. dollars, the issuance of SocialFlow Tokens pursuant to the SAFE, the use or other disposition of SocialFlow Tokens and the repayment of Purchase Amounts. Such tax consequences may include income taxes, withholding taxes and tax reporting requirements. In addition to carefully reviewing the discussion below “Certain United States Federal Income Tax Considerations,” you should consult with and must rely upon the advice of your own professional tax advisors with respect to the United States and non-U.S. tax treatment of an investment in the SAFE and the purchase rights contained therein. Even if the purchase of SocialFlow Tokens does not currently result in adverse tax consequences to you, future events may cause this change.
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Sources: Simple Agreement for Future Equity, Simple Agreement for Future Equity