Risk Factors Update Summary

• Sales of licensing agreements with Chinese licensees terminated in 2023 resulted in a $16.6 million revenue decrease.
• Added "and services" to risk factors related to cybersecurity and data privacy. This change broadens the scope of potential risks.
• The largest licensee's contribution to consolidated revenues decreased from 16% to 12% in 2023.
• Increased federal NOLs from $298 million to $328 million, with $182 million expiring between 2028 and 2037. This change impacts future tax liabilities significantly.
• Recorded non-cash inventory reserve charges of $6.2 million for the twelve-month period ended December 31, 2023. This impacts financial statements and inventory valuation.
• Failure of licensees to meet obligations could substantially reduce revenue and cash flows.
• Goodwill decreased from $170 million to $161.8 million, with trademarks and intangible assets decreasing from $236 million to $157.9 million. These impairments could affect financial results.
• The company received a Nasdaq Staff Deficiency Letter due to stock price below $1.00.
• Added risks related to fluctuations in currency exchange rates, impacting revenue and costs. This change highlights potential financial risks due to currency fluctuations.
• Chairman's ownership of 25% of common stock may lead to conflicts in major decisions.
• The company evaluated litigation conditions that could raise doubts about its ability to continue.
• Implementation of asset dispositions and cost reduction actions may not fully realize expected financial benefits.