Newsmax Inc.

Current report

Risks Relating to Legal and Regulatory Matters

Current report

Our continued expansion into international markets through licensing arrangements exposes us to legal, regulatory, commercial, and reputational risks that could adversely affect our business, financial condition and results of operations.

Current report

As we expand internationally through agreements that permit non-U.S. counterparties to distribute, market, or monetize our content and brand, we become increasingly exposed to laws, regulations and government actions in the jurisdictions in which those activities occur. These legal and regulatory regimes may govern, among other things, media and broadcast content, content quotas, censorship,advertising, consumer protection, privacy and data protection, intellectual property, sanctions, export controls, anti-corruption, taxes, currency transfers and local commercial practices. Such requirements may change rapidly, may be interpreted inconsistently by courts and regulators, and may be enforced unevenly or unpredictably, particularly in emerging markets where the legal and regulatory environment is less predictable.

Current report

In addition, because we may rely on third-party licensees, distributors, agents or other counterparties in these markets, we may have limited ability to control or monitor full compliance with applicable local legal and regulatory requirements, contractual restrictions, contents, and brand standards and operational practices. If a foreign counterparty fails to maintain quality or integrity of our content, engages in unethical or illegal practices, or fails to comply with applicable law or with the terms of its arrangement with us, or if local law limits our ability to enforce our contractual or intellectual property rights, we could experience business interruptions, disputes, the inability of counterparties to meet minimum guarantee or other payment obligations, delayed payments, loss of expected revenues, impairment of valuable commercial relationships, brand or reputational harm, fines, penalties or other liabilities. Furthermore, the laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as the laws of the United States, and inadequate protection of our intellectual property could allow third parties to exploit our content or brand without authorization.

Current report

Additionally, new or changing laws, regulations or government policies in foreign jurisdictions could require us to modify, restrict or terminate certain international licensing activities, delay market entry, increase compliance, monitoring and enforcement costs, or make certain arrangements commercially impracticable. Any of these developments could materially adversely affect our business, financial condition and results of operations.

Previous report

Sales and use, value added and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable or that our presence in such jurisdictions is sufficient to require us to collect taxes, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties and interest or future requirements may adversely affect our financial condition and results of operations. Further, in June 2018, the Supreme Court held in South Dakota v. Wayfair, Inc. that states could impose sales tax collection obligations on out-of-state sellers even if those sellers lack any physical presence within the states imposing the sales taxes. Under the Wayfair decision, a person requires only a “substantial nexus” with the taxing state before the state may subject the person to sales tax collection obligations therein. An increasing number of states (both before and after the publication of the Wayfair decision) have considered or adopted laws that attempt to impose sales tax collection obligations on out-of-state sellers. The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment and enforcement of these laws, and it is possible that states may seek to tax out-of-state sellers on sales that occurred in prior tax years, which could create additional administrative burdens for us, put us at a competitive disadvantage if such states do not impose similar obligations on our competitors, and decrease our future sales, which could adversely affect our business, financial condition, and results of operations.

Previous report

We are subject to risks of doing business in other countries, including those related to tariffs, trade restrictions and government actions.

Previous report

We are subject to the risks of doing business internationally, which increasingly include the following:

Previous report

•changes in regulatory requirements or other executive branch actions, such as Executive Orders;

Previous report

•changes in the global trade environment, including potential deterioration in geopolitical or trade relations between countries;

Previous report

•disputes with authorities in non-U.S. jurisdictions, including international trade authorities;

Previous report

•imposition of domestic and international taxes, export controls, tariffs, duties, embargoes, sanctions and other trade restrictions;

Previous report

•changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements; and

Previous report

•the complexity and necessity of using non-U.S. representatives and consultants.