ContextLogic Holdings Inc.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties set forth below, together with all of the other information contained in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and related notes, and in our Annual Report on Form 10-K for the year ended December 31, 2024, before making a decision to invest in our common stock. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect our business. These risk factors could materially and adversely affect our business, financial condition and results of operations, and the market price of our common stock could decline. These risk factors do not identify all risks that we face – our financial condition and/or operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our financial conditions and/or operations. Due to risks and uncertainties, known and unknown, as well as the completion of the Asset Sale on April 19, 2024, our past financial results will not be a reliable indicator of future performance and historical trends should not be unduly used to anticipate results or trends in future periods. Other than as described below, there have been no additional material changes from the risk factors previously disclosed under the heading "Risk Factors" in Part I, Item 1A of our 2024 Form 10-K.

Risks Related to the Asset Purchase Agreement

We have counterparty risk with the Buyer and its affiliates for certain ongoing obligations under the Asset Purchase Agreement and the failure of the Buyer and its affiliates to perform their obligations could cause us to suffer losses.

In connection with the Asset Sale, under the Asset Purchase Agreement, we agreed with the Buyer to transfer and assign the lease for the facility located at One Sansome Street (the “Lease”) to the Buyer and for the Buyer to assume all obligations under the Lease. The Company relinquished control of the leased facility after the Asset Sale. In order to obtain the landlord’s consent to the transfer of the Lease and effect its assignment, we agreed to maintain a letter of credit for an additional 90 days following the April 19, 2024 closing date during which time (i) the Buyer was obligated to secure a replacement security acceptable to the landlord and (ii) we and the Buyer agreed to provide the landlord with cash collateral in the amount of $7 million funded equally by the parties. As of October 31, 2024, the landlord had consented to the assignment of the Lease to the Buyer. We maintain the letter of credit for the facility, however, in March 2025, the landlord agreed to amend the Lease which lowered the letter of credit amount to $1 million and decreased the cash collateral to approximately $1 million. Until the landlord accepts a replacement security proposed by the Buyer, any event by the landlord to draw on the security will come from the maintained letter of credit. Under the Asset Purchase Agreement, the Buyer agreed to assume all obligations under the Lease since the Asset Sale.

As of June 2025, the letter of credit is expected to expire in the third quarter of 2025. If the Buyer fails to pay the rent under the Lease or comply with other obligations under the Lease, we would be responsible for the remaining obligations under the Lease. While the cash collateral held as restricted cash on our consolidated balance sheet could be utilized to satisfy obligations under the Lease should the Buyer fail to meet them, approximately one-third of the cash collateral has been funded by the Company, and if more than two-thirds of the cash collateral is used to satisfy obligations under the Lease, such funds will not be returned to the Company. While the Buyer would be responsible for such obligations under the terms of the Asset Purchase Agreement, we can provide no assurance that we would be successful in obtaining payment or reimbursement from the Buyer or Qoo10 for such losses.

Risks Related to Our Common Stock

We recently transferred the trading of ContextLogic common stock from The Nasdaq Stock Market to the OTCQB. Because the ContextLogic common stock is quoted on the OTC Markets, your ability to sell your shares in the secondary trading market may be limited.

On May 30, 2025, the Company notified The Nasdaq Stock Market LLC (“Nasdaq”) of its decision to voluntarily withdraw from the hearings process, the result of which resulted in the ContextLogic common stock being delisted from The Nasdaq Global Market. The Company filed a Form 25 with the SEC relating to the delisting of the ContextLogic common stock on June 9, 2025, and the delisting of the ContextLogic common stock from Nasdaq became effective June 19, 2025. On June 3, 2025, the ContextLogic common stock was quoted for trading with the OTCQB Venture Market of OTC Markets. The decision to move ContextLogic common stock from trading on Nasdaq to the OTC Markets was influenced by several factors, including the Company’s evaluation of its ability to continue maximizing the value of its assets while also considering the advantages of remaining listed on Nasdaq versus the regulatory requirements, the time management dedicated to compliance and reporting, and the costs involved in maintaining the listing.

As a result of the transfer of the ContextLogic common stock from Nasdaq to the OTCQB, we anticipate that our stockholders could experience negative consequences related to our securities, including but not limited to: limited availability of market quotations for our securities; a reduced level of trading activity in the secondary trading market for shares of our common stock; a limited amount of analyst coverage; and decreased ability to issue additional securities or obtain additional financing in the future.

Because the ContextLogic common stock is quoted on the OTCQB market, your ability to sell your shares in the secondary trading market may be limited. Since June 3, 2025, the OTCQB is the only liquidity platform for the ContextLogic common stock. We cannot assure our stockholders that the ContextLogic common stock will continue to trade on this liquidity platform, whether broker-dealers will continue to provide public quotes of the ContextLogic common stock on this liquidity platform, whether the trading volume of the ContextLogic common stock will be sufficient to provide for respective efficient liquidity platforms or whether quotes for the ContextLogic common stock will continue on this liquidity platform in the future, which could result in significantly lower trading volumes and reduced liquidity for investors seeking to buy or sell our common stock. As a result, prices for shares of our common stock may be lower than might otherwise prevail if the ContextLogic common stock was listed on a national securities exchange.

Risks Related to the Reorganization, Transfer Restrictions, and the Future Use of NOLs

We may not obtain the expected benefits of the Reorganization

We believe our reorganization into a holding company structure will provide us with benefits in the future, however, these expected benefits may not be obtained if we fail to complete acquisitions or if market conditions or other circumstances prevent us from taking advantage of the strategic, business and financing flexibility that it affords us. In addition, the holding company structure may not keep the assets and liabilities of ContextLogic LLC and any new businesses we acquire legally separate. As a result, we may incur the costs of implementing the Reorganization without realizing the possible benefits. These costs include the increased administrative costs and expenses associated with keeping separate records, and in some cases making separate regulatory filings for ContextLogic Holdings Inc. and ContextLogic LLC.

The imposition of transfer restrictions may cause the market price of our common stock to decline.

Following the Reorganization, ContextLogic LLC stockholders received shares of our common stock. These shares are subject to transfer restrictions that did not apply to ContextLogic LLC common stock. It is possible that the transfer restrictions will have an adverse effect on the liquidity and market price of our common stock. Because of the implementation of the transfer restrictions, we cannot assure stockholders that the market price of the shares of ContextLogic Holdings Inc. common stock will be comparable to the market price of ContextLogic LLC’s common stock. The transfer restrictions will remain in effect until July 25, 2028, being the third anniversary of the filing and effectiveness of the Second Amended and Restated Certificate of Incorporation of ContextLogic Holdings Inc., or until the Board of Directors determines that (i) an ownership change would not result in a substantial limitation on our ability to use our NOLs, (ii) no significant value attributable to the NOLs would be preserved by continuing the transfer restrictions or (iii) that such restrictions are no longer in our best interests.

The transfer restrictions may impede or discourage efforts by a third party to acquire us, even if doing so would benefit stockholders.

Although the transfer restrictions are designed as a protective measure to preserve the NOLs, the transfer restrictions may have the effect of impeding or discouraging a merger, tender offer or proxy contest, even if such a transaction may be favorable to the interests of some or all of our stockholders. This effect might prevent stockholders from realizing an opportunity to sell all or a portion of their shares of common stock at a premium above market prices. In addition, the transfer restrictions may delay the assumption of control by a holder of a large block of our common stock and the removal of incumbent directors and management, even if such removal may be beneficial to some or all of our stockholders.

The transfer restrictions may not be enforceable, and an ownership change may occur with the result that the ability to use the NOLs could be severely limited.

The transfer restrictions could be challenged, and a court could refuse to enforce them. It is also possible that the IRS and other tax authorities could take the position that the transfer restrictions were not effective and did not protect ContextLogic LLC from an ownership change for tax purposes.

Future legislation may result in us being unable to realize the tax benefits of the NOLs.

It is possible that legislation or regulations will be adopted that would limit our ability to use the tax benefits associated with the NOLs. We are not aware, however, of any proposed changes in the tax laws or regulations that would materially affect our ability to use the NOLs.

We may not be able to make use of the existing tax benefits of the NOLs because we may not generate taxable income.

The use of the NOLs is subject to uncertainty because it is dependent upon the amount of taxable income and capital gains generated by us and our consolidated subsidiaries. There can be no assurance that we will have sufficient taxable income or capital gains in future years to use the NOLs.

The IRS could challenge the amount of the NOLs or claim that ContextLogic LLC or ContextLogic Holdings Inc. experienced an ownership change, which could reduce the amount of NOLs that we can use.

The amount of the NOLs has not been audited or otherwise validated by the IRS. The IRS could challenge the amount of the NOLs, which could result in an increase our future income tax liability. In addition, calculating whether an ownership change has occurred is subject to uncertainty, both because of the complexity and ambiguity of Section 382 and because of limitations on a publicly traded company’s knowledge as to the ownership of, and transactions in, its securities. Therefore, we cannot assure you that a governmental authority will not claim that the ContextLogic LLC or ContextLogic Holdings Inc. experienced an ownership change and attempt to reduce or eliminate the benefit of the NOLs even though our common stock is subject to the transfer restrictions.