BEYOND, INC.

ITEM 1A. RISK FACTORS

Any investment in our securities involves a high degree of risk. Please consider the following risk factors and the risk factors previously disclosed in Part 1, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2025 carefully. If any one or more of such risks were to occur, it could have a material adverse effect on our business, prospects, financial condition and results of operations, and the market price of our securities could decrease significantly. Statements to the effect that an event could or would harm our business (or have an adverse effect on our business or similar statements) mean that the event could or would have a material adverse effect on our business, prospects, financial condition and results of operations, which in turn could or would have a material adverse effect on the market price of our securities. Many of the risks we face involve more than one type of risk. Consequently, you should carefully read all of the risk factors below, the risk factors described in our Form 10-K for the year ended December 31, 2025, and in any reports we file with the SEC after we file this Form 10-Q, before making any decision to acquire or hold our securities.

Other than the risk factors set forth below, there are no material changes from the risk factors previously disclosed in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2025.

IFuture sales or other distributions of our stockholders do not approve the proposal may depress our stock price or subject us to limitations on our ability to in use our net operating loss and tax crease dit carryforwards.

Sales or othe numberr distributions of authorized  substantial number of shares of our common stock, our future capitalraising and strategic flexibility could be materially limited.

Atin the public market or otherwise, by us or by a significant stockholder, have in the Companys 2026 Annual Stockholder Meeting, stockholders are bepast and could in the future, depress the trading asked to vote price of our common a proposalstock and impair our ability to amend our certificatraise capital through the sale of incorporation to increase additional equity securities.

In addition, we have in the number of authorized past and may in the future issue additional shares of our common or preferred stock (the Share Increase Amendment). Failure to obtaifrom time to time in amounts that may be significant. We have sold common stockhold including under approval ofour "at the Share Increase Amendmarket" sales agreement could adversely aand in follow-on underwritten offect our ability to rings in the past and may do so in the future. We also previously issue shares d a class of preferred stock that was publicly traded and may in the future for otherissue preferred stock that is purposes, for example to raise capital through equity financings, satisfy obligblicly traded. The sale of substantial amounts of our common or any preferred stock, by us or a significant stockholder, or the perception that these sales may occur, could adversely affect the trading prices of our securities.

Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, if a corporations under equitygoes an ownership change, the compensrporation arrangements, issue equity incentive amay be limited in its ability to use its pre-ownership change net operating loss carryforwards for long-term retention, pursue strategic acquisitions or partnand certain other tax attributes to offset its post-ownership change taxable income or otherwise reduce its income tax liabilities. In general, an ownerships, or support change will occur if the ownership of our growth strategy. Any such limitations could require us to seek alternative financstock by certain stockholders or groups of stockholders changes by more than 50% over a rolling arrangements, delthree-year period. Similar rules may or reduceapply under strategic tax laws. Changes initiatives, forego opportunities that the ownership of our stock, including as a require the sult of issuances of equitystock in connection with the proposed TCS Merger, or rely more heavily onur merger with TBHC and other transactions (some of which may be beyond our cash from operations,ontrol), may result in any one of ownership change, which could adversely affect our business, financial condition, andresult in increased future income tax liability to us.

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Risks results of operations. Additionally, if the Share Increase Amendment isRelated to the Combined Company with TCS

The TCS Merger will involve substantial costs.

We and TCS have incurred and expect to incur not approvn-recurring costs associated by our stockholders, the interest rwith combining the operations of the two companies, as well as transaction fees and other costs relate ond to the Convertible Notes (as defined below)TCS Merger. These costs and expenses include fees paid to financial, legal, accounting and other advisors, and other related charges.

The combined company will also increase (see Risks Related tour restructuring and integration costs in connection with the TCS MergerIf we do no. The costs related to restructuring will be expensed as a cost obtainf the requisite stockholder approvals required under the indenture that will governongoing results of operations of the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the TCS Merger and the Convertible Notes, the interest rate integration of TCSs business with our business. We expect that the elimination the Convertible Notes wilof duplicative costs, strategic benefits, and additional increase, which could materially increase ourome, as well as the realization of other efficiencies related to the interest expense, adversely affect our liquidity,gration of the businesses, may offset incremental transaction, TCS Merger-related and reduce our financial flexibility.).

Risks Relatstructuring costs over time. However, any net benefit may not be achieved in the near term or at all. While we have assumed to the TCS Merger

Thhat certain expenses would be incurred in connection with the TCS Merger may not be completed and tand the other transactions pursuant to the TCS Merger Agreement may be terminated in accordance with its terms.

T, there are many factors beyond our control that could affect the total amount or the Agreement and Plantiming of Merger (the TCS Merger Agreement) byintegration and among The Container Store Holdings, LLC (implementation expenses.

Lawsuits may in the future be filed against us or TCS), the Company, and Falcon, or against our directors or TCSs principals, challenging the TCS Merger Sub, LLC (.

Transactions such as the TCS Merger Sub) is sare frequently subject to a numbelitigation or of condither legal proceedings, including actions alleging that must be satisfieour board or waived (tof directors or the extent permitted) priorTCS principals breached their respective fiduciary duties to the completion of our proposed merger with TCS (ir stockholders or equity holders by entering into the TCS Merger),

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 Agreement, by faincludling (i) the absence of lawsto obtain a greater value in the transaction or orders restrainingtherwise. Neither we nor TCS can provide assurance the consummat such litigation of r othe TCS Merger, (ii) eir legal proceedings will not be brought. If litigation or other (A) receipt of the requiredlegal proceedings are in fact brought against us or TCS term loan lender approvals contemplated by, or against our board of directors or the TCS Merger Agreement (principals, we and the TCS Ly will defender Transaction Approval) or (B) (x) the occurrence of a foreclosure and related restructuring in accordance with the strict foreclosure agreement contemplated by against them, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operations or financial position or that of the TCS Merger Agreement and (y)combined company, including through the delpossible diverysion of writteneither consent from more than 50%mpanys resources or distraction of the holders of Class A Units of TCS following fokey personnel.

We and TCS have each incurred significant losses in reclosure aent years, and related restructuring (the Post-Foreclosure Securityholder Written Consent), (iii) TCSs receiptwe cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of authorizthe combined new loans in an aggregate principalcompany.

We and TCS have each historically used significant amounts of no lesscash in operating activities, and we expect than $55.0 million, which such new loans shall be repaid in full at the closing ofe combined company to continue to use significant amounts of cash to fund ongoing operations, capital requirements, working capital needs, and debt service obligations for the TCS Merger viaforeseeable future. If the issuance of convertible notes (the Convertible Notes), (iv) the satisfaccombined company do not achieve profitability as anticipated, we may be required to allocate additional financial resources, which could adversely affect liquidity, results of operation of certain conditions set forths, or the ability to pursue other strategic initiatives. The incurrence of indebtedness for such purposes would result in TCSs asset-based revolving credit agreement, including, among other things, approvingincreased payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or consenting to the TCS Merger, (v) secure such debt, limitations on our ability to acquire, sell or license intellectual property rights and othe Companysr operating receipt of astrictions that copy of TCSs 2026 auuld adversely impact our liquiditedy, financial statements and,condition, or ability to conduct our business. We cannot be certain when or if the closing of the TCS Merger has not occurreombined companys operations will generate sufficient cash to fully fund on or priogoing operations or to August 15, 2026, receipt of the unaudihe growth of the combined company.

Combining our business with that of TCS may be more difficult, costly or time-consuming than expected quarterly financial statemenand the combined company may fail to realize the anticipated benefits of the TCS for the fiscal quarter endMerger, which may adversely affect the combined June 30, 2026companys business results and (vi)negatively affect the representations and warrantievalue of the combined companys common stock.

The success of the TCS, Merger Sub and the Company bewill depend on, among other thing trues, the ability of us and correct, subject to theTCS to combine our businesses in a materiality stnner that facilitates growth opportunities. We andards contain TCS have entered into the TCS Merger Agreement, and  because we believe that the TCS, Merger Sub and the Company havingother transactions contempliated with their rby the TCS Merger Agreement are in the best interests of our respective obligations under the stockholders and that combining our businesses will produce benefits.

However, we and TCS Merger Agreement. Tmust successfully combine and integrate our businesses in a manner that permits these conditions tobenefits to be realized. In addition, the completion of the TCS Merger, sbined company must achieve the anticipated growth without adversely affecting current revenues, liquidity, custome of which are beyor and vendor relationships, and the control oinvestments in future growth. If the Company and TCS, may combined company is not be saable

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tisfied or waived in a timely manner or at all, and, accordingly,o successfully achieve these objectives, the anticipated benefits of the TCS Merger may not be delayrealized fully, or not completeat all, or may take longer to realize than expected.

Additionally, ein inability to realize ther t full extent of the Company oranticipated benefits of the TCS may terminateMerger and the other transactions under the TCS Merger Agreement under certa, as well as any delays encountered in circumstancethe integration process, including, among ocould have an adverse effect upon ther reasons, ivenues, level of expenses and operating results of the other party breaches its representacombined company, which may adversely affect the value of the common stock of the combined company.

In additions, warranties, or covenants under, the actual integration may result in additional and unforeseen expenses, and the TCS Merger Agreement in a w anticipated benefits of the integration plan may that would result in a failure of its condition to closing being satisfied (subject not be realized. Actual growth and any potential cost savings, if achieved, may be lower than what we and TCS expect and may take longer to achieve than anticipated. If we and TCS are not able to certain procedures and cure adequately address integration challenges, we may be unable to successfully integrate operiods), ifations or realize there exis anticipated benefits any law or order restrainingof the integration of the consummation of thetwo companies.

The failure to successfully integrate TCS Merger, or ifwith our businesses and operations in the TCS Merger has not closexpected time frame may adversely affect the combined by July 31, 2026, or, if the only conditioncompanys future results.

We and TCS have operated will continue to operate independently. There can be no assurance that has not been satisfied or waived at such time is TCSs requirement to delivour businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees of either company, the loss of customers, the disruption of either certain finaompanys or both companies ongoing businesses, inconsistencial statementes in standards, controls, procedures and policies, September 30, 2026.

The terminunexpected integration issues, higher than expected integration of the TCS Merger Agreement could negcosts and an overall post-completion integrativeon process that takes longer than originally impact our business and the tradanticipated. Specifically, the following issues, among others, must be addressed in integrating prices of our common stock.

Iour operations in order to realize the anticipated benefits of the TCS Merger is not so the combined company performs as expected:

combining the completed, the ongoing anies operations and corporate functions;

combining the business sses and meeting the capital requirements of the Comcombined company may be adversely affect, in a manner that permits the combined and, without realizingcompany to achieve any of cost savings or othe expecr synergies anticipated benefits of having completedto result from the TCS Merger, wethe failure of which would be subject to a numberresult in the anticipated benefits of risks, includingthe TCS Merger not being realized in the following:

failure totime frame currently anticipated or at all;

integrating the complete the proposed TCS Merger may result in neganies technologies and technologies licensed from third parties;

integrating and unifying the offerings and services available to customers;

identifying and eliminative publicityng redundant and underperforming functions and a negative impression of us in the investssets;

harmonizing the companies operating practices, employee development and community;

we may experience negative reactions from ourpensation programs, internal controls and other policies, procedures and processes;

maintaining existing agreements with customers, employeesuppliers, distributors, vendors, land lords, and other counterparties;

we will be required , avoiding delays in entering into pay ournew agreements with prospective costs runterparties, and leveraging relating to the TCS Merger, such as financial advisory, legal, financing aonships with such third parties for the benefit of the combined company;

addressing possible differences in business backgrounds, corporate cultures and accounmanagement philosophies;

consolidating coststhe companies administrative and associated feesinformation technology infrastructure;

coordinating distribution and expenses, whether or not the TCS Merger is completed; and

matters relamarketing efforts;

managing the movement of certain positions to different locations;

coordinating geographically dispersed organizations; and

effecting toactions the TCS Merger (including integraat may be required in connection planwith obtaining) will require substantial commitm regulatory or other governmental approvals and consents of.

In addition, at time and resources by s the attention of certain members of our management, which coul and resources may be focused on therwise have been devo integration of the businesses of the two companies and diverted tofrom day-to-day business operations or to oother opportunities that may have been beneficial to us.

Our current stockholders willsuch company, which may disrupt the business of the combined company.

The combined company may not be able to retain customers or other business relationships, which could have a reduced ownershipn adverse effect on the combined companys business and voting interest in us after the operations. Third parties may terminate or alter existing contracts or relationships with us or TCS Merger.

The combined compared to theirany may experience impacts on relationships with current ownership stomers, suppliers, vendors, landlords, and other counterparties that may harm the combined companys business and will exercise leresults of operations. Certain counterparties may no longer desire to do business influence overwith the combined company following the TCS Merger, management. y seek to renegotiate commercial terms,

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Based on the number of issued and outstand

or may terminate, reduce, or fail to renew existing relationships. There can be no guarantee that customers and other third parties will remain with or continue to have a relationship with the combined company following shares of commonthe TCS Merger. If any customers or other counterparties stock as of March 31, 2026, it is expected thatp doing business with the combined company, then the combined companys business and results of operations may be harmed.

We and TCSs equity holde also have contracts with landlords, licensors and creditoother business partners entitledwhich may contain limitations applicable to receive msuch contracts following the TCS Merger . If these consideration willents cannot be obtained, the combined collectively own up to approximpany may suffer a loss of potential future revenue, incur costs and lose rights that may be mately 22%, of our outstanding sharrial to the combined companys business. In addition, third parties of common stock after giving effect towith whom we or TCS currently have relationships may terminate or otherwise reduce the scope of their relationship with either party following the TCS Merger and assuming. Any such disruptions could limit the conversion of all Convertible Notes. As a resultmbined companys ability to achieve the anticipated benefits of the TCS Merger, assuming.

The combined consummated, our current stockholders will own a smaller mpany may be exposed to increased litigation, which could have an adverse effect on the combined companys business and opercentage of tations.

The combined company than theymay be exposed to increased litigation from stockholders, currently own,stomers, suppliers, distributors, consumers and as a result will  other third parties due to the combination of our and TCSs businesses following the TCS Merger. Such litigation may have less influence on our management and policies ofan adverse impact on the combined companys business and results of operations or may cause disruptions to the combined company than they now have on our manages operations.

Due to the TCS Merger, we may be required to recognize impairment acharges for goodwill and polother intangible assets.

We anticies, as pate that we will have a significant amount of goodwill and othe case may be.

Underr intangible assets on our consolidated balance sheet following the TCS Merger Agreem. Goodwill represent,s the merger consideration includes aexcess of the purchase price paid over the fair value of the net assets acquired in business combination of s, such as the Convertible Notes and shares of common stock. The number of shares of common stock that may be issued at closing is subjTCS Merger. If the carrying amount exceeds fair value, an impairment loss is recognized. Goodwill is tested for impairment at least annually, or when we determine that a triggering event has occurred. Significant negative industry or economic trends, disruptions to our business, the impact of acquired businesses (including an inability to effectively integrate acquired businesses), unexpect to a cap equal toed significant changes, planned changes in use of the lesser of (i) 19.99% of assets, divestitures and market capitalization declines may impair goodwill and othe combined voting power or number of sr intangible assets. We may recognize impairment charges of common stock outstandfor goodwill and other intangible assets. Any charges relating to such immedipairments could mately prior to entryrially and adversely affect our results of operations into the TCS Merger Agreement and (ii) periods recognized, which could result in an adverse effect on the numbermarket price of authorized and unissuedour common stock.

The market price for shares of our common stock not ofollowing therwise reserv TCS Merger may be affected as of the closing date. Toby factors different from, or in addition to, the extenose that historically have affected or currently affect the required market prices of shares of our common stock consi.

Our stockholderation would exceed thats and the former equity holders and creditors of TCS were entitled to receive merger consideration under threse TCS Merger Agreement now hold, the amount of such exc shares of common stock in the combined company. The business generally would instead be s of TCS differs from our business, and, accordingly, the results of operatisfied through ons and prospects of the issuance of convertible notes. As a combined company will be affected by some factors that are different from those currently or historically affecting our result, s of operations and the ultimate mix of market price of our common stock.

Former TCS equity holders and debt securities issued creditors who received shares of our common stock or the Convertible Notes in the TCS Merger may differ materially from ecide not to hold such securrent expectationsities following the TCS Merger, and/or could requi our existing stockholders before the Company TCS Merger may decide to pay

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reduce their intevestment in us as a result on an increasedf changes to our investment principal amount of convertible notes, whichofile following the TCS Merger. Sales of our couldmmon stock affect investter the closing, or the perception of the transaction, create uncertainty regarding dilution and leverage, and adversely athat such sales may occur, as well as future conversion of the Convertible Notes into shares of our common stock, could have the effect of depressing the market price of ourthe common stock of the combined company.

ObtainRisks Related to the Fathom and F9 Mergers

The Pending required approvalsMergers may not be completed and satisfying closing conditions may prevent or delay completion ofthe Merger Agreements may be terminated in accordance with their terms.

The Fathom Merger Agreement and the F9 Merger Agreement (together with the TCSFathom Merger.

The TCS Agreement, the Merger is Agreements) are subject to a number of conditions to closing as specihat must be satisfied inor waived (to the TCS Merger Agreement. These closextent permitted) prior to the completion of our proposed merger with, as applicable, FTHM and F9 (together, the Pending Mergers). The conditions include, among oto the completion of ther Pending Mergers, the absencesome of which are beyond the control of laws or orders rethe Company, Fathom and F9, may not be

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straining the consummation ofatisfied or waived in a timely manner or at all, and, accordingly, the TCSPending Mergerers may be delayed or not completed. Additionally, either the TCS Lender Transaction Approval or the occurreCompany or Fathom and F9 may terminate the Pending Merger Agreements, as applicable, under certain circumstance of a foreclosures.

The termination of the Merger Agreements could negatively impact our business and written consent from morethe trading prices of our common stock.

If the Merger Agreements are not completed, than 50%e ongoing business of holdthe Company may be advers of Class A unely affected and, without realizing any of the expected benefits of TCS followhaving completed the Pending foreclosure, TCSs receipt of authorizMergers, we would be subject to a number of risks, including the following:

failure to complete the proposed new loansPending Mergers may result in an aggrnegative publicity and a negate principal amount of no less than $55.0 mive impression of us in the investment community;

we may experience negative reactions from our customers, employees, and other counterparties;

we willion, t be required to pay our costs relating to the satisfaction of certainPending Mergers, such as financial advisory, legal, financing and accounting conditions set forth in TCSsts and associated fees and expenses, whether or not the Pending Mergers asset-based revolvre completed; and

matters relating to the Pending Mergers (including integration planning credit agreem) will require substantial commitments of time and resources by management, including, among otwhich could otherwise have been devoted to day-to-day operations or to other things, approvopportunities that may have been beneficial to us.

Our current stockholders will have a reduced ownership and voting tinterest in us after the TCSPending Merger,s compared to the Companys receipt ir current ownership and will exercise less influence over management.

Based on the number of a copyissued and outstanding shares of common stock as of TCSs June 30, 2026 audited financial statements, , it is expected that Fathom and F9 equity holders and creditors entitled to receive merger consideration will collectively own up to approximately 21%, of our outstand reping sharesentations of of common stock after giving effect to the parties bePending Mergers. As a result of the Pending true and coMergers, assuming consummated, our currect, subject tont stockholders will own a smaller percentage of the materiality stcombined company than they currently own, andards contai as a result will have less influence on our management and policies of the combined incompany the TCS Merger Agreean they now have on our management, and policies, as the parties havicase may be.

Obtaining required approvals and satisfying complied in all material respects with their resplosing conditions may prevent or delay completion of the Pending Mergers.

The Pending Mergers are subjective obliga to a number of conditions underto closing as specified in the TCSrespective Merger Agreements. No assurance can be given that these approvals, financings, consents and other required conditions to closing will be obtained or satisfied, and, if they are obtained or satisfied, no assurance can be given as to their timing or the terms on which they are obtained. Any delay in completing the TCSPending Mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the TCSPending Merger iss are successfully completed within the expected time frame.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the TCSPending Mergers.

The success of the TCSPending Mergers will depend in part on the combined companys ability to retain the talents and dedication of the professionals currently employed by us and TCSFathom and F9. It is possible that these employees may decide not to remain with us or TCSFathom or F9, as applicable, while the TCSPending Merger is s are pending, or with the combined company if the merger is s are consummated. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, the combined companys business activities may be adversely affected and managements attention may be diverted from successfully integrating us and TCS  Fathom or F9 to hiring suitable replacements, all of which may cause the combined companys business to suffer. In addition, we and TCS Fathom or F9 may not be able to locate suitable replacements for any key employees who leave either company or offer employment to potential replacements on reasonable terms. In addition, there could be disruptions to or distractions for the workforce and management, including disruptions associated with integrating employees into the combined company. No assurance can be given that the combined company will be able to attract or retain key employees of ours and TCS Fathom or F9 to the same extent that those companies have been able to attract or retain their own employees in the past.

The TCSPending Mergers, and uncertainty regarding the TCSPending Mergers, may cause customers, strategic partners and others to delay or defer decisions concerning us or TCS Fathom or F9 and adversely affect each companys ability to effectively manage its respective business.

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The TCSPending Mergers will occur only if the stated conditions are met, including the receipt of required approvals, and consents among other conditions. Many of these conditions are beyond our control and TCSFathom and F9s control, and bothall parties also have certain rights to terminate the TCSPending Merger Agreements under certain circumstances.

Accordingly, there may be uncertainty regarding the completion of the TCSPending Mergers. This uncertainty may cause customers, strategic partners or others that deal with us or TCS Fathom or F9 to delay or defer entering into contracts with us or making other decisions concerning us or seek to change or cancel existing business relationships with us, which could negatively affect the business of either company. Any delay or deferral of those decisions or changes in existing agreements could have an adverse impact on our business, regardless of whether the TCSPending Merger iss are ultimately completed.

Whether or not the TCSPending Merger iss are completed, the announcement and pendency of the TCSPending Mergers could cause disruptions in our business, which could have an adverse effect on our business and financial results.

Whether or not the TCSPending Merger is s are completed, the announcement and pendency of the TCSPending Mergers could cause disruptions in our business, including by diverting the attention of our management away from day-to-day business operations and toward the completion of the TCSPending Mergers. In addition, we have diverted significant management resources in an effort to complete the TCSPending Mergers. If the TCSPending Merger is s are not completed, we will have incurred significant costs, including the diversion of management resources, for which we will have received little or no benefit. These disruptions could adversely affect our business and financial results.

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The consummation of the TCS Merger is dependent upon financing-related arrangements that may not be completed as expected.

Pursuant to the TCS Pending Merger Agreement, TCS is required to receive authorized new loans in an aggregate principal amount of $55.0 million, and on the closing date, contingent upon the occurrence of the closing, we are required to issue and deliver the Convertible Notes in an aggregate principal amount equal to the aggregate obligations arising under or in connection with such new loans, subject to the adjustments contemplated by the TCS Merger Agreement. In addition, the TCS Merger Agreement contemplates other financing-related arrangements, including specified loan and note mechanics tied to the consummation of the TCS Merger. There can be no assurance that these financing arrangements will be completed on the expected timeline, on acceptable terms, or at all, and failure to do so could delay the consummation of the TCS Merger, increase costs, or otherwise adversely affect us, TCS, or the combined company.

The TCS Merger will involve substantial costs.

We and TCSrs will involve substantial costs.

We, Fathom and F9 have incurred and expect to incur non-recurring costs associated with combining the operations of the two companies, as well as transaction fees and other costs related to the TCSPending Mergers. These costs and expenses include fees paid to financial, legal, accounting and other advisors, and other related charges. Some of these costs are payable by us regardless of whether the TCSPending Merger is s are completed.

The combined company will also incur restructuring and integration costs in connection with the TCSPending Mergers. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the TCSPending Mergers and the integration of TCSFathom and F9s businesses with our business. We expect that the elimination of duplicative costs, strategic benefits, and additional income, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, TCS Mmerger- related and restructuring costs over time. However, any net benefit may not be achieved in the near term or at all. Many of these costs will be borne by us even if the TCSPending Merger is s are not completed. While we have assumed that certain expenses would be incurred in connection with the TCSPending Mergers and the other transactions contemplated by the TCS Merger Agreements, there are many factors beyond our control that could affect the total amount or the timing of the integration and implementation expenses.

Lawsuits may in the future be filed against us or TCSFathom or F9, or against our directors or TCSFathom or F9s principals, challenging the TCSPending Mergers, and an adverse ruling in any such lawsuit may prevent the TCSPending Mergers from becoming effective or from becoming effective within the expected time frame.

Transactions such as the proposed TCSPending Mergers are frequently subject to litigation or other legal proceedings, including actions alleging that ourthe respective board of directors or the TCS principals breached their respective fiduciary duties to their stockholders or equity holders by entering into the TCS Merger Agreements, by failing to obtain a greater value in the transaction or otherwise. Neither we nor TCS Fathom or F9 can provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against us or TCS, Fathom or F9, or against ourthe respective board of directors or the TCS principals, we and they will defend against them, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our business, results of operations or financial position or that of the combined company, including through the possible diversion of either companys resources or distraction of key personnel.

Furthermore, one of the conditions to the completion of each of the TCSPending Mergers is that no law or order restraining, enjoining, making illegal, or otherwise prohibiting the consummation of the TCSPending Mergers be in effect. As such, if any plaintiff or governmental authority is successful in obtaining such relief, that relief may prevent the TCS Merger from becoming effective or from becomPending effective within the expected time frame.

If we do not obtain the requisite stockholder approvals required under the indenture that will govern the Convertible Notes, the interest rate on the Convertible Notes will increase, which could materially increase our interest expense, adversely aMergers from becoming effect our liquidity, and reduce our financial flexibility.

Under the indenture that will govern the Convertible Notes, if we do not obtain the stockholder approval required under the New York Stock Exchange rules to permit us to issue more than 19.99% of our outstanding ive or from becommon stock in satisfaction of conversion obligations, the interest rate on the Convertible Notes will increase. The Convertible Notes will

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initially bear interest at a rate oing ef 5.00% per year. The Indenture will provide that if we have not obtained such stockholder approval on or before the three-month annfectiversary of the closing of the TCS Merger, the interest payable on the Convertible Notes will increase to 10.00% per year until such stockholder approval is obtained and if  within the Company has not obtained such stockholder approval on or before the six-month anniversary of the Closing, the interest payable on the Buyer Convertible Notes will increase to 12.00% per year until such stockholder approval is obtained. Accordingly, if stockholder approval is delayed or never obtained, we could remain subject to an elevated interest rate for a prolonged period, which could materially adversely affect our results of operations, cash flows and financial flexibilityexpected time frame.

Future sales or other distributions of our stock may depress our stock price or subject us to limitations on our ability to use our net operating loss and tax credit carryforwards.

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Sales or other distributions of a substantial number of shares of our common stock, in the public market or otherwise, by us or by a significant stockholder, have in the past and could in the future, depress the trading price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

In addition, we have in the past and may in the future issue additional shares of our common or preferred stock from time to time in amounts that may be significant. We have sold common stock including under our "at the market" sales agreement and in follow-on underwritten offerings in the past and may do so in the future. We also previously issued a class of preferred stock that was publicly traded and may in the future issue preferred stock that is publicly traded. The sale of substantial amounts of our common or any preferred stock, by us or a significant stockholder, or the perception that these sales may occur, could adversely affect the trading prices of our securities.

Under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an ownership change, the corporation may be limited in its ability to use its pre-ownership change net operating loss carryforwards and certain other tax attributes to offset its post-ownership change taxable income or otherwise reduce its income tax liabilities. In general, an ownership change will occur if the ownership of our stock by certain stockholders or groups of stockholders changes by more than 50% over a rolling three-year period. Similar rules may apply under state tax laws. Changes in the ownership of our stock, including as a result of issuances of stock in connection with the proposed TCSPending Mergers, our merger with TCS, our merger with TBHC and other transactions (some of which may be beyond our control), may result in an ownership change, which could result in increased future income tax liability to us.

Risks Related to the Combined Company with TCS

WeFathom and TCSF9

We have each incurred significant losses in recent years, and we cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of the combined company.

We and TCS have each hhistorically used significant amounts of cash in operating activities, and we expect the combined company to continue to use significant amounts of cash to fund ongoing operations, capital requirements, working capital needs, and debt service obligations for the foreseeable future. If we, TCS, Fathom, F9, or the combined company do not achieve profitability as anticipated, we may be required to allocate additional financial resources, which could adversely affect liquidity, results of operations, or the ability to pursue other strategic initiatives. The incurrence of indebtedness for such purposes would result in increased payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or secure such debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our liquidity, financial condition, or ability to conduct our business. We cannot be certain when or if our, TCSFathoms, F9s, or the combined companys operations will generate sufficient cash to fully fund ongoing operations or the growth of the combined company.

Combining our business with that of TCSFathom or F9 may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated benefits of the TCSPending Mergers, which may adversely affect the combined companys business results and negatively affect the value of the combined companys common stock.

The success of the TCSPending Mergers, if consummated, will depend on, among other things, the ability of us a, Fathom and TCSF9 to combine our businesses in a manner that facilitates growth opportunities. We a, Fathom and TCSF9 have entered into the TCSrespective Merger Agreements because we believe that the TCSPending Mergers and the other transactions contemplated by the TCS Merger Agreements are in the best interests of our respective stockholders and that combining our businesses will produce benefits.

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However, we a, Fathom and TCSF9 must successfully combine and integrate our businesses in a manner that permits these benefits to be realized. In addition, the combined company must achieve the anticipated growth without adversely affecting current revenues, liquidity, customer and vendor relationships, and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the TCSPending Mergers may not be realized fully, or at all, or may take longer to realize than expected.

An inability to realize the full extent of the anticipated benefits of the TCSPending Mergers and the other transactions contemplated by the TCS Merger Agreements, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and any potential cost savings, if achieved, may be lower than what we a, Fathom and TCSF9 expect and may take longer to achieve than anticipated. If we a, Fathom and TCSF9 are not able to adequately address

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integration challenges, we may be unable to successfully integrate operations or realize the anticipated benefits of the integration of the two companies.

The failure to successfully integrate TCS Fathom or F9 with our businesses and operations in the expected time frame may adversely affect the combined companys future results.

We a, Fathom and TCSF9 have operated and, until the completion of the TCSPending Mergers, will continue to operate independently. There can be no assurance that our businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees of either company, the loss of customers, the disruption of either companys or both companies ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating our operations in order to realize the anticipated benefits of the TCSPending Mergers so the combined company performs as expected:

combining the companies operations and corporate functions;

combining the businesses and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the TCSPending Mergers, the failure of which would result in the anticipated benefits of the TCSPending Mergers not being realized in the time frame currently anticipated or at all; 

integrating the companies technologies and technologies licensed from third parties;

integrating and unifying the offerings and services available to customers;

identifying and eliminating redundant and underperforming functions and assets;

harmonizing the companies operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

maintaining existing agreements with customers, suppliers, distributors, vendors, landlords, and other counterparties, avoiding delays in entering into new agreements with prospective counterparties, and leveraging relationships with such third parties for the benefit of the combined company;

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

consolidating the companies administrative and information technology infrastructure;

coordinating distribution and marketing efforts;

managing the movement of certain positions to different locations;

coordinating geographically dispersed organizations; and

effecting actions that may be required in connection with obtaining regulatory or other governmental approvals and consents.

In addition, at times the attention of certain members of our Fathoms and TCSF9s management and each companys respective resources may be focused on completion of the TCSPending Mergers and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each companys ongoing business and the business of the combined company.

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The combined company may not be able to retain customers or other business relationships, which could have an adverse effect on the combined companys business and operations. Third parties may terminate or alter existing contracts or relationships with us or TCS, Fathom or F9.

If the TCSPending Merger iss are consummated, the combined company may experience impacts on relationships with customers, suppliers, vendors, landlords, and other counterparties that may harm the combined companys business and results of operations. Certain counterparties may no longer desire to do business with the combined company following the TCSPending Mergers, may seek to renegotiate commercial terms, or may terminate, reduce, or fail to renew existing relationships. There can be no guarantee that customers and other third parties will remain with or continue to have a relationship with the combined company following the TCSPending Mergers. If any customers or other counterparties stop doing business with the combined company, then the combined companys business and results of operations may be harmed.

We and TCS also have coContracts with landlords, licensors and other business partners which may require us or TCS, Fathom or F9, as applicable, to obtain consent from these other parties in connection with the TCSPending Mergers, or which may otherwise contain limitations applicable to such contracts following the TCSPending Mergers. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined companys business. In addition, third parties with whom we or TCS, Fathom or F9 currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the TCSPending Mergers. Any such disruptions could limit the combined companys ability to achieve the anticipated benefits of the TCSPending Mergers. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the TCSPending Mergers or by a termination of the TCS Merger Agreements.

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The combined company may be exposed to increased litigation, which could have an adverse effect on the combined companys business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, distributors, consumers and other third parties due to the combination of our a, Fathoms and TCSF9s businesses following the TCSPending Mergers. Such litigation may have an adverse impact on the combined companys business and results of operations or may cause disruptions to the combined companys operations.

Due to the TCSPending Mergers, we may be required to recognize impairment charges for goodwill and other intangible assets.

Upon and subject to closing the TCSPending Mergers, we anticipate that we will have a significant amount of goodwill and other intangible assets on our consolidated balance sheet. Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations, such as the TCSPending Mergers. If the carrying amount exceeds fair value, an impairment loss is recognized. Goodwill is tested for impairment at least annually, or when we determine that a triggering event has occurred. Significant negative industry or economic trends, disruptions to our business, the impact of acquired businesses (including an inability to effectively integrate acquired businesses), unexpected significant changes, planned changes in use of the assets, divestitures and market capitalization declines may impair goodwill and other intangible assets. If the TCSPending Merger iss are consummated, we may recognize impairment charges for goodwill and other intangible assets. Any charges relating to such impairments could materially and adversely affect our results of operations in the periods recognized, which could result in an adverse effect on the market price of our common stock.

The market price for shares of our common stock following the TCSPending Mergers may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of our common stock.

If the TCSPending Merger iss are consummated, our stockholders and the current equity holders and creditors of TCS Fathom and F9 entitled to receive merger consideration under the TCSrespective Merger Agreements will hold shares of common stock in the combined company. The business of TCS dFathom and F9 differs from our business, and, accordingly, the results of operations and prospects of the combined company will be affected by some factors that are different from those currently or historically affecting our results of operations and the market price of our common stock.

Former TCSFathom and F9 equity holders and creditors who receive shares of our common stock orin the Convertible Notes in the TCSPending Mergers may decide not to hold such securities following the TCSPending Mergers, and our existing stockholders may decide to reduce their investment in us as a result of changes to our investment profile following the TCSPending Mergers. Sales of our common stock after the closing, or the perception that such sales may occur, as well as future conversion of the Convertible Notes into shares of our common stock, cou could have the effect of depressing the market price of the common stock of the combined company.

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