Grindr (GRND) Risk Analysis

The Committee on Foreign Investment in the United States ("CFIUS") is an interagency body of the U.S. government authorized to review certain foreign investment transactions in U.S. businesses ("Covered Transactions") in order to determine the effect of such transactions on the national security of the United States. If CFIUS determines that a Covered Transaction presents national security risks to the United States and that other provisions of law do not provide adequate authority to address the risks, then CFIUS may enter into an agreement with, or impose conditions on, parties to mitigate such risks or may refer the case to the President who may suspend, prohibit, or unwind the transaction. As widely reported in media coverage, we have previously been the subject of CFIUS scrutiny in connection with a prior Covered Transaction. Certain past or future investments in our business by foreign investors may be Covered Transactions subject to CFIUS jurisdiction for review depending on the nationality of the foreign investor, the structure of the transaction, and the governance and voting interests acquired by the foreign person. Submission of a notification to CFIUS with respect to a Covered Transaction related to our business could result in significant transaction delays, as CFIUS' review of a Covered Transaction can last between thirty days and several months, if not longer, depending on the form of the filing, the complexity of the transaction, the nationality and identity of the parties, and the underlying national security risks associated with the Covered Transaction. If CFIUS identifies national security concerns arising from a prior investment into the Company, CFIUS has the authority to initiate a post-closing inquiry and can demand information from the parties or require a filing at any time. In the event CFIUS reviews a Covered Transaction relating to our business, there can be no assurances that the relevant foreign investor will be able to maintain, or proceed with, participation in the Covered Transaction on terms acceptable to such foreign investor. If CFIUS identifies national security concerns with an existing foreign investor, CFIUS could exercise its authority to force a divestiture or unwind a prior transaction, which could have a material adverse effect on our share price. In addition, potential restrictions on the ability of foreign persons to invest in us could affect the price that an investor may be willing to pay for shares of our common stock. In some circumstances, moreover, we may choose not to pursue certain investments or other transactions, which are otherwise attractive, solely or in part based on an evaluation of the associated CFIUS risks. The parties to the Merger Agreement sought and obtained CFIUS approval for the Business Combination. On March 6, 2023, CFIUS concluded its review of the Business Combination and determined that there were no unresolved national security concerns. As part of the resolution of the CFIUS review, we entered into a National Security Agreement ("NSA") with certain CFIUS monitoring agencies ("CMAs") to address national security risks identified by CFIUS. Pursuant to the NSA, we have agreed to protect our data, including by implementing a data security plan, appointing a security officer, and periodically meeting with and reporting to the CMAs, among other terms. Our operating results may be negatively affected by increased compliance costs associated with the NSA measures and if we fail to comply with our obligations under the NSA, we may be subject to potential penalties.

In May 2025 we launched Woodwork by Grindr, a telehealth service that facilitates access to health care professionals employed by our partners who may, for eligible patients, make treatments available and prescribe certain medications, including, but not limited to, controlled substances and compounded medications, for erectile dysfunction, weight loss, low testosterone, vitality, muscle gain, and energy, through third-party pharmacy partners. Certain of these products are compounded drug products under Section 503A of the FDCA, which provides for certain FDA exemptions, including those that require premarket approval and labeling that bears with adequate directions for use. To market our products under these exemptions, we must comply with all Section 503A requirements. Section 503A permits compounding by a licensed pharmacist or physician of a drug that is not "essentially a copy" of a commercially available FDA-approved drug based on the receipt of a valid prescription for an individual patient. 503A pharmacies are not subject to cGMP requirements. Compounding under 503A is primarily regulated by state pharmacy laws and regulations governing pharmacy operations. These laws and regulations often include specific requirements for compounding operations, including requirements for licensing of pharmacists, pharmacy technicians, and pharmacies; supervision and training; inspections; sterility assurance; and recordkeeping, among other requirements. Regulations are updated periodically, generally under the jurisdiction of individual state boards of pharmacy. Failure to comply with the state pharmacy regulations of a particular state could result in a pharmacy being prohibited from operating in that state, financial penalties, and/or becoming subject to additional oversight from that state's board of pharmacy. In addition, many states are considering imposing, or have already begun to impose, more stringent requirements on compounding operations. If insurance coverage or contractual indemnification we have is insufficient to satisfy claims made against us, the claims could have an adverse effect on our business and financial condition. Compounding pharmacies subject to Section 503A of the FDCA and outsourcing facilities subject to Section 503B of the FDCA have recently been subject to increased scrutiny of their compounding activities by the FDA and state regulatory agencies. A governmental inquiry or action or litigation could be brought against us, our third-party telehealth provider, or the dispensing compounding pharmacy. In such a case, we may experience negative publicity and reputational harm, and additional expense required to respond to the injury, action, or litigation. Manufacturers of FDA-approved GLP-1 medications have brought private actions against compounders and outsourcing facilities, as well as prescribers of compounded medications, including against med-spas, medical practices, and telehealth providers. Similar litigation could be filed against us. Additionally, many FDA-approved GLP-1 medications have protected intellectual property, for example, related to their formulations and methods of use that other parties may use. The parties that own this intellectual property may file claims against us for infringement and other claims relating to their intellectual property, which could result in adverse judgments including fines or equitable relief, and adversely affect our ability to effectively compete. While we believe the compounded drug products available through our platform satisfy Section 503A of the FDCA, and therefore are exempted from many regulatory requirements, if the FDA were to determine that such drugs do not satisfy Section 503A, FDA would have to approve a new drug application for the drugs currently dispensed by the 503A facility before they could be lawfully sold or otherwise distributed in interstate commerce. Failure to comply with Section 503A or obtain FDA approval to market the drugs could result in an enforcement action, including injunction, seizure, civil fine, and criminal penalties, or the issuance of an FDA warning or untitled letter. Other federal and state enforcement authorities might also take action against us if they determine that compounded drug products available through our platform or the advertisements or promotional activities of such products do not meet applicable legal or regulatory requirements. The FDA or other federal, state, or foreign enforcement authorities may also take action if they determine our health and wellness services, related products, and promotional activities do not meet applicable legal requirements. For example, as part of the Make America Healthy Again (MAHA) Commission's Strategy Report, the current Administration signaled an initiative to tighten controls over direct-to-consumer pharmaceutical advertising, with a particular focus on social media and digital platforms. In September 2025, the FDA announced that it had dispatched thousands of letters warning pharmaceutical companies to remove misleading ads, and in March 2026, the FDA announced the issuance of 30 warning letters to telehealth companies for making false or misleading claims regarding compounded GLP-1 products on their websites. Moreover, in February 2026, the FDA issued a statement indicating that the agency intends to restrict GLP-1 active pharmaceutical ingredients intended for use in non-FDA-approved compounded drugs that are being mass-marketed as similar alternatives to FDA-approved drugs. In addition, Woodwork markets dietary supplements, which are subject to regulation by the FDA under the FDCA, as amended by the Dietary Supplement Health and Education Act of 1994 ("DSHEA"), and the regulations promulgated thereunder. These laws and regulations govern, among other things, product formulation, manufacturing, labeling, packaging, storage, distribution, marketing claims, and recordkeeping. Although DSHEA permits dietary supplements to make certain substantiated structure/function claims, dietary supplements generally may not be marketed with claims to diagnose, mitigate, treat, cure, or prevent disease without being regulated as drugs. FDA regulations applicable to dietary supplements also impose cGMP requirements intended to ensure the quality of dietary supplements and the accuracy of their labeling. Regulatory or enforcement actions by the FDA or other federal or state authorities could harm our reputation and have a material adverse effect on our business, financial condition, and results of operations. Further, the Administration's enforcement priorities and policies under the FDCA and its implementing regulations are subject to change at any time. Shifts in these policies and any resulting regulatory or enforcement actions by federal or state agencies could adversely affect our business, financial condition, and results of operations.

The products and services we offer in connection with Woodwork currently and may in the future offer as we expand our health and wellness initiative and our arrangements with third-parties in carrying out these services expose us to broadly applicable federal and state fraud and abuse and other healthcare laws and regulations, including anti-kickback, self-referral, health information privacy and security, state corporate practice of medicine, fee-splitting, and professional licensing restrictions and standards. In certain jurisdictions, the corporate practice of medicine ("CPOM") doctrine generally prohibits non-physicians from practicing medicine, employing physicians to provide clinical services, or otherwise exercising undue influence or control over medical decisions of physicians, among other things. Many states also limit the extent to which nurse practitioners and physician assistants can practice independently. Additionally, the practice of medicine is subject to various federal, state, and local certification and licensing laws, regulations, approvals and standards, relating to, among other things, the qualifications of the provider, the practice of medicine (including specific requirements when providing health care utilizing telehealth technologies and the provision of remote care), the continuity and adequacy of medical care, the maintenance of medical records, the supervision of personnel, and the prerequisites for prescribing medication and ordering of tests. Through our Woodwork business, we are now associated with, and may in the future become associated with, third-party telehealth providers or equivalent entities ("Affiliated Telehealth Providers"), including OpenLoop. We are dependent on our relationships with Affiliated Telehealth Providers, which we do not own or control, and our business would be adversely affected if those relationships were disrupted. We and the Affiliated Telehealth Providers may suffer losses or reputational harm from medical malpractice liability, professional liability or other claims against the healthcare professionals employed by, or contracting with, Affiliated Telehealth Providers. Affiliated Telehealth Providers may provide inappropriate medical treatment, fail to follow procedures or guidelines, engage in services outside the scope of their practice, or engage in unprofessional conduct or other activities that could lead to claims, significant defense costs, reputational harm, negative publicity, increased scrutiny by regulators and payors, or other risks, which may adversely affect our business. We and/or the Affiliated Telehealth Providers may be unable to obtain or maintain adequate insurance against these claims. Healthcare professionals providing telehealth services have become subject to a number of lawsuits alleging malpractice and some of these lawsuits may involve large claims and significant defense costs. It is possible that these claims could also be asserted against us and potential litigation may include us as an additional defendant. Any suits against us, or Affiliated Telehealth Providers, if successful, could result in substantial damage awards to the claimants that may exceed the limits of any applicable insurance coverage. Although we do not control the practice of telehealth by the Affiliated Telehealth Providers, it could be asserted that we should be held liable for malpractice of a healthcare professional employed or contracted by a Affiliated Telehealth Providers. In addition, regulation of telehealth is evolving, and the application, interpretation and enforcement of laws, regulations and standards with respect to telehealth can be uncertain or uneven. Further, any compensation arrangement with our healthcare partners must be structured to comply with applicable state anti-kickback and self-referral restrictions. At present time, we offer any health and wellness services as cash-pay only. To the extent that we expand our health and wellness offerings to include reimbursement from third-party payors, we may become subject to additional federal and state healthcare laws, such as the federal Anti-Kickback Statute. It is possible that governmental authorities will conclude that our business practices may not comply with current or future healthcare statutes, regulations or related case law. If our operations are found to be in violation of any of these laws or regulations, we could be required to curtail or restructure our operations, and we could be subject to significant regulatory and/or legal enforcement actions, including injunctions, seizures, imprisonment, disgorgement, exclusion from participation in healthcare programs, additional reporting obligations and oversight obligations, civil fines, and criminal penalties. Any regulatory or legal enforcement actions by federal or state enforcement authorities against us or our partners could harm our reputation and have a material adverse effect on our and our partners' business, financial condition, and results of operations. Further, these healthcare laws are subject to change at any time. Any changes in these laws may adversely affect our and our partners' business, financial condition, and results of operations.