Creative Realities (CREX) risk factors, FY2024 10-K

RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY

1. 01We have generally incurred losses, and may never become or remain profitable
2. 02We have incurred historical net losses, and we have had negative cash flows from operations. While we were able to achieve net income in 2022, we incurred a net loss in 2023 and 2024 and it is uncertain whether we will be able to obtain or increase our profitability in successive periods
3. 03Our digital marketing business is evolving in a rapidly changing market, and we cannot ensure the long-term successful operation of our business or the execution of our business plan
4. 04Our success and longevity depend on our ability to generate profits from future operations and obtain sufficient capital through financing transactions to refinance our debt obligations, pay any contingent consideration owed to former Reflect stockholders, and meet our other business obligations
5. 05We do not have sufficient capital to engage in material research and development, which may harm our long-term growth
6. 06The variable sales cycle of some of our products make it difficult to predict operating results
7. 07There has been, and we expect that there will continue to be, significant consolidation in our industry. Our failure or inability to either lead or participate in that consolidation may have a severe adverse impact on our access to financing, customers, technology, and human resources
8. 08Unpredictability in financing markets could impair our ability to grow our business through acquisitions
9. 09Our success depends on our interactive marketing technologies achieving and maintaining widespread acceptance in our targeted markets
10. 10the reliability of our interactive marketing technologies
11. 11Our financial condition and potential for continued net losses may negatively impact our relationships with customers, prospective customers and third-party suppliers
12. 12Because we do not have long-term purchase commitments from our customers, the failure to obtain anticipated orders or the deferral or cancellation of commitments could have adverse effects on our business
13. 13Our continued growth and financial performance could be adversely affected by the loss of several key customers
14. 14Most of our contracts are terminable by our customers with limited notice and without penalty payments, and terminations could have a material adverse effect on our business, financial condition, and results of operations
15. 15Our industry is characterized by frequent technological change. If we are unable to adapt our products and services and develop new products and services to keep up with these rapid changes, we will not be able to obtain, or maintain, market share
16. 16We operate in an intensely competitive industry, and our competitors are developing products and solutions that incorporate AI and ML. We may not be as successful as our competitors in incorporating AI and ML into our products and solutions
17. 17Issues relating to the use of new and evolving technologies in our offerings, such as AI and ML, may result in increased regulation and costs to comply with such regulations
18. 18We use developed and licensed software technology, and we could face claims of infringement by others in the industry. Such claims are costly and add uncertainty to our operational results
19. 19Our proprietary platform architectures and data tracking technology underlying certain of our services are complex and may contain unknown errors in design or implementation that could result in system performance failures or inability to scale
20. 20Our business may be adversely affected by malicious applications that interfere with, or exploit security flaws in, our products and services
21. 21We compete with other companies that have more resources, which puts us at a competitive disadvantage
22. 22Our future success depends on retaining key personnel and our ability to attract and retain additional personnel
23. 23Our reliance on information management and transaction systems to operate our business exposes us to cyber incidents and hacking of our sensitive information if our outsourced service provider experiences a security breach
24. 24Because our technology, products, platform, and services are complex and are deployed in and across complex environments, they may have errors or defects that could seriously harm our business
25. 25We may have insufficient network or server capacity, which could result in interruptions in our services and loss of revenues
26. 26Our business operations are susceptible to interruptions caused by events beyond our control
27. 27increased volatility and uncertainty in the financial projections we use as the basis for estimate used in our financial statements
28. 28Corporate social responsibility, specifically related to ESG, may impose additional costs and expose us to new risks
29. 29Anticipated changes in the U.S. political environment, including those resulting from the change in Presidential Administration and control of Congress, and to regulatory agencies, may result in significant changes to regulatory framework and enforcements
30. 30Our competitors are constantly evolving, and we may be unable to compete successfully against existing or future competitors to our business
31. 31devote greater resources to the marketing and sales of their products, technology, platform, and services

RISKS RELATED TO OUR SECURITIES AND OUR COMPANY

1. 32Our largest shareholder possesses significant voting power with respect to our common stock, which will limit your influence on our management and affairs, and may discourage parties from initiating potential merger, takeover, or other change-of-control transactions
2. 33Our Articles of Incorporation grant our Board of Directors the power to issue additional shares of common and preferred stock and to designate other classes of preferred stock, all without shareholder approval
3. 34We have never paid dividends on our capital stock and we do not anticipate paying dividends in the foreseeable future
4. 35We do not have significant tangible assets that could be sold upon liquidation
5. 36We can provide no assurance that our securities will continue to meet Nasdaq listing requirements. If we fail to comply with the continuing listing standards of the Nasdaq, our securities could be delisted
6. 37Sales of a substantial number of shares of our common stock in the public market by certain of our shareholders, including Slipstream, could cause our stock price to fall
7. 38There may not be an active market for shares of our common stock
8. 39Because of our limited internal resources, we may not have in place various processes and protections common to more mature companies and may be more susceptible to adverse events
9. 40Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition
10. 41Inflation and price volatility in the global economy could hurt our business and results of operations