Rekor Systems (REKR) risk factors, FY2025 10-K

Risks Relating to Our Corporate Structure and Business

1. 01We are currently not profitable, and we may be unable to become profitable on a quarterly or annual basis45% rewritten
2. 02The market for certain of our solutions is new and unproven, may decline or experience limited growth and is dependent in part on our ability to attract new customers to adopt our platform and use our services
3. 03For our hardware product offerings we depend on component and product manufacturing provided by outsourcing partners, most of which are located outside of the U.S
4. 04Our internal investments and go-to-market strategy may place downward pressure on our operating margins
5. 05We have not been a leading provider of traffic management and public safety products and services in the past and do not have the level of established contacts and existing business relationships that some of our competitors have
6. 06We may need to raise additional capital in the future, which may not be available on acceptable terms, or at all
7. 07If we experience declining or flat revenues and fail to manage such declines effectively, we may be unable to execute our business plans and may experience future weaknesses in operating results
8. 08If we are unable to retain our existing customers, our revenue and results of operations would be adversely affected
9. 09Our sales cycles for commercial and government clients can be long, unpredictable and require considerable time and expense, which may cause our operating results to fluctuate
10. 10Industry consolidation may result in increased competition
11. 11We may not be able to respond to rapid technological changes in time to address the needs of our customers, which could have a material adverse effect on our sales and profitability
12. 12The success of our business will depend, in part, on the continued services of certain members of our management. Our inability to attract and retain qualified personnel could significantly disrupt our business
13. 13We may fail to realize the anticipated benefits of acquisitions which we consummate, and we may be subject to business uncertainties
14. 14We may be required to write-down certain assets after completing our required annual evaluations, which may affect our reported financial results
15. 15Our operating results may be harmed if we are required to collect sales or other related taxes or duties for our licensing and subscription products and services or pay regulatory fees in jurisdictions where we have not historically done so
16. 16Improper disclosure of confidential and personal data could result in liability and harm to our reputation
17. 17Our business could be negatively impacted by cyber and other security threats or disruptions
18. 18We are dependent upon technology services, and if we experience damage, service interruptions or failures in our computer and telecommunications systems, our customer and worker relationships and our ability to attract new customers may be adversely affected
19. 19If we do not keep pace with rapid technological changes and evolving industry standards, we will not be able to remain competitive, and the demand for our services will likely decline
20. 20A downturn of the U.S. or global economy or in our ability to provide customers with a sustained level of support could result in our customers using fewer products and services or becoming unable to pay us for our services on a timely basis or at all, which would materially adversely affect our business
21. 21Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, which could subject our business to higher tax liability33% rewritten
22. 22Assertions by a third party that our services and solutions infringe its intellectual property, whether or not correct, could subject us to costly and time-consuming litigation or result in settlements or licensing arrangements that could affect our short-term or long-term profitability
23. 23If our services are used to commit intentional or illegal acts, we may incur significant liabilities, our services may be perceived as not secure, and customers may curtail or stop using our services
24. 24We use a limited number of data centers to deliver our services. Any disruption of service at these facilities could harm our business
25. 25Our long-term success depends, in part, on our ability to expand the sales of our services to customers located outside of the United States, and thus our business is susceptible to risks associated with international sales and operations
26. 26Our success depends in part on our ability to protect and enforce our intellectual property rights
27. 27Material defects or errors in the software that we use to deliver our services could harm our reputation, result in significant costs to us and impair our ability to sell our solutions
28. 28Government regulation of the Internet, telecommunications and other communications technologies could harm our business and operating results
29. 29Natural disasters, public health crises, political crises, and other catastrophic events or other events outside of our control may damage our business and operating results

Risks relating to our common stock

1. 30If securities or industry analysts do not publish research or publish inaccurate or unfavorable reports about our business, our stock price and trading volume could decline
2. 31Sales of a substantial number of shares of our common stock may cause the price of our common stock to decline44% rewritten
3. 32The market price of our common stock may be volatile and this may adversely affect our stockholders
4. 33general economic and stock market conditions
5. 34Investors may experience future dilution as a result of future equity offerings34% rewritten
6. 35We do not intend to pay dividends on our common stock for the foreseeable future27% rewritten
7. 36We are a “ smaller reporting company ” and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive to investors
8. 37Delaware law and provisions in our certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock