Rimini Street (RMNI) risk factors, FY2024 10-K

Risks Related to Our Business, Operations and Industry

1. 01disproportionately affect the demand for our products and services and could negatively impact our results of operations

Risks Related to Litigation

1. 02As a result of the Stipulation and the subsequent payment by us of the amount described above, all issues relating to the Rimini I Injunction Proceedings have been resolved. At this time, we believe that we are in substantial compliance with the Rimini I Injunction
2. 03In October 2022, Oracle withdrew all of its monetary damages claims against us and our President, Chief Executive Officer and Chairman of the Board, Mr. Ravin, in Rimini II and moved to proceed with a bench trial instead of a jury trial for its claims for equitable relief
3. 04In July 2023, we filed a notice of appeal in the District Court, commencing an appeal of the District Court’s July 2023 Rimini II judgment and Injunction and filed an emergency motion with the District Court to stay enforcement of the Rimini II Injunction pending our appeal of the Rimini II judgment and Injunction
4. 05A three-judge panel of the Ninth Circuit heard oral argument on our appeal of the District Court’s July 2023 Rimini II judgment and Injunction on June 5, 2024, and the Ninth Circuit issued its decision on our appeal on December 16, 2024
5. 06On December 23, 2024, as required by the District Court, we filed a notice with the District Court informing it that the Ninth Circuit had denied our motion to stay the Rimini II Injunction because the Ninth Circuit’s December 16, 2024 decision had rendered Rimini’s motion moot
6. 07Further, no assurance is or can be given that the District Court will rule in a manner that is favorable to us on any issues relating to the Rimini II litigation that are reconsidered on remand. We reserve all rights, including appellate rights, with respect to these issues
7. 08on March 11, 2025, and Oracle’s answering brief is due April 10, 2025. Our optional reply brief is due 21 days after Oracle files its answering brief
8. 09The Oracle software products that are part of our ongoing Rimini I Injunction compliance and that are the subject of the Rimini II litigation with Oracle represent a significant portion of our current revenue
9. 10Our ongoing litigation with Oracle presents challenges for maintaining and growing our business
10. 11Additionally, the existence of this ongoing litigation could negatively impact the value of our equity securities, and could negatively impact our ability to raise additional equity or debt financing, as well as result in other legal claims against us
11. 12Oracle has a history of litigation against companies offering alternative support programs for Oracle products, and Oracle could pursue additional litigation with us
12. 13Other Risks Related to Our Business, Operations and Industry
13. 14The market for independent software support services is relatively undeveloped and may not grow
14. 15We have had a history of losses and may not achieve revenue growth or profitability in the future. Further, if we are unable to attract new clients or retain and/or sell additional products or services to our existing clients, our revenue growth could be adversely affected
15. 16We may not successfully accomplish all or any of these objectives
16. 17If our retention rates continue to decrease, or we do not accurately predict retention rates, our future revenue and results of operations may be harmed
17. 18Because we recognize revenue from subscriptions over the term of the relevant contract, downturns or upturns in sales are not immediately reflected in full in our results of operations
18. 19Due to the variability of timing in our sales cycle, if we fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our results of operations and liquidity could be adversely affected
19. 20Our future liquidity and results of operations may be adversely affected by the timing of new orders, the level of client renewals and cash receipts from clients
20. 21Our failure to generate significant capital through our operations or raise additional capital necessary to fund and expand our operations, invest in new services and products, and service our debt could reduce our ability to compete and could harm our business
21. 22Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others
22. 23Interruptions to or degraded performance of our service could result in client dissatisfaction, damage to our reputation, loss of clients, limited growth and reduction in revenue
23. 24We also deliver tax, legal and regulatory updates to our clients. If there are inaccuracies in these updates, or if we are not able to deliver them on a timely basis to our clients, our reputation may be damaged, and we could be found liable for damages to our clients and potentially lose clients
24. 25We may experience fluctuations in our results of operations due to the sales cycles for our products and services, which makes our future results difficult to predict and could cause our results of operations to fall below expectations
25. 26We may need to change our pricing models to compete successfully
26. 27We may not be able to scale our business systems quickly enough to meet our clients’ changing needs or decrease our costs adequately in response to changing client demand, and if we are not able to manage these changes efficiently, our results of operations could be harmed
27. 28Because our long-term strategy involves further expansion of our sales to clients outside the United States, our business will be susceptible to risks associated with global operations, including currency exchange rate fluctuations
28. 29Consolidation in our target sales markets is continuing at a rapid pace, which could harm our business in the event that our clients are acquired and their agreements are terminated, or not renewed or extended
29. 30If there is a widespread shift by clients or potential clients to enterprise software vendors, products and releases for which we do not provide software products or services, our business, financial condition and results of operations would be adversely impacted
30. 31We are subject to governmental and other legal obligations related to privacy and security, and our actual or perceived failure to comply with such obligations could harm our business
31. 32If our products and services fail due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose clients, become subject to service performance or warranty claims or incur significant costs
32. 33If we are not able to maintain an effective system of internal control over financial reporting, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our Common Stock price
33. 34If we fail to enhance and protect our brand, our ability to expand our client base will be impaired and our financial condition may suffer
34. 35If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights
35. 36We may be subject to additional obligations to collect and remit sales tax, VAT and other taxes, and we may be subject to tax liability, interest and/or penalties for past sales, which could adversely harm our business
36. 37penalties for past sales, discourage clients from purchasing our products and services or otherwise harm our business and results of operations
37. 38We have United States federal and state net operating loss carryforwards due to prior period losses, which could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability
38. 39We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions
39. 40Our reputation and/or business could be negatively impacted by environmental, social and governance (ESG) matters and/or our reporting of such matters and expose us to additional costs and risks

Risks Related to our Indebtedness and Securities

1. 41Our level of indebtedness and any future indebtedness we may incur may limit our operational and financing flexibility and negatively impact our business
2. 42The terms of our 2024 Credit Facility impose operating and financial restrictions on us
3. 43Our variable rate indebtedness subjects us to interest rate risk, which, along with the previous phase-out of LIBOR and transition to SOFR, could cause our indebtedness service obligations to increase significantly
4. 44The price of our Common Stock may be volatile, any issuance of Common Stock upon the exercise of remaining warrants will dilute existing stockholders, and such issuances and/or any sales of Common Stock by large stockholders may depress the market price of our Common Stock
5. 45Certain of our common stockholders can exercise significant control, which could limit our stockholders’ ability to influence the outcome of key transactions, including a change of control
6. 46We do not currently intend to pay dividends on our Common Stock and, consequently, the ability to achieve a return on investment in our Common Stock will depend on appreciation in the price of our Common Stock
7. 47Our stock repurchase program could affect the price of our Common Stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our Common Stock

Risks Relating to our Corporate Governance

1. 48The DGCL and our certificate of incorporation, bylaws and corporate governance policies contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
2. 49In addition, as a Delaware corporation, we are subject to provisions of Delaware law, including Section 203 of the DGCL, which may prohibit certain stockholders holding 15% or more of our outstanding capital stock from engaging in certain business combinations with us for a specified period of time

General Risks

1. 50Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value and adversely affect our financial condition and results of operations
2. 51Catastrophic events may disrupt our business
3. 52Failure to comply with laws and regulations applicable to our operations could harm our business
4. 53Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Common Stock