Soundthinking (SSTI) risk factors, FY2024 10-K

Risks Related to Our Growth

1. 01If our business does not grow as we expect, or if we fail to manage our growth effectively, our operating results and business prospects would suffer
2. 02maintain our competitive and technology leadership position; and
3. 03Our quarterly results of operations may fluctuate significantly due to a wide range of factors, which makes our future results difficult to predict
4. 04general economic factors, such as the imposition of tariffs, inflation, rising interest rates, past and potential future disruptions in access to bank deposits and lending commitments due to bank failures, and political conditions, both domestically and internationally
5. 05Because we generally recognize our subscription revenues ratably over the term of our contract with a customer, fluctuations in sales will not be fully reflected in our operating results until future periods
6. 06in any period, as revenues from new customers generally are recognized over the applicable agreement term. Our subscription-based approach may result in uneven recognition of revenues
7. 07We have not been profitable in the past and may not achieve or maintain profitability in the future
8. 08general and administrative expenses
9. 09We may require additional capital to fund our business and support our growth, and our inability to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition and prospects

Risks Related to Our Public Safety Business

1. 10Our success depends on maintaining and increasing our sales, which depends on factors we cannot control, including the availability of funding to our customers
2. 11For example, our contract with the City of Chicago ended in November 2024 and we were not able to renew or extend our contract. The City of Chicago was one of our largest customers and represented 10% of our total revenues for the year ended December 31, 2024
3. 12Contracting with government entities can be complex, expensive, and time-consuming
4. 13If we are unable to further penetrate the public safety market, our revenues may not grow
5. 14Our sales cycle can be lengthy, time-consuming and costly, and our inability to successfully complete sales could harm our business
6. 15Changes in the availability of federal funding to support local law enforcement efforts could impact our business
7. 16The nature of our business may result in undesirable press coverage or other negative publicity, which could adversely affect our growth prospects and results of operations
8. 17Economic uncertainties or downturns, or political changes, could limit the availability of funds available to our existing and potential customers, which could materially and adversely affect our business
9. 18New competitors may enter the market for our public safety solutions
10. 19Concerns regarding privacy and government-sponsored surveillance may deter customers from purchasing our solutions
11. 20Ongoing social unrest may have a material adverse effect on our business, the future magnitude or duration of which we cannot predict with accuracy

Strategic and Operational Risks

1. 21If we are unable to sell our solutions into new markets, or cross-sell our other solutions to our existing customers, our revenues may not grow
2. 22The failure of our solutions to meet our customers’ expectations or of our solutions generally could, in some cases, result in injury or loss of life, and could harm our reputation, which may have a material adverse effect on our business, operating results and financial condition
3. 23damage to or degradation of our sensors or sensor network and cameras by third parties
4. 24Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and results of operations
5. 25We rely on wireless carriers to provide access to wireless networks through which our acoustic sensors communicate with our cloud-based backend and with which we provide our notification services to customers, and any interruption of such access would impair our business
6. 26We recognize revenue on a subscription basis as our solutions are provided to our customers over time. If our services are disrupted due to natural disasters, infectious disease outbreaks, power outages or other events that we cannot control, we may not be able to continue providing our solutions as expected
7. 27The incurrence of debt may impact our financial position and subject us to additional financial and operating restrictions
8. 28limiting our ability to obtain additional financing for working capital to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity
9. 29The competitive landscape for our security solutions is evolving
10. 30Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our solutions
11. 31being unable to generate sufficient revenues and profits from acquisitions to offset the associated acquisition costs
12. 32The nature of our business exposes us to inherent liability risks
13. 33Real or perceived errors, failures, or bugs in our software could adversely affect our operating results and growth prospects
14. 34integrated entities, may discover security issues that were not found during due diligence of such entities, and it may be difficult to integrate companies and their products into our information technology environment and security program
15. 35We rely on the cooperation of customers and third parties to permit us to install our ShotSpotter sensors and SafePointe bollards on their facilities, and failure to obtain these rights could increase our costs or limit the effectiveness of our ShotSpotter and SafePointe solutions
16. 36If we lose our ability to share a significant agency’s dataset in our CrimeTracer platform, our ability to sell that product may be adversely affected
17. 37If we fail to offer high-quality customer support, our business and reputation may suffer
18. 38We rely on a limited number of suppliers and contract manufacturers, and our proprietary ShotSpotter sensors are manufactured by a single contract manufacturer
19. 39Our solutions use third-party software and services that may be difficult to replace or cause errors or failures of our solutions that could lead to a loss of customers or harm to our reputation and our operating results
20. 40We use artificial intelligence in our products and services which may result in operational challenges, legal liability, reputational concerns and competitive risks
21. 41If we do not or cannot maintain the compatibility of our platform with applications that our customers use, our business could suffer
22. 42We are in the process of expanding our international operations, which exposes us to significant risks
23. 43political or social unrest, global pandemics, or economic instability in a specific country or region in which we operate, which could have an adverse impact on our operations in that location
24. 44We are dependent on the continued services and performance of our senior management and other key personnel, the loss of any of whom could adversely affect our business
25. 45If we are unable to attract, integrate and retain additional qualified personnel, including top technical talent, our business could be adversely affected

Legal and Regulatory Risks

1. 46and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws)
2. 47We may be subject to additional obligations to collect and remit certain taxes, and we may be subject to tax liability for past activities, which could harm our business
3. 48Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
4. 49We may be subject to litigation for a variety of claims or to other legal requests, which could adversely affect our results of operations, harm our reputation or otherwise negatively impact our business
5. 50Changes in financial accounting standards may cause adverse and unexpected revenue fluctuations and impact our reported results of operations
6. 51Failure to protect our intellectual property rights could adversely affect our business
7. 52We may be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies
8. 53Our use of generative artificial intelligence tools may pose particular risks to our proprietary software and systems and subject us to legal liability
9. 54Our use of open source software could subject us to possible litigation

Risks Related to the Ownership of Our Common Stock

1. 55Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors
2. 56negative publicity, including false information, regarding our solutions
3. 57Substantial future sales of shares of our common stock could cause the market price of our common stock to decline
4. 58Stock repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves, and we cannot guarantee that our stock repurchase program will enhance long-term stockholder value
5. 59If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline
6. 60We incur substantial costs as a result of being a public company
7. 61we may need to hire more corporate employees in the future or engage outside consultants, which would increase our costs and expenses
8. 62We do not intend to pay dividends for the foreseeable future
9. 63Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock
10. 64establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings
11. 65Our certificate of incorporation contains exclusive forum provisions that could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us