Revenue Recognition and Stability - The company recognizes revenue from subscription agreements ratably over typically one-year terms, leading to potential delays in reflecting downturns in operating results [87]. - A significant portion of the company's revenue is derived from government contracts, which are subject to early termination and audits, posing risks to revenue stability [88]. - The company does not expect to pay any dividends on its common stock for the foreseeable future, as it plans to retain earnings to maintain and expand operations [109]. Compliance and Legal Risks - Compliance with federal securities laws results in higher expenses compared to privately held companies, impacting resource allocation for growth initiatives [90]. - The company may incur substantial expenditures due to indemnification obligations for directors and officers, which could discourage legal actions against them [91]. - The company faces risks from potential litigation related to intellectual property claims, which could increase costs and harm future revenue generation [97]. Market and Stock Performance - The issuance of additional securities may dilute existing shareholders' ownership and affect the market value of common stock [98]. - The market price of the company's common stock may fluctuate significantly, leading to potential losses for shareholders [106]. - FINRA sales practice requirements may limit the ability of shareholders to buy and sell the company's stock, adversely affecting market conditions [107]. - The company must comply with NYSE American listing requirements, and failure to do so could result in delisting and reduced trading activity [102]. Operational Risks - Security breaches could lead to loss of confidential information and significant liabilities, adversely affecting the company's reputation and business [92]. - The company faces risks from potential disruptions at third-party data centers, which could harm business operations and customer satisfaction [112]. - Global economic uncertainty, including inflation and higher interest rates, may adversely impact the company's operating results and financing [110]. - The company’s IntelliCloud Payables Automation Solution is targeted at industries like home-building and construction, which may be negatively affected by new tariffs [110]. Human Resources and Competition - The company relies heavily on attracting and retaining top employees, with competition for skilled personnel being intense [115]. - The company is dependent on its ability to protect proprietary technology, with software piracy posing a persistent threat to revenue [116].
Intellinetics(INLX) - 2024 Q4 - Annual Report