Imax (IMAX)

Risks

• The success of the IMAX network is directly related to the availability and success of IMAX DMR films, and other films released to the IMAX network, as well as the continued purchase or lease of IMAX Theater Systems and other support by movie exhibitors, for which there can be no guarantee.
• The Company faces cyber-security and similar risks, which could result in the disclosure, theft, or loss of confidential or other proprietary information, including intellectual property, damage to the Company’s brand and reputation, legal exposure and financial losses. The Company must also comply with a variety of data privacy regulations and failure to comply with such regulations may affect the Company’s financial performance.
• The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales, and future growth prospects.
• The Company faces risks in connection with its significant presence in China and the continued expansion of its business there.
• Consolidation among commercial exhibitors and studios reduces the breadth of the Company’s customer base, and could result in a narrower market for the Company’s products and reduced negotiating leverage. A deterioration in the Company’s relationship with key partners could materially and adversely affect the Company’s business, financial condition or results of operation. In addition, an adverse economic impact on a significant customer’s business operations could have a corresponding material adverse effect on the Company.
• Failure to respond adequately or in a timely fashion to changes and advancements in digital technology could negatively affect the Company’s business.
• The Company may not be able to adequately protect its intellectual property, and competitors could misappropriate its technology or brand, which could weaken its competitive position.
• The Company may be subject to claims of infringement of third-party intellectual property rights that are costly to defend, result in the diversion of management’s time and efforts, require the payment of damages, limit the Company’s ability to use particular technologies in the future or prevent the Company from marketing its existing or future products and services.
• The Company’s operating results and cash flow can vary substantially from period to period and could increase the volatility of its share price.
• The Company’s theater system revenue can vary significantly from its cash flows under IMAX Theater System sales or lease agreements.
• The Company’s inability to enter into renewals of new sales and lease agreements on favorable terms or at all would adversely affect its cash flows and operating results.
• The Company’s revenues from existing customers are derived in part from financial reporting provided by its customers, which may be inaccurate or incomplete, resulting in lost or delayed revenues.
• There is collection risk associated with payments to be received over the terms of the Company’s theater system agreements.
• The Company may be subject to impairment losses on its film assets if such assets do not meet management’s estimates of total revenues.
• The Company may be subject to impairment losses on its inventories if they become obsolete.
• Because the Company is incorporated in Canada, it may be difficult for plaintiffs to enforce against the Company liabilities based solely upon United States federal securities laws.
• The credit agreement governing the Company’s senior secured credit facility contains significant restrictions that limit its operating and financial flexibility.
• The Company may be unable to raise the funds necessary to repurchase the Convertible Notes for cash following a fundamental change, or to pay the cash amounts due upon conversion, and the Company’s other indebtedness may limit its ability to repurchase the Convertible Notes or pay cash upon their conversion.
• The loss of one or more of the Company’s key personnel, or its failure to attract and retain its employee population, could adversely affect its business.
• Regulatory and market responses to climate change concerns may negatively impact our business and increase our operating costs.
• The Company’s business and financial results could be adversely affected by weather conditions and natural disasters.