Wag! (PET)2025-03-24 20:47Financial Performance - The company incurred net losses of 13.3 million, and 179.3 million as of December 31, 2024[92]. - For the year ended December 31, 2024, the company reported a net loss of 7.0 million[129]. - The company has incurred significant losses since inception, and failure to manage risks and challenges may adversely affect its long-term benefits and financial condition[92]. - The company faces substantial doubt regarding its ability to continue as a going concern due to projected cash needs and history of net losses[129]. - The company has approximately 189.9 million in state net operating loss carryforwards as of December 31, 2024[151]. Customer Dependence - For the fiscal year ended December 31, 2024, three customers accounted for an aggregate of 38% of total revenues, indicating substantial dependence on a small number of customers[96]. - The company is substantially dependent on revenues from a small number of customers, and any decline in revenue from these customers could adversely affect its financial condition[96]. Market and Competition - The company faces significant competition from various players in the pet care services market, which may impact its ability to attract and retain users[91]. - Demand for online pet care services has grown rapidly since the platform's launch in 2015, but the market is still in early stages, and future growth is uncertain[94]. - The company has launched new fee or pricing strategies, which may not be successful in attracting and retaining Pet Parents and Pet Caregivers due to competitive pressures[102]. - The company plans to continue investing in new offerings and initiatives to differentiate itself from competitors, but these efforts may increase expenses and organizational complexity[103]. Operational Risks - The company has experienced significant fluctuations in operating results, which may continue to vary significantly and are not necessarily indicative of future performance[93]. - The company faces risks related to privacy, data protection, and security breaches, which could lead to significant legal, regulatory, and financial exposure[161]. - The company has a limited operating history since its launch in 2015, making it difficult to predict future operating results and growth[119]. - International expansion poses additional risks, including compliance with various laws and managing operations across different cultures and legal systems[123]. Financial Condition and Funding - The company needs to obtain additional financing and/or refinance existing indebtedness, raising doubts about its ability to continue as a going concern[89]. - The company completed a registered public offering of common stock in July 2024 for net proceeds of approximately 5.6 million and accounts receivable of 20.2 million[129]. Legal and Regulatory Risks - The company is subject to various legal and regulatory proceedings that could materially affect its reputation and financial condition[141]. - Regulatory scrutiny on gig economy companies may lead to new laws that could adversely affect the company's business model and operations[140]. - The company is currently subject to audits by tax authorities, which may result in additional tax liabilities[147]. - The company may face legal or regulatory proceedings related to intellectual property claims, which could result in substantial damages and affect its financial condition[183]. Cybersecurity and Data Privacy - The company has been subject to cybersecurity attacks in the past, which could harm its operations and reputation if such incidents occur again[89]. - The company maintains sensitive personal information and is vulnerable to data security breaches, which could adversely affect its business[157]. - The company may incur significant costs related to compliance with data privacy laws, which could affect its financial condition and operational results[165]. - Any negative publicity from data breaches or compliance failures could harm the company's reputation and user trust[166]. Internal Controls and Governance - The company has identified material weaknesses in its internal control over financial reporting as of December 31, 2024, which could lead to misstatements in financial statements[198]. - The company plans to remediate these material weaknesses by implementing technology, hiring personnel, and engaging external resources[199]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements, which may affect investor perception[202]. - The company has begun implementing remedial measures to address internal control weaknesses, but there is no assurance of success[199]. Stock and Market Risks - The stock price has fluctuated significantly, which may affect investor confidence and the ability to issue additional securities[208]. - The company's common stock has been below the minimum bid price requirement of 50 million minimum requirement for continued listing on Nasdaq for 30 consecutive business days[219]. - If compliance is not regained, the company may face delisting, which could negatively impact share price and liquidity[221].