Financial Condition and Capital Requirements - The company has existing debt and may require additional capital in the future, which might not be available on acceptable terms, potentially harming its financial condition [104]. - The company must maintain a minimum liquidity balance of 6.6 million under a Lease Termination Surrender Agreement, with payments scheduled from August 2024 to March 2025 [118]. - As of December 31, 2024, the aggregate principal amount of the Note outstanding is 1.1 million impact on the carrying value of debt [269]. Internal Control and Financial Reporting - The company restated its Condensed Consolidated Financial Statements for the quarterly periods ended March 31, 2022, and June 30, 2022, due to material weaknesses in internal control over financial reporting, which may have negatively impacted investor confidence [115]. - The company has identified material weaknesses in its internal control over financial reporting, which could result in challenges related to the accuracy of financial data used for decision-making [114]. Tax Liabilities and Compliance - The company is subject to various tax laws and regulations, which could lead to additional tax liabilities and affect its financial condition [123]. - The company currently collects and remits applicable sales taxes in jurisdictions where it has determined a taxable presence, but there is uncertainty regarding future tax obligations which could lead to substantial liabilities [128]. - Ongoing costs associated with compliance with indirect tax requirements in various markets could materially adversely affect the company's financial condition and results of operations [129]. Intellectual Property Risks - The company faces risks related to intellectual property, including potential litigation that could divert resources and adversely affect its business [130]. - The company has applied for patent rights for certain technology aspects, but successful claims against its intellectual property could result in significant monetary liabilities [132]. - The company utilizes third-party open-source software, which poses risks if the terms of licenses are not complied with, potentially leading to increased costs or operational restrictions [133]. Cybersecurity and Data Protection - Cybersecurity risks are heightened due to increasing sophistication of cyberattacks, particularly as the company serves high-income individuals, making it an attractive target [137]. - The company has experienced security incidents primarily through phishing attempts, which were addressed, but any future incidents could harm its reputation and financial results [139]. - Compliance with evolving privacy and data protection laws, such as the GDPR and CCPA, is critical, as noncompliance could result in significant penalties and operational disruptions [142][144]. - Enhanced security measures are being implemented, but the company acknowledges that these may not fully eliminate risks associated with cybersecurity incidents [150]. Market and Currency Risks - Operating expenditures denominated in foreign currencies for the year ended December 31, 2024, were approximately 2.5 million [270]. - The company is exposed to equity risk related to stock price fluctuations, which can affect stock-based compensation expenses [271]. Related Party Transactions - The company has entered into related party transactions that may expose it to conflicts of interest and operational inefficiencies [121]. Nasdaq Delisting Risks - The company may face significant negative consequences if its securities are delisted from Nasdaq, including reduced trading activity and limited analyst coverage [113].
Inspirato rporated(ISPO) - 2024 Q4 - Annual Report