Smartbird (BIRD) risk factors, FY2024 10-K

Risks Related to Our Business, Brand, Products, and Industry

1. 01We may be unable to successfully execute on our strategic transformation plan or our long-term growth strategy, including efforts to maintain or grow our current revenue and profit levels, reduce our costs, or accurately forecast demand and supply for our products
2. 02If we fail to attract new customers, retain existing customers, or maintain or increase sales to customers, our business, financial condition, results of operations, and growth prospects will be harmed
3. 03drive beneficial network effects with our suppliers, our net revenue may decrease, and our business, financial condition, and results of operations may be materially adversely affected
4. 04Our operating results may fluctuate significantly and our past operating results may not be a good indication of future performance
5. 05We may require additional capital to support business growth, and this capital might be unavailable or might be available only by diluting existing stockholders
6. 06Our Credit Agreement contains restrictions that limit our flexibility in operating our business
7. 07Our efforts to transition our international go-to-market strategy from a direct to a distributor model may not be successful and may negatively impact our operating results and brand value
8. 08experience standards, or sustainability and ESG expectations could impair the value of our brand. Failure to successfully execute the distributor arrangements, or a failure to protect the value of our brands, could have a material adverse effect on our results of operations
9. 09Economic uncertainty in our key markets may affect consumer purchases of discretionary items, which has affected and may continue to adversely affect demand for our products
10. 10We have incurred significant net losses since inception and anticipate that we will continue to incur losses for the foreseeable future
11. 11We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our net revenue and profitability
12. 12We rely on technical and materials innovation to offer high-quality products
13. 13Our focus on using sustainable high-quality materials and environmentally friendly manufacturing processes and supply chain practices may increase our cost of revenue and hinder our revenue growth
14. 14Climate change and increased focus by governments, organizations, customers, and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our reputation, business, and financial results
15. 15If we are unable to anticipate product trends and consumer preferences and successfully develop and introduce new products, we may not be able to maintain or increase our revenue and profits
16. 16We utilize a range of marketing, advertising, and other initiatives to increase existing customers’ spend and to acquire new customers; if the costs of advertising or marketing increase, or if our initiatives fail to achieve their desired impact, we may be unable to grow the business profitably
17. 17Our business is subject to the risk of manufacturer concentration
18. 18We have a significant amount of long-lived assets, which are assessed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In addition, we may never realize the full value of our long-lived assets, causing us to record material impairment charges
19. 19Failure to accurately forecast consumer demand could lead to excess inventories or inventory shortages, which could result in decreased operating margins, reduced cash flows, and harm to our business
20. 20As a company that operates retail stores, we are subject to various risks, including commercial real estate and labor and employment risks
21. 21We may be unable to successfully open new store locations in existing or new geographies in a timely manner, if at all, which could harm our results of operations
22. 22Beginning in 2022 we have entered into broad-based agreements with third-party retailers, and we have limited operating experience executing this channel distribution strategy
23. 23Our financial results may be adversely affected if substantial investments in businesses and operations, including in our retail stores, fail to produce expected returns
24. 24We are subject to risks related to our ESG activities and disclosures, and our reputation and brand could be harmed if we fail to meet our public sustainability targets and goals
25. 25We are subject to risks related to our commitment to certain ESG criteria, which we call the Sustainability Principles and Objectives Framework, or the SPO Framework
26. 26Our future success is substantially dependent on highly skilled personnel and if we are unable to attract and retain talent, we may not be able to grow effectively
27. 27If we cannot maintain our culture and values as we grow, our business could be harmed
28. 28Merchandise returns could harm our business
29. 29Counterfeit or “knock-off” products, as well as products that are “inspired-by-Allbirds,” may siphon off demand we have created for sustainable footwear and apparel, and may result in customer confusion, harm to our brand, a loss of our market share, and/or a decrease in our results of operations
30. 30Certain of our key operating metrics are subject to inherent challenges in measurement, and any real or perceived inaccuracies in such metrics or the underlying data may cause a loss of investor confidence in such metrics, and the market price of our Class A common stock may decline
31. 31Our business is affected by seasonality

Risks Related to Our Supply Chain

1. 32Our reliance on suppliers and manufacturers to provide materials for and to produce our products could cause problems in our supply chain
2. 33suppliers and manufacturers may not adequately meet our production requirements, and we compete with other companies for raw materials and production
3. 34Failure of our contractors or our licensees’ contractors to comply with our supplier code of conduct, contractual obligations, local laws, and other standards could harm our business
4. 35Failure of our suppliers or manufacturers to consistently provide high-quality materials and products could adversely affect our brand and reputation and cause our business and results of operations to suffer
5. 36The fluctuating cost of raw materials could increase our cost of revenue and cause our results of operations and financial condition to suffer
6. 37The operations of our suppliers, most of which are located outside of the United States, are subject to additional risks that are beyond our control and that could harm our business, financial condition, and results of operations
7. 38Shipping and delivery are critical parts of our business and any changes in, or disruptions to, our shipping and delivery arrangements could adversely affect our business, financial condition, and results of operations
8. 39If we do not successfully optimize, operate, and manage our global network of third-party owned and operated logistics and distribution centers, our business, financial condition, and results of operations could be harmed

Risks Related to Intellectual Property, Information Technology, and Data Security and Privacy

1. 40Our failure or inability to protect or enforce our intellectual property rights could diminish the value of our brand and weaken our competitive position
2. 41Our trademarks and other proprietary rights could potentially conflict with the rights of others, and we may be prevented from selling some of our products
3. 42The inability to acquire, use, or maintain our marks and domain names for our websites could substantially harm our business, financial condition, and results of operations
4. 43Any material disruption of our information technology systems or unexpected network interruption could disrupt our business and reduce our sales
5. 44If the technology-based systems that give our customers the ability to shop with us online do not function effectively, our results of operations, as well as our ability to grow our digital business globally, could be materially adversely affected
6. 45We are subject to risks related to online payment methods
7. 46If sensitive information about our customers is actually or alleged to have been disclosed, or if we or our third-party providers are subject to real or perceived cyberattacks or misuse, our customers may curtail use of our website or mobile app, we may be exposed to liability, and our reputation could suffer
8. 47Use of social media, emails, push notifications, and text messages in ways that do not comply with applicable laws and regulations, lead to the loss or infringement of intellectual property, or result in unintended disclosure may harm our reputation or subject us to fines or other penalties

Risks Related to Other Legal, Regulatory, and Taxation Matters

1. 48Government regulation of the internet and eCommerce is evolving, and unfavorable changes or failure by us to comply with these regulations, whether or not inadvertent, could substantially harm our business, financial condition, and results of operations
2. 49We have and may continue to face exposure to foreign currency exchange rate fluctuations
3. 50Adverse changes in, or withdrawal from, trade agreements or political relationships between the United States and countries where we sell or source our products, could negatively impact our results of operations or cash flows
4. 51Any failure to comply with trade, anti-corruption, and other regulations could lead to investigations or actions by government regulators and negative publicity
5. 52Uncertainties in the interpretation and application of existing, new and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate
6. 53including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows
7. 54Our ability to use our net operating loss carryforwards may be limited
8. 55We are currently and may again in the future be subject to claims and litigation that could result in unexpected expenses and could ultimately be resolved against us

Risks Related to Our Status as a Public Benefit Corporation and Certified B Corporation

1. 56Our status as a public benefit corporation may not result in the benefits that we anticipate
2. 57If our publicly reported certified B Corp score declines, or if we lose our certified B Corp status, our reputation could be harmed and our business could suffer
3. 58Our directors have a fiduciary duty to consider not only our stockholders’ interests, but also our specific public benefit and the interests of other stakeholders affected by our conduct. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholders
4. 59As a public benefit corporation, our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance
5. 60As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations

Risks Related to Ownership of Our Class A Common Stock

1. 61The market price of our Class A common stock has declined and may decline further regardless of our operating performance, resulting in substantial losses for investors purchasing shares of our Class A common stock
2. 62Our Class A common stock is currently listed on the Nasdaq Global Select Market under the symbol “BIRD.” To maintain the listing of our Class A common stock on the Nasdaq Global Select Market, we are required to meet certain listing requirements, including, a minimum closing bid price of $1.00 per share
3. 63The dual class structure of our common stock may adversely affect the trading market for our Class A common stock
4. 64Sales, directly or indirectly, of a substantial amount of our Class A common stock in the public markets by our existing security holders may cause the price of our Class A common stock to decline
5. 65We do not intend to pay dividends for the foreseeable future
6. 66Additional stock issuances could result in significant dilution to our stockholders
7. 67Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all
8. 68The requirements of being a public company may increase our costs, strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
9. 69We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors
10. 70If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and trading volume could decline
11. 71We may incur losses from fraud or theft
12. 72If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
13. 73Extreme weather conditions, natural disasters, public health crises, political crises and instability, and other catastrophic events, including those caused or exacerbated by climate change, could negatively impact our results of operations and financial condition