Latch (LTCH) risk factors, FY2022 10-K

Risks Related to the Investigation, Restatement, Internal Controls and Related Matters

1. 01The Financial Statement Review and the audits of the years ended 2020, 2021 and 2022 have been time-consuming and expensive, and may result in additional expense
2. 02We are subject to an ongoing SEC investigation and may be named in future governmental or other regulatory investigations and proceedings, each of which could have a material adverse impact on our business, financial condition, results of operation, cash flows and reputation
3. 03In the future, if eligible to do so, we could elect to deregister our securities under the Exchange Act. Deregistration would result in less disclosure about us and may negatively affect the liquidity and trading prices of our securities
4. 04Matters relating to or arising from the Restatement and the Investigation, including adverse publicity and potential concerns from our customers, have had, and could continue to have, an adverse effect on our business and financial condition

Risks Related to our Business and Industry

1. 05We are an early-stage company with a history of losses. We have not been profitable historically and may not achieve or maintain profitability in the future
2. 06Our operating results and financial condition may fluctuate from period to period
3. 07Our growth and the quickly changing markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our common stock
4. 08Our restructuring and associated workforce reductions in May and August 2022 and July 2023 resulted in the loss of institutional knowledge and could disrupt our business
5. 09We engage some individuals classified as independent contractors, not employees, and if U.S. or international regulatory authorities mandate that they be classified as employees, our business would be adversely impacted
6. 10Any failure to offer high-quality support of our HelloTech platform may harm our relationships with merchants, consumers, and technicians and could adversely affect our business, financial condition and results of operations
7. 11The success of our HelloTech platform depends, in substantial part, on our ability to establish and maintain relationships with quality and trustworthy service professionals
8. 12Our future operating results will rely in part upon the successful execution of our strategic partnerships, which may not be successful. If these companies choose not to partner with us, our business and results of operations may be harmed
9. 13If our security controls are breached, or unauthorized or inadvertent access to user information or other data or to control or view systems are otherwise obtained, our products, software or services may be perceived as insecure, our business may be harmed and we may incur significant liabilities
10. 14Direct selling may subject us to additional risks
11. 15We may be unable to attract new customers and maintain customer satisfaction with current customers, which could have an adverse effect on our business and rate of growth
12. 16We rely on certain third-party providers of licensed software and services that are important to the operation of our business
13. 17We rely on our channel partner network to sell and deploy our products, and the inability of our channel partners to effectively perform to our standards, or the loss of key channel partners, could adversely affect our operating results
14. 18Potential customer turnover, or costs we incur to retain and upsell our customers, could materially and adversely affect our financial performance
15. 19If we are unable to develop new solutions, adapt to technological change, sell our software, services and products into new markets or further penetrate our existing markets, our revenue may not grow as expected
16. 20We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations
17. 21New lines of business or new products and services may subject us to additional risks
18. 22Claims from riders, drivers, residents, guests or third parties that allege harm, whether or not our products or services are in use, could adversely affect our business, brand, financial condition and results of operations
19. 23Changes in effective tax rates or tax laws, or adverse outcomes resulting from examination of our income or other tax returns, could adversely affect our results of operations and financial condition
20. 24Any changes in our effective tax rate could adversely affect our results of operations
21. 25We may be unable to use some or all of our net operating loss carryforwards, which could materially and adversely affect our results of operations
22. 26A new 1% U.S. federal excise tax could be imposed on us in connection with any redemptions we undertake
23. 27We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our business, results of operations and financial condition may be adversely affected
24. 28If we are unable to acquire intellectual property or adequately protect intellectual property, we could be competitively disadvantaged
25. 29existing customers, lower our profits and have a material adverse effect on our business, financial condition, cash flows or results of operations
26. 30Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business
27. 31Some of our products and services contain open source software, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could harm our business
28. 32Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation
29. 33Our new software, services and products may not be successful
30. 34If we fail to continue to develop our brands, our business may suffer
31. 35Our applications run on mobile operating systems, networks and devices that we do not control
32. 36We must successfully upgrade and maintain our information technology systems
33. 37Potential problems with our information systems, third-party systems and infrastructure upon which we rely could interfere with our business and operations
34. 38We collect, store, process and use personal information, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business
35. 39We rely on a limited number of suppliers, manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business
36. 40We have limited control over our suppliers, manufacturers and logistics partners, which may subject us to significant risks, including the potential inability to produce or obtain quality products and services on a timely basis or in sufficient quantity
37. 41Increases in component costs, long lead times, supply shortages and changes, labor shortages and construction delays could disrupt our supply chain and operations and have an adverse effect on our business, financial condition and operating results
38. 42Regulations related to “conflict minerals” require us to incur additional expenses and could limit the supply and increase the cost of certain metals used in manufacturing our products
39. 43Our operating results could be adversely affected if we are unable to accurately forecast customer demand for our products and services and adequately manage our inventory
40. 44From time to time, we may be subject to legal proceedings, regulatory disputes and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention and materially harm our business, financial condition and operating results
41. 45The impact of pandemics or other global health concerns could negatively impact our operations, supply chain and customer base
42. 46Our smart building technology is subject to varying state and local regulations, which may be updated from time to time
43. 47We may fail to comply with import and export, bribery and money laundering laws, regulations and controls
44. 48If we are unable to sustain pricing levels for our software, services and products, our business could be adversely affected
45. 49Insurance policies may not cover all of our operating risks, and a casualty loss beyond the limits of our coverage could negatively impact our business
46. 50Downturns in general economic and market conditions and reductions in spending may reduce demand for our software, services and products, which could harm our revenue, results of operations and cash flows
47. 51We are dependent upon relationships with foreign-based manufacturers and service providers, which exposes us to complex regulatory regimes, logistical challenges and business risk
48. 52If we were unable to import products from China and Taiwan at all or in a cost-effective manner, we could suffer irreparable harm to our business and be required to significantly curtail our operations, file for bankruptcy or cease operations
49. 53We may face exposure to foreign currency exchange rate fluctuations
50. 54Our private placement warrants are accounted for as liabilities, and the changes in value of our warrants could have a material effect on our financial results

Risks Related to Our Indebtedness

1. 55We may not be able to generate sufficient cash to service our indebtedness, and we may be forced to take other actions to satisfy our obligations under applicable debt instruments, which may not be successful
2. 56The Loan Agreement does, and any future agreements related to indebtedness may, restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions
3. 57A breach of any of these covenants could result in an event of default under the Loan Agreement

Risks Related to Ownership of Our Securities

1. 58Our common stock price may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment
2. 59We do not intend to pay dividends on our common stock for the foreseeable future
3. 60Our issuance of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price
4. 61Future sales, or the perception of future sales, of our common stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline
5. 62are current in our SEC filings, in which case shares registered under such registration statement will again be available for sale in the open market, subject to the limitations noted elsewhere in this Form 10-K
6. 63You may only be able to exercise the public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of common stock from such exercise than if you were to exercise such warrants for cash
7. 64We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless
8. 65Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock
9. 66Climate change and related environmental issues may have an adverse effect on our business, financial condition and operating results
10. 67Stockholder and customer emphasis on environmental, social, and governance responsibility may impose additional costs on us or expose us to new risks
11. 68Our business is subject to the risk of earthquakes, fires, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism
12. 69We incur increased costs as a result of being a public company. Failure to comply with laws, regulations and standards relating to our public company status could materially and adversely affect our business and results of operations
13. 70If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline