PSQ Holdings (PSQH) risk factors, FY2024 10-K

Risks Related to Our Financial Performance and Operation Risks Related to Our Business

1. 01We have a very limited operating history, which makes it difficult to evaluate our business and prospects
2. 02To date, we have not generated significant revenues or achieved profitability, and may never generate significant revenues or become profitable
3. 03We may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all
4. 04Our past successful fundraising efforts do not guarantee long term liquidity, and we may be unable to obtain additional financing to fund the operation and growth of our business
5. 05Our growth to date may not be sustainable or indicative of future performance
6. 06In order to grow, we must attract, retain and engage our consumers, business owners, and advertisers on the Platform and maintain an active consumer base. Our consumers may not grow, and may decline which, in turn, may affect our continued ability to attract businesses and advertisers to the Platform
7. 07The market for the Platform and services may not be as large as we believe it to be
8. 08Our business depends on hiring, developing and retaining highly skilled and dedicated employees, and any failure to do so, including turnover in our senior management and other key personnel, could have a material adverse effect on our business
9. 09If we cannot maintain our company culture as we grow, our success and our business and competitive position may be harmed
10. 10Our success depends on establishing and maintaining a strong brand and base of business owners and consumers of the Platform, and any failure to establish and maintain a strong brand or consumer base would adversely affect our future growth prospects
11. 11Negative publicity or media coverage about us or persons or businesses associated with us could adversely affect our reputation and our business, results of operations and future growth prospects
12. 12Our five core values may not always align with the interests of our business or our stockholders
13. 13Any failure by us to attract and onboard new merchants in the Financial Technology segment or any change in or loss of relationships with our existing partners could adversely affect our business and results of operations
14. 14If engagement by consumers on the Platform fails to increase or declines, our revenue, business and operating results will be harmed
15. 15If we fail to generate and maintain a sufficiently high quality directory of businesses on the Platform, we may be unable to provide consumers with the information they are looking for, which could negatively impact our traffic and revenue
16. 16We are subject to payments-related risks
17. 17Uncertain global macro-economic and political conditions could materially and adversely affect our results of operations and financial condition
18. 18If we fail to maintain adequate operational and financial resources, we may be unable to execute our business plan or maintain high levels of service and consumer satisfaction
19. 19We may not be able to scale our systems, technology, or network infrastructure to ensure that the Platform is accessible
20. 20We currently rely upon third-party providers of cloud-based infrastructure to host our products. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations
21. 21Engagement by consumers and businesses on the Platform, and our ability to monetize the Platform depend upon effective operation within and compatibility with operating systems, networks, devices, web browsers and standards, including mobile operating systems, networks, and standards that we do not control
22. 22Real or perceived errors, failures or bugs in the Platform or our products could materially and adversely affect our operating results and growth prospects
23. 23The loss of Michael Seifert, Our Founder, Chief Executive Officer and Chairman of the Board, or other key personnel, or failure to attract and retain other highly qualified personnel, could harm our business
24. 24Changes in tax rates, changes in tax treatment of companies engaged in e-commerce, or the adoption of new tax legislation may adversely impact our financial results
25. 25Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations
26. 26We hold a portion of our cash and cash equivalents that we use to meet our working capital needs in deposit accounts that could be adversely affected if the financial institutions holding such funds fail
27. 27Natural disasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business schedule

Risks Related to Our Business Strategy and Industry

1. 28Our business faces significant competition, and if we are unable to compete effectively, our business and operating results would be adversely affected
2. 29We have limited experience with respect to determining the optimal prices and pricing structures for our products and services, which may impact our financial results
3. 30The expansion of our operations, including in areas not part of our current operations, subjects us to additional risks that can adversely affect our operating results
4. 31Changes to our existing platform and services could fail to attract engagement with the Platform or fail to generate revenue
5. 32If we fail to successfully capitalize on our new e-commerce functionality or new D2C product offerings, introduce new platform innovations or expand effectively into new markets, our revenue and our business may be harmed
6. 33We may not be able to expand into or to compete successfully in a highly competitive D2C market
7. 34The D2C market is subject to unique risks related to payment, which, if realized, could adversely impact our business, financial condition and results of operations
8. 35The D2C model may expose us to significant inventory risks
9. 36We may in the future make acquisitions, and such acquisitions could disrupt our operations, and may have an adverse effect on our operating results
10. 37Any acquisitions, partnerships or joint ventures that we enter into could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations
11. 38We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain our executive officers and other key management and technical personnel

Risks Related to Credova’s Industry

1. 39The consumer finance and buy now pay later (“BNPL”) industry has become subject to increased regulatory scrutiny, and Credova’s failure to manage its business to comply with new regulations would materially and adversely affect Credova’s business, results of operations and financial condition
2. 40Credova operates in a highly competitive industry, and Credova’s inability to compete successfully would materially and adversely affect Credova’s business, results of operations, financial condition, and prospects
3. 41Credova derives a significant portion of its revenue from its relationships with merchant partners and the transactions they process through its platform, and as more merchants are integrated into Credova’s network, there are more reasons for consumers to shop with it
4. 42If Credova is unable to attract new consumers and retain and grow its relationships with its existing consumers, Credova’s business, results of operations, financial condition, and future prospects would be materially and adversely affected
5. 43Credova’s revenue is impacted, to a significant extent, by the general economy, the creditworthiness of the U.S. consumer and the financial performance of Credova’s merchants
6. 44Negative publicity about Credova or its industry could adversely affect Credova’s business, results of operations, financial condition, and prospects

Risks Related to Credova’s Financing Program

1. 45Consumers may not view or treat their BNPL product loans as having the same significance as other obligations, and the loans facilitated through Credova’s platform are not secured, guaranteed, or insured and involve a high degree of financial risk
2. 46Credova’s results depend on prominent presentation, integration, and support of Credova’s platform by Credova’s merchants
3. 47If Credova’s merchants fail to fulfill their obligations to consumers or comply with applicable law, Credova may incur costs
4. 48Internet-based loan origination processes may give rise to greater risks than paper-based processes
5. 49Exposure to consumer bad debts and insolvency of merchants may adversely impact Credova’s financial success
6. 50Credova may incur costs from litigation relating to products offered by Credova’s merchants, which could adversely affect Credova’s reputation, revenue and profitability

Risks Related to Credova’s Technology and the Credova Platform

1. 51Unanticipated surges or increases in transaction volumes may adversely impact Credova’s financial performance
2. 52Real or perceived software errors, failures, bugs, defects, or outages could adversely affect Credova’s business, results of operations, financial condition, and prospects
3. 53Any significant disruption in, or errors in, service on Credova’s platform or relating to vendors could prevent it from processing transactions on its platform or posting payments
4. 54Fraudulent activities may result in Credova suffering losses, causing a materially adverse impact to Credova’s reputation and results of operations

Risks Related to Regulatory, Compliance and Legal

1. 55We are or may be subject to numerous risks relating to the need to comply with data and information privacy laws
2. 56Overall, because of the complexity of these laws, the changing obligations and the risk associated with our collection and use of data, we cannot guarantee that we are, or will be, in compliance with all applicable U.S., Canadian, or other international regulations as they are enforced now or as they evolve
3. 57Issues in the use of artificial intelligence, including machine learning and computer vision (together, “AI”), in our analytics platforms may result in reputational harm or liability
4. 58Compliance obligations imposed by new privacy laws, laws regulating social media platforms and online speech in the U.S., or industry practices may adversely affect our business
5. 59If we infringe on the intellectual property (“IP”) of others, we could be exposed to substantial losses and face restrictions on our operations
6. 60Inadequate technical and legal IP protections could prevent us from defending or securing our proprietary technology and IP
7. 61Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks, proprietary products, trade secrets and other IP, including our name and logos
8. 62If we fail to adequately protect our proprietary IP rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights
9. 63We could face employee claims
10. 64From time to time, we may be party to various claims and litigation proceedings

Risks Related to Credova’s Regulatory Environment

1. 65The consumer finance and BNPL industry is subject to various state and federal laws in the United States and federal law concerning consumer finance, and the costs to maintain compliance with such laws and regulations may be significant
2. 66Litigation, regulatory actions, and compliance issues could subject Credova to fines, penalties, judgments, remediation costs, and requirements resulting in increased expenses
3. 67Current and future government regulations may negatively impact the demand for Credova’s merchants’ products and Credova’s operations and financial results

Risks Related to Our Operations as a Public Company

1. 68The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified independent Board members
2. 69We may have increasing difficulty attracting and retaining qualified outside independent Board members
3. 70Stock trading volatility could impact our ability to recruit and retain employees
4. 71Members of our management team have limited experience managing a public company
5. 72We are an Emerging Growth Company, making comparisons to non-Emerging Growth companies difficult or impossible
6. 73We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures
7. 74A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented, or detected and corrected on a timely basis
8. 75As a public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company
9. 76We have insured certain products and launches to the extent that insurance was available at acceptable premiums. This insurance will not protect us against all losses due to specified exclusions, deductibles and material change limitations

Risks Related to Ownership of Our Class A Common Stock

1. 77Future sales of our Class A Common Stock could cause the market price for our Class A Common Stock to decline
2. 78An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities
3. 79Our issuance of additional capital stock in connection with financings, acquisitions, investments, the Stock Incentive Plan (“SIP”), the Employee Stock Purchase Plan (“ESPP”) or otherwise will dilute all other stockholders
4. 80There can be no assurance that we will continue to be able to comply with the continued listing standards of the NYSE
5. 81If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline
6. 82We do not intend to pay cash dividends for the foreseeable future
7. 83Because there are no current plans to pay cash dividends on our Class A Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Class A Common Stock at a price greater than what you paid for it
8. 84Our stockholders may experience dilution in the future
9. 85Our Warrants may have an adverse effect on the market price of our Class A Common Stock
10. 86Our Founder and Chief Executive Officer will continue to exercise significant control over our business and operations, including through his holdings of a special Class C Common Stock with majority voting rights
11. 87In accordance with ASC 815, Derivatives and Hedging (“ASC 815”), the Company’s warrants are classified as derivative liabilities and measured at fair value on its balance sheet, with any changes in fair value to be reported each period in earnings on our statement of operations
12. 88Future sales, or the perception of future sales, by us or our stockholders in the public market following could cause the market price for the Class A Common Stock to decline
13. 89Certain holders of our common stock are entitled to a contingent right to receive Earnout Shares that is conditioned on specific circumstances, of which the occurrence is uncertain, and the failure of any of such circumstances to occur could create potential negative effects such as an increased risk of litigation