RYTHM (RYM) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have a relatively short operating history, which makes it difficult to evaluate our business and future prospects
2. 02We may require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce, or terminate our product manufacturing and development, and other operations
3. 03We face risks associated with strategic acquisitions
4. 04There can be no assurance that our current and future strategic alliances or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations
5. 05Past and potential future divestitures or other transactions could adversely affect our costs, revenues, profitability and financial position
6. 06We have substantial debt and other financial obligations, and we may incur even more debt. Any failure to meet our debt and other financial obligations or maintain compliance with related covenants could harm our business, financial condition, and results of operations
7. 07We are dependent on key inputs and suppliers; and fluctuations in the cost or availability of materials we use in our products and supply chain could negatively affect our results
8. 08Our sales are difficult to forecast
9. 09We may be subject to growth-related risks
10. 10We rely on third parties for certain products sold to our customers, which could limit our control over the quality of the products
11. 11We face an inherent risk of product liability and similar claims
12. 12Our products may be subject to product recalls
13. 13The growth and success of our business depends on the continued contributions of personnel employed by Green Thumb, as well as our ability to attract and retain qualified personnel
14. 14We rely on third parties, including our largest shareholder, to provide numerous capabilities that we depend upon on to operate, and a disruption of these systems could adversely affect our business
15. 15Protecting and defending against intellectual property claims may have a material adverse effect on our business
16. 16Our success depends in part upon our ability to protect our core technology and intellectual property
17. 17We generally control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners, and our software is protected by U.S. copyright laws
18. 18We may need to enter into intellectual property license agreements in the future, and if we are unable to obtain these licenses, our business could be harmed
19. 19Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
20. 20Failure by our co-manufacturers to comply with food safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business
21. 21We may not be able to obtain or maintain necessary permits and authorizations
22. 22We are dependent on the popularity of consumer acceptance of our brand portfolio
23. 23We are and may continue to be subject to constraints on marketing our products
24. 24Our business and asset portfolio are not highly diversified by either industry or geographically. If our business and assets underperform, our business, financial condition and results of operations would be negatively impacted
25. 25We face risks related to our products

Risks Relating to our Industry

1. 26The 2018 Farm Bill, which federally legalized hemp and hemp products, could be amended to severely restrict or prohibit the Company’s hemp-derived THC products
2. 27States are passing their own laws regulating, restricting or prohibiting hemp-derived products, creating a difficult regulatory patchwork within which to operate
3. 28Hemp-derived THC products are not permitted under the FDCA
4. 29The FDA could issue new regulations that prohibit or strictly limit the sale of hemp-derived products
5. 30Other federal agencies may take enforcement actions against companies selling hemp-derived products
6. 31Hemp-derived products which exceed a delta-9 THC concentration of 0.3% on a dry weight basis are federally illegal under the Controlled Substances Act (the “CSA”). The CSA classifies cannabis as an illegal Schedule I drug, meaning it is considered to have a high potential for abuse and no accepted medical use
7. 32The Company is subject to regulations that could impact its ability to sell its product internationally
8. 33Third parties with whom we do business may perceive themselves as being exposed to reputational risk because of their relationship with us due to our cannabis and hemp-related business activities and may as a result, refuse to do business with us
9. 34We face competition from the illicit market as well as larger competitors and licensed medical and adult use cannabis dispensaries
10. 35Inconsistent public opinion and perception of the cannabis and hemp industries may hinder market growth and state regulation, which would adversely impact our growth plans and current operations and result in an adverse effect on our business, financial condition and results of operations
11. 36Hemp-derived products may be shown to have negative health and/or safety impacts upon consumers
12. 37We face exposure to fraudulent or illegal activity, and our reputation may be negatively impacted by improper conduct by our business partners, employees or agents
13. 38We face risks due to industry immaturity or limited comparable, competitive or established industry best practices
14. 39The cannabis and hemp industries could face strong opposition from other industries
15. 40Our business depends in part on client licensing
16. 41Banking regulations could limit access to banking services
17. 42We face risks related to our insurance coverage and uninsurable risks
18. 43We participate in an evolving industry

Risks Related to Ownership of our Common Stock

1. 44Concentration of ownership may prevent new investors from influencing significant corporate decisions
2. 45A large number of shares eligible for public sale could depress the market price of our Common Stock
3. 46Our failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our common stock
4. 47The exercise of all or any number of outstanding warrants or the issuance of stock-based awards may dilute your holding of shares of our Common Stock
5. 48Provisions in our articles of incorporation, our by-laws and Nevada law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our Common Stock
6. 49We have not and do not expect to declare any dividends to our shareholders in the foreseeable future
7. 50As a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting. These internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our Common Stock
8. 51As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024
9. 52Increases in costs, disruption of supply or shortage of raw materials could harm our business
10. 53Litigation may adversely affect our business, financial condition and results of operations
11. 54An active, liquid, and orderly trading market for our Common Stock may not develop, the price of our stock may be volatile, and you could lose all or part of your investment
12. 55We incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our operating results
13. 56If our shares of Common Stock become subject to the penny stock rules, it would become more difficult to trade our shares
14. 57The financial and operational projections that we may make from time to time are subject to inherent risks
15. 58If securities or industry analysts do not publish research or reports about us, our business, or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline