Content analysis
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H.S. freshman Bad
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Financial report summary
?Risks
- We have a history of losses, and although we aim to stabilize/lower our operating expenses in the future, we still may not achieve or sustain profitability. If we cannot achieve and sustain profitability, our business, operating results, and financial condition could be adversely affected.
- We may need to raise additional capital required to grow our business, and we may not be able to raise capital on terms favorable to us or at all.
- The market in which we participate is highly competitive; if we do not compete effectively, our business, operating results, and financial condition could be adversely impacted.
- Our business depends substantially on customers renewing their subscriptions with us. Any decline in our customer renewals could harm our business, operating results and financial condition.
- If we are unable to attract new customers, our revenue growth could be slower than we expect and our business, operating results and financial condition could be adversely affected.
- If we are unable to execute on our strategy to grow and stabilize, our business, operating results and financial condition could be adversely affected.
- If we are not able to effectively introduce enhancements to our platform, including new products, services, features and functionality, that achieve market acceptance, or keep pace with technological developments, our business, operating results and financial condition could be adversely affected.
- Real or perceived defects or errors on our platform could harm our reputation, result in significant costs to us and impair our ability to sell subscriptions to our platform and related services.
- Unanticipated costs or delays in connection with development or implementation of our solutions could have a material adverse impact on our margins and, ultimately, our business, operating results and financial condition.
- We invest significantly in research and development, and to the extent our research and development investments do not translate into enhancements to our platform, or if we do not make those investments efficiently, our business, operating results and financial condition could be adversely impacted.
- If we fail to offer high-quality customer support, our business, operating results and financial condition could be adversely impacted and our reputation will suffer.
- As a substantial portion of our sales efforts are targeted at large enterprise customers, our sales cycle may become increasingly lengthy and more expensive and we may encounter greater pricing pressure, all of which could adversely impact our business, operating results and financial condition.
- Our revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand our direct sales and customer success team force and increase the productivity of both.
- From time to time we provide performance guarantees and/or service level commitments under our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits or refunds for prepaid amounts related to unused subscription services or face contract terminations, which could adversely affect our business, operating results and financial condition.
- Unfavorable conditions in our industry or the economy more generally or reductions in information technology spending could limit our ability to grow our business and adversely affect our business, operating results and financial condition.
- Our business depends on the strength of our reputation, and any failure to maintain, protect, and enhance our brand would hurt our ability to retain or expand our customer base, to attract and retain employees and to achieve our growth aspirations.
- Our customers may fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment.
- Our business depends largely on our ability to attract and retain talented employees, including senior management. If we lose the services of the members of our senior management team, we may not be able to execute on our business strategy.
- Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and teamwork fostered by our culture, and our business may be harmed.
- Our level of indebtedness may reduce our financial flexibility.
- Severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business.
- The impact of the COVID-19 pandemic, including the resulting global economic disruptions, remains uncertain at this time, and it may have a material adverse impact on our business, results of operations, financial condition, liquidity and cash flows.
- If our security measures are breached and customers’ data are compromised, our offerings may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed and we could lose sales and customers.
- We process, store, and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and violation of these privacy obligations could result in a claim for damages, regulatory action, loss of business, or unfavorable publicity.
- Any disruption of service of Microsoft Azure (Azure) or Amazon Web Services (AWS), our data hosting services, or the operation of our solutions could interrupt or delay our ability to deliver our services to our customers.
- Our intellectual property rights are valuable, and failure to protect them could reduce the value of our products, services, and brand.
- We may become subject to intellectual property infringement claims brought against us by others.
- We employ third-party licensed software for use in or with our software, and the inability to maintain these licenses or errors in the software we license could result in increased costs or reduced service levels, which could adversely affect our business.
- Our platform contains open-source software components, and failure to comply with the terms of the underlying licenses could restrict our ability to sell our platform.
- Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
- Because we recognize revenue from our subscriptions over the subscription term, downturns or upturns in new sales and renewals may not be immediately reflected in our operating results and may be difficult to discern. In addition, pricing options we may offer could reduce visibility into our operating results and financial condition.
- Our operating results may fluctuate from period-to-period, which makes our future results difficult to predict.
- We may not have adequate insurance to cover losses and liabilities.
- Investors’ expectations of our performance relating to environmental, social, and governance factors may impose additional costs and expose us to new risks.
- Changes in our effective tax rate could impact our financial results.
- Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability.
- The applicability of sales, use, and other tax laws or regulations on our business is uncertain. Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our customers, which could subject us to additional tax liability and related interest and penalties, increase the costs of our services and adversely impact our business.
- We will incur significant costs and are subject to additional regulations and requirements as a public company in both Australia and the US, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the listing standards of ASX and any U.S. securities exchange on which our shares may become listed for trading. In addition, key members of our management team have limited experience managing a public company.
- We are subject to risks related to government contracts and related procurement regulations, which may adversely impact our business and operating results.
- Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved could expose us to monetary damages or limit our ability to operate our business.
- Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws associated with our activities outside of the US, could subject us to penalties and other adverse consequences.
- We are required to comply with governmental export control and sanctions laws and regulations. Our failure to comply with these laws and regulations would have an adverse effect on our business, operating results, and financial condition.
- Our common stock may never be listed on a major U.S. stock exchange.
- The market price of our CDIs and common stock may be volatile, which could cause the value of our common stock to decline.
- If securities and industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
- U.S. investors may have difficulty in reselling their shares due to the lack of market or restrictions under state Blue Sky laws.
- Our operating results and financial condition are subject to foreign currency fluctuation risks.
- If we are not able to maintain sufficient cash funds, we may cease trading on the ASX.
- The different characteristics of the capital markets in Australia and the US may negatively affect the trading prices of our CDIs and may limit our ability to take certain actions typically performed by a U.S. company.
- We do not intend to pay dividends for the foreseeable future.
- We qualify as an “emerging growth company”, as well as a “smaller reporting company”, and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make our securities less attractive to investors.
- Provisions of our charter documents and Washington law may inhibit a merger, acquisition or other change of control, which could limit the price investors might be willing to pay in the future for our CDIs.
- We have not yet tested our internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). If we identify a material weakness in our internal control over financial reporting that we are unable to remedy or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the price of our common stock and CDIs.
- Our Articles provide, subject to exceptions, that the federal and state courts in Washington are the exclusive forum for certain shareholder litigation matters, which could limit our shareholders’ ability to bring a claim in a judicial forum that they find more favorable for disputes with us or our directors, officers, employees or shareholders.
Management Discussion
- Subscription services revenue increased by $1.6 million, or 13% from the three months ended March 31, 2022 to the three months ended March 31, 2023. This change was primarily due to two new Well-Being customers beginning services in the first quarter of 2023. Listening revenue was slightly up period over period.
- Other revenue increased by $0.1 million, or 17% from the three months ended March 31, 2022 to the three months ended March 31, 2023, due to an increase in biometric services from new and existing customers.
- Cost of revenue increased by $0.5 million, or 10% from the three months ended March 31, 2022 to the three months ended March 31, 2023. This was primarily due to a $0.5 million increase in amortization expense related to capitalized software development costs.