Revenue and Market Dependence - The company relies heavily on its key product lines, with LokoMat accounting for over 45% of revenue and other key products (Erigo, Armeo, C-Mill, and CAREN/Grail) collectively contributing 55%[77]. - Approximately 90% of the company's revenue is generated from its current key product lines, which are critical for its financial success[75]. - 80% of the company's revenue is concentrated in the EMEA and Americas regions, indicating a significant reliance on these markets[77]. Economic and Regulatory Risks - The company faces risks related to economic conditions, including potential decreases in demand due to economic slowdowns, inflation, and increased interest rates[78]. - The company has not yet substantiated the long-term health benefits of its products through large randomized clinical trials, which may limit market adoption[98]. - Regulatory compliance is critical, as failure to meet FDA and international standards could result in product recalls or inability to market products[122]. - The new Medical Device Regulation (MDR) in the EU introduces additional compliance challenges that could affect product approval timelines[124]. - Legislative and regulatory healthcare reforms may lead to decreased reimbursement for medical devices, impacting the company's ability to market and generate sales[135]. Operational Challenges - The company is dependent on the successful training of customers and clinicians for the effective use of its products, which is critical for achieving expected growth[90]. - The company may face challenges in maintaining its sales and marketing infrastructure, which is essential for expanding its market presence and product adoption[96]. - Manufacturing delays due to raw material shortages, labor disputes, and regulatory compliance failures could adversely impact the business[101]. - The company relies on sole source third-party manufacturers for certain raw materials and products, which poses risks of supply interruptions and potential revenue loss[100]. - The company faces challenges in managing growth, which could limit its ability to increase sales and cash flow if not addressed properly[121]. Financial Performance and Growth - The company recorded revenue of approximately 64,473,000, an increase of 19.9% compared to 8,443,000, compared to a net loss of 35,735,000 as of March 31, 2024, compared to $31,779,000 as of March 31, 2023, reflecting a growth of 12.5%[298]. - The company anticipates significant growth, which will require enhanced operational and financial systems to manage effectively[120]. Capital and Financing - The company may need to raise additional capital to fund growth and operations, which could dilute shareholder value if equity is sold[84]. - The Company plans to fund its growth through cash flows from operations and future debt and equity financing[322]. - The Company may issue up to 6,000,000 Earnout Shares based on the volume-weighted average price of DIH Common Stock reaching certain thresholds during the Earnout Period[317]. Compliance and Legal Risks - The company must comply with various privacy and data protection laws, such as the CCPA and GDPR, which could increase compliance costs and liabilities[140]. - The risk of litigation or claims related to acquired companies could increase operational costs and divert management focus[119]. - The company faces risks related to potential patent infringement claims, especially for products acquired through acquisitions[164]. Management and Internal Controls - The company has identified material weaknesses in its internal control over financial reporting, particularly due to limited accounting personnel, which could impact the accuracy and timeliness of financial reporting[197]. - The management team has limited experience managing a public company, which may affect the company's ability to comply with regulatory obligations and manage day-to-day operations effectively[194]. - The anticipated growth may strain the management team and financial resources, potentially leading to misallocation of resources and operational weaknesses[192]. Market and Competitive Landscape - The fragmented rehabilitation technology market presents both opportunities for consolidation and challenges in changing customer mindsets[104]. - The company faces volatility in its common stock price due to various factors, including fluctuations in growth rates and competition from new technologies[181]. - Political changes in the United States or Europe could significantly impact the company’s sales performance and growth projects[152]. Product and Warranty Management - The Company estimates warranty costs based on the number of units sold and historical claim rates, adjusting recorded warranty liabilities quarterly as necessary[338]. - The Company recognizes revenue primarily at the point in time when the customer obtains control, typically coinciding with delivery and customer acceptance[337]. - The Company assesses the adequacy of its recorded warranty liabilities on a quarterly basis and adjusts these amounts as necessary[338].
Aurora Technology Acquisition (ATAK) - 2024 Q4 - Annual Report