Sonder Holdings Inc.

Sonder believes that its existing facilities are adequate for its near-term needs, and that suitable alternative space would be available if required in the future on commercially reasonable terms.

• Our leases have been and may in the future be subject to termination before their scheduled expiration, which could be disruptive and costly.
• Our business is susceptible to risks associated with international operations.
• If we fail to attract new guests or generate repeat bookings from previous guests, our business, results of operations, financial condition, and cash flows would be materially adversely affected.
• We offer different types of hospitality services than traditional hospitality operators and short-term rental marketplaces, and if guest and property owner acceptance of this innovative approach to accommodations does not continue to grow or grows more slowly than we expect, our business, results of operations, financial condition, and cash flows could be adversely affected.
• The hospitality market is highly competitive and we may be unable to compete successfully with current or future competitors.
• We market our units through third-party distribution channels, and if such third parties do not perform adequately or terminate or modify their relationships with us, our business, results of operations, financial condition, and cash flows could be adversely affected.
• Our results of operations vary from period-to-period, and historical performance may not be indicative of future performance.
• Certain of the measures we use to evaluate our operating performance are subject to inherent challenges in measurement and may be subject to future adjustments.
• Our business depends on our reputation and the strength of our brand, and any deterioration could adversely impact our market share, revenues, business, results of operations, financial condition, and cash flows.
• We are involved in and may in the future become involved in claims, lawsuits, and other proceedings that could adversely affect our business, results of operations, financial condition, and cash flows.
• We have been and may in the future be subject to liability for the activities of our guests or other incidents at our properties, which could harm our reputation and increase our operating costs.
• We are subject to claims and liabilities associated with potential health and safety issues and hazardous substances at our properties.
• We are subject to the risk of financial and reputational damage due to fraud.
• We depend on our key personnel and other highly skilled personnel, and if we fail to attract, retain, motivate, or integrate our personnel, our business, results of operations, financial condition, and cash flows could be adversely affected.
• We are subject to risks associated with the employment of hospitality personnel, particularly at locations that employ unionized labor, and the use of third-party guest services contractors.
• We have identified and may again identify material weaknesses in our internal controls over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or other adverse consequences.
• If we fail to maintain effective disclosure controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired, which may adversely affect investor confidence in us and, as a result, the market price of our common stock.
• We face risks related to the restatement of our previously issued consolidated financial statements and financial information, and that restatement and any future financial restatement or correction may adversely affect us.
• Our delayed SEC filings have made us currently ineligible to use certain registration statements to register the offer and sale of securities, which could have adverse effects including on our ability to raise capital or employee retention and recruitment.
• We rely on certain third-party services and technologies, and any defects or failures in these technologies or any inability to obtain or integrate third-party technologies could harm our business.
• We rely on third-party payment processors to process payments, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, results of operations, financial condition, and cash flows could be adversely affected.
• If our data or information technology systems, or those of third parties with whom we work, are or were again compromised, we could experience, and have in the past experienced, adverse consequences, including regulatory investigations or actions, litigation (including class claims), fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of guest loyalty or sales, and other adverse consequences.
• System capacity constraints or operational failures could materially adversely affect our business, results of operations, financial condition, and cash flows.
• Supply chain interruptions may increase our costs or reduce our revenues.
• We may be subject to liability claims and our insurance may be inadequate to cover our losses.
• Our technology contains third-party open-source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to operate as intended or could increase our costs.
• We may be unable to protect our brand and other intellectual property, and we have been and may be subject to legal proceedings and claims relating to intellectual property rights.
• We expend resources relating to the opening, operation, and maintenance of our leased properties, which may be higher than anticipated.
• Our properties are concentrated in a limited number of cities, which increases our exposure to local factors affecting demand or hospitality operations.
• We are exposed to fluctuations in currency exchange rates.
• If we are unable to introduce new or upgraded amenities, services, or features that guests recognize as valuable, we may fail to attract guests, property developers, and landlords. Our efforts to develop new and upgraded services and amenities could require us to incur significant costs and losses.
• Changes in our effective tax rate could harm our future operating results.
• Our corporate structure and intercompany arrangements cause us to be subject to the tax laws of various jurisdictions and we could be obligated to pay additional taxes, which could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects.
• Our ability to use net operating loss (“NOL”) carryforwards and other tax attributes may be limited due to prior and potential future ownership changes.
• Failure to comply with anti-bribery, anti-corruption laws and similar laws, could subject us to penalties and other adverse consequences.
• We are subject to governmental export and import controls and economic sanctions programs that could impair our ability to compete in international markets or subject us to liability if we violate these controls.
• Risks Related to Government Regulation
• Unfavorable changes in government regulations or taxation of the short-term and long-term rental, Internet, and e-commerce industries could harm our operating results.
• We will continue to 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 business, results of operations, financial condition, and cash flows. In addition, key members of our management team have limited experience managing a public company.
• Failure to comply with consumer protection, marketing and advertising laws, including with regard to direct marketing and internet marketing practices, could result in fines or place restrictions on our business.
• Industry-specific payment regulations and standards are evolving, and unfavorable industry-specific laws, regulations, interpretive positions or standards could harm our business.
• Risks Related to Indebtedness and Liquidity
• There is substantial doubt about the Company’s ability to continue as a going concern, and this may adversely affect our stock price, our ability to raise capital or enter into strategic transactions, and our relationships with key stakeholders.
• We have previously may again require additional capital to support business growth or respond to business challenges, and this capital might not be available in a timely manner or on favorable terms.
• Our indebtedness and credit facilities contain financial covenants and other restrictions on our actions that may limit our financial and operational flexibility or otherwise adversely affect our results of operations.
• Risks Related to Ownership of Our Securities
• We are not in compliance with Nasdaq’s requirements for continued listing of our securities, and if we fail to continue to meet the listing standards of Nasdaq, our common stock and Public Warrants may be delisted, which could have a material adverse effect on the liquidity and trading price of our common stock and warrants and on our ability to raise capital, and other adverse consequences.
• The market price and trading volume of our common stock and Public Warrants may be volatile and could decline significantly.
• Our outstanding shares of Preferred Stock and the holders thereof have certain special rights. Such rights, as well as similar or other rights that may accompany any future issuance of shares of preferred stock, may adversely affect the voting power or value of our common stock.
• We have issued, and may in the future issue, shares of common stock or other equity securities, which may depress the price of our common stock and other publicly traded securities.
• There is no guarantee that the Public Warrants will ever be in the money, and they may expire worthless.
• We may amend the terms of the Public Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50.0% of the then-outstanding Public Warrants.
• We may redeem unexpired Public Warrants prior to their exercise at a time and at a price that is disadvantageous to warrant holders, thereby making their Public Warrants worthless, and an exercise of a significant number of warrants could adversely affect the market price of our Common Stock.
• Provisions in the Amended and Restated Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to bring a claim in a judicial forum that it finds favorable for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.