SkinHealth Systems Inc.

We believe our present facilities are suitable and adequate for our current operating needs. We do not own any real property.

• Our growth and profitability are dependent on a number of factors, and any historical growth may not be indicative of future growth.
• We may fail to realize all of the anticipated benefits of any entities that we acquire, such benefits may take longer to realize than expected or we may encounter significant difficulties integrating acquired businesses into our operations. If our acquisitions do not achieve their intended benefits, or do not achieve their intended benefits on our projected timelines, our business, financial condition, and results of operations could be materially and adversely affected.
• We may be unable to grow our business effectively or efficiently, which would harm our business, financial condition and results of operations.
• Acquisitions or investments could disrupt our business and harm our financial condition.
• Our operating results have fluctuated in the past and we expect our future quarterly and annual operating results to fluctuate for a variety of reasons, particularly as we focus on increasing provider and consumer demand for our products. Volatility in the financial markets could also have a material adverse effect on our business.
• We have a history of operating losses and may experience future losses.
• Risks related to our business operations
• A disruption in our operations could materially and adversely affect our business.
• Our success depends, in part, on our retention of key members of our senior management team, whose continued service is not guaranteed, and ability to attract and retain qualified personnel.
• We rely on a number of third-party suppliers, distributors and other vendors, and they may fail to produce products or to provide services that are consistent with our standards or applicable regulatory requirements, which could harm our brand reputation, cause consumer dissatisfaction or require us to find alternative suppliers of our products or services.
• We maintain single supply relationships for certain key components, and our business and operating results could be harmed if supply is restricted or ceases or the price of raw materials used in our manufacturing process increases.
• We rely on third-party delivery service providers.
• A disruption in the operations of our primary freight carrier or higher shipping costs could cause a decline in our net revenues or a reduction in our earnings.
• If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may be materially and adversely affected.
• In order to deepen our market penetration and raise awareness of our brand and products, we continue to spend on marketing activities, which may not ultimately prove successful or an effective use of our resources.
• We manufacture and assemble our Delivery Systems in California, and if this site were to become compromised or damaged, our ability to continue to manufacture and assemble our products would be negatively affected.
• We rely heavily on our sales professionals to market and sell our products worldwide. If we are unable to hire, effectively train, manage, improve the productivity of and retain our sales professionals, our business will be harmed, which would impair our future revenue and profitability.
• Our providers generally are not under any obligation to purchase product, and business challenges at one or more of these providers could adversely affect our results of operations.
• We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenues.
• Risks related to our financial condition
• Our business could also be adversely affected by our inability to repay or refinance existing debt.
• If our cash from operations is insufficient to meet our current or future operating needs, expenditures and debt service obligations, our business, financial condition and results of operations may be materially and adversely affected.
• The terms of our Notes require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
• We maintain our cash at financial institutions, often in balances that exceed federally insured limits.
• Our ability to use any net operating loss carryforwards and certain other tax attributes may be limited.
• Changes in tax law, our tax rates or our exposure to additional income tax liabilities or assessments could materially and adversely affect our business, financial condition and results of operations.
• Our effective tax rate may vary significantly from period to period.
• Fluctuations in currency exchange rates may negatively affect our financial condition and results of operations.
• If our goodwill or long-lived assets become impaired, we may be required to record a significant charge to earnings.
• Volatility in the financial markets could have a material adverse effect on our business.
• Our sales and profitability may decline as a result of increasing costs and decreasing selling prices.
• Risks related to information technology and cybersecurity
• We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.
• We must successfully maintain and upgrade our information technology systems, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.
• Privacy and data protection laws increase our compliance burden.
• We are subject to risks associated with product failure and/or technology flaws.
• If we fail to adopt new technologies or adapt our e-commerce websites and systems to changing consumer demands or emerging industry standards, our business may be materially and adversely affected.
• Failure to protect sensitive information of our consumers and information technology systems against security breaches could damage our reputation and brand and substantially harm our business, financial condition and results of operations.
• Payment methods used on our e-commerce websites subject us to third-party payment processing-related risks.
• We use AI in our business, and challenges with properly managing its use could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations.
• Risks related to conducting business internationally
• International sales and operations comprise a significant portion of our business, which exposes us to foreign operational, political and other risks that may harm our business.
• Adverse economic conditions in the United States, Europe, China or any of the other countries in which we may conduct business could negatively affect our business, financial condition and results of operations.
• Legal, political, and economic uncertainty surrounding the exit of the United Kingdom from the European Union continue to be a source of instability and uncertainty.
• We conduct business in China, which exposes us to risks inherent in doing business in that country.
• Recent and potential additional tariffs imposed by the United States government on certain imports or a global trade war could increase the cost of our products, which could materially and adversely affect our business, financial condition and results of operations.
• Our business could be negatively impacted by changes in the United States political environment.
• Disruption due to any government shutdown and personnel or policy changes at regulatory agencies, including the FDA, may hinder our ability to operate our business as intended.
• Risks related to environmental, social, and governance issues
• Climate change and governmental actions to reduce such change may disrupt our operations and/or reduce consumer demand for our products.
• Increased scrutiny from investors and others regarding our environmental, social, governance, or sustainability, responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us.
• Risks related to evolving laws and regulations and compliance with laws and regulations
• New laws, regulations, enforcement trends or changes in existing regulations governing the introduction, marketing and sale of our products to consumers could harm our business.
• New laws, regulations, enforcement trends, or changes in existing regulations could affect the ability of our esthetician providers in certain states to provide our treatments to consumers, any of which could have a material adverse effect on our business, financial condition, and results of operation.
• Uncertainty in regulatory frameworks and changes in applicable laws and regulations may affect our ability to commercialize products.
• Our employees, consultants, and other commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
• Our facilities are subject to regulation under the FDCA and FDA implementing regulations governing the manufacture of our products. If we fail to comply with federal, state and foreign regulations, our manufacturing operations could be halted, and our business would suffer.
• The use, misuse or off-label use of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines, or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
• Government regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit, or delay our ability to sell our products and harm our business, financial condition and results of operations.
• Our products may cause or contribute to adverse medical events or other undesirable side effects that we are required to report to the FDA or foreign regulatory authorities, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us.
• Changes in funding for, or disruptions caused by global health concerns impacting the FDA and other government agencies or notified bodies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products from being developed, authorized, or commercialized in a timely manner, which could negatively impact our business.
• If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our shares of Class A Common Stock.
• Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.
• Failure to comply with the U.S. FCPA, other applicable anti-corruption and anti-bribery laws, and applicable trade control laws could subject us to penalties and other adverse consequences.
• As compliance with healthcare regulations becomes more costly and difficult for us or our customers, we may be unable to grow our business.
• If we market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties.
• Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition and results of operations.