1331931--3/31/2010--Pet_DRx

related topics

{stock, price, share}

{debt, indebtedness, cash}

{condition, economic, financial}

{stock, price, operating}

{acquisition, growth, future}

{operation, natural, condition}

{product, market, service}

{tax, income, asset}

{customer, product, revenue}

{investment, property, distribution}

{cost, operation, labor}

{personnel, key, retain}

{financial, litigation, operation}

{regulation, change, law}

{loan, real, estate}

We have substantial indebtedness which requires a significant amount of cash to service. We may not be able to generate or raise sufficient cash to meet our debt service obligations, and these obligations will reduce the amount of cash available to operate and expand our business. We may not be able to pay our obligations with respect to our Senior Notes upon maturity, prepayment or redemption. Our debt instruments may adversely affect our ability to run our business. The issuance of the Senior Notes and related financing warrants will impact net earnings (loss) going forward. Galen and Camden, investors in the Senior Notes, may have the ability to significantly influence our business and affairs. We may be unable to effectively execute our growth strategy which could cause our margins and profitability to decline. Even if we are able to effectively execute our growth strategy, the growth of the business may put a strain on the business, and we may not achieve desired economies of scale. Failure to satisfy covenants in our debt instruments will cause a default under those instruments. Incurring substantial amounts of debt could adversely affect our financial condition. Our business strategy includes growth through acquisitions, which involve special risks that could increase expenses, and divert the time and attention of management. Difficulties integrating new acquisitions may impose substantial costs and disrupt our business, which could adversely affect our financial condition, results of operations, cash flows and prospects. The termination or failure to renew a lease or sublease for a veterinary hospital facility would require us to relocate such hospital to a different facility and make substantial capital expenditures, which could disrupt our business and adversely impact our results of operations, cash flows and financial condition. Loss of key personnel could adversely affect our business. Due to the fixed cost nature of our business, fluctuations in our revenue could adversely affect its operating income. Demand for certain products and services, including animal vaccinations, may decline, which could have a material adverse effect on our financial condition, results of operations, cash flows and prospects. Further economic downturn could materially adversely affect our business and recessionary economic conditions may reduce demand for our services. Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our intangible assets for impairment at least annually, which may result in a material, non-cash write down of goodwill and could have a material adverse impact on our results of operations and stockholders equity. Shortages of skilled veterinarians may cause us to experience hiring difficulties which could result in a disruption of our business. Currently existing or newly enacted laws and regulations could restrict our business or result in significant costs and expenses. Any failure to comply with these laws and regulations could have a material adverse effect on our financial condition, results of operations, cash flows and prospects. The possible widespread implementation of pet insurance could adversely affect our business, operating results and prospects. We face increasing competition, including from better-established companies that have significantly greater resources, which places pressure on our pricing and which could prevent us from increasing revenue or maintaining profitability. The costs of defending litigation and potential claims could be significant and adversely affect our results and financial condition. We are subject to local market risks as a result of the geographic concentration of our operations. Risks Related to our Common Stock We may not be able to maintain compliance with NASDAQ s continued listing requirements. If our securities are delisted from NASDAQ, trading of our securities may be restricted by the SEC s penny stock regulations and FINRA s sales practice requirements, which may limit a holder s ability to buy and sell our securities. The market prices of our securities are likely to be highly volatile and subject to wide fluctuations. The amount of stock held by executive officers, directors and other affiliates may limit your ability to influence the outcome of director elections and other matters requiring stockholder approval. If our existing stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock. The exercise of our outstanding warrants and/or conversion of our outstanding convertible securities will result in a dilution of our current stockholders voting power and an increase in the number of shares eligible for future resale in the public market which may negatively impact the market price of our stock. Future financings may dilute your ownership and investment or result in the issuance of additional debt.

Full 10-K form ▸

1331931--3/31/2010--Pet_DRx_CORP