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Vaso (VASO) Risk Analysis
Risk Overview Q3, 2024
Source: the company's latest filing for the period ended Sep 30, 2024, filed Nov 14, 2024
Risk Change Over Time
- Corporate Activity and Growth - Risk 1We currently derive a significant amount of our revenue and segment operating income from our agreement with GEHC.
On May 19, 2010, we signed a sales representation agreement with GEHC. Under the GEHC Agreement, we have been appointed the exclusive representative for these products to specific market segments in the 48 contiguous states of the United States and the District of Columbia. The GEHC Agreement had an initial term of three years commencing July 1, 2010 and in 2012 was extended for two additional years to June 30, 2015. In December 2014, the agreement was extended again through December 31, 2018. In December 2017, the agreement was further extended through December 31, 2022, including GEHC's right to terminate without cause with certain conditions. A significant amount of our revenue and operating income arise from activities under this agreement. Moreover, our performance and growth in the professional sales service segment depends partially on the territories, customer accounts and product modalities assigned to us by GEHC, and thus relies on our ability to demonstrate our added value as a channel partner, and on maintaining a positive relationship with GEHC. There is no assurance that the agreement will not be terminated prior to its expiration pursuant to its termination provisions or will be extended beyond the current expiration date. Should GEHC terminate the agreement, it would have a material adverse effect on our financial condition and results of operations.
Risk Highlights Q3, 2024
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 32
- Share Price & Shareholder Rights - Risk 1New Vaso's business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause New Vaso to incur significant expense, hinder execution of business and growth strategy and impact its stock price.
In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the stock price of the New Vaso Common Stock or other reasons may in the future cause New Vaso to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management's and board of directors' attention and resources from New Vaso's business. Additionally, such securities litigation and stockholder activism could give rise to perceived uncertainties as to New Vaso's future, adversely affect its relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, New Vaso may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, its stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.
- Share Price & Shareholder Rights - Risk 2The dual class structure of our Common Stock after the Business Combination will have the effect of concentrating voting control with the holders of our Class B Common Stock; this will limit or preclude your ability to influence corporate matters.
Following the Business Combination, New Vaso's Class B common stock will have one hundred votes per share and our Class A common stock will have one vote per share. Although it is not expected that New Vaso will issue Class B common stock for the foreseeable future, New Vaso stockholders who hold shares of Class B common stock will together hold a substantial majority of the voting power of New Vaso's outstanding capital stock. Because of the hundred-to-one voting ratio between New Vaso's Class B common stock and Class A common stock, the holders of New Vaso's Class B common stock will collectively control a majority of the combined voting power of New Vaso's common stock and therefore are able to control all matters submitted to New Vaso's stockholders for approval. This concentrated control will limit or preclude your ability to influence corporate matters. Holders of Class B common stock may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of New Vaso, could deprive New Vaso's stockholders of an opportunity to receive a premium for their common stock as part of a sale of New Vaso and might ultimately affect the market price of New Vaso's Class A common stock.
- Share Price & Shareholder Rights - Risk 3As a "smaller reporting company" New Vaso would be permitted to provide less disclosure than larger public companies which may make its common stock less attractive to investors.
If the Business Combination is completed, you will own shares of Class A Common Stock of New Vaso (currently Achari), currently a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act and will continue to be one immediately after the Business Combination. As a smaller reporting company, New Vaso will be eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies. Consequently, it may be more challenging for investors to analyze New Vaso's results of operations and financial prospects which may result in less investor confidence. Investors may find New Vaso's common stock less attractive as a result of our smaller reporting company status. If some investors find its common stock less attractive, there may be a less active trading market for its common stock and our stock price may be more volatile.
- Share Price & Shareholder Rights - Risk 4Achari is, and New Vaso will be, an "emerging growth company," and New Vaso cannot be certain that the reduced disclosure requirements applicable to "emerging growth companies" will not make its common stock less attractive to investors.
Achari is, and New Vaso will be, an "emerging growth company," as defined under the Jumpstart Our Business Startups Act ("JOBS Act") and will continue to be after the Business Combination is completed. For so long as it is an emerging growth company, New Vaso may intend to take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in New Vaso's periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. New Vaso could be an emerging growth company for up to five years from the end of its most recently completed fiscal year, although it may lose such status earlier, depending on the occurrence of certain events, including when New Vaso has generated total annual gross revenue of at least $1.235 billion or when it is deemed to be a "large accelerated filer" under the Exchange Act, which means that the market value of New Vaso's common stock that is held by non-affiliates exceeds $700 million as of December 31st of the prior year, or when we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period. We cannot predict if investors will not find New Vaso common stock less attractive or New Vaso less comparable to certain other public companies because New Vaso may rely on these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for our common stock, and the New Vaso stock price may be more volatile. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. New Vaso has irrevocably elected not to avail itself of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
- Share Price & Shareholder Rights - Risk 5Vaso's officers and directors may be argued to have conflicts of interest that may influence or have influenced them to support or approve the Business Combination without regard to your interests or in determining whether the Business Combination is appropriate for Vaso.
The personal and financial interests of Vaso's officers and directors may influence or have influenced their completing the Business Combination. These interests include, among other things: - that the current member of Vaso's board of directors, Joshua Markowitz, David Lieberman, Jun Ma, Jane Moen, Edgar Rios, Leon Dembo and Behnam Movaseghi, are expected to serve as members of New Vaso's board of directors after consummation of the Business Combination and, in their capacity as such, shall become entitled to any cash fees, stock options or stock awards that New Vaso determines to pay its directors;- that executive officers of Vaso, including Jun Ma as its Chief Executive Officer, are expected to serve in their same capacities with New Vaso; and - that, upon consummation of the Business Combination, and subject to approval by the Achari stockholders of the New Vaso 2024 Equity Incentive Plan Proposal, New Vaso's executive officers after the Business Combination are expected to receive grants of stock options and restricted stock units under the New Vaso 2024 Equity Incentive Plan from time to time. These interests, among others, may influence or have influenced the officers and directors of Vaso to support or approve the Business Combination.
- Share Price & Shareholder Rights - Risk 6If Vaso fails to approve the Business Combination Proposal at the Vaso Stockholders' Meeting, it will owe Achari a termination fee of $5.28 million.
Vaso has agreed in the Business Combination Agreement that if it holds a duly convened stockholders' meeting but, after adjournment if necessary, fails to obtain approval for the Business Combination, it will owe Achari a termination fee. The termination fee would equal 3% of the consideration that the Vaso stockholders are deemed to receive in the Business Combination, 3% of which equals $5.28 million.
- Share Price & Shareholder Rights - Risk 7The percentage ownership of New Vaso after the Business Combination by the current Vaso stockholders will not be known until the redemptions are complete.
If the Business Combination occurs, we do not know what percentage of New Vaso the current Vaso stockholders will own. Certain shares of Achari common stock (as of December 31, 2023, approximately 551,000 of the outstanding shares of Achari common stock, the "Public Shares") may be redeemed by their stockholders in connection with the Business Combination. We expect that Achari's current stockholders would hold in the aggregate approximately 6.9% of the outstanding common stock of New Vaso assuming no redemption of any Public Shares upon the consummation of the Business Combination. If any of the Public Shares are redeemed in connection with the Business Combination or if certain shares held by Achari's sponsor need to be returned to Achari because of unpaid expenses in excess of the limit set forth in the Business Combination Agreement, the percentage of the outstanding shares of common stock after the Business Combination that is held by the current Achari stockholders will decrease and the percentage of outstanding common stock after the Business Combination that is held by current Vaso stockholders will increase. Furthermore, to the extent that (i) any of the outstanding warrants after the Business Combination (including warrants to purchase 8.25 million shares of common stock) are exercised for New Vaso Class A Common Stock and (ii) Achari's sponsor elects to convert the working capital loan of up to (which was $0 as of December 31, 2023) into warrants, which are convertible into shares of New Vaso common stock at $0.75 per warrant, the stockholders immediately after the Business Combination may experience dilution.
- Share Price & Shareholder Rights - Risk 8Our common stock is subject to price volatility.
The market price of our common stock historically has been and may continue to be highly volatile. Our stock price could be subject to wide fluctuations in response to various factors beyond our control, including, but not limited to: - actual or anticipated fluctuations in our operating results;- overall market fluctuations and domestic and worldwide economic conditions;- medical reimbursement;- announcements of technological innovations, new products or pricing by our competitors;- the timing of patent and regulatory approvals;- the timing and extent of technological advancements;- the sales of our common stock by affiliates or other shareholders with large holdings; and - other factors described in the "Risk Factors" and elsewhere in this Report. Our future operating results may fall below the expectations of securities industry analysts or investors. Any such shortfall could result in a significant decline in the market price of our common stock. In addition, the stock market has experienced significant price and volume fluctuations that have affected the market price of our stock and that often have been unrelated to the operating performance of such companies. These broad market fluctuations may directly influence the market price of our common stock.
- Share Price & Shareholder Rights - Risk 9The application of the "penny stock" rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.
As long as the trading price of our common shares is below $5 per share, the open-market trading of our common shares will be subject to the "penny stock" rules. The "penny stock" rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser's written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers restrict the ability and decrease the willingness of broker-dealers to sell our common shares, which we believe results in decreased liquidity for our common shares as well as increased transaction costs for sales and purchases of our common shares as compared to other securities.
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