Limited Operating History; Limited Capital; Start-up Company
Although One Pet World, Inc has limited operating history, the business model and imputed experience of the Founders is based upon the previous entity know for the purpose of this offering as the "Old Pet Airways". The Old Pet Airways operated for approximately 2 years, flew over 9,000 pets successfully and reach a positive Gross Margin in its last quarter of operations. One Pet World has not established any revenues or operations that shall provide financial stability in the long term. And, there can be no assurance that the Company can realize its plans on the projected timetable in order to reach sustainable or profitable operations. Any material deviation from the Company’s timetable could require that the Company seek additional capital. There can be no assurance that such capital shall be available at reasonable cost, or that it would not materially dilute the investment of investors in this Offering if it is obtained.
Some of these risks and uncertainties relate to the Company’s ability to do the following:
· generate and grow revenue and meet anticipated growth targets;
· successfully introduce new products and technologies;
· respond to government regulations;
· respond effectively to competition, and;
· attract and retain qualified management and employees.
If the Company is unable to address these risks, its business, results of operations and prospects could be materially adversely affected.
Investment in a start-up company such as the Company is inherently subject to many risks, and investors should be prepared to withstand a complete loss of their investments. The Company has no operating history upon which investors may base an evaluation of its performance therefore it is still subject to all the risks incident to the creation and development of a new business. The Company plans to conduct closings of sales of Shares as subscriptions are received. If less than anticipated is received from the sale of the Common Stock, the Company may have insufficient cash to implement its plans as described below, and investors who purchase Preferred Series A Stock shall be at heightened risk of loss from their investments.
Development Stage Company
The Company’s Business Plan contemplates rapid growth and expansion. Successful implementation of the Business Plan will be dependent on a number of factors, some of which are beyond the control of the Company, and is subject to a number of contingencies which could have a material adverse effect on the development and growth of the Company and its business. If the Company’s short and medium term business objectives are achieved, the Company will experience rapid growth, but its operations are subject to all of the risks inherent in a rapidly growing company. The likelihood of the success of the Company’s operations must be considered in light of the financial obligations, problems, expenses, difficulties, complications and delays frequently encountered in connection with the operation of a development stage entity in a competitive industry.
Need for Additional Financing
There can be no assurances that the Company will be able to obtain additional funding when needed, or that such funding, if available, will be available on terms acceptable to the Company. In the event that the Company’s operations do not generate sufficient cash flow, or the Company cannot acquire additional funds if and when needed, the Company may be forced to curtail or cease its activities which would likely result in the loss to investors of all or a substantial portion of their investments.
If the Company incurs indebtedness, a portion of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan agreements also might contain restrictive covenants, which may impair the Company’s operating flexibility. Such loan agreements would also provide for default under certain circumstances, such as failure to meet certain financial covenants. A default under a loan agreement could result in the loan becoming immediately due and payable and, if unpaid, a judgment in favor of such lender which would be senior to the rights of shareholders of the Company. A judgment creditor would have the right to foreclose on any of the Company’s assets resulting in a material adverse effect on the Company’s business, operating results or financial condition. The Company intends to lease its planes which is a form of indebtedness.
Risks Associated with the Airline Industry
The airline industry tends to experience adverse financial results during general economic downturns, leading to significant trickle down effects for our sub-segment of the airline industry. Since a substantial portion of airline travel, and in particular airline travel for pets, is discretionary, the industry tends to experience a downturn in revenues during general economic downturns. Events beyond the control of the industry and the economy, such as the terrorist attacks of September 11, 2001 can impact the travel patterns for quite some time, and thus affect the industry.
The 2001 terrorist attacks, seriously harmed the airline industry, and the risk of additional attacks or wars in the Middle East and elsewhere, may harm the industry in the future. The aftermath of attacks or the duration of wars throughout the world, have negative impacts on the airline industry. Substantial loss of bookings, increased security, insurance costs, fuel costs and airport delays, all affect the revenues. We cannot predict the scope or effects of such incidents in the future as they relate to our business or success.
Increased fuel costs. Fuel cost will be a significant portion of our operating expense. Significant increases in fuel costs would harm our profitability. Historically, fuel costs have fluctuated widely based on geopolitical issues and supply and demand. We cannot assure you that such significant fuel increases can adequately offset the higher fares, if indeed we can charge higher fares
Adverse Weather. Like all airline traffic, we will be at the mercy of the weather conditions. One of the principles of our operations will be to fly in weather that we feel does not pose any undue risks. In the event that the weather is not up to our minimum standards, we will be forced to cancel or delay flights, thus incurring certain additional costs e.g. boarding costs, and delays in connecting with pet owners.
Our reputation and financial results could be affected in the event of an accident or incident involving one of our aircraft. An accident or incident involving one of our aircraft could affect us by burdening us with additional costs not covered by insurance, such as good will, litigation etc., but even more importantly, if an incident causes the public to perceive our operation as unsafe or unreliable, our business would be substantially harmed.
Federal and State Regulation
The Company’s industry is subject to a complex body of state and federal laws and regulations which govern environmental as well as other aspects of industry operations. The impact of current and future statutory and regulatory changes cannot be predicted with certainty.
As an early stage business, our success is dependent upon numerous factors, many of which are beyond the control of management. Our success will depend in part on our ability to deal with the problems, expenses, and delays frequently associated with establishing a new business venture. Even if all shares offered through this memorandum are sold, and we raise the maximum offering amount, we cannot assure you that we will be successful in executing our plan or achieving profitability. Due to our early stage of development, regardless of the amount of funds raised, there is a substantial risk that all investors may lose all of their investment. Even if all shares offered through this memorandum are sold, we expect that we may need to seek additional financing in the future.
There is no guarantee that we will be able to raise the entire amount of the offering. Our plan calls for substantial capital being earmarked for Brand Awareness and Marketing. If we do not raise the entire amount, we will have to adjust the dollars that are available to the marketing effort. This may adversely affect our ability to ramp up and build loyalty and short-term revenues.
Disruptions in market demand for the markets we will serve by the Company could adversely impact the profitability of our business. A sudden or prolonged disruption of our sources of supply, or a slump in the market for our products and services generally or for our products and services in particular could have a severe adverse impact on our level of profitability.
Limitations of Management
We expect our business will develop rapidly. A rapid growth will require significant investment in management personnel, financial and management systems and controls, and facilities, which, if our revenues do not develop as projected, would cause us to require additional capital to support our business. Moreover, no assurance can be given that the time and effort required to train and integrate new management personnel will not adversely affect the our ability to manage our growth.
Attaining and Growing Sales
Achieving our revenue projections will depend in large part upon us being able to build and retain ridership. If we rae unable to do so in accordance with our projections, our projected revenue will be materially adversely affected. There are numerous factors that can and likely will contribute to our ability to sell its services, including without limitation:
If we are unable to successfully manage the deployment of our service into the marketplace to meet these requirements, our business, financial condition and anticipated results of operations could be materially adversely affected.
Risks Associated with Expansion
We plan to expand our business through the introduction of a sophisticated marketing campaign. Any expansion of operations we may undertake will entail risks. Such actions may involve specific operational activities, which may negatively impact our profitability of the Company. Consequently, shareholders must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Company at that time, and (ii) management of such expanded operations
may divert Management’s attention and resources away from its existing operations, all of which factors may have a material adverse effect on our present and prospective business activities.
Risks of a SAFE agreement
We may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, we may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
The Company’s Officers, Our VP of Technology & Special Projects, David Crane, is a part-time officer. As he is not spending 100% of his time on our business, his other work obligations may result in slower product development and company growth.