EFTA01381278.pdf

Form S-I Table of Contents Our success depends on our ability to at 'ad andretain key employees and the succession ofsenior management as well as team members within stores. Our continued growth and suceiss requires us to hire, retain and develop our leadership bench. If we arc unable to attract and retain talented, highly qualified senior management and other key executives, as well as provide for the succession of senior management. our growth and results of operations may be adversely impacted. Our success also depends on our ability to continue to attract, motivate and retain employees who understand and appreciate our culture and are able to represent our brand effectively, including our Pet Detectives who interact with consumers in stores. If we arc unable to attract, train and retain new employees and new team members to act as Pet Detectives, this could delay or prevent the implementation of our business strategy and in turn, lead to fewer sales of our products. In addition, we have in the past been a defendant in a purported class action by former and current Pet Detectives, which alleged certain violations of wage and labor laws in California and Oregon, and we may be subject to other claims in the future. Risks Related to this Offering and Ownership of our Common Stock We are a "controlled company" within the meaning ofNASDAQ rules and, as a result, quail:6,1ot exemptionsfrom certain corporate governance requirements. Our Sponsor will continue to control a majority of the voting power of our outstanding common stock after completion of this offering. Under NASDAQ rules a listed company of which more than 50% of the voting power for the election of directors is held by another person or group of persons acting together is a "controlled company- and such a company may elect not to comply with certain NASDAQ corporate governance requirements, including the requirement (1) that a majority of the Board of Directors consist of independent directors, (2) to have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, (3) to have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities, (4) that the compensation committee consider certain independence factors when engaging compensation consultants, legal counsel and other committee advisors and (5) for an annual performance evaluation of the nominating and corporate governance and compensation committees. We have elected to be treated as a "controlled company" following this offering. Accordingly, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements. Our Sponsor controls us andits interests may conflict with yours in thefuture. Immediately following this offering, our Sponsor will beneficially own % of our common stock, or % if the underwriters exercise in full their over-allotment option to purchase additional shares from the selling stockholders. Our Sponsor will be able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of our amended and restated certificate of incorporation or amended and muttd bylaws and other significant corporate transactions for so long as our Sponsor and its affiliates retain significant ownership of us. This concentration of our ownership may delay or deter possible changes in control of the Company, which may reduce the value of an investment in our common stock. So long as our Sponsor continues to own a significant amount of our combined voting power, even if such amount is less than 50%, our Sponsor will continue to be able to strongly influence or effectively control our decisions and, so long as our Sponsor and its affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, it will be able to appoint individuals to our Board of Directors under the amended and restated investor rights agreement we have entered into with the Sponsor. See "Certain Relationships and Related Party Transactions — Investor Rights Agreement." The interests of our Sponsor may not coincide with the interests of other holders of our common stock. 32 httplAnnv.see.gov/Archi vestedgar/datatI 609989/000119312515218883/d734898dsl.htm17/20/2015 10:30:13 Alvij CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0080119 CONFIDENTIAL SDNY GM_00228303 EFTA01381278