Air Industries Group (AIRI) risk factors, FY2024 10-K

Other

1. 01The purchase of our common stock involves a very high degree of risk

Risks Related to Our Business

1. 02We may need additional financing to fund investments in new or upgraded property or equipment
2. 03A reduction in budgeted or actual U.S. government spending for defense or changes in the mix of defense products could materially adversely impact our business strategy, revenues, operating results and financial condition
3. 04We depend on revenues from components for a few aircraft programs and platforms and the cancellation or reduction of funding of them will harm our business
4. 05Changes in outsourcing strategies and intense competition in our markets may lead to a reduction in our revenues and market share
5. 06We may lose sales if we fail to timely meet the specifications and requirements of our customers
6. 07We may lose sales if our suppliers fail to meet our needs or ship raw materials to us on timely
7. 08We may not be able to improve our gross margin and a reduction in future sales levels could have a disproportionate effect on our gross profit as a percentage of our net sales
8. 09There are risks associated with the bidding processes in which we compete
9. 10Due to fixed contract pricing, increasing contract costs expose us to reduced profitability and the potential loss of business
10. 11The prices of raw materials we use are volatile
11. 12Some of the products we produce have long lead times
12. 13We do not own the intellectual property rights to products we produce
13. 14There are risks associated with new programs
14. 15To perform on new programs, we may be required to incur material up-front costs which may not have been separately negotiated and may not be recoverable. Such charges and the loss of up-front costs could have a material impact on our liquidity
15. 16There are risks associated with offering new services to our customers
16. 17Attracting and retaining executive talent and other key personnel is an essential element of our future success
17. 18We are subject to intense competition for the skilled machinists necessary to manufacture our products
18. 19We are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expense in the event of non-compliance
19. 20We may be subject to fines and disqualification for non-compliance with Federal Aviation Administration regulations
20. 21Cyber security attacks, internal system or service failures, and any unauthorized access to our customer data will have an adverse effect on our business and reputation
21. 22Complying with the requirements imposed by the U.S. Government and our customers with respect to privacy, data governance, data protection and cybersecurity is costly and requires a significant amount of attention form management

Risks Related to Our Indebtedness

1. 23The weighted average interest rate we paid in 2024 on borrowings outstanding on the Current Credit Facility was 7.66% and this interest rate may increase in the future
2. 24We have a history of net losses, need to refinance our bank debt and the opinion of our auditor contains an explanatory paragraph as to our ability to continue as a going concern
3. 25We may not be able to comply with the covenants of the Current Credit Facility and our debt could be called
4. 26We currently do not pay dividends and the terms of our Current Credit Facility limit our ability to pay dividends

Risks Related to our status as a public company and our common stock

1. 27There is only a limited public market for our common stock
2. 28The ownership of our common stock is highly concentrated amongst related parties, and their interests may conflict with the interests of other stockholders
3. 29The market price of our common stock is likely to be highly volatile, which could result in substantial losses to investors
4. 30If we fail to meet the expectations of securities analysts or investors, our stock price could decline significantly
5. 31Future financings or acquisitions may adversely affect the market price of our common stock
6. 32If we are unable to effectively maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be adversely affected