Cadre Holdings (CDRE) risk factors, FY2024 10-K

Risks Related to Our Industry

1. 01The products we sell are inherently risky and could give rise to product liability, product warranty claims, and other loss contingencies
2. 02We are subject to extensive government regulations, and our failure or inability to comply with these regulations could materially restrict our operations and subject us to substantial penalties
3. 03Changes in federal spending often have a cascading effect, influencing not only federally funded programs but also state and local government budgets that rely on federal support
4. 04We have significant international operations and assets and, therefore, are subject to additional financial and regulatory risks
5. 05Changes in global cultural, political, and financial market conditions, including but not limited to tariffs, tax laws and global trade policies, could impair our international operations and financial performance
6. 06The conflicts between Russia and Ukraine and Palestine and Israel, respectively, could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook
7. 07Pandemics, epidemics or other disease outbreaks may negatively impact our business operations, financial condition, liquidity, and consolidated results of operations

Risks Related to Our Business

1. 08Many of our customers have fluctuating budgets, which may cause substantial fluctuations in our results of operations
2. 09Because our markets are highly competitive, and our business depends significantly on winning contracts from government customers, if we are unable to compete effectively, we will be adversely affected
3. 10There are limited sources for some of our raw materials and components, which may significantly curtail our manufacturing operations
4. 11Our resources may be insufficient to manage demand
5. 12We are dependent on industry relationships
6. 13We may be unable to protect our proprietary technology
7. 14Technological advances, the introduction of new products, and new design and manufacturing techniques could adversely affect our operations unless we are able to adapt to the resulting change in conditions
8. 15We may be adversely affected by applicable environmental, health and safety laws and regulations
9. 16We may lose money or generate less than expected profits on our fixed-price contracts
10. 17Our business is subject to various laws and regulations favoring the U.S. government’s contractual position, and our failure to comply with such laws and regulations could harm our operating results and prospects
11. 18Our Chief Executive Officer has divided responsibilities and is not required to devote any specified amount of time to our business
12. 19We may be subject to disruptions, failures or cyber-attacks in our information technology systems and network infrastructures that could disrupt our operations, damage our reputation and adversely affect our business, operations, and financial results
13. 20Initiatives to upgrade our business processes and information technology systems to optimize our operational and financial performance involve many risks which could result in, among other things, business interruptions, higher costs and lost profits
14. 21If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, such as the cybersecurity incidents occurring in July and September 2024, our business, operations, and financial results could be materially and adversely affected
15. 22Misuse of our products may adversely affect the Company’s reputation
16. 23Adverse publicity about the Company and/or its brands, including without limitation, through social media or in connection with brand damaging events and/or public perception, could negatively impact our business
17. 24The terms of our outstanding long-term debt and any requirements to incur further indebtedness or refinance our outstanding indebtedness in the future could have a material adverse effect on our business and results of operations
18. 25due and payable, which would have a material adverse effect on our business, financial condition, results of operations and prospects and could lead to foreclosure on our assets
19. 26Our business is significantly dependent on our ability to meet our labor needs
20. 27Reductions in the availability of energy supplies or an increase in energy costs may increase our operating costs
21. 28Our nuclear operations subject us to various environmental, regulatory, financial, and other risks
22. 29Pursuant to the Price-Anderson Act, the DoE has provided indemnification by incorporating its Nuclear Hazards Indemnity Agreement into contracts deemed to involve a risk of nuclear liability. This indemnity protects subcontractors in work that entails radiological risk
23. 30Our business may suffer if it or its employees are unable to obtain the security clearances or other qualifications needed to perform services for its customers

Risks Related to our Acquisition Strategy

1. 31A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue
2. 32We may be unsuccessful in identifying suitable acquisition candidates, which may negatively impact our competitive position and our growth strategy
3. 33The due diligence process that we undertake in connection with acquisitions may not reveal all facts that may be relevant in connection with an investment
4. 34We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future
5. 35We typically retain the management of the businesses we acquire and rely on them to continue running their businesses, which leaves us vulnerable in the event they leave our Company
6. 36We may be required to take write downs or write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment

Risks Related to Ownership of Our Common Stock

1. 37Our executive officers, directors and principal stockholders, if they choose to act together, will continue to have the ability to control all matters submitted to stockholders for approval
2. 38Shares of our common stock have been, and may continue to be, thinly traded, which may contribute to volatility in our stock price and less liquidity for investors
3. 39Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors
4. 40Substantial future sales of shares of our common stock could cause the market price of our common stock to decline
5. 413,750,000 shares pledged as security for loans from financial institutions and that may be sold by such financial institutions in the event of a foreclosure of these loans
6. 42If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline
7. 43We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors
8. 44Compliance with changing laws, regulations and standards of corporate governance and public disclosure may result in additional expenses
9. 45Our payment of future quarterly dividends on our common stock is subject to the discretion and approval of our board of directors
10. 46We could be subject to securities class action litigation
11. 47Our amended and restated certificate of incorporation authorizes the issuance of shares of blank check preferred stock
12. 48We may issue a substantial amount of our common stock in connection with future acquisitions, and the sale of those shares could adversely affect our stock price
13. 49Techniques employed by short sellers or other derivative traders may drive down the market price of our common stock and/or spur litigation or regulatory action