GPGI (GPGI) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Rapidly evolving domestic and global economic conditions are beyond our control and could materially adversely affect our business, operations, and results of operations
2. 02We may not be able to sustain our revenue growth rate in the future
3. 03Failure to retain existing customers or identify and attract new customers could adversely affect our business, financial condition and results of operations
4. 04Any failure by us to identify, manage, integrate and complete acquisitions and other significant transactions successfully could harm our financial results, business and prospects
5. 05Data and security breaches could compromise our systems and confidential information, cause reputational and financial damage, and increase risks of litigation, which could adversely affect our business, financial condition and results of operations
6. 06Additionally, it is possible that unauthorized access to sensitive customer and business data may be obtained through inadequate use of security controls by our customers, suppliers or other vendors
7. 07System outages, data loss or other interruptions affecting our operations could adversely affect our business and reputation
8. 08Disruptions at our primary production facility may adversely affect our business, results of operations and/or financial condition
9. 09Our future growth may depend upon our ability to develop, introduce, manufacture and commercialize new products, which can be a lengthy and complex process. If we are unable to introduce new products and services in a timely manner, our business could be materially adversely affected
10. 10A disruption in our operations or supply chain or the performance of our suppliers, liquidity partners and/or development partners could adversely affect our business and financial results
11. 11Digital asset storage systems, such as the Arculus Cold Storage Wallet, are subject to potential illegal misuse, risks related to a loss of funds due to theft of digital assets, security and cybersecurity risks, system failures and other operational issues, which could cause damage to our reputation and brand
12. 12Regulatory uncertainty surrounding the digital asset environment, and the regulatory classification of such digital assets
13. 13U.S. regulators, courts and lawmakers alike are grappling with these questions, and the legal landscape remains uncertain
14. 14December 2024, the U.S. Treasury finalized a rule requiring digital asset brokers, including non-custodial brokers, to report additional user information, although such rule is the subject of ongoing litigation
15. 15Regulatory Risks of Operating as an Unregistered Exchange or as Part of an Unregistered Exchange Mechanism
16. 16Our inability to safeguard against misappropriation or infringement of our intellectual property may adversely affect our business
17. 17We may incur substantial costs because of litigation or other proceedings relating to patents and other intellectual property rights
18. 18Production quality and manufacturing process disruptions could adversely affect our business
19. 19We are dependent on certain distribution partners for distribution of our products and services. A loss of distribution partners could adversely affect our business
20. 20We face competition that may result in a loss of our market share and/or a decline in profitability
21. 21Our long-lived assets recorded as of December 31, 2024 were $28.9 million, representing approximately 6.1% of our total assets, of which we have recorded plant, equipment and leasehold improvements of $23.4 million, as our operations require significant investments in machinery and equipment
22. 22Our failure to operate our business in compliance with the security standards of the payment card industry or other industry standards applicable to our customers, such as payment networks certification standards, could adversely affect our business
23. 23As consumers and businesses spend less, our business, operation outcomes, and financial state may be adversely affected
24. 24Product liability and warranty claims and their associated costs may adversely affect our business
25. 25If tariffs and other restrictions on imported goods are imposed by the U.S. government, our revenue and operations may be materially and adversely affected
26. 26Our international sales subject us to additional risks that can adversely affect our business, operating results and financial condition
27. 27We rely on licensing arrangements in production and other fields, and actions taken by any of our licensing partners could have a material adverse effect on our business
28. 28The adoption of new tax legislation could affect our financial performance
29. 29Pandemics or a resurgence of a pandemic may adversely affect our business, financial condition, liquidity or results of operations

Risks Related to the Resolute Holdings Management Agreement

1. 30Our business is managed for a fee by Resolute Holdings, which has substantial influence over our business, operations and strategy and upon which our business is heavily reliant
2. 31The Management Agreement does not create a mutually exclusive relationship between Holdings and Resolute Management
3. 32The Management Agreement may be terminated by Resolute Holdings or Holdings, and a termination fee may be payable in certain circumstances
4. 33Resolute Holdings maintains a contractual as opposed to a fiduciary relationship with Holdings, and has limited liability under the Management Agreement for which they may be indemnified
5. 34We may have conflicts of interest with Resolute Holdings and its other affiliates

Risks Related to the Tax Receivable Agreement

1. 35We may be required to pay certain parties for most of the realized benefits relating to any additional tax depreciation or amortization deductions that we may claim
2. 36In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement
3. 37The acceleration of payments under the Tax Receivable Agreement in the case of certain changes of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our Class A Common Stock

Risks Related to Our Indebtedness

1. 38We had approximately $197.5 million of indebtedness as of December 31, 2024, consisting of amounts outstanding under our senior secured credit facility
2. 39Upon the occurrence of an event of default relating to our credit facility, the lenders could elect to accelerate payments due and terminate all commitments to extend further credit
3. 40The debt outstanding under our existing credit facility has a variable rate of interest that is based on the SOFR which may have consequences for us that cannot be reasonably predicted and may increase our cost of borrowing in the future
4. 41Our credit facility contains restrictive covenants that may impair our ability to conduct business
5. 42Our only significant asset is our ownership of our subsidiaries’ business. If the business of our subsidiaries is not profitably operated, they may be unable to make distributions to enable us to pay any dividends on our common stock or satisfy our other financial obligations
6. 43Provisions in our Charter and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A Common Stock and could entrench management
7. 44We may be unable to satisfy the Nasdaq Global Market listing requirements in the future, which could limit investors’ ability to effect transactions in our securities and subject us to additional trading restrictions
8. 45We incur significant costs and obligations as a result of being a public company
9. 46We are a "controlled company" within the meaning of the Nasdaq listing rules and, as a result, qualify for and rely on certain exemptions from certain corporate governance requirements
10. 47As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our securities less attractive to investors
11. 48If we do not properly maintain and implement all required accounting practices and policies, including new accounting practices and policies, as applicable, we may be unable to provide the financial information required of a United States publicly traded company in a timely and reliable manner
12. 49If our operating performance does not meet market expectations, the price of our securities may decline
13. 50The exercise price for our Warrants is $7.97 per share (as adjusted effective February 28, 2025), subject to adjustment. There can be no assurance that the Warrants will remain in the money prior to their expiration and, as such, the Warrants may expire worthless
14. 51Our Warrants may be redeemed prior to their exercise at a time that is disadvantageous to the holders, thereby making such Warrants worthless
15. 52Warrants to purchase our Class A Common Stock are presently exercisable, which could increase the number of shares of Class A Common Stock eligible for future resale in the public market and result in dilution to our stockholders
16. 53We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002, which could have a material adverse effect on our business
17. 54Our ability to successfully operate our business largely depends upon the efforts of certain key personnel. The loss of such key personnel could adversely affect our operations and profitability
18. 55Our ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for our securities
19. 56Future sales of our securities, including resale of securities issued to certain stockholders, may reduce the market price of our securities that you might otherwise obtain
20. 57Because certain significant stockholders control a significant percentage of our Class A Common Stock, such stockholders may influence major corporate decisions of the Company and our interests may conflict with the interests of other holders of our Class A Common Stock
21. 58Our Charter renounces any expectancy in or right to be offered an opportunity to participate in certain transactions or matters that may be investment, corporate or business opportunities and that are presented to the Company or our officers, directors or stockholders
22. 59Our Bylaws designate the Court of Chancery in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by stockholders, which could limit the ability of stockholders to obtain a favorable judicial forum for disputes
23. 60We 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 securities prices, which could cause you to lose some or all of your investment
24. 61We may be subject to securities litigation, which is expensive and could divert management attention