Holley (HLLY) risk factors, FY2024 10-K

Risks Relating to Our Business and Industry

1. 01Global economic and financial market conditions beyond our control might materially and negatively impact us
2. 02We must successfully manage the demand, supply, and operational challenges brought about by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns
3. 03Unfavorable economic conditions could have an adverse impact on consumer discretionary spending and therefore adversely impact our business, sales, financial condition and results of operations
4. 04Inflation could result in higher costs and decreased profitability
5. 05Disruptions of supply or shortages of raw materials or components used in our products could harm our business and profitability
6. 06A significant disruption in the operations of our manufacturing facilities or distribution centers could have a material adverse effect on our business, sales, financial condition and results of operations
7. 07Failure to compete effectively could reduce our market share and significantly harm our business, sales, financial condition and results of operations
8. 08If we are unable to successfully design, develop and market new products, our business may be harmed
9. 09A drive toward electric vehicles or away from vehicle ownership in general could impact our business, sales, financial condition and results of operations
10. 10Our business depends on maintaining and strengthening our brands to generate and maintain ongoing demand for our products, and a significant reduction in such demand could harm our business, sales, financial condition and results of operations
11. 11If we inaccurately forecast demand for our products, we may manufacture either insufficient or excess quantities, which, in either case, could adversely affect our financial performance
12. 12We may not be able to effectively manage our growth
13. 13If we fail to attract new customers, or fail to do so in a cost-effective manner, we may not be able to increase sales
14. 14Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so
15. 15Competitors have attempted, and will likely continue to attempt to, imitate our products and technology. If we are unable to protect or preserve the image of our brands and proprietary rights, our business, sales, financial condition and results of operations may be harmed
16. 16Our profitability may decline as a result of increasing pressure on pricing
17. 17Our current and future products may experience quality problems from time to time that can result in negative publicity, litigation, product recalls, and warranty claims, which could result in decreased sales and operating margin, and harm to our brand
18. 18Our reliance on foreign suppliers for some of the automotive parts we sell to our customers or include in our products presents risks to the business
19. 19our ability or inability to enforce any agreements with our foreign suppliers
20. 20We depend on retail partners to display and present our products to customers, and our failure to maintain and further develop our relationships with retail partners could harm our business
21. 21If our plans to increase sales through our DTC channel are not successful, our business, sales, financial condition and results of operations could be harmed
22. 22Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management
23. 23Our results of operations may be adversely affected by increases in labor costs, labor shortages, and/or turnover
24. 24Our operations and reputation may be negatively impacted if our information technology systems fail to perform adequately or if we experience an interruption in our operations due to security threats or disruptions
25. 25We are exposed to risks related to the failure to protect the integrity of individually identifiable information of our customers, vendors, suppliers and employees
26. 26We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not be available on terms acceptable to us, or at all
27. 27Events affecting the financial services industry could have an adverse impact on the Company's business operations, financial condition, and results of operations
28. 28Our indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with the covenants in our current credit agreements, our business, sales, financial condition and results of operations could be harmed
29. 29potentially places us at a competitive disadvantage compared to our competitors that have less indebtedness
30. 30Our failure to maintain effective internal controls over financial reporting could harm us
31. 31We have identified a material weakness in our internal control over financial reporting that if not remediated could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations
32. 32Our disclosure controls and procedures may not prevent or detect all acts of fraud
33. 33We may acquire or invest in other companies to complement our organic growth, which may not be successful and may divert financial and management resources
34. 34Our management team does not have extensive experience managing a public company
35. 35If our goodwill, other intangible assets, or fixed assets become impaired, we may be required to record a charge to earnings
36. 36Global climate change and related regulations could negatively affect our business
37. 37Increasing scrutiny and evolving expectations with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks
38. 38We are exposed to political or country risk inherent in doing business in some countries, including China
39. 39increased financial accounting and reporting burdens and complexity
40. 40If we are unable to effectively adopt or react to the risks posed by and the opportunity presented by, new technology, such as artificial intelligence, machine learning, blockchain or other new approaches to data mining, we may be exposed to risks related to the adoption and application of such technology
41. 41Furthermore, reliance on third-party technologies introduces risks outside of our control, including potential challenges related to data privacy, intellectual property rights, and compliance with evolving regulatory standards
42. 42We may become involved in legal or regulatory proceedings and audits
43. 43We may become subject to intellectual property claims or lawsuits that could cause us to incur significant costs or pay significant damages or that could prohibit us from selling our products
44. 44Sales of our products by unauthorized retailers or distributors could adversely affect our authorized distribution channels and harm our reputation
45. 45We are subject to environmental, health, safety, and other governmental laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future
46. 46Changes in, or any failure to comply with, privacy laws, regulations, and standards may adversely affect our business
47. 47Our insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses that are not covered by our insurance
48. 48Changes in tax law or regulation, effective tax rates and unanticipated tax liabilities could adversely affect our effective income tax rate and profitability

Risks Related to Ownership of Our Securities

1. 49Certain of our stockholders, including the Holley Stockholder and the Sponsor, may have conflicts of interest with other stockholders and may limit other stockholders' ability to influence corporate matters
2. 50Warrants are exercisable for Common Stock, which could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders
3. 51The Warrants may expire worthless, and the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Warrants approve of such amendment
4. 52The market price and trading volume of Common Stock and Warrants may be volatile
5. 53changes in accounting principles, policies and guidelines; and
6. 54Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the market price and trading volume of Common Stock and Warrants
7. 55Future sales of our Common Stock and Warrants in the public market could cause our stock price to fall
8. 56We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to the Warrant holders, thereby making the Warrants worthless
9. 57The NYSE may delist our securities from trading on its exchange, which could limit stockholders’ ability to make transactions in our securities and subject us to additional trading restrictions
10. 58a decreased ability to issue additional securities or obtain additional financing in the future
11. 59Future issuances of debt securities and equity securities may adversely affect us, including the market price of Common Stock and may be dilutive to existing stockholders
12. 60We do not intend to pay cash dividends for the foreseeable future
13. 61The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies
14. 62Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti- takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
15. 63advance notice procedures with which stockholders must comply to nominate candidates to the board of directors or to propose matters to be acted upon at a stockholders’ meeting
16. 64The provisions of the certificate of incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers