Holley (HLLY) risk factors, FY2025 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. 02If significant tariffs or other restrictions are placed on products or materials we import, or any related counter-measures are taken by foreign countries, our revenue and results of operations may be materially harmedNew
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 may continue to adversely affect us by increasing the cost of raw materials, which could continue to result in higher costs and decreased profitability. Consumer demand could be negatively impacted by higher prices as the result of inflationNew
5. 05Disruptions of supply or shortages of raw materials or components used in our products could continue to 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. 08Fuel shortages, or high fuel prices, could have a negative effect on the use of powered vehicles that use our productsNew
9. 09If we are unable to successfully design, develop and market new products, our business may be harmed
10. 10A drive toward electric vehicles or away from vehicle ownership in general could impact our business, sales, financial condition and results of operations
11. 11Our 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
12. 12If 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
13. 13We may not be able to effectively manage our growth
14. 14If we fail to attract new customers, or fail to do so in a cost-effective manner, we may not be able to increase sales
15. 15Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so
16. 16Competitors 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
17. 17Our profitability may decline as a result of increasing pressure on pricing
18. 18Our 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
19. 19Our reliance on foreign suppliers for some of the automotive parts we sell or include in our products presents risks to the business21% rewritten
20. 20We depend on distribution partners to display and present our products to customers, and our failure to maintain and further develop our relationships with distribution partners could harm our business38% rewritten
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 operations38% rewritten
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 harmed55% rewritten
29. 29We are required to assess our internal control over financial reporting, and our failure to maintain effective internal control over financial reporting could harm us49% rewritten
30. 30We previously identified a material weakness in our internal control over financial reporting, and we may experience additional material weaknesses or otherwise fail to design and maintain effective internal control over financial reportingNew
31. 31A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basisNew
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. 34If our goodwill, other intangible assets, or fixed assets become impaired, we may be required to record a charge to earnings34% rewritten
35. 35Global climate change and related regulations could negatively affect our business
36. 36Evolving expectations with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks53% rewritten
37. 37We must successfully manage the demand, supply, and operational challenges brought about by any disease outbreak, including epidemics, pandemics, or similar widespread public health concerns
38. 38We are exposed to political or country risk inherent in doing business in some countries, including China28% rewritten
39. 39If 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
40. 40Furthermore, 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
41. 41We may become involved in legal or regulatory proceedings and audits
42. 42We 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
43. 43Sales of our products by unauthorized retailers or distributors could adversely affect our authorized distribution channels and harm our reputation
44. 44We 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 future72% rewritten
45. 45regulatory or judicial orders enjoining or curtailing operations or requiring remedial or corrective measures, installation of pollution control equipment or other actionsNew
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 volatile38% rewritten
5. 53Reports 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
6. 54Future sales of our Common Stock and Warrants in the public market could cause our stock price to fall
7. 55We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to the Warrant holders, thereby making the Warrants worthless
8. 56The 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 restrictions82% rewritten
9. 57maintain certain financial, distribution and stock price levels. Generally, we are required to maintain a minimum amount of stockholders’ equityNew
10. 58Future 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
11. 59We do not intend to pay cash dividends for the foreseeable future
12. 60We are a “smaller reporting company” and we have elected to comply with certain reduced reporting and disclosure requirements which could make our common stock less attractive to investorsNew
13. 61Delaware 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 favorable36% rewritten
14. 62The 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