Lsi Industries (LYTS) risk factors, FY2026 10-K

RISKS RELATED TO OUR STRATEGY

1. 01The inability to effectively execute our business strategies could adversely affect our financial condition and results of operations
2. 02The markets in which we operate are subject to competitive pressures that could affect selling prices, and therefore could adversely affect our operating results
3. 03Two of our largest market verticals are the refueling and convenience store and grocery markets, and any substantial change in these markets could have an adverse effect on our business
4. 04The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits
5. 05If we do not develop the appropriate new products or if customers do not accept new products, we could experience a loss of competitive position which could adversely affect future revenues
6. 06If we are unable to adequately protect our intellectual property, we may lose some of our competitive advantage

RISKS RELATED TO OUR OPERATIONS

1. 07Price increases in, and significant shortages of, raw materials and components; and shortages in transportation and increased fuel prices could adversely affect our operating margin
2. 08Our information technology systems are subject to certain cyber risks and could be subject to interruptions that are beyond our control
3. 09Labor shortages or increases in labor costs could adversely impact our business and results of operations
4. 10Changes in a customer’s demands and commitment to proprietary inventory could result in significant inventory write-offs
5. 11The turnover of independent commissioned sales representatives could cause a significant disruption in sales volume
6. 12The Company may be unable to sustain significant customer and/or channel partner relationships
7. 13A loss of key personnel or inability to attract qualified personnel could have an adverse effect on our operating results
8. 14Changes in a shift in product mix can have a significant impact on our gross margins
9. 15We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts
10. 16We face the potential harm of natural disasters, pandemics, acts of war, terrorism, international conflicts or other disruptions to our operationsNew
11. 17Artificial intelligence presents risks and challenges that can impact our businessNew

RISKS RELATED TO ROYSTON GROUP ACQUISITION

1. 18The Company may not have discovered undisclosed liabilities of Royston Group, if anyNew

RISKS RELATED TO LEGAL AND REGULATORY MATTERS

1. 19Potential changes in U.S. trade policies could have a material adverse effect on the Company
2. 20Changes in our tax rates and exposures to additional income tax liabilities could have an unfavorable effect on the Company’s reported results
3. 21Emphasis on environmental, social, and governance (“ESG”) matters by various stakeholders could negatively affect our business

RISKS RELATED TO FINANCIAL MATTERS

1. 22The Company incurred substantial indebtedness in connection with the acquisition of Royston GroupNew
2. 23The Company incurred substantial indebtedness in connection with the acquisition of Royston Group. As of the closing of the acquisition, on a consolidated basis, the Company had approximately $267.5 million in gross indebtedness outstanding under the Company’s Credit FacilityNew
3. 24A significant decline in our stock price could adversely affect our ability to raise additional capital
4. 25Increases in inflation and interest rates in the United States and elsewhere could adversely affect our business
5. 26Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price
6. 27the votes of holders of 66 2/3% of all outstanding shares are required to amend our Articles of Incorporation and to approve mergers, reorganizations, and similar transactions; and advance notice requirements by shareholders for director nominations and actions to be taken at annual meetings
7. 28Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft, and fraud, or in informing management of all material information in a timely manner