NextBoat (NXB) risk factors, FY2025 10-K

Other

1. 011. Risks Relating to Our Business
2. 022. Risks Related to the Industry and Competition
3. 034. Risks Related to Intellectual Property

Risks Related to Our Business

1. 04Fluctuating interest rates may adversely impact OTH’s ability to procure financing
2. 05Improper handling of inventory could cause overstocking or inventory shortages
3. 06Our success depends to a significant extent on our manufacturers, and the loss of certain manufacturers could have an adverse effect on our business, financial condition, and results of operations
4. 07Boat manufacturers exercise control over our business
5. 08The failure to receive rebates and other manufacturer incentives on inventory purchases or retail sales could substantially reduce our margins
6. 09We depend on our ability to attract and retain customers
7. 10We depend on income from financing, insurance and extended service contracts
8. 11Our operations are dependent upon key personnel and team members
9. 12Customer trust and reputation are crucial in the yacht sales industry
10. 13If we cannot dispose of pre-owned boats acquired through our trade-in or direct purchase processes at prices that allow us to recover its costs, our profitability will be adversely affected
11. 14We rely on Floorplan Financing

Risks Related to Our Industry and Competition

1. 15The yacht and boat sales industry is highly sensitive to macroeconomic conditions and may experience severe fluctuations
2. 16Our business, as well as the entire retail marine industry, is highly seasonal, with seasonality varying in different geographic markets
3. 17We face intense competition
4. 18Failure to implement strategies to enhance our performance could have a material adverse effect on our business and financial condition
5. 19Demand in the powerboat industry is highly volatile
6. 20General economic conditions, particularly in the U.S., affect our industry, demand for our products and our business, and results of operations
7. 21Other recreational activities, poor industry perception, real or perceived human health or safety risks, changing consumer attitudes and environmental conditions can adversely affect the levels of boat purchases
8. 22Policy changes affecting international trade could adversely impact the demand for our products and our competitive position
9. 23We face substantial supplier and inventory acquisition risks
10. 24Our Marine Asset Recovery (MAR) division provides a valuable inventory source through the acquisition and resale of repossessed boats. However, changes in lender policies, consumer protection laws, or state and federal regulations could limit our ability to access or efficiently process these assets
11. 25Manufacturer recall campaigns could adversely affect our business
12. 26Climatic events may adversely impact our operations, disrupt the business of our third party vendors on whom we rely upon for products and services, and may not be adequately covered by our insurance
13. 27Increases in fuel prices may adversely affect our business
14. 28The availability of boat insurance is critical to our success
15. 29We face expansion and acquisition risks

Risks Related to Regulatory & Compliance Challenges

1. 30Environmental and other regulatory issues impact our operations from time to time
2. 31We have established online marketplaces and a failure in such online operations, security breaches and cybersecurity risks could disrupt our business and lead to reduced sales and growth prospects and reputational damage
3. 32We may be exposed to lawsuits from time to time, which could affect us adversely

Risks Related to Intellectual Property

1. 33A significant portion of our intellectual property is not protected through patents or formal copyright registration. As a result, we do not have the full benefit of patent or copyright laws to prevent others from replicating our products, product candidates, and brands
2. 34Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information
3. 35We may need to defend ourselves against patent, copyright or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs
4. 36We may be unable to adequately maintain, enforce, and protect our intellectual property rights and we may be accused of infringing the intellectual property rights of third parties, which could have a material adverse effect on our business, financial condition, and operations