CPI Card Group (PMTS) risk factors, FY2024 10-K

Risks Relating to our Business and Industry

1. 01Risks associated with reduced levels of consumer and business spending, inflation-related challenges and the effects of an economic downturn could adversely affect our business, financial condition and results of operations
2. 02Our operating results are unpredictable and may vary significantly from quarter to quarter and annually, and may differ significantly from our expectations
3. 03Failure to retain our existing customers or identify and attract new customers would have a material adverse effect on our business
4. 04Our marketplace is highly competitive, relatively saturated and increasingly consolidated. We expect these market dynamics to continue for new product innovations, and as competitors develop lower-cost production, competitors consolidate and other competitors attempt to enter the markets in which we operate
5. 05A disruption or other failure in our supply chain could adversely affect our business and financial results
6. 06Interruptions in our operations, particularly in our IT systems, could have a material adverse effect on our business and reputation
7. 07penalties if our systems do not meet certain operating standards, and failure to operate in accordance with the standards of one or more of the Payment Card Brands could result in a loss of compliance of our facilities, any of which could have a material adverse effect on our business
8. 08We may experience software defects, which could harm our business and reputation and expose us to potential liability
9. 09Disruptions in production at one or more of our facilities may have a material adverse impact on our business, results of operations and/or financial condition
10. 10Our business could suffer from problems in production quality, materials and process, which could reduce, delay or interrupt production of our products, resulting in adverse impacts to our business and financial results
11. 11Costs relating to product defects, and any related product liability and warranty claims may materially adversely affect our business
12. 12The failure to effectively recruit, retain and develop qualified personnel and implement effective succession processes could adversely affect our success and could have a material adverse effect on our business, financial condition and results of operations
13. 13The covenants and restrictions contained in agreements governing our indebtedness may adversely affect our business and results of operations, may restrict our ability to grow and could make it difficult or impossible to timely make our debt service payments or refinance our debt when it comes due
14. 14We may not be able to refinance our existing long-term debt if necessary, or we may only be able to do so at a higher interest rate or on other less favorable terms
15. 15We may not be able to successfully execute our acquisition strategy or integrate acquisitions successfully, or successfully enter into, maintain and leverage business relationships, which could adversely affect our financial condition and results of operations
16. 16In executing our strategy, we have consolidated certain of our facilities and divested certain of our businesses. We will continue to evaluate such opportunities
17. 17Expectations of stakeholders relating to environmental, social and governance matters may impose additional costs and expose us to new risks as well as have an adverse effect on our business, financial condition, results of operations, and cash flows
18. 18Damage to our reputation or brand image can adversely affect our business
19. 19Climate change may adversely affect our operations and financial performance
20. 20We may be unable to adequately protect our trade secrets and intellectual property rights against misappropriation or infringement, which may have a material adverse effect on our business
21. 21We 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
22. 22Our ability to raise capital in the future may be limited, which could lead to delays in innovation and abandonment of our strategic initiatives
23. 23Our long-lived assets recorded as of December 31, 2024 include $68.6 million of plant, equipment, leasehold improvements and operating lease right-of-use assets, $10.5 million of net intangible assets, and $47.2 million of goodwill
24. 24Current and prospective regulations, changes in our product offerings and customer contractual requirements addressing consumer privacy and data use and security could increase our costs of operations, which could adversely affect our operations, results of operations and financial condition
25. 25Our failure to operate our business in accordance with the standards of the PCI Security Standards Council or other industry standards applicable to our customers, such as Payment Card Brands compliance standards, could have a material adverse effect on our business
26. 26Delays or interruptions in our ability to source raw materials and components used in our products from foreign countries, as well as trade restrictions on goods imported into the United States, could materially harm our business, financial condition and results of operations
27. 27Prolonged military action in foreign conflicts has impacted and may continue to have adverse effects on the global economy, and such effects could materially adversely affect our business, operations, operating results and financial condition
28. 28Conditions in the banking system and financial markets, including the failure of banks and financial institutions, could have an adverse effect on our business, financial condition and results of operations
29. 29Environmental, health and safety laws and regulations, including climate change regulations, expose us to liability and any such liability may have a material adverse effect on our business
30. 30releases of, or exposure to, regulated materials, may have a material adverse effect on our business, financial condition and results of operations

Risks Relating to Ownership of our Common Stock

1. 31Our former controlling stockholders continue to own a significant percentage of our common stock, and such stockholders may influence major corporate decisions of the Company and our interests may conflict with the interests of other holders of our common stock
2. 32The concentration of ownership by our significant stockholders and the sale or availability for sale of substantial amounts of our common stock may adversely impact the market price and liquidity of our common stock
3. 33Conflicts of interest may arise because directors who are principals of or who were nominated by our significant stockholders serve on our board of directors
4. 34Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline
5. 35Our business and operations could be negatively affected by stockholder activism and securities litigation
6. 36Certain provisions of our organizational documents and other contractual provisions may make it difficult for stockholders to change the composition of our board of directors and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial
7. 37Our business and financial results may be materially adversely affected by various legal and regulatory proceedings