Outdoor Holding (POWW) risk factors, FY2025 10-K

Risk Related to Our Business

1. 01Our business, financial performance, and growth depends on our ability to attract and retain an active and engaged community of buyers and sellers on our e-commerce platform
2. 02Substantial competition may harm our business
3. 03Breaches of our information systems could adversely affect our reputation, disrupt our operations, and result in increased costs and loss of sales
4. 04We and the third parties with whom we work are subject to stringent and evolving obligations related to data privacy and security, and our actual or perceived failure to comply with such obligations (or such failure by the third parties with whom we work) could lead to adverse business consequences
5. 05A failure of our information technology systems, or an interruption in their operation due to internal or external factors including cyberattacks, could have a material adverse effect on our business, financial condition or results of operations
6. 06Generative artificial intelligence may have a significant impact on our business
7. 07Operations and continued development of our payments system and financial services offerings require ongoing investment, are subject to evolving laws, regulations, rules, and standards, and involve risk, including risks related to our dependence on third-party providers
8. 08Changes to our policies to protect buyers and sellers could increase our costs and loss rate, and failure to manage such programs effectively can result in harm to our reputation
9. 09Our performance is influenced by a variety of economic, social, and political factors
10. 10War, terrorism, other acts of violence, or natural, or manmade disasters, may affect the markets in which the Company operates, the Company’s customers, and the Company’s customer service, and could have a material adverse impact on our business, results of operations, or financial condition
11. 11If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights
12. 12We may be subject to intellectual property infringement claims, which could cause us to incur litigation costs and divert management attention from our business
13. 13We are engaged in legal proceedings that could cause us to incur unforeseen expenses and could occupy a significant amount of our management’s time and attention
14. 14Because many of our products are used for seasonal outdoor sporting activities, our operating results may be significantly impacted by unseasonable weather conditions. Accordingly, our operating results could suffer when weather patterns do not conform to seasonal norms

Risks Related to the Restatement and Failure to Timely File Required Reports

1. 15The matters relating to the restatement of our financial statements have required, and may continue to require, a significant amount of management time and accounting, financial and legal resources, which could adversely affect our business, financial condition and results of operations
2. 16We are and may continue to be subject to litigation, regulatory proceedings, and government enforcement actions arising from the restatement of our financial statements and related matters, which could result in significant judgments, settlements, penalties, and legal expenses
3. 17We expect to incur substantial costs in connection with remediation efforts following the restatement, which could adversely affect our results of operations
4. 18We may be required to indemnify our current and former directors, officers and employees in connection with litigation and other actions which could result in significant legal expenses and other costs to us
5. 19We may suffer adverse tax consequences in connection with our historical share-based compensation practices, which could have a negative impact on our results of operations and financial condition
6. 20Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital, impacts our ability to obtain alternative financing, and could have negative consequences under the terms of our existing credit agreements
7. 21Our reputation may be harmed by the Special Committee Investigation, the SEC Investigation, and the restatement, making it more difficult to attract business opportunities, employees, and investors
8. 22The restatement and related matters could cause increased volatility in the trading price of our securities
9. 23Investors may view our historical financial statements as less reliable following the restatement, which could adversely effect our access to capital markets and our stock price
10. 24These material weaknesses, if not remediated, create an increased risk of misstatement of the Company’s financial results, which, if material, may require future restatement thereof

Risks Related to Regulation

1. 25Current and future government regulations, particularly regulations relating to the sale of firearms and ammunition, may negatively impact the demand for products held for sale on our platform
2. 26Changes in government policies and firearms legislation could adversely affect our financial results
3. 27Our operating results may experience significant fluctuations
4. 28natural and manmade disasters, including health emergencies such as the recent COVID-19 pandemic
5. 29We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs
6. 30Our charter documents and Delaware law could make it more difficult for a third party to acquire us and discourage a takeover
7. 3110 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction

Risks Related to our Series A Preferred Stock

1. 32The Series A Preferred Stock ranks junior to all of our indebtedness and other liabilities
2. 33The trading market for the Series A Preferred Stock may not provide investors with adequate liquidity
3. 34We may issue additional shares of Series A Preferred Stock and additional series of preferred stock that rank on parity with the Series A Preferred Stock as to dividend rights, rights upon liquidation or voting rights
4. 35dividends on all Series A Preferred Stock outstanding and other classes or series of stock with greater or equal priority with respect to dividends
5. 36We may not be able to pay dividends on the Series A Preferred Stock if we have insufficient cash to make dividend payments
6. 37Our Series A Preferred Stock has not been rated
7. 38We may redeem the Series A Preferred Stock
8. 39Holders of Series A Preferred Stock have extremely limited voting rights
9. 40The Series A Preferred Stock is not convertible, and investors will not realize a corresponding upside if the market price of the Common Stock increases