Perimeter Solutions (PRM) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01The demand for our products is impacted by a number of factors outside of our control
2. 02A small number of customers represent a significant portion of our revenue, and a loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations
3. 03We are dependent on sales to the USDA Forest Service and the state of California, which account for a substantial portion of our revenue related to our Fire Safety segment
4. 04As a supplier and service provider to the U.S. government, we are subject to certain heightened risks, such as those associated with the government’s rights to audit and conduct investigations and with its rights to terminate contracts for convenience or default
5. 05Some of our sales are to foreign buyers, which exposes us to additional risks such as foreign political, foreign exchange, economic and regulatory risks
6. 06We are subject to risks from changes to trade policies, tariffs and import/export regulations by the U.S. and/or other foreign governments
7. 07Our profitability could be negatively impacted by price and inventory risk related to our business, including commodity price exposure
8. 08There can be no assurance that we will maintain our relationship with, or serve, our customers at current levels
9. 09Risks from the improper conduct of, or use of our products by, employees, agents, government contractors, or collaborators could adversely affect our reputation as well as our business, financial condition and results of operations
10. 10There is no guarantee that we will be able to continue purchasing products from our suppliers on a long-term basis
11. 11Production interruptions or shutdowns could increase our operating or capital expenditures or negatively impact the supply of products resulting in reduced sales
12. 12The operation of manufacturing plants involves many risks, including suspension of operations and increased costs or requirements stemming from new government statutes, regulations, guidelines and policies, including evolving environmental regulations
13. 13We rely on third-party logistics suppliers for the distribution, storage and transportation of raw materials, operating supplies and products
14. 14If new products are introduced into the market that are lower in cost, have enhanced performance characteristics or are considered preferable for environmental or other reasons, demand for some of our products could be reduced or eliminated
15. 15There are other risks that are inherent in our global operations
16. 16We are required to test goodwill, identified intangible assets and fixed assets for possible impairment and on an interim basis if there are indicators of a possible impairment
17. 17Our substantial indebtedness may adversely affect our cash flow and our ability to operate our business and fulfill our obligations under our indebtedness
18. 18The terms of our indebtedness may limit our ability to borrow additional funds or capitalize on business opportunities, and our future debt level may limit our future financial and operating flexibility
19. 19We may incur substantial additional indebtedness, which could further exacerbate the risks that we may face
20. 20Interest payments for borrowings under our revolving credit facility are based on variable rates. As a result, an increase in interest rates will reduce our cash flow available for other corporate purposes
21. 21We intend to pursue acquisitions. Our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations

Risks Related to Regulatory and Legal Matters

1. 22We are the subject of litigation by customers, suppliers and other third parties and may be the subject of such litigation in the future
2. 23A failure to comply with export control or economic sanctions laws and regulations could have a material adverse impact on our business, financial condition and results of operations. We may be unable to ensure that our distributors comply with applicable sanctions and export control laws
3. 24Because of our international operations, we could be materially adversely affected by violations of the U.S. FCPA and similar anticorruption, anti-bribery and anti-kickback laws
4. 25Our products are subject to extensive government scrutiny and regulation, including the USDA Forest Service qualification process. There can be no assurance that such regulations will not change and that our products will continue to be approved for usage

Risks Related to Operating as a Public Company and Our Corporate Structure

1. 26Our share price could be adversely affected if we are unable to maintain effective internal controls
2. 27The EverArc Founders, all of whom are directors in our company, have interests that are different, or in addition to the interests of our shareholders
3. 28Pursuant to the Founder Advisory Agreement, we may be required to pay significant fees to the EverArc Founder Entity, which could reduce cash available for investment in the business, working capital and distribution to shareholders
4. 29Our shareholders will experience dilution as a consequence of the issuance of our Common Stock as payment for the Advisory Amounts payable to the EverArc Founder Entity
5. 30Pursuant to the Founder Advisory Agreement, we will be required to make a termination payment if the Founder Advisory Agreement is terminated under certain circumstances

Risks Related to Taxes and the Redomiciliation Transaction

1. 31Anti-takeover provisions in the Company’s Organizational Documents could make an acquisition of us more difficult and limit attempts by our shareholders to replace or remove our current management
2. 32The forum selection provision in the Company’s Organizational Documents does not apply to establish the Court of Chancery of the State of Delaware as the forum for actions or proceedings brought to enforce a duty or liability created by the Securities Act or the Exchange Act
3. 33The expected benefits of the Redomiciliation Transaction may not be realized
4. 34Additional taxes could adversely affect our financial results
5. 35Changes in tax laws may materially adversely affect our business, prospects, financial condition and operating results
6. 36Cybersecurity attack, acts of cyber-terrorism, failure of technology systems and other disruptions to our information technology systems could compromise our information, disrupt our operations, and expose us to liability, which may adversely impact our business, financial condition and results of operations
7. 37Our insurance may not fully cover all of our operational risks, including, but not limited to, environmental risks, and changes in the cost of insurance or the availability of insurance could materially increase our insurance costs or result in a decrease in our insurance coverage
8. 38Inflation could adversely affect our business and results of operations
9. 39state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination and security of data
10. 40The loss of key personnel or our inability to attract and retain new qualified personnel could hurt our business and inhibit our ability to operate and grow successfully
11. 41management to effectively anticipate, implement, and manage personnel required to sustain our growth would have a material adverse effect on our business, financial condition and results of operations