Qnity Electronics (Q) risk factors, FY2025 10-K

Other

1. 01You should carefully consider the following risks and other information in this Annual Report on Form 10-K in evaluating us and our common stock

Risks Related to Our Business

1. 02Our results are affected by competitive conditions and customer preferences
2. 03Fluctuations in the demand for semiconductors and the overall volume of semiconductor manufacturing may decrease demand for our products and may adversely affect our business
3. 04If we are unable to anticipate and respond to rapid technological change and customer requirements by continuing to innovate and introduce new and enhanced products and solutions, we may experience a loss of market share, decreased sales, revenue, profitability and damage to our reputation
4. 05A large percentage of our net sales are generated from our international operations and are subject to economic, geopolitical, foreign exchange and other risks
5. 06We are subject to a variety of rapidly evolving environmental laws and regulations that could cause us to incur significant liabilities and expenses and subject us to environmental litigation
6. 07Supply chain and operational disruptions and volatility in energy and raw material costs could adversely impact our sales and earnings and impact access to sources of liquidity
7. 08If we do not successfully execute our go-to-market strategy, our business and financial performance may suffer
8. 09Changes in the global and local tax regulatory environments in, and the distribution of income among, the various jurisdictions in which we operate, could adversely impact our results of operations
9. 10On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted in the United States and imposes a 15% corporate alternative minimum tax (“CAMT”) on certain corporations. We continue to monitor the impact and risk of this on our future effective tax rate
10. 11If we are unable to attract or retain key personnel and qualified employees, or maintain relations with our employees, unions and other employee representatives, it could adversely affect our ability to compete and achieve our strategic goals
11. 12Our reliance on certain key customers, contract manufacturers and suppliers could adversely affect our overall sales and profitability
12. 13Risks related to trade disputes, regulations and policies could have an adverse impact on our operations and reduce the competitiveness or availability of our products relative to local and global competitors
13. 14Our business, results of operations and reputation could be adversely affected by industry-specific risks, including process safety, product stewardship and regulatory compliance issues
14. 15Our revenues and operating results have fluctuated in the past and may do so in the future, which could impact our stock price
15. 16Enforcing our intellectual property rights, or defending against intellectual property claims asserted by others, could adversely affect our business, results of operations, financial condition and cash flows
16. 17Failure to effectively manage acquisitions, divestitures, partnerships and other portfolio actions could adversely impact our business, results of operations, financial condition and cash flows
17. 18We may not be able to access the capital and credit markets on terms that are favorable to us, or at all

Risks Related to our Recent Spin-Off from DuPont

1. 19We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off
2. 20We could incur substantial additional costs and experience temporary business interruptions, and we may not be adequately prepared to meet the requirements of an independent, publicly traded company on a timely or cost-effective basis
3. 21We have incurred indebtedness in connection with the Spin-Off
4. 22We may have received better terms from unaffiliated third parties than the terms received in the commercial agreements we and/or certain of our subsidiaries will enter into with DuPont and/or certain of its subsidiaries
5. 23If the Spin-Off were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, DuPont could be subject to significant tax liabilities, and our indemnification obligations to DuPont related to such taxes could adversely affect our business, financial condition, and results of operations
6. 24We agreed to numerous restrictions to preserve the tax-free treatment of the Spin-Off, which may reduce our strategic and operating flexibility
7. 25Although we have not identified any conflicts of interest, certain of our directors and employees may have actual or potential conflicts of interest because of their financial or equity interests in DuPont, or because of their previous positions with DuPont
8. 26We are subject to certain restrictions in the Corteva Side Letter, which may restrict our ability to pursue our business strategies
9. 27Restrictions under our Intellectual Property Cross-License Agreement with DuPont will limit our ability to prosecute, maintain and enforce certain intellectual property

Risks Related to our Capital Stock

1. 28We cannot be certain that an active trading market for our common stock will be sustained and our stock price may fluctuate significantly
2. 29A large number of shares of our common stock are or will be eligible for future sale, which may cause our stock price to decline
3. 30Our stockholders’ percentage of ownership in Qnity may be diluted in the future
4. 31Our Series A Preferred Stock has separate voting rights over certain potentially material matters and transactions, and the Trust is required to vote against such matters and transactions
5. 32Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws, Delaware law and in the Tax Matters Agreement and other Spin-Off-related agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock
6. 33In addition, indemnity obligations and/or certain restrictive covenants in the Tax Matters Agreement might discourage, delay or prevent a change of control that you may consider favorable