Resolute Holdings Management (RHLD) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We manage the business of a single company, CompoSecure Holdings, which subjects us to a greater risk of significant loss
2. 02Our growth prospects may depend upon the successful negotiation of management agreements with additional managed companies and the payment by those companies to us of management fees
3. 03The management fees payable to us by our managed companies may impact our management priorities or cause us to select riskier managed company businesses to increase our compensation
4. 04We face risks associated with conducting due diligence into potential additional managed companies
5. 05In addition, if we are unable to timely engage third-party providers, our ability to evaluate and negotiate with more complex managed companies could be adversely affected
6. 06We may change our strategies from time to time
7. 07The termination of the CompoSecure Management Agreement or the management agreements that we may enter into with other companies from time to time, or the reduction of the management fees payable to us thereunder, would materially and adversely affect us
8. 08Our managed companies, including CompoSecure Holdings, may not be able to successfully fund future activities of new businesses on acceptable terms
9. 09We may enter into management agreements with a limited number of companies, or with companies that are concentrated in certain industries or geographic regions, which could negatively affect our performance to the extent those concentrated holdings perform poorly
10. 10Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition
11. 11We are a new company and have a limited operating history
12. 12We and our managed companies are dependent upon our key personnel for our future success, particularly David Cote and Tom Knott
13. 13Conflicts of interest with our directors, executive officers or other employees could damage our reputation and negatively impact our business

Risks Related to the Business of CompoSecure

1. 14Rapidly evolving domestic and global economic conditions are beyond CompoSecure’s control and could materially adversely affect CompoSecure’s business, operations and results of operations
2. 15CompoSecure may not be able to sustain its revenue growth rate in the future
3. 16Failure to retain existing customers or identify and attract new customers could adversely affect CompoSecure’s business, financial condition and results of operations
4. 17Any failure by CompoSecure to identify, manage, integrate and complete acquisitions and other significant transactions successfully could harm its financial results, business and prospects
5. 18Data and security breaches could compromise CompoSecure’s systems and confidential information, cause reputational and financial damage and increase risks of litigation, which could adversely affect its business, financial condition and results of operations
6. 19Additionally, it is possible that unauthorized access to sensitive customer and business data may be obtained through inadequate use of security controls by CompoSecure’s customers, suppliers or other vendors
7. 20The ability to efficiently execute and operate business functions and systems without interruption is critical to CompoSecure’s business. A significant portion of the communication between CompoSecure’s employees, customers and suppliers relies upon CompoSecure’s integrated and complex IT systems
8. 21Disruptions at CompoSecure’s primary production facility may adversely affect its business, results of operations and/or financial condition
9. 22CompoSecure’s future growth may depend upon its ability to develop, introduce, manufacture and commercialize new products, which can be a lengthy and complex process. If CompoSecure is unable to introduce new products and services in a timely manner, its business could be materially adversely affected
10. 23A disruption in CompoSecure’s operations or supply chain or the performance of its suppliers, liquidity partners and/or development partners could adversely affect its business and financial results
11. 24Regulatory uncertainty surrounding the digital asset environment and the regulatory classification of such digital assets
12. 25U.S. regulators, courts and lawmakers alike are grappling with these questions, and the legal landscape remains uncertain
13. 26subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect CompoSecure’s business, operating results and financial condition, each of which may materially and adversely affect the CompoSecure Management Fee payable to us
14. 27Regulatory Risks of Operating as an Unregistered Exchange or as Part of an Unregistered Exchange Mechanism
15. 28CompoSecure’s inability to safeguard against misappropriation or infringement of its intellectual property may adversely affect its business
16. 29CompoSecure may incur substantial costs because of litigation or other proceedings relating to patents and other intellectual property rights
17. 30Production quality and manufacturing process disruptions could adversely affect CompoSecure’s business
18. 31CompoSecure is dependent on certain distribution partners for distribution of its products and services. A loss of distribution partners could adversely affect CompoSecure’s business
19. 32CompoSecure faces competition that may result in a loss of its market share and/or a decline in profitability
20. 33CompoSecure Holdings’ long-lived assets represent a significant portion of its total assets, and their full value may never be realized
21. 34CompoSecure’s failure to operate its business in compliance with the security standards of the payment card industry or other industry standards applicable to its customers, such as payment networks certification standards, could adversely affect its business
22. 35As consumers and businesses spend less, CompoSecure’s business, operation outcomes and financial state may be adversely affected
23. 36Product liability and warranty claims and their associated costs may adversely affect CompoSecure’s business
24. 37If tariffs and other restrictions on imported goods are imposed or increased by the U.S. government, CompoSecure’s revenue and operations may be materially and adversely affected
25. 38CompoSecure’s international sales subject CompoSecure to additional risks that can adversely affect its business, operating results and financial condition
26. 39CompoSecure relies on licensing arrangements in production and other fields, and actions taken by any of its licensing partners could have a material adverse effect on its business
27. 40The adoption of new tax legislation could affect CompoSecure’s financial performance
28. 41Pandemics or a resurgence of a pandemic may adversely affect CompoSecure’s business, financial condition, liquidity or results of operations

Risks Related to Other Managed Companies

1. 42Our managed companies may be subject to a number of inherent risks
2. 43Economic recessions or downturns could impair our managed companies and harm our operating results
3. 44Changes in the laws or regulations governing the businesses of our managed companies and any failure by us or our managed companies to comply with these laws or regulations, could negatively affect the profitability of our operations or of our managed companies
4. 45We and our managed companies may experience cyber security incidents and are subject to cyber security risks
5. 46We may become involved in litigation, arbitration and governmental proceedings, including those stemming from third-party conduct beyond our control

Risks Related to Ownership of Our Common Stock

1. 47Investing in our securities involves a high degree of risk and is highly speculative
2. 48Certain provisions in our certificate of incorporation, bylaws and Delaware law may discourage takeovers and limit the power of our stockholders
3. 49Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities that may prevent us from receiving the benefit of certain corporate opportunities
4. 50We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make shares of our common stock less attractive to investors
5. 51We could incur substantial additional costs and experience temporary business interruptions, such costs may increase when we cease to be an emerging growth company, and we may not be adequately prepared to meet the requirements of an independent, publicly traded company on a timely or cost-effective basis
6. 52Our stock price may fluctuate significantly
7. 53Substantial sales of our common stock may occur in the future, which could cause our stock price to decline or be volatile
8. 54We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off
9. 55We or CompoSecure may fail to perform under various transaction agreements that were executed as part of the separation