What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-21 compared with 2023-02-22 · 130 added, 132 removed, 70 unchanged (79% of the section changed)

ITEM 1A—RISK FACTORS

The Company’s operations could be affected by

various risks, many of which are beyond its control.

The Company’s operations could be affected

by various risks, many of which are beyond its control.

Based on current information, the Company believes that the following identifies

the most significant risk factors that could adversely affect its business.

Past financial performance may not be a reliable indicator

of future performance and historical trends should not be used to anticipate results or trends in future periods.

In evaluating the Company’s business, the following

risk factors, as well as other information in this report, should be carefully considered.

Changes in government policies and firearms legislation

could adversely affect the Company’s financial results.

the most significant risk factors that could have a material, adverse effect on its business, operating results,

and financial

Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to

anticipate results or trends in future periods.

In evaluating the Company’s business, the

following risk factors, as well as other information in this report, should be carefully considered.

Changes in government policies and firearms

legislation could adversely affect the Company’s financial results.

The sale, purchase, ownership, and use of firearms

19 unchanged sentences

Currently, federal and several states’ legislatures

are considering additional legislation relating to the regulation of firearms.

These proposed bills are numerous and extremely varied,

but many seek either to restrict or ban the sale and, in some cases, the ownership of various types of firearms.

Other legislation seeks

to require new technologies, such as microstamping and so-called “smart gun” technology, which are not proven, reliable or

Such legislation became effective in California in 2013, which has limited our ability to sell certain products in California.

If similar legislation is enacted in other states, or at the Federal level, it could effectively ban or severely limit the sale of affected

There also are legislative proposals to limit magazine capacity.

are considering additional legislation relating to the regulation of firearms, and a number of new laws have been enacted at the federal,

state, and local level.

Enacted legislation and proposed bills are numerous and extremely varied, but many seek to limit magazine capacity,

restrict or ban the sale and, in some cases, the ownership of various types of firearms, or ban commonly owned firearms with certain features.

Other legislation seeks to require new technologies, such as microstamping and so-called “smart gun” technology, which are

not proven, reliable or feasible.

The Company believes that the lawful private ownership

6 unchanged sentences

for example, limiting the number of firearms that may be purchased in a specified time, increasing the age for ownership, imposing additional

licensing or registration requirements, creating additional restrictions on certain, common firearm features, and levying new taxes on

registration requirements, creating additional restrictions on certain, common firearm features, and levying new taxes on

firearms and/or ammunition.

1 unchanged sentence

be further adversely affected if legislation with diverse requirements is enacted .

With literally thousands of laws being proposed at

the federal, state and local levels, if even a small percentage of these laws are enacted and they are incongruent, the Company could

With literally thousands of laws being proposed

at the federal, state and local levels, if even a small percentage of these laws are enacted and they are incongruent, the Company could

find it difficult, expensive or even practically impossible to comply with them, impeding new product development and distribution of

existing products.

The COVID-19 pandemic could have a significant

adverse impact on the Company’s operations, financial results, cash flow, and financial condition.

The COVID-19 pandemic created significant uncertainty

and adversely impacted many industries throughout the global economy.

Thus far, the Company has been able to mitigate the impact of COVID-19

through its proactive measures.

The extent to which it impacts the Company’s operations, financial results, cash flow, and financial

condition is difficult to predict and dependent upon many factors over which the Company has no control.

These factors include, but are

not limited to, the duration and severity of the pandemic;

government restrictions on businesses and individuals;

potential significant

adverse impacts on the Company’s employees, customers, suppliers, or service providers;

the impact on U.S.

and global economies

and the timing and rate of economic recovery;

and potential adverse effects on the financial markets, any of which could negatively impact

The Company’s results of operations could be adversely affected

3 unchanged sentences

These matters include, but are not limited to, assertions of allegedly defective product design or

manufacture, alleged failure to warn, purported class actions against firearms manufacturers, generally seeking relief such as medical

expense reimbursement, property damages, and punitive damages arising from accidents involving firearms or the criminal misuse of firearms,

and those lawsuits filed on behalf of municipalities alleging harm to the general public.

Various factors or developments can lead to

changes in current estimates of liabilities such as final adverse judgment, significant settlement or changes in applicable law.

adverse outcome in any one or more of these matters could have a material adverse effect on the Company’s financial results.

Note 21 to the financial statements which are included in this Annual Report on Form 10-K.

The Company relies upon relationships with financial

institutions.

The Company utilizes the services of numerous financial

institutions, including banks, insurance carriers, transfer agents, and others.

Anti-gun politicians, gun-control activists, and others

may target these institutions and attempt to pressure them into ceasing to do business with the Company, or to use financial relationships

to impose unacceptable and improper restrictions on the Company’s business, which could have a material adverse impact on our business,

operating results, and financial condition.

Our insurance may be insufficient to protect us from claims or losses.

We maintain insurance coverage with third-party insurers.

However, not every risk or liability is or can be protected by insurance, and, for those risks we insure, the limits of coverage we purchase

or that are reasonably obtainable in the market may not be sufficient to cover all actual losses or liabilities incurred.

Moreover, there

is a risk that commercially available liability insurance will not continue to be available to us at a reasonable cost, if at all.

liability claims or losses exceed our current or available insurance coverage, our business and prospects may be harmed.

manufacture, alleged failure to warn, claimed unfair trade practices, purported class actions against firearms manufacturers, generally

seeking relief such as medical expense reimbursement, property damages, and punitive damages arising from accidents involving firearms

or the criminal misuse of firearms, and those lawsuits filed on behalf of municipalities alleging harm to the general public.

factors or developments can lead to changes in current estimates of liabilities such as final adverse judgment, significant settlement

or changes in applicable law.

A future adverse outcome in any one or more of these matters could have a material adverse effect on the

Company’s financial results.

See Note 20 to the financial statements which are included in this Annual Report on Form 10-K.

The Company relies upon relationships with

financial institutions.

The Company utilizes the services of numerous

financial institutions, including banks, insurance carriers, transfer agents, and others.

Anti-gun politicians, gun-control activists,

and others may target these institutions and attempt to pressure them into ceasing to do business with the Company, or to use financial

relationships to impose unacceptable and improper restrictions on the Company’s business, which could have a material adverse impact

on the Company’s business, operating results, and financial condition.

The Company’s insurance may be insufficient to protect us

from claims or losses.

The Company maintains insurance coverage with

third-party insurers.

However, not every risk or liability is or can be protected by insurance, and, for those risks it insures, the limits

of coverage it purchases or that are reasonably obtainable in the market may not be sufficient to cover all actual losses or liabilities

Moreover, there is a risk that commercially available liability insurance will not continue to be available to the Company at

a reasonable cost, if at all.

If liability claims or losses exceed the Company’s current or available insurance coverage, its business

may be harmed.

The Company’s results of operations could

3 unchanged sentences

Decreased demand could

result from a macroeconomic downturn, or could be specific to the firearms industry as a result of social, political, or other factors.

result from a macroeconomic downturn, or could be specific to the firearms industry as a result of social,

political, or other factors.

If the decrease in demand occurs abruptly, the adverse impact would be even greater.

The financial health of our independent distributors is critical to

Over 90% of our sales are made to 15 federally licensed,

independent wholesale distributors.

We review our distributors’ financial statements and have credit insurance for many of them.

However, our credit evaluations of distributors and credit insurance may not be completely effective, especially if interest rate increases

continue to exact an additional financial strain.

If one or more independent distributors experience financial distress or liquidity issues,

our sales could be adversely affected and we may not be able to collect our accounts receivable on a timely basis, which would have an

adverse impact on our operating results and financial condition.

The Company must comply with various laws and regulations

pertaining to workplace safety and environment, environmental matters, and firearms manufacturing.

The financial health of the Company’s independent distributors

is critical to its success.

Over 90% of the Company’s sales are made

to 15 federally licensed, independent wholesale distributors.

The Company reviews its distributors’ financial statements and has

credit insurance for many of them.

However, the Company’s credit evaluations of distributors and credit insurance may not be completely

effective, especially if higher interest rates continue to exact a financial strain.

If one or more independent distributors experience

financial distress or liquidity issues, the Company’s sales could be adversely affected and the Company may not be able to collect

its accounts receivable on a timely basis, which would have an adverse impact on its operating results and financial condition.

The Company must comply with various laws and

regulations pertaining to workplace safety and environment, environmental matters, and firearms manufacturing.

In the normal course of its manufacturing operations,

4 unchanged sentences

have a material adverse impact on the Company.

Misconduct of our employees or contractors could

cause us to lose customers and could have a significant adverse impact on our business and reputation.

Misconduct, fraud or other improper activities by

our employees or contractors could have a material adverse impact on our business and reputation.

Such misconduct could include the failure

to comply with federal, state, local or foreign government procurement regulations, regulations regarding the protection of personal information,

laws and regulations relating to antitrust and any other applicable laws or regulations.

Misconduct of the Company’s employees

or contractors could cause the Company to lose customers and could have a significant adverse impact on its business and reputation.

Misconduct, fraud or other improper activities

by the Company’s employees or contractors could have a material adverse impact on its business and reputation.

Such misconduct could

include the failure to comply with federal, state, local or foreign government procurement regulations, regulations regarding the protection

of personal information, laws and regulations relating to antitrust and any other applicable laws or regulations.

Product quality and performance is important

to the Company’s success.

The Company has a long history

of producing rugged, reliable firearms for the commercial market.

While we believe our record of designing, manufacturing, and selling

high-quality products demonstrates our commitment to safety and quality, we have occasionally identified design and/or manufacturing issues

with respect to some firearms and, as a result, issued a product safety bulletin or initiated a product recall.

Depending upon the volume

of products we have shipped into the market, any future recall or safety bulletin could harm our reputation, cause us to lose business,

and cause us to incur significant support and repair costs.

The Company has a long

history of producing rugged, reliable firearms for the commercial market.

While the Company believes its record of designing, manufacturing,

and selling high-quality products demonstrates its commitment to safety and quality, the Company has occasionally identified design and/or

manufacturing issues with respect to some firearms and, as a result, issued a product safety bulletin or initiated a product recall.

upon the volume of products the Company has shipped into the market, any future recall or safety bulletin could harm its reputation, cause

the Company to lose business, and cause the Company to incur significant support and repair costs.

Business disruptions at one of the Company’s

manufacturing facilities could adversely affect the Company’s financial results.

The Newport, New Hampshire, Prescott, Arizona, Mayodan,

North Carolina, and Earth City, Missouri facilities are critical to the Company’s success.

The Newport, New Hampshire, Prescott, Arizona,

Mayodan, North Carolina, and Earth City, Missouri facilities are critical to the Company’s success.

These facilities house the Company’s

1 unchanged sentence

Any event that causes a disruption of the operation

of any of these facilities for even a relatively short period of time could have a material adverse effect on the Company’s ability

of any of these facilities for even a relatively short

period of time could have a material adverse effect on the Company’s ability

to produce and ship products and to provide service to its customers.

We rely on our information and communications systems

in our operations.

Security breaches and other disruptions could adversely affect our business and results of operations.

Cyber-security threats are significant and evolving

The Company relies on its information and communications

systems in its operations.

Security breaches and other disruptions could adversely affect its business and results of operations.

Cybersecurity threats are significant and evolving

and include, among others, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that

could lead to disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information and corruption

In addition to security threats, we are also subject to other systems failures, including network, software or hardware failures,

whether caused by us, third-party service providers, natural disasters, power shortages, terrorist attacks or other events.

The unavailability

of our information or communications systems, the failure of these systems to perform as anticipated or any significant breach of data

security could cause loss of data, disrupt our operations, lead to financial losses from remedial actions, require significant management

attention and resources, and negatively impact our reputation among our customers and the public, which could have a negative impact on

our financial condition, results of operations and liquidity.

In addition to security threats, the Company is also subject to other systems failures, including network, software or hardware

failures, whether caused by the Company, third-party service providers, natural disasters, power shortages, terrorist attacks or other

The unavailability of the Company’s information or communications systems, the failure of these systems to perform as anticipated

or any significant breach of data security could cause loss of data, disrupt Company operations, lead to financial losses from remedial

actions, require significant management attention and resources, and negatively impact the Company’s reputation among its customers

and the public, which could have a negative impact on the Company’s financial condition, results of operations and liquidity.

The lack of available raw materials or component

2 unchanged sentences

costs of raw materials and component parts could adversely affect the Company’s financial results.

Third parties supply the Company with various raw

materials for its firearms and castings, such as fabricated steel components, walnut, birch, beech, maple and laminated lumber for rifle

stocks, wax, ceramic material, metal alloys, various synthetic products and other component parts.

There is a limited supply of these

materials in the marketplace at any given time, which can cause the purchase prices to vary based upon numerous market factors.

conditions result in a significant prolonged inflation of certain prices or if adequate quantities of raw materials cannot be obtained,

the Company’s manufacturing processes could be interrupted and the Company’s financial condition or results of operations

Third parties supply the Company with various

raw materials for its firearms and castings, such as fabricated steel components, walnut, birch, beech, maple and laminated lumber for

rifle stocks, wax, ceramic material, metal alloys, various synthetic products and other component parts.

There is a limited supply of

these materials in the marketplace at any given time, which can cause the purchase prices to vary based upon numerous market factors.

If market conditions result in a significant prolonged inflation of certain prices or if adequate quantities of raw materials cannot be

obtained, the Company’s manufacturing processes could be interrupted and the Company’s financial condition or results of operations

could be materially adversely affected.

We rely primarily on third

parties for transportation of the products we manufacture as well as delivery of our raw materials.

The Company relies

primarily on third parties for transportation of the products it manufactures as well as delivery of its raw materials.

Any increase in the cost

of the transportation of our raw materials or products, as a result of increases in fuel or labor costs, higher demand for logistics services,

consolidation in the transportation industry or otherwise, may adversely affect our results of operations.

If any of these providers were

to fail to deliver raw materials to us in a timely manner, we may be unable to manufacture and deliver our products in a timely manner.

In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them

at a reasonable cost.

And such failure of a third-party transportation provider could harm our reputation, negatively affect our customer

relationships and have a material adverse effect on our financial position and results of operations

The integration of Marlin

branded firearms may be more difficult than anticipated.

If we are unable to execute

our strategy related to the acquisition of Marlin assets and we are not able to manufacture Marlin branded firearms to the planned level

of quality, quantity, cost effectiveness, or timeliness as planned, our financial condition, results of operations, and reputation would

of the transportation of the Company’s raw materials or products, as a result of increases in fuel or labor costs, higher demand

for logistics services, consolidation in the transportation industry or otherwise, increased restrictions on the transportation of firearms,

may adversely affect its results of operations.

If any of these providers were to fail to deliver raw materials to the Company in a timely

manner, the Company may be unable to manufacture and deliver its products in a timely manner.

In addition, if any of these third parties

were to cease operations or cease doing business with the Company, the Company may be unable to replace them at a reasonable cost.

such failure of a third-party transportation provider could harm the Company’s reputation, negatively affect its customer relationships

and have a material adverse effect on its financial position and results of operations.

Availability and retention

of our labor force, especially our key management, is critical to the success of the Company.

have observed an overall tightening and increasingly competitive labor market, which could inhibit our ability to recruit and retain the

employees we require and could lead to increased costs, such as additional overtime to meet demand and increased wage rates to attract

and retain employees.

We rely on the knowledge, experience, and leadership skills of our senior management team.

Our senior executives

are not bound by employment agreements.

The loss of the services of one or more of our senior executives or other key personnel could

have a significant adverse impact on our business .

ITEM 1B—UNRESOLVED STAFF COMMENTS

of the Company’s labor force, especially its key management, is critical to the success of the Company.

Company has observed an overall tightening and increasingly competitive labor market, which could inhibit its ability to recruit

and retain the employees it requires and could lead to increased costs, such as additional overtime to meet demand and increased wage

rates to attract and retain employees.

The Company relies on the knowledge, experience, and leadership skills of its senior management

The Company’s senior executives are not bound by employment agreements.

The loss of the services of one or more of the Company’s

senior executives or other key personnel could have a significant adverse impact on its business .

A pandemic, like the COVID-19 pandemic, could

have a significant adverse impact on the Company’s operations, financial results, cash flow, and financial condition.

The COVID-19 pandemic created significant uncertainty

and adversely impacted many industries throughout the global economy.

Thus far, the Company has been able to mitigate the impact of COVID-19

through its proactive measures.

The extent to which a future pandemic may impact the Company’s operations, financial results, cash

flow, and financial condition is difficult to predict and dependent upon many factors over which the Company has no control.

These factors

include, but are not limited to, the duration and severity of the pandemic;

government restrictions on businesses and individuals;

significant adverse impacts on the Company’s employees, customers, suppliers, or service providers;

the impact on U.S.

economies and the timing and rate of economic recovery;

and potential adverse effects on the financial markets, any of which could negatively

impact the Company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors