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Item 1A. Risk Factors

2024-02-27 compared with 2023-02-27 · 152 added, 106 removed, 288 unchanged (47% of the section changed)

Risk Factors.

Certain Business Risks

Although it is not possible to identify all of the risks we encounter, we have identified the following significant risk factors that could affect our actual results and cause actual results to differ materially from any such results that might be projected, forecasted, or estimated by us in this Annual Report.

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Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control.

Oil prices fell beginning in early 2020 and recovered during 2021 and into early 2022.

Although oil prices steadily rose during 2021 through early 2022, they fell slightly during 2023.

West Texas Intermediate oil prices averaged $68.14, $94.90, and $77.58 per barrel during 2021, 2022, and 2023, respectively.

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natural gas prices have also been volatile, with the Henry Hub price averaging $3.89, $6.45, and $2.53 per MMBtu during 2021, 2022, and 2023, respectively.

The prolonged volatility and low levels of oil and natural gas prices and supply and demand imbalances depressed levels of exploration, development, and production activity during 2020 and early 2021.

If oil and natural gas prices return to levels at or below those experienced in 2020 and early 2021 and supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

The prolonged volatility and low levels of oil and natural gas prices and supply and demand imbalances generate depressed levels of exploration, development, and production activity.

If oil and natural gas prices return to levels at or below those experienced during 2020 and 2021 and supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

Should current market conditions worsen for an extended period of time, we may be required to record additional asset impairments.

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weather conditions, natural disasters, and health or similar issues, such as pandemics or epidemics;

worldwide political, military, and economic conditions such as the Russia-Ukraine conflict;

worldwide political, military, and economic conditions such as the Russia-Ukraine conflict, the conflict in the Israel-Gaza region and continued hostilities in the Middle East;

the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and non-OPEC countries, such as Russia, to set and maintain oil production levels;

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Other factors, such as heightened competition, changes in sales and distribution channels, availability of skilled labor and contract services, shortages in raw materials, or inability to obtain supplies at reasonable prices, may also affect the cost of sales and the fluctuation of gross margin in future periods.

Although equipment and materials used in providing our products and services to our customers are normally readily available, market conditions could trigger constraints in the supply chain of certain equipment and raw materials used in providing products and services to our customers.

If we experience future supply chain disruptions, or if we experience significant increases in the costs of equipment and materials used in providing our products and services, it could have a material adverse effect on our revenues and profitability.

Other factors affecting our operating results and activity levels include oil and natural gas industry spending levels for exploration, completion, production, development, and acquisition activities, and impairments of long-lived assets.

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Adverse changes in any of these other factors may have a material adverse effect on our revenues and profitability.

In addition, the United States inflation rate increased in 2021, 2022 and much of 2023.

These inflationary pressures have resulted and may in the future result in increases to the costs of our goods, services and labor, which in turn has caused and may cause our capital expenditures and operating costs to rise.

To the extent elevated inflation remains, we may experience additional cost increases for our operations, including services, labor costs and equipment if our operating activity increases.

If we can’t recover higher costs through higher prices for our services, it would negatively impact our business, financial condition and results of operations.

We hold minority investments in both publicly-traded and privately-held companies.

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The value of our investment in CSI Compressco may be adversely affected by negative changes in its results of operations, cash flows and financial position, which may occur as a result of the many risks attendant with operating in the compression services industry.

In addition, on December 19, 2023, CSI Compressco announced that it had entered into an agreement to be acquired by Kodiak Gas Services, Inc.

(“Kodiak”) with Kodiak surviving the merger (the “Kodiak Transaction”).

If the Kodiak Transaction closes, our common units in CSI Compressco will be exchanged for Kodiak common stock and the value of our investment in the go-forward company may be adversely affected by negative changes to Kodiak’s results of operations, cash flows and financial position.

We are party to agreements in which Standard Lithium has the right to explore, produce and extract Lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California.

The company receives cash and stock of Standard Lithium

under the terms of the arrangements.

If we elect to hold Standard Lithium stock received under these agreements, our operating results could be significantly affected by fluctuations in the market value of our stock holding.

As of December 31, 2022, we also hold a $6.1 million investment in a convertible note issued by CarbonFree.

The company receives cash and stock of Standard Lithium under the terms of the arrangements.

If we elect to hold Standard Lithium stock received under these agreements, our operating results could be significantly affected by fluctuations in the market value of Standard Lithium stock.

As of December 31, 2023, we also hold an investment in a convertible note issued by CarbonFree valued at approximately $6.9 million.

This note will be subject to fair value measurement adjustments which will affect our financial results and there can be no assurance that it will ultimately be repaid or converted into equity of CarbonFree.

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The impact of reduced expected future cash flow could require the write-down of all or a portion of the carrying value for these assets, which would result in additional impairments, resulting in decreased earnings.

During the three-year period ending December 31, 2022, we recorded a total of $3.9 million of impairments and other charges for certain inventory and long-lived assets other than goodwill.

During the three-year period ending December 31, 2023, we recorded a total of $6.4 million of impairments and other charges for certain right-of-use lease assets, inventory and long-lived assets other than goodwill.

See Note 6 - “Impairments and other charges” in the Notes to Consolidated Financial Statements for further discussion of impairments.

Depressed commodity prices and/or adverse changes in the economic environment could result in a greater decrease in the demand for many of our products and services, which could impact the expected utilization rates of certain of our long-lived assets, including plant facilities, operating locations, and operating equipment.

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There are several raw materials for which there are only a limited number of suppliers or a single supplier.

For example, we are currently required to purchase all of our requirements of elemental bromine, up to a certain specified maximum, from LANXESS under a long-term supply agreement.

For example, we are currently required to purchase all of our requirements of elemental bromine, up to a certain specified maximum and subject to a specified annual minimum, from LANXESS under a long-term supply agreement.

To mitigate potential supply constraints, we enter into supply agreements with particular suppliers, including LANXESS.

We also evaluate alternative sources of supply to avoid reliance on limited or sole-source suppliers when possible.

Although we have long-term supply agreements with LANXESS, there is no assurance that we will have an adequate supply of elemental bromine or the other raw materials required for all of our CBFs opportunities, or that such raw materials will be available at reasonable prices.

Economic sanctions and other regulations imposed by the United States and other international countries as a result of the conflict involving Russia and Ukraine may disrupt supplies or affect the prices of certain raw materials.

Although we have long-term supply agreements with LANXESS, there is no assurance that we will have an adequate supply of elemental bromine or the other raw materials required for all of our CBF opportunities, or that such raw materials will be available at reasonable prices.

Economic sanctions and other regulations imposed by the United States and other international countries as a result of the conflict involving Russia and Ukraine, Israel and

Gaza region, hostilities in the Middle East, or maritime piracy attacks may disrupt supplies or affect the prices of certain raw materials.

Should the conflict in Ukraine or other international locations further escalate, it is difficult to anticipate the extent to which current or future sanctions could increase our costs, disrupt our supplies, reduce our sales or otherwise affect our operations.

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Our operations involve significant operating risks and insurance coverage may not be available or cost-effective.

We are subject to operating hazards normally associated with the oilfield service industry, including automobile accidents, fires, explosions, blowouts, formation collapse, mechanical problems, abnormally pressured

formations, and environmental accidents.

Environmental accidents could include, but are not limited to, oil and produced water spills, gas leaks or ruptures, uncontrollable flows of oil, gas, or well fluids, or discharges of CBFs or toxic gases or other pollutants into the air, soil, water, groundwater, etc.

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We may not be able to economically extract lithium or bromine from the leased acreage in our Arkansas brine leases.

Our Arkansas brine leases currently only contain inferred resources of lithium and bromine, and we may never convert any of these resources to proven mineral reserves on these properties, or enough of them to justify the decision to engage in the extraction of lithium and/or bromine.

While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently completed the initial assessment of the bromine resource, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.

Our Arkansas brine leases currently contain inferred, indicated and measured resources of lithium and bromine, and we may never convert any of these resources to proven mineral reserves on these properties, or enough of them to justify the decision to engage in the extraction of lithium and/or bromine.

While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently completed a technical resources report for our Evergreen Brine Unit, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.

In addition, the extraction of lithium and bromine from these brine leases will likely require a significant amount of time and capital, which we are not able to estimate at this time and which may not be available to us on acceptable terms or at all.

There can be no assurance that any future exploration efforts on these properties will be successful.

Prior to producing lithium and bromine from the Evergreen Brine Unit, we must complete a lithium FEED study, a preliminary economic assessment for our lithium acreage, a pre-feasibility and/or feasibility studies for both our bromine and lithium acreage, validate the lithium technologies used, as well as finalize any contractual agreements with our joint venture partner.

As a result of these uncertainties, no assurance can be given that any future exploration programs will result in the discovery of commercially viable mineral resources or reserves.

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Our future success may depend on our ability to effectively execute on our low carbon energy initiatives.

This strategy depends on our ability to effectively develop new technologies, expand application of our global infrastructure and chemistry expertise and on the economic viability of the extraction of lithium and bromine from the leased acreage.

The exploration, development and extraction of brine and lithium from our Arkansas brine leases will likely require significant time and capital, and there is no guarantee of a return from these operations.

Our low carbon energy initiatives may also depend in part on successful development of partnerships with other companies, such as our partnership and investment in CarbonFree, and such partners’ execution of their own respective projects and business strategies.

This strategy depends on our ability to effectively identify, develop, and scale new technologies, expand application of our global infrastructure and chemistry expertise and on the economic viability of the extraction of lithium and bromine from the leased acreage.

Furthermore, execution of our low carbon initiatives are subject to a number of permitting, real estate, and project development risks, which could delay, limit, or even prevent the successful execution of these initiatives.

Moreover, we cannot guarantee that the low carbon initiatives we may identify will meet the expectations of our various stakeholders.

Even if successful, we could face increased costs from our pursuit of low carbon initiatives.

For example, the exploration, development and extraction of brine and lithium from our Arkansas brine leases will likely require significant time and capital, and there is no guarantee of a return from these operations.

Our low carbon energy initiatives may also depend in part on successful development of partnerships with other companies, such as our partnership and investment in CarbonFree and our MOU and potential joint venture partnership with Saltwerx, and such partners’ execution of their own respective projects and business strategies.

If we, or the projects or partners we invest in, fail to execute our low carbon energy initiatives as planned, or if execution of such initiatives requires more time and capital than expected, demand for our technologies, services and mineral assets and consequently, our business, results of operations and financial condition could be adversely affected.

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Certain of our operations are seasonal and depend, in part, on weather conditions.

In addition, severe weather, including named windstorms, and severe winter weather, can cause damage and disruption to our businesses.

In certain markets, the Water & Flowback Services Division’s onshore water management services can be dependent on adequate water supplies being available to our customers.

To the extent severe drought or other weather-related conditions prevent our customers from obtaining needed water, frac water operations may not be possible and our Water & Flowback Services Division business may be negatively affected.

Severe weather, including named windstorms, and severe winter weather, can cause damage and disruption to our businesses.

A portion of our operations is susceptible to adverse weather conditions in the Gulf of Mexico, including hurricanes and other extreme weather conditions.

Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our

key markets and negatively impacted the supply chain for our industrial chemicals operations.

Further, a portion of our operations is susceptible to adverse weather conditions in the Gulf of Mexico, including hurricanes and other extreme weather conditions.

Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our key markets and negatively impacted the supply chain for our industrial chemicals operations.

Even if we do not experience direct damage from storms, we may experience disruptions in our operations, because we are unable to operate or our customers or suppliers may curtail their activities due to damage to their wells, platforms, pipelines, and facilities.

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In recent years, the stock market in general has experienced extreme price and volume fluctuations that have affected the market price for companies in industries similar to ours.

Some of these fluctuations have been unrelated to operating performance and are attributable, in part, to outside factors such as general economic conditions, including the impact of the COVID-19 pandemic, the ongoing Russia-Ukraine conflict and fear of a global recession.

The volatility of our common stock may make it difficult to resell shares of our common stock at attractive prices.

Our long-term debt agreements contain covenants and other provisions that restrict our ability to take certain actions and may limit our ability to operate or grow our business in the future.

As of December 31, 2022, our total long-term debt outstanding of $156.5 million consisted of the carrying amount outstanding under our credit agreement (the “Term Credit Agreement”) [and our Asset-Based Credit Agreement (the “ABL Credit Agreement”)], both of which we entered into in September 2018, as well as borrowings under our revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”), which was entered into in January 2022.

The ABL Credit Agreement and Term Credit Agreement each contain certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, (i) incurring debt, (ii) granting liens, (iii) engaging in mergers and other fundamental changes, (iv) making investments, (v) entering into, or amending, transactions with affiliates, (vi) paying dividends and making other restricted payments, (vii) prepaying other indebtedness, and (viii) selling assets.

As of December 31, 2023, our total long-term debt outstanding of $157.5 million consisted of the carrying amount outstanding under our credit agreement (the “Term Credit Agreement”).

We also have availability under our Asset-Based Credit Agreement (the “ABL Credit Agreement”), which we entered into in September 2018, and under our revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”), which was entered into in January 2022.

On January 12, 2024, the Company entered into a definitive agreement for a $265.0 million credit facility with a maturity of January 2030, consisting of a $190.0 million funded term loan and a $75.0 million delayed-draw term loan (collectively the “New Term Credit Agreement”) that refinanced the Company’s Term Credit Agreement outstanding as of December 31, 2023 and provided capital to advance the Company’s Arkansas bromine processing project.

The ABL Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, (i) incurring debt, (ii) granting liens, (iii) engaging in mergers and other fundamental changes, (iv) making investments, (v) entering into, or amending, transactions with affiliates, (vi) paying dividends and making other restricted payments, (vii) prepaying other indebtedness, and (viii) selling assets.

The ABL Credit Agreement also contains a provision that may require a fixed charge coverage ratio (as defined in the ABL Credit Agreement) of not less than 1.00 to 1.00 in the event that certain conditions associated with outstanding borrowings and cash availability occur.

The Term Credit Agreement also contains a requirement that the borrowers comply at the end of each fiscal quarter with a minimum Interest Coverage Ratio (as defined in the Term Credit Agreement) of 1.00 to 1.00.

Our Term Credit Agreement requires us to annually prepay up to 50% of Excess Cash Flow (as defined in the Term Credit Agreement) from the most recent full fiscal year.

If our Leverage Ratio (as defined in the Term Credit Agreement) at year-end is less than 2.00 to 1.00, the prepayment requirement is decreased to 25%.

If our Leverage Ratio at year-end is less than 1.50 to 1.00, then no prepayment is required.

The New Term Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of the Company and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, engaging in mergers and other fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness and the sale of assets.

The New Term Credit Agreement also requires the Company to maintain a Leverage Ratio (as defined in the new term loan credit agreement) of not more than 4.0 to 1.0 as of the end of each fiscal quarter and Liquidity (as defined in the New Term Credit Agreement) of not less than $50.0 million at all times.

Our continuing ability to comply with covenants in our Long-Term Debt Agreements depends largely upon our ability to generate adequate earnings and operating cash flow.

We may not be able to utilize all or a portion of our net operating loss carryforwards or other tax benefits to offset future taxable income for U.S.

federal, state or foreign tax purposes, which could adversely affect our financial position, results of operations and cash flows.

We have adopted a Tax Benefits Preservation Plan (the “Tax Plan”) that is designed to protect our Tax Attributes.

As of December 31, 2023, we had federal, state, and foreign net operating loss carryforwards/carrybacks (“NOLs”) equal to approximately $75.8 million, $10.3 million, and $8.9 million, respectively.

In those countries and states in which NOLs are subject to an expiration period, our NOLs, if not utilized, will expire at various dates from 2024 through 2043.

We may be limited in the portion of our NOLs that we can use in the future to offset taxable income for United States, federal, state, and foreign income tax purposes.

Utilization of these NOLs depends on many factors, including our future taxable income, which cannot be assured.

Under Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation experiences an “ownership change,” any NOLs, losses or deductions attributable to a “net unrealized

built-in loss” and other tax attributes (“Tax Attributes”) could be substantially limited, and timing of the usage of such Tax Attributes could be substantially delayed.

A corporation generally will experience an ownership change if one or more stockholders (or group of stockholders) who are each deemed to own at least 5% of the corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a testing period (generally, a rolling three-year period).

Utilization of our Tax Attributes may be subject to a significant annual limitation as a result of prior or future “ownership changes.” Determining the limitations under Section 382 is technical and highly complex, and no assurance can be given that, upon further analysis, our ability to take advantage of our NOLs or other Tax Attributes will not be limited to a greater extent than we currently anticipate.

The Board of Directors has adopted the Tax Plan to protect the availability of the Company’s Tax Attributes.

The Tax Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain acquisitions of our common stock.

There can be no assurances, however, that the deterrent mechanism will be effective, and, therefore, such acquisitions may still occur.

In addition, the Tax Plan could adversely affect the marketability of our common stock by discouraging existing or potential investors from acquiring our common stock or additional shares of our common stock.

If the Company is unable to use the Tax Attributes in years in which it has taxable income, the Company will pay significantly more in cash tax than if it were able to utilize the Tax Attributes, and those tax costs would negatively impact the Company’s financial position, results of operations and cash flows.

We have continuing exposure to abandonment and decommissioning obligations associated with oil and gas properties previously owned by Maritech.

From 2001 to 2012, our former subsidiary, Maritech Resources, Inc.

(“Maritech”), sold various oil and gas producing properties in numerous transactions to different buyers.

(“Maritech”), acquired, produced, and operated various oil and gas properties in the Gulf of Mexico and eventually sold of the various oil and gas producing properties in numerous transactions to different buyers.

In connection with those sales, the buyers generally assumed the decommissioning liabilities associated with the properties sold (the “Legacy Liabilities”) and generally became the successor operator.

In some cases, Maritech retained certain liabilities and we provided guaranties of Maritech’s retained liabilities.

Some buyers of these Maritech properties subsequently sold certain of these properties to other buyers, who also assumed the financial responsibilities associated with the properties’ operations, including decommissioning liabilities, and these buyers also typically became the successor operator of the properties.

To the extent that a buyer of these properties fails to perform the decommissioning work required, a previous owner, including Maritech, may be required to perform operations to satisfy the decommissioning liabilities.

As a result of the third-party indemnity agreements and corporate guaranties we have previously provided, we may be responsible for satisfying these obligations if they are not satisfied by the current owners and operators of the properties or by Maritech.

In some cases, we provided guaranties of certain liabilities retained by Maritech, and we provided guaranties to the entities which originally sold the properties to Maritech.

To the extent that a buyer, or subsequent buyer, of these properties fails to perform the decommissioning work required, Maritech or we may be required to perform operations to satisfy the Legacy Liabilities.

Pursuant to a Bonding Agreement entered into as part of the Orinoco transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace the Initial Bonds with other non-revocable performance bonds in the aggregate sum of $47.0 million (collectively, the “Replacement Bonds”).

In the event Orinoco does not provide the Replacement Bonds, Orinoco is required to make certain cash escrow payments to us.

Significant decommissioning liabilities that were assumed by the buyers of the Maritech properties in these previous sales remain unperformed.

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Department of the Interior may seek to impose those obligations on Maritech and on us.

The amount of cash necessary to satisfy these obligations could be significant and could adversely affect our business, results of operations, financial condition, and cash flows.

See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion of decommissioning liabilities and the Bonding Agreement.

The amount of cash necessary to satisfy these obligations could be significant and, and if Maritech or Orinoco is unable to cover deficiency between any bond payment and the decommissioning liability, our financial condition and results of operations may be negatively affected.

In March 2018, pursuant to a series of transactions, Maritech sold the remaining offshore leases held by Maritech to Orinoco Natural Resources, LLC (“Orinoco”) and, immediately thereafter, we sold all equity interest in Maritech to Orinoco.

The assignments for all of the offshore leases conveyed to Orinoco have now been approved by the U.S.

Department of the Interior and Orinoco (or its successors in interest) own these leases.

Maritech also remains a recognized owner of one additional lease and remains an operator of a portion of four other offshore leases, two of which have either been relinquished or expired.

Maritech was also a lessee on six leases when they expired and which have unsatisfied decommissioning liabilities.

Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases conveyed to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the Legacy Liabilities, subject to limited exceptions unrelated to the decommissioning liabilities.

Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases conveyed to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the Legacy Liabilities and liabilities pertaining to properties still operated by Maritech, subject to limited exceptions unrelated to the decommissioning liabilities.

Under the Bonding Agreement, TETRA received non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech.

Our guarantees may still cover these liabilities.

Pursuant to a Bonding Agreement executed in connection with such purchase agreements, Orinoco provided non-revocable bonds in the aggregate amount of approximately $46.8 million to secure the performance of certain of Maritech’s decommissioning obligations related to the Orinoco Lease Liabilities and certain of Maritech’s remaining current decommissioning obligations (not including the Legacy Liabilities, the “Initial Bonds”).

Orinoco was required to replace the Initial Bonds delivered at closing with other non-revocable performance bonds but has not done so.

See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion of status of bond replacement.

If in the future we become liable for decommissioning liabilities associated with any property covered by either an Initial Bond or Replacement Bonds, the Bonding Agreement provides that if we call any of the Initial Bonds or the Interim Replacement Bonds to satisfy such liability and the amount of the bond payment is not sufficient to pay for such liability, Orinoco will pay us for the additional amount required.

To the extent Orinoco is unable to cover any such deficiency or we become liable for a significant portion of the Legacy Liabilities, our financial condition and results of operations may be negatively affected.

Orinoco has failed to replace certain bonds required to be maintained to secure the performance of Maritech’s decommissioning liabilities.

Further, Maritech and certain other interest owners have received BSEE decommissioning orders, and from time to time we receive demand notices from third parties related to such corporate guarantees.

See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion of status of this bond replacement process.

If we become liable for decommissioning liabilities and Maritech or Orinoco is unable to cover any deficiency between any bond payment and the decommissioning liability, our financial condition and results of operations may be negatively affected.

Possible changes in the U.S.

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In July 2016, the U.S.

Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of

additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities.

The 2016 NTL, which became effective in September 2016, eliminated the past practice of waiving supplemental bonding requirements where lease owners or operators, or their guarantors, could demonstrate a certain level of financial strength.

Instead, under the 2016 NTL, the U.S.

Department of the Interior indicated that it would allow lease owners and operators to “self-insure,” but only up to 10% of their “tangible net worth,” which is defined as the difference between a company’s total assets and the value of all liabilities and intangible assets.

It is unclear how this self-insurance allowance relates to lease owners or operators with a guarantor presently in place.

Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities.

Although the U.S.

Department of the Interior under the Trump Administration ultimately rescinded the 2016 NTL in 2020, the Biden Administration could seek to reconsider the changes made by the U.S.

Department of the Interior under the Trump Administration and, should the Biden Administration re-issue and fully implement guidance or rules analogous to, or more rigorous than, the 2016 NTL, such developments could increase operating costs for lease owners and operators in the Gulf of Mexico and reduce the availability of surety bonds due to the increased demands for such bonds.

Department of the Interior under the Trump Administration ultimately rescinded the 2016 NTL in 2020, the Biden Administration has taken steps to reconsider the changes made by the U.S.

Department of the Interior under the Trump Administration.

For example, in June 2023, BOEM issued a notice of proposed rulemaking seeking to modify its criteria for determining bonds and financial assurance for offshore oil and gas lessees and other operators, which generally imposes more stringent requirements for waiving supplemental bonding requirements.

In August 2023, the public comment period for this proposal was extended, and the rulemaking remains pending.

Should the rule be finalized as proposed, or if the Biden Administration were to otherwise re-issue and fully implement guidance or rules analogous to, or more rigorous than, the 2016 NTL, such developments could increase operating costs for lease owners and operators in the Gulf of Mexico and reduce the availability of surety bonds due to the increased demands for such bonds.

As a result, there is significant uncertainty surrounding financial assurance obligations for Gulf of Mexico lease owners and operators and for us through the third-party indemnity agreements we have provided for Maritech liabilities to the U.S.

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Department of the Interior’s supplemental bonding process could result in demands for the posting of increased financial assurances by owners and operators in the Gulf of Mexico, including Maritech, Orinoco and the other entities to whom Maritech divested its Gulf of Mexico assets, but such demands cannot be directly placed on us due to the fact that we are only a former parent company of Maritech and are only a guarantor as opposed to an actual lease owner or operator.

This may force lease owners and operators of leases and other infrastructure in the Gulf of Mexico to obtain surety bonds or other forms of financial assurance, the costs of which could be significant.

This may force lease owners and operators of leases and other infrastructure in the Gulf of Mexico to obtain additional surety bonds or other forms of financial assurance, the costs of which could be significant.

Moreover, anticipated changes to the bonding and financial assurance program for the Gulf of Mexico could result in the loss of supplemental bonding waivers for a large number of lease owners and operators of infrastructure in the Gulf of Mexico, which could in turn force these owners and operators to seek additional surety bonds which could exceed the surety bond market’s ability to provide such additional financial assurance.

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Consequently, we face credit risk associated with the ability of these companies to satisfy their decommissioning liabilities.

If these companies are

unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.

If these companies are unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.

Our operating results and cash flows for certain of our subsidiaries are subject to foreign currency risk.

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We are exposed to interest rate risks with regard to our credit facility debt and future refinancing thereof.

As of December 31, 2022, we had $163.1 million outstanding under our Term Credit Agreement and $3.0 million outstanding under our ABL Credit Agreement.

These credit facilities consist of floating rate loans that bear interest at an agreed upon percentage rate spread above London Interbank Offered Rate (“LIBOR”) or an alternate base rate.

During 2021, our asset-based credit agreement and term credit agreement were amended to allow replacement of LIBOR with another benchmark rate, such as the secured overnight financing rate (“SOFR”) in the event that LIBOR cannot be determined or does not fairly reflect the cost to our lenders of funding our loans.

As of December 31, 2023, we had $163.1 million principal outstanding under our Term Credit Agreement and no balance outstanding under our ABL Credit Agreement.

In January 2024, the Company entered into a New Term Credit Agreement that refinanced the Term Credit Agreement outstanding as of December 31, 2023 and provided capital to advance the Company’s Arkansas bromine processing project.

These credit facilities consist of floating rate loans that bear interest at an agreed upon percentage rate spread above the secured overnight financing rate (“SOFR”) or an alternate base rate.

Whenever we have amounts outstanding under these facilities, our cash flows and results of operations will be subject to interest rate risk exposure associated with the debt balance outstanding.

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Our ABL Credit Agreement is scheduled to mature on May 31, 2025.

Our Term Loan Agreement is scheduled to mature on September 10, 2025.

Our New Term Credit Agreement is scheduled to mature on January 12, 2030.

There can be no assurance that financial market conditions or borrowing terms at the times these existing debt agreements are renegotiated will be as favorable as the current terms and interest rates.

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Legal, Regulatory, and Political Risks

We operate in a highly competitive environment.

If we are unable to maintain product and technology leadership, this could adversely affect any competitive advantage we hold.

The industries in which we operate are highly competitive and rapidly evolving.

Our business may be adversely affected if we fail to continue developing and producing innovative products and services in response to changes in the market, including customer and government requirements, or if we fail to deliver such products and services to our customers in a timely and cost-competitive manner.

If we are unable to maintain products and services leadership in our industries, our ability to maintain market share, defend, maintain, or increase prices for our products and services, and negotiate acceptable contract terms with our customers could be adversely affected.

Furthermore, competing or new technologies may accelerate the obsolescence of our products or services and reduce the value of our intellectual property.

Limitations on our ability to obtain, maintain, protect, or enforce our intellectual property rights, including our trade secrets, could cause a loss in revenue and any competitive advantage we hold.

There can be no assurance that the steps we take to obtain, maintain, protect, and enforce our intellectual property rights will be adequate.

Some of our products or services, and the processes we use to produce or provide them, have been granted patent protection, have patent applications pending, or are trade secrets.

Our business may be adversely affected when our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected.

Our competitors may also be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets.

Our proprietary rights may be violated or compromised, which could damage our operations.

In addition, Third parties may claim that we have infringed upon or otherwise violated their intellectual property rights.

We own numerous patents, patent applications, and unpatented trade secret technologies in the U.S.

and certain foreign countries.

There can be no assurance that the steps we have taken to protect our proprietary rights will be adequate to deter misappropriation of these rights.

In addition, independent third parties may develop competitive or superior technologies.

In addition, the tools, techniques, methodologies, programs, and components we use to provide our services and products may infringe upon or otherwise violate the intellectual property rights of others or be challenged on that basis.

Regardless of the merits, any such claims generally result in significant legal and other costs, including reputational harm, and may distract management from running our business.

Resolving such claims could increase our costs, including through royalty payments to acquire licenses, if available, from third parties and through the development of replacement technologies.

If a license to resolve a claim were not available, we might not be able to continue providing a particular service or product.

Our operations are subject to extensive and evolving U.S.

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We cannot predict whether any federal, state or local laws or regulations will be enacted regarding hydraulic fracturing, and, if so, what actions any such laws or regulations would require or prohibit.

Other jurisdictions where our products and services are used may impose similar or more

stringent restrictions.

Other jurisdictions where our products and services are used may impose similar or more stringent restrictions.

If additional levels of regulation or permitting requirements were imposed on oil and gas operators through the adoption of new laws and regulations, the demand for certain of our products and services could be decreased or subject to delays.

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Moreover, following the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United States.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things,

establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United States.

The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years.

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Congress approved, and President Biden signed into law, a resolution under the Congressional Review Act to repeal the September 2020 revisions, effectively reinstating the prior standards.

Additionally, in November 2021, EPA issued a proposed rule that, if finalized, would establish OOOOb new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.

Operators of affected facilities will have to comply with specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.

EPA issued a supplemental proposal in November 2022, which, among other items, sets forth specific revisions strengthening the first nationwide emission guidelines for states to limit emissions from existing oil and gas facilities.

The proposal also revises requirements for fugitive emissions monitoring and repair and as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.

The proposal is currently subject to public comment and is expected to be finalized in 2023;

however, it is likely that these requirements will be subject to legal challenges.

We cannot predict the scope of any future methane regulatory requirements or the cost to comply with such requirements.

However, given the long-term trend toward increasing regulation, further federal GHG regulations of the oil and gas industry remain a significant possibility.

Additionally, in December 2023, EPA issued a final rule that established more stringent OOOOb new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.

Given the long-term trend toward increasing regulation, further federal GHG regulations of the oil and gas industry remain a significant possibility.

For more information, see our disclosures titled “Health, Safety, and Environmental Affairs Regulation” set forth in Item 1 of this Annual Report.

Separately, various states and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

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These goals were reaffirmed at COP27 in November 2022, and countries were called upon to accelerate efforts to phase out inefficient fossil fuel subsidies, though no firm commitments or timelines were made.

At the 28 th Conference of the Parties (“COP28”), the parties signed onto an agreement to transition away from fossil fuels in energy systems and increase renewable energy capacity, though no timeline for doing so was set.

While non-binding, the agreements coming out of COP28 could result in increased pressure among financial institutions and various stakeholders to reduce or otherwise impose more stringent limitations on funding for and increase potential opposition to the production and use of fossil fuels.

The full impact of these actions is uncertain at this time, and it is unclear what additional initiatives may be adopted or implemented that may have adverse effects upon us and our customers’ operations.

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Litigation risks are also increasing as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.

There is also a growing trend of the SEC or parties suing public companies for “greenwashing,” which is where a company makes unsubstantiated

statements designed to mislead consumers or shareholders into thinking that the company’s products or practices are more environmentally friendly than they are.

There is also a growing trend of the SEC or parties suing public companies for “greenwashing,” which is where a company makes unsubstantiated statements designed to mislead consumers or shareholders into thinking that the company’s products or practices are more environmentally friendly than they are.

There are also increasing financial risks for companies in the fossil fuel sector as shareholders currently invested in such companies may elect in the future to shift some or all of their investments into other sectors.

Institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies.

For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from

over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

The various sub-alliances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero emissions by 2050.

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Additionally, the Securities and Exchange Commission published a proposed rule that would require registrants to make climate-related disclosures, including any climate targets and goals, and data on Scope 1 and 2 GHG emissions and, in certain cases, Scope 3.

While we cannot predict the final form or substance of the rule, this may result in additional costs to comply with any such disclosure requirements.

Several states have also enacted or are considering enhanced climate-related disclosure requirements.

While we cannot predict the final form or substance of these rules, this may result in additional costs to comply with any such disclosure requirements.

Additionally, we cannot predict how financial institutions and investors might consider information disclosed under such rule, and as a result it is possible that we could face increases with respect to the costs of, or restrictions imposed on, our access to capital.

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Such physical risks may also impact our suppliers, which may adversely affect our ability to provide our products and services.

Increased attention to ESG matters and conservation measures may adversely impact our or our customers’ business.

Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor and societal expectations regarding voluntary ESG disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our customers’ products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.

Increasing attention to ESG matters and conservation measures may adversely impact our or our customers’ business.

Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor, regulatory and societal expectations regarding voluntary and mandatory ESG-related disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our customers’ products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and reduced access to capital markets.

Increasing attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our customers.

To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted

damage, or to other mitigating factors.

To the extent that societal pressures, regulatory, political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.

For more information, see our risk factor titled “Our operations, and those of our suppliers and customers, are subject to a series of risks arising from climate change.”

Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, certain statements in those voluntary disclosures may be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.

Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

Mandatory ESG-related disclosure is also emerging as an area where we may be, or may become, subject to required disclosures in certain jurisdictions, and any such mandatory

disclosures may similarly necessitate the use of hypothetical, projected or estimated data, some of which is not controlled by us and is inherently subject to imprecision.

Disclosures reliant upon such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

Additionally, we may announce various targets or product and service offerings in an attempt to improve our ESG profile.

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Also, despite any voluntary actions, we may receive pressure from certain investors, lenders, or other groups to adopt more aggressive climate or other ESG-related goals or policies, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.

Furthermore, our reputation, as well as our stakeholder relationships, could be adversely impacted as a result of, among other things, any failure to meet our ESG plans or goals or stakeholder perceptions of statements made by us, our employees and executives, agents, or other third parties or public pressure from investors or policy groups to change our policies.

Such statements with respect to ESG matters are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.

As a result, we may face increased litigation risks from private parties and governmental authorities related to our ESG efforts.

Moreover, any alleged claims of greenwashing against us or others in our industry may lead to negative sentiment towards our company or industry.

To the extent that we are unable to respond timely and appropriately to any negative publicity, our reputation could be harmed.

Damage to our overall reputation could have a negative impact on our financial results and require additional resources to rebuild our reputation.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.

Such ratings are used by some investors to inform their investment and voting decisions.

Such ratings may be used by some investors to inform their investment and voting decisions.

Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.

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To the extent alternative technologies are preferred, whether as a result of regulatory impacts, technological developments, or changes in industry practice, it may adversely impact our business or results of operation.

Our operations in foreign countries exposes us to complex regulations and may present us with new obstacles to growth.

Our operations in foreign countries expose us to complex regulations and may present us with new obstacles to growth.

We plan to continue to grow both in the United States and in foreign countries.

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While we and our subsidiaries are committed to conducting business in a legal and ethical manner, there is a risk of violating the U.S.

Foreign Corrupt Practices Act, the U.K Bribery Act, or laws or legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign

officials for the purpose of obtaining or keeping business.

Violation of these laws could result in monetary penalties against us or our subsidiaries and could damage our reputation and our ability to do business.

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For example, the EPA has issued rulemakings under several laws governing hydraulic fracturing activities and disposal of wastes associated with the process.

In 2016, the U.S.

Bureau of Land Management (“BLM”) also published a final rule that established new or more stringent standards for performing hydraulic fracturing on federal and Indian lands.

BLM under the Trump Administration issued a final rule in late 2018 rescinding the 2016 action;

however, a California federal court vacated the 2018 final rule in July 2020, and a Wyoming federal court subsequently vacated the 2016 final rule in October 2020.

Accordingly, the 2016 final rule is no longer in effect, but the Wyoming decision has been appealed.

Moreover, the Biden Administration is expected to pursue regulatory initiatives that restrict hydraulic fracturing activities on federal lands as well as other actions to more stringently regulate certain aspects of oil and gas development such as air emissions and water discharges.

President Biden issued an executive order on January 27, 2021, that effectively paused new leasing activities, but not operations under existing leases, for oil and gas exploration and production on non-Indian federal lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.

President Biden issued an executive order on January 27, 2021, that effectively paused new leasing activities for oil and gas exploration and production on non-Indian federal lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.

Although the federal court for the Western District of Louisiana issued a permanent injunction against the leasing pause, in response to the executive order, the Department of Interior issued a report recommending various changes to the federal leasing program, though many such changes would require Congressional action.

However, the Bureau of Land Management proposed a rule in November 2022 that would limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if the Bureau finds that an operator’s methane waste minimization plan is insufficient.

Additionally, in July 2023 the Bureau proposed a rule to update the fiscal terms of federal oil and gas leases, increasing fees, rents, royalties, and bonding requirements.

The rule would also add new criteria for the Bureau to consider when determining whether to lease nominated land, including the presence of important habitats or wetlands, the presence of historical properties or sacred sites, and recreational use of the land.

The Bureau of Land Management anticipates a final action on this proposal in Spring 2024.

As a result, we cannot predict the final scope of regulations or restrictions that may apply to oil and gas operations on federal lands and waters.

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Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular.

If new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted, our customers could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells.

For example, from time to time states such as Texas and Oklahoma have suspended permitting for disposal wells in certain areas in response to seismic activity.

drilling wells.

Increased regulation and attention given to the hydraulic fracturing process could lead to greater opposition to oil and gas production activities using hydraulic fracturing techniques.

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The adoption of any federal, state or local laws or the implementation of additional regulations regarding hydraulic fracturing could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.

Our proprietary rights may be violated or compromised, which could damage our operations.

We own numerous patents, patent applications, and unpatented trade secret technologies in the U.S.

and certain foreign countries.

There can be no assurance that the steps we have taken to protect our proprietary rights will be adequate to deter misappropriation of these rights.

In addition, independent third parties may develop competitive or superior technologies.

Our operations and reputation may be impaired if our information technology systems fail to perform adequately or if we are the subject of a data breach or cyberattack.

Our information technology systems are critically important to operating our business efficiently.

We rely on our information technology systems to manage our business data, communications, supply chain, customer invoicing, employee information, and other business processes.

Our operations, reputation, and financial condition may be impaired if our information or operational technology systems fail to perform adequately or if we are the subject of a data breach or cyberattack.

Our information and operational technology systems are critically important to operating our business.

We rely on our information and operational technology systems to manage our business data, communications, supply chain, customer invoicing, employee information, and other business processes.

We outsource certain business process functions to third-party providers and similarly rely on these third parties to maintain and store confidential information on their systems.

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We also invest in security technology, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such breaches.

However, there can be no assurance that security breaches will not occur.

However, there can be no assurance that future security breaches will not occur.

Our facilities and systems, and those of our third-party service providers, have been and are vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, scams, burglary, human errors, acts of vandalism, misdirected wire transfers, or other malicious or criminal activities.

These threats and incidents may originate from a variety of sources, including hackers, cybercriminals, nation-states, insiders, or other third parties.

Moreover, the development and maintenance of these measures requires continuous monitoring as technologies change and efforts to overcome security measures evolve.

We have experienced and expect to continue to experience, cyber security threats and incidents, none of which has been material to us to date.

However, a successful breach or attack could have a material negative impact on our operations or business reputation and subject us to consequences such as litigation and direct costs associated with incident response.

Cyberattacks in particular are evolving and have increased in frequency.

Cyberattacks are becoming more sophisticated and include, but are not limited to, ransomware attacks, credential stuffing, spear phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media generated by artificial intelligence) and other attempts to gain unauthorized access to data for purposes of extortion or other malfeasance.

We have experienced and expect to continue to experience, cyber security threats and incidents, though as of the date of this Annual Report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.

However, a successful breach or attack could have a material negative impact on our operations or business reputation and subject us to consequences such as litigation costs, regulatory fines, remediation costs, and direct costs associated with incident response.

No security measure is infallible.

Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.

We are subject to various complex and evolving United States federal, state, and local and non-U.S.

Our business and future profitability could be affected by numerous factors, including the availability of tax credits, exemptions, refunds and other benefits to reduce our tax liabilities, changes in the relative amount of our earnings subject to tax in the various jurisdictions in which we operate or have subsidiaries, the potential expansion of our business into or otherwise becoming subject to tax in additional jurisdictions, changes to our existing business structure and operations, the extent of our intercompany transactions, and the extent to which taxing authorities in the relevant jurisdictions respect those intercompany transactions.

business into or otherwise becoming subject to tax in additional jurisdictions, changes to our existing business structure and operations, the extent of our intercompany transactions, and the extent to which taxing authorities in the relevant jurisdictions respect those intercompany transactions.

Further, United States federal, state, and local and non-U.S.

tax laws, policies, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business and future profitability.

Unresolved Staff Comments.

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