CDRE

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How CDRE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. ● We are uncertain of our ability to manage our growth. ● We have significant payment obligations under the terms of our long-term debt, $309.1 million of which was outstanding as of December 31, 2025. ● The concentration of our capital stock ownership with insiders may limit your ability to influence corporate matters. ● We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future. ● Cybersecurity incidents, IT outages, and evolving privacy and cybersecurity requirements could disrupt operations and expose us to liability and reputational harm. ● Climate and ESG related stakeholder expectations and regulatory requirements are evolving and uncertain and may result in increased compliance costs, litigation, and reputational harm. ● Changes in tariffs, tax laws, global trade policies and instability and volatility in global markets could adversely affect our business and results of operations. ● If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours, which could adversely affect our market share and results of operations.
We are also subject to routine audits to ensure our compliance with these requirements While we continually work to enhance our international trade compliance programs, we cannot assure you that we are or will be in full compliance at all times with applicable laws and regulations governing the export and deemed export of defense articles, defense services, and dual-use products and services that are controlled by U.S. and/or foreign governments.
In those instances where we have identified actual or potential non-compliance, we may incur remediation costs, reputational harm, and could be subject to enhanced oversight, penalties, suspension, or debarment, even where we take corrective actions.
Like other companies operating internationally, we are subject to the Foreign Corrupt Practices Act (the “FCPA”) and other anti-corruption, anti-money laundering, and sanctions laws that prohibit improper payments and other misconduct by us, our employees, agents, distributors, and other third parties with whom we do business.
We operate, and may seek to expand, in markets where corruption and bribery risks may be heightened, and we rely on third parties in certain jurisdictions.
We have implemented policies, procedures, training, and internal controls designed to promote compliance, but we cannot assure you that our employees or third parties will comply, that our controls will be effective, or that we will not be subject to investigations, enforcement actions, or private litigation.
On February 10, 2025, Executive Order 14209 directed the U.S.
Department of Justice (“DOJ”) to pause certain FCPA enforcement activity for a review period, and DOJ issued updated enforcement guidelines in June 2025 and resumed FCPA enforcement with a stated focus on matters implicating U.S. economic and national security interests.
These developments, and any future shifts in enforcement priorities, do not eliminate our compliance obligations, and enforcement may increase or decrease over time.
In addition, the SEC retains civil enforcement authority relating to, among other things, the FCPA’s accounting provisions (books and records and internal controls), and we could face significant penalties, compliance costs, business disruption, reputational harm, and loss of business if we, our employees, or third parties are alleged to have violated applicable laws.
In addition, we are subject to governmental laws, regulations and other legal obligations related to privacy, data protection, cybersecurity, and the collection, use, storage, sharing and transfer of personal data and other regulated or sensitive information.
The legal and regulatory landscape in this area is rapidly evolving and increasingly complex, including an expanding patchwork of U.S. state privacy and cybersecurity laws, evolving global requirements (including in the European Union and other jurisdictions where we do business), and enhanced disclosure expectations for public companies regarding cybersecurity risk management, strategy and governance.
These obligations may require us to implement and maintain additional administrative, technical and physical safeguards; conduct assessments and audits; provide expanded notices and consumer rights mechanisms; implement vendor and supply-chain controls; and devote significant management time and resources.
Any actual or alleged non-compliance, or any cybersecurity incident or other compromise of our systems or those of our vendors, could result in investigations, enforcement actions, fines, penalties, contractual liability, remediation costs, litigation (including class actions), and reputational harm.
In addition, certain incidents may trigger public disclosure or notification obligations, and public reporting could increase our legal exposure and the cost and complexity of responding to such incidents.
Further, foreign providers of competing products and services may have a substantial advantage over us in attracting customers and businesses in their countries due to earlier established businesses in those countries, greater knowledge with respect to the cultural differences of customers and businesses located in those countries and/or their focus on a single market.
The conflict between Russia and Ukraine and the conflicts in the Middle East, and the potential for these and other geopolitical conflicts to expand or intensify, including through the emergence of additional conflicts or heightened tensions in other regions, could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook. There is continued, sustained military conflict between Russia and Ukraine as well as in the Middle East, and continued disruption in these regions and the broader global economic environment is likely.
The uncertain consequences and duration of these conflicts, and the risk that they may expand in scope, escalate, or result in broader regional or global instability, including through the emergence of additional conflicts or heightened tensions in other regions, including the potential effects of any sanctions and countersanctions against officials, individuals and industries relating to these regions, including Russia, and the potential response to any such sanctions, as well as prolonged unrest and/or intensified military activities impacting these regions could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.
Thus, if our supply of any of these materials or components were materially reduced or cut off or if there was a material increase in the prices of these materials or components, our manufacturing operations could be adversely affected and our costs increased, and our business, financial condition, results of operations and liquidity could be materially adversely affected.
We also may be subject to liability if contamination is discovered at a landfill or other location where we have disposed of waste, notwithstanding that historic disposal practices may have been in accordance with all applicable requirements.
The effects of climate change, together with increased focus by governmental and non-governmental organizations, customers and investors on sustainability issues, including evolving climate and sustainability related disclosure expectations, may adversely affect our business and financial results and damage our reputation. Climate change is occurring around the world and may impact our business in numerous ways.
Such change could lead to, among other things, increased costs (including energy, raw materials and packaging), supply chain disruptions, damage to or interruption of operations at our facilities or those of suppliers due to extreme weather events, increased insurance costs or limited availability of coverage, changes in customer demand, and impacts on our employees and communities.
In addition, we may incur increased costs to measure, monitor and manage climate-related risks and to satisfy actual or proposed legal requirements, contractual obligations and market expectations relating to climate and sustainability matters. Investor advocacy groups, institutional investors, lenders, customers and other stakeholders have increasingly focused on environmental, social and governance (“ESG”) practices and disclosure.
We may face increased requests for ESG information, contractual requirements, and expectations regarding targets, policies or performance.
We may also face reputational harm, litigation or regulatory scrutiny (including so-called “greenwashing” claims) if our disclosures, statements or actions are perceived as inaccurate, incomplete or misleading.
The SEC adopted climate-related disclosure rules on March 6, 2024, but the rules have been stayed and remain subject to litigation and potential changes, including the SEC’s March 2025 vote to cease defending the rules in court.
Even if the SEC rules are modified, rescinded or never become effective, climate and ESG related requirements and expectations in the United States and other jurisdictions may continue to evolve and could increase our compliance costs and legal exposure.
Fixed-price contracts represented approximately 18% and 65% of 2025 Product and Distribution segment net sales, respectively.
The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the DoW.
We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business, including manufacturing, order fulfillment, financial reporting, and communications with customers and suppliers.
Techniques used to gain unauthorized access to networks, compromise systems, or obtain data are constantly evolving, and we may be unable to anticipate or prevent all incidents.
We and our third-party vendors are vulnerable to computer viruses, malware, ransomware, phishing and other social engineering attacks, denial-of-service attacks, insider threats, and other malicious activities.
Any such incident could lead to interruptions, delays, or shutdowns; loss, corruption, or unauthorized access to data (including personally identifiable information); and increased costs and diversion of management attention.
For example, in July 2024 we experienced a cybersecurity incident involving unauthorized access to certain systems that required containment and mitigation measures and resulted in temporary interruptions to certain operations, and in September 2024 we experienced a second incident that required containment actions. In addition, public companies are subject to evolving cybersecurity disclosure and governance requirements, including SEC rules adopted in July 2023 that require disclosure of material cybersecurity incidents on Form 8-K and enhanced annual disclosures regarding cybersecurity risk management, strategy and governance.
Compliance may require additional processes, controls, and resources, and may increase the risk of regulatory scrutiny, private litigation, and reputational harm.
Moreover, disclosure of information about incidents or our cybersecurity controls could be costly, could expose us to additional risks (including by providing threat actors with information), and could adversely affect our relationships with customers, suppliers, and other stakeholders.
Our use of emerging technologies (including artificial intelligence) and reliance on third-party service providers could expose us to operational, regulatory, intellectual property, and reputational risks.
We may use, or our employees, suppliers and business partners may use, emerging technologies, including automated decision-making tools and artificial intelligence (“AI”) systems (including generative AI), in areas such as product development, customer service, procurement, security, and back-office functions.
The use of such tools may introduce risks, including errors or hallucinated outputs, bias, cybersecurity vulnerabilities, unauthorized disclosure of confidential information or personal data, loss of intellectual property or trade secrets, infringement allegations, and failures to comply with evolving laws and regulations governing AI, privacy, consumer protection, and workplace practices.
In addition, reliance on third-party AI providers and other vendors may increase concentration and resiliency risks, including outages, changes in terms of service, model behavior changes, or restrictions on use.

and 18 more.

Gone since FY2024

Kanders, as well as any loss of officers or employees due to illness or other events outside of our control. ● We are uncertain of our ability to manage our growth. ● We have significant payment obligations under the terms of our long-term debt, $225.4 million of which was outstanding as of December 31, 2024. ● The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters. ● We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future. ● The ability of our information technology systems or information security systems to operate effectively, including as a result of cybersecurity incidents, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes, and the potential legal, reputational, operational and financial effects any such incident may have on the Company.
We are also subject to routine audits to assure our compliance with these requirements While we continually work to enhance our international trade compliance programs, we cannot assure you that we are or will be in full compliance at all times with applicable laws and regulations governing the export and deemed export of defense articles, defense services, and dual-use products and services that are controlled by U.S. and/or foreign governments.
In those instances where we have identified non-compliances with applicable laws or regulations, we have taken affirmative steps to correct or mitigate such identified failures and to self-report them to the cognizant U.S. or foreign government agencies.
Like other companies operating internationally, we are subject to the FCPA and other laws that prohibit improper payments to foreign governments and their officials by U.S. and other business entities.
We operate in countries known to experience endemic corruption.
Our extensive operations in such countries create risk of an unauthorized payment by one of our employees or agents, which would be in violation of various laws including the FCPA.
Traditionally, violations of the FCPA can result in severe criminal penalties, which could have a material adverse effect on our business, financial condition, results of operations and liquidity.
However, on February 10, 2025, President Trump issued Executive Order 14209, mandating a 180-day pause on new FCPA investigations and enforcement by the DoJ, with limited exceptions.
The order also directs a review of FCPA guidelines, potentially altering enforcement practices.
While the SEC enforces the FCPA, it may also scale back enforcement during this review.
Despite these changes, we remain committed to ethical business practices and our anti-corruption compliance program.
However, reduced compliance by competitors could create an uneven playing field, potentially impacting our revenue and market share.
In addition, we are subject to governmental laws, regulations and other legal obligations related to privacy, data protection, and cybersecurity.
We collect and otherwise process data, including personal data and other regulated or sensitive data, as part of our business processes and activities.
This data is subject to a variety of U.S. and foreign laws and regulations, including oversight by various regulatory or other governmental bodies.
Many foreign countries and governmental bodies, including the European Union and other relevant jurisdictions where we conduct business, have laws and regulations concerning the collection and use of personal data, and other data obtained from their residents or by businesses operating within their jurisdictions that are currently more restrictive than those in the U.S.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, damage our reputation, inhibit sales and have a material adverse effect on our business, results of operations, and financial condition.
Further, foreign providers of competing products and services may have a substantial advantage over us in attracting consumers and businesses in their countries due to earlier established businesses in those countries, greater knowledge with respect to the cultural differences of consumers and businesses residing in those countries and/or their focus on a single market.
The conflicts between Russia and Ukraine and Palestine and Israel, respectively, could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook. There is continued, sustained military conflict between Russia and Ukraine as well as Palestine and Israel, and continued disruption in these regions and the broader global economic environment is likely.
The uncertain consequences and duration of these conflicts, including the potential effects of any sanctions and countersanctions against officials, individuals and industries relating to these regions, including Russia, and the potential response to any such sanctions, as well as prolonged unrest and/or intensified military activities impacting these regions could have a material adverse effect on our operations, results of operations, financial condition, liquidity and business outlook.
Thus, if our supply of any of these materials or components were materially reduced or cut off or if there were a material increase in the prices of these materials or components, our manufacturing operations could be adversely affected and our costs increased, and our business, financial condition, results of operations and liquidity could be materially adversely affected.
We also may be subject to liability if contamination is discovered at a landfill or other location where we have disposed of wastes, notwithstanding that historic disposal practices may have been in accordance with all applicable requirements.
The effects of climate change and increased focus by governmental and non-governmental organizations, customers, consumers and investors on sustainability issues, including those related to climate change and socially responsible activities, may adversely affect our business and financial results and damage our reputation. Climate change is occurring around the world and may impact our business in numerous ways.
Such change could lead to an increase in raw material and packaging prices, reduced availability, for example, due to water shortages which could adversely impact raw material availability.
Increased frequency of extreme weather (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending. Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and stakeholders have focused increasingly on the environmental, social and governance (“ESG”) and related sustainability practices of companies.
These parties have placed increased importance on the implications of the social cost of their investments.
If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.
It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.
We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices.
Also, our failure, or perceived failure, to manage reputational threats and meet expectations with respect to socially responsible activities and sustainability commitments could negatively impact our credibility, employee retention, and the willingness of our customers and suppliers to do business with us.
Fixed-price contracts represented approximately 13.9% and 60% of 2024 Product and Distribution segment net sales, respectively.
The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S.
We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business.
Techniques used to gain unauthorized access to private networks are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information.
Like all Internet services, our direct-to-consumer service, which is supported by our own systems and those of third-party vendors, is vulnerable to computer viruses, Internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service or other attacks, and similar disruptions and malicious activities.
Any of these incidents could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information on our and/or third-party vendor computer systems.
For example, in July 2024, we experienced a cybersecurity incident involving unauthorized access to certain systems, which required us to implement containment and mitigation measures.
Although we acted promptly and effectively to address the issue, the incident led to temporary interruptions in our business operations, including impacts to production and order fulfillment at some of our facilities.
Additionally, in September 2024, we experienced another, albeit negligible, cybersecurity incident that similarly required containment actions out of an abundance of caution.
Although the September incident had a minimal impact on our operations, it underscores the persistent and evolving nature of cybersecurity risks we face.

and 27 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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