Altisource Portfolio Solutions (ASPS) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01We earn a significant portion of our revenue in connection with providing services to two customers
2. 02If the Rithm Brokerage Agreement is terminated, expires, breached, or if there is a significant reduction in the volume of services that we provide pursuant to such agreement, our business and results of operations would be adversely affected
3. 03Technology disruptions, failures, defects, inadequacies, delays, difficulties in implementing software or hardware modifications, acts of vandalism, or the introduction of harmful code could damage our business operations and relationships with clients and stakeholders, and increase our costs
4. 04We also leverage third-party technology to provide certain of our services, including using third-party order management and billing technology, and using third-party technology to access data or take actions, such as governmental filings, and externally hosted and managed data centers and operating environments
5. 05Many of our services and processes require effective interoperation with internal and external technology platforms and services, and failures in such interoperation could have a negative impact on our operations and the operations of our customers
6. 06We depend on our ability to use services, products, data, infrastructure and solutions provided by third parties to maintain and grow our businesses
7. 07We may not successfully prevent or detect fraudulent activity which could harm our services, clients, third parties, reputation, and our results of operations
8. 08Our business continuity and disaster recovery plans may not adequately address potential impacts from business interruptions or pandemics, which could result in operational disruptions, financial losses, or regulatory compliance issues
9. 09The insurance underwriting loss limitation methods we used may not be effective or sufficient
10. 10reinsurance, we maintain first loss exposure and the frequency and severity of claims could be greater than contemplated in our pricing and risk management methods and our controls and mitigation efforts may not be effective or sufficient

Risks Related to Our Industry

1. 11Changes in economic and market conditions that reduce residential real estate sales, values or mortgage origination volumes could negatively impact demand for our services
2. 12A reduction in residential mortgage delinquencies, defaults or foreclosures, and REO volume in the United States can negatively affect demand for certain of our services
3. 13We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers. Customers may seek to reduce the number of their service providers
4. 14Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact our auction marketplace, real estate brokerage and related default services
5. 15Changes that reduce the frequency or alter or eliminate requirements to use default or origination services of the type we provide may reduce the volume of sales of our services
6. 16Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively affect demand for certain of our default-related services and impact our ability to meet certain contractual performance metrics
7. 17Changes to compensation paid in connection with residential property transactions could negatively impact us

Risks Related to Our Growth Strategy

1. 18Sales from our awarded business or pipeline may not occur or may take longer than anticipated to develop, which could result in lower-than-expected revenue and impact our financial performance
2. 19Business expansion involves potential risks and uncertainties
3. 20Acquisitions to accelerate growth initiatives involve potential risks

Risks Related to Human Capital

1. 21A majority of our employees and contractors work from locations other than in our facilities (“Remote Work Environment”), which could negatively impact our control environment or productivity and create additional risks for our business, including increasing our risk for cybersecurity breaches or failures
2. 22In addition, our Remote Work Environment may result in difficulties creating and maintaining current and accurate records of where our employees are working. Such uncertainty in employee location may subject us to risks related to taxing jurisdictions or maintaining certain licenses
3. 23We make extensive use of contractors in certain of our lines of business. If we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes
4. 24Our success depends on the relevant industry experience and relationships of certain members of our Board of Directors, executive officers and other key personnel
5. 25Attracting, motivating, and retaining skilled employees could prove difficult
6. 26The presence of our operations in multiple countries subjects us to risks endemic to those countries
7. 27We operate in jurisdictions that have experienced corruption, bribery and other similar practices from time-to-time. We are subject to the Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, and the failure to comply with these laws could result in substantial penalties

Risks Related to Our Common Stock

1. 28We may never pay cash dividends on our common stock so any returns would be limited to the potential appreciation of our stock
2. 29Our smaller market capitalization could increase the volatility, and limit investors in and analyst coverage, of our stock
3. 30Owners of our securities could be diluted
4. 31The recent Transactions, including the issuance of the Debt Exchange Shares and the proposed issuance of Stakeholder Warrants could result in increased volatility in the price and trading volume of our common stock
5. 32We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” or a “non-accelerated filer” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies
6. 33We are not currently eligible to file new short form registration statements on Form S-3 for the primary offering of securities, except in limited circumstances. As a result, our ability to raise capital on favorable terms or at all may be impaired
7. 34Volatility in the trading price of our common stock or other securities could result in litigation
8. 35We may be delisted from Nasdaq, which could negatively impact the value of our common stock and our business
9. 36the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of ten consecutive business days

Risks Related to Shareholder Structure and Governance

1. 37Significant shareholders, management and members of the Board of Directors may have direct or beneficial ownership interests in certain of our clients or vendors
2. 38These relationships and interests could create, or appear to create, conflicts of interest in matters involving or affecting us and our business dealings with certain of our clients or vendors, or with our lenders

Risks Related to Financing, Our Indebtedness and Capital Structure

1. 39If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position would be negatively affected
2. 40In addition, our liquidity could be adversely affected by any inability to access the capital markets, volatility in the capital markets, unforeseen outflows of cash, funding for contingencies and increased regulatory liquidity requirements
3. 41Our failure to comply with the covenants or terms contained in the New Facility or the Super Senior Facility, including as a result of events beyond our control, could result in an event of default
4. 42The New Facility and the Super Senior Facility impose restrictions on our ability to incur additional indebtedness or refinancing
5. 43We have a significant net operating loss recognized by one of our Luxembourg subsidiaries, Altisource S.à r.l. We may not be able to fully utilize this deferred tax asset before the net operating loss expires
6. 44We have significant investments in goodwill and intangible assets recorded as a result of prior acquisitions and an impairment of these assets would require a write-down that would reduce our net income
7. 45Cash, cash equivalents and escrow funds we hold at financial institutions could be lost and not recoverable
8. 46Fluctuations in currency exchange rates could expose us to losses

Risks Relating to Luxembourg Organization and Ownership of Our Shares

1. 47As a Luxembourg company, we face legal requirements and limitations on company governance and actions which may negatively impact our ability to manage the company and respond to market conditions
2. 48Luxembourg law imposes specific requirements regarding the structure and governance of companies which could limit flexibility in decision-making or lead to increased operational complexity
3. 49A significant challenge of the Luxembourg tax regime or of its interpretation by the Luxembourg tax authorities, or its application of us or our business could have a negative impact us
4. 50Changes in trade policies, including tariffs, taxes or restrictions on foreign service providers, could adversely affect our business

Risks Relating to Regulation

1. 51Our business and the business of our customers are subject to extensive scrutiny and legal requirements. We, or our services, may fail or be perceived as failing to comply with applicable legal requirements
2. 52existing and potential customers. Such settlements and additional actions could increase costs, place limitations on our services, and result in a reduction in demand
3. 53Failure to comply with applicable sanctions, including blocking certain activities in sanctioned countries, could expose us to penalties and other adverse consequences
4. 54If we fail to timely make required disclosure filings with the United States Department of Treasury Financial Crimes Enforcement Network, we could be subject to penalties
5. 55A violation by our customers of applicable legal requirements in the selection or use of our services could generate legal liability for us
6. 56Certain of our customers are subject to governmental oversight, regulations, orders, judgments or settlements which may impose certain obligations and limitations on their use of our services
7. 57The tax regulations, and the interpretation thereof, in the countries, states and local jurisdictions in which we operate periodically change, which may adversely affect our results due to higher taxes, interest and penalties, or our inability to utilize operating losses or other tax credits available to us
8. 58Our operations and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would harm our results of operations