Atlanticus Holdings (ATLC) risk factors, FY2024 10-K

Other

1. 01Our Cash Flows and Net Income Are Dependent Upon Payments from Our Investments in Receivables
2. 02Our portfolio of receivables is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime
3. 03Economic slowdowns increase our credit losses
4. 04We Are Substantially Dependent Upon Borrowed Funds to Fund Receivables We Purchase
5. 05Capital markets may experience periods of disruption and instability, potentially limiting our ability to grow our receivables
6. 06Our Financial Performance Is, in Part, a Function of the Aggregate Amount of Receivables That Are Outstanding
7. 07The recent growth of our investments in private label credit and general purpose credit card receivables may not be indicative of our ability to grow such receivables in the future
8. 08Reliance upon relationships with a few large retailers in the private label credit operations may adversely affect our revenues and operating results from these operations
9. 09We Operate in a Heavily Regulated Industry
10. 10Reviews and enforcement actions by regulatory authorities under banking and consumer protection laws and regulations may result in changes to our business practices, may make collection of receivables more difficult or may expose us to the risk of fines, restitution and litigation
11. 11The CFPB recently issued a final rule regarding credit card late fees, which represents a significant departure from the rules that are currently in effect. Should this rule be implemented, the rule would have an adverse impact on our business, results of operations and financial condition for at least the short term and, depending on the effectiveness of our actions taken in response to the rule, potentially over the long term
12. 12We support banks that market general purpose credit cards and certain other credit products directly to consumers
13. 13The FDIC has issued guidance affecting the banks that utilize our technology platform to market general purpose credit cards and certain other credit products and these or subsequent new rules and regulations could have a significant impact on such credit products
14. 14Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact our business practices
15. 15Our Automobile Lending Activities Involve Risks in Addition to Others Described Herein
16. 16Funding for automobile lending may become difficult to obtain and expensive
17. 17Our automobile lending business is dependent upon referrals from dealers
18. 18The financial performance of our automobile loan portfolio is in part dependent upon the liquidation of repossessed automobiles
19. 19Repossession of automobiles entails the risk of litigation and other claims
20. 20We Routinely Explore Various Opportunities to Grow Our Business, to Make Investments and to Purchase and Sell Assets

Risks Related to Our Financial Reporting and Accounting

1. 21We are remediating a material weakness in our internal control over financial reporting. If we experience additional material weaknesses in the future, our business may be harmed
2. 22We operate in a highly competitive industry, and our inability to compete successfully would materially and adversely affect our business, results of operations, financial condition, and future prospects
3. 23Our business and operations may be negatively affected by rising prices and interest rates
4. 24We are a holding company with no operations of our own
5. 25We are party to litigation
6. 26The failure of financial institutions or transactional counterparties could adversely affect our current and projected business operations and our financial condition and results of operations
7. 27Because we outsource account-processing functions that are integral to our business, any disruption or termination of these outsourcing relationships could harm our business
8. 28Failure to keep up with the rapid technological changes in financial services and e-commerce could harm our business
9. 29If we are unable to protect our information systems against service interruption, our operations could be disrupted and our reputation may be damaged
10. 30Unauthorized or unintentional disclosure of sensitive or confidential customer data could expose us to protracted and costly litigation, and civil and criminal penalties
11. 31Internet and data security breaches also could impede our bank partners from originating loans over the Internet, cause us to lose consumers or otherwise damage our reputation or business
12. 32Regulation in the areas of privacy and data security could increase our costs
13. 33Unplanned system interruptions or system failures could harm our business and reputation
14. 34Climate change and related regulatory responses may impact our business
15. 35Our allowance for credit losses are determined based upon both objective and subjective factors and may not be adequate to absorb credit losses

Risks Relating to an Investment in Our Securities

1. 36The prices of our securities may fluctuate significantly, and this may make it difficult for you to resell our securities when you want or at prices you find attractive
2. 37Future sales of our common stock or equity-related securities in the public market could adversely affect the trading price of our common stock and our ability to raise funds in new stock offerings
3. 38The shares of Series A preferred stock and Series B preferred stock are senior obligations, rank prior to our common stock with respect to dividends, distributions and payments upon liquidation and have other terms, such as a redemption right, that could negatively impact the value of shares of our common stock
4. 39Our outstanding Series A preferred stock has anti-dilution protection that, if triggered, could cause substantial dilution to our then-existing holders of common stock, which could adversely affect our stock price
5. 40In the past, we have not paid cash dividends on our common stock on a regular basis, and an increase in the market price of our common stock, if any, may be the sole source of gain on an investment in our common stock
6. 41We have the ability to issue additional preferred stock, warrants, convertible debt and other securities without shareholder approval
7. 42Our executive officers, directors and parties related to them, in the aggregate, control a majority of our common stock and may have the ability to control matters requiring shareholder approval
8. 43The Series B preferred stock rank junior to our Series A preferred stock and all of our indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of our subsidiaries
9. 44We may issue additional shares of the Series B preferred stock and additional series of preferred stock that rank on a parity with the Series B preferred stock as to dividend rights, rights upon liquidation or voting rights
10. 45Holders of Series B preferred stock have extremely limited voting rights. Holders of Series B preferred stock have limited voting rights
11. 46The conversion feature of the Series B preferred stock may not adequately compensate holders of such stock, and the conversion and redemption features of the Series B preferred stock may make it more difficult for a party to take over our company and may discourage a party from taking over the Company
12. 47Holders of Series B preferred stock may be unable to use the dividends-received deduction and may not be eligible for the preferential tax rates applicable to "qualified dividend income."
13. 48Holders of Series B preferred stock may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the Series B preferred stock even though such holders do not receive a corresponding cash dividend
14. 49The indenture governing the 2026 Senior Notes and the 2029 Senior Notes does not prohibit us from incurring additional indebtedness
15. 50The 2026 Senior Notes and 2029 Senior Notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future
16. 51The 2026 Senior Notes and 2029 Senior Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries
17. 52The indenture governing the 2026 Senior Notes and 2029 Senior Notes contains limited protection for holders of the 2026 Senior Notes and 2029 Senior Notes
18. 53We may not be able to generate sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful
19. 54An increase in market interest rates could result in a decrease in the value of the 2026 Senior Notes and 2029 Senior Notes
20. 55We may issue additional notes
21. 56The ratings for the 2026 Senior Notes and 2029 Senior Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency