FG Nexus (FGNXP) risk factors, FY2024 10-K

Other

1. 01The Company is engaged in mergers and acquisition activity and may incur significant costs or risks related to execution and integration
2. 02We are integrating multiple mergers, which may be more difficult, costly or time-consuming than expected and the Company may fail to realize the anticipated benefits
3. 03The Company’s future results may suffer if the Company does not effectively manage the combined operations from the mergers
4. 04The Company may be unable to retain current personnel
5. 05Our capital allocation strategy may not be successful, which could adversely impact our financial condition
6. 06Any potential future acquisitions, strategic investments, entry into new lines of business, divestitures, mergers or joint ventures may subject us to significant risks, any of which could harm our business
7. 07Our holdings in special purpose acquisition companies as well as the sponsors of special purpose acquisition companies involve a high degree of risk
8. 08Our results of operations will fluctuate from period to period and may not be indicative of our long-term prospects
9. 09Changes in the value of our equity holdings could have a significant impact on our reported financial results
10. 10As of December 31, 2024, our consolidated balance sheet includes approximately $60.1 million related to equity and other holdings held directly by us or indirectly through equity method holdings
11. 11We may not be successful in carrying out our asset management strategy, and the fair value of our holdings will be subject to a loss in value
12. 12We have no assurance of future business from our managed services customers
13. 13Our operating results could be harmed if we are unable to accurately forecast demand for our products and services and adequately manage our inventory
14. 14Interruptions of, or higher prices of, components from our suppliers may affect our results of operations and financial performance
15. 15The markets for our products and services are highly competitive and if market share is lost, we may be unable to lower our cost structure quickly enough to offset the loss of revenue
16. 16If we are unable to maintain our brand and reputation, our business, results of operations and prospects could be materially harmed
17. 17Our operating margins may decline as a result of increasing product costs
18. 18We are substantially dependent upon significant customers who could cease purchasing our products at any time
19. 19Our business is subject to the economic and political risks of selling products in foreign countries
20. 20The risk of non-compliance with U.S. and foreign laws and regulations applicable to our international operations could have a significant impact on our financial condition, results of operations and strategic objectives
21. 21Failure to effectively utilize or successfully assert intellectual property rights could negatively impact us
22. 22The insurance that we maintain may not fully cover all potential exposures

Risks Relating to Our Reinsurance Business

1. 23Failure to complete the sale of all or a substantial portion of our reinsurance business may have a material adverse effect on our future business, financial condition, results of operations and prospects
2. 24We entered into an agreement to sell a significant portion of our reinsurance business and have classified our reinsurance operations as discontinued operations. There is no assurance that the sale will be completed or that we will realize the planned proceeds or fully exit the reinsurance business

Legal and Regulatory Risks

1. 25The requirements of being a public company may strain our resources, divert management’s attention, affect our ability to attract and retain qualified board members and have a material adverse effect on us and our stockholders
2. 26We are subject to the risk of becoming an investment company under the Investment Company Act
3. 27If we fail to establish and maintain an effective system of integrated internal controls, we may not be able to report our financial results accurately, which could have a material adverse effect on our business, financial condition and results of operations
4. 28Holders of our outstanding shares of 8.00% Cumulative Preferred Stock, Series A, have dividend, liquidation and other rights that are senior to the rights of holders of our common shares
5. 29We may fail to satisfy the continued listing standards of Nasdaq, in which case our stock might be delisted

Technology and Operational Risks

1. 30Our information technology systems may fail or suffer a loss of security which may have a material adverse effect on our business

Risks Related to Our Significant Shareholder

1. 31FG Financial Holdings, LLC (“FG Holdings”) and its affiliated entity control a substantial interest in us and thus may exert substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support
2. 32Some of our directors and officers also serve as directors and/or executive officers for other public companies or for our controlling stockholders or their affiliates, which may lead to conflicting interests
3. 33Our executive officers and directors allocate their time to our and other businesses in which they are involved, at their discretion, potentially to the detriment of the Company
4. 34Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
5. 35Adverse developments in the financial markets could have a material adverse effect on our results of operations, financial position and our businesses, and may also limit our access to capital