Meridian Holdings (MRDN) risk factors, FY2024 10-K

Risks Related to Our Business Operations and Industry

1. 01We face the risk of fraud, theft, and cheating. We face cyber security risks that could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data
2. 02There may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that could subject the Company to significant reputational, financial, legal and operational consequences
3. 13Economic downturns and adverse political and market conditions could adversely negatively affect the Company’s business, financial condition and results of operations
4. 14Economic uncertainty may affect consumer purchases of discretionary items, which has affected and may continue to adversely affect demand for the Company’s products and services
5. 15Economic uncertainty may affect our access to capital and/or increase the costs of such capital
6. 16A reduction in discretionary consumer spending, from an economic downturn or disruption of financial markets or other factors, could negatively impact the financial performance of the Company
7. 17During periods of economic contraction, the Company’s revenues may decrease while most of the Company’s costs remain fixed and some costs even increase, resulting in decreased earnings
8. 18Global pandemics could in the future have an adverse impact on our revenue and results of operations
9. 19The Company’s planned Player2P gaming product is currently on hold and we may never move forward with such gaming product
10. 20The Company’s ongoing investments in new products, services, and technologies is inherently risky, and could divert management attention and harm the Company’s financial condition and operating results
11. 21The Company operates in a rapidly evolving industry and if it fails to successfully develop, market or sell new products or adopt new technology, it could materially adversely affect its results of operations and financial condition
12. 22competitor product introductions or regulatory changes that render our new products obsolete
13. 23The Company relies on third-party payment processors to process deposits and withdrawals made by users, and if they cannot manage their relationships with such third parties and other payment-related risks, their business, financial condition and results of operations could be adversely affected
14. 24A significant amount of our revenues come from a limited number of customers for the resale of our gaming content, and if we were to lose any of those customers, our results of operations could be adversely affected
15. 25If the Company is not able to compete effectively against companies with greater resources, the Company’s prospects for future success will be jeopardized
16. 26In the past we have been affected by, and in the future, we may be affected by, unauthorized transfers, withdrawals, wires, charges, checks and payments, from our bank accounts and service providers
17. 27The online gaming industry is highly competitive, and if the Company fails to compete effectively, it could experience price reductions, reduced margins or loss of revenues
18. 28We face the risk of fraud, theft, and cheating
19. 29MeridianBet Group’s operations are subject to potential future disruptions from military activities, skirmishes, coups, terrorist activities and wars, in the Balkans
20. 30We face cyber security risks that could result in damage to our reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data
21. 31Our technology, systems and infrastructure have previously experienced, and may in the future, experience, a disruption in service, failure or a loss of data, which have in the past, and may in the future, cause financial and reputational harm to our business
22. 32Systems failures and resulting interruptions in the availability of our websites, applications, products, or services could harm our business
23. 33Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, bank closures or FDIC takeovers, could adversely affect our business, financial condition or results of operations
24. 34We have business operations located in non-U.S. countries which subject us to additional costs and risks that could adversely affect our operating results
25. 35reduced protection for intellectual property rights in some countries
26. 36Our results of operations may be adversely affected by fluctuations in currency values
27. 37The Company depends on the services of key personnel to execute its business strategy. If it loses the services of its key personnel or we are unable to attract and retain other qualified personnel, we may be unable to operate our business effectively
28. 38We rely on third party cloud services and such providers or services have in the past, and may in the future, encounter technical problems and service interruptions
29. 39Our operations rely heavily on an uninterrupted supply of electrical power
30. 40Our business is vulnerable to changing economic conditions and to other factors that adversely affect the industries in which we operate
31. 41The Company’s results of operations could be affected by natural events in the locations in which we operate or where our customers or service providers operate and we do not currently have insurance in place to mitigate such risks
32. 42Our insurance coverage may not be adequate to cover all possible losses that we could suffer, and our insurance costs may increase
33. 43There is a risk that the Company’s network systems will be unable to meet the growing demand for its online products
34. 44The internet’s viability as a medium for products and services offered by us could be affected if the necessary infrastructure is not sufficient, or if other technologies and technological devices eclipse the internet as a viable channel
35. 45Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks we cannot control
36. 46The operations of the Company are seasonal

Risks Related to our Common Stock and Securities

1. 03Aleksandar Milovanović exercises majority voting control over us, which limits your ability to influence corporate matters and could delay or prevent a change in corporate control
2. 67Nevada law and our articles of incorporation authorize us to issue shares of stock, which shares may cause substantial dilution to our existing shareholders
3. 68Certain warrants we have granted include anti-dilutive rights
4. 69There may not be sufficient liquidity in the market for our securities in order for investors to sell their shares. The market price of our comment stock has been, and may continue to be, volatile
5. 70The issuance of common stock upon conversion of the Secured Convertible Note and exercise of warrants will cause immediate and substantial dilution to existing shareholders
6. 71As of December 31, 2024, the principal balance of the Secured Convertible Note was $9,600,000
7. 72We are subject to various restrictions while the Secured Convertible Note remains outstanding which may have an adverse effect on our ability to raise capital and undertake certain transactions
8. 73Our common stock may continue to be followed by only a limited number of analysts and there may continue to be a limited number of institutions acting as market makers for our common stock
9. 74We currently have an illiquid and volatile market for our common stock, and the market for our common stock is and may remain illiquid and volatile in the future
10. 75passage of legislation or other regulatory developments that adversely affect us or the gaming industry
11. 76Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives
12. 77We incur significant costs to ensure compliance with U.S. and Nasdaq Capital Market reporting and corporate governance requirements
13. 78We need to meet certain continued listing requirements of The Nasdaq Capital Market in order to not have our common stock delisted from such markets

Risks Related to the Company’s Need for Additional Funding and Financial Agreements

1. 04We may require additional financing, and we may not be able to raise funds on favorable terms, or at all
2. 05The Company will likely need to raise funding to pay the post-closing obligations associated with the Meridian Purchase Agreement, the terms of which may not be favorable, may necessitate the payment of interest which otherwise would not need to be paid, and may cause dilution
3. 06We may choose not to sell any shares of common stock under our Distribution Agreement
4. 07No shares have been sold under the Distribution Agreement to date
5. 08Our Secured Convertible Note with the Investor is secured by a Security Agreement over substantially all of our assets and a pledge of the securities of certain of our subsidiaries
6. 09After such time as the principal amount of the Secured Convertible Note is $6,000,000 or less and, so long as no event of default has occurred and is continuing, at the request of the Company, the Investor agreed to release its lien on its collateral under the Security Agreement and Pledge Agreement
7. 10Because we have a limited operating history our future operations may not result in profitable operations
8. 11We are required to make amortization payments of the amounts owed under the Secured Convertible Note upon the occurrence of certain events and we may not have sufficient cash to make such payments, if required
9. 12We face significant penalties if we fail to keep effective the required registration statement to register the resale of the shares of common stock issuable upon conversion of the Senior Secured Note and warrants

Risks Related to Regulation

1. 47Our products are generally part of new and evolving industries, which presents significant uncertainty and business risks
2. 48Changes in the UK government’s or the Republic of Ireland’s rules relating to gaming could have a material negative impact on our business
3. 49We are subject to various laws relating to trade, export controls, and foreign corrupt practices, the violation of which could adversely affect our operations, reputation, business, prospects, operating results and financial condition
4. 50The Company’s ability to operate in the U.S. is currently, and may continue to be, limited
5. 51Our product offerings must be approved in most regulated jurisdictions in which they are offered; this process cannot be assured or guaranteed
6. 52Legislative and regulatory changes could negatively affect our business and the business of our customers
7. 53Material increases to our taxes or the adoption of new taxes or the authorization of new or increased forms of gaming could have a material adverse effect on our future financial results
8. 54Gaming opponents may persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit the growth of our operations
9. 55Climate change, climate change regulations and greenhouse gas effects may adversely impact our operations
10. 56The gaming industry is highly regulated, and we must adhere to various regulations and maintain applicable licenses to continue our operations. Failure to abide by regulations or maintain applicable licenses could be disruptive to our business and could adversely affect our operations
11. 57We may be unable to obtain licenses in new jurisdictions where we or our customers operate
12. 58Privacy concerns could result in regulatory changes and impose additional costs and liabilities on the Company, limit its use of information, and adversely affect its business

Risks Related to Intellectual Property and Technology

1. 59If we are unable to protect our proprietary information or other intellectual property, our business could be adversely affected
2. 60Our intellectual property may be insufficient to properly safeguard our technology and brands
3. 61We may be subject to claims of intellectual property infringement or invalidity and adverse outcomes of litigation could unfavorably affect our operating results

Risks Related to our Management

1. 62We rely on our management and if they were to leave our company our business plan could be adversely affected
2. 63the board maintains a Compensation Committee with prescribed duties and a written charter and comprised solely of independent directors
3. 64Consequently, Company stockholders have less influence over the management and policies of the Company and the Meridian Sellers are effectively in control of the Company
4. 65Potential competition from existing executive officers, after they leave our employment, and the Meridian Sellers, subject to the non-compete terms of the Meridian Purchase Agreement, could negatively impact the profitability of the Company

Risks Related to International Operations

1. 66The Company may in the future enter into agreements and conduct activities outside of the jurisdictions where they currently carry on business, which expansion may present challenges and risks that we have not faced in the past, any of which could adversely affect their results of operations and/or financial condition

Risks Related To our Governing Documents and Nevada Law

1. 79Our Bylaws provide for indemnification of officers and directors at our expense, which may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers or directors
2. 80The limitation of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights to them may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees
3. 81Anti-takeover provisions in our Articles of Incorporation, as amended and our Bylaws, as well as provisions of Nevada law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock
4. 82limiting the liability of, and providing indemnification to, our directors and officers
5. 83Our Articles of Incorporation allow for our Board of Directors to create a new series of preferred stock without further approval by our shareholders, which could have an anti-takeover effect and could adversely affect holders of our common stock
6. 84If we make any future acquisitions, they may disrupt or have a negative impact on our business
7. 85potential expenses under the labor, environmental and other laws of various jurisdictions
8. 86Our insurance may not provide adequate levels of coverage against claims
9. 87We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment
10. 88We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause the value of our common stock to have a lower value than other similar companies which do pay cash dividends
11. 89We are party to pending litigation in various jurisdictions and with various plaintiffs, and we may be subject to future litigation in the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business
12. 90Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock
13. 91The sale of shares by our directors and officers may adversely affect the market price for our shares
14. 92Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock
15. 93If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages
16. 94A significant number of our shares are eligible for sale and their sale or potential sale may depress the market price of our common stock
17. 95Our ability to grow and compete in the future will be adversely affected if adequate capital is not available
18. 96If we are unable to manage future growth effectively, our profitability and liquidity could be adversely affected
19. 97We may be adversely affected by climate change or by legal, regulatory or market responses to such change
20. 98We might be adversely impacted by changes in accounting standards