What the changes say
- New risks emphasize the Reciprocal’s insurance exposure, including weather catastrophes, reinsurance, consolidation, fees and regulatory assessments.
- Aon reinsurance-contract breach could require repayment of approximately $25.9 million in payments.
- Porch highlights acquisition uncertainty and the need to sustain profitability after reporting losses through the third quarter of 2024.
What changed since the prior 10-K
New
- NewRisks Relating to Porch’s Business and Industry
partners. Further, if in the future Porch decides to use its captive reinsurer to provide other reinsurance offerings to the Reciprocal to benefit the Reciprocal or increase cashflow to Porch shareholders, unusual weather could impact the seasonality and financial results of Porch
Severe weather, climate change, pandemics and higher claims could reduce reinsurance availability, damage housing markets and hurt the Reciprocal.
- NewRisks Relating to our Insurance Operations
management services including, but not limited to, underwriting, policy renewal, risk and portfolio management, financial oversight, and investment guideline setting. We receive compensation in the form of commissions and fees calculated based on the Reciprocal’s written premium and policies in force
Porch consolidates the Reciprocal’s risks despite not owning it, may fail to deconsolidate, and cannot receive its profits or surplus.
- NewRisks Relating to our Insurance Operations
We are dependent upon management fees we retain from the Reciprocal, which represent a significant source of revenue. Accordingly, any reduction in premiums written by the Reciprocal and/or the management fee rate could have a negative effect on our revenues and net income
Lower Reciprocal premiums, reduced management fees or weaker financial-strength ratings could materially reduce Porch’s revenue and profitability.
- NewRisks Relating to our Insurance Operations
The Reciprocal is dependent on the use of reinsurance, including reinsurance from our wholly owned reinsurance captive
Insufficient or unavailable reinsurance, reinsurer nonpayment and changing profit commissions could materially affect the Reciprocal’s premiums, capital and results.
- NewRisks Relating to our Insurance Operations
The insolvency or termination of a reinsurance contract at one or more reinsurers of the Reciprocal may expose the Reciprocal and the Company to various risks that could materially and adversely affect the Reciprocal’s and the Company’s business, financial condition and results of operations
Breaching the Aon agreement, including through a rating decline or use of another broker, could require repayment of Aon’s payments.
- NewRisks Relating to our Insurance Operations
Our ability to pursue and complete acquisitions is uncertain, and we may not successfully identify, negotiate, or close desirable transactions
Porch may be unable to identify, negotiate or obtain regulatory approval for acquisitions supporting the Reciprocal’s growth strategy.
- NewRisks Relating to Financial Reporting and Results of Operations
Prior to the fourth quarter of fiscal 2024, we had a history of losses, and we may be unable to sustain profitability
Porch may not sustain profitability because recent revenue growth is unproven, expenses may remain high and dependence on the Reciprocal continues.
- NewRisks Relating to Compliance with Laws and Regulations, and Litigation
significantly restrict the insurance businesses’ ability to exit unprofitable markets. Such actions and related regulatory restrictions may limit their ability to reduce potential exposure to hurricane-related losses
Texas TWIA and other assigned-risk, shared-market and guaranty-fund requirements could force unprofitable underwriting or impose assessments on the insurance businesses.
Dropped
- DroppedRisks Relating to Porch’s Business and Industry
personal information and property data, and adverse consumer reaction to our marketing practices. This could cause us to lose customers and reduce the number of commercial partners using our platforms
- DroppedRisks Relating to Porch’s Business and Industry
Our success will depend, in substantial part, on the continued migration of the home and home-related services market online
- DroppedRisks Relating to Porch’s Business and Industry
ability to use the technology on which we rely. Even if these claims are resolved in our favor, such claims could result in significant expenses and could distract our management until resolved
- DroppedRisks Relating to our Insurance Operations
interest and principal. Further, notwithstanding receipt of regulatory approval, there can be no guarantee that PIRE will be able to repay timely or all the interest and principal on the surplus notes we hold
- DroppedRisks Relating to our Insurance Operations
If the management fee rate retained by Porch’s insurance services businesses is reduced or if there is a significant decrease in the amount of direct and assumed premiums written by PIRE, revenues and profitability of the Company could be materially adversely affected
Targeted marketing using consumer and property data faced privacy scrutiny, potentially causing customer and commercial-partner losses.
- DroppedRisks Relating to our Insurance Operations
PIRE is dependent on the use of reinsurance
- DroppedRisks Relating to our Insurance Operations
of reinsurance, extend our reinsurance contracts or purchase new reinsurance protection in amounts that we consider sufficient at current or acceptable prices, we would have to either accept an increase in our exposure, reduce their insurance writings or develop or seek other alternatives
- DroppedRisks Relating to our Insurance Operations
Reinsurance may be unavailable at current levels and prices, which may limit PIRE’s ability to write new business. Furthermore, reinsurance subjects PIRE to counterparty risk and may not be adequate to protect it against losses, which could have a material effect on results of our operations and financial condition
Porch’s growth depended on consumers moving home and home-related services online.
- DroppedRisks Relating to our Insurance Operations
result in regulatory actions from the CIMA or loss of or modification of Porticus Re’s Class B (iii) insurer license, which could adversely impact PIRE’s ability to improve its overall capital efficiency
- DroppedRisks Relating to our Insurance Operations
Regulatory factors could impact the value at which HOA carries our shares on its statutory financial statements, negatively impact HOA regulatory surplus, and require us to take additional steps to enable HOA to adhere to regulatory requirements and maintain its financial stability rating
- DroppedRisks Relating to Financial Reporting and Results of Operations
We have a history of losses, and we may be unable to achieve or sustain profitability
- DroppedRisks Relating to Compliance with Laws and Regulations, and Litigation
each state where it elects to offer such products. States may also regulate various aspects of the contractual relationships between insurers and independent agents
Reworded
- 93% rewrittenRisks Relating to Our Growth Strategy and Strategic Initiatives
Nasdaq may delist the Company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject the Company to additional trading restrictions
The revised risk removes explicit $2.5 million equity, 300-holder and $1 bid-price thresholds and adds delisting consequences such as penny-stock status and reduced financing access.
- 87% rewrittenRisks Relating to our Insurance Operations
We may change the structure of the reinsurance arrangement for the Reciprocal and our reinsurance captive in the future, which may impact our overall risk profile and financial condition
The examples now refer to other catastrophic events rather than terrorist attacks, and the Reciprocal replaces PIRE throughout the reinsurance discussion.
Was: We may change the structure of the reinsurance arrangement for PIRE and our reinsurance captive in the future, which may impact our overall risk profile and financial and capital condition
- 79% rewrittenRisks Relating to Compliance with Laws and Regulations, and Litigation
The insurance businesses we manage and operate are subject to state governmental regulation, which could limit the growth of the insurance businesses and impose additional costs on the Reciprocal and HOA
No substantive change; the state-regulation risk retains the same scope and examples.
Was: The insurance businesses we manage and operate are subject to state governmental regulation, which could limit the growth of the insurance businesses and impose additional costs on PIRE and HOA
- 76% rewrittenRisks Relating to Financial Reporting and Results of Operations
Our risk management policies and procedures may prove to be ineffective and leave us exposed to unidentified or unanticipated risk
No substantive change; the risk-management limitations and unidentified-risk language remain the same.
- 63% rewrittenRisks Relating to our Insurance Operations
Our results of operations and financial condition may be adversely affected due to limitations in the analytical models or changes in accessibility to such models used to assess and predict the Reciprocal’s exposure to catastrophic losses
No substantive change; the catastrophe-model limitations, climate effects and Reciprocal exposure remain the same.
Was: Our results of operations and financial condition may be adversely affected due to limitations in the analytical models or changes in accessibility to such models used to assess and predict PIRE’s exposure to catastrophic losses
- 52% rewrittenRisks Relating to Porch’s Business and Industry
We rely on relationships with third parties to provide us with access to derive personal data and information, and property data
No substantive change; the risk still concerns third-party access to personal and property data and restrictive data-sharing practices.
- 50% rewrittenRisks Relating to our Indebtedness
The indenture governing our 2028 Notes also requires us to maintain a minimum amount of unrestricted cash and cash equivalents of at least $25 million (tested monthly on the last day of each calendar month) on a consolidated basis among Porch Group, Inc. and certain of its domestic subsidiaries
The prior 2026 Notes repurchase trigger is replaced by broader 2028 Notes covenant, default, secured-collateral and foreclosure risks.
- 46% rewrittenRisks Relating to Our Growth Strategy and Strategic Initiatives
The price of our securities may change significantly, and investors could lose all or part of their investment as a result
References to PIRE’s financial performance are changed to the Reciprocal’s, with the remaining stock-volatility examples substantially unchanged.
Was: The price of the Company’s securities may change significantly, and investors could lose all or part of their investment as a result
- 45% rewrittenRisks Relating to Porch’s Business and Industry
We face a variety of risks from our expansion into the insurance business, including as a result of higher than expected claims costs and other factors outside of our control, which may result in an adverse impact on the Company’s financial condition
Was: We face a variety of risks from our expansion into the insurance business, including as a result of higher than expected claims costs and other factors outside of the Company’s control, which may result in an adverse impact on the Company’s financial condition
- 44% rewrittenRisks Relating to Our Growth Strategy and Strategic Initiatives
These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low
Was: These broad market and industry fluctuations may adversely affect the market price of the Company’s common stock, regardless of the Company’s actual operating performance. In addition, price volatility may be greater if the public float and trading volume of the Company’s common stock is low
- 37% rewrittenRisks Relating to our Insurance Operations
The financial strength ratings of the Reciprocal and HOA, its insurance company subsidiary, could be downgraded
Was: The financial strength ratings of PIRE and HOA, its insurance company subsidiary, could be downgraded
- 36% rewrittenRisks Relating to Porch’s Business and Industry
We rely upon trademarks, trade dress, domain names and logos to market our brands and businesses and to build and maintain brand loyalty and recognition, as well as upon trade secrets
- 36% rewrittenRisks Relating to our Indebtedness
Certain provisions in the indentures governing the Notes may delay or prevent an otherwise beneficial takeover attempt of us
Was: Certain provisions in the indenture governing the 2026 Notes and indenture governing the 2028 Notes may delay or prevent an otherwise beneficial takeover attempt of us
- 35% rewrittenRisks Relating to our Insurance Operations
Failure to maintain the Reciprocal’s risk-based capital at the required levels could adversely affect its ability to maintain regulatory authority to conduct business
Was: Failure to maintain PIRE’s risk-based capital at the required levels could adversely affect its ability to maintain regulatory authority to conduct business
- 35% rewrittenRisks Relating to Porch’s Business and Industry
If we are unable to deliver effective customer service, it could harm our relationships with our existing home services companies, customers, service providers and commercial partners and adversely affect our ability to attract new home services companies, customers, service providers and commercial partners
Was: If we are unable to deliver effective customer service, it could harm our relationships with our existing home services companies, consumers, service providers and commercial partners and adversely affect our ability to attract new home services companies, consumers, service providers and commercial partners
- 31% rewrittenRisks Relating to our Insurance Operations
A sustained decline in the price of our common stock would negatively impact the Reciprocal statutory surplus, which may require it to raise additional funds to enable the Reciprocal to adhere to regulatory requirements and maintain its financial stability rating
Was: A sustained decline in the price of our common stock would negatively impact HOA regulatory surplus, which may require it to raise additional funds to enable HOA to adhere to regulatory requirements and maintain its financial stability rating
- 30% rewrittenRisks Relating to Porch’s Business and Industry
We have been incorporating and continue to work to further incorporate AI into our products, services and internal operations. Implementation of AI and machine learning technologies may result in legal and regulatory risks, reputational harm or have other adverse consequences to our business
- 29% rewrittenRisks Relating to Financial Reporting and Results of Operations
We have incurred and will continue to incur increased costs as a result of being a public company that reports to the SEC and our management will be required to devote substantial time to meet compliance obligations
- 28% rewrittenRisks Relating to our Insurance Operations
Other restrictions under Texas law limit the total amount the Reciprocal may invest in an affiliate such as Porch Group, Inc., which could limit the portion of the contributed shares’ value that can be included as admitted assets on its statutory financial statements
Was: Other restrictions under Texas law limit the total amount HOA may invest in an affiliate such as Porch Group, Inc., which could limit the portion of the contributed shares’ value that can be included as admitted assets on its statutory financial statements
- 27% rewrittenRisks Relating to our Insurance Operations
If the costs of providing services to the Reciprocal are not controlled, our profitability could be materially adversely affected
Was: If the costs of providing services to PIRE are not controlled, our profitability could be materially adversely affected
- 26% rewrittenRisks Relating to Porch’s Business and Industry
Our efforts to develop new insurance products, expand in targeted insurance markets, improve business processes and workflows, use of Home Factors in underwriting, or make acquisitions may not be successful and may create enhanced risk
- 26% rewrittenRisks Relating to our Insurance Operations
Future sales of our common stock by the Reciprocal, or deconsolidation of the Reciprocal’s financial statements from our financial statements, could cause our stock price to decline
Was: Future sales of our common stock by HOA, or deconsolidation of PIRE’s financial statements from our financial statements, could cause our stock price to decline
- 23% rewrittenRisks Relating to Porch’s Business and Industry
We may face negative consequences from the actions and omissions of our service providers, and our terms and conditions may not adequately protect us from claims
- 22% rewrittenRisks Relating to Financial Reporting and Results of Operations
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
- 22% rewrittenRisks Relating to our Insurance Operations
The performance of the Reciprocal’s and our reinsurance captive’s investment portfolios is subject to a variety of investment risks
Was: The performance of PIRE’s and our reinsurance captive’s investment portfolios is subject to a variety of investment risks
- 22% rewrittenRisks Relating to Porch’s Business and Industry
Our brands and businesses, including the insurance business we manage, operate in an especially competitive and evolving industry
- 21% rewrittenRisks Relating to our Indebtedness
Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to make such payments
All 69 risk factors
Headings as the filing states them, in filing order.
Risks Relating to Porch’s Business and Industry
- 01Our brands and businesses, including the insurance business we manage, operate in an especially competitive and evolving industry22% rewritten
- 02We face a variety of risks from our expansion into the insurance business, including as a result of higher than expected claims costs and other factors outside of our control, which may result in an adverse impact on the Company’s financial condition45% rewritten
- 03partners. Further, if in the future Porch decides to use its captive reinsurer to provide other reinsurance offerings to the Reciprocal to benefit the Reciprocal or increase cashflow to Porch shareholders, unusual weather could impact the seasonality and financial results of PorchNew
- 04Our efforts to develop new insurance products, expand in targeted insurance markets, improve business processes and workflows, use of Home Factors in underwriting, or make acquisitions may not be successful and may create enhanced risk26% rewritten
- 05We rely on relationships with third parties to provide us with access to derive personal data and information, and property data52% rewritten
- 06Marketing efforts designed to drive traffic to our brands and businesses may not be successful or cost-effective
- 07including service providers, could indirectly harm the reputation of our brands and businesses and, in turn, adversely affect our business, financial condition and results of operations
- 08Our brands and businesses are sensitive to general economic events, trends and conditions, including those related to, without limitation, the housing and financial markets, which impact the demand for certain of our products and services
- 09If we are unable to deliver effective customer service, it could harm our relationships with our existing home services companies, customers, service providers and commercial partners and adversely affect our ability to attract new home services companies, customers, service providers and commercial partners35% rewritten
- 10We may be unable to access the capital markets when needed, which could adversely affect the ability to take advantage of business opportunities as they arise, refinance our outstanding debt, and fund operations in a cost-effective manner
- 11Increases in parts, appliance and home system prices and other operating costs could adversely impact our business, financial position and results of operations
- 12We may face negative consequences from the actions and omissions of our service providers, and our terms and conditions may not adequately protect us from claims23% rewritten
- 13The nature of our platform is complex and highly integrated, and if we fail to successfully manage releases or integrate new solutions, it could harm our business, financial condition, and results of operations
- 14We rely upon trademarks, trade dress, domain names and logos to market our brands and businesses and to build and maintain brand loyalty and recognition, as well as upon trade secrets36% rewritten
- 15We rely on our ability to reach consumers earlier than our competitors and ongoing throughout the homebuying and homeownership journey. Our competitors could find ways to reach these customers and consumers earlier than us or at other times during the homebuying and homeownership journey
- 16Our success depends, in part, on our ability to develop and monetize versions of our products and services for mobile and other digital devices
- 17We have been incorporating and continue to work to further incorporate AI into our products, services and internal operations. Implementation of AI and machine learning technologies may result in legal and regulatory risks, reputational harm or have other adverse consequences to our business30% rewritten
Risks Relating to our Insurance Operations
- 18management services including, but not limited to, underwriting, policy renewal, risk and portfolio management, financial oversight, and investment guideline setting. We receive compensation in the form of commissions and fees calculated based on the Reciprocal’s written premium and policies in forceNew
- 19We are dependent upon management fees we retain from the Reciprocal, which represent a significant source of revenue. Accordingly, any reduction in premiums written by the Reciprocal and/or the management fee rate could have a negative effect on our revenues and net incomeNew
- 20The Reciprocal is dependent on the use of reinsurance, including reinsurance from our wholly owned reinsurance captiveNew
- 21The insolvency or termination of a reinsurance contract at one or more reinsurers of the Reciprocal may expose the Reciprocal and the Company to various risks that could materially and adversely affect the Reciprocal’s and the Company’s business, financial condition and results of operationsNew
- 22We may change the structure of the reinsurance arrangement for the Reciprocal and our reinsurance captive in the future, which may impact our overall risk profile and financial condition87% rewritten
- 23The performance of the Reciprocal’s and our reinsurance captive’s investment portfolios is subject to a variety of investment risks22% rewritten
- 24The financial strength ratings of the Reciprocal and HOA, its insurance company subsidiary, could be downgraded37% rewritten
- 25The effects of emerging claim and coverage issues in the insurance industry are uncertain
- 26In addition, potential passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to extend statutes of limitations or otherwise repeal or weaken tort reforms could have an adverse impact on the insurance businesses we manage and operate
- 27Failure to maintain the Reciprocal’s risk-based capital at the required levels could adversely affect its ability to maintain regulatory authority to conduct business35% rewritten
- 28The Reciprocal’s and our insurance captive’s loss reserves may be inadequate to cover actual losses
- 29The Reciprocal and our reinsurance captive could be forced to sell investments to meet liquidity requirements
- 30The failure to accurately and timely pay claims could harm the insurance businesses we manage and operate
- 31Our results of operations and financial condition may be adversely affected due to limitations in the analytical models or changes in accessibility to such models used to assess and predict the Reciprocal’s exposure to catastrophic losses63% rewritten
- 32Other restrictions under Texas law limit the total amount the Reciprocal may invest in an affiliate such as Porch Group, Inc., which could limit the portion of the contributed shares’ value that can be included as admitted assets on its statutory financial statements28% rewritten
- 33A sustained decline in the price of our common stock would negatively impact the Reciprocal statutory surplus, which may require it to raise additional funds to enable the Reciprocal to adhere to regulatory requirements and maintain its financial stability rating31% rewritten
- 34Future sales of our common stock by the Reciprocal, or deconsolidation of the Reciprocal’s financial statements from our financial statements, could cause our stock price to decline26% rewritten
- 35If the costs of providing services to the Reciprocal are not controlled, our profitability could be materially adversely affected27% rewritten
- 36Our ability to pursue and complete acquisitions is uncertain, and we may not successfully identify, negotiate, or close desirable transactionsNew
Risks Relating to Financial Reporting and Results of Operations
- 37Our quarterly operating results may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of the market, including research analysts or investors, which could cause our stock price to decline
- 38Our quarterly results of operations fluctuate due to seasonality in consumer demand and historical weather trends, in addition to other factors associated with our industry
- 39Prior to the fourth quarter of fiscal 2024, we had a history of losses, and we may be unable to sustain profitabilityNew
- 40We have incurred and will continue to incur increased costs as a result of being a public company that reports to the SEC and our management will be required to devote substantial time to meet compliance obligations29% rewritten
- 41Our risk management policies and procedures may prove to be ineffective and leave us exposed to unidentified or unanticipated risk76% rewritten
- 42We are subject to credit risk arising from the financial soundness of counterparties, including the Reciprocal’s and our reinsurance captive’s reinsurers, which may have a material adverse effect on our business, financial condition, and results of operations
- 43Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited22% rewritten
Risks Relating to Compliance with Laws and Regulations, and Litigation
- 44The insurance businesses we manage and operate are subject to state governmental regulation, which could limit the growth of the insurance businesses and impose additional costs on the Reciprocal and HOA79% rewritten
- 45significantly restrict the insurance businesses’ ability to exit unprofitable markets. Such actions and related regulatory restrictions may limit their ability to reduce potential exposure to hurricane-related lossesNew
- 46The processing, storage, use and disclosure of personal data is subject to a variety of federal and state laws and regulations and could give rise to liabilities and increased costs
- 47We are subject to payment network rules, and any material modification of our payment card acceptance privileges could have a material adverse effect on our business, results of operations, and financial condition
- 48Our marketing efforts are subject to a variety of federal and state regulations
- 49Litigation and regulatory actions could distract management, increase our expenses or subject us to material monetary damages and other remedies
- 50Our moving services business is subject to state regulations and certain state regulatory structures do not address our business model for moving services. Compliance with required licensure and other regulatory requirements could be costly and any inability to comply could harm our business
Risks Relating to our Indebtedness
- 51Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to make such payments21% rewritten
- 52The conditional conversion features of the Notes, if triggered, may adversely affect our financial condition and operating results
- 53The indenture governing our 2028 Notes also requires us to maintain a minimum amount of unrestricted cash and cash equivalents of at least $25 million (tested monthly on the last day of each calendar month) on a consolidated basis among Porch Group, Inc. and certain of its domestic subsidiaries50% rewritten
- 54Conversion of our Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock
- 55The accounting method for the Notes could adversely affect our reported financial condition and results
- 56Certain provisions in the indentures governing the Notes may delay or prevent an otherwise beneficial takeover attempt of us36% rewritten
Risks Relating to Personnel
- 57We face risks associated with our independent contractors
- 58In addition, many U.S.-based companies are seeking to hire talented information technology personnel and other skilled personnel located in other jurisdictions, leading to additional competition for the services of independent contractors in the jurisdictions in which we retain independent contractors
- 59We depend on key personnel to operate our business, and if we are unable to retain, attract and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed
- 60Expansion of our employee base to foreign countries will subject us to additional risks that can adversely affect our business, results of operations, and financial condition
Risks Relating to Our Growth Strategy and Strategic Initiatives
- 61We may experience risks related to acquisitions and divestitures which could adversely affect our financial results
- 62We may not be able to effectively manage our growth
- 63The price of our securities may change significantly, and investors could lose all or part of their investment as a result46% rewritten
- 64These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low44% rewritten
- 65Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our common stock to decline
- 66Nasdaq may delist the Company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject the Company to additional trading restrictions93% rewritten
- 67Because there are no current plans to pay cash dividends on the Company’s common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it
- 68If securities analysts do not publish research or reports about the Company’s business or if they downgrade the Company’s stock or the Company’s sector, the Company’s stock price and trading volume could decline
- 69Anti-takeover provisions in the Company’s organizational documents could delay or prevent a change of control
Other Porch Group 10-Ks
- FY2024 10-K risk factors73 risks
Porch Group faces significant operational, regulatory, and financial risks following the 2025 sale of HOA to reciprocal insurance exchange PIRE. The company relies heavily on management fees from PIRE, reinsurance availability, and maintaining adequate capital and loss reserves. Growth depends on online migration of home services, data access, and effective AI adoption without regulatory penalties.
Filed Feb 25, 2025
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The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.