BRC Group Holdings (RILY) risk factors, FY2024 10-K

Risks Related to Global and Economic Conditions and International Operations

1. 01Our revenues and results of operations are volatile and difficult to predict and have been impacted by recent divestiture transactions
2. 02Conditions in the financial markets and general economic conditions have impacted and may continue to impact our ability to generate business and revenues, which may cause significant fluctuations in our stock price
3. 03Global economic and political uncertainty could adversely affect our revenue and results of operations
4. 04We focus principally on certain sectors of the economy in our investment banking operations, and deterioration in the business environment in these sectors or a decline in the market for securities of companies within these sectors could harm our business
5. 05Our businesses may be adversely affected by the disruptions in the credit markets, including reduced access to credit and liquidity and higher costs of obtaining credit
6. 06Climate change could have a material negative impact on us and our customers and counterparties, and our efforts to address concerns relating to climate change could result in damage to our reputation
7. 07All of our production is performed by third-party contract manufacturers, including original design manufacturers, in Taiwan, China, Thailand, Vietnam, Cambodia, India, South Korea and Philippines
8. 08We depend on overseas third-party suppliers for the manufacture of Targus and magicJack products, and our reputation and results of operations would be harmed if these manufacturers or suppliers fail to meet our requirements
9. 09Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition

Risks Related to Legal Liability, Risk Management, Finance and Accounting

1. 10Our exposure to legal liability is significant, and could lead to substantial damages
2. 11Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price
3. 12Company loaned $108.0 million to Conn’s subsequently reduced to $93.0 million due to principal repayments. The fair value of this loan receivable was $19.1 million at December 31, 2024
4. 13We may incur losses as a result of ineffective risk management processes and strategies
5. 14Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks
6. 15Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business
7. 16personally invested. Similarly, conflicts of interest may exist or develop regarding decisions about the allocation of specific investment opportunities between the Company and the funds
8. 17Financial services firms have been subject to increased scrutiny over the last several years, increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions
9. 18If we cannot meet our future capital requirements, we may be unable to develop and enhance our services, take advantage of business opportunities and respond to competitive pressures
10. 19Our ability to use net loss carryovers to reduce our taxable income may be limited
11. 20Changes in tax laws or regulations, or to interpretations of existing tax laws or regulations, to which we are subject could adversely affect our financial condition and cash flows
12. 21We may suffer losses if our reputation is harmed
13. 22Misconduct by our employees or by the employees of our business partners could harm us and is difficult to detect and prevent
14. 23We may enter into new lines of business, make strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties for our business

Risks Related to BRS' Capital Markets Activities

1. 24Our corporate finance and strategic advisory engagements are singular in nature and do not generally provide for subsequent engagements
2. 25Our Capital Markets operations are highly dependent on communications, information and other systems and third parties, and any systems failures could significantly disrupt our capital markets business
3. 26The growth of electronic trading and the introduction of new technology in the markets in which our market-making business operates may adversely affect this business and may increase competition
4. 27Pricing and other competitive pressures may impair the revenues of our sales and trading business
5. 28Larger and more frequent capital commitments in our trading and underwriting businesses increase the potential for significant losses
6. 29Our underwriting and market making activities may place our capital at risk
7. 30We are subject to net capital and other regulatory capital requirements; failure to comply with these rules would significantly harm our business
8. 31In addition, a change in the net capital rules or the imposition of new rules affecting the scope, coverage, calculation, or amount of net capital requirements, or a significant operating loss or any large charge against net capital, could have similar adverse effects

Risks Related to our Investment Activities

1. 32We have made and may make investments in relatively high-risk, illiquid assets that often have significantly leveraged capital structures, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest in these activities
2. 33We are exposed to credit risk from a variety of our activities, including loans, lines of credit, guarantees and backstop commitments, and we may not be able to fully realize the value of the collateral securing certain of our loans
3. 34The amount and duration of our credit exposures have been increasing over the past year, as have the breadth and size of the entities to which we have credit exposures
4. 35We have had and may experience write downs of our investments and other losses related to the valuation of our investments and volatile and illiquid market conditions
5. 36A substantial portion of our cash flows and net income are dependent upon payments from our investments in consumer finance receivables
6. 37Our investment in these loans is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime. Our reliance on these receivables may in the future negatively impact our performance
7. 38Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact us or the originator of our receivables

Risks Related to our Wealth Management Business

1. 39Poor investment performance may decrease assets under management and reduce revenues from and the profitability of our asset management business
2. 40The historical returns of our funds may not be indicative of the future results of our funds
3. 41We are subject to risks in using custodians
4. 42We manage debt investments that involve significant risks

Risks Related to Our Communications Businesses

1. 43Dial-up and DSL pay accounts may decline faster than expected and adversely impact our business
2. 44Our marketing efforts for our communications businesses may not be successful or may become more expensive, either of which could increase our costs and adversely impact our business, financial condition, results of operations, and cash flows
3. 45Our communications businesses are dependent on the availability of telecommunications services and compatibility with third-party systems and products
4. 46Government regulations could adversely affect our business or force us to change our business practices
5. 47Increases in credit card processing fees and high chargeback costs would increase our operating expenses and adversely affect our results of operations, and an adverse change in, or the termination of, our relationship with any major credit card company would have a severe, negative impact on our business
6. 48Flaws in our technology and systems could cause delays or interruptions of service, damage our reputation, cause us to lose customers and limit our growth
7. 49We rely on independent retailers to sell the magicJack devices, and disruption to these channels would harm our business
8. 50The success of our business relies on customers’ continued and unimpeded access to broadband service. Providers of broadband services may be able to block our services or charge their customers more for also using our services, which could adversely affect our revenue and growth
9. 51In December 2017, the FCC rescinded rules that, among other things, prohibited broadband Internet access providers from blocking, throttling, or otherwise degrading the quality of data packets, or attempting to extract additional fees from edge service providers

Risks Related to Our Consumer Products Segment

1. 52If Targus fails to innovate and develop new products in a timely and cost-effective manner for its new and existing product categories, our business and operating results could be adversely affected
2. 53We rely on third parties to sell and distribute our products, and we rely on their information to manage our business
3. 54compliance with laws and regulations, and their reputations - of which we may or may not be aware - may affect our business and our reputation
4. 55Targus’ business is heavily reliant on the general demand for IT and personal computer-related devices

Risks Related to Competition

1. 56We face competition with respect to all of our service and product areas. The level of competition depends on the particular service or product area
2. 57effectively compete could have a material adverse effect on our financial condition, growth potential and results of operations
3. 58If we are unable to attract and retain qualified personnel, we may not be able to compete successfully in our industry

Risks Related to Data Security and Intellectual Property

1. 59Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage
2. 60We may be unsuccessful in protecting our proprietary rights or may have to defend ourselves against claims of infringement, which could impair or significantly affect our business
3. 61We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries

Risks Related to our Securities and Ownership

1. 62Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control and could also limit the market price of our stock
2. 63Because of their significant stock ownership, some of our existing stockholders will be able to exert control over us and our significant corporate decisions
3. 64Our common stock price may fluctuate substantially, and your investment could suffer a decline in value
4. 65The trading price of our common shares is subject to volatility
5. 66We may not pay dividends regularly or at all in the future
6. 67Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity
7. 68Our publicly traded 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
8. 69Our publicly traded senior notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries
9. 70The indenture under which our senior notes were issued contains limited protection for holders of our publicly traded senior notes
10. 71An increase in market interest rates could result in a decrease in the value of our senior notes and increase our future borrowing costs
11. 72An active trading market for our senior notes may not develop, which could limit the market price of our senior notes or the ability of our senior note holders to sell them
12. 73We have and may continue to issue additional notes
13. 74The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency
14. 75There is no established market for the Depositary Shares and the market value of the Depositary Shares could be substantially affected by various factors
15. 76The Existing Preferred Stock and the Depositary Shares rank junior to all of the Company’s indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of the Company’s subsidiaries
16. 77The Company may issue additional shares of the Existing Preferred Stock and additional series of preferred stock that rank on a parity with the Existing Preferred Stock as to dividend rights, rights upon liquidation or voting rights
17. 78Holders of Depositary Shares have extremely limited voting rights
18. 79The Depositary Shares have not been rated
19. 80The conversion feature may not adequately compensate the holders, and the conversion and redemption features of the Existing Preferred Stock and the Depositary Shares may make it more difficult for a party to take over the Company and may discourage a party from taking over the Company
20. 81The market price of the Depositary Shares could be substantially affected by various factors
21. 82The price of our securities may be adversely affected by third parties who raise allegations about our Company
22. 83A “short squeeze” due to a sudden increase in demand for our securities that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in our securities