BRC Group Holdings (RILY) risk factors, FY2025 10-K

Risks Related to our Business & Competition

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. 03We 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
4. 04transactions slows or the average transaction size declines due to a decrease in private equity financings, difficult market conditions in our target industries or other factors, our business and results of operations may be harmed
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

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

1. 06Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity
2. 07general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations
3. 08Our exposure to legal liability is significant, and could lead to substantial damages
4. 09Recent events and developments related to our prior 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
5. 10We may incur losses as a result of ineffective risk management processes and strategies
6. 11Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks
7. 12Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business
8. 13Financial 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. 14If 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. 15Our ability to use net loss carryovers to reduce our taxable income may be limited
11. 16Changes 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. 17We may suffer losses if our reputation is harmed
13. 18Misconduct by our employees or by the employees of our business partners could harm us and is difficult to detect and prevent
14. 19We 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 Global and Economic Conditions and International Operations

1. 20Global economic and political uncertainty could adversely affect our revenue and results of operations
2. 21All 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

Risks Related to BRS’ Capital Markets Activities

1. 22Our corporate finance and strategic advisory engagements are singular in nature and do not generally provide for subsequent engagements
2. 23Our 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. 24The 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. 25Pricing and other competitive pressures may impair the revenues of our sales and trading business
5. 26Larger and more frequent capital commitments in our trading and underwriting businesses increase the potential for significant losses
6. 27Our underwriting and market making activities may increase our liability
7. 28We are subject to net capital and other regulatory capital requirements; failure to comply with these rules would significantly harm our business
8. 29In 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. 30We 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. 31We 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. 32The 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. 33We 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. 34Changes 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. 35Poor investment performance may decrease assets under management and reduce revenues from and the profitability of our asset management business
2. 36The historical returns of our funds may not be indicative of the future results of our funds
3. 37We are subject to risks in using custodians
4. 38We manage debt investments that involve significant risks

Risks Related to our Communication Related Businesses (Lingo, magicJack, Marconi Wireless and/or UOL)

1. 39Our marketing and customer retention efforts for our Lingo, magicJack and Marconi Wireless 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
2. 40Government regulations could adversely affect our communication-related businesses (Lingo, magicJack, Marconi Wireless and UOL) or force us to change our business practices
3. 41For our Lingo, magicJack and UOL businesses, flaws in our technology and systems could cause delays or interruptions of service, damage our reputation, cause us to lose customers and limit our growth
4. 42Our Lingo, Marconi Wireless and UOL businesses are dependent on the availability of telecommunications services and compatibility with third-party systems and products

Risks Related to Lingo Business

1. 43Plain Old Telephone (“POTs”) services have been decommissioned in several rural areas, and this legacy technology may no longer be available in most major urban areas in the next five years, impacting our ability to service our residential and business customers
2. 44Lingo has pushed existing POTs customers to POTs alternative solutions; however, these products may have a lower average revenue per customer (“ARPU”), which may affect Lingo’s top line revenues. The conversion of POTs lines to POTs alternative solutions may also cause Lingo to incur a higher CAPEX

Risks Related to magicJack Business

1. 45We rely on independent retailers to sell the magicJack devices, and disruption to these channels would harm our business
2. 46The 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
3. 47In 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 UOL Business

1. 48Dial-up and DSL pay accounts may decline faster than expected and adversely impact our business

Risks Related to Our Consumer Products Segment

1. 49If 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. 50products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically
3. 51We rely on third parties to manufacture, sell and distribute our products, and we rely on their information to manage our business
4. 52Targus’ business is heavily reliant on the general demand for IT and personal computer-related devices

Risks Related to Competition

1. 53We 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. 54If 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. 55Significant disruptions of information technology systems, breaches of data security, cyberattacks, 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. 56We 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. 57We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries
4. 58the marketplace. In addition, if any our products or the technology underlying our products is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions

Risks Related to our Securities and Ownership

1. 59Anti-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. 60Because of their significant stock ownership, some of our existing stockholders will be able to exert control over us and our significant corporate decisions
3. 61Our common stock price may fluctuate substantially, and your investment could suffer a decline in value
4. 62There has been recent dilution and there may continue to be additional future dilution of our Common Stock, including as a result of the Company’s recent Section 3(a)(9) exchanges and potential future exchanges, which could adversely affect the market price of shares of our Common Stock
5. 63The trading price of our common stock, Depositary Shares and publicly traded senior notes are subject to volatility
6. 64We may not pay dividends regularly or at all in the future
7. 65Our publicly traded senior notes are not secured by any of our assets or any of the assets of our subsidiaries making such notes effectively subordinated to any secured indebtedness
8. 66The indenture under which our senior notes were issued contains limited protection for holders of our publicly traded senior notes
9. 67An increase in market interest rates could result in a decrease in the value of our senior notes and increase our future borrowing costs
10. 68An active trading market for our senior notes may be limited, which could limit the market price of our senior notes or the ability of our senior note holders to sell them
11. 69We have and may continue to issue additional notes
12. 70The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 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
13. 71An active trading market for the Depositary Shares may be limited and the market value of the Depositary Shares could be substantially affected by various factors
14. 72The 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
15. 73The 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
16. 74Holders of Depositary Shares have extremely limited voting rights
17. 75The Depositary Shares have not been rated
18. 76The 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
19. 77The market price of the Depositary Shares could be substantially affected by various factors
20. 78The price of our securities may be adversely affected by third parties who raise allegations about our Company
21. 79A “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