The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered.
−Removed: The risks and uncertainties described below address the most materials risks, of which we are currently aware but are not the only ones we face.
+Added: The risks and uncertainties described below address the most material risks of which we are currently aware but are not the only ones we face.
Therefore, the following risk factors should not be considered a complete list of potential risks that we may face.
Any risk factor described in this Annual Report on Form 10-K or in any of our other SEC filings, or any risk not currently known to us or that we currently anticipate to be immaterial, may, by itself or together with other factors, materially adversely affect our business, reputation, prospects, competitive position, liquidity, results of operations, capital position, or financial condition, including by materially increasing our expenses or decreasing our revenues or profits, which could result in material losses.
−Removed: If any of these risks occur, the trading price of our common stock could decline, and investors could lose all or part of their investment.
−Removed: While insurance coverage may be applicable to help address certain risks that may result in losses, recovery pursuant to our insurance policies may not be available, and available insurance may be insufficient to compensate for damages, expenses, fines, penalties, and other losses we may incur as a result of these and other risks.
+Added: If any of these risks materialize, they could negatively impact the trading price of our common stock and investors could lose all or part of their investment in our common stock.
+Added: While insurance coverage may help address certain risks that result in losses, recovery under our insurance policies may not be available or sufficient to compensate for damages, expenses, fines, penalties, and other losses we may incur as a result of these and other risks.
In this ITEM 1A unless the context otherwise clearly indicates, references to our “services” include any services, products or solutions provided, or made available by us.
−Removed: • We may experience a significant and extended reduction in the demand for our default-related services due to the continued low number of residential mortgage foreclosures, extended time periods from foreclosure starts to sales, the reduction in rates of foreclosures starts converting to foreclosure sales and reduced supply of Real Estates Owned inventory resulting from loss mitigation and borrower relief measures, fiscal policies, and other relevant economic conditions.
−Removed: • We earn a significant portion of our revenue in connection with providing services to two customers.
−Removed: • Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact us.
−Removed: • If our agreement with Rithm is terminated, expires, is breached, or suffers a significant reduction in volume we could be adversely affected.
−Removed: • Technology disruptions, failures, defects or inadequacies, delays or difficulties in implementing software or hardware changes, acts of vandalism or the introduction of harmful code could negatively impact us.
−Removed: • We depend on our ability to use services, products, data and infrastructure provided by third parties to maintain and grow our businesses.
−Removed: • We may not successfully detect fraudulent activity, which could impact our services, our clients or third parties and could adversely affect our reputation and our results of operations.
−Removed: • The Company’s databases contain our proprietary information, the proprietary information of third parties and personal information of our customers, consumers, vendors and employees.
−Removed: Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure or processing of information, or our failure to comply with required disclosures or notifications related to unauthorized disclosure or processing of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses.
−Removed: • Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic.
−Removed: • The insurance underwriting loss limitation methods we use may not be effective or sufficient.
−Removed: • Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with beneficial ownership of a defined percentage of the combined voting power or economic interest of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default.
−Removed: • The majority of our employees and contractors work from locations other than our facilities, which could negatively impact our control environment or productivity and create additional risks.
−Removed: • We rely on vendors for many aspects of our business.
−Removed: If our vendor oversight activities are ineffective, we may fail to meet customer or regulatory requirements.
−Removed: We may face difficulties sourcing required vendors or supplies or managing our relationships with vendors.
−Removed: • We make extensive use of contractors in certain of our lines of business.
−Removed: If we are required to reclassify contractors as employees, we may incur fines and penalties and additional costs and taxes.
−Removed: • There can be no guarantee that we will be able to continue to implement appropriate measures to manage potential conflicts of interest.
−Removed: • Our success depends on the relevant industry experience and relationships of certain members of our Board of Directors, executive officers and other key personnel.
−Removed: • We may face difficulties to attract, motivate and retain skilled employees.
−Removed: • The presence of our operations in multiple countries subjects us to risks endemic to those countries.
−Removed: • We may be unable to realize sales represented by our awarded business or sales pipeline.
−Removed: • We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers.
−Removed: • Business expansion involves potential risks.
−Removed: • Acquisitions to accelerate growth initiatives involve potential risks.
−Removed: • Changes in economic and market conditions that reduce residential real estate sales or values or mortgage origination volumes could negatively impact demand for our services.
−Removed: • A reduction in residential mortgage delinquencies, defaults or foreclosures in the United States can negatively affect demand for certain of our services.
−Removed: • Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively impact us.
−Removed: • Changes to real estate brokerage commission structures or rates paid for residential property transactions could negatively impact us.
−Removed: • We may never pay dividends on our common stock so any returns would be limited to the potential appreciation of our stock.
−Removed: • We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies.
+Added: • A significant portion of our revenue is generated from providing services to two customers, the loss of some or all of these customer(s)’ business would negatively impact us.
+Added: • If the Rithm Brokerage Agreement is terminated, expires, is breached, or if there is a significant reduction in the volume of services that we provide pursuant to such agreement, our business and results of operations would be adversely affected.
+Added: • Technology disruptions, failures, defects, inadequacies, delays, difficulties in implementing software or hardware modifications, acts of vandalism, or the introduction of harmful code could negatively affect our operations and relationships with clients and stakeholders.
+Added: • We depend on third-party services, products, data, infrastructure and solutions to maintain and grow our businesses, the loss or disruption of which could negatively impact us.
+Added: • We may not successfully prevent or detect fraudulent activity, which could harm our services, clients, third parties, reputation, and our results of operations.
+Added: • Our databases contain our proprietary information, the proprietary information of third parties, and personal information about our customers, consumers, vendors, and employees.
+Added: Unauthorized disclosure, access or processing of such information, whether due to a cybersecurity incident, human error or other vulnerabilities, or our failure to comply with applicable information management requirements, privacy laws, or notification obligations, could result in adverse publicity, loss of trust, investigations, regulatory fines, loss of customers, government enforcement actions, private litigation, claims from third parties, and significant financial and operational costs.
+Added: • Our business continuity and disaster recovery plans may not adequately address potential impacts from business interruptions or pandemics, which could result in operational disruptions, financial losses, or regulatory compliance issues.
+Added: • The insurance underwriting loss limitation methods we used may not be effective or sufficient.
+Added: • Certain shareholder arrangements could trigger termination or events of defaults under some of our material agreements.
+Added: • Changes in economic or market conditions that reduce residential real estate sales, values, or mortgage origination volumes could negatively impact demand for our services.
+Added: • Changes in residential mortgage delinquencies, defaults, or foreclosures could negatively affect demand for some of our services.
+Added: • Adapting to changes in technology or marketplace dynamics related to mortgage servicing or origination and changing requirements of governmental authorities, GSEs and customers, could pose risks to us.
+Added: • Changes to compensation paid in connection with residential property transactions could negatively impact us .
+Added: • Changes that reduce the frequency or alter or eliminate requirements to use default or origination services of the type we provide may reduce the volume of sales of our services.
+Added: • Developments impacting residential foreclosures, REO supply, or sales could negatively affect us.
+Added: • Changes to real estate brokerage commission structures or transaction rates could adversely affect us by reducing revenue from brokerage activities and impacting profitability.
+Added: • Sales from our awarded business or pipeline may not occur or may take longer than anticipated to develop which could result in lower-than-expected revenue and impact our financial performance.
+Added: • Business expansion carries potential risks and uncertainties, which could lead to operational inefficiencies, increased costs, or failure to achieve anticipated growth.
+Added: • Acquisitions to support growth initiatives involve inherent risks.
+Added: • A majority of our employees and contractors work remotely, potentially impacting control environments, productivity, and cybersecurity.
+Added: • Dependence on vendors for many aspects of our business exposes us to risks related to vendor availability, performance, and oversight.
+Added: • Extensive use of contractors could result in reclassification risks, incurring additional costs or penalties.
+Added: • Our performance could be negatively impacted by the loss of the experience and relationships of certain directors, executives, and key personnel.
+Added: • Attracting, motivating, and retaining skilled employees could prove difficult.
+Added: • The presence of operations in multiple countries subjects us to unique risks endemic to those countries and regions.
+Added: • We may not pay cash dividends, limiting returns to stock appreciation.
+Added: • Our smaller market capitalization could increase the volatility, and limit investors in and analyst coverage, of our stock.
• The market price and trading volume of our stock may be volatile.
−Removed: • If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position may be negatively affected.
−Removed: • Our level of debt and the variable interest rate on our term loan makes us sensitive to the effects of our current financial performance and interest rate increases;
−Removed: our level of debt and provisions in our senior secured term loan and revolving credit facility could limit our ability to react to changes in the economy or our industry.
−Removed: • Our failure to comply with the covenants or terms contained in our senior secured term loan agreements or our credit facility, including as a result of events beyond our control, could result in an event of default.
−Removed: • We may be unable to exercise the option to extend the maturity of our loan agreements (Amended Credit Agreement and Revolver) from April 2025 to April 2026.
−Removed: We may be unable to repay or refinance the balance of our loans under the Amended Credit Agreement or Revolver upon maturity, particularly if cash from operations fails to significantly improve, assets are not readily available for sale and sold or we are unable to timely refinance on favorable terms or at all.
−Removed: • We have a significant net operating loss recognized by one of our Luxembourg subsidiaries.
−Removed: We may not be able to fully utilize this deferred tax asset before the net operating loss expires.
−Removed: • Cash, cash equivalents and escrow funds we hold at financial institutions could be lost and not recoverable.
−Removed: • The rights of shareholders under Luxembourg law may differ in certain respects from the rights afforded to shareholders of companies organized under laws in other jurisdictions.
−Removed: • Luxembourg tax law could have a negative impact on us.
−Removed: • Our business and the business of our customers are subject to extensive scrutiny and legal requirements.
−Removed: • Failure to comply with US sanctions, including blocking certain activities in Sanctioned Countries, could expose the company to penalties and other adverse consequences.
−Removed: • We are subject to licensing and regulation as a provider of certain services and our failure to maintain licensing or to comply with licensing or regulatory requirements could adversely impact our ability to continue performing the services in compliance with the applicable legal or contractual requirements.
−Removed: • A violation by our customers of applicable legal requirements in the selection or use of our services could generate legal liability or additional expense for us.
−Removed: • Certain of our customers are subject to governmental oversight, regulations, orders, judgments or settlements which may impose certain obligations and limitations on their use of our services.
−Removed: • The tax regulations, and the interpretation thereof, in the countries, states and local jurisdictions in which we operate periodically change and our operations and intercompany arrangements are subject to the tax laws of various jurisdictions.
−Removed: Risks Related to the COVID-19 Pandemic
−Removed: We may experience a significant and extended reduction in the demand for our default-related services due to the continued reduction in residential mortgage foreclosures, extended time periods from foreclosure starts to sales, the reduction in rates of foreclosure starts converting to foreclosure sales and reduced supply of REO inventory resulting from loss mitigation and borrower relief measures, fiscal policies, and other relevant economic conditions.
−Removed: Actions taken by federal, state and local governments, GSEs and mortgage servicers in connection with the COVID-19 pandemic continue to have a profound impact on our business, our customers, and the industries in which we operate.
−Removed: In response to the COVID-19 pandemic, beginning in March 2020, various governmental entities and servicers implemented unprecedented foreclosure and eviction moratoriums, forbearance programs and loss mitigation measures to help mitigate the impact to borrowers and renters (collectively, “Relief Measures”).
−Removed: The Federal government’s foreclosure moratorium expired on July 1, 2021 and the CFPB’s temporary loss mitigation measures expired on December 31, 2021.
−Removed: Despite the expiration of
−Removed: these and certain other governmental measures, we believe servicers are proceeding slowly with foreclosure initiations for borrowers in default.
−Removed: Industrywide foreclosure starts were 4% lower in 2023 compared to 2022, and 31% lower than the same pre-COVID-19 period in 2019.
−Removed: The average length of time loans in foreclosure have been delinquent extended to 34 months in 2023 from 29 months in 2019.
−Removed: Industrywide foreclosure sales were 8% higher in 2023 compared to 2022, and 46% lower than the same pre-COVID-19 period in 2019.
−Removed: Foreclosure sales as a percentage of foreclosure inventory has declined to 37% in 2023 from 51% in 2019.
−Removed: The decline in foreclosure initiations and foreclosure sales throughout the pandemic, partially offset by the restart of the default market, significantly decreased default related referrals to us and continues to negatively impact virtually all of our default related services revenue.
−Removed: We anticipate that we will continue to experience significant impacts of the Relief Measures and cannot predict when those impacts may begin to abate.
−Removed: Based on the expirations of certain Relief Measures, we believe the demand for our Default business will grow, but our estimate may not be correct and is subject to macro and micro economic factors that could negatively impact us.
−Removed: We estimate that in today’s environment it typically takes on average two years to convert foreclosure initiations to foreclosure sales and six months to market and sell the REO, but multiple factors could impact this estimate.
−Removed: The extent and duration of the impact of the Relief Measures and societal responses will depend on future developments which remain highly uncertain.
−Removed: As a result, it is difficult to predict the impact on our business and the timing for the recovery of the default market, if it recovers at all.
−Removed: Volatile or uncertain economic conditions caused by the COVID-19 pandemic and its consequences, as well as governmental fiscal policies and other relevant economic conditions, have and may continue to affect our customers and the markets we serve, causing customers to reduce, defer or eliminate spending on our services.
+Added: • As a "smaller reporting company," reduced disclosure requirements may affect the information we provide to stockholders.
+Added: • Loss of Form S-3 eligibility or offering limitations under SEC regulations could restrict our ability to raise capital efficiently and on favorable terms.
+Added: • The large number of authorized shares and outstanding warrants may make the market price and trading volume of our stock volatile.
+Added: • Future issuances of common stock, warrants, or equity grants could dilute existing shareholders' economic and voting interests, potentially negatively impacting the trading price of our stock and leading to litigation.
+Added: • We may be delisted from the Nasdaq Global Select Market, which could negatively impact the market for our common stock and our business.
+Added: • We could have conflicts of interest with certain shareholders, lenders, members of management and our Board of Directors.
+Added: These conflicts may be resolved in a manner adverse to us.
+Added: • Insufficient cash flow or access to capital markets could negatively affect liquidity and competitive positioning.
+Added: • Debt levels and variable interest rates may constrain our financial flexibility and responses to customer, industry or economic changes.
+Added: • The New Facility and the Super Senior Facility terms could limit cash and reduce liquidity available for operations and strategic investments.
+Added: • Failure to comply with loan covenants in the New Facility or the Super Senior Facility would result in a loan default and could result in termination of either or both facilities and acceleration of amounts owing which, in turn, could have a negative impact on liquidity and our business.
+Added: • The maturity extension risk under the New Facility or the Super Senior Facility and restrictions on refinancing could lead to challenges if market conditions worsen or alternative financing is unavailable.
+Added: • Utilizing a significant deferred tax asset depends on future profitability;
+Added: if profitability does not materialize, we may not be able to realize some or all of the tax benefit.
+Added: • Cash, cash equivalents, and escrow funds held at financial institutions could be at risk.
+Added: • Fluctuations in currency exchange rates could expose us to losses.
+Added: • Shareholder rights under Luxembourg law differ from other jurisdictions.
+Added: • Luxembourg requirements and limitations on company governance and actions could negatively impact our ability to manage the company and respond to market conditions.
+Added: • Risks related to Luxembourg tax law could negatively impact our finances.
+Added: Changes in trade policies, including tariffs, taxes or restrictions on foreign service providers, could adversely affect our business.
+Added: • Non-compliance with sanctions or licensing requirements could result in penalties.
+Added: • Failure to comply with anti-money laundering and financial crime reporting requirements could result in penalties, contractual breaches, and potential termination of agreements with title insurance underwriters.
+Added: • Failure to maintain regulatory compliance, required licenses, or timely filings could result in penalties, contract terminations, or operational restrictions.
+Added: • Our business and customers are subject to extensive legal and regulatory scrutiny.
+Added: • Our global operations and intercompany arrangements are subject to evolving tax laws, audits, and regulatory interpretations in multiple jurisdictions.
+Added: Changes in tax rates, disputes over taxable income allocation, or challenges to our transfer pricing practices could result in additional taxes, penalties, interest, or prevent us from utilizing operating losses or other tax credits, any of which would negatively impact our cash flow and profitability.
Risks Related to Our Business and Operations
We earn a significant portion of our revenue in connection with providing services to two customers.
−Removed: A significant portion of our revenue is earned from providing services to Ocwen and Rithm.
+Added: A significant portion of our revenue is earned from providing services to Onity and Rithm.
If either party substantially reduces the scope or volume of services acquired from us, or otherwise ceases using us as a vendor, it would negatively impact our business.
−Removed: For example, we could experience a reduction in scope or volume of business as a direct or indirect result of the existence or outcome of regulatory matters impacting one or more of these clients, a change in the servicing relationship between these clients, a reduction in the MSRs for which Ocwen or Rithm acts as a servicer or subservicer or controls the rights to designate service providers, or a change in the contractual relationship between Altisource and Ocwen or Rithm.
+Added: For example, we could experience a reduction in scope or volume of business as a direct or indirect result of the existence or outcome of regulatory matters impacting one or more of these clients, a change in the servicing relationship between these clients, a reduction in the MSRs for which Onity or Rithm acts as a servicer or subservicer or controls the rights to designate service providers, or a change in the contractual relationship between Altisource and Onity or Rithm.
In addition, providing services to these customers affords us the opportunity to provide certain services to third parties and the loss of these customers or reduction in the quantity of services provided to these customers would also result in the loss or reduction of these additional revenue streams.
1 unchanged sentence
Customer concentration also exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from one or both of these customers.
−Removed: If the characteristics of the portfolios of properties on which we provide services for either of these customers were to significantly change, for example to become less delinquent, more rural or lower value, this could impact the type and volume of services that we provide, increase our costs of doing business, or reduce the value of commissions or fees we earn.
+Added: If the characteristics of the portfolios of properties on which we provide services for either of these customers were to change, for example to become less delinquent, more rural or lower value, this could impact the type and volume of services that we provide, increase our costs of doing business, or reduce the value of commissions or fees we earn.
Our business concentration or relationships with these two customers may be viewed as a risk or otherwise negatively by other customers or potential customers, impeding our efforts to retain customers or obtain new customers.
−Removed: Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact our auction marketplace, real estate brokerage and related default services.
−Removed: Governmental, GSE, servicer or investor actions or action by others that restrict online real estate auctions (foreclosure and REO), reduce the permissible fees or direct the use of auction providers other than us, could negatively impact demand for our auction marketplace, real estate brokerage and related services, and negatively impact our ability to meet certain contractual performance metrics, including those related to aging of assets, time on market and sale price compared to valuation.
−Removed: If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a provider.
−Removed: We entered into a brokerage agreement with Rithm’s licensed brokerage subsidiary.
−Removed: If the agreement is terminated, expires, is breached or if there is a significant reduction in the volume of services that we provide pursuant to such agreement, our business and results of operations could be adversely affected.
−Removed: On August 28, 2017, Altisource, through its licensed subsidiaries, entered into the Brokerage Agreement with Rithm which extends through August 2025 (“Brokerage Agreement”).
−Removed: Under this agreement and related amendments, Altisource is the exclusive provider (with certain exceptions) of brokerage services for REO associated with the certain MSR through August 2025, irrespective of the subservicer, as long as Rithm owns such MSRs.
−Removed: The Brokerage Agreement may be terminated by Rithm upon the occurrence of certain specified events.
−Removed: Termination events include, but are not limited to, a breach of the terms of the Brokerage Agreement (including, without limitation, the failure to meet performance standards and non-compliance with law in a material respect), the failure to maintain licenses which failure materially prevents performance of the contract, regulatory allegations of non-compliance resulting in an adversarial proceeding against Rithm, voluntary or involuntary bankruptcy, appointment of a receiver, disclosure in a Form 10-K or Form 10-Q that there is significant uncertainty about Altisource’s ability to continue as a going concern, failure to maintain a specified level of cash and an unapproved change of control.
−Removed: Rithm could decide to not renew or extend the term of the Brokerage Agreement upon its termination in August 2025, in which case Rithm may elect to use a brokerage service provider other than the Altisource subsidiaries for some or all of its REO.
−Removed: If any one of these termination events occurs and the Brokerage Agreement is terminated or if the Brokerage Agreement is not renewed or extended, Altisource’s business and results of operations could be adversely affected.
−Removed: In addition, Rithm operational changes, breach of the Brokerage Agreement or other actions that reduce the number of properties converting to REO status could:
−Removed: (i) reduce the volume of services that we provide on the applicable MSRs pursuant to our agreements with Ocwen, and (ii) reduce the volume of services that we provide pursuant to the Brokerage Agreement.
−Removed: Technology disruptions, failures, defects or inadequacies, delays or difficulties in implementing software or hardware changes, acts of vandalism or the introduction of harmful code could damage our business operations and increase our costs.
−Removed: We rely on critical technology to provide certain of our services.
−Removed: We rely on our proprietary technology in our Hubzu real estate marketing, Equator, Equator.com, NestRange, LOLA, REALSynergy, RentRange, Trelix TM Connect, Vendorly ® and other platforms.
−Removed: Certain of our proprietary technology includes licensed open source and third-party code or may be created or maintained by using artificial intelligence, low-code or other coding techniques that contain inherent risks.
+Added: If the Rithm Brokerage Agreement is terminated, expires, breached, or if there is a significant reduction in the volume of services that we provide pursuant to such agreement, our business and results of operations would be adversely affected.
+Added: On August 28, 2017, Altisource, through its licensed subsidiaries, entered into the Rithm Brokerage Agreement.
+Added: Under this agreement and related amendments, Altisource is the exclusive provider (with certain exceptions) of brokerage services for REO associated with certain MSRs through August 2025, irrespective of the subservicer, as long as Rithm owns such MSRs.
+Added: The Rithm Brokerage Agreement may be terminated by Rithm upon the occurrence of certain specified events.
+Added: Termination events include, but are not limited to, a breach of the terms of the Rithm Brokerage Agreement (including, without limitation, the failure to meet performance standards and non-compliance with law in a material respect), a failure to maintain licenses which materially prevents performance of the contract, regulatory allegations of non-compliance resulting in an adversarial proceeding against Rithm, voluntary or involuntary bankruptcy, appointment of a receiver, disclosure in a Form 10-K or Form 10-Q that there is significant uncertainty about Altisource’s ability to continue as a going concern, failure to maintain a specified level of cash and an unapproved change of control.
+Added: Rithm could decide to not renew or extend the term of the Rithm Brokerage Agreement upon its termination in August 2025, in which case Rithm may elect to use a brokerage service provider other than the Altisource subsidiaries for some or all of its REO.
+Added: If any one of these termination events occurs and the Rithm Brokerage Agreement is terminated or if the Rithm Brokerage Agreement is not renewed or extended or the volume of referrals under the Rithm Brokerage Agreement is reduced, Altisource’s business and results of operations would be adversely affected.
+Added: In addition to loss of the direct revenue from the Rithm Brokerage Agreement, we would likely experience the loss of significant revenue related to the Subject MSRs when a party other than Rithm selects us as the service provider.
+Added: In addition, Rithm operational changes, a breach of the Rithm Brokerage Agreement, or other actions that reduce the number of properties converting to REO status could:
+Added: (i) reduce the volume of services that we provide on the applicable MSRs pursuant to our agreements with Onity, and (ii) reduce the volume of services that we provide pursuant to the Rithm Brokerage Agreement.
+Added: Technology disruptions, failures, defects, inadequacies, delays, difficulties in implementing software or hardware modifications, acts of vandalism, or the introduction of harmful code could damage our business operations and relationships with clients and stakeholders, and increase our costs.
+Added: We rely on critical technology to provide certain of our services, including our proprietary platforms such as Hubzu real estate marketing, Equator, Equator.com, NestRange, LOLA, Keystone, REALSynergy, RentRange, TrelixAI, Vendorly ® , and others.
+Added: Certain of our proprietary technologies incorporate licensed open source and third-party code or may be created or maintained using artificial intelligence, low-code, or other coding techniques, all of which carry inherent risks.
+Added: The integration of artificial intelligence into our services and operations introduces specific risks.
+Added: Artificial intelligence systems may produce errors or exhibit biases, leading to inaccurate or misleading information.
+Added: Such outcomes could result in
+Added: liability or reputational harm.
+Added: Additionally, delays or difficulties in implementing artificial intelligence-related software changes may disrupt our operations.
+Added: Failure to effectively leverage these technologies could also place us at a competitive disadvantage, adversely affecting our business and results of operations.
We also leverage third-party technology to provide certain of our services, including using third-party order management and billing technology, and using third-party technology to access data or take actions, such as governmental filings, and externally hosted and managed data centers and operating environments.
−Removed: Disruptions, failures, defects or inadequacies in our technology or third-party technology or related services we utilize, delays or errors in developing or maintaining our technology, or acts of vandalism, misuse or malicious use of our solutions, system attacks or the introduction of malicious code in technology we utilize, the use of outdated or unsupported open source or third-party code, or the use of defective, compromised or insecure code may interrupt or delay our ability to provide products or services to our customers, impact our ability to satisfy performance requirements, or cause the loss, corruption or disclosure of data.
+Added: Our ability to provide services, satisfy performance and legal requirements, and maintain the confidentiality and integrity of data could be negative impacted by disruptions, failures, defects, inadequacies in our technology or third-party technology or related services we utilize, delays or errors in developing or maintaining our technology, difficulties in implementing software or hardware modifications, acts of vandalism, misuse or malicious use of our services, system attacks or the introduction of malicious code in technology we utilize, the use of outdated or unsupported open source or third-party code, or the use of defective, compromised or insecure code.
We may be a target for network hackers or others with malicious intent due to our storage and processing of consumer information as part of providing our services or as a result of operating public-facing technology platforms, including, for example, our Hubzu marketing platform.
−Removed: Any sustained and repeated disruptions in these services may have an adverse impact on our and our customers’ business and results of operations and, in the case of acts of vandalism or introduction of harmful code, could necessitate improvements to our physical and cybersecurity practices that may require an investment of money, time and resources.
+Added: Any sustained and repeated negative issues with these services may have an adverse impact on our and our customers’ business and results of operations and our relationships with clients and other stakeholders.
+Added: In the case of acts of vandalism or the introduction of harmful code, we may need to implement improvements to our physical and cybersecurity practices that may require an investment of money, time and resources.
+Added: In addition, we may be subject to ransomware attacks or other attempts by malicious third parties to interrupt or prevent our access to systems or data to extract payment of a ransom or meeting other conditions.
+Added: We may determine that it is necessary or expedient to pay a ransom or meet other conditions which could be harmful to the Company in seeking to regain access to our systems or data.
+Added: There can be no guarantee that paying a ransom or satisfying conditions would enable us to regain access to our systems or data or that the same would not be corrupted or made more vulnerable to subsequent attacks.
+Added: If we were to pay a ransom or satisfy other conditions, our actions could encourage further malicious acts.
+Added: We may not be able to recover ransom from the third-party malicious actors.
+Added: We may not have insurance coverage for any resulting losses or may be unable to recover our losses from insurance.
Many of our services and processes require effective interoperation with internal and external technology platforms and services, and failures in such interoperation could have a negative impact on our operations and the operations of our customers.
−Removed: Further, our customers may require changes and improvements to the systems we provide to them to manage the volume and complexity, laws or regulations of their businesses, or to interoperate with other systems, which changes and improvements may be unfeasible, unsuccessful, costly or time-consuming to implement or may create disruptions in our provision of services to customers.
−Removed: Our customers may refuse to agree to modifications to technology or infrastructure that we provide to them or that interoperate with the technology or infrastructure we provide to them that we may believe are desirable to improve the reliability, performance, efficiency or cost in delivering.
−Removed: Additionally, the improper implementation or use of Altisource technology, such as Equator, by customers could adversely impact the operation of that technology, and potentially cause harm to our reputation, loss of customers, negative publicity or exposure to liability claims or government investigations or actions.
−Removed: We depend on our ability to use services, products, data and infrastructure provided by third parties to maintain and grow our businesses.
−Removed: We rely on certain third parties to provide services, products and solutions including certain data, infrastructure, technology, systems and functionality including a third-party hosted and managed data center and operating environment (collectively, “Inputs”) critical to our services, including our Hubzu real estate marketing, Equator, Field Services, NestRange, RentRange, Trelix Connect, Vendorly, and other solutions.
+Added: Further, our customers may require modifications to the services we provide to them to manage the volume and complexity of or laws or regulations applicable to their businesses, or to interoperate with other systems, which modifications may be unfeasible, unsuccessful, costly or time-consuming to implement, or may create disruptions in our provision of systems to customers.
+Added: Our customers may refuse to agree to modifications to technology or infrastructure services which we provide or which interoperate with the technology or infrastructure services which we provide and we believe are desirable to improve the reliability, performance, efficiency or cost in delivering services.
+Added: Additionally, the improper implementation or use of Altisource services, such as Equator and others, by customers could adversely impact the operation of our services.
+Added: The forgoing could potentially cause harm to our reputation, loss of customers, negative publicity, or exposure to liability claims or government investigations or actions.
+Added: We depend on our ability to use services, products, data, infrastructure and solutions provided by third parties to maintain and grow our businesses.
+Added: We rely on certain third parties to provide services, products data, infrastructure and solutions (collectively, “Inputs”) critical to our services, including our Hubzu real estate marketing, Equator, Field Services, credit reporting, NestRange, RentRange, TrelixAI and Vendorly.
The failure of such third parties to provide or make available the Inputs in accordance with applicable requirements could negatively impact our ability to provide our services or perform transactions and to meet our obligations.
In addition, these third parties could cease providing or reduce the availability, type, details or other aspects of the Inputs, and change the pricing, performance or functionality of the Inputs.
−Removed: If such Inputs become unavailable or too expensive and we are unable to obtain suitable alternatives and efficiently and effectively integrate these alternatives into our service offerings or infrastructure, we could experience service disruptions, increased costs and reduced quality of our services.
−Removed: We may not successfully detect fraudulent activity, which could impact our services, our clients or third parties and could adversely affect our reputation and our results of operations.
+Added: If such Inputs become unavailable or too expensive, and we are unable to obtain suitable alternatives and efficiently and effectively integrate these alternatives into our services or infrastructure, we could experience service disruptions, increased costs and reduced quality of our services.
+Added: We also provide certain third-party services for resale or distribution to our clients.
+Added: The third-party providers of such services could seek to compete with us by offering the same services directly to our clients.
+Added: If we are not able to provide substitute services on competitive pricing to our clients, our sales, profits, ability to resell or distribute, or compete with such offerings could be negatively impacted.
+Added: We may not successfully prevent or detect fraudulent activity which could harm our services, clients, third parties, reputation, and our results of operations.
Our provision of certain services in connection with real estate-related transactions relies upon information provided by employees and third parties, including our vendors, and upon certain technology systems.
The provisions of such services could be negatively impacted by fraudulent or incorrect information provided by employees or third parties.
−Removed: Vulnerabilities in technology systems on which we rely to provide certain services could permit employees or third parties to introduce fraudulent information into those systems or otherwise compromise those systems, impacting our ability to provide services without error.
−Removed: If we are not able to detect that information on which we rely to provide services is inaccurate or fraudulent, or that systems are compromised, we may take actions in providing certain services which could damage third parties or our clients.
−Removed: Employees and third parties have in the past conducted, and may attempt in the future to conduct, fraudulent activity, which may result in, among others, transferring funds to fraudulent actors, paying for services which were not performed or failed to meet applicable requirements, disbursing construction funds when applicable conditions have not been satisfied, selling real estate for below market values, issuing title insurance based on fraudulent ownership documentation, underwriting mortgage applications based on fraudulent information and insuring fraudulent mortgages.
+Added: Vulnerabilities in technology systems and controls on which we rely to provide certain services could permit employees or third parties to introduce fraudulent information into those systems or otherwise compromise those systems or applicable controls, impacting our ability to provide services without error, negatively impacting, us, our clients and third parties.
+Added: Employees and third parties have, in the past, engaged in fraudulent activity and may attempt to do so in the future.
+Added: This activity may result in, among others, transferring funds to fraudulent actors, paying for services which were not performed or failed to meet applicable requirements, disbursing construction funds when applicable conditions have not been satisfied, selling real estate for below market values, issuing title insurance based on fraudulent ownership documentation, underwriting mortgage applications based on fraudulent information, and insuring fraudulent mortgages.
Persistent and pervasive fraudulent activity may harm our client relationships and our reputation and could result in financial loss, thereby adversely affecting our business and results of operations .
−Removed: The Company’s databases contain our proprietary information, the proprietary information of third parties and personal information of our customers, consumers, vendors and employees.
−Removed: Our failure to comply with applicable information management requirements or best practices or the legal rights of individuals about whom we collect or process personal information, or an unauthorized disclosure or processing of information, or our failure to comply with required disclosures or notifications related to unauthorized disclosure or processing of information, could subject us to adverse publicity, investigations, fines, costly government enforcement actions or private litigation and expenses.
+Added: Our databases contain our proprietary information, the proprietary information of third parties, and personal information about our customers, consumers, vendors and employees.
+Added: Unauthorized disclosure, access or processing of such information, whether due to a cybersecurity incident, human error or other vulnerabilities, or our failure to comply with applicable information management requirements, privacy laws, or notification obligations, could result in adverse publicity, loss of trust, investigations, regulatory fines, government enforcement actions, private litigation, claims from third parties, and significant financial and operational costs.
As part of our business, we collect, store, process, transfer and dispose in tangible and electronic forms customer, consumer, vendor and employee personal information (“PI”).
−Removed: We and our vendors rely on processes that are intended to provide necessary notices, processes and controls regarding the collection, storage, processing and destruction of PI, and to permit subjects to exercise their legal rights concerning their PI in our possession.
+Added: We and our vendors rely on processes that are intended to provide necessary notices, processes and controls regarding the collection, access, storage, processing and destruction of PI, and to permit subjects to exercise their legal rights concerning their PI in our possession.
If those notices, processes or controls are not sufficient, or our processes or controls experience an error or other disruption, we or our vendors may fail to comply with applicable requirements concerning PI.
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This could result in costly investigations and litigation, civil or criminal penalties, large scale remediation requirements, operational changes or other response measures, significant penalties, fines, settlements, costs, consent orders, loss of consumer confidence in our security measures and negative publicity.
−Removed: The inadequacy, disruption or failure of our business continuity or disaster recovery plans and procedures in response to significant business or system disruption could adversely affect our business.
−Removed: Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic, or may not be implemented on a timely or error free basis in response to business interruptions or a pandemic, resulting in negative operational impacts and errors.
−Removed: The insurance underwriting loss limitation methods we use may not be effective or sufficient.
−Removed: Altisource, through its subsidiary Association of Certified Mortgage Originators Risk Retention Group, Inc., provides certified loan insurance to its customers.
+Added: Our business continuity and disaster recovery plans may not adequately address potential impacts from business interruptions or pandemics, which could result in operational disruptions, financial losses, or regulatory compliance issues.
+Added: Our business continuity and disaster recovery plans and other adjustments to business may not be sufficient to anticipate impacts of, or address or adequately recover from, business interruptions or a pandemic, or may not be maintained, updated and implemented on a timely or error free basis in response to business interruptions or a pandemic, resulting in negative operational impacts and errors.
+Added: The insurance underwriting loss limitation methods we used may not be effective or sufficient.
+Added: Altisource, through its subsidiary Association of Certified Mortgage Originators Risk Retention Group, Inc., provided certified loan insurance to its customers.
Altisource reduces a portion of its risk of insurance loss through third-party reinsurance.
The incidence and severity of claims against insurance policies are inherently unpredictable.
−Removed: Although we attempt to manage our exposure to insurance underwriting risk through the use of disciplined underwriting controls and the purchase of third-party reinsurance, we maintain first loss exposure and the frequency and severity of claims could be greater than contemplated in our pricing and risk management methods and our controls and mitigation efforts may not be effective or sufficient.
+Added: Although we attempted to manage our exposure to insurance underwriting risk through the use of disciplined underwriting controls and the purchase of third-party
+Added: reinsurance, we maintain first loss exposure and the frequency and severity of claims could be greater than contemplated in our pricing and risk management methods and our controls and mitigation efforts may not be effective or sufficient.
We also face counterparty risk when purchasing reinsurance from third-party reinsurers.
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Under certain material agreements to which we are currently a party or into which we may enter in the future, the formation by shareholders of Altisource of a “group” with beneficial ownership of a defined percentage of the combined voting power or economic interest of Altisource capital stock exceeding a defined percentage may give rise to a termination event or an event of default.
−Removed: Under certain of our material agreements a change of control would be deemed to occur if, among other things, a “group” (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is formed by shareholders holding beneficial ownership of a defined percentage of the combined voting power or economic interest of our capital stock.
−Removed: The Brokerage Agreement with Rithm’s licensed brokerage subsidiary contains a similar provision, and we may enter into material agreements in the future that contain similar provisions.
+Added: Under certain of our material agreements a change of control would be deemed to occur if, among other things, a “group” (as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is formed by shareholders holding beneficial ownership of a defined percentage of the combined voting power or economic interest of our capital stock.
+Added: The Rithm Brokerage Agreement contains such a provision, and we may enter into material agreements in the future that contain similar provisions.
The formation of a “group” could occur without the involvement of or input by us, and we are not in a position to prevent such an event from occurring.
−Removed: Such a change of control could constitute a termination event or an event of default under these agreements.
+Added: Such a change of control could constitute a termination event or an event of default under these agreements which could negatively impact us.
+Added: Risks Related to Our Industry
+Added: Changes in economic and market conditions that reduce residential real estate sales, values or mortgage origination volumes could negatively impact demand for our services.
+Added: Economic or market fluctuations such as a decrease in sales, sales prices or values of residential properties or origination volumes or an increase in sales transaction timelines could reduce the demand for certain of our services related to marketing and real estate sale transactions, including services ancillary to such transactions, such as closing services and title insurance services.
+Added: Typically, the volume of residential property sales decline and transaction timelines increase as residential mortgage interest rates increase, financing options and availability for borrowers decline or consumer confidence falls.
+Added: A reduction in the volume of real estate transactions or the sales price of real estate could negatively impact our residential real estate brokerage and auction businesses which earn commission fees generally set as a percentage based on the property sale price.
+Added: Demand for services from other businesses, such as mortgage origination, valuation, title and closing, may also decline as a result of a reduction in real estate transaction volumes including from increasing residential real estate values or mortgage interest rates.
+Added: Residential real estate value appreciation typically increases equity in borrowers’ homes providing borrowers with more options to avoid foreclosure and, therefore, reducing foreclosure auction and REO referrals and ancillary services such as closing and title insurance services.
+Added: Economic or market fluctuations that reduce the volume or value of residential mortgage origination or refinancings could decrease the demand for our mortgage origination and mortgage insurance related services, including those provided to members of the Lenders One mortgage cooperative.
+Added: An increase in residential mortgage interest rates or a decline in financing availability for borrowers, potentially due to an inflationary environment or government actions, could reduce demand for these services.
+Added: Rising residential real estate values could also reduce the number of sale transactions, leading to a decrease in new mortgage origination.
+Added: A reduction in residential mortgage delinquencies, defaults or foreclosures, and REO volume in the United States can negatively affect demand for certain of our services.
+Added: We provide certain services to residential mortgage servicers and subservicers, as well as government sponsored entities, federal agencies and others, to protect, preserve, manage and potentially dispose of properties securing residential mortgage loans, when such loans become delinquent, default, undergo foreclosure or become REO assets.
+Added: Rates of residential mortgage delinquencies, defaults and foreclosures, and REO volume can be negatively impacted by numerous factors, such as strengthening economic conditions, increasing housing equity from rising home values, decreasing residential mortgage interest rates, reductions in the number of residential mortgages outstanding, reductions in homeownership levels or governmental or servicer action.
+Added: National servicing standards, federal and state government scrutiny and regulation, requirements specifying loan loss mitigation, modification and foreclosure procedures, rules instituted by governmental authorities, GSEs, servicers or investors preventing actions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, may also reduce the number of mortgage loans entering the foreclosure process or
+Added: suspend pending foreclosure and eviction actions.
+Added: Such conditions could negatively impact demand for our default services.
+Added: Reductions in the rates of residential mortgage delinquencies, defaults, foreclosures and REO volume would likely reduce demand for our services related to non-judicial foreclosures, inspecting, maintaining, valuing, marketing and selling such assets.
+Added: If faced with an extended period of decline in demand for and revenue from certain of our services as a result of economic conditions, borrower loss mitigation or relief measures, or due to government, GSE, servicer or investor restrictions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, we may be unable to sufficiently adjust our cost structure, in our operations that provide such impacted services or at the corporate level, to avoid negative impacts to net revenue or profits.
+Added: We also may be unable to maintain our ability to offer such services in the future.
+Added: The expiration dates of certain requirements, loss mitigation or relief measures that impact demand for our services may be indefinite or extended in the future making it difficult to predict when such requirements or measures may end.
+Added: In response to such conditions, we may be required to modify or suspend such operations which could negatively impact our ability to timely respond to an increase in demand for such services or to provide such services in the future, or which could cause us to incur significant expense to restart or scale such services in response to an increase in demand.
+Added: We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers.
+Added: Customers may seek to reduce the number of their service providers.
+Added: The markets for our services are characterized by constant technological and other changes, frequent introduction of new services by competitors, and evolving industry standards and government regulations.
+Added: We are currently in the process of, and from time to time will be, developing and introducing new services and technologies and improving existing services and technologies.
+Added: Our future success will depend on completing these efforts, enhancing our services and technologies, and developing new services that address changes in technology, competing services, applicable marketplaces, or customer needs.
+Added: These efforts carry risks, including of cost overruns, delays, lack of market acceptance, and performance shortfalls.
+Added: There is no assurance that we will successfully develop, enhance, market, sell, or implement new or improved technologies or services.
+Added: Customers may also reduce the number of service providers employed through vendor consolidation, insourcing, or other means, which could decrease demand for our services and impact pricing control.
+Added: Changes that reduce or limit the use of online default real estate auctions or otherwise reduce the volume or rate of success of such auctions can negatively impact our auction marketplace, real estate brokerage and related default services.
+Added: Governmental, GSE, servicer or investor actions or action by others that restrict online real estate auctions (foreclosure and REO), reduce the permissible fees or direct the use of auction providers other than us, could negatively impact demand for our auction marketplace, real estate brokerage and related services, revenues we receive related to such real estate auctions and impact our ability to meet certain contractual performance metrics.
+Added: If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a provider.
+Added: Changes that reduce the frequency or alter or eliminate requirements to use default or origination services of the type we provide may reduce the volume of sales of our services.
+Added: Industry or regulatory changes related to servicing residential mortgages which are delinquent, in default or in foreclosure, or related to residential mortgage loan origination requirements, could reduce the frequency and volume of orders for our services.
+Added: Any reduction in frequency or volume of providing services would have a negative impact on our cash flow and financial condition.
+Added: Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively affect demand for certain of our default-related services and impact our ability to meet certain contractual performance metrics.
+Added: A reduction in residential foreclosures or the supply or sale of REO in the United States could reduce the demand for services, including foreclosure trustee, foreclosure auction, REO asset management, REO property inspection and preservation, real estate brokerage, real estate auction and marketing services, as well as sales of REO, especially in cases where more loans are resolved prior to foreclosure or sold at foreclosure auctions, and therefore do not convert to REO.
+Added: The reduced supply of REO or sales of REO could also impact our ability to meet certain contractually required service metrics, including those metrics tied to satisfying certain conversion percentage requirements as the size of the applicable population declines and the population of REO that remains is often the most difficult to sell.
+Added: Reduced volumes may make it more difficult to provide services in an economic manner, undermine beneficial efficiencies, and increase risks and costs of securing vendors to provide services on a smaller scale.
+Added: We may not be able to effectively manage rapid or unanticipated increases in foreclosures or the supply, sale price or sale of REO which could negatively impact our ability to satisfy service level metrics that are tied to conversion rates or other percentage requirements.
+Added: For example, if a service metric specifies that a certain percentage of the total population of REO is to be sold within a defined period of time, a rapid increase in the total REO population may increase the risk of failing to meet the defined percentage metric during the period required to prepare the newly added REO to be marketed.
+Added: Some of the service metrics which may be impacted include those related to REO conversion rates, aging of REO, time on market and sale price compared to valuation.
+Added: If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a service provider.
+Added: Changes to compensation paid in connection with residential property transactions could negatively impact us.
+Added: Changes to residential real estate brokerage commission structures or compensation paid in connection with residential real estate transactions, such as auction fees or buyers’ premiums, which reduce compensation for services or limit commission sharing or cooperative commissions among brokerages or brokers could negatively impact the commissions we receive and certain contractual arrangements.
+Added: Changes to fees paid permitted or paid in connection with foreclosure or REO sales or auctions could negatively impact our revenue.
+Added: Risks Related to Our Growth Strategy
+Added: Sales from our awarded business or pipeline may not occur or may take longer than anticipated to develop, which could result in lower-than-expected revenue and impact our financial performance.
+Added: As part of our business and financial planning, we make assumptions about the quantity and timing of services that our customers and prospective customers will order from us.
+Added: In many instances, however, our customers may not be obligated to acquire our services or may only be obligated to acquire our services to the extent they can make use of them.
+Added: Our anticipated sales volume may not materialize if customers or prospective customers choose other service providers, or if economic, industry, or company-specific conditions reduce their demand for services or fees paid for the services.
+Added: For example, economic conditions, restrictions imposed by governmental authorities, GSEs, servicers or investors, or the sale, consolidation or failure of current or potential customers may negatively impact the quantity or timing of customer demand for our services despite existing agreements.
+Added: Customers may also reduce the quantity or mix of services acquired from us versus other providers.
+Added: Even in cases where our customer contracts require minimum purchases, we may be unable or decide not to enforce or collect the contractual minimums.
+Added: Business expansion involves potential risks and uncertainties.
+Added: Efforts to enter new business sectors or expand beyond our core services may not achieve anticipated benefits, may take longer or be more costly than expected.
+Added: This could negatively impact our financial results, reputation and growth prospects.
+Added: We may not accurately identify market needs.
+Added: New services may not function as intended or achieve market adoption or commercial success.
+Added: Financial obligations in the Rithm Brokerage Agreement and restrictions in our loan agreements may limit funding for new initiatives.
+Added: Newly-developed businesses, services or initiatives may have lower or negative margins.
+Added: Growth related investments may increase operating cash requirements, increase costs and reduce margins in the short term or over longer periods.
+Added: We may not recoup our investments or achieve anticipated financial returns, potentially limiting opportunities to pursue other investments.
+Added: Acquisitions to accelerate growth initiatives involve potential risks.
+Added: Historically, our strategy has included the acquisition of complementary businesses from time to time.
+Added: In the future, we may consider acquisitions or mergers to complement our business or to access to new markets.
+Added: However, our ability to pursue acquisitions depends on access to sufficient capital (equity or debt) to fund the acquisition and subsequent integration.
+Added: Financial obligations in the Rithm Brokerage Agreement and restrictions in our loan agreements may limit our ability to undertake acquisitions or to secure adequate capital on acceptable terms to fund acquisitions.
+Added: Acquisitions carry risks, including risks of operational disruptions, which could negatively impact relationships with customers, suppliers, and employees.
+Added: As a Luxembourg-domiciled company, acquisitions may require immediate or significant changes post-closing to the acquired business, increasing the complexity of acquisitions.
+Added: Acquisitions may also increase amortization expenses related to intangible assets, reducing profitability.
+Added: Failure to properly and timely integrate acquired businesses may prevent us from realizing expected value and may reduce revenue or earnings anticipated as a result of the acquisition.
Risks Related to Human Capital
−Removed: The majority of our employees and contractors work from locations other than in our facilities, which could negatively impact our control environment or productivity and create additional risks for our business, including increasing our risk for cybersecurity breaches or failures.
−Removed: A significant portion of our workforce works from locations other than our facilities (“Remote Work Environment”).
+Added: A majority of our employees and contractors work from locations other than in our facilities (“Remote Work Environment”), which could negatively impact our control environment or productivity and create additional risks for our business, including increasing our risk for cybersecurity breaches or failures.
+Added: A majority of our workforce works from a Remote Work Environment.
We may incur significant costs associated with the Remote Work Environment and we may not be able to increase our fees to cover the additional costs.
Employing a Remote Work Environment could decrease workforce productivity, including due to a lower level of oversight, supervision or monitoring, increased distractions, impediments to real-time communication or other challenges to effective collaboration, use of slower residential internet connections, the instability, inadequacy or unavailability of our network, unstable electrical services or unreliable internet access.
−Removed: We also may face increased data privacy and security risks resulting from the use of non-Altisource networks to access information and to provide services.
−Removed: Additional risks to our systems and data as well as customer, vendor and borrower data include increased phishing activities targeting our workforce, vendors and counterparties in transactions and the possibility of attacks on our systems or systems of our remote workforce.
−Removed: A Remote Work Environment could also negatively impact certain controls, such as our financial reporting systems, internal control over financial reporting and disclosure controls and procedures, and controls designed to detect or prevent misconduct.
−Removed: If any reduction in productivity or data privacy or cybersecurity failures or breaches or issues with our controls occurs, we may incur additional costs to address such issues and our financial condition and results may be adversely impacted.
+Added: We also may face increased data privacy and security risks resulting from the use of non-Altisource networks to access and process information and to provide services.
+Added: Additional risks to our systems and data, as well as customer, vendor and borrower data, include increased phishing activities targeting our workforce, vendors and counterparties in transactions, and potential attacks on our systems or systems of our remote workforce.
+Added: A Remote Work Environment could also negatively impact certain controls, such as our financial reporting systems, internal control over financial reporting, disclosures and procedures, as well as controls designed to detect or prevent misconduct.
In addition, our Remote Work Environment may result in difficulties creating and maintaining current and accurate records of where our employees are working.
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We may face difficulties sourcing required vendors or supplies or managing our relationships with vendors.
−Removed: We rely on vendors to provide goods and services in relation to many aspects of our operations, including field services providers and certain providers of web-based services or software as services.
−Removed: Our dependence on these vendors makes our operations vulnerable to the unavailability of such vendors, the pricing and quality of services and products offered by such vendors, solvency of those vendors, security failures of those vendors, deficiencies and failures of business continuity and disaster recovery plans and efforts of such vendors, and such vendors’ failure to perform adequately under our agreements with them.
+Added: We rely on vendors to provide goods and services in relation to many aspects of our operations, including field services and renovation providers, data providers, and certain providers of web-based services or software as services.
+Added: Our dependence on these vendors makes our operations vulnerable to the unavailability of such vendors, the pricing and quality of services and products offered by such vendors, solvency of those vendors, deficiencies and failures of technology, security and business continuity and disaster recovery plans and efforts of such vendors, and such vendors’ failure to perform adequately under our agreements with them.
In addition, where a vendor provides services or products that we are required to provide under a contract with a customer, we are generally responsible for such performance and could be held accountable by the customer for any failure of performance by our vendors or related defects.
−Removed: If our vendor sourcing efforts are not effective or if we are otherwise not able to secure an appropriate supply and quality of vendors, services or supplies, if vendors are unable to hire or retain employees or acquire supplies or are prohibited or prevented from performing the services or providing the products for which we contract, including as the result of restrictions imposed by state or local governments or health departments, we may be unable to provide services or compliant services or services may become more expensive.
−Removed: If our vendor oversight activities are ineffective, if a vendor fails to provide the services or products that we require or expect or fails to meet contractual requirements, such as service levels or compliance with applicable laws, or a vendor engages in misconduct, the failure or misconduct could negatively impact our business by adversely affecting our ability to serve our customers or subjecting us to litigation and regulatory risk for ineffective vendor oversight.
+Added: If our vendor sourcing efforts are not effective or if we are otherwise not able to secure an appropriate supply and quality of vendors, services or supplies, if vendors are unable to hire or retain employees or acquire supplies, or are prohibited or prevented from performing the services or providing the products for which we contract, including as the result of restrictions imposed by state or local governments or health departments, we may be unable to provide services or compliant services, or our services may become more expensive.
+Added: If our vendor oversight activities are ineffective, if a vendor fails to provide the services or products that we require or expect, or fails to meet contractual requirements, such as service levels or compliance with applicable laws, or if a vendor engages in misconduct, the failure or misconduct could negatively impact our business by adversely affecting our ability to serve our customers or by subjecting us to litigation and regulatory risk for ineffective vendor oversight.
Furthermore, the failure to obtain services or products at anticipated pricing could impact our cost structure and the prices of our services and we may not be able to increase our fees to cover the additional costs.
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These contractors may be retained by us or retained by vendors providing services to us.
−Removed: There are a number of tests used in determining whether an individual is an employee or a contractor.
−Removed: There can be no assurance that we are in compliance, or that legislative, judicial or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations that would change, or at least challenge, the classification of our contractors.
−Removed: The United States Internal Revenue Service or other United States federal or state authorities or similar authorities of a foreign government may determine that we or our vendors have misclassified our contractors for employment tax or other purposes and, as a result, seek additional taxes from us, require us to pay certain compensation or benefits to wrongly classified employees, or attempt to impose fines or penalties.
−Removed: In addition, contractors, or contractors or employees of our vendors, may assert claims that they are our employees and seek to recover compensation, benefits, damages and penalties from us.
−Removed: If we are required to pay employer taxes, pay backup withholding compensation, benefits, damages or penalties with respect to or on behalf of our contractors or contractors or employees of our vendors, our operating costs will increase.
−Removed: We could have conflicts of interest with Ocwen, Rithm, Deer Park Road Management Company L.P., or affiliates of the foregoing, and/or certain of our shareholders, members of management, employees and members of our Board of Directors, which may be resolved in a manner adverse to us.
−Removed: We have significant business relationships with and provide services to Ocwen and to Rithm, and we have business relationships with certain companies in which William C.
−Removed: Erbey has invested.
−Removed: We also have a revolving credit facility with a fund managed by Deer Park Road Management Company L.P.
−Removed: (together with its affiliates and managed funds, “Deer Park”), and Deer Park owns Altisource debt as a lender pursuant to our senior secured term loan agreement, as amended and restated with an effective date of February 14, 2023 (the “Amended Credit Agreement”).
−Removed: Deer Park and William C.
−Removed: Erbey (directly or through trust or investment vehicles in which he has sole voting and investment power) have disclosed that they own equity interests in Altisource representing approximately 16% and 23%, respectively, of Altisource’s outstanding common stock as of December 31, 2023.
−Removed: As of December 31, 2023, Deer Park owned approximately 18% of Altisource’s debt under the Amended Credit Agreement and held 292 thousand warrants received in connection with the February 2023 debt amendment.
−Removed: Certain members of our management and independent members of our Board of Directors (or entities affiliated with such members of the Board of Directors) have direct or beneficial equity interests in one or more of Altisource, Ocwen and Rithm, including in one instance, equity interests in both Ocwen (estimated to be approximately 8%) and Altisource (approximately 16%) as well as debt of both of these companies.
−Removed: Such interests and relationships could create, or appear to create, potential conflicts of interest with respect to matters involving or affecting us and Ocwen, Rithm, Deer Park, William C.
−Removed: Erbey or their affiliates.
−Removed: There can be no assurance that we will implement measures that will enable us to manage such potential conflicts.
−Removed: There can be no assurance that any current or future measures that may be implemented to manage potential conflicts will be effective or that we will be able to manage or resolve all potential conflicts with Ocwen, Rithm, Deer Park, William C.
−Removed: Erbey or their affiliates and,
−Removed: even if we do, that the resolution will be no less favorable to us than if we were dealing with another third-party that has none of the connections we have with Ocwen, Rithm, Deer Park or William C.
−Removed: There can be no guarantee that we will be able to continue to implement appropriate measures to manage these potential conflicts of interest.
+Added: There can be no assurance that we are or will be in compliance the various tests used in determining whether an individual is an employee or a contractor, or that legislative, judicial or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations that would change, or at least challenge, the classification of our contractors.
+Added: Authorities may determine that we or our vendors have misclassified contractors for employment tax or other purposes and, as a result, seek additional taxes from us, require us to pay certain compensation or benefits to wrongly classified
+Added: employees, or attempt to impose fines or penalties.
+Added: In addition, our contractor, and contractors and employees of our vendors may assert claims that they are our employees and seek to recover compensation, benefits, damages and penalties from us.
+Added: If we are required to pay employer taxes, pay backup withholding compensation, benefits, damages or penalties with respect to or on behalf of our contractors or contractors or employees of our vendors, our costs would increase and we would be financially harmed.
Our success depends on the relevant industry experience and relationships of certain members of our Board of Directors, executive officers and other key personnel.
Our success is dependent on the efforts and abilities of members of our Board of Directors, our executive officers and other key employees, many of whom have significant experience in the real estate and mortgage, financial services and technology industries or play a substantial role in our relationship with certain customers.
−Removed: We are dependent on the services of members of our Board of Directors and key executives at our corporate headquarters and personnel at each of our lines of business and support groups.
In addition, certain members of our Board of Directors, executive officers or other key employees have relationships with certain customers or vendors that facilitate our business and operations.
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Our Luxembourg location can also make it difficult to attract and retain executive officers and other senior leadership and to achieve diversity and succession planning in such roles.
−Removed: We may face difficulties to attract, motivate and retain skilled employees.
+Added: Attracting, motivating, and retaining skilled employees could prove difficult.
Our business is labor intensive and places significant importance on our ability to recruit, engage, train and retain skilled employees.
−Removed: Additionally, demand for qualified professionals with experience in certain businesses or technologies may exceed available supply.
+Added: Additionally, demand for qualified employees with experience in certain businesses or technologies may exceed available supply.
Our ability to recruit and train employees is critical to achieving our growth objective.
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We may continue to encounter significant challenges in attracting and retaining employees as needed to satisfy demand or growth expectations for our services, or to be able to limit compensation related costs to make operations economically viable.
−Removed: We may not be able to attract and retain skilled employees.
+Added: We may not be able to attract or retain skilled employees.
We may face an increase in wages or other costs of attracting, training or retaining skilled employees.
−Removed: In addition, attrition of current employees may negatively impact our ability to provide services of a quality or volume that satisfy applicable contractual obligations or that support our planned growth or expansion of services.
+Added: In addition, attrition of current employees may negatively impact our ability to provide services of a quality or volume that satisfies applicable contractual obligations or supports our planned growth or expansion of services.
The presence of our operations in multiple countries subjects us to risks endemic to those countries.
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Governmental authorities could seek to impose financial costs or restrictions on foreign companies providing services to customers in the United States.
−Removed: Governmental authorities may attempt to prohibit or otherwise discourage our United States-based customers from sourcing services from foreign companies and, as a result, some of our customers may require us to use labor based in the United States or cease doing business with Altisource.
−Removed: In addition, some of our customers may require us to use labor based in the United States for other reasons.
+Added: Governmental authorities may attempt to prohibit or otherwise discourage our United States-based customers from sourcing services from foreign companies.
+Added: Some of our customers may require us to use labor based in the United States or cease doing business with Altisource.
To the extent that we are required to use labor based in the United States, we may not be able to pass on the increased costs of higher-priced United States-based labor to our customers.
−Removed: Risks Related to Our Growth Strategy
−Removed: We may be unable to realize sales represented by our awarded business or sales pipeline.
−Removed: As part of our business and financial planning, we make assumptions about the quantity and timing of services that our customers and prospective customers will order from us.
−Removed: In many instances, however, our customers may not be obligated to acquire our services or may only be obligated to acquire our services to the extent the customer can make use of such services.
−Removed: Our volume of sales may not materialize to the extent our customers or prospect customers elect to use providers of services other than us, or if economic, industry or company specific conditions exist such that our customers or prospect customers do not require the assumed quantity of services or reduce the fees paid for the services.
−Removed: For example, economic conditions and restrictions instituted by governmental authorities, GSEs, servicers or investors, or the sale, consolidation or failure of current or potential customers, may negatively impact the quantity or timing of customer demand for our services despite the existence of an agreement.
−Removed: Our customers may use more than one provider for given services resulting in such customers varying over time the quantity or mix of services acquired from us versus other providers.
−Removed: Even in cases where our customer contracts require minimum purchases by a customer, we may be unable or we may determine that it is inadvisable for us to seek to enforce or collect upon the contractual minimums.
−Removed: We may fail to adapt our services to changes in technology or in the marketplace related to mortgage servicing or origination, changing requirements of governmental authorities, GSEs and customers.
−Removed: Customers may seek to reduce reliance upon the number of service providers.
−Removed: The markets for our services are characterized by constant technological and other changes, our customers’ and competitors’ frequent introduction of new services, and evolving industry standards and government regulations.
−Removed: We are currently in the process of, and from time to time will be, developing and introducing new services and technologies and improvements to existing services and technologies.
−Removed: Our future success will be significantly affected by our ability to complete our current efforts and in the future enhance, our services and technologies, and to develop and introduce new services that address changes in technology or applicable marketplaces or the increasingly sophisticated needs of our customers and their customers, as well as our ability to reduce costs by relying on cloud architecture and other infrastructure advancements.
−Removed: These efforts may include implementing new real estate auction and marketing capabilities, as well as technological and other modifications to increase efficiency and flexibility in supplying our default-related and origination services.
−Removed: These initiatives carry the risks associated with any new technology or service development effort, including cost overruns, delays in delivery and performance effectiveness.
−Removed: There can be no assurance that we will continue with our current efforts and be successful in developing, enhancing, marketing, selling and implementing new and improved technology or services.
−Removed: In addition, we may experience difficulties that could delay or prevent the successful development, enhancement, introduction and marketing of technologies or services.
−Removed: Our technology and services and their enhancements may also not adequately meet the demands of the marketplace or governmental authorities and achieve market acceptance.
−Removed: Customers of our default-related services and origination services may seek to reduce the number of service providers employed through vendor consolidation, insourcing (providing the services itself) or by other means.
−Removed: Such changes could reduce the demand for our services or control over the prices we are able to charge for our services.
−Removed: Business expansion involves potential risks.
−Removed: Entry into new business sectors, expansion beyond our core services, and organic growth initiatives may not result in the anticipated benefits, may take longer or be more costly than expected, which may adversely affect our financial results, ability to conduct investments in other businesses, reputation and growth prospects.
−Removed: We may not accurately identify market needs.
−Removed: New products and services may not function as intended or achieve anticipated rates of market adoption or commercial success.
−Removed: Because of the obligations to maintain a minimum cash threshold in the Cooperative Brokerage Agreement and restrictions in our Amended Credit Agreement, we may not be able to provide adequate funding to new initiatives.
−Removed: Newly-developed businesses, products, services or initiatives may have lower or negative margins.
−Removed: Growth related investments may increase our costs and lower our margins in the short term and potentially over longer periods.
−Removed: We may not be able to recoup our investments in such initiatives or achieve anticipated financial returns, and such initiatives may negatively impact our ability to identify or pursue other potential opportunities.
−Removed: Acquisitions to accelerate growth initiatives involve potential risks.
−Removed: Historically, our strategy has included the acquisition of complementary businesses from time to time.
−Removed: In the future, we may consider acquisitions of or merger with other businesses that we believe could complement our business, offer us greater access in our current markets or offer us greater access and expertise in other asset types and markets that are related to ours, but we do not currently serve.
−Removed: Our ability to pursue additional acquisitions in the future depends on our access to sufficient capital (equity
−Removed: and/or debt) to fund the acquisition and subsequent integration.
−Removed: Because of the obligations to maintain a minimum cash threshold in the Cooperative Brokerage Agreement and restrictions in our Amended Credit Agreement, we may not be able to secure adequate capital as needed on terms that are acceptable to us, or at all.
−Removed: When we acquire new businesses, we may face a number of integration risks, including a loss of focus on our daily operations, the need for additional management, constraints on operating resources, constraints on financial resources from integration and system conversion costs, and the inability to maintain key pre-acquisition relationships with customers, suppliers and employees.
−Removed: We may have particular integration risks as we are a Luxembourg-domiciled company, resulting in numerous changes that may need to be made immediately or promptly following closing of such an acquisition.
−Removed: In addition, any acquisition may result in the incurrence of additional amortization expense of related intangible assets, which could reduce our profitability.
−Removed: Failure to properly and timely integrate any acquired business may result in our inability to realize the expected value from the acquisition, which can lead us to generate less revenue and/or earnings than anticipated, and/or sell or otherwise dispose of the acquired business at a loss.
−Removed: Risks Related to Our Industry
−Removed: Changes in economic and market conditions that reduce residential real estate sales or values or mortgage origination volumes could negatively impact demand for our services.
−Removed: Economic or market fluctuations such as a decrease in sales or sales prices of residential properties or an increase in sales transaction timelines could reduce the demand for certain of our services related to marketing and real estate sale transactions, including services ancillary to such transactions, such as closing services and title insurance services.
−Removed: Typically, the volume of residential property sales decline and transaction timelines increase as residential mortgage interest rates increase, financing options and availability for borrowers decline or consumer confidence falls.
−Removed: A reduction in the volume of real estate transactions or the sales price of real estate could negatively impact our residential real estate brokerage and auction businesses which earn commission fees that are generally set as a percentage based on the property sale price.
−Removed: Demand for services from other businesses, such as mortgage origination, valuation, title and closing, may also decline as a result of a reduction in real estate transaction volumes including from increasing residential mortgage interest rates.
−Removed: Home price appreciation typically increases equity in the borrowers’ homes providing borrowers with more options to avoid foreclosure and, therefore, reducing foreclosure auction and REO referrals and ancillary services such as closing and title insurance services.
−Removed: Economic or market fluctuations that reduce the volume or value of residential mortgage origination or re-financings could decrease the demand for our mortgage origination and mortgage insurance related services, including those provided to members of the Lenders One mortgage cooperative.
−Removed: An increase in residential mortgage interest rates or a decline in financing available for borrowers as a result of an inflationary environment or government action responding to the same could result in a decrease in such demand.
−Removed: Increasing housing prices could also reduce the number of sale transactions resulting in a decrease in new mortgage origination.
−Removed: A reduction in residential mortgage delinquencies, defaults or foreclosures in the United States can negatively affect demand for certain of our services.
−Removed: We provide certain services to residential mortgage servicers and subservicers, as well as government sponsored entities, federal agencies and others, to protect, preserve, manage and potentially dispose of properties securing residential mortgage loans, when such loans become delinquent, default, undergo foreclosure or become a REO asset.
−Removed: Rates of residential mortgage delinquencies, defaults and foreclosures can be negatively impacted by numerous factors, including strengthening economic conditions, increasing housing equity from rising home values, decreasing residential mortgage interest rates, a reduction in the number of residential mortgages outstanding or a reduction in home ownership levels or governmental or servicer action.
−Removed: National servicing standards, federal and state government scrutiny and regulation, requirements specifying loan loss mitigation, modification and foreclosure procedures, rules instituted by governmental authorities, GSEs, servicers or investors preventing actions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, may also reduce the number of mortgage loans entering the foreclosure process or suspend pending foreclosure and eviction actions.
−Removed: Such conditions could negatively impact demand for our default services.
−Removed: Reductions in the rates of residential mortgage delinquencies, defaults, foreclosures and REO would likely reduce demand for our services related to non-judicial foreclosures, inspecting, maintaining, valuing, marketing and selling such assets.
−Removed: If faced with an extended period of decline in demand for and revenue from certain of our services as a result of economic conditions, borrower loss mitigation or relief measures, or due to government, GSE, servicer or investor restrictions related to loan delinquencies and foreclosures, including moratoriums on foreclosures and mortgage payment forbearance plans, we may
−Removed: be unable to sufficiently adjust our cost structure, in our operations that provide such impacted services or at the corporate level, to avoid negative impacts to net revenue or profits.
−Removed: We also may be unable to maintain our ability to offer such services in the future.
−Removed: The expiration dates of certain requirements, loss mitigation or relief measures that impact demand for our services may be indefinite or extended in the future making it difficult to predict when such requirements or measures may end.
−Removed: In response to such conditions, we may be required to modify or suspend such operations which could negatively impact our ability to timely respond to an increase in demand for such services or to provide such services in the future, or which could cause us to incur significant expense to restart or scale such services in response to an increase in demand.
−Removed: Developments that impact residential foreclosures or the supply, sale price or sale of REO could negatively affect demand for certain of our default-related services and negatively impact our ability to meet certain contractual performance metrics.
−Removed: Reduction in residential foreclosures or the supply or sales of REO in the United States could reduce the demand for and volume of certain of our services, including foreclosure trustee, foreclosure auction, REO asset management, REO property inspection and preservation, real estate brokerage, real estate auction and marketing services, as well as sales of REO, especially in cases where more loans are resolved prior to foreclosure or sold at foreclosure auctions and therefore do not convert to REO.
−Removed: The reduced supply of REO or sales of REO could also impact our ability to meet certain contractually required service metrics, including those metrics tied to satisfying certain conversion percentage requirements as the size of the applicable population declines and the population of REO that remains is often the most difficult to sell.
−Removed: Reduced volumes may make it more difficult to provide services in an economic manner, undermine beneficial efficiencies, and increase the risks and costs of securing vendors to provide required services and products on a smaller scale.
−Removed: We may not be able to effectively manage rapid or unanticipated increases in foreclosures or the supply, sale price or sale of REO which could negatively impact our ability to satisfy service level metrics that are tied to conversion rates or other percentage requirements.
−Removed: For example, if a service metric specifies that a certain percentage of the total population of REO is to be sold within a defined period of time, a rapid increase in the total REO population may increase the risk of failing to meet the defined percentage metric during the period required to prepare the newly added REO to be marketed.
−Removed: Some of the service metrics which may be impacted include those related to REO conversion rates, aging of REO, time on market and sale price compared to valuation.
−Removed: If we fail to satisfy applicable performance metrics or perform in a manner satisfactory to our customers, such customers may reduce the services they acquire from us or otherwise terminate us as a service provider.
−Removed: Changes to real estate brokerage commission structures or rates paid for residential property transactions could negatively impact us.
−Removed: Changes to real estate brokerage commission structures or rates paid for residential property transactions as a result of litigation, claims, settlements, governmental regulations or other reasons, which reduce real estate brokerage compensation or limit commission sharing or cooperative commissions amongst among brokerages or brokers, could negatively impact the value of commissions to which we are entitled or receive and could negatively impact certain contractual obligations.
Risks Related to Our Common Stock
−Removed: We may never pay dividends on our common stock so any returns would be limited to the potential appreciation of our stock.
+Added: We may never pay cash dividends on our common stock so any returns would be limited to the potential appreciation of our stock.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate we will declare or pay any cash dividends for the foreseeable future.
In addition, the terms of applicable debt agreements may preclude us from paying dividends.
−Removed: Any return to stockholders will therefore be limited to the potential appreciation of their stock.
−Removed: We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies.
−Removed: We are a “smaller reporting company,” as defined under Regulation S-K.
−Removed: As a smaller reporting company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies.
−Removed: These provisions include, among other things, scaled disclosure requirements, including simplified executive compensation disclosures in our filings, exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an
−Removed: independent registered accounting firm provide an attestation report on the effectiveness of internal control over financial reporting and certain other decreased disclosure obligations in our SEC filings.
−Removed: We intend to continue to take advantage of certain of the scaled disclosure requirements of smaller reporting companies.
−Removed: We may continue to take advantage of these allowances until we are no longer a smaller reporting company.
−Removed: Therefore, the information that we provide stockholders may be different than one might get from other public companies.
−Removed: Further, if some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares of common stock and the market price of such shares of common stock may be more volatile.
−Removed: Although we are currently eligible to file new short form registration statements on Form S-3, we cannot guarantee we will remain eligible to do so.
−Removed: If we were to lose such eligibility, it may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
+Added: Any return to stockholders could therefore, be limited to potential stock appreciation.
+Added: Our smaller market capitalization could increase the volatility, and limit investors in and analyst coverage, of our stock.
+Added: As a company with a relatively small market capitalization, our stock may be subject to increased volatility compared to larger, more established companies.
+Added: Small-cap stocks can experience greater price fluctuations due to lower trading volumes, which may result in limited liquidity for shareholders.
+Added: This volatility may make it more difficult for investors to buy or sell shares at favorable prices.
+Added: Additionally, our market capitalization may make it harder to access capital through public markets or secure favorable financing terms.
+Added: Furthermore, the limited liquidity and volatility of our stock may restrict certain institutional investors, such as mutual funds or pension funds, from investing, as they may have policies that exclude smaller-cap companies.
+Added: Moreover, as a small-cap company, we may not receive the same level of analyst coverage as larger firms, which can lead to a lack of publicly available information about our performance, prospects, and financial health.
+Added: This lack of visibility may make it more difficult for investors to make informed decisions about our stock.
+Added: As a result, potential investors should be aware that investing in small-cap companies involves heightened risks, including the possibility of significant losses, limited investor participation, and limited access to research and analysis.
+Added: Owners of our securities could be diluted.
+Added: Issuing new shares of common stock or other securities could dilute the economic and voting interests of current shareholders.
+Added: We have 250 million authorized shares of common stock, approximately 87.6 million of which were outstanding as of March 25, 2025.
+Added: The unissued shares are available for future issuance by our Board of Directors.
+Added: Our Board of Directors has the authority to issue shares without requiring shareholder approval and may, under certain circumstances, limit or cancel the preferential subscription rights of shareholders.
+Added: If the Board exercises this authority, shareholders may not have the opportunity to participate in future issuances on a pro rata basis and could have their economic and voting interests diluted.
+Added: In addition, on February 4, 2025, we announced the proposed issuance under Luxembourg law of transferable Stakeholder Warrants to purchase, subject to certain conditions, up to approximately 114.5 million shares of common stock for $1.20 per share.
+Added: In addition, as of March 25, 2025, we had approximately 7.4 million RSUs outstanding.
+Added: Outstanding warrants and RSUs entitle the holders thereof to receive shares of our common stock upon the exercise of the warrants or the vesting of RSUs.
+Added: If the Stakeholder Warrants are exercised and/or the outstanding RSUs vest, a significant number of additional shares of common stock will be issued, which could adversely impact the trading price of our common stock and would further dilute the economic and voting interests of existing shareholders.
+Added: Similarly, any future equity grants to employees, executives, or directors under the Equity Plan, or issuance of additional warrants, if exercised, would increase the number of outstanding shares, further diluting the ownership percentage of existing shareholders.
+Added: The market price and trading volume of our stock may be volatile.
+Added: The recent Transactions, including the issuance of the Debt Exchange Shares and the proposed issuance of Stakeholder Warrants could result in increased volatility in the price and trading volume of our common stock.
+Added: It is expected that the Lock-Up on the Debt Exchange Shares will expire on September 17, 2025.
+Added: The potential for large-scale resales of the Debt Exchange Shares in the public market, or the perception that such sales could occur, may contribute to significant fluctuations in the trading volume and trading price of our common stock.
+Added: Volatility in our stock could negatively affect investor confidence and impair our ability to raise additional capital in future equity financings.
+Added: Additionally, the existence of the Stakeholder Warrants may further affect trading patterns and market price dynamics.
+Added: If the VWAP Condition is satisfied and the market price of our common stock exceeds the Implied Per Share Exercise Price of the Stakeholder Warrants, a substantial number of shares could be issued upon exercise of the Stakeholder Warrants.
+Added: The potential for such issuances could create an overhang on our stock, adversely affecting trading volume and market price.
+Added: We may take advantage of specified reduced disclosure requirements applicable to a “smaller reporting company” or a “non-accelerated filer” under Regulation S-K, and the information that we provide to stockholders may be different than they might receive from other public companies.
+Added: We are a “smaller reporting company,” as defined under Item 10(f)(1) of Regulation S-K.
+Added: As such, we intend to take advantage of reduced disclosure and other requirements applicable to smaller reporting companies, including scaled disclosure requirements, simplified executive compensation disclosures, and certain other reduced disclosure obligations in our SEC filings.
+Added: Because of our status, as a “non-accelerated filer” under SEC rules we are not required to comply with Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires an independent registered public accounting firm to provide an attestation report on management’s assessment of the Company’s internal control over financial reporting.
+Added: We intend to utilize these allowances until we no longer qualify as a smaller reporting company or are no longer a “non-accelerated filer”, as applicable.
+Added: Therefore, the information we provide stockholders may differ from that provided by other public companies which are not smaller reporting companies.
+Added: If some investors find our shares less attractive as a result, our stock could experience reduced trading activity and increased volatility in the market price.
+Added: We are not currently eligible to file new short form registration statements on Form S-3 for the primary offering of securities, except in limited circumstances.
+Added: As a result, our ability to raise capital on favorable terms or at all may be impaired.
Form S-3 permits eligible issuers to conduct registered offerings using a short form registration statement that allows the issuer to incorporate by reference its past and future filings and reports made under the Exchange Act.
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The shelf registration process, combined with the ability to forward incorporate information, allows issuers to avoid delays and interruptions in the offering process and to access the capital markets in a more expeditious and efficient manner than raising capital in a standard registered offering pursuant to a registration statement on Form S-1.
−Removed: The ability to newly register securities for resale may also be limited as a result of the loss of Form S-3 eligibility with respect to such registrations.
−Removed: SEC regulations limit the amount of funds we may raise during any 12-month period pursuant to our shelf registration statement on Form S-3
−Removed: Our public float was less than $75 million as of the date of filing of this Annual Report on Form 10-K.
+Added: We registered the sale of $100,000,000 of common stock and warrants on Form S-3 on December 12, 2022 (the “Form S-3”), of which $62.5 million remains available as of the date of the filing of this Form 10-K.
+Added: However, our public float was less than $75.0 million as of the date of filing of this Annual Report on Form 10-K.
As a result, under General Instruction I.B.6 to Form S-3, the amount of funds we can raise through primary public offerings of securities, in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by our non-affiliates.
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If we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by the SEC.
−Removed: As of January 23, 2024, our public float (i.e., the aggregate market value of our outstanding equity securities held by non-affiliates) was approximately $48.8 million, based on 15.3 million shares of outstanding common stock held by non-affiliates and on the closing price of $3.20 per share of our common stock as reported on Nasdaq on January 23, 2024 (a date within 60 days of the date hereof), as calculated in accordance with General Instruction I.B.6 of Form S-3.
−Removed: In addition, during the 12 calendar month period that ends on the date of this filing of this Annual Report on Form 10-K, we had offered and sold $20.1 million of our common stock pursuant to the prospectus supplement dated September 7, 2023.
−Removed: After giving effect to the $16.3 million offering limit imposed by General Instruction I.B.6 of Form S-3, and after deducting the shares we sold within the preceding 12 months, as of the date of filing this Annual Report, we may sell $0 shares of our common stock at this time under our shelf registration statement.
−Removed: The market price and trading volume of our stock may be volatile.
−Removed: The market price of our common stock could be subject to significant fluctuations.
−Removed: Stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies or our sector.
−Removed: These broad market fluctuations, in addition to our operating performance, may also adversely affect the trading price of our common stock.
−Removed: If we issue common stock, warrants or other securities, the trading price of our common stock or other Company securities could experience significant volatility or be negatively impacted.
+Added: As of March 25, 2025, our public float (i.e., the aggregate market value of our outstanding equity securities held by non-affiliates) was approximately $62.5 million, based on 54.3 million shares of outstanding common stock held by non-affiliates and on the closing price of $1.15 per share of our common stock on February 13, 2025 (a date within 60 days of the date hereof), as calculated in accordance with General Instruction I.B.6 of Form S-3.
+Added: In accordance with General Instruction I.B.6 of Form S-3, we can only sell $20.8 million (one-third of our public float) of common stock and warrants pursuant to the Form S-3 in a 12-month period, and that amount will not increase unless the market value of the shares of our common stock held by our non-affiliates increases.
+Added: Volatility in the trading price of our common stock or other securities could result in litigation.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
−Removed: Such litigation, if instituted, could result in substantial costs and diversion of management’s attention and resources, which could significantly impact our profitability and reputation.
−Removed: Owners of our securities could be diluted.
−Removed: We may issue new shares of common stock or other forms of securities which could dilute the economic and voting interests of current shareholders.
−Removed: We may issue warrants and holders of outstanding warrants may exercise their warrant rights to acquire Company securities, which actions would dilute the economic and voting interests of current shareholders.
+Added: Such litigation, if instituted, could result in substantial costs and divert management’s attention adversely affecting profitability and reputation.
+Added: We may be delisted from Nasdaq, which could negatively impact the value of our common stock and our business.
+Added: On December 19, 2024, the Company received a letter (the “Bid Price Notice”) from The Nasdaq Stock Market (“Nasdaq”) notifying the Company that, because the closing bid price for its common stock has been below $1.00 per share for 30 consecutive business days, it no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market.
+Added: Nasdaq Listing Rule 5450(a)(1) requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Rule”), and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Rule exists if the deficiency continues for a period of 30 consecutive business days.
+Added: Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until June 17, 2025, to regain compliance with the Minimum Bid Price Rule.
+Added: The Bid Price Notice states that the Nasdaq staff will provide written confirmation that the Company has achieved compliance with the Minimum Bid Price Rule if at any time before June 17, 2025,
+Added: the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of ten consecutive business days.
+Added: In the event the Company is not in compliance with the Minimum Bid Price Rule by June 17, 2025, the Company may be afforded a second 180 calendar day grace period.
+Added: To qualify, the Company must submit an application to transfer the listing of its common stock to the Nasdaq Capital Market, which requires the Company to meet the continued listing requirement for the market value of publicly held shares (“MVPHS”) and all other initial listing standards for the Nasdaq Capital Market, other than the Minimum Bid Price Rule.
+Added: There is no assurance that the Company will be able to meet the Nasdaq Capital Market continued listing requirements with respect to MVPHS or all other Nasdaq Capital Market initial listing requirements if it does not regain compliance with the Minimum Bid Price Rule before June 17, 2025.
+Added: If necessary, the Company intends to conduct a reverse stock split in an effort to regain compliance with the Minimum Bid Price Rule.
+Added: While a reverse stock split could help the Company regain compliance with the Minimum Bid Price Rule, it carries several risks.
+Added: Reverse stock splits can be perceived negatively by the market, potentially leading to a decline in the price of our common stock and the Warrants.
+Added: Additionally, a reverse stock split reduces the number of shares outstanding, which may decrease the trading volume and liquidity of our common stock.
+Added: There is no assurance that a reverse stock split would result in an initially higher or sustained higher price for our common stock, and the price of our common stock could decline again, leading to further non-compliance with listing standards.
+Added: If we fail to regain compliance with the Minimum Bid Price Rule by June 17, 2025 and we are unable to meet the requirements to transfer the listing of our common stock to the Nasdaq Capital Market, our common stock (and the Warrants, to the extent they are listed on Nasdaq) will likely be delisted from Nasdaq, which could significantly reduce the liquidity and marketability of our common stock (and the Warrants, to the extent they are listed on Nasdaq).
+Added: A delisting could result in increased volatility, reduced market interest, and difficulty in attracting institutional shareholders and investors who are restricted from investing in stocks not listed on a major securities exchange.
+Added: Additionally, delisting may adversely impact employee retention and recruitment, our ability to raise capital, and our relationships with customers and business partners.
+Added: Risks Related to Shareholder Structure and Governance
+Added: We could have conflicts of interest with certain shareholders, lenders, members of management and our Board of Directors.
+Added: These conflicts may be resolved in a manner adverse to us.
+Added: Significant shareholders, management and members of the Board of Directors may have direct or beneficial ownership interests in certain of our clients or vendors.
+Added: These relationships and interests could create, or appear to create, conflicts of interest in matters involving or affecting us and our business dealings with certain of our clients or vendors, or with our lenders.
+Added: As a result of the Transactions, the Lenders received approximately 63.5% of our outstanding common stock.
+Added: The individual and collective interests and objectives of the lenders under our New Facility who are also our shareholders (collectively, the “Lender Shareholders”) may not align or may conflict with those of our other shareholders.
+Added: Lender Shareholders may, as shareholders or lenders, take actions or support decisions that prioritize debt recovery over equity appreciation, pursue strategies that prioritize short-term liquidity at the expense of long-term growth, or resist initiatives requiring additional capital investment that could dilute their ownership or delay repaying of the debt.
+Added: The Lender Shareholders may exert significant influence over the composition of our Board of Directors, operational decisions, and key business initiatives, which do not align with the interests of non-debt-holding shareholders.
+Added: In particular, two Lender Shareholders (one of whom beneficially owns approximately 22.6% of our common stock) each have a one-time right to nominate one member of our Board of Directors at our next meeting of shareholders at which directors will be elected.
+Added: Lender Shareholders may seek to implement governance or leadership changes that could create uncertainty or disruption to our business operations.
+Added: The Lender Shareholders, who in the aggregate control a majority of the shares of common stock, could create governance challenges and increase the risk of conflicts in decision-making, particularly in areas such as corporate strategy, capital allocation, and management oversight.
+Added: There can be no assurance that the interests of Lender Shareholders will align with the long-term interests of the Company or all of its other stakeholders.
+Added: Potential conflicts between the Lender Shareholders and non-debt-holding shareholders could complicate decision-making and negatively impact our operations.
+Added: Non-debt-holding shareholders may have limited ability to influence the direction or governance of the company.
+Added: There is no assurance that we will be able to implement or maintain measures to manage these potential conflicts effectively.
+Added: Even if such measures are in place, they may not fully mitigate all conflicts of interest, and any resolution could be less favorable to us than if we were dealing with unrelated third parties.
Risks Related to Financing, Our Indebtedness and Capital Structure
−Removed: If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position will be negatively affected.
−Removed: An extended period of reduced demand for all or certain of our default-related services could negatively impact our cash flow such that we may need to use unrestricted cash on hand to satisfy our obligations, which would reduce our cash balance negatively impacting our liquidity.
−Removed: In addition, our liquidity would be adversely affected by any inability to access the capital markets, volatility in the capital markets, unforeseen outflows of cash, funding for contingencies and increased regulatory liquidity requirements.
+Added: If we are unable to generate sufficient cash flow or access the capital markets or our borrowing capacity is reduced, our liquidity and competitive position would be negatively affected.
+Added: An extended period of reduced demand for all or certain of our services would negatively impact our cash flow such that we may need to use unrestricted cash to satisfy our obligations, which would reduce our cash balance negatively impacting our liquidity.
+Added: In addition, our liquidity could be adversely affected by any inability to access the capital markets, volatility in the capital markets, unforeseen outflows of cash, funding for contingencies and increased regulatory liquidity requirements.
Our ability to borrow money could be limited, or our cost of borrowing could increase, due to volatility in the capital markets, worsening terms on which credit is available or limitations in our loan agreements.
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A reduction in our ability to borrow funds to support our operations or a reduction in cash flow would also reduce our ability to pursue our business strategy to diversify and grow our customer base.
−Removed: Our level of debt and the variable interest rate on our term loan makes us sensitive to the effects of our current financial performance and interest rate increases;
−Removed: our level of debt and provisions in our Amended Credit Agreement and revolving credit facility could limit our ability to react to changes in the economy or our industry.
−Removed: Our term loans under the Amended Credit Agreement make us more vulnerable to changes in our results of operations because a portion of our cash flows from operations and current cash on the balance sheet is dedicated to servicing our debt and is not available for other purposes.
−Removed: Our term loans under the Amended Credit Agreement, and the Revolver (amended with an effective date of February 14, 2023) are secured by virtually all of our assets.
−Removed: From time to time, our debt under the Amended Credit Agreement may trade at a substantial discount to face value.
−Removed: Our ability to raise additional debt is limited, and in many circumstances is subject to lender approval and could require modification of certain of the loan agreements.
−Removed: The provisions of our Amended Credit Agreement could have other negative consequences to us including the following:
−Removed: • limiting our ability to borrow money for our working capital, capital expenditures and debt service requirements or other general corporate purposes;
−Removed: • limiting our flexibility in planning for, or reacting to, changes in our operations, our business or the industry in which we compete;
−Removed: • requiring us to use 50% of our excess cash flow, as defined in the Amended Credit Agreement, to repay debt;
−Removed: • requiring us to use 75% of the first $50 million of net proceeds received from equity issuances or capital contributions to repay debt;
+Added: Our level of debt and the variable interest rate on our New Facility and the Super Senior Facility make us sensitive to the effects of our financial performance and interest rate increases;
+Added: our level of debt and provisions of the New Facility and the Super Senior Facility could limit our ability to react to changes in the economy or our industry.
+Added: Our term loans under the New Facility and Super Senior Facility exposes us to potential risks because a portion of our cash flows from operations and current cash on the balance sheet is dedicated to servicing our debt and is not available for other purposes.
+Added: The term loans under the New Facility and the Super Senior Facility are secured by virtually all of our assets.
+Added: Our ability to raise additional debt is limited, and in many circumstances, is subject to lender approval and could require modifications to certain loan agreements.
+Added: The provisions of the New Facility and the Super Senior Facility could have other negative consequences to us, including the following:
+Added: • limiting our ability to borrow money for our working capital, capital expenditures, debt service requirements, or other general corporate purposes;
+Added: • limiting our flexibility in planning for, or reacting to, changes in our operations, business, or the industry in which we compete;
+Added: • if we have Excess Cash Flow, requiring us to prepay the debt by the lesser of (a) 75% of the Excess Cash Flow and (b) the amount that would leave the Company with no less than $30 million of total cash on the balance sheet to prepay outstanding debt, beginning with the fiscal year ending December 31, 2025;
+Added: • to the extent we receive proceeds from the exercise of the Cash Exercise Stakeholder Warrants, requiring us to use 95% of the proceeds to prepay debt;
• placing us at a competitive disadvantage by limiting our ability to invest in our business.
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There can be no assurance that we will be able to achieve historical levels of revenues and cash flows (adjusted for businesses sold or discontinued).
−Removed: If we do not generate sufficient cash flows and do not have sufficient cash on hand to meet our debt service and working capital requirements, we may need to seek additional financing, raise equity or sell assets, and our ability to take these actions may be limited by the terms of the Amended Credit Agreement, Revolver or the market.
−Removed: We may not be able to refinance our existing indebtedness when it becomes due or obtain alternative financing on terms that are acceptable to us, or at all.
−Removed: Without any such financing, we could be forced to sell assets or reduce costs under unfavorable circumstances to make up for any shortfall in our payment obligations.
−Removed: Even if necessary, we may not be able to sell assets or reduce costs quickly enough or for sufficient amounts to enable us to meet our obligations.
−Removed: Failure to meet our debt service requirements could result in an event of default under our loans agreement which, if not cured or waived, would result in the holders of the defaulted debt causing all outstanding amounts with respect to that debt to be immediately due and payable and potentially permitting lenders to execute applicable security interests, negatively impacting our future operations or ability to engage in other favorable business activities.
−Removed: An event of default under the loan agreements would provide certain of our customers, including Ocwen and Rithm, with the ability to terminate our agreements.
−Removed: In addition, our Amended Credit Agreement contains covenants that limit our flexibility in planning for, or reacting to changes in, our business and our industry, including limitations on incurring additional indebtedness, making investments, adding new product lines, disposing or selling of assets, granting liens and merging or consolidating with other companies.
+Added: If we do not generate sufficient cash flows and do not have sufficient cash on hand to meet our debt service and working capital requirements, we may need to seek additional financing, raise equity, or sell assets, and our ability to take these actions may be limited by the terms of the New Facility and the Super Senior Facility or the market.
+Added: In addition, the New Facility and the Super Senior Facility contain covenants that limit our flexibility in planning for, or reacting to, changes in our business and our industry, including limitations on incurring additional indebtedness, making investments, adding new lines of service, disposing or selling of assets or equity, granting liens, and merging or consolidating
+Added: with other companies.
Complying with these covenants may impair our ability to finance our future operations or capital needs or to engage in other favorable business activities.
−Removed: Our failure to comply with the covenants or terms contained in our Amended Credit Agreement or Revolver, including as a result of events beyond our control, could result in an event of default.
−Removed: Our Amended Credit Agreement requires us to comply with various operational, reporting and other covenants or terms including, among other things, limiting us from engaging in certain types of transactions.
−Removed: If we do not have appropriate controls, or the controls we implement fail or are not effective, we could experience an event of default under our Amended Credit Agreement or Revolver.
−Removed: If we experience an event of default under our Amended Credit Agreement or Revolver that is not cured or waived, it could result in the debt being called and immediately due and payable in full.
−Removed: a going concern uncertainty, which in turn could provide certain of our customers the ability to terminate our agreements and allow the holders of the defaulted debt to cause all amounts outstanding with respect to that debt to be immediately due and payable or choose to execute on applicable security interests.
−Removed: Our assets or cash flows may not be sufficient to fully repay borrowings under our outstanding Amended Credit Agreement and Revolver if accelerated upon an event of default and we may not be able to refinance or restructure the payments on the borrowings under the Amended Credit Agreement and Revolver.
−Removed: We may be unable to exercise the option to extend the maturity of our Amended Credit Agreement and Revolver from April 2025 to April 2026.
−Removed: We may be unable to repay or refinance the balance of our loans under the Amended Credit Agreement or Revolver upon maturity, particularly if cash from operations fails to significantly improve, assets are not readily available for sale and sold or we are unable to timely refinance on favorable terms or at all.
−Removed: Our loan agreements require us to repay the outstanding balance due in April 2025, with an option to extend to April 2026 if we make par paydowns from the proceeds of issuances of equity interests or from junior indebtedness totaling at least $30 million on or before February 13, 2024, and there is no continuing default of the loan agreements.
−Removed: We satisfied the $30 million paydown requirement through a par paydown in the amount of $20 million in February 2023 and an additional par paydown of $10 million in September 2023 each from the proceeds of equity issuances, providing us with the option to be able to extend the maturity date of our debt to April 2026.
−Removed: However, there can be no assurance that we will be permitted under our Amended Credit Agreement and Revolver to exercise the option to extend the maturity of our Amended Credit Agreement and Revolver to April 2026.
−Removed: If our cash from operations fails to significantly improve, there can be no assurance that our cash balances and other assets readily available for sale and sold would be sufficient to fully repay borrowings under our outstanding Amended Credit Agreement and Revolver upon maturity, or that we will be able to refinance the remaining portion of the debt sufficiently prior to the due date or on terms acceptable to us.
−Removed: If we were to default on our debt, our lenders could take action adverse to our interests under the terms of the loan agreements, including seeking to take possession of the applicable collateral.
−Removed: In addition, a default under the loan agreements could constitute a termination event under certain of our client or vendor agreements, which could adversely impact our revenue or cash flow or our ability to provide products and services.
−Removed: Under such circumstances, if we are not able to agree upon a resolution with our lenders, we might seek applicable legal protections including under bankruptcy law, which further could provide certain of our customers or vendors the ability to terminate our agreements.
−Removed: If we refinance the loans under less favorable terms, we may be required to accept a higher interest rate and debt-related costs, as well as additional restrictions and covenants which constrain our ability to finance and operate our business.
+Added: Our failure to comply with the covenants or terms contained in the New Facility or the Super Senior Facility, including as a result of events beyond our control, could result in an event of default.
+Added: The New Facility and the Super Senior Facility require us to comply with various operational, reporting and other covenants or terms including, among other things, limiting us from engaging in certain types of transactions.
+Added: If we do not have appropriate controls, or the controls we implement fail or are not effective, we could experience an event of default.
+Added: If we experience an event of default that is not cured or waived, it could result in the debt being called and immediately due and payable in full.
+Added: Our assets or cash flows may not be sufficient to fully repay the accelerated debt and we may not be able to refinance or restructure the payments on such debt, which could lead to a going concern uncertainty, which in turn could provide certain of our customers the ability to terminate our agreements.
+Added: An event of default would allow the holders of the defaulted debt to cause all amounts outstanding with respect to that debt to be immediately due and payable and permit the lenders to execute on applicable security interests.
+Added: We may be unable to repay or refinance the balance of our loans under the New Facility or the Super Senior Facility upon maturity, particularly if cash from operations fails to improve, assets are not readily available for sale, or we are unable to refinance on favorable terms or at all.
+Added: The New Facility requires us to repay the outstanding balance by April 30, 2030.
+Added: The Super Senior Facility requires us to repay the outstanding balance by February 19, 2029.
+Added: The New Facility and the Super Senior Facility impose restrictions on our ability to incur additional indebtedness or refinancing.
+Added: There can be no assurance that our cash from operations, cash balances, or other assets readily available for sale will be sufficient to meet our debt obligations.
+Added: If we are unable to generate sufficient cash flow or refinance our debt under favorable terms, we may be required to sell assets, raise equity, or seek alternative financing.
+Added: There can be no assurance that such actions will be available to us, or that we will be able to refinance the remaining debt on acceptable terms or at all.
+Added: We may not be able to refinance our then-existing indebtedness when it becomes due or obtain alternative financing on terms that are acceptable to us or at all.
+Added: If we refinance our then-existing debt, the refinancing could be on less favorable terms which would further limit our ability to finance and operate our business.
+Added: We could be forced to sell assets or reduce costs under unfavorable circumstances to make up for any shortfall in our payment obligations.
+Added: We may be unable to sell assets or reduce costs quickly enough or for sufficient consideration to enable us to meet our obligations.
+Added: Failure to meet our debt service obligations would result in an event of default under our loan agreements which, if not cured or waived, could result in the holders of the defaulted debt causing all outstanding amounts with respect to that debt to be immediately due and payable and permit lenders to execute applicable security interests.
+Added: If we were to default on our debt, our lenders could take action adverse to our interests under the loan agreements, including seeking to take possession of applicable collateral, negatively impacting our future operations or ability to engage in other favorable business activities.
+Added: Additionally, a default could trigger termination events under certain of our client or vendor agreements, including the Rithm Brokerage Agreement with Rithm, which could negatively impact our revenue, cash flow, or ability to provide services.
+Added: If we are unable to agree upon a resolution with our lenders, we might seek applicable legal protections, including under bankruptcy law, which could further provide certain of our customers or vendors the ability to terminate our agreements.
We have a significant net operating loss recognized by one of our Luxembourg subsidiaries, Altisource S.à r.l.
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is unable to generate sufficient pretax income by 2034, the Company may not be able to fully utilize this deferred tax asset.
−Removed: addition, changes in our structure or operations could prevent us from fully realizing some or all of the benefit of such deferred tax asset.
+Added: In addition, changes in our structure or operations could prevent us from fully realizing some or all of the benefit of such deferred tax asset.
We have significant investments in goodwill and intangible assets recorded as a result of prior acquisitions and an impairment of these assets would require a write-down that would reduce our net income.
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These cash balances expose us to purposeful misappropriation of cash by employees or others and unintentional mistakes resulting in a loss of cash which may not be recoverable.
+Added: Cash may be invested in certain securities or products which could lose value.
+Added: Cash deposits could exceed amounts insured by the Federal Deposit Insurance Corporation or other applicable depository insurers.
Amounts that are held in escrow accounts for limited periods of time are not included in the accompanying consolidated balance sheets.
We may become liable for funds owed to third parties as a result of purposeful misappropriation of cash by employees or others, unintentional mistakes or the failure of one or more of these financial institutions.
−Removed: There is no guarantee we would recover the funds deposited, whether through Federal Deposit Insurance Corporation coverage, private insurance or otherwise.
−Removed: Foreign Exchange
+Added: There is no guarantee we would recover the funds deposited, whether through depository insurer coverage, private insurance or otherwise.
+Added: Fluctuations in currency exchange rates could expose us to losses.
We have operations in India, Luxembourg and Uruguay which may result in us being party to transactions denominated, or incurring obligations, in currencies other than the United States dollar, including, for example, payroll, taxes, facilities-related expenses.
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The rights of shareholders under Luxembourg law may differ in certain respects from the rights afforded to shareholders of companies organized under laws in other jurisdictions.
−Removed: It may also be difficult to obtain and enforce judgments against us or our directors and executive officers.
+Added: Luxembourg may also impose additional limitations and requirements on company actions which may limit our ability to manage the company and respond to market conditions.
We are a public limited liability company (société anonyme) organized and existing under the laws of, and headquartered in, Luxembourg.
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It may be difficult for our investors to obtain and enforce, in the United States, judgments obtained in United States courts against us or our directors based on the civil liability provisions of the United States securities laws or to enforce, in Luxembourg, judgments obtained in other jurisdictions including the United States.
+Added: As a Luxembourg company, we face legal requirements and limitations on company governance and actions which may negatively impact our ability to manage the company and respond to market conditions.
+Added: Our corporate governance and activities are subject to Luxembourg’s legal and regulatory framework.
+Added: Certain legal limitations and regulatory requirements may impose constraints on how we operate and actions which we may undertake.
+Added: These may include, but are not limited to, restrictions related to corporate governance, financial reporting, tax obligations, and compliance with European Union directives and regulations.
+Added: Luxembourg law imposes specific requirements regarding the structure and governance of companies which could limit flexibility in decision-making or lead to increased operational complexity.
+Added: Additionally, Luxembourg has a rigorous legal framework concerning anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
+Added: Compliance with this framework can impose significant burdens on our corporate action and require significant expenditure of resources.
+Added: Non-compliance with these laws could result in legal penalties, reputational damage, or restrictions on doing business in certain sectors or regions.
+Added: Changes to Luxembourg’s legal environment or an interpretation of laws in a manner unfavorable to our operations, the company could face increased legal and operational risks, higher compliance costs, or limitations on business activities, which may adversely impact our financial results, strategic objectives, and growth prospects.
A significant challenge of the Luxembourg tax regime or of its interpretation by the Luxembourg tax authorities, or its application of us or our business could have a negative impact us.
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The EC is requiring these EU member states to recover from certain companies the prior year tax benefits they received.
+Added: Changes in trade policies, including tariffs, taxes or restrictions on foreign service providers, could adversely affect our business.
+Added: As a Luxembourg-based company providing services primarily to customers located in the United States, we are subject to risks related to changes in trade, tax and tariff policies of the United States or the European Union.
+Added: Tariffs, trade restrictions, or other protectionist measures affecting us as a non-United States domiciled service provider or owner of intellectual property, our ability to contract with clients or our transfer pricing structure could negatively impact our operations and financial performance.
+Added: Additionally, new or increased tariffs, cross-border taxation, or regulatory burdens on foreign businesses operating in the United States could increase our costs, reduce our competitiveness, or limit our ability to expand our operations.
+Added: We may not be able to increase our prices to cover our increases in costs.
Risks Relating to Regulation
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Regulatory inquiries or determinations of failures to comply with applicable requirements could increase our costs and expose us to sanctions which could include limitations on our ability to provide services or otherwise reduce demand for our services.
−Removed: Furthermore, even if we believe we comply with applicable laws and regulations, we may choose to settle such allegations in order to avoid the potentially significant costs of defending such allegations and to further avoid the risk of increased damages if we ultimately were to receive an unfavorable outcome, but such settlements may also result in further claims or create issues for existing and potential customers.
+Added: Furthermore, even if we believe we comply with applicable laws and regulations, we may choose to settle such allegations to avoid the potentially significant costs of defending such allegations and to further avoid the risk of increased damages if we ultimately were to receive an unfavorable outcome, but such settlements may also result in further claims or create issues for
+Added: existing and potential customers.
Such settlements and additional actions could increase costs, place limitations on our services, and result in a reduction in demand.
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Such proceedings and settlement could increase our costs and expose us to sanctions, including limitations on our ability to provide services, or otherwise reduce demand for our services.
−Removed: Failure to comply with US sanctions, including blocking certain activities in Sanctioned Countries, could expose us to penalties and other adverse consequences.
−Removed: Our business activities may be subject to U.S.
−Removed: sanctions laws administered and maintained by the US government, including restrictions or prohibitions on transactions with, or on dealing in funds transfers to/ from certain embargoed jurisdictions (currently, Iran, North Korea, Syria, Cuba, and the Crimea, so-called- Donetsk People’s Republic, and so-called Luhansk People’s Republic regions of Ukraine).
+Added: Failure to comply with applicable sanctions, including blocking certain activities in sanctioned countries, could expose us to penalties and other adverse consequences.
+Added: Our business activities may be subject to sanctions laws in the jurisdictions in which we operate, including restrictions or prohibitions on transactions with, or on dealing in funds transfers to or from certain embargoed jurisdictions.
We have implemented internet protocol (“IP”) address blocking and screening mechanisms to promote compliance with US sanctions rules and regulations, although the blocking and screening mechanisms may not be able to completely block all unwanted IP access.
−Removed: A determination that we have failed to comply with US sanctions,
−Removed: whether knowingly or inadvertently, could result in the imposition of substantial penalties, including enforcement actions, fines, and civil and/or criminal penalties, and may adversely affect our business.
−Removed: If we fail to timely make required disclosure filings with the U.S.
−Removed: Department of Treasury Financial Crimes Enforcement Network, we could be subject to fines and penalties.
+Added: A determination that we have failed to comply with applicable sanctions, whether knowingly or inadvertently, could result in the imposition of substantial penalties, including enforcement actions, fines, and civil and/or criminal penalties, and may adversely affect our business.
+Added: If we fail to timely make required disclosure filings with the United States Department of Treasury Financial Crimes Enforcement Network, we could be subject to penalties.
We operate as a title insurance agent through one or more subsidiaries.
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In addition, the lack of certain licenses in one or more jurisdictions could cause us to breach applicable contracts.
−Removed: We are required to have and maintain licenses as a provider of certain product and services including, among others, services as a residential mortgage origination underwriter, valuation provider, appraisal management company, asset manager, property manager, title insurance agent, insurance broker and underwriter, real estate broker, auctioneer, foreclosure trustee and credit report provider in a number of jurisdictions.
−Removed: Our employees and subsidiaries may be required to be licensed by various state or regulatory commissions or bodies for the particular type of product or service provided and to participate in regular continuing education programs.
+Added: We are required to have and maintain licenses as a provider of certain services including, among others, services as a residential mortgage origination underwriter, valuation provider, appraisal management company, asset manager, property manager, title insurance agent, insurance broker and underwriter, real estate broker, auctioneer, foreclosure trustee and credit report provider in a number of jurisdictions.
+Added: Our employees and subsidiaries may be required to be licensed by various state or regulatory commissions or bodies for the particular type of service provided and to participate in regular continuing education programs.
If one or more of our licenses are lost, revoked, expire or limited, or if we fail to maintain or otherwise surrender one or more such license, we may be prohibited from doing business in certain markets.
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A violation by our customers of applicable legal requirements in the selection or use of our services could generate legal liability for us.
−Removed: Certain of our services are provided at the direction and pursuant to the identified requirements of our customers, including property preservation, inspection, title, valuations, brokerage, auction, foreclosure and eviction services that are triggered by information provided by our customers.
+Added: Certain of our services are provided at the direction and pursuant to the identified requirements of our customers, including property preservation, inspection, title, valuations, brokerage, auction, foreclosure and eviction services that are triggered by
+Added: information provided by our customers.
The failure of our customers to properly identify or account for regulatory requirements applicable to the use of our services, in selecting appropriate services for the intended purposes, or in specifying how services are rendered could expose us to significant penalties, fines, litigation, settlements, costs and consent orders.
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As such, we are subject to oversight by our customers.
−Removed: If we do not meet the standards established by or imposed upon our customers, regulators allege that products or services provided by Altisource fail to meet applicable legal requirements, or if any other oversight procedures result in a negative outcome for Altisource, we may lose customers, may no longer be granted referrals for certain services, or may have to conform our business to address these standards.
−Removed: The tax regulations, and the interpretation thereof, in the countries, states and local jurisdictions in which we operate periodically change, which may adversely affect our results due to higher taxes, interest and penalties, or our inability to utilize tax credits available to us.
+Added: If we do not meet the standards established by or imposed upon our customers, regulators allege that services provided by Altisource fail to meet applicable legal requirements, or if any other oversight procedures result in a negative outcome for Altisource, we may lose customers, may no longer be granted referrals for certain services, or may have to conform our business to address these standards.
+Added: The tax regulations, and the interpretation thereof, in the countries, states and local jurisdictions in which we operate periodically change, which may adversely affect our results due to higher taxes, interest and penalties, or our inability to utilize operating losses or other tax credits available to us.
Certain of our subsidiaries provide services in the United States and several other countries.
−Removed: Those jurisdictions are subject to changing tax environments, which may result in higher operating expenses or taxes and which may introduce uncertainty as to
−Removed: the application of tax laws and regulations to our operations.
+Added: Those jurisdictions are subject to changing tax environments, which may result in higher operating expenses or taxes and which may introduce uncertainty as to the application of tax laws and regulations to our operations.
Furthermore, we may determine that we owe additional taxes or may be required to pay taxes for services provided in prior periods as interpretations of tax laws and regulations are clarified or revised.
Changes in laws concerning sales tax, gross recipient tax, dividends, retained earnings, application of operating or other losses, and intercompany transactions and loans, among others, could impact us.
−Removed: We may not be able to raise our prices to customers or pass-through such taxes to our customers or vendors in response to changes, which could adversely affect our results of operations.
+Added: We may not be able to raise our prices to customers or pass-through such taxes to our customers or vendors in response to changes, which would adversely affect our results of operations.
If we fail to accurately anticipate or apply tax laws and regulations to our operations, we could be subject to liabilities and penalties.
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Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
+Added: These regulations are designed to ensure that transactions between related entities are conducted at arm’s length, i.e., at prices that would be agreed upon by unrelated parties in the open market.
+Added: Transfer pricing regulations, and associated guidelines, are complex and vary from country to country, and changes in the tax treatment of transfer pricing could have a material effect on the Company.
The amount of taxes paid in different jurisdictions may depend on the application of the tax laws of the various jurisdictions to our business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
−Removed: The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
+Added: The relevant taxing authorities may disagree with our determinations as to the transfer pricing, income and expenses attributable to specific jurisdictions.
If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
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Even if we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have an adverse effect on our results of operations or cash flows in the period or periods for which a determination is made.
+Added: Additionally, evolving tax policies focused on combating base erosion and profit shifting may lead to more aggressive tax enforcement by authorities, increased documentation and compliance requirements, and the potential for disputes with tax authorities.
+Added: This could lead to unexpected tax adjustments, higher operating costs, and delays in operations as the Company seeks to address any tax challenges or compliance issues.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.