Item 1A. Risk Factors
Item 1A.
RISK FACTORS
Management is not aware of any material changes to the risk factors that appeared under “Part I, Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2024, as amended,
other than those additional risks described below. You should carefully consider such risks and the other information in this Quarterly Report on Form 10-Q/A, any of which could materially and adversely affect the Company’s business, financial
condition, results of operations and stock price. The risks described in this Quarterly Report on Form 10-Q/A and in the Annual Report on Form 10-K/A are not the only risks facing the Company. Additional risks and uncertainties not presently known
to management or that management presently believes not to be material may also result in material and adverse effects on the Company’s business, financial condition, and results of operations.
The Company has identified material weaknesses in its internal control over financial reporting.
As disclosed in “Part I - Item 4. Controls and Procedures,” of this Quarterly Report on Form 10-Q/A, management has identified material weaknesses in the Company’s internal control over financial reporting. As a
result, management concluded that the Company’s internal control over financial reporting and disclosure controls and procedures were not effective as of March 31, 2025. The Company is working to remediate the material weakness. However, there can
be no assurance that these remediation efforts will be successful. In addition, these remediation efforts may place a burden on management and may result in additional expenses.
The Company cannot assure that additional significant deficiencies or material weaknesses in its internal control over financial reporting will not be identified in the future. Any failure to maintain or implement
required new or improved controls, or any difficulties the Company experiences in their implementation, could result in additional material weaknesses, cause the Company to fail to meet its periodic SEC reporting obligations or result in material
misstatements to its financial statements in future periods, any of which could cause investors or customers to lose confidence in the Company’s reported financial information, a decline in the trading price of the Company’s common stock or a
delisting of the Company’s common stock from the Nasdaq Stock Market.
The Company may not qualify to repurchase its Series C Preferred Stock on favorable terms.
On June 7, 2022, the Company sold shares of its Series C Preferred Stock to the U.S. Treasury for the purchase price of $150 million under the Emergency Capital Investment Program, or “ECIP.” Under the ECIP program,
the Treasury invested in depository institutions that are Community Development Financial Institutions or minority depository institutions (“MDIs”) to encourage lending to small businesses, minority-owned businesses and consumers in low-income and
underserved communities.
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Under terms of an ECIP Securities Purchase Option Agreement by between the Company and Treasury, if the Company meets certain conditions, the Company or the Company’s qualifying designee may repurchase the Series C
Preferred Stock, potentially at a substantial discount (the “Repurchase Option”). To be eligible to exercise the Repurchase Option, the Company must, among other things, meet certain thresholds for “deep impact lending” or “qualified lending” (as
defined in the ECIP’s guidelines), comply with the ECIP agreements and rules, continue to qualify as an MDI, and be “well-capitalized” under federal Prompt Corrective Action guidelines. The earliest possible date by which the Company could exercise
the repurchase options (assuming it meets all required conditions) is June 30, 2028. There can be no assurance that the Company will ever satisfy the lending and other requirements necessary to exercise the Repurchase Option.
Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
Item 3.
DEFAULTS UPON SENIOR SECURITIES
None
Item 4.
MINE SAFETY DISCLOSURES
Not Applicable
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