6 unchanged sentences
• Our revenues and results of operations are volatile and difficult to predict and have been impacted by recent divestiture transactions.
−Removed: • Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.
+Added: • Recent events and developments related to our prior investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price.
• Our exposure to legal liability is significant and could lead to substantial damages.
−Removed: • Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price.
• We may incur losses as a result of ineffective risk management processes and strategies.
• If we cannot meet our future capital requirements, we may be unable to develop and enhance our services, take advantage of business opportunities and respond to competitive pressures.
+Added: • Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.
• We may suffer losses if our reputation is harmed.
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• We have had and may experience write downs of our investments and other losses related to the valuation of our investments and volatile and illiquid market conditions.
−Removed: • We depend on financial institutions as primary clients for our financial consulting business.
−Removed: Consequently, the loss of any financial institutions as clients may have an adverse impact on our business.
• If we are unable to attract and retain qualified personnel, we may not be able to compete successfully in our industry.
• Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage.
−Removed: • Our Chairman and Co-Chief Executive Officer is a party to a credit agreement pursuant to which he has pledged as collateral the substantial majority of his common stock in our Company to a bank, and any foreclosure on such stock or the sale or attempted sale of such common stock, could adversely impact the price of our common stock and result in negative publicity.
• We did not pay dividends with respect to shares of our preferred stock and common stock and may not pay dividends regularly or at all in the future.
−Removed: • Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.
• Our publicly traded senior notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future.
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• We have and may continue to issue additional notes.
−Removed: • The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
−Removed: Risks Related to Global and Economic Conditions and International Operations
+Added: • The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, or 6.00% 2028 Notes provided at the time of the original issuance could, at any time, be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
+Added: • Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.
+Added: Risks Related to our Business & Competition
Our revenues and results of operations are volatile and difficult to predict and have been impacted by recent divestiture transactions.
4 unchanged sentences
• The extent to which we acquire assets for resale, or guarantee a minimum return thereon, and our ability to resell those assets at favorable prices;
−Removed: • Variability in the mix of revenues from the Financial Consulting businesses;
• The rate of decline we experience from our dial-up and DSL Internet access pay accounts in our UOL business as customers continue to migrate to broadband access which provides faster Internet connection and download speeds offered by our competitors;
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• Government intervention may not succeed in improving the financial and credit markets and may have negative consequences for our business.
−Removed: Global economic and political uncertainty could adversely affect our revenue and results of operations.
−Removed: As a result of the international nature of our business, we are subject to the risks arising from adverse changes in global economic and political conditions.
−Removed: An unpredictable or volatile political environment in the United States or globally, reductions in government spending, concerns related to the U.S.
−Removed: debt ceiling, the imposition of tariffs and retaliatory responses, and uncertainty about the effects of current and future economic and political conditions, including acts of war, aggression or terrorism, on us, our customers, suppliers and partners, makes it difficult for us to forecast operating results and to make decisions about future investments.
−Removed: Deterioration in economic conditions in any of the countries in which we do business could result in reductions in sales of our products and services and could cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.
−Removed: As was observed during the COVID-19 pandemic, a significant outbreak of a contagious disease or other severe public health crisis could negatively impact the availability of key personnel necessary to conduct our business, and the business and operations of our third-party service providers who perform critical services for our business.
−Removed: Pandemics, epidemics, future highly infectious or contagious diseases, or other severe public health crisis could cause a material adverse effect on our business, financial condition, results of operations and cash flow.
We focus principally on certain sectors of the economy in our investment banking operations, and deterioration in the business environment in these sectors or a decline in the market for securities of companies within these sectors could harm our business.
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Most of these private company clients are initially funded and controlled by private equity firms.
−Removed: To the extent that the pace of these private company transactions slows or the average transaction size declines due to a decrease in private equity financings, difficult market conditions in our target industries or other factors, our business and results of operations may be harmed.
+Added: To the extent that the pace of these private company
+Added: transactions slows or the average transaction size declines due to a decrease in private equity financings, difficult market conditions in our target industries or other factors, our business and results of operations may be harmed.
Underwriting and other corporate finance transactions, strategic advisory engagements and related sales and trading activities in our target industries represent a significant portion of our investment banking business.
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The lack of available credit and the increased cost of credit could adversely affect the size, volume and timing of our clients’ merger and acquisition transactions-particularly large transactions-and adversely affect our investment banking business and revenues.
−Removed: Climate change could have a material negative impact on us and our customers and counterparties, and our efforts to address concerns relating to climate change could result in damage to our reputation.
−Removed: Our business, as well as the operations and activities of our customers and counterparties, could be negatively impacted by climate change.
−Removed: Climate change presents both immediate and long-term risks to us and our customers and these risks are expected to increase over time.
−Removed: Climate change may cause extreme weather events that disrupt operations at one or more of our primary locations, which may negatively affect our ability to service and interact with our clients, adversely affect the value of our investments, and reduce the availability of insurance.
−Removed: Climate change and the transition to a less carbon-dependent economy may also have a negative impact on the operations or financial condition of our clients and counterparties, which may decrease revenues from those clients and counterparties and increase the credit risk associated with loans and other credit exposures to those clients and counterparties.
−Removed: In addition, climate change may impact the broader economy, including through disruptions to supply chains.
−Removed: Climate change also exposes us to transition risks associated with the transition to a less carbon-dependent economy.
−Removed: Transition risks may result from changes in policies;
−Removed: laws and regulations;
−Removed: technologies;
−Removed: and/or market preferences to address climate change.
−Removed: Such changes could materially, negatively impact our business, results of operations, financial condition and/or our reputation, in addition to having a similar impact on our customers and counterparties.
−Removed: For example, our reputation and client relationships may be damaged as a result of our involvement, or our clients’ involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
−Removed: New regulations or guidance relating to climate change, as well as the perspectives of regulators, stockholders, employees and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products.
−Removed: The risks associated with, and the perspective of regulators, shareholders, employees and other stakeholders regarding, climate change are continuing to evolve rapidly and in some cases greatly diverge, which can make it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties, and we expect that climate change-related risks will increase over time.
−Removed: Our third-party contract manufacturers are located across several countries in Asia, which could expose us to risks associated with doing business in those geographic areas.
−Removed: All of our production is performed by third-party contract manufacturers, including original design manufacturers, in Taiwan, China, Thailand, Vietnam, Cambodia, India, South Korea and Philippines.
−Removed: Our global manufacturing suppliers in Asia and other countries could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on available labor pool, changes in labor costs and other employment dynamics, high turnover among skilled employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between the United States and some other countries, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
−Removed: We depend on overseas third-party suppliers for the manufacture of Targus and magicJack products, and our reputation and results of operations would be harmed if these manufacturers or suppliers fail to meet our requirements.
−Removed: Our manufacturers supply substantially all of the raw materials and provide all facilities and labor required to manufacture our products.
−Removed: Within Asia, except for India, the majority of raw materials are from China.
−Removed: If these companies were to terminate their arrangements with us or fail to provide the required capacity and quality on a timely basis, either due to actions of the manufacturers;
−Removed: earthquakes, typhoons, tsunamis, fires, floods, or other natural disasters;
−Removed: COVID-19 or other pandemics;
−Removed: wars or armed conflicts;
−Removed: strains on infrastructure;
−Removed: available labor pools or manufacturing capacity;
−Removed: or the actions of their respective governments, we would be unable to manufacture our products until replacement contract manufacturing services could be obtained.
−Removed: To qualify a new contract manufacturer, familiarize it with our products, quality standards and other requirements, and commence volume production is a costly and time-consuming process.
−Removed: Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for an input component, and supplier capacity.
−Removed: From time to time, we have experienced component shortages and extended lead times on semiconductors and other input products used in our finished products.
−Removed: Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.
−Removed: While we work to address and mitigate such risks, we are exposed to the risks of supply chain disruption which could negatively impact our business.
−Removed: Any material interruption in the manufacture of our products could likely result in delays in shipment, lost sales and revenue, and damage to our reputation in the market, all of which would harm our business and results of operations.
−Removed: Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.
−Removed: In recent years, the U.S.
−Removed: government has instituted or proposed changes to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from China, EMEA, and other countries.
−Removed: Given our contract manufacturing and logistic providers in those countries, policy or regulations changes in the United States or other countries present particular risks for us.
−Removed: The new administration has imposed, and has indicated it plans to continue to impose, tariffs on various U.S.
−Removed: trading partners, and those trading partners have retaliated or threatened to retaliate with tariffs on U.S.
−Removed: New or increased tariffs, retaliatory tariffs and resulting trade wars could adversely affect many of our products.
−Removed: We cannot predict future trade policy and regulations in the United States and other countries, the terms of any renegotiated trade agreements or treaties, or tariffs and their impact on our business.
−Removed: An escalated trade war could have a significant adverse effect on world trade and the world economy.
−Removed: To the extent that trade tariffs and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or components or materials used in our products imported into the United States or other countries, or create adverse tax consequences, the sales, cost, or gross margin of our products may be adversely affected and the demand from our customers for products and services may be diminished.
−Removed: Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could also have an adverse effect on consumer confidence and spending.
−Removed: If we deem it necessary to alter all or a portion of our activities or operations in response to such policies, agreements, or tariffs, our capital and operating costs may increase.
−Removed: Our financial performance is subject to risks associated with fluctuations in currency exchange rates.
−Removed: While the majority of our business is conducted in U.S.
−Removed: Dollars, we face some exposure to movements in currency exchange rates.
−Removed: For manufacturing, our components are sourced mainly in U.S.
−Removed: Our primary exposure to movements in currency exchange rates relates to non-U.S.
−Removed: Dollar-denominated sales and operating expenses worldwide.
−Removed: The weakening of currencies relative to the U.S.
−Removed: Dollar adversely affects the U.S.
−Removed: Dollar value of our non-U.S.
−Removed: Dollar-denominated sales and earnings.
−Removed: If we raise international pricing to compensate, it could potentially reduce demand for our products, adversely affecting our sales and potentially having an adverse impact on our market share.
−Removed: Margins on sales of our products in non-U.S.
−Removed: Dollar-denominated countries and on sales of products that include components obtained from suppliers in non-U.S.
−Removed: Dollar-denominated countries could be adversely affected by currency exchange rate fluctuations.
−Removed: In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the U.S.
−Removed: Dollar’s strengthening, which would adversely affect the U.S.
−Removed: Dollar value of our non-U.S.
−Removed: Dollar-denominated sales and earnings.
−Removed: Competitive conditions in the markets in which we operate may also limit our ability to increase prices in the event of fluctuations in currency exchange rates.
−Removed: Conversely, strengthening of currency rates may also increase our product component costs and other expenses denominated in those currencies, adversely affecting operating results.
−Removed: As a result, fluctuations in currency exchange rates could and have in the past adversely affected our business, operating results and financial condition.
−Removed: Risks Related to Legal Liability, Risk Management, Finance and Accounting
+Added: Risks Related to Legal Liability, Risk Management, Liquidity, Finance and Accounting
+Added: Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.
+Added: Together with our subsidiaries, we have a significant amount of indebtedness and substantial debt service requirements.
+Added: As of December 31, 2025, we had approximately $1.4 billion of outstanding indebtedness.
+Added: On March 30, 2026, the Company completed the full redemption equal to approximately $96.0 million aggregate principal amount of its 5.50% Senior Notes due 2026.
+Added: In the next 12 months, in addition to funding the Company’s operations, several debt obligations will be due including approximately $355.6 million in Senior Note maturities (RILYN in September 2026 and RILYG in December 2026) and a total of $16.0 million in term loan amortization payments.
+Added: The terms of the instruments governing such indebtedness contain various restrictions and covenants regarding the operation of our business, including, but not limited to, restrictions on our ability to merge or consolidate with or into any other entity.
+Added: We may also secure additional debt financing in the future in addition to our current debt.
+Added: Our level of indebtedness generally could adversely affect our operations and liquidity, by, among other things:
+Added: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments;
+Added: (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, capital expenditures and other business activities;
+Added: (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions;
+Added: and (iv) limiting our ability to borrow additional monies in the future to fund working capital, capital expenditures, acquisitions and other
+Added: general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.
+Added: We may not be able to generate sufficient cash flow to pay the interest on our debt, and future working capital, borrowings or equity financing may not be available to pay, redeem or refinance such debt.
+Added: If we are unable to generate sufficient cash flow to pay the interest on our debt or redeem such debt when it becomes due, we may have to delay or curtail our operations.
+Added: If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.
+Added: These alternative strategies may not be affected on satisfactory terms, if at all, and they may not yield sufficient funds to make required payments on our indebtedness.
+Added: During 2024 and 2025, we engaged in a number of assets sales the proceeds of which were largely used to repay and/or service our indebtedness.
+Added: If, for any reason, we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreements governing our debt, which could allow our creditors at that time to declare certain outstanding indebtedness to be due and payable or exercise other available remedies, which may in turn trigger cross acceleration or cross default rights in other agreements.
+Added: If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it.
+Added: Even if new financing were then available, it may not be on terms that are acceptable to us.
Our exposure to legal liability is significant, and could lead to substantial damages.
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Legal or regulatory matters involving our directors, officers or employees in their individual capacities also may create exposure for us because we may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters to the extent permitted under applicable law.
−Removed: In addition, like other financial services companies, we may face the possibility of employee fraud or misconduct.
+Added: In addition, we may face the possibility of employee fraud or misconduct.
The precautions we take to prevent and detect this activity may not be effective in all cases and there can be no assurance that we will be able to deter or prevent fraud or misconduct.
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In addition, future results of operations could be adversely affected if reserves relating to these legal liabilities are required to be increased or legal proceedings are resolved in excess of established reserves.
−Removed: Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price.
+Added: See “Risk Factors - Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had, and may continue to have, adverse effects on our business, results of operations, reputation, and stock price” and “Legal Proceedings.”
+Added: Recent events and developments related to our prior investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had, and may continue to have, adverse effects on our business, results of operations, reputation, and stock price.
On August 21, 2023, we completed the FRG take-private transaction.
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Kahn was identified as an unindicted co-conspirator in criminal and civil charges of securities fraud against the executive of an unrelated hedge fund.
−Removed: While we had no involvement with, or knowledge of, any of the alleged misconduct concerning that hedge fund (and each of the separate review and investigations undertaken by the Audit Committee of our Board of Directors confirmed this), as a result of these matters we have experienced and will likely continue to experience adverse impacts on our business, results of operations, reputation, and/or stock price.
−Removed: These adverse impacts have arisen and will likely continue to arise out of current and future legal proceedings initiated since the November 2023 news reports, the many continuing unfounded allegations by short sellers and others, the substantial short pressure on our stock price (for further information, see the Risk Factor “—The price of our securities may be adversely affected by third parties who raise allegations about our Company” below), and the resulting damage to certain business relationships and employee morale and increased employee attrition, among others.
−Removed: We have incurred and will continue to incur expenses in connection with these matters and any future legal proceedings arising out of these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance.
+Added: While we had no involvement with, or knowledge of, any of the alleged misconduct concerning that hedge fund, Mr.
+Added: Kahn or any of his affiliates (and each of the separate review and investigations undertaken by the Audit Committee of our Board of Directors confirmed this), as a result of these matters we have experienced, and may likely continue to experience, adverse impacts on our business, results of operations, reputation, and/or stock price.
+Added: These adverse impacts have arisen, and may likely continue to arise, out of current and future legal proceedings initiated since the November 2023 news reports, the many continuing unfounded allegations by short sellers and others, the substantial short pressure on our stock price (for further information, see “Risk Factors - The price of our securities may be adversely affected by third parties who raise allegations about our Company”), and the resulting damage to certain business relationships and employee morale and increased employee attrition, among others.
+Added: On July 3, 2024 and November 22, 2024, each of the Company and Bryant Riley received subpoenas from the SEC requesting the production of certain documents and other
+Added: information primarily related to (i) the Company’s business dealings with Mr.
+Added: Kahn, (ii) certain transactions in an unrelated public company’s securities, (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries (iv) certain additional documents and information relating to the Franchise Group, Inc.
+Added: The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred and both the Company and Mr.
+Added: Riley are responding to the subpoenas and are fully cooperating with the SEC.
+Added: On November 10, 2025, news reports and a court filing by the U.S.
+Added: Attorney’s Office for the District of New Jersey indicated that the U.S.
+Added: Attorney’s Office has charged Kahn with securities fraud in connection with his activities as a Prophecy sub-adviser.
+Added: An initial appearance, bond hearing, and plea agreement hearing was held on December 10, 2025 before the New Jersey District Court at which Mr.
+Added: Kahn plead guilty to one count of conspiracy to commit securities fraud.
+Added: As a result of these events, we have incurred, and will continue to incur, expenses in connection with these matters and any future legal proceedings arising out of these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance.
In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under Chapter 11 of the Bankruptcy Code.
−Removed: As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the Freedom VCM Investment and the Vintage Loan Receivable.
−Removed: As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.3 million to the Vintage Loan Receivable as of September 16, 2025.
+Added: As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the investment in Freedom VCM (the “Freedom VCM Investment”) and the receivable due from Vintage Capital Management, LLC (“Vintage Loan Receivable”).
+Added: As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024, and a value of $1.8 million to the Vintage Loan Receivable as of December 31, 2025.
For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivables were $221.0 million and $222.9 million respectively.
Prior to the filing of the FRG Chapter 11 Cases in November 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief (the “Conn's Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code.
−Removed: FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s, and in December 2023, the
−Removed: Company loaned $108.0 million to Conn’s subsequently reduced to $93.0 million due to principal repayments.
−Removed: The fair value of this loan receivable was $19.1 million at December 31, 2024.
−Removed: We expect that the Company may be subject to lawsuits and other claims related to the FRG Chapter 11 Cases and the Conn's Chapter 11 Cases (see "Recent Developments - Conn's and FRG").
+Added: FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s, and in December 2023, the Company loaned $108.0 million to Conn’s subsequently reduced to $93.0 million due to principal repayments.
+Added: The fair value of this loan receivable was $19.1 million at December 31, 2024 given that in July 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.
+Added: During the years ended December 31, 2025 and 2024, the Company recorded unrealized gains (losses) of $0.8 million and $(71.7) million, respectively, and additional cash payments of $19.9 million during the year ended December 31, 2025 with respects to this loan receivable.
+Added: The fair value of this loan receivable was zero at December 31, 2025.
+Added: We expect that the Company may be subject to additional lawsuits and other claims related to the FRG Chapter 11 Cases and the Conn’s Chapter 11 Cases.
These events and developments have exacerbated, and they and additional similar events and developments including additional litigation and claims will continue to exacerbate, the risk that we will continue to:
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(ii) harm our reputation and negatively impact employee morale, retention and hiring;
−Removed: (iii) lose customers or negatively impact on our ability to attract new customers and increased competition for new clients and business;
−Removed: and (iv) result in additional write-downs, which may be material.
+Added: and (iii) lose customers or negatively impact on our ability to attract new customers and increased competition for new clients and business.
We may incur losses as a result of ineffective risk management processes and strategies.
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In addition, we are investing our own capital in our funds and funds of funds, as well as principal investing activities, and limitations on our ability to withdraw some or all of our investments in these funds or liquidate our investment, positions, whether for legal, reputational, illiquidity or other reasons, may make it more difficult for us to control the risk exposures relating to these investments.
+Added: See “Risk Factors - We have identified material weaknesses in our internal control over financial reporting, and these material weaknesses, or our failure or inability to remediate them, or our failure to otherwise design and maintain effective internal control over financial reporting, exposes us to additional risks and uncertainties and could result in loss of investor confidence, shareholder litigation or governmental proceedings or investigations, any of which could cause the market value of our securities to decline or impact our ability to access the capital markets.”
Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks.
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A failure to adequately manage our growth, or to effectively manage our risk, could materially and adversely affect our business and financial condition.
−Removed: We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations.
+Added: We are exposed to the risk that third parties who owe us money, securities or other assets will not perform their obligations.
These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure, and breach of contract or other reasons.
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For example, a decision to acquire material non-public information about a company while pursuing an investment opportunity for a particular fund gives rise to a potential conflict of interest when it results in our having to restrict the ability of the Company or other funds to take any action.
−Removed: In addition, there may be conflicts of interest regarding investment decisions for funds in which our officers, directors and employees, who have made and may continue to make significant personal investments in a variety of funds, are
−Removed: personally invested.
+Added: In addition, there may be conflicts of interest regarding investment decisions for funds in which our officers, directors and employees, who have made and may continue to make significant personal investments in a variety of funds, are personally invested.
Similarly, conflicts of interest may exist or develop regarding decisions about the allocation of specific investment opportunities between the Company and the funds.
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Financial services firms have been subject to increased scrutiny over the last several years, increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions.
−Removed: Firms in the financial services industry have been operating in a difficult regulatory environment which we expect may become even more stringent in light of recent well-publicized failures of regulators to detect and prevent fraud.
−Removed: The industry has experienced increased scrutiny from a variety of regulators, including the SEC, the NYSE, FINRA and state attorneys general.
+Added: Firms in the financial services industry have historically been operating in a difficult regulatory environment.
+Added: The industry has historically experienced increased scrutiny from a variety of regulators, including the SEC, FINRA and state attorneys general.
Penalties and fines sought by regulatory authorities have increased substantially over the last several years.
−Removed: This regulatory and enforcement environment has created uncertainty with respect to a number of transactions that had historically been entered into by financial services firms and that were generally believed to be permissible and appropriate.
+Added: This regulatory environment has created uncertainty with respect to a number of transactions that had historically been entered into by financial services firms and that were generally believed to be permissible and appropriate.
We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations.
−Removed: Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, restrict or otherwise impose conditions on the right to carry on particular businesses.
+Added: Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel,
+Added: restrict or otherwise impose conditions on the right to carry on particular businesses.
For example, a failure to comply with the obligations imposed by the Exchange Act on broker-dealers and the Investment Advisers Act of 1940 on investment advisers, including record-keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, or by the Investment Company Act of 1940, could result in investigations, sanctions and reputational damage.
3 unchanged sentences
In addition, financial services firms are subject to numerous conflicts of interests or perceived conflicts.
−Removed: The SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest.
We have adopted various policies, controls and procedures to address or limit actual or perceived conflicts and regularly review and update our policies, controls and procedures.
2 unchanged sentences
Failure to adhere to these policies and procedures may result in regulatory sanctions or litigation against us.
−Removed: For example, the research operations of investment banks have been and remain the subject of heightened regulatory scrutiny which has led to increased restrictions on the interaction between equity research analysts and investment banking professionals at securities firms.
−Removed: Several securities firms in the U.S.
−Removed: reached a global settlement in 2003 and 2004 with certain federal and state securities regulators and self-regulatory organizations to resolve investigations into the alleged conflicts of interest of research analysts, which resulted in rules that have imposed additional costs and limitations on the conduct of our business.
Asset management businesses have experienced a number of highly publicized regulatory inquiries which have resulted in increased scrutiny within the industry and new rules and regulations for mutual funds, investment advisors and broker-dealers.
3 unchanged sentences
In the equity and fixed income markets, regulatory requirements and the increased use of electronic trading and alternative trading systems has resulted in greater price transparency, leading to increased price competition and decreased trading margins.
−Removed: The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading
−Removed: markets and our ability to access market information, and lead to the creation of new and stronger competitors.
+Added: The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading markets and our ability to access market information, and lead to the creation of new and stronger competitors.
In the equity markets, we utilize certain market centers to execute orders on our behalf in exchange for payment for our order flow.
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Increased regulatory scrutiny of payment for order flow may result in a decrease in this type of revenue.
−Removed: Institutional clients also have pressured financial services firms to alter "soft dollar" practices under which brokerage firms bundle the cost of trade execution with research products and services.
−Removed: Some institutions separate (or “unbundle”) payments for research products or services from sales commissions.
−Removed: Institutions subject to MiFID II were required to unbundle such payments commencing January 3, 2018.
−Removed: The SEC’s decision to no longer extend regulatory relief from certain arrangements required by MiFID II will increase competitive pressures from those clients which have yet to unbundle payments for research products or services from sales commissions.
−Removed: Should we be unable to reach agreement regarding the terms of unbundling arrangements with institutional clients who are actively seeking such arrangements, this could result in the loss of those clients, which would likely reduce the level of institutional commissions.
−Removed: We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins.
−Removed: In addition, Congress is currently considering imposing new requirements on entities that securitize assets, which could affect our credit activities.
−Removed: It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law.
−Removed: Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.
+Added: We believe that price competition and pricing pressures will continue as institutional investors continue to reduce the amounts they are willing to pay, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins.
If we cannot meet our future capital requirements, we may be unable to develop and enhance our services, take advantage of business opportunities and respond to competitive pressures.
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In addition, the Exchange Act requires that we file annual, quarterly and current reports.
−Removed: Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties
−Removed: under federal securities laws, expose us to lawsuits and restrict our ability to access financing.
+Added: Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing.
In addition, the Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes.
Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules.
−Removed: As reported in Item 9A, Controls and Procedures of this Annual Report, we have identified material weaknesses in our internal control over financial reporting.
+Added: As reported in Item 9A.
+Added: Controls and Procedures of this Annual Report, we have identified material weaknesses in our internal control over financial reporting.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.
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In addition, our Capital Markets operations depend to a large extent on our relationships with our clients and reputation for integrity and high-caliber professional services to attract and retain clients.
−Removed: As noted above under, “Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price” , damage to our reputation from the matters described in that risk factor have led to negative impacts on our business relationships particularly in B.
+Added: As noted above, under “Risk Factors - Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price,” damage to our
+Added: reputation from the matters described in that risk factor have led to negative impacts on our business relationships particularly in B.
Riley Securities, Inc.’s (“BRS”) Capital Markets segment and could continue to have a negative impact on our business relationships.
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In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under our control.
+Added: Risks Related to Global and Economic Conditions and International Operations
+Added: Global economic and political uncertainty could adversely affect our revenue and results of operations.
+Added: As a result of the international nature of our business, we are subject to the risks arising from adverse changes in global economic and political conditions.
+Added: An unpredictable or volatile political environment in the United States or globally, reductions in government spending, concerns related to the U.S.
+Added: debt ceiling, the imposition of tariffs and retaliatory responses, and uncertainty about the effects of current and future economic and political conditions, including acts of war, aggression or terrorism, on us, our customers, suppliers and partners, makes it difficult for us to forecast operating results and to make decisions about future investments.
+Added: Deterioration in economic conditions in any of the countries in which we do business could result in reductions in sales of our products and services and could cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.
+Added: As was observed during the COVID-19 pandemic, a significant outbreak of a contagious disease or other severe public health crisis could negatively impact the availability of key personnel necessary to conduct our business, and the business and operations of our third-party service providers who perform critical services for our business.
+Added: Pandemics, epidemics, future highly infectious or contagious diseases, or other severe public health crisis could cause a material adverse effect on our business, financial condition, results of operations and cash flow.
+Added: Our third-party contract manufacturers are located across several countries in Asia, which could expose us to risks associated with doing business in those geographic areas.
+Added: All of our production is performed by third-party contract manufacturers, including original design manufacturers, in Taiwan, China, Thailand, Vietnam, Cambodia, India, South Korea and Philippines.
+Added: Our global manufacturing suppliers in Asia and other countries could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on available labor pool, changes in labor costs and other employment dynamics, high turnover among skilled employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between the United States and some other countries, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.
+Added: We depend on overseas third-party suppliers for the manufacture of Targus and magicJack products, and our reputation and results of operations would be harmed if these manufacturers or suppliers fail to meet our requirements.
+Added: For Targus, our sourcing and distribution footprint directly expose us to multiple tariff regimes and the impact of global trade wars.
+Added: As most of our sourcing activity is focused in Asia, emergency cross-border tensions have added additional risk to our Company and increased the need for supply chain resilience and flexibility.
+Added: Our manufacturers supply substantially all of the raw materials and provide all facilities and labor required to manufacture our products.
+Added: Within Asia, except for India, the majority of raw materials are from China.
+Added: If these companies were to terminate their arrangements with us or fail to provide the required capacity and quality on a timely basis, either due to actions of the manufacturers;
+Added: earthquakes, typhoons, tsunamis, fires, floods, or other natural disasters;
+Added: COVID-19 or other pandemics;
+Added: wars or armed conflicts;
+Added: strains on infrastructure;
+Added: available labor pools or manufacturing capacity;
+Added: or the actions of their respective governments, we would be unable to manufacture our products until replacement contract manufacturing services could be obtained.
+Added: To qualify a new contract manufacturer, familiarize it with our products, quality standards and other requirements, and commence volume production is a costly and time-consuming process.
+Added: Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for an input component, and supplier capacity.
+Added: From time to time, we have experienced component shortages and extended lead times on semiconductors and other input products used in our finished products.
+Added: Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.
+Added: While we work to address and mitigate such risks, we are exposed to the risks of supply chain disruption which could negatively impact our business.
+Added: Any material interruption in the manufacture of our products could likely result in delays in shipment, lost sales and revenue, and damage to our reputation in the market, all of which would harm our business and results of operations.
+Added: Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, export controls, sanctions, customs enforcement, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.
+Added: In recent years, the U.S.
+Added: government has instituted or proposed changes to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from China, EMEA, and other countries.
+Added: Given our contract manufacturing and logistic providers in those countries, policy or regulations changes in the United States or other countries present particular risks for us.
+Added: The current administration has imposed, and has indicated it plans to continue to impose, tariffs on various U.S.
+Added: trading partners, and those trading partners have retaliated or threatened to retaliate with tariffs on U.S.
+Added: New or increased tariffs, retaliatory tariffs, export controls, sanctions, customs enforcement and resulting trade wars could adversely affect many of our products.
+Added: We cannot predict future trade policy and regulations in the United States and other countries, the terms of any renegotiated trade agreements or treaties, or tariffs and their impact on our business.
+Added: An escalated trade war could have a significant adverse effect on world trade and the world economy.
+Added: To the extent that trade tariffs and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or components or materials used in our products imported into the United States or other countries, or create
+Added: adverse tax consequences, the sales, cost, or gross margin of our products may be adversely affected and the demand from our customers for products and services may be diminished.
+Added: Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could also have an adverse effect on consumer confidence and spending.
+Added: If we deem it necessary to alter all or a portion of our activities or operations in response to such policies, agreements, or tariffs, our capital and operating costs may increase.
+Added: Our financial performance is subject to risks associated with fluctuations in currency exchange rates.
+Added: While the majority of our business is conducted in U.S.
+Added: Dollars, we face some exposure to movements in currency exchange rates.
+Added: For manufacturing, our components are sourced mainly in U.S.
+Added: Our primary exposure to movements in currency exchange rates relates to non-U.S.
+Added: Dollar-denominated sales and operating expenses worldwide.
+Added: The weakening of currencies relative to the U.S.
+Added: Dollar adversely affects the U.S.
+Added: Dollar value of our non-U.S.
+Added: Dollar-denominated sales and earnings.
+Added: If we raise international pricing to compensate, it could potentially reduce demand for our products, adversely affecting our sales and potentially having an adverse impact on our market share.
+Added: Margins on sales of our products in non-U.S.
+Added: Dollar-denominated countries and on sales of products that include components obtained from suppliers in non-U.S.
+Added: Dollar-denominated countries could be adversely affected by currency exchange rate fluctuations.
+Added: In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the U.S.
+Added: Dollar’s strengthening, which would adversely affect the U.S.
+Added: Dollar value of our non-U.S.
+Added: Dollar-denominated sales and earnings.
+Added: Competitive conditions in the markets in which we operate may also limit our ability to increase prices in the event of fluctuations in currency exchange rates.
+Added: Conversely, strengthening of currency rates may also increase our product component costs and other expenses denominated in those currencies, adversely affecting operating results.
+Added: As a result, fluctuations in currency exchange rates could and have in the past adversely affected our business, operating results and financial condition.
Risks Related to BRS’ Capital Markets Activities
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Introduction of new technologies present new challenges on a regular basis.
−Removed: We have an ongoing need to upgrade and improve our various technology systems, including our data and transaction processing, financial, accounting, risk management and trading systems.
+Added: We have an ongoing need to upgrade and improve our various technology systems, including our data and
+Added: transaction processing, financial, accounting, risk management and trading systems.
This need could present operational issues or require significant capital spending.
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However, our computer systems and software are subject to unauthorized access, computer viruses or other malicious code, inadvertent, erroneous or intercepted transmission of information (including by e-mail), and other events that have had an information security impact.
−Removed: If one or more of such events occur, this potentially could jeopardize our or our clients’ or counterparties’ confidential and other information processed and stored in, and
−Removed: transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients’, our counterparties’ or third parties’ operations.
+Added: If one or more of such events occur, this potentially could jeopardize our or our clients’ or counterparties’ confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients’, our counterparties’ or third parties’ operations.
We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.
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Some of our large institutional sales and trading clients in terms of brokerage revenues have entered into arrangements with us and other investment banking firms under which they separate payments for research products or services from trading commissions for sales and trading services, and pay for research directly in cash, instead of compensating the research providers through trading commissions (referred to as “soft dollar” practices).
−Removed: In addition, we have entered into certain commission sharing arrangements in which institutional clients execute trades with a limited number of brokers and instruct those brokers to allocate a portion of the commission directly to us or other broker-dealers for research or to an independent research provider.
+Added: In addition, we have entered into
+Added: certain commission sharing arrangements in which institutional clients execute trades with a limited number of brokers and instruct those brokers to allocate a portion of the commission directly to us or other broker-dealers for research or to an independent research provider.
If more of such arrangements are reached between our clients and us, or if similar practices are adopted by more firms in the investment banking industry, we expect that would increase the competitive pressures on trading commissions and spreads and reduce the value our clients place on high quality research.
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Conversely, to the extent that we have sold assets we do not own, i.e., have short positions, in any of those markets, an upturn in those markets could expose us to potentially large losses as we attempt to cover our short positions by acquiring assets in a rising market.
−Removed: Our underwriting and market making activities may place our capital at risk.
+Added: Our underwriting and market making activities may increase our liability.
We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we purchased as an underwriter at the anticipated price levels.
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In addition, a change in the net capital rules or the imposition of new rules affecting the scope, coverage, calculation, or amount of net capital requirements, or a significant operating loss or any large charge against net capital, could have similar adverse effects.
−Removed: Furthermore, our broker-dealer subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from it to B.
−Removed: Riley Financial, Inc.
−Removed: As a holding company, B.
−Removed: Riley Financial, Inc.
+Added: Furthermore, our broker-dealer subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from it to BRC Group Holdings, Inc.
+Added: As a holding company, BRC Group Holdings, Inc.
depends on dividends, distributions and other payments from its subsidiaries to fund dividend payments, if any, and to fund all payments on its obligations, including debt obligations.
−Removed: As a result, regulatory actions could impede access to funds that B.
−Removed: Riley Financial, Inc.
+Added: As a result, regulatory actions could impede access to funds that BRC Group Holdings, Inc.
needs to make payments on obligations, including debt obligations, or dividend payments.
−Removed: In addition, because B.
−Removed: Riley Financial, Inc.
+Added: In addition, because BRC Group Holdings, Inc.
holds equity interests in the firm’s subsidiaries, its rights as an equity holder to the assets of these subsidiaries may not materialize, if at all, until the claims of the creditors of these subsidiaries are first satisfied.
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For example, a further increase in inflation, interest rates, a general decline in the stock markets, such as the recent declines in the stock markets due to the anticipated rising interest rate environment, or other market and industry conditions adverse to companies of the type in which we invest and intend to invest could result in a decline in the value of our investments or a total loss of our investment.
+Added: Also, we may have to hold these investments for a longer period of time than originally planned at the time of investment.
+Added: This may result in further declines in value or a total loss of our investment.
In addition, some of these investments are, or may in the future be, in industries or sectors which are unstable, in distress or undergoing some uncertainty.
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We are exposed to credit risk from a variety of our activities, including loans, lines of credit, guarantees and backstop commitments, and we may not be able to fully realize the value of the collateral securing certain of our loans.
−Removed: We are generally exposed to the risk that third parties that owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others.
+Added: We are generally exposed to the risk that third parties owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others.
Additionally, when we guarantee or backstop the obligations of third parties, we are exposed to the risk that our guarantee or backstop may be called by the holder following a default by the primary obligor, which could cause us to incur significant losses, and, when our obligations are secured, expose us to the risk that the holder may seek to foreclose on collateral pledged by us.
We incur credit risk through loans, lines of credit, guarantees and backstop commitments issued to or on behalf of businesses and individuals, and other loans collateralized by a variety of assets, including securities.
−Removed: We have experienced credit losses and bear increased credit risk because we have made loans and commitments to borrowers or issuers engaged
−Removed: in emerging businesses or who lack access to conventional financing who, as a group, may be uniquely or disproportionately affected by economic or market conditions.
+Added: We have experienced credit losses and bear increased credit risk because we have made loans and commitments to borrowers or issuers engaged in emerging businesses or who lack access to conventional financing who, as a group, may be uniquely or disproportionately affected by economic or market conditions.
For example, we have made loans to borrowers in the cryptocurrency industry and have incurred losses as cryptocurrency prices have declined and participants in the cryptocurrency industry have experienced liquidity issues and we expect to incur further losses in the event that the cryptocurrency market experiences further volatility or liquidity issues or further declines or fails to recover.
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The fair value of this loan receivable was $19.1 million at December 31, 2024 given that in July 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.
+Added: During the years ended December 31, 2025 and 2024, the Company recorded unrealized gains (losses) of $0.8 million and $(71.7) million, respectively, and additional cash payments of $19.9 million during the year ended December 31, 2025 with respects to this loan receivable.
+Added: The fair value of this loan receivable was zero at December 31, 2025.
In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapter 11 of the Bankruptcy Code.
As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the Freedom VCM Investment and the Vintage Loan Receivable.
−Removed: As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.3 million to the Vintage Loan Receivable as of September 16, 2025.
+Added: As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.8 million to the Vintage Loan Receivable as of December 31, 2025.
For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable were $221.0 million and $222.9 million, respectively.
We have had and may experience write downs of our investments and other losses related to the valuation of our investments and volatile and illiquid market conditions.
−Removed: In our proprietary investment activities, our concentrated holdings, illiquidity and market volatility may make it difficult to value certain of our investment securities.
−Removed: We have experienced, and may continue to experience in light of factors then prevailing, such as rising interest rates, general economic and market conditions or changes in the financial condition of the applicable issuer, significant downward adjustments in subsequent valuations of securities on our balance sheet.
+Added: In our proprietary investment activities, our concentrated holdings, illiquidity and market volatility may make it difficult to value certain of our investment securities and/or to exit such investments.
+Added: We have experienced, and may continue to experience in light of factors then prevailing, such as rising interest rates, general economic and market conditions, stock market volatility or changes in the financial condition of the applicable issuer, significant downward adjustments in subsequent valuations of securities on our balance sheet.
In addition, at the time of any sales and settlements of these securities, the price we ultimately realize will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value.
Any of these factors could require us to take write downs in the value of our investment and securities portfolio, which may have an adverse effect on our results of operations in future periods.
−Removed: A substantial portion of our cash flows and net income are dependent upon payments from our investments in consumer finance receivables.
−Removed: We have a related party loan receivable with a fair value of approximately $2.2 million as of December 31, 2024 , from home-furnishing retailer W.S.
−Removed: Badcock Corporation (“Badcock”) that is collateralized by consumer finance receivables of Badcock.
−Removed: These consumer finance receivables were acquired from Badcock in multiple purchases beginning in December 2021.
−Removed: On December 18, 2023, Badcock was sold by Freedom VCM to Conn’s and now operates as a wholly owned subsidiary of Conn’s.
−Removed: This continues to be reported as a related party loan receivable due to the Company’s related party relationship with Freedom VCM and Freedom VCM’s ability to exercise influence over Conn’s as a result of the equity consideration Freedom VCM received from the sale of Badcock to Conn’s on December 18, 2023.
−Removed: The Company also has a related party loan receivable from a Freedom VCM affiliate with a fair value of approximately $3.9 million as of December 31, 2024, the Freedom Receivables Note (see Part I, Item 1 above).
−Removed: The Freedom Receivables Note resulted from the sale of BRRII to a Freedom VCM affiliate and the collateral for this note includes the collection of certain consumer finance receivables by the Freedom VCM affiliate.
−Removed: The collectability and repayment of the principal balance and interest on these loans receivable, which total $45.8 million, are a function of many factors including the ultimate collection of the consumer finance receivables that collateralize the loans, criteria used to select the consumers that were issued credit, the pricing of the credit products, the lengths of the relationships, general economic conditions, the rate at which consumers repay their accounts or become delinquent, and the rate at which consumers borrow funds.
−Removed: Deterioration in these factors would adversely impact our business.
−Removed: In addition, to the extent we have over-estimated collectability, in all likelihood we have over-estimated our financial performance.
−Removed: Some of these concerns are discussed more fully below.
−Removed: Our investment in these loans is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime.
−Removed: Our reliance on these receivables may in the future negatively impact our performance.
−Removed: Economic slowdowns increase our credit losses.
−Removed: During periods of economic slowdown or recession, we generally experience an increase in rates of delinquencies and frequency and severity of credit losses.
−Removed: Our actual rates of delinquencies and frequency and severity of credit losses may be comparatively higher during periods of economic slowdown or recession.
−Removed: Because a significant portion of our reported interest income is based on management’s estimates of the future performance of receivables that collateralize $6.1 million of loans receivable, at fair value as of December 31, 2024, differences between actual and expected performance of the receivables may cause fluctuations in interest income.
−Removed: The fair value of these loans and the interest income we report are based on management’s estimates of cash flows we expect to receive on receivables that collateralize the loan receivable.
−Removed: The expected cash flows are based on management’s estimates of future default rates, payment rates, servicing costs, and charge-offs from the receivables portfolio.
−Removed: These estimates are based on a variety of factors, many of which are not within our control.
−Removed: Substantial differences between actual and expected performance of the receivables can occur and cause fluctuations in the interest income we record.
−Removed: For instance, higher than expected rates of delinquencies and losses from the receivables portfolio could cause interest income to be lower than expected.
−Removed: Our past and ongoing investment in consumer credit receivables may not be indicative of our ability to grow such receivables in the future.
−Removed: Additionally, even if such receivables continue to increase, the rate of such growth could decline.
−Removed: If we cannot manage the growth in receivables effectively, it could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows.
−Removed: Furthermore, reliance upon our relationship with a single retailer may adversely affect our revenues and operating results from our receivables portfolio.
Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact us or the originator of our receivables.
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In addition, investment performance is one of the most important factors in retaining existing investors and competing for new asset management business.
−Removed: Investment performance may be poor as a result of the current or future difficult market or economic conditions, including changes in interest rates or inflation, acts of war, aggression or terrorism,
−Removed: widespread outbreaks of disease, such as the COVID-19 pandemic or similar pandemics, or political uncertainty, our investment style, the particular investments that we make, and other factors.
+Added: Investment performance may be poor as a result of the current or future difficult market or economic conditions, including changes in interest rates or inflation, acts of war, aggression or terrorism, widespread outbreaks of disease, such as the COVID-19 pandemic or similar pandemics, or political uncertainty, our investment style, the particular investments that we make, and other factors.
Poor investment performance may result in a decline in our revenues and income by causing (i) the net asset value of the assets under our management to decrease, which would result in lower management fees to us, (ii) lower investment returns, resulting in a reduction of incentive fee income to us, and (iii) investor redemptions, which would result in lower fees to us because we would have fewer assets under management.
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While uncertainty of recovery in an insolvency or distressed situation is inherent in all debt instruments, second lien loan products carry more risks than certain other debt products.
−Removed: Risks Related to Our Communications Businesses
−Removed: Dial-up and DSL pay accounts may decline faster than expected and adversely impact our business.
−Removed: A significant portion of UOL’s revenues and profits come from dial-up Internet and DSL access services and related services and advertising revenues.
−Removed: UOL’s dial-up and DSL Internet access pay accounts and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for dial-up and DSL Internet access, competitive pressures in the industry and limited sales efforts.
−Removed: Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband access.
−Removed: Advanced applications such as online gaming, music downloads and videos require greater bandwidth for optimal performance, which adds to the demand for broadband access.
−Removed: The pricing for basic broadband services has been declining as well, making it a more viable option for consumers.
−Removed: In addition, the popularity of accessing the Internet through tablets and mobile devices has been growing and may accelerate the migration of consumers away from dial-up Internet access.
−Removed: The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of new pay accounts signing up for UOL’s services, as well as the impact of subscribers canceling their accounts, which we refer to as “churn.” Churn has increased from time to time and may increase in the future.
−Removed: If we experience a higher than expected level of churn, it will make it more difficult for us to increase or maintain the number of pay accounts, which could adversely affect our business, financial condition, results of operations, and cash flows.
−Removed: We expect UOL’s dial-up and DSL Internet access pay accounts to continue to decline.
−Removed: As a result, related services revenues and the profitability of this segment may decline.
−Removed: The rate of decline in these revenues may continue to accelerate.
−Removed: We may not be able to consistently make a high level of expense reductions in the future.
−Removed: Continued declines in revenues relating to the UOL business, particularly if such declines accelerate, will materially and adversely impact the profitability of this business.
−Removed: Our marketing efforts for our communications businesses may not be successful or may become more expensive, either of which could increase our costs and adversely impact our business, financial condition, results of operations, and cash flows.
−Removed: We rely on relationships with a wide variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, Internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new customers and to promote or distribute our services and products.
−Removed: In addition, in connection with the launch of new services or products for our communications businesses, we may spend a significant amount of resources on marketing.
−Removed: With any of our brands, services, and products, if our marketing activities are inefficient or unsuccessful, if important third-party relationships or marketing strategies, such as Internet search engine marketing and search engine optimization, become more expensive or unavailable, or are suspended, modified, or terminated, for any reason, if there is an increase in the proportion of consumers visiting our websites or purchasing our services and products by way of marketing channels with higher marketing costs as compared to channels that have lower or no associated marketing costs, or if our marketing efforts do not result in our services and products being prominently ranked in Internet search listings, our business, financial condition, results of operations, and cash flows could be materially and adversely impacted.
−Removed: Our communications businesses are dependent on the availability of telecommunications services and compatibility with third-party systems and products.
−Removed: Our communications businesses substantially depend on the availability, capacity, affordability, reliability, and security of telecommunications networks operated by third parties.
−Removed: Only a limited number of telecommunications providers offer the network and data services we currently require for our services, and we purchase most of our telecommunications services from a few providers.
−Removed: Some of our telecommunications services are provided pursuant to short-term agreements that the providers can terminate or elect not to renew.
−Removed: In addition, some telecommunications providers may cease to offer network services for certain less populated areas, which would reduce the number of providers from which we may purchase services and may entirely eliminate our ability to purchase services for certain areas.
−Removed: Currently, the mobile network service of our Marconi Wireless business is entirely dependent upon services acquired from one service provider.
−Removed: If we are unable to maintain, renew or obtain a new agreement with the telecommunications provider on acceptable terms, or the provider discontinues its services, our business, financial condition, results of operations, and cash flows could be materially and adversely affected.
−Removed: Our dial-up Internet access services of our UOL business also rely on their compatibility with other third-party systems, products and features, including operating systems.
−Removed: Incompatibility with third-party systems and products could
−Removed: adversely affect our ability to deliver our services or a user’s ability to access our services and could also adversely impact the distribution channels for our services.
−Removed: Our dial-up Internet access services are dependent on dial-up modems and an increasing number of computer manufacturers, including certain manufacturers with whom we have distribution relationships, do not pre-load their new computers with dial-up modems, requiring the user to separately acquire a modem to access our services.
−Removed: We cannot assure you that, as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services.
−Removed: Government regulations could adversely affect our business or force us to change our business practices.
−Removed: The services we provide are subject to varying degrees of international, federal, state and local laws and regulation, including, without limitation, those relating to taxation, bulk email or “spam,” advertising (including, without limitation, targeted or behavioral advertising), user privacy and data protection, consumer protection, antitrust, export, and unclaimed property.
+Added: Risks Related to our Communication Related Businesses (Lingo, magicJack, Marconi Wireless and/or UOL)
+Added: Our marketing and customer retention efforts for our Lingo, magicJack and Marconi Wireless businesses may not be successful, or may become more expensive, either of which could increase our costs and adversely impact our business, financial condition, results of operations, and cash flows.
+Added: We rely on relationships with a wide variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, Internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, direct marketers and channel partners, to source new customers and to promote or distribute our services and products for our Lingo, magicJack and Marconi Wireless businesses.
+Added: In addition, in connection with the launch of new services or products for these communication businesses, we may spend a significant amount of resources on marketing or upfront commissions to channel partners.
+Added: With any of our brands, services, and products, if our marketing activities are inefficient or unsuccessful, if important third-party relationships or marketing strategies, such as Internet search engine marketing and search engine optimization, become more expensive or unavailable, or are suspended, modified, or terminated, for any reason, if there is an increase in the proportion of consumers visiting our websites or purchasing our services and products by way of marketing channels with higher marketing costs as compared to channels that have lower or no associated marketing costs, or if our marketing efforts do not result in our services and products being prominently ranked in Internet search listings, or our partner commissions continue to increase, our business, financial condition, results of operations, and cash flows could be materially and adversely impacted.
+Added: Government regulations could adversely affect our communication-related businesses (Lingo, magicJack, Marconi Wireless and UOL) or force us to change our business practices.
+Added: The services we provide are subject to varying degrees of international, federal, state and local laws and regulation, including, without limitation, those relating to taxation, bulk email or “spam,” advertising (including, without limitation, targeted or behavioral advertising), user privacy, robocalling, Caller ID spoofing, and data protection, consumer protection, antitrust, export, and unclaimed property.
Compliance with such laws and regulations, which in many instances are unclear or unsettled, is complex.
−Removed: New laws and regulations, such as those being considered or recently enacted by certain states, the federal government, or international authorities related to automatic-renewal practices, spam, user privacy, targeted or behavioral advertising, and taxation, could impact our revenues or certain of our business practices or those of our advertisers.
+Added: New laws and regulations, such as those being considered or recently enacted by certain states, the federal government, or international authorities related to automatic-renewal practices, spam, robocalling, spoofing, user privacy, targeted or behavioral advertising, and taxation/surcharges, could impact our revenues or certain of our business practices or those of our advertisers.
Moreover, distribution partners or customers may require us, or we may otherwise deem it necessary or advisable, to alter our products to address actual or anticipated changes in the regulatory environment.
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We are faced, and may continue to face, difficulty collecting such charges from our customers and/or carriers, and collecting such charges may cause us to incur legal fees.
−Removed: We may be unsuccessful in collecting all of the regulatory fees owed to us.
−Removed: The imposition of any such additional regulatory fees, charges, taxes and regulations on VoIP communications services could materially increase our costs and may limit or eliminate our competitive pricing advantages.
−Removed: We offer our magicJack products and services in other countries, and therefore could also be subject to regulatory risks in each such foreign jurisdiction, including the risk that regulations in some jurisdictions will prohibit us from providing our services cost-effectively or at all, which could limit our growth.
+Added: We may be unsuccessful in collecting all of the regulatory fees and/or surcharges owed to us.
+Added: The imposition of any such additional regulatory fees, surcharges, taxes and regulations on VoIP and cloud communications services could materially increase our costs and may limit or eliminate our competitive pricing advantages.
+Added: In the case of our magicJack business, we offer our magicJack products and services in other countries, and therefore could also be subject to regulatory risks in each such foreign jurisdiction, including the risk that regulations in some jurisdictions will prohibit us from providing our services cost-effectively, or at all, which could limit our growth.
Currently, there are several countries where regulations prohibit us from offering service.
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Our success depends, in part, on our ability to anticipate these risks and manage these difficulties.
−Removed: Broadband Internet access is currently classified by the FCC as an “information service.” While this classification means that broadband Internet access services are not subject to Universal Service Fund (“USF”) contributions, Congress or the FCC may expand the USF contribution obligations to include broadband Internet access services.
−Removed: If broadband Internet access providers become subject to USF contribution obligations, it would likely raise the effective cost of our services to customers, which could adversely affect customer satisfaction and have an adverse impact on our revenues and profitability.
−Removed: We are faced, and may continue to face, difficulty collecting regulatory charges from our customers and/or carriers and collecting such charges may cause us to incur legal fees.
−Removed: We may be unsuccessful in collecting all the regulatory fees owed to us.
−Removed: The imposition of any such additional regulatory fees, charges, taxes and regulations on our services could materially increase our costs and may limit or eliminate our competitive pricing advantages.
−Removed: Failure to remit regulatory fees, charges and taxes mandated by federal and state regulations;
+Added: In the case of UOL, Broadband Internet access is currently classified by the FCC as an “information service.” While this classification means that broadband Internet access services are not subject to Universal Service Fund (“USF”) contributions, Congress or the FCC may expand the USF contribution obligations to include broadband Internet access services.
+Added: If broadband Internet access providers become subject to USF contribution obligations, it would likely raise the effective cost of our services to customers, which could adversely affect customer satisfaction and have an adverse impact on the revenues and profitability of our UOL business.
+Added: We are faced, and may continue to face, difficulty collecting regulatory fees and surcharges from our customers and/or carriers and collecting such charges may cause us to incur legal fees.
+Added: We may be unsuccessful in collecting all the regulatory fees or surcharges owed to us.
+Added: The imposition of any such additional regulatory fees, surcharges, taxes and regulations on our services could materially increase our costs and may limit or eliminate our competitive pricing advantages.
+Added: Failure to remit regulatory fees, surcharges and taxes mandated by federal and state regulations;
failure to maintain proper state tariffs and certifications;
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and imposition of new burdensome or adverse regulatory requirements could limit the types of services we provide or the terms on which we provide these services.
−Removed: We cannot predict the outcome of any ongoing legislative initiatives or administrative or judicial proceedings or their potential impact upon the communications and information technology industries generally or upon our communications businesses specifically.
−Removed: Any changes in the laws and regulations applicable to our communications businesses, the enactment of any additional laws or regulations, or the failure to comply with, or increased enforcement activity by regulators of, such laws and regulations, could significantly impact our services and products, our costs, or the manner in which we or our advertisers conduct business, all of which could adversely impact our business, financial condition, results of operations, and cash flows and cause our business to suffer.
−Removed: The FCC and some states require us to obtain prior approval of certain major merger and acquisition transactions, such as the acquisition of control of another telecommunications carrier.
+Added: We cannot predict the outcome of any ongoing legislative initiatives or administrative or judicial proceedings or their potential impact upon the communications and information technology industries generally or upon our communication-related businesses specifically.
+Added: Any changes in the laws and regulations applicable to our communication-related businesses, the enactment of any additional laws or regulations, or the failure to comply with, or increased enforcement activity by regulators of, such laws and regulations, could significantly impact our services and products, our costs, or the manner in which we or our advertisers or partners conduct business, all of which could adversely impact our business, financial condition, results of operations, and cash flows and cause our business to suffer.
+Added: The FCC and some state PUCs require us to obtain prior approval of certain major merger and acquisition transactions, such as the acquisition of control of another telecommunications carrier.
Delays in obtaining such approvals could affect our ability to close proposed transactions in a timely manner and could increase our costs and increase the risk of non-consummation of some transactions.
−Removed: Increases in credit card processing fees and high chargeback costs would increase our operating expenses and adversely affect our results of operations, and an adverse change in, or the termination of, our relationship with any major credit card company would have a severe, negative impact on our business.
−Removed: A significant number of our communications customers purchase their products through our websites and pay for our communications products and services using credit or debit cards.
+Added: Increases in credit card processing fees and high chargeback costs would increase our operating expenses and adversely affect our results of operations, and an adverse change in, or the termination of, our relationship with any major credit card company would have a severe, negative impact on our communication-related businesses (Lingo, magicJack, Marconi Wireless and UOL).
+Added: A significant number of our customers purchase our products and services through our websites and pay for our communications products and services using credit or debit cards.
The major credit card companies, or the issuing banks, may increase the fees that they charge for transactions using their cards.
An increase in those fees would require us to either increase the prices we charge for our products, or suffer a negative impact on our profitability, either of which could adversely affect our business, financial condition and results of operations.
−Removed: We have potential liability for chargebacks associated with the transactions we process, or that are processed on our behalf by merchants selling our products.
−Removed: If a customer returns his or her products at any time, or claims that our product was purchased fraudulently, the returned product is “charged back” to magicJack or its bank, as applicable.
+Added: We have potential liability for chargebacks associated with the transactions we process, or that are processed on our behalf by merchants selling our services and/or products.
+Added: If a customer returns his or her products at any time, or claims that our product was purchased fraudulently, the returned product is “charged back” in the case of magicJack, to magicJack or its bank, as applicable.
If we or our sponsoring banks are unable to collect the chargeback from the merchant’s account, or, if the merchant refuses or is financially unable, due to bankruptcy or other reasons, to reimburse the merchant’s bank for the chargeback, we bear the loss for the amount of the refund paid.
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In addition, as a result of high chargeback rates or other reasons beyond our control, the credit card companies or issuing bank may terminate their relationship with us, and there are no assurances that it will be able to enter into a new credit card processing agreement on similar terms, if at all.
−Removed: Upon a termination, if our credit card processor does not assist it in transitioning its business to another credit card processor, or if we were not able to obtain a new credit card processor, the negative impact on the liquidity of our communications businesses likely would be significant.
+Added: Upon a termination, if our credit card processor does not assist it in transitioning its business to another credit card processor, or if we were not able to obtain a new credit card processor, the negative impact on the liquidity of our communication-related businesses likely would be significant.
The credit card processor may also prohibit us from billing discounts annually or for any other reason.
−Removed: Any increases in the credit card fees paid by our communications businesses could adversely affect our results of operations, particularly if we elect not to raise
−Removed: our service rates to offset the increase.
+Added: Any increases in the credit card fees paid by our communication-related businesses could adversely affect our results of operations, particularly if we elect not to raise our service rates to offset the increase.
The termination of our ability to process payments on any major credit or debit card, due to high chargebacks or otherwise, would significantly impair our ability to operate our business.
−Removed: Flaws in our technology and systems could cause delays or interruptions of service, damage our reputation, cause us to lose customers and limit our growth.
−Removed: Our communications services could be disrupted by problems with our technology and systems, such as malfunctions in our software or other facilities and overloading of our servers.
−Removed: Our customers could experience interruptions in the future as a result of these types of problems.
−Removed: Interruptions could in the future cause us to lose customers, which could adversely affect our revenue and profitability.
−Removed: In addition, because our systems and our customers’ ability to use our services are Internet-dependent, our services may be subject to “hacker attacks” from the Internet, which could have a significant impact on our systems and services.
+Added: For our Lingo, magicJack and UOL businesses, flaws in our technology and systems could cause delays or interruptions of service, damage our reputation, cause us to lose customers and limit our growth.
+Added: Services of our Lingo, magicJack and UOL businesses could be disrupted by problems with our technology and systems, such as malfunctions in our software or other facilities and overloading of our servers.
+Added: Our customers in these businesses could experience interruptions in the future as a result of these types of problems.
+Added: Interruptions could in the future cause us to lose customers, which could adversely affect our revenue and profitability in these businesses.
+Added: In addition, because many of our systems and our customers’ ability to use our services are Internet-dependent, our services may be subject to “hacker attacks” from the Internet, which could have a significant impact on our systems and services, as well as our underlying providers’ systems and network.
If service interruptions adversely affect the perceived reliability of our service, it may have difficulty attracting and retaining customers and our brand reputation and growth may suffer.
+Added: Our Lingo, Marconi Wireless and UOL businesses are dependent on the availability of telecommunications services and compatibility with third-party systems and products.
+Added: Our Lingo, Marconi Wireless and UOL businesses substantially depend on the availability, capacity, affordability, reliability, and security of telecommunications networks operated by third parties.
+Added: Only a limited number of telecommunications providers offer the network and data services we currently require for our services, and we purchase most of our telecommunications services from a few providers.
+Added: Some of our telecommunications services are provided pursuant to short-term agreements that the providers can terminate or elect not to renew.
+Added: In addition, some telecommunications providers may cease to offer network services for certain less populated areas, such as POTs, which would reduce the number of providers from which we may purchase services, and may entirely eliminate our ability to purchase services for certain areas.
+Added: Lingo’s POTs services rely primarily on four major ILECs nationwide for these legacy services and, as copper lines and other infrastructure issues arise, the ILECs move forward with their intention to decommission the networks, subject in most cases to long lead times prior to any decommission.
+Added: Upon decommission, Lingo works to convert its POTs customers to POTs alternative products and this conversion is typically successful.
+Added: There is no guarantee these legacy networks will continue to be available nationwide, and we cannot predict with certainty our ability to convert all POTs customer to POTs alternative products.
+Added: Any substantial impact on our ability to convert these customers to new products could negatively impact our revenue.
+Added: Currently, consistent with mobile practice, the mobile network service of our Marconi Wireless business is purposely entirely dependent upon services acquired from one service provider.
+Added: If such provider did not provide adequate notice in the event of a termination, we may experience a delay in obtaining a new agreement with a different telecommunications provider on acceptable terms, or if the provider abruptly discontinues its services, our business, financial condition, results of operations, and cash flows could be materially and adversely affected.
+Added: Our dial-up Internet access services of our UOL business also rely on their compatibility with other third-party systems, products and features, including operating systems.
+Added: Incompatibility with third-party systems and products could adversely affect our ability to deliver our services or a user’s ability to access our services and could also adversely impact the distribution channels for our services.
+Added: Our dial-up Internet access services are dependent on dial-up modems and an increasing number of computer manufacturers, including certain manufacturers with whom we have distribution relationships, do not pre-load their new computers with dial-up modems, requiring the user to separately acquire a modem to access our services.
+Added: We cannot assure you that, as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services.
+Added: Risks Related to Lingo Business
+Added: Plain Old Telephone (“POTs”) services have been decommissioned in several rural areas, and this legacy technology may no longer be available in most major urban areas in the next five years, impacting our ability to service our residential and business customers.
+Added: In addition to providing cloud/unified communications, the Lingo carriers are national Competitive Local Exchange Carriers (“CLECs”), and a significant portion of revenues consists of reselling POTs copper lines to its customers.
+Added: Over the last several years, the Incumbent Local Exchange Carriers (“ILECs”), whose POTs services Lingo resells, have been decommissioning POTs lines in rural areas, and have increasingly provided notice that it will no longer take POTs orders in several other wire centers, which impacts Lingo’s ability to service its large enterprise POTs lines customers.
+Added: Additionally, the ILECs have indicated they could potentially discontinue offering POTs services in the next five years and have recently filed applications with the FCC and state Public Utilities Commissions (“PUCs”) to discontinue its requirements to offer legacy POTs services.
+Added: The pricing for POTs services has also seen dramatic increases year over year, and this may impact Lingo’s ability to bring on new POTs customers.
+Added: This has also led to a higher-than-expected level of churn, and with the added difficulty in adding new POTs customers, could adversely affect Lingo’s business, financial condition, results of operations, and cash flows.
+Added: Lingo has pushed existing POTs customers to POTs alternative solutions;
+Added: however, these products may have a lower average revenue per customer (“ARPU”), which may affect Lingo’s top line revenues.
+Added: The conversion of POTs lines to POTs alternative solutions may also cause Lingo to incur a higher CAPEX.
+Added: Lingo’s profitability mat be lower due to the decommissioning of POTs services and will rely on converting its POTs customer to POTs alternative products, as well as controlling the costs of these conversions.
+Added: Risks Related to magicJack Business
We rely on independent retailers to sell the magicJack devices, and disruption to these channels would harm our business.
−Removed: Because we sell a significant amount of the magicJack devices, other devices and certain services to independent retailers, we are subject to many risks, including risks related to their inventory levels and support for magicJack’s products.
+Added: Because we sell magicJack devices, other devices and certain services to independent retailers, we are subject to many risks, including risks related to their inventory levels and support for magicJack’s products.
In particular, magicJack’s retailers may maintain significant levels of our products in their inventories.
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Providers of broadband services may be able to block our services or charge their customers more for also using our services, which could adversely affect our revenue and growth.
−Removed: Our customers must have broadband access to the Internet in order to use our service.
+Added: Our customers must have broadband access to the Internet in order to use some of our services.
Providers of broadband access, some of whom are also competing providers of broadband voice services, may take measures that affect their customers’ ability to use our service, such as degrading the quality of the data packets they transmit over their lines, giving those packets low priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their customers more for also using our services.
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Although some states, most notably California, have adopted prohibitions similar to those rescinded by the FCC, if broadband providers block, throttle or otherwise degrade the quality of our data packets or attempt to extract additional fees from us or our customers, it could adversely impact our business.
+Added: Risks Related to UOL Business
+Added: Dial-up and DSL pay accounts may decline faster than expected and adversely impact our business.
+Added: A significant portion of UOL’s revenues and profits come from dial-up Internet and DSL access services and related services and advertising revenues.
+Added: UOL’s dial-up and DSL Internet access pay accounts and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for dial-up and DSL Internet access, competitive pressures in the industry and limited sales efforts.
+Added: Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband access.
+Added: Advanced applications such as online gaming, music downloads and videos require greater bandwidth for optimal performance, which adds to the demand
+Added: for broadband access.
+Added: The pricing for basic broadband services has been declining as well, making it a more viable option for consumers.
+Added: In addition, the popularity of accessing the Internet through tablets and mobile devices has been growing and may accelerate the migration of consumers away from dial-up Internet access.
+Added: The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of new pay accounts signing up for UOL’s services, as well as the impact of subscribers canceling their accounts, which we refer to as “churn.” Churn has increased from time to time and may increase in the future.
+Added: If we experience a higher-than-expected level of churn, it will make it more difficult for us to increase or maintain the number of pay accounts, which could adversely affect our business, financial condition, results of operations, and cash flows.
+Added: We expect UOL’s dial-up and DSL Internet access pay accounts to continue to decline.
+Added: As a result, related services revenues and the profitability of this segment may decline.
+Added: The rate of decline in these revenues may continue to accelerate.
+Added: We may not be able to consistently make a high level of expense reductions in the future.
+Added: Continued declines in revenues relating to the UOL business, particularly if such declines accelerate, will materially and adversely impact the profitability of this business.
Risks Related to Our Consumer Products Segment
If Targus fails to innovate and develop new products in a timely and cost-effective manner for its new and existing product categories, our business and operating results could be adversely affected.
−Removed: Targus product categories are characterized by short product life cycles, intense competition, frequent new product introductions, rapidly changing technology, dynamic consumer demand and evolving industry standards.
+Added: Targus product categories are characterized by short product life cycles, intense competition, frequent new product introductions, rapidly changing technology, dynamic consumer demand, seasonality and evolving industry standards.
As a result, we must continually innovate in our new and existing product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.
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In addition, if we do not continue to differentiate our products through distinctive, technologically advanced features, designs, and services that are appealing to our customers and consumers, as well as continue to build and strengthen our brand recognition and our access to distribution channels, our business could be adversely affected.
−Removed: The development of new products and services can be very difficult and requires high levels of innovation.
+Added: Our products are also impacted by seasonality with demand concentrated around back-to-school and holiday periods.
+Added: Inflationary pressures, employment trends and enterprise IT budget timing can amplify volatility, impacting forecasting accuracy, production planning and inventory management.
+Added: The development of new products and services can be very difficult and requires high levels of innovation, as well as intellectual property protection and enforcement.
The development process also can be lengthy and costly.
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If we fail to accurately anticipate technological trends or our users’ needs or preferences, are unable to complete the development of products and services in a cost-effective and timely fashion, or are unable to appropriately increase production to fulfill customer demand, we will be unable to successfully introduce new products and services into the market or compete with other providers.
−Removed: Even if we complete the development of our new products and services in a cost-effective and timely manner, they may not be competitive with products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically.
+Added: Even if we complete the development of our new products and services in a cost-effective and timely manner, they may not be competitive with
+Added: products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically.
As we introduce new or enhanced products, integrate new technology into new or existing products, or reduce the overall number of products offered, we face risks including, among other things, disruption in customers’ ordering patterns, excessive levels of new and existing product inventories, revenue deterioration in our existing product lines, insufficient supplies of new products to meet customers’ demand, possible product and technology defects, and a potentially different sales and support environment.
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Our failure to manage the transition to new products and services or the integration of new technology into new or existing products and services could adversely affect our business, results of operations, operating cash flows and financial condition.
−Removed: We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.
+Added: We rely on third parties to manufacture, sell and distribute our products, and we rely on their information to manage our business.
Targus primarily sells products to a network of distributors, retailers and e-tailers (together with our direct sales channel partners).
We are dependent on those direct sales channel partners to distribute and sell our products to indirect sales channel partners and ultimately to consumers.
−Removed: The sales and business practices of all such sales channel partners, their
−Removed: compliance with laws and regulations, and their reputations - of which we may or may not be aware - may affect our business and our reputation.
+Added: The sales and business practices of all such sales channel partners, their compliance with laws and regulations, and their reputations (of which we may or may not be aware) may affect our business and our reputation.
+Added: Also, adverse changes in these partners’ purchasing policies, returns and promotional practices, marketplace rules or financial condition could materially affect our sell-through, inventory turns and gross margins.
Our sales channel partners also sell products offered by our competitors, and in the case of retailer house brands and original equipment manufacturers, may also be our competitors.
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If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.
+Added: We also rely on third-party manufacturing and logistics providers.
+Added: Capacity constraints, quality escapes, labor shortages, geopolitical disruptions or increases in freight and material costs can adversely affect supply continuity, product quality and profitability.
+Added: Rapid changes to USB‑C power delivery specifications, operating system updates, and the introduction of new high‑speed interfaces (such as Thunderbolt™ 5) require certification and controller availability.
+Added: Delays or shortages in required silicon, firmware incompatibilities, and host OEM variability may increase returns, warranty costs, and time‑to‑market risk.
Targus’ business is heavily reliant on the general demand for IT and personal computer-related devices.
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Some of our competitors may be able to devote greater financial resources to marketing and promotional campaigns, secure merchandise from sellers on more favorable terms, adopt more aggressive pricing or inventory availability policies and devote more resources to website and systems development than we are able to do.
−Removed: Any inability on our part to
−Removed: effectively compete could have a material adverse effect on our financial condition, growth potential and results of operations.
+Added: Any inability on our part to effectively compete could have a material adverse effect on our financial condition, growth potential and results of operations.
We compete with specialized investment banks to provide financial and investment banking services to small and middle-market companies.
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Many of these firms may have the ability to support investment banking, including financial advisory services, with commercial banking, insurance and other financial services in an effort to gain market share, which could result in pricing pressure in our businesses.
−Removed: The businesses in our communications segment compete with numerous communications providers, many of whom are large and have significantly more financial and marketing resources.
+Added: The businesses in our four communication-related segments compete with numerous communications providers, many of whom are large and have significantly more financial and marketing resources.
The principal competitors for UOL’s mobile broadband and DSL services include, among others, local exchange carriers, wireless and satellite service providers, and cable service providers.
−Removed: magicJack, Lingo, and BullsEye compete with the traditional telephone service providers, which provide telephone service using the public switched telephone network.
+Added: magicJack and Lingo (including Lingo’s subsidiary, BullsEye) compete with the traditional telephone service providers, which provide telephone service using the public switched telephone network.
Certain of these traditional providers have also added, or are planning to add, broadband telephone services to their existing telephone and broadband offerings.
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We face competition for management from other companies and organizations;
−Removed: therefore, we may not be able to retain our existing personnel or fill new positions or
−Removed: vacancies created by expansion or turnover at existing compensation levels.
+Added: therefore, we may not be able to retain our existing personnel or fill new positions or vacancies created by expansion or turnover at existing compensation levels.
Although we have entered into employment agreements with key members of the senior management team, there can be no assurances such key individuals will remain with us.
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Risks Related to Data Security and Intellectual Property
−Removed: Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage.
+Added: Significant disruptions of information technology systems, breaches of data security, cyberattacks, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage.
Our business is increasingly dependent on critical, complex, and interdependent information technology (“IT”) systems, including Internet-based systems, some of which are managed or hosted by third parties, to support business processes as well as internal and external communications.
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In addition, the increased use of social media by our employees and contractors could result in inadvertent disclosure of sensitive data or personal information, including but not limited to, confidential information, trade secrets and other intellectual property.
+Added: As previously disclosed, in April 2024, we experienced a cybersecurity incident that resulted in temporary interruption of certain Targus operations.
+Added: Although we do not believe the incident material affected our financial condition at the time, future events could be more severe.
+Added: Our risk is heightened by reliance on global networks and third-party providers, integration of manufacturing systems and logistics partners, and evolving regulatory disclosure requirements.
Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by U.S.
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Such rights were expanded under the California Privacy Rights Act (“CPRA”) which went into effect on January 1, 2023.
−Removed: addition, similar laws have and may be adopted by other states where the Company does business.
+Added: In addition, similar laws have and may be adopted by other states where the Company does business.
The impact of the CCPA and other state privacy laws on the Company’s business is yet to be determined.
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Despite our efforts to protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to copy aspects of our products or to obtain and use information that it regards as proprietary.
−Removed: Third parties may also design around our proprietary rights, which may render our protected products less valuable if the design around is favorably received in the marketplace.
+Added: Third parties may also design around our proprietary rights, which may render our protected products less valuable if the design around is favorably received in
+Added: the marketplace.
In addition, if any our products or the technology underlying our products is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions.
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We are also governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock.
−Removed: The foregoing and other provisions in our amended and restated certificate of incorporation, our bylaws, as amended, and Delaware law could
−Removed: make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors, including delaying or impeding a merger, tender offer, or proxy contest or other change of control transaction involving our company.
+Added: The foregoing and other provisions in our amended and restated certificate of incorporation, our bylaws, as amended, and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors, including delaying or impeding a merger, tender offer, or proxy contest or other change of control transaction involving our company.
Any delay or prevention of a change of control transaction or changes in our board of directors could prevent the consummation of a transaction in which our stockholders could receive a substantial premium over the then current market price for their shares.
Because of their significant stock ownership, some of our existing stockholders will be able to exert control over us and our significant corporate decisions.
−Removed: Our executive officers, directors and their affiliates own or control, in the aggregate, approximately 31.0% of our outstanding common stock as of December 31, 2024.
+Added: Our executive officers, directors and their affiliates own or control, in the aggregate, approximately 25.4% of our outstanding common stock as of March 27, 2026.
In particular, our Chairman and Co-Chief Executive Officer, Bryant R.
−Removed: Riley, owns or controls, in the aggregate, 6,914,063 shares of our common stock or 22.8% of our outstanding common stock as of December 31, 2024.
−Removed: These stockholders are able to exercise influence over matters requiring stockholder approval, such as the election of directors and the approval of significant corporate transactions, including transactions involving an actual or potential change of control of the company or other transactions that non-controlling stockholders may not deem to be in their best interests.
+Added: Riley, owns or controls, in the aggregate, 6,914,063 shares of our common stock, or 19.7%, of our outstanding common stock as of March 27, 2026.
+Added: These stockholders are able to exercise influence over matters requiring stockholder approval, such as the election of directors and the approval of significant corporate transactions, including transactions involving an actual or potential change of control of the company or other transactions that noncontrolling stockholders may not deem to be in their best interests.
This concentration of ownership may harm the market price of our common stock by, among other things:
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• discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company.
−Removed: Our Chairman and Co-Chief Executive Officer is a party to a credit agreement pursuant to which he has pledged as collateral the substantial majority of his common stock in our Company to a bank, and any foreclosure on such stock or the sale or attempted sale of such common stock, could adversely impact the price of our common stock and result in negative publicity.
−Removed: As reported by Mr.
−Removed: Riley in his Schedule 13D filed with the SEC, he has pledged as collateral the substantial majority of his shares of Company common stock beneficially owned by him as well as other personal assets in favor of a bank lender (the “Lender”), pursuant to a Credit Agreement and Pledge Agreement, each dated as of March 19, 2019, as amended (collectively, the “Loan Agreements”).
−Removed: Pursuant to the Loan Agreements, Mr.
−Removed: Riley has pledged a total of 5,804,124 shares of Company common stock in exchange for a loan of $21.4 million (as of September 16, 2025) which loan is currently due on April 1, 2026.
−Removed: The Loan Agreements permit the Lender, under certain specified circumstances (including upon the occurrence and during the continuance of an event of default), to exercise its rights to foreclose on, and dispose of, the pledged shares and other collateral, in each case, in accordance with the Loan Agreements.
−Removed: An event of default may occur if, upon the satisfaction of loan-to-collateral value ratios including as a result of a decline in our stock price, Mr.
−Removed: Riley was unable to pre-pay a requisite portion of the loan amount or post additional collateral.
−Removed: Any such foreclosure or disposition of shares of our common stock, or any attempt by the Lender to exercise such remedies, could cause the price of our common stock to decline and result in negative publicity for the Company.
Our common stock price may fluctuate substantially, and your investment could suffer a decline in value.
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These broad market factors may materially harm the market price of our common stock, regardless of our operating performance.
−Removed: The trading price of our common shares is subject to volatility.
−Removed: Trading of our common stock has in the past been highly volatile and the market price of shares of our common stock could continue to fluctuate substantially.
+Added: There has been recent dilution and there may continue to be additional future dilution of our Common Stock, including as a result of the Company’s recent Section 3(a)(9) exchanges and potential future exchanges, which could adversely affect the market price of shares of our Common Stock.
+Added: In February and March 2026, the Company executed several Section 3(a)(9) exchanges whereby they exchanged outstanding units of various series of senior notes for shares of the Company’s Common Stock in an effort to decrease the Company’s outstanding indebtedness.
+Added: As a result of these Section 3(a)(9) exchanges, the outstanding shares of our Common Stock increased by 4,553,866 shares.
+Added: We may issue additional shares of Common Stock in similar Section 3(a)(9) exchanges or other capital raising transactions to further pay down the Company’s outstanding indebtedness.
+Added: Additional issuances will dilute the ownership interest of our common stockholders.
+Added: Investors who purchase our shares will likely pay different prices, and so may experience different outcomes in their investment results.
+Added: Investors may experience declines in the value of their shares as a result of share sales made at prices lower than the prices they paid.
+Added: In addition, future issuances of Common Stock could depress the market price of our common stock and impair our ability to raise capital.
+Added: We cannot predict the effect that future issuances of our common stock would have on the market price of our common stock.
+Added: The trading price of our common stock, Depositary Shares and publicly traded senior notes are subject to volatility.
+Added: Trading of our common stock, Depositary Shares and publicly traded senior notes has in the past been highly volatile and the market price of shares of our common stock could continue to fluctuate substantially.
Additionally, if we are not able to maintain our listing on Nasdaq, then our common stock will be quoted for trading on an over-the-counter quotation system and may be subject to more significant fluctuations in stock price and trading volume and large bid and ask price spreads.
+Added: Our Depositary Shares and publicly traded senior notes may be delisted which would trigger certain rights of holders under the agreements governing our Depositary Shares and publicly traded senior notes.
+Added: See “Risk Factors - The conversion feature may not adequately compensate the holders, and the conversion and redemption features of the Existing Preferred Stock and the Depositary Shares may make it more difficult for a party to take over the Company and may discourage a party from taking over the Company.”
We may not pay dividends regularly or at all in the future.
−Removed: During 2024, we suspended paying dividends on our preferred stock and common stock, and we may not pay dividends in the near future.
+Added: During 2024 we suspended paying dividends on our common stock, and in early 2025, we also suspended paying dividends on our Existing Preferred Stock.
+Added: We may not pay dividends in the near future on our common or preferred stock.
Even if we were to reinitiate dividends, our Board of Directors may reduce or discontinue dividends at any time for any reason it deems relevant and there can be no assurances that we will continue to generate sufficient cash to pay dividends, or that we will continue to pay dividends with the cash that we do generate.
The determination regarding the payment of dividends is subject to the discretion of our Board of Directors and compliance with applicable laws, and there can be no assurances that we will generate sufficient cash to pay dividends, or that we will pay dividends in future periods.
−Removed: Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.
−Removed: Together with our subsidiaries, we have a significant amount of indebtedness and substantial debt service requirements.
−Removed: As of December 31, 2024, we had approximately $1.8 billion of outstanding indebtedness.
−Removed: The terms of the instruments governing such indebtedness contain various restrictions and covenants regarding the operation of our business, including, but not limited to, restrictions on our ability to merge or consolidate with or into any other entity.
−Removed: We may also secure additional debt financing in the future in addition to our current debt.
−Removed: Our level of indebtedness generally could adversely affect our operations and liquidity, by, among other things:
−Removed: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments;
−Removed: (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, capital expenditures and other business activities;
−Removed: (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions;
−Removed: and (iv) limiting our ability to borrow additional monies in the future to fund working capital, capital expenditures, acquisitions and other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.
−Removed: We may not be able to generate sufficient cash flow to pay the interest on our debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt.
−Removed: If we are unable to generate sufficient cash flow to pay the interest on our debt, we may have to delay or curtail our operations.
−Removed: If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.
−Removed: These alternative strategies may not be affected on satisfactory terms, if at all, and they may not yield sufficient funds to make required payments on our indebtedness.
−Removed: During 2024 and the first half of 2025, we engaged in a number of assets sales the proceeds of which were largely used to repay indebtedness.
−Removed: If, for any reason, we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreements governing our debt, which could allow our creditors at that time to declare certain outstanding indebtedness to be due and payable or exercise other available remedies, which may in turn trigger cross acceleration or cross default rights in other agreements.
−Removed: If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it.
−Removed: Even if new financing were then available, it may not be on terms that are acceptable to us.
−Removed: Our publicly traded senior notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future.
+Added: Voting rights for holders of Depositary Shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of the Company’s preferred stock, or Depositary Shares representing interests in the Company’s preferred stock, or additional series of preferred stock the Company may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to the Company’s Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Existing Preferred Stock are in arrears.
+Added: See “Risk Factors - Risks Related to our Securities and Ownership - Holders of Depositary Shares have extremely limited voting rights.”
+Added: Our publicly traded senior notes are not secured by any of our assets or any of the assets of our subsidiaries making such notes effectively subordinated to any secured indebtedness.
Our publicly traded senior notes are not secured by any of our assets or any of the assets of our subsidiaries.
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The indenture governing our senior notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness in the future.
−Removed: In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of our senior notes.
−Removed: Our publicly traded senior notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
−Removed: Our publicly traded senior notes are obligations exclusively of the Company and not of any of our subsidiaries.
None of our subsidiaries is a guarantor of our senior notes, and our senior notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future.
−Removed: Therefore, in any bankruptcy, liquidation or similar proceeding, all claims of creditors (including trade creditors) of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of our senior notes) with respect to the assets of such subsidiaries.
−Removed: Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims.
−Removed: Consequently, our senior notes will be structurally subordinated to all indebtedness and other liabilities (including trade payables and the New Notes) of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.
−Removed: The indenture governing our senior notes does not prohibit us or our subsidiaries from incurring additional indebtedness in the future.
+Added: Therefore, any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of our senior notes.
+Added: Further, all claims of creditors (including trade creditors) of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of our senior notes) with respect to the assets of such subsidiaries.
In addition, future debt and security agreements entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral.
−Removed: On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which the investor exchanged approximately $86.3 million aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 and approximately $36.7 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by it for approximately $87.8 million aggregate principal amount of New Notes, whereupon the exchanged notes were cancelled.
+Added: During the year ended December 31, 2025, the Company completed five private exchange transactions with institutional investors pursuant to which the investors exchanged senior notes for New Notes, whereupon the exchanged notes were cancelled.
+Added: See Footnote 19 - Senior Notes Payable in our accompanying consolidated financial statements for amounts exchanged.
The New Notes were issued pursuant to the Indenture between the Company, certain subsidiaries of the Company, as guarantors, and the Trustee, GLAS Trust Company LLC, a New Hampshire limited liability company, and the New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries (collectively, the “Guarantors”).
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The New Notes are subordinated in right of payment to the payment in full of the obligations under the Company’s credit agreement, dated as of February 26, 2025, with Oaktree Fund Administration, LLC, as administrative agent and as collateral agent, as amended.
−Removed: On April 7, 2025, the Company completed a private exchange transaction with a certain institutional investor pursuant to which the such investor exchanged approximately $22.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $10.0 million aggregate principal amount of the New Notes.
−Removed: On May 21, 2025, the Company completed a private exchange transaction with certain institutional investors pursuant to which such investors exchanged approximately $139.1 million aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026 and 6.00% Senior Notes due January 2028 for approximately $93.1 million aggregate principal amount of the New Notes.
−Removed: On June 30, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $28.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $13.0 million aggregate principal amount of the New Notes.
−Removed: On July 11, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $42.8 million aggregate principal amount of the Company’s 6.50% Senior Notes due September 2026, 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $24.6 million aggregate principal amount of the New Notes.
The indenture under which our senior notes were issued contains limited protection for holders of our publicly traded senior notes.
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In particular, the terms of the indenture and our senior notes do not place any restrictions on our or our subsidiaries’ ability to:
−Removed: • issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to our senior notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to our senior notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to our senior notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to our senior notes with respect to the assets of our subsidiaries;
+Added: • issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to our senior notes, (2) any indebtedness
+Added: or other obligations that would be secured and therefore rank effectively senior in right of payment to our senior notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to our senior notes, and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to our senior notes with respect to the assets of our subsidiaries;
• pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to our senior notes;
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The increase in market interest rates over the last several years contributed to the decline in the market value of our senior notes.
−Removed: We cannot predict the future level of market interest rates, but to the extent market interest rates rise, the market value of our existing
−Removed: senior notes can be expected to further decline.
+Added: We cannot predict the future level of market interest rates, but to the extent market interest rates rise, the market value of our existing senior notes can be expected to further decline.
Additionally, if interest rates rise, we may be required to refinance existing lower interest rate indebtedness with indebtedness bearing a higher rate of interest, and our issuance of new indebtedness at higher interest rates would likely cause the market value of our existing indebtedness that we do not refinance to decline.
We cannot predict the future level of market interest rates.
−Removed: An active trading market for our senior notes may not develop, which could limit the market price of our senior notes or the ability of our senior note holders to sell them.
−Removed: The 5.00% 2026 Notes are quoted on NASDAQ under the symbol “RILYG,” the 5.25% 2028 Notes are quoted on NASDAQ under the symbol “RILYZ,” the 6.50% 2026 Notes are quoted on NASDAQ under the symbol “RILYN,” the 5.50% 2026 Notes are quoted on the NASDAQ under the symbol “RILYK” and the 6.00% 2028 Notes are quoted on NASDAQ under the symbol “RILYT”.
−Removed: We cannot provide any assurances that an active trading market will develop for our senior notes or that our senior note holders will be able to sell their senior notes.
+Added: An active trading market for our senior notes may be limited, which could limit the market price of our senior notes or the ability of our senior note holders to sell them.
+Added: The 5.00% 2026 Notes are quoted on Nasdaq under the symbol “RILYG,” the 5.25% 2028 Notes are quoted on Nasdaq under the symbol “RILYZ,” the 6.50% 2026 Notes are quoted on Nasdaq under the symbol “RILYN” and the 6.00% 2028 Notes are quoted on Nasdaq under the symbol “RILYT.” We cannot provide any assurances that our senior
+Added: note holders will be able to sell their senior notes.
Since issuance, our senior notes have traded at times at a discount from their initial offering price due to prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors.
We cannot assure our senior note holders that a liquid trading market will develop for our senior notes, that our senior note holders will be able to sell our senior notes at a particular time or that the price our senior note holders receive when they sell will be favorable.
−Removed: To the extent an active trading market does not develop, the liquidity and trading price for our senior notes may be harmed.
Accordingly, our senior note holders may be required to bear the financial risk of an investment in our senior notes for an indefinite period of time.
We have and may continue to issue additional notes.
−Removed: Under the terms of the indenture governing our senior notes, we may from time to time without notice to, or the consent of, the holders of our senior notes, create and issue additional notes which will be equal in rank to our senior notes.
−Removed: We will not issue any such additional notes unless such issuance would constitute a “qualified reopening” for U.S.
+Added: Under the terms of the indentures governing our senior notes, we may from time to time without notice to, or the consent of, the holders of our senior notes, create and issue additional notes, including notes that are senior to our publicly-traded senior notes and including the issuance of notes with a security interest.
+Added: Additional notes of the same series will not be issued unless such issuance would constitute a “qualified reopening” for U.S.
federal income tax purposes.
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The New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries and are secured on a second lien basis, junior to the obligations under the Company’s credit agreement, by substantially all of the assets of the Company and the Guarantors.
−Removed: The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
−Removed: We have obtained a rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, and 6.00% 2028 Notes (collectively, the “Rated Notes”).
+Added: The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
+Added: We have obtained a rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, and 6.00% 2028 Notes (collectively, the “Rated Notes”).
Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
3 unchanged sentences
If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the Rated Notes.
−Removed: There is no established market for the Depositary Shares and the market value of the Depositary Shares could be substantially affected by various factors.
−Removed: The Depositary Shares are an issue of securities with no established trading market.
−Removed: Although the shares are trading on the NASDAQ Global Market, an active trading market on the NASDAQ Global Market for the Depositary Shares may not develop or last, in which case the trading price of the Depositary Shares could be adversely affected.
−Removed: If an active trading market does develop on the NASDAQ Global Market, the Depositary Shares may trade at prices higher or lower than their initial offering price.
+Added: An active trading market for the Depositary Shares may be limited and the market value of the Depositary Shares could be substantially affected by various factors.
+Added: The Depositary Shares are trading on the Nasdaq Global Market but an active trading market or the Depositary Shares may be limited and the trading price of the Depositary Shares could be adversely affected.
+Added: The Depositary Shares may trade at prices higher or lower than their initial offering price.
The trading price of the Depositary Shares also depends on many factors, including, but not limited to:
3 unchanged sentences
• the Company’s financial condition, results of operations and prospects.
−Removed: The Company has been advised by some of the underwriters that they intend to make a market in the Depositary Shares, but they are not obligated to do so and may discontinue market-making at any time without notice.
The Existing Preferred Stock and the Depositary Shares rank junior to all of the Company’s indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of the Company’s subsidiaries.
−Removed: In the event of a bankruptcy, liquidation, dissolution or winding-up of the affairs of the Company, the Company’s assets will be available to pay obligations on the 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) and the 7.375% Series B Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Existing Preferred Stock”), which ranks in parity with the Series A Preferred Stock, only after all of the Company’s indebtedness and other liabilities have been paid.
+Added: In the event of a bankruptcy, liquidation, dissolution or winding-up of the affairs of the Company, the Company’s assets will be available to pay obligations on the 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) and the 7.375% Series B Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Existing Preferred Stock”), which ranks in parity with the Series A Preferred Stock, only after all of the Company’s indebtedness and other
+Added: liabilities have been paid.
The rights of holders of the Existing Preferred Stock to participate in the distribution of the Company’s assets will rank junior to the prior claims of the Company’s current and future creditors and any future series or class of preferred stock the Company may issue that ranks senior to the Existing Preferred Stock.
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As a result, the Company may not have sufficient funds remaining to satisfy its dividend obligations relating to the Existing Preferred Stock if the Company incurs additional indebtedness.
−Removed: In January 2025, the Company suspended payment of cash dividends on its 6.875% Series A and 7.375% Series B preferred shares.
+Added: In January 2025, the Company suspended payment of cash dividends on its Series A Preferred Stock and Series B Preferred Stock.
Future offerings of debt or senior equity securities may adversely affect the market price of the Depositary Shares.
8 unchanged sentences
However, the use of depositary shares enables the Company to issue significant amounts of preferred stock, notwithstanding the number of shares authorized by the Company’s certificate of incorporation.
−Removed: The issuance of additional shares of Existing Preferred Stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the Existing Preferred
−Removed: stockholders upon the Company’s liquidation or dissolution or the winding up of the Company’s affairs.
+Added: The issuance of additional shares of Existing Preferred Stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the Existing Preferred stockholders upon the Company’s liquidation or dissolution or the winding up of the Company’s affairs.
It also may reduce dividend payments on the Existing Preferred Stock issued and outstanding if the Company does not have sufficient funds to pay dividends on all Existing Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.
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Voting rights for holders of Depositary Shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of the Company’s preferred stock, or Depositary Shares representing interests in the Company’s preferred stock, or additional series of preferred stock the Company may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to the Company’s Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Existing Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s certificate of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of the Company’s preferred stock as a single class) that materially and adversely affect the rights of the holders of Depositary Shares (and other series of preferred stock, as applicable) or create additional classes or series of the Company’s stock that are senior to the Existing Preferred Stock, provided that in any event adequate provision for redemption has not been made.
−Removed: Other than the limited circumstances described in this prospectus supplement, holders of Depositary Shares will not have any voting rights.
+Added: Other than the limited circumstances described herein, holders of Depositary Shares will not have any voting rights.
+Added: On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Existing Preferred Stock.
+Added: In the event the Company is not able to resume payment of dividends on the Existing Preferred Stock on or before the end of April 2026, the voting rights applicable to the Depositary Shares as outlined herein will become effective in accordance with the certificates of designation applicable to the Existing Preferred Stock.
The Depositary Shares have not been rated.
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The conversion feature may not adequately compensate the holders, and the conversion and redemption features of the Existing Preferred Stock and the Depositary Shares may make it more difficult for a party to take over the Company and may discourage a party from taking over the Company.
−Removed: Upon the occurrence of a Delisting Event or Change of Control (each as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively), holders of the Depositary Shares will have the right (unless, prior to the Delisting Event Conversion Date or Change of Control Conversion Date (each as defined in the certificate of
−Removed: designation for each series of the Existing Preferred Stock, respectively), as applicable, the Company has provided or provide notice of the Company’s election to redeem such series of Existing Preferred Stock) to direct the depositary to convert some or all of such series of Existing Preferred Stock underlying their Depositary Shares into the Company’s common stock (or equivalent value of alternative consideration), and under these circumstances the Company will also have a special optional redemption right to redeem such series of Existing Preferred Stock.
+Added: Upon the occurrence of a Delisting Event or Change of Control (each as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively), holders of the Depositary Shares will have the right (unless, prior to the Delisting Event Conversion Date or Change of Control Conversion Date (each as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively), as applicable, the Company has provided or provide notice of the Company’s election to redeem such series of Existing Preferred Stock) to direct the depositary to convert some or all of such series of Existing Preferred Stock underlying their Depositary Shares into the Company’s common stock (or equivalent value of alternative consideration), and under these circumstances the Company will also have a special optional redemption right to redeem such series of Existing Preferred Stock.
Upon such a conversion, the holders will be limited to a maximum number of shares of the Company’s common stock equal to the Share Cap (as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively) multiplied by the number of shares of such series of Existing Preferred Stock converted.
If the common stock price is less than $11.49 in the case of the Series A Preferred Stock (which is approximately 50% of the closing sale price per share of the Company’s common stock on October 1, 2019) or $13.39 in the case of the Series B Preferred Stock (which is approximately 50% of the closing sale price per share of the Company’s common stock on August 31, 2020), subject to adjustment, the holders will receive a maximum number of shares of the Company’s common stock per depositary share, which may result in a holder receiving value that is less than the liquidation preference of the Depositary Shares.
−Removed: In addition, those features of the Existing Preferred Stock and Depositary Shares may have the effect of inhibiting a third party from making an acquisition proposal for the Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of the Company’s common stock and Depositary Shares with the opportunity to realize a premium over the then-current market price or that shareholders may otherwise believe is in their best interests.
+Added: In addition, those features of the Existing Preferred Stock and Depositary Shares may have the effect of inhibiting a third party from making an acquisition
+Added: proposal for the Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of the Company’s common stock and Depositary Shares with the opportunity to realize a premium over the then-current market price or that shareholders may otherwise believe is in their best interests.
The market price of the Depositary Shares could be substantially affected by various factors.
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Speculation on the price of our securities may involve long and short exposures.
−Removed: To the extent aggregate short exposure exceeds the number of securities available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase our securities for delivery to lenders of our securities.
+Added: To the extent aggregate short exposure exceeds the number of securities available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase our securities for delivery to lenders of our
Those repurchases may, in turn, dramatically increase the price of our securities until additional securities are available for trading or borrowing.
5 unchanged sentences
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.