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Strong Global Entertainment, Inc. Class A (SGE)
:SGE
Risk Overview Q2, 2024
Risk Distribution
49% Finance & Corporate
15% Ability to Sell
13% Production
11% Macro & Political
7% Legal & Regulatory
5% Tech & Innovation
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Strong Global Entertainment, Inc. Class A Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q2, 2024
Main Risk Category
Finance & Corporate
With 27 Risks
Finance & Corporate
With 27 Risks
Number of Disclosed Risks
55
No changes from last report
S&P 500 Average: 31
55
No changes from last report
S&P 500 Average: 31
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Jun 2024
0Risks added
0Risks removed
0Risks changed
Since Jun 2024
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 3
0
No changes from last report
S&P 500 Average: 3
See the risk highlights of Strong Global Entertainment, Inc. Class A in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 55
Finance & Corporate
Total Risks: 27/55 (49%)Above Sector Average
Share Price & Shareholder Rights20 | 36.4%
Share Price & Shareholder Rights - Risk 1
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our Common Shares, or if our results of operations do not meet their expectations, our share price and trading volume could decline.Share Price & Shareholder Rights - Risk 2
We could be negatively affected by actions of activist shareholders.Campaigns by shareholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term shareholder value through actions such as financial restructuring, increased debt, special dividends, share repurchases or sales of assets or the entire company. If we are targeted by an activist shareholder in the future, the process could be costly and time-consuming, disrupt our operations and divert the attention of management and our employees from executing our strategic plan. Additionally, perceived uncertainties as to our future direction as a result of shareholder activism or changes to the composition of our Board may lead to the perception of a change in the direction of our business, instability or lack of continuity, which may be exploited by our competitors, cause concern to current or potential customers, who may choose to transact with our competitors instead of us, and make it more difficult to attract and retain qualified personnel.
Share Price & Shareholder Rights - Risk 3
Raising additional capital by issuing securities may cause dilution to existing shareholders and/or have other adverse effects on our operations.We may need to raise future capital to implement our business strategies. We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity, convertible debt securities or other equity-based derivative securities, the existing shareholders' ownership interest will be diluted and the terms may include liquidation or other preferences that adversely affect the existing shareholders' rights as shareholders. Any additional indebtedness we incur would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our Common Shares to decline and existing shareholders may not agree with our financing plans or the terms of such financings. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, or our products, or grant licenses on terms unfavorable to us. Adequate additional financing may not be available to us on acceptable terms, or at all.
Share Price & Shareholder Rights - Risk 4
The market price of our Common Shares may fluctuate significantly, which could result in substantial losses by our investors.The market price of our Common Shares may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as:
- Announcements of technological innovations, new products or product enhancements by us or others; - Announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments; - Success of research and development projects; - Developments concerning intellectual property rights or regulatory approvals; - Variations in our and our competitors' results of operations; - Changes in earnings estimates or recommendations by securities analysts, if our Common Shares are covered by analysts; - Changes in government regulations or patent decisions; - Future issuances of Common Shares or other securities; - The addition or departure of key personnel; - Announcements by us or our competitors of acquisitions, investments or strategic alliances; - General market conditions, including the volatility of market prices for shares of technology companies generally, and other factors, including factors unrelated to our operating performance; and - The other factors described in this "Risk Factors" section.
These factors and any corresponding price fluctuations may materially and adversely affect the market price of our Common Shares and result in substantial losses by our investors.
Further, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations in the past. Continued market fluctuations could result in extreme volatility in the price of our Common Shares, which could cause a decline in the value of our Common Shares. Price volatility of our Common Shares might be worse if the trading volume of our Common Shares is low. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and attention of management from our business, even if we are successful. Future sales of our Common Shares could also reduce the market price of such shares.
Moreover, the liquidity of our Common Shares is limited, not only in terms of the number of shares that can be bought and sold at a given price, but by delays in the timing of transactions and reduction in security analysts' and the media's coverage of us, if any. These factors may result in lower prices for our Common Shares than might otherwise be obtained and could also result in a larger spread between the bid and ask prices for our Common Shares. In addition, without a large float, our Common Shares are less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our Common Shares may be more volatile. In the absence of an active public trading market, an investor may be unable to liquidate its investment in our Common Shares. Trading of a relatively small volume of our Common Shares may have a greater impact on the trading price of our Common Shares than would be the case if our public float were larger. We cannot predict the prices at which our Common Shares will trade in the future.
Share Price & Shareholder Rights - Risk 5
The Class B Shares contain terms that could adversely affect common shareholders or which could be used to resist a potential take-over of us.100 Class B Shares are issued and outstanding. The Class B Shares could have the effect of making it more difficult for a third party to acquire a majority of our outstanding Common Shares. The Class B Shares include voting rights to elect fifty percent (50%) of our board (or a majority, where our board is set at an odd number) which has the effect of limiting the common share voting rights with respect to election of the Board.
Share Price & Shareholder Rights - Risk 6
Our Board can, without shareholder approval, cause preferred shares to be issued on terms that adversely affect common shareholders or which could be used to resist a potential take-over of us.Under our Notice of Articles, as amended, our Board is authorized to issue up to 150,000,000 preferred shares in one or more series, none of which were issued and outstanding as of the date of this Annual Report. Also, our Board, without shareholder approval, will have the authority to determine the rights, preferences, privileges and restrictions, including voting rights, of those shares. If the Board causes preferred shares to be issued, the rights of the holders of our Common Shares could be adversely affected. The Board's ability to determine the terms of preferred shares and to cause its issuance, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting shares. Preferred shares issued by the Board could include voting rights which could shift the ability to control us to the holders of the preferred shares. Preferred shares could also have conversion rights into Common Shares at a discount to the market price of the Common Shares which could negatively affect the market for our Common Shares. In addition, preferred shares would have preference in the event of liquidation of us, the payment of dividends and other rights superior to the Common Shares. We have no current plans to issue any preferred shares.
Share Price & Shareholder Rights - Risk 7
Our Common Shares are listed on NYSE American. We can provide no assurance that an active trading market will continue for our Common Shares or that we will continue to meet NYSE American listing requirements. If we fail to comply with the continuing listing standards of NYSE American, our securities could be delisted.Our Common Shares are listed on NYSE American. However, we can provide no assurance that an active trading market for our Common Shares will continue. If we fail to satisfy the continued listing requirements of NYSE American, such as the corporate governance requirements or the minimum closing bid price requirement, NYSE American may take steps to delist our Common Shares. Such a delisting would likely have a negative effect on the price of our Common Shares and would impair investors' ability to sell or purchase our Common Shares when they wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our Common Shares to become listed again, stabilize the market price or improve the liquidity of our Common Shares, prevent our Common Shares from dropping below the NYSE American minimum bid price requirement or prevent future noncompliance with NYSE American's listing requirements.
Share Price & Shareholder Rights - Risk 8
Because we are a corporation incorporated under the laws of British Columbia, it may be difficult for investors in the United States to enforce civil liabilities against us based solely upon the federal securities laws of the United States. Similarly, it may be difficult for Canadian Investors to enforce civil liabilities against our directors and officers residing outside Canada.We are a corporation incorporated under the laws of British Columbia that maintains a principal executive office in the United States, and a substantial portion of our assets are located outside the United States. Consequently, it may be difficult for U.S. investors to effect service of process within the United States upon us, or to realize in the United States upon judgements of courts of the United States predicated upon civil liabilities under the Securities Act. Investors should not assume that Canadian courts: (i) would enforce judgements of U.S. courts obtained in actions against us predicated upon the civil liability provisions of the U.S. federal securities laws or the securities or blue sky laws of any state within the United States or (ii) would enforce, in original actions, liabilities against us predicated upon the U.S. federal securities laws or any such state securities or blue sky laws.
Share Price & Shareholder Rights - Risk 9
Provisions in our Articles, as amended, Canadian law and certain restrictive covenants applicable to us could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management and/or limit the market price of our Common Shares.Provisions in our Articles, as amended, currently in effect, as well as certain provisions under the BCBCA and applicable Canadian laws may discourage, delay or prevent a merger, acquisition or other change in control of us that shareholders may consider favorable, including transactions in which they might otherwise receive a premium for their Common Shares. For instance, our Articles, as amended, contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders' meetings.
Share Price & Shareholder Rights - Risk 10
We are governed by the corporate laws of British Columbia, Canada, which in some cases have a different effect on the rights of shareholders than the corporate laws of the United States.We are governed by the Business Corporations Act (British Columbia) (the "BCBCA"), which may affect the rights of shareholders differently than those of a company governed by the laws of a U.S. jurisdiction, and may, together with our Articles, as amended, have the effect of delaying, deferring or discouraging another party from acquiring control of our company by means of a tender offer, a proxy contest or otherwise, or may affect the price an acquiring party would be willing to pay for our Common Shares. The material differences between the BCBCA and Delaware General Corporation Law that may have the greatest such effect include, but are not limited to, the following: (i) for certain corporate transactions (such as amalgamations, arrangements or amendments to our Articles) the BCBCA generally requires the voting threshold to be a special resolution approved by 66 2/3% of shareholders, or as set out in the Articles, as amended, as applicable, whereas Delaware General Corporation Law generally only requires a majority vote; and (ii) under the BCBCA holders of an aggregate of 5% or more of our Common Shares can requisition a special meeting of shareholders, whereas such right does not exist under the Delaware General Corporation Law. We cannot predict whether investors will find our company and our Common Shares less attractive because of these material differences or because we are governed by the BCBCA. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our share price may be more volatile.
Share Price & Shareholder Rights - Risk 11
Future sales by Fundamental Global or others of our Common Shares, or the perception that such sales may occur, could depress the price of our Common Shares.As of March 25, 2024, Fundamental Global owns indirectly 76.2% of our outstanding Common Shares. Subject to the restrictions described in the paragraph below, future sales of these Common Shares in the public market are subject to the volume and other restrictions of Rule 144 under the Securities Act, for so long as Fundamental Global is deemed to be our affiliate, unless the Common Shares to be sold are registered with the SEC. We are unable to predict with certainty whether or when Fundamental Global will sell a substantial number of Common Shares to the extent it retains Common Shares. The sale by Fundamental Global of a substantial number of Common Shares, or a perception that such sales could occur, could significantly reduce the market price of our Common Shares.
Pursuant to lock-up agreements, our directors and officers have agreed, for a period of twelve (12) months from May 18, 2023, the closing date of our IPO, and any other holder of our outstanding Common Shares has agreed, for a period of twelve (12) months from May 18, 2023, subject to limited exceptions, without the prior written consent of the representative of the underwriters, that they will not offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our securities. In addition, pursuant to the underwriting agreement we entered in connection with our IPO, we and any of our successors have agreed, for a period of twelve (12) months from May 15, 2023, the date of the underwriting agreement, that each will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock; (ii) file or caused to be filed any registration statement with the SEC relating to the offering of any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock; (iii) complete any offering of our debt securities, other than entering into a line of credit with a traditional bank; or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our capital stock, whether any such transaction described in clause (i), (ii), (iii) or (iv) above is to be settled by delivery of shares of our capital stock or such other securities, in cash or otherwise. The representative of the underwriters may, in its sole discretion and at any time without notice, release all or any portion of the Common Shares subject to the lock-up.
We filed two registration statements on Form S-8 registering under the Securities Act the Common Shares reserved for issuance under our 2023 Share Compensation Plan (the "Share Compensation Plan"). When equity securities granted under our Share Compensation Plan are sold or it is perceived that they will be sold in the public market, the trading price of our Common Shares could decline substantially. These sales also could impede our ability to raise future capital.
Share Price & Shareholder Rights - Risk 12
We are a "controlled company" within the meaning of the rules of the NYSE American and, as a result, qualify for exemptions from certain corporate governance requirements. While we do not intend to avail ourselves of these exemptions, we may do so, and, accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to such requirements.Fundamental Global continues to control indirectly a majority of the voting power of our outstanding Common Shares and all of our Class B Shares, which indirectly entitles Fundamental Global to elect fifty percent (50%) of our board (or a majority, where our board is set at an odd number), until such Class B Shares are redeemed. As a result, we are a "controlled company" within the meaning of the corporate governance standards of the NYSE American. Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:
- the requirement that a majority of the Board of Directors consist of independent directors; - the requirement that our nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and - the requirement that our compensation committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
While Fundamental Global indirectly controls a majority of the voting power of our outstanding Common Shares and all of our Class B Shares, we may not have a majority of independent directors or our nominating and corporate governance and compensation committees may not consist entirely of independent directors. While we do not intend to avail ourselves of these exemptions, we may do so, and, accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE American.
Share Price & Shareholder Rights - Risk 13
Our share price may fluctuate significantly, and our shareholders may not be able to resell their Common Shares at or above the purchase price.The trading price of our Common Shares is likely to be volatile and subject to wide price fluctuations in response to various factors, including:
- market conditions in the broader stock market in general, or in our industry in particular; - actual or anticipated fluctuations in our quarterly financial and results of operations; - introduction of new products and services by us or our competitors; - issuance of new or changed securities analysts' reports or recommendations; - sales of large blocks of our Common Shares; - additions or departures of key personnel; - regulatory developments; - litigation and governmental investigations; - economic and political conditions or events; and - changes in investor perception of our market positions based on third-party information.
These and other factors may cause the market price and demand for our Common Shares to fluctuate substantially, which may limit or prevent investors from readily selling their Common Shares and may otherwise negatively affect the liquidity of our Common Shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the shares. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.
The trading market for our Common Shares may also be influenced by the research and reports that industry or securities analysts could publish about us or our business. If one or more of these analysts initiates or ceases coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. Moreover, if one or more of the analysts downgrades our stock, or if our results of operations do not meet their expectations, our share price could decline.
Share Price & Shareholder Rights - Risk 14
There may not be an active, liquid trading market for our Common Shares.Prior to our IPO, there was no public market for our Common Shares. Subsequent to the IPO, the daily volume of trading in our Common Shares has been relatively low compared to other public companies. If an active trading market does not develop and continue, our shareholders may have difficulty selling any of their Common Shares. The market price of Common Shares may decline, and our shareholders may not be able to resell their Common Shares at or above their purchase price.
Share Price & Shareholder Rights - Risk 15
We do not know whether an active market for our Common Shares will be sustained or what the market price of our Common Shares will be and as a result it may be difficult for investors to sell their Common Shares.Prior to our listing on the NYSE American, there was no trading market for our Common Shares. Additionally, an active trading market for our Common Shares may not be sustainable. It may be difficult for investors to sell their Common Shares without depressing the market price for the Common Shares or at all. As a result of these and other factors, investors may not be able to sell their Common Shares at or above the purchase price or at all. Further, an inactive market may also impair our ability to raise capital by selling Common Shares and may impair our ability to enter into strategic partnerships or acquire companies or products by using our Common Shares as consideration. If an active market for our Common Shares does not develop or is not sustained, it may be difficult to sell the shareholders' Common Shares.
Share Price & Shareholder Rights - Risk 16
We are an "emerging growth company," as defined in the Securities Act, and a "smaller reporting company," as defined in the Exchange Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our Common Shares less attractive to investors.We are an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our Common Shares less attractive if we rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our share price may be more volatile.
We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting ordinary shares held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100 million during the most recently completed fiscal year and our voting and non-voting ordinary shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter.
Share Price & Shareholder Rights - Risk 17
Some of our directors and officers may have actual or potential conflicts of interest because of their equity ownership in Fundamental Global, and some of our directors may have actual or potential conflicts of interest because they also serve as officers of Fundamental Global.Because of their current or former positions with Fundamental Global, some of our executive officers and directors may own Fundamental Global common shares or have options to acquire Fundamental Global common shares, and the individual holdings may be significant for some of these individuals compared to their total assets. In addition, certain of our officers and directors serve as officers and directors of Fundamental Global. Although all transactions with related parties are approved by a committee of non-Fundamental Global-affiliated directors, this ownership or service may create the appearance of conflicts of interest when the Fundamental Global-affiliated officers and/or directors are faced with decisions that could have different implications for Fundamental Global or us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between Fundamental Global and us regarding the terms of the agreements governing the Separation and the relationship between the companies, including the Management Services Agreement.
Share Price & Shareholder Rights - Risk 18
If Fundamental Global sells a controlling interest in our company to a third party in a private transaction, our shareholders may not realize any change-of-control premium on our Common Shares and we may become subject to the control of a presently unknown third party.Fundamental Global controls a significant equity interest in our company. Fundamental Global has the ability, should it choose to do so, to sell some or all of our Common Shares it owns in a privately-negotiated transaction, which, if sufficient in size, could result in a change of control of our company.
The ability of Fundamental Global to privately sell the Common Shares it owns, with no requirement for a concurrent offer to be made to acquire all of the Common Shares that are publicly traded, could prevent our shareholders from realizing any change-of-control premium on Common Shares that may otherwise accrue to Fundamental Global on its private sale of our Common Shares. Additionally, if Fundamental Global privately sells its significant equity interests in our company, we may become subject to the control of a presently unknown third party. Such third party may have interests that conflict with those of other shareholders.
Share Price & Shareholder Rights - Risk 19
Fundamental Global continues to indirectly control the direction of our business, as their concentrated ownership of our Common Shares and Class B Shares prevent other shareholders from influencing significant decisions.As of March 25, 2024, Fundamental Global controls 76.2% of our outstanding Common Shares and 100% of the outstanding Class B Shares, which entitles Fundamental Global, or an entity controlled by Fundamental Global, to nominate and elect at least 50% of our board, until such Class B Shares are redeemed. As long as Fundamental Global beneficially controls a majority of the voting power of our outstanding Common Shares with respect to a particular matter, or Fundamental Global directly or indirectly holds any number of Class B Shares, it generally is able to determine the outcome of all corporate actions requiring shareholder approval, including by the election and removal of at least 50% of our directors. Even if FG Group Holdings were to control less than a majority of the voting power of our outstanding Common Shares and ceased to hold any Class B Shares, it may be able to influence the outcome of such corporate actions so long as it owns a significant portion of our Common Shares.
Fundamental Global's interests may not be the same as, or may conflict with, the interests of our other shareholders. Our public shareholders are not able to affect the outcome of any shareholder vote while Fundamental Global controls the majority of the voting power of our outstanding Common Shares. As a result, Fundamental Global may be able to control, directly or indirectly and subject to applicable law, all matters affecting us, including:
- any determination with respect to our business direction and policies, including the appointment and removal of directors; - any determinations with respect to mergers, business combinations or dispositions of assets; - our financing and dividend policy, and the payment of dividends on our Common Shares, if any; - compensation and benefit programs and other human resources policy decisions; - changes to any other agreements that may adversely affect us; and - determinations with respect to our tax returns.
Because Fundamental Global's interests may differ from ours or from those of our other shareholders, actions that Fundamental Global takes with respect to us, as our controlling shareholder, may not be favorable to us or our other shareholders.
Share Price & Shareholder Rights - Risk 20
We are a holding company with no operations of our own.We are a holding company, and our ability to operate is dependent upon the earnings from the business conducted by our operating subsidiaries. The effect of this structure is that we depend on the earnings of our subsidiaries, and the distribution or payment to us of a portion of these earnings to meet our obligations, including those under any of our debt obligations. The distributions of those earnings or advances or other distributions of funds by these entities to us, all of which are contingent upon our subsidiaries' earnings, are subject to various business considerations. In addition, distributions by our subsidiaries could be subject to statutory restrictions, including state laws requiring that such subsidiaries be solvent, or contractual restrictions. Some of our subsidiaries may become subject to agreements that restrict the sale of assets and significantly restrict or prohibit the payment of dividends or the making of distributions, loans or other payments to shareholders, partners or members.
Accounting & Financial Operations4 | 7.3%
Accounting & Financial Operations - Risk 1
Our revenues and results of operations may fluctuate significantly from period to period.Accounting & Financial Operations - Risk 2
The obligations associated with being a public company require significant resources and management attention.We are subject to the reporting and other requirements of the Exchange Act and the rules of the NYSE American. As an independent public company, we are required to, among other things:
- prepare and distribute periodic reports, proxy statements and other shareholder communications in compliance with the federal securities laws and NYSE American rules; - have our own Board of Directors and committees thereof, which comply with federal securities laws and NYSE American rules; - maintain an internal audit function; - institute our own financial reporting and disclosure compliance functions; - establish an investor relations function; - establish internal policies, including those relating to trading in our securities and disclosure controls and procedures; and - comply with the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Act, the Public Company Accounting Oversight Board and the NYSE American.
These reporting and other obligations place significant demands on our management and our administrative and operational resources, including accounting resources, and we face increased legal, accounting, administrative and other costs and expenses relating to these demands that we had not incurred as a segment of FG Group Holdings. Certain of these functions are provided by Fundamental Global pursuant to the Management Services Agreement. Our investment in compliance with existing and evolving regulatory requirements result in increased administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities, which could have an adverse effect on our business, financial condition, results of operations and cash flows.
Accounting & Financial Operations - Risk 3
Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.Prior to the Separation, we were a business segment of Fundamental Global, and Fundamental Global, as successor of FG Group Holdings, is subject to Section 404 of the Sarbanes-Oxley Act. However, before completion of our IPO, we were not required to comply with all SEC rules that implement Section 404 of the Sarbanes-Oxley Act and therefore were not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Section 404(a) of the Sarbanes-Oxley Act, or Section 404(a), requires that beginning with our second annual report following our IPO, management assess and report annually on the effectiveness of our internal control over financial reporting and identify any material weaknesses in our internal control over financial reporting. Although Section 404(b) of the Sarbanes-Oxley Act, or Section 404(b), requires our independent registered public accounting firm to issue an annual report that addresses the effectiveness of our internal control over financial reporting, we have opted to rely on the exemptions provided in the Jumpstart Our Business Startups Act (the "JOBS Act"), and consequently will not be required to comply with SEC rules that implement Section 404(b) until such time as we are no longer an "emerging growth company." We expect our first Section 404(a) assessment will take place for our annual report for the fiscal year ending December 31, 2024, and we will not be required to comply with Section 404(b) rules until we cease to be an "emerging growth company" as defined in the JOBS Act. We will remain an "emerging growth company" until December 31, 2028, although if our total annual gross revenues are $1.235 billion or more, we would cease to be an "emerging growth company" as of December 31st of that year.
In order to comply with these rules, we expect to incur additional expenses and devote increased management effort toward ensuring compliance. To maintain and improve the effectiveness of our disclosure controls and procedures, we need to commit significant resources, hire additional staff and provide additional management oversight. We cannot predict or estimate the amount of additional costs we may incur as a public company or the timing of such costs.
In the future, if we fail to complete the annual Section 404 evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. When evaluating our internal controls over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may issue an adverse opinion due to ineffective internal controls over financial reporting, and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. Our remediation efforts may not enable us to avoid a material weakness in our internal control over financial reporting in the future. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could negatively affect our results of operations and cash flows. Any of the foregoing occurrences, should they come to pass, could negatively impact the public perception of our company, which could have a negative impact on our share price.
Accounting & Financial Operations - Risk 4
We do not intend to pay cash dividends.We do not intend to declare or pay any cash dividends in the near term and plan to retain all available funds to finance the growth of our business. Any future determination to pay dividends will be at the discretion of our Board of Directors in accordance with applicable law and will be dependent upon then-existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that our Board of Directors considers relevant.
Corporate Activity and Growth3 | 5.5%
Corporate Activity and Growth - Risk 1
The services that Fundamental Global provides to us post-Separation, pursuant to the Management Services Agreement, may not be sufficient to meet our needs, which may result in increased costs and otherwise adversely affect our business.Corporate Activity and Growth - Risk 2
We may not realize the anticipated benefits from the Separation, and the Separation could harm our business.We historically operated as a business segment of FG Group Holdings. We may not be able to achieve the full strategic and financial benefits expected to result from the Separation, or such benefits may be delayed or not occur at all. The Separation is expected to enhance strategic and management focus, provide a distinct investment identity and allow us to efficiently allocate resources and deploy capital. We may not achieve these and other anticipated benefits for a variety of reasons, including, among others:
- we are more susceptible to economic downturns and other adverse events than when we were still a part of Fundamental Global; - following the Separation, our business is less diversified than Fundamental Global's business prior to the Separation; and - following the Separation, our general and administrative expenses have increased due to the additional burdens of operating as a separate public company.
If we fail to achieve some or all of the benefits expected to result from the Separation, or if such benefits are delayed, our business could be harmed.
Corporate Activity and Growth - Risk 3
Any potential future acquisitions, strategic investments, entry into new lines of business, divestitures, mergers or joint ventures may subject us to significant risks, any of which could harm our business.Our long-term strategy may include identifying and acquiring, investing in or merging with suitable candidates on acceptable terms, entry into new lines of business and markets or divesting of certain business lines or activities. In particular, over time, we may acquire, make investments in or merge with providers of product offerings that complement our business or may terminate such activities. Mergers, acquisitions, divestitures and entries into new lines of business include a number of risks and present financial, managerial and operational challenges, including but not limited to:
- diversion of management attention from running our existing business; - possible material weaknesses in internal control over financial reporting; - increased expenses including legal, administrative and compensation expenses related to newly hired or terminated employees; - increased costs to integrate, develop or, in the case of a divestiture, separate the technology, personnel, customer base and business practices of the acquired, new or divested business or assets; - potential exposure to material liabilities not discovered in the due diligence process; - potential adverse effects on reported results of operations due to possible write-down of goodwill and other intangible assets associated with acquisitions; - potential damage to customer relationships or loss of synergies in the case of divestitures; and - unavailability of acquisition financing or inability to obtain such financing on reasonable terms.
Any acquired business, technology, service or product or entry into a new line of business could significantly under-perform relative to our expectations, and may not achieve the benefits we expect. For all these reasons, our pursuit of an acquisition, investment, new line of business, divestiture, merger or joint venture could cause our actual results to differ materially from those anticipated.
Ability to Sell
Total Risks: 8/55 (15%)Above Sector Average
Competition1 | 1.8%
Competition - Risk 1
The markets for our products and services are highly competitive and if market share is lost, we may be unable to lower our cost structure quickly enough to offset the loss of revenue.Demand3 | 5.5%
Demand - Risk 1
We have no assurance of future business from any of our customers.Demand - Risk 2
We are substantially dependent upon significant customers who could cease purchasing our products at any time.Our top ten customers accounted for approximately 48% and 52% of consolidated net revenues during the years ended December 31, 2023 and December 31, 2022, respectively. Trade accounts receivable from these customers represented 49% and 69% of net receivables at December 31, 2023 and December 31, 2022, respectively. One of our customers accounted for more than 10% of both our consolidated net revenues during 2023 and our net consolidated receivables as of December 31, 2023. None of our customers accounted for more than 10% of both our consolidated net revenues during the year ended December 31, 2022 of our net consolidated receivables as of December 31, 2022. While we believe our relationships with such customers are stable, most arrangements with these customers are made by purchase order and are terminable at will by either party. A significant decrease or interruption in business from our significant customers could have a material adverse effect on our business, financial condition and results of operations. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which we sell our products.
Several larger operators in the cinema industry carry high levels of balance sheet leverage. For example, Cineworld Group Plc, the parent company of Regal Cinemas and one of the largest cinema operators, filed for Chapter 11 bankruptcy on September 7, 2022 to restructure their balance sheet and alleviate their debt burden. As a result of the bankruptcy, we collected $0.2 million of the $0.3 million we had in accounts receivable at the time of the bankruptcy filing related to products and services sold to Regal Cinemas. If any of our larger customers were to have financial difficulties or enter bankruptcy it could negatively impact the collectability of our accounts receivable and could also negatively impact our revenue in future periods.
Financial instruments that potentially expose us to a concentration of credit risk principally consist of accounts receivable. We sell products to a large number of customers in many different geographic regions. To minimize credit concentration risk, we perform ongoing credit evaluations of our customers' financial condition or use letters of credit.
Demand - Risk 3
Our operating results could be materially harmed if we are unable to accurately forecast demand for our products and services and adequately manage our inventory.To ensure adequate inventory supply, we forecast inventory needs, place orders and plan personnel levels based on estimates of future demand. Our ability to accurately forecast demand for our products and services is limited and could be affected by many factors, including an increase or decrease in customer demand for our products and services or for products and services of our competitors, product and service introductions by competitors, unanticipated changes in general market conditions, effects of the COVID-19 pandemic and the weakening of economic conditions or consumer confidence in future economic conditions. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products available for sale. Conversely, if we underestimate customer demand for our products and services, we may not be able to deliver products to meet requirements, and this could result in damage to our brand and customer relationships and adversely affect our revenue and operating results.
Sales & Marketing3 | 5.5%
Sales & Marketing - Risk 1
We depend in part on distributors, dealers and resellers to sell and market our products and services, and our failure to maintain and further develop our sales channels could harm our business.Sales & Marketing - Risk 2
Our sales cycle can be long and timing of orders and shipments unpredictable, particularly with respect to large enterprises, which could harm our business and operating results.The timing of our sales is difficult to predict, and customers typically order screen and other distribution products with limited advance notice which impacts our ability to forecast revenue and manage operations. For our managed service offerings, the sales cycle can be long and involve educating and achieving buy-in from multiple parts of a customer organization. As a result the length and variable nature of customer ordering patterns and timing could materially adversely impact our business and results of operations.
Sales & Marketing - Risk 3
Fundamental Global may fail to perform under various transaction agreements that were executed as part of the Separation or it may fail to have necessary systems and services in place when certain of the transaction agreements expire.In connection with the Separation, we entered into various agreements, including for the lease of the Joliette facility and certain administrative services. If FG Quebec and/or Fundamental Global Inc. are unable to satisfy their respective obligations under these agreements, we could incur operational difficulties or losses, which may not be adequately indemnified under those agreements.
Brand / Reputation1 | 1.8%
Brand / Reputation - Risk 1
If we are unable to maintain our brand and reputation, our business, results of operations and prospects could be materially harmed.Production
Total Risks: 7/55 (13%)Above Sector Average
Employment / Personnel2 | 3.6%
Employment / Personnel - Risk 1
If we fail to retain key members of management, or successfully integrate new executives, our business may be materially harmed.Employment / Personnel - Risk 2
Certain of our officers and directors are engaged in other activities and may not devote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.Certain of our officers and directors have existing responsibilities to provide management and services to other entities including Fundamental Global. For example, Mark D. Roberson, our Chief Executive Officer and director, Todd R. Major, our Chief Financial Officer, and D. Kyle Cerminara, our Chairman, also have responsibilities with Fundamental Global. As a result, demands for the time and resources from our Company and other entities, including Fundamental Global, may conflict from time to time. Because we rely primarily on each of our officers and directors to manage our company, our officers' and directors' limited devotion of time and resources to our business may negatively impact the operation of our business.
Supply Chain1 | 1.8%
Supply Chain - Risk 1
Interruptions of, or higher prices of, components from our suppliers may affect our results of operations and financial performance.Costs4 | 7.3%
Costs - Risk 1
Our operating margins may decline as a result of increasing product costs.Costs - Risk 2
Because we lease, instead of own, the Joliette Plant where we manufacture all of our screens, it is possible that FG Quebec as landlord may terminate the lease which would negatively impact our production.We manufacture our screens in the Joliette Plant, an approximately 80,000 square-foot facility near Montreal, Quebec, Canada. FG Quebec, our major shareholder, owns this facility. We lease it through Strong/MDI, our subsidiary. While we entered into the Joliette Plant Lease, which is a fifteen (15) year lease for the Joliette Plant (with the option of Strong/MDI to renew for five (5) consecutive periods of five years each, and a right of first refusal to purchase the Joliette Plant in the event that FG Quebec wishes to sell the property to a third-party in the future) with FG Quebec, it is possible that FG Quebec may terminate the lease under certain limited circumstances, and therefore interrupt our screen production. In addition, we are using part of the proceeds from our IPO to improve and expand the Joliette Plant, because it is our only manufacturing facility in North America. Compared to the ownership, the rental relationship may not provide us enough protection on our interests and investments in this facility.
Costs - Risk 3
We are exiting the content business which could result in additional costs.We have discontinued our content business to improve the Company's focus resources on its core businesses, reduce general and administrative costs, and improve financial performance. While the Company may receive proceeds from the disposition of certain parts of the content business, it may also not realize the expected benefits and may incur additional costs and liabilities associated with the exit activities that could negatively impact the Company. We are involved in a dispute regarding one of the projects in the content business and may incur significant legal and other costs in the future as we exit the business.
Costs - Risk 4
The insurance that we maintain may not fully cover all potential exposures.We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We are potentially at risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain.
Macro & Political
Total Risks: 6/55 (11%)Above Sector Average
Economy & Political Environment3 | 5.5%
Economy & Political Environment - Risk 1
Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.Economy & Political Environment - Risk 2
Geopolitical conditions, military conflicts, acts or threats of terrorism, natural disasters, pandemics, and other conditions or events beyond our control could adversely affect us.Geopolitical conditions, military conflicts (including Russia's invasion of Ukraine and conflicts between Israel and Hamas), acts or threats of terrorism, natural disasters, pandemics (including the COVID-19 pandemic), and other conditions or events beyond our control may adversely affect our business, results of operations, financial condition, or prospects. For example, military conflicts, acts or threats of terrorism, and political, financial, or military actions taken in response could adversely affect general economic, business, or market conditions and, in turn, us, especially as an intermediary within the financial system. In addition, nation states engaged in warfare or other hostile actions may directly or indirectly use cyberattacks against financial systems and financial-services companies like us to exert pressure on one another or other countries with influence or interests at stake. We also could be negatively impacted if our key personnel, a significant number of our employees, or our systems or infrastructure were to become unavailable or damaged due to a pandemic, natural disaster, war, act of terrorism, accident, or similar cause. These same risks and uncertainties arise too for the service providers and counterparties on whom we depend as well as their own third-party service providers and counterparties.
The most notable impact of COVID-19 on our results of operations was the significant impact to our customers, specifically those in the entertainment and advertising industries, and their ability and willingness to purchase our products and services. A significant number of our customers temporarily ceased operations during the pandemic. For instance, many movie theaters and other entertainment centers were forced to close or curtail their hours and, correspondingly, terminated or deferred their non-essential capital expenditures. The COVID-19 pandemic also adversely affected film production and the pipeline of feature films available in the short- and long-term. We were also required to temporarily close our screen manufacturing facility in Canada due to the governmental response to COVID-19, experienced lower revenues from field services, and saw a reduction in non-recurring time and materials-based services. The impact of any future outbreak of contagious disease, or a worsening or resurgence of COVID-19, is not readily ascertainable, is uncertain and cannot be predicted, but could have an adverse impact on the Company's business, financial condition and results of operations.
In the case of Russia's invasion of Ukraine and conflicts between Israel and Hamas, security risks as well as increases in fuel and other commodity costs, supply-chain disruptions, and associated inflationary pressures have impacted our business the most.
We may also experience one or more of the following conditions that could have a material adverse impact on our business operations and financial condition: adverse effects on our strategic partners' businesses or on the businesses of companies in which we hold equity stakes; impairment charges; extreme currency exchange-rate fluctuations; inability to recover costs from insurance carriers; and business continuity concerns for us, our customers and our third-party vendors.
These conditions and events and others like them are highly complex and inherently uncertain, and their effect on our business, results of operations, financial condition, and prospects in the future cannot be reliably predicted.
There is no guarantee that we will be able to service and retain or renew existing agreements, maintain relationships with any of our customers or business partners on acceptable terms or at all, or collect amounts owed to us from insolvent customers or business partners. The loss of any of our large customers could have a material adverse impact on our business.
Economy & Political Environment - Risk 3
A reversal of the U.S. economic recovery and a return to volatile or recessionary conditions in the United States or abroad could adversely affect our business or our access to capital markets in a material manner.Worsening economic and market conditions, downside shocks, or a return to recessionary economic conditions could serve to reduce demand for our products and adversely affect our operating results. These economic conditions may also impact the financial condition of one or more of our key suppliers, which could affect our ability to secure products to meet our customers' demand. In addition, a downturn in the cinema market could impact the valuation and collectability of certain receivables held by us. Our results of operations and the implementation of our business strategy could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the impact of health and safety concerns from the current outbreak of COVID-19 and variants thereof. The most recent global financial crisis caused by the coronavirus resulted in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our business and could have a material adverse effect on us. We could also be adversely affected by such factors as changes in foreign currency rates and weak economic and political conditions in each of the countries in which we sell our products.
International Operations1 | 1.8%
International Operations - Risk 1
Our business is subject to the economic and political risks of selling products in foreign countries.Natural and Human Disruptions1 | 1.8%
Natural and Human Disruptions - Risk 1
Natural disasters and other catastrophic events beyond our control could adversely affect our business operations and financial performance.Capital Markets1 | 1.8%
Capital Markets - Risk 1
Canada does not have a system of exchange controls, and control of the Company by "non-Canadians" may be subject to review and further government action.Legal & Regulatory
Total Risks: 4/55 (7%)Above Sector Average
Regulation2 | 3.6%
Regulation - Risk 1
The risk of non-compliance with U.S. and foreign laws and regulations applicable to our international operations could have a significant impact on our financial condition, results of operations and strategic objectives.Regulation - Risk 2
Government agencies in Canada have notified FG Quebec that certain modifications are required to be made to the Joliette Plant in order to meet safety and emissions standards.FG Quebec has been informed by certain government agencies in Canada, including but not limited to, the Joliette Fire Department and the Quebec Ministry of the Environment, that certain aspects of the Joliette Plant must be modified to fully comply with safety and emissions standards. FG Quebec has implemented changes to address some, but not all, of the identified requirements.
The required modifications include installing new air evaluator and exhaust chimneys as well as modifying the walls and doors in the paint and coatings area to achieve a 2-hour fire resistance standard. In addition, it was required that we modify certain mezzanine areas to reduce their size and upgrade construction to non-combustible materials, add an additional exterior access, and purchase spill resistant pallets. Our intention is to address the remaining requirements as a component of an expansion and reorganization of certain areas of the Joliette Plant. We believe the project would improve production flow in the plant, accommodate growth of the Eclipse product line in addition to addressing the requirements. If we fail to address the requirements, it could be possible that we could incur penalties or production could be interrupted. The expansion could cost more or take longer than our expectations and could result in production disruptions in the facility during the construction process.
Litigation & Legal Liabilities1 | 1.8%
Litigation & Legal Liabilities - Risk 1
We have agreed to indemnify Fundamental Global for future losses, if any, related to current litigation related to the operation businesses transferred to us in the Separation.Taxation & Government Incentives1 | 1.8%
Taxation & Government Incentives - Risk 1
The IRS may not agree with the position that we should be treated as a foreign corporation for U.S. federal income tax as a result of the Separation.Tech & Innovation
Total Risks: 3/55 (5%)Above Sector Average
Trade Secrets1 | 1.8%
Trade Secrets - Risk 1
Failure to effectively utilize or successfully assert intellectual property rights could negatively impact us.Cyber Security1 | 1.8%
Cyber Security - Risk 1
Any failure to maintain the security of information relating to our customers, employees and suppliers, whether as a result of cybersecurity attacks or otherwise, could expose us to litigation, government enforcement actions and costly response measures, and could disrupt our operations and adversely affect our business and reputation.Technology1 | 1.8%
Technology - Risk 1
We rely extensively on our information technology systems and are vulnerable to damage and interruption.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.