Valuation and Financial Risks - The company's valuation of life insurance policies is uncertain, as many values are tied to actual maturity dates, which could materially impact business performance [81]. - The company may fail to accurately forecast life expectancies, leading to lower returns on life settlement policies if people live longer than expected [90]. - The company assumes credit risk associated with life insurance companies, which may affect the realization of full value from insurance payouts [84]. - The company may not realize anticipated benefits from recent acquisitions, which could negatively impact business results and stock value [84]. - The company may experience difficulties in liquidating life insurance policies, which could adversely affect its financial position [84]. - The company assumes credit risk associated with life insurance policies, and the failure or bankruptcy of insurance companies could materially impact its profits [133]. - The insolvency of any insurance company could limit the value of life insurance policies and the collectability of face values, with state guaranty associations capping coverage at $300,000 or lower [134]. - The company may face litigation or claims related to acquisitions that could materially affect its business and financial results [174]. - The company may incur additional indebtedness in the future, which could adversely affect its financial and operational flexibility [193]. Market and Competitive Environment - The company faces increased competition from life insurance companies and brokers, which could adversely affect its ability to acquire quality life insurance policies [97]. - The secondary market for life insurance policies has grown, but the availability of policies may be limited, impacting the company's acquisition strategy [95]. - The life settlement industry faces negative public perception and political opposition, which could adversely affect the value and liquidity of the Company's investments [99]. - The Company may face challenges in realizing the anticipated benefits from the Carlisle Acquisition and the FCF Acquisition, which could adversely affect revenues and operating results [160]. - Integration of the acquired businesses may lead to the loss of key employees and customers, increased costs, and disruptions in ongoing operations [161]. Regulatory and Compliance Risks - Changes in tax regulations or interpretations could negatively affect the company's cash flows and operational results [84]. - Changes in legislation could classify life settlements as securities, imposing additional regulatory burdens and potentially limiting the Company's investment strategies [107]. - The Company must comply with U.S. state securities laws, and failure to do so could result in fines and sanctions that adversely affect its performance [112]. - The Company is subject to various U.S. privacy laws, including the GLBA and HIPAA, and violations could result in significant penalties and operational disruptions [119][120]. - The Company must comply with the EU General Data Protection Regulation (GDPR), and failure to do so could result in significant penalties [167]. - The Company is subject to various international regulatory requirements that could impose additional costs and operational challenges, impacting financial results [164]. Operational Risks - The company is subject to privacy and cybersecurity risks, which could have a material adverse impact on its operations [82]. - The Company faces privacy and cybersecurity risks related to the maintenance of proprietary information, which could lead to financial and reputational damage [114]. - The Company relies on third-party data for tracking life settlement policies, and failures in these systems could lead to financial losses and operational disruptions [102]. - There is a risk of fraud in the origination of life insurance policies, which could result in significant financial losses for the Company if policies are challenged [103]. - The Company must ensure timely premium payments on life insurance policies to avoid lapses, which could materially impact its business [127]. - Pandemics, rising interest rates, and inflation may disrupt the Company's ability to originate life settlement policies, adversely affecting its financial position [142]. - Failure to maintain adequate internal controls over financial reporting could lead to material weaknesses and errors in financial reporting [144]. Financial Position and Capital Structure - The company had outstanding indebtedness of approximately $381 million as of December 31, 2024, including $100 million under its Senior Secured Credit Facility [193]. - The company has an additional committed Delayed Draw Facility of up to $50 million available to be drawn subject to certain conditions [193]. - The Company has irrevocably elected to opt out of the extended transition period under the JOBS Act [360]. - As an emerging growth company, the Company will adopt new or revised accounting standards at the same time as public companies [361]. - Following the consummation of the Business Combination, the Company will comply with new or revised accounting standards on the relevant adoption dates for non-emerging growth companies [361]. - The Company’s ability to raise capital may be limited, affecting its investment strategy and financial condition [147]. - The stock repurchase program may not enhance long-term stockholder value and could increase stock price volatility [176]. - The company has not paid cash dividends in the past and does not expect to pay cash dividends in the foreseeable future [189]. - The company may issue additional securities, which could result in substantial dilution to existing stockholders [181]. - The market price of the company's Common Stock may be volatile due to various factors, including operating performance and market conditions [185]. - The company is subject to restrictive covenants under its Credit Agreement that could impact its operational flexibility [194].
ET.RES.ACQ(ERESW) - 2024 Q4 - Annual Report