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as the success of any organic growth strategy, will be dependent on the continuing efforts of the management teams of our businesses. |
We will seek to provide these individuals with equity incentives and to have employment agreements with certain persons we have identified |
as key to their businesses. However, these measures may not prevent these individuals from leaving their employment. The loss of services |
of one or more of these individuals may materially adversely affect our financial condition, business and results of operations. We may experience difficulty as we evaluate, |
acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management, |
and disruptions of our on-going business. We acquire small businesses in various industries. |
Generally, because such businesses are privately held, we may experience difficulty in evaluating potential target businesses as much |
of the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the |
operations, management and market risks with respect to potential target businesses may be subject to various risks and uncertainties. |
Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial |
drain on our resources and may divert our management team’s attention away from the operations of our businesses for significant |
periods of time. In addition, we may have difficulty effectively |
integrating and managing acquisitions. The management or improvement of businesses we acquire may be hindered by a number of factors, |
including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions. Further, |
the management of an acquired business may involve a substantial reorganization of the business’ operations resulting in the loss |
of employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties |
relating to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition. 43 We face competition for businesses that |
fit our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition |
opportunities. We have been formed to acquire and manage small |
businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range of other potential purchasers. Although |
the pool of potential purchasers for such businesses is typically smaller than for larger businesses, those potential purchasers can |
be aggressive in their approach to acquiring such businesses. Furthermore, we expect that we may need to use third-party financing in |
order to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To the extent that other potential |
purchasers do not need to obtain third-party financing or are able to obtain such financing on more favorable terms, they may be in a |
position to be more aggressive with their acquisition proposals. As a result, in order to be competitive, our acquisition proposals may |
need to be aggressively priced, including at price levels that exceed what we originally determined to be fair or appropriate. Alternatively, |
we may determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive acquisition opportunity. We may not be able to successfully fund |
acquisitions due to the unavailability of debt or equity financing on acceptable terms, which could impede the implementation of our |
acquisition strategy. In order to make acquisitions, we intend to raise |
capital primarily through debt financing, primarily at our operating company level, additional equity offerings, the sale of equity or |
assets of our businesses, offering equity in our company or our businesses to the sellers of target businesses or by undertaking a combination |
of any of the above. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding |
on short notice to benefit fully from attractive acquisition opportunities. Such funding may not be available on acceptable terms. In |
addition, the level of our indebtedness may impact our ability to borrow at our company level. The sale of additional shares of any class |
of equity will also be subject to market conditions and investor demand for such shares at prices that may not be in the best interest |
of our shareholders. These risks may materially adversely affect our ability to pursue our acquisition strategy. Adverse developments affecting the financial |
services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions |
or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and |
results of operations. Actual events involving limited liquidity, defaults, non-performance or |
other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services |
industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have |
in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, or SVB, |
was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, |
or the FDIC, as receiver. Similarly, on March 12, 2023, Signature Bank Corp., or Signature, and Silvergate Capital Corp. were each |
swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated |
that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured |
deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature or |
any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. Although we do not have any funds deposited with |
SVB, Signature Bank or any financial institution currently in receivership, we regularly maintain cash balances with other financial institutions |
in excess of the FDIC insurance limit. A failure of a depository institution to return deposits could impact access |
to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance. Furthermore, if |
any of our partners, suppliers or other parties with whom we conduct business are unable to access funds with such a financial institution, |
such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments |
to us could be adversely affected. In this regard, counterparties to credit agreements and arrangements with these financial institutions, |
and third parties such as beneficiaries of letters of credit (among others), may experience direct impacts from the closure of these financial |
institutions and uncertainty remains over liquidity concerns in the broader financial services industry. Similar impacts have occurred |
in the past, such as during the 2008-2010 financial crisis. 44 Inflation and rapid increases in interest rates |
have led to a decline in the trading value of previously issued government securities with interest rates below current market interest |
rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 |
billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate |
the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of |
financial institutions for immediately liquidity may exceed the capacity of such program. Our access to funding sources and other credit |
arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly |
impaired by factors that affect us, any financial institutions with which we enter into credit agreements or arrangements directly, or |
the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints |
or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions |
or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies |
in the financial services industry. These factors could involve financial institutions or financial services industry companies with which |
we have financial or business relationships, but could also include factors involving financial markets or the financial services industry |
generally. The results of events or concerns that involve |
one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations |
and our financial condition and results of operations. These risks include, but may not be limited to, the followin ● delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial |
assets; ● inability to enter into credit facilities or other working capital resources; ● potential or actual breach of contractual obligations that require us to maintain letters of credit or |
other credit support arrangements; or ● termination of cash management arrangements and/or delays in accessing or actual loss of funds subject |
to cash management arrangements. In addition, investor concerns regarding the U.S. |
or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs |
and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more |
difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity |
resources could, among other risks, adversely impact our ability to meet our operating expenses or other obligations, financial or otherwise, |
result in breaches of our financial and/or contractual obligations, or result in violations of federal or state wage and hour laws. Any |
of these impacts, or any other impacts resulting from the factors described above or other related or similar factors, could have material |
adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations. In addition, any further deterioration in the |
macroeconomic economy or financial services industry could lead to losses or defaults by our partners, vendors or suppliers, which in |
turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial |
condition. For example, a partner may fail to make payments when due, default under their agreements with us, become insolvent or declare |
bankruptcy, or a supplier may determine that it will no longer deal with us as a customer. In addition, a vendor or supplier could be |
adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts |
on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing |
credit facilities involving a troubled or failed financial institution. The bankruptcy or insolvency of any partner, vendor or supplier, |
or the failure of any partner to make payments when due, or any breach or default by a partner, vendor or supplier, or the loss of any |
significant supplier relationships, could cause us to suffer material losses and may have a material adverse impact on our business. We may change our management and acquisition |
strategies without the consent of our shareholders, which may result in a determination by us to pursue riskier business activities. We may change our strategy at any time without |
the consent of our shareholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier |
than, the strategy described in this report. A change in our strategy may increase our exposure to interest rate and currency fluctuations, |
subject us to regulation under the Investment Company Act of 1940, as amended, which we refer to as the Investment Company Act, or subject |
us to other risks and uncertainties that affect our operations and profitability. 45 If we are unable to generate sufficient |
cash flow from the anticipated dividends and interest payments that we expect to receive from our businesses, we may not be able to make |
distributions to our shareholders. Our primary business is the holding and managing |
of controlling interests our operating businesses. Therefore, we will be dependent upon the ability of our businesses to generate cash |
flows and, in turn, distribute cash to us in the form of interest and principal payments on indebtedness and distributions on equity |
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