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IDW Media Holdings (IDWM) Risk Analysis
Risk Overview Q4, 2022
Source: the company's latest filing for the period ended Jan 31, 2023, filed Mar 15, 2023
Risk Change Over Time
- Natural and Human Disruptions - Risk 1The collapse of certain U.S. banks and potentially other financial institutions may have adverse impacts on certain of our vendors and customers or our ability to access payments from certain customers which could negatively impact our operations and financial condition.
On March 10, 2023, Silicon Valley Bank ("SVB") was shut down, followed on March 11, 2023 by Signature Bank and the Federal Deposit Insurance Corporation ("FDIC") was appointed as receiver for those banks. Since that time, there have been reports of instability at other U.S. banks, including First Republic. The Company maintains an account at First Republic and certain customers make payments to the Company via that account, although the Company does not generally maintain significant deposits in that account beyond the short term. If First Republic were to fail, we may not be able to access the payments made by those of our customers who make payments via that account on a timely basis, if at all. Despite the steps taken to date by U.S. agencies to protect depositors, the follow-on effects of the events surrounding the SVB and Signature Bank failures and pressure on other banks are unknown, could include failures of other financial institutions to which we face direct or more significant exposure, and may lead to significant disruptions to our operations, financial position, and reputation. The extent of such impacts is uncertain, and there may be additional risks that we have not yet identified. We are taking steps to identify any potential impact and minimize any disruptions to our operations. However, we cannot guarantee that we will be able to avoid negative consequences directly or indirectly from the foregoing events or other impacts on U.S. financial institutions. None
Risk Highlights Q4, 2022
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 40
- Share Price & Shareholder Rights - Risk 1There can be no assurances that our Class B common stock will not be subject to potential delisting if we do not continue to maintain the listing requirements of the NYSE American.
We are subject to, among other things, our fulfilling all of the listing requirements of NYSE American. In addition, NYSE American has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing (i.e., being de-listed from NYSE American), would make it more difficult for stockholders to sell our Class B common stock and more difficult to obtain accurate price quotations on our Class B common stock. This could have an adverse effect on the price of our Class B common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for any financing we may need in the future, may also be materially and adversely affected if our Class B common stock is not traded on a national securities exchange.
- Share Price & Shareholder Rights - Risk 2Although we do not intend to utilize the "controlled company" exemption that may now or in the future be afforded to us by the NYSE American, we may do so in the future which could limit or reduce the effectiveness of our corporate governance.
The Trusts (as defined below) collectively hold shares that represent approximately 58.6% of the combined voting power of our outstanding stock as of January 17, 2023. See "Eight trusts for the benefit of sons and daughters of Howard S. Jonas, our Chairman of the Board of Directors, hold shares that, in the aggregate, represent more than a majority of the combined voting power of our outstanding capital stock, which may limit the ability of other stockholders to affect our management", below, and "Holders of our Class B common stock have significantly less voting power than holders of our Class C common stock", below. Although we do not believe it to be the case currently, as a result of our current ownership by the Trusts or otherwise we may now or in the future qualify for the exceptions from the NYSE American's corporate governance listing requirements available to us because we are a "controlled company" as defined in section 801(a) of the NYSE American Company Guide. Among other things, a "controlled company" may exempt itself from the requirement that (i) a majority of its directors be independent directors, (ii) its Compensation Committee, Corporate Governance Committee and/or Nominating Committee be comprised entirely of independent directors, and (iii) the Company not have a single Nominating/Corporate Governance Committee. If we currently or in the future qualify as a "controlled company," we do not intend to rely on any applicable exceptions from the NYSE American's corporate governance listing requirements available to us because we are at that time a "controlled company." However, there can be no assurance that we will not in the future, if at that time we are a "controlled company," rely on any or all of the exceptions from the NYSE American's corporate governance listing requirements available to us because we are a "controlled company." If we do rely on any or all of the exceptions from the NYSE American's corporate governance listing requirements because we are then a "controlled company," the effectiveness of our corporate governance could be limited or reduced.
- Share Price & Shareholder Rights - Risk 3Our multi-class structure may render our shares ineligible for inclusion in certain stock market indices, and thus adversely affect the share price of our Class B common stock and its liquidity.
We have issued and outstanding shares of Class B common stock and shares of Class C common stock. Our multi-class structure may render our shares ineligible for inclusion in certain stock market indices, which may adversely affect the share price of our Class B common stock and its liquidity.
- Share Price & Shareholder Rights - Risk 4There is a limited trading market for shares of our Class B common stock and stockholders may find it difficult to sell our shares.
Our Class B common stock may be subject to the penny stock rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. The SEC regulations generally define a penny stock to be an equity that has a market price of less than $5.00 per share, subject to certain exceptions. If we do not retain a listing on NYSE American and if the price of our Class B common stock is less than $5.00, our Class B common stock will be deemed a penny stock. Unless an exception is available, those regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions and high net worth individuals). In addition, the broker-dealer must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. Moreover, broker-dealers who recommend such securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser's written agreement to transactions prior to sale. Regulations on penny stocks could limit the ability of broker-dealers to sell our Class B common stock and thus the ability of purchasers of our Class B common stock to sell their shares in the secondary market. We cannot predict the extent to which investor interest in us and our Class B common stock will lead to the development or continuance of an active trading market or how liquid that trading market for our Class B common stock might become. If an active trading market for our Class B common stock does not develop or is not sustained, it may be difficult for investors to sell shares, particularly large quantities, of our Class B common stock at a price that is attractive or at all. As a result, an investment in our Class B common stock may be illiquid and investors may not be able to liquidate their investment readily or at all when they desire to sell.
- Share Price & Shareholder Rights - Risk 5There is limited liquidity in our Class B common stock, which may adversely affect your ability to sell your shares of our Class B common stock.
The market price of our Class B common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include, but are not limited to: - developments concerning intellectual property rights and regulatory approvals relating to us;- quarterly variations in our business and financial results or the business and financial results of our competitors;- the ability or inability of us to generate increases in revenue and operate profitably;- the ability or inability of us to raise capital, if needed, and the terms and conditions associated with any such raising of capital;- developments in our industry and target markets;- the number of market makers who are willing to continue to make a market in our stock and the market or exchange on which they decide to make a market in our stock;- our ability to have our Class B common stock continue to be listed on the NYSE American; and - general market conditions and other factors, including factors unrelated to our own operating performance. In recent years, the stock market in general has experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of shares of our Class B common stock, which could cause a decline in the value of our shares. Price volatility may be accentuated if trading volume of our Class B common stock is low, which historically has often been the case. The volatility in our Class B stock may be combined with low trading volume. Any or all of these above factors could adversely affect your ability to sell your shares of our Class B common stock or, if you are able to sell your shares, to sell your shares at a price that you determine to be fair or favorable.
- Share Price & Shareholder Rights - Risk 6We are a "smaller reporting company" and an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies and emerging growth companies will make our Class B common stock less attractive to investors.
We are a "smaller reporting company," as defined in Rule 12b-2 under the Exchange Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including "emerging growth companies" such as, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Our status as a "smaller reporting company" is determined on an annual basis. We cannot predict if investors will find our Class B common stock less attractive or our company less comparable to certain other public companies because we will rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future financial results may not be as comparable to the financial results of certain other companies in our industry that adopted such standards. If some investors find our Class B common stock less attractive as a result, there may be a less active trading market for our Class B common stock and our stock price may be more volatile.
- Share Price & Shareholder Rights - Risk 7Holders of our Class B common stock have significantly less voting power than holders of our Class C common stock.
Holders of our Class B common stock are entitled to one-tenth of a vote per share on all matters on which our stockholders are entitled to vote, while holders of our Class C common stock are entitled to three votes per share. Because of their voting power, the holders of our Class C common stock will be able to control matters requiring approval by our stockholders, including the election of all of the directors, amendment of organizational documents and the approval of significant corporate transactions, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of the holders of our Class B common stock to influence our management may be limited. In addition, our dual class structure has an anti-takeover effect, and accordingly, the holders of the shares of Class C common stock have the ability to prevent any change in control transactions that may otherwise be in the best interest of stockholders
- Share Price & Shareholder Rights - Risk 8Eight trusts for the benefit of sons and daughters of Howard S. Jonas, our Chairman and Chairman of the Board, hold shares that, in the aggregate, represent more than a majority of the combined voting power of our outstanding capital stock, which may limit the ability of other stockholders to affect our management.
Eight trusts for the benefit of sons and daughters of Howard S. Jonas (the "Trusts"), our Chairman and Chairman of the Board, collectively have voting power over 1,733,750 shares of our common stock (which includes 545,360 shares of our Class C common stock (which is all the issued and outstanding shares of the Class C common stock), which are convertible into shares of our Class B common stock on a 1-for-1 basis, and 1,188,390 shares of our Class B common stock), representing approximately 58.6% of the combined voting power of our outstanding capital stock, as of January 17, 2023. In addition, as of January 17, 2023, Howard S. Jonas beneficially holds 3,479,934 shares of our Class B common stock, warrants to purchase up to 89,243 shares of our Class B common stock at a price per share of $1.936 and warrants to purchase up to 98,336 shares of our Class B common stock at a price per share of $1.936. Each of the Trusts has a different, independent trustee. Howard S. Jonas serves as our Chairman, an executive officer position, and Chairman of the Board, which is not an officer position. He is our founder and served as an executive officer, including our Chief Executive Officer, for a very significant time period, and the members of the Board and management often look to him for guidance on major financial, operational and strategic matters. Howard S. Jonas does not have the right to direct or control the voting of the shares of our common stock that are held by the Trusts, and the independent trustees hold sole voting and dispositive power over the common stock held by the Trusts. However, Howard S. Jonas is the trustor of the trusts and is the father of each of the beneficiaries of the Trusts and his views may be taken into account by the trustees and others related to the Trusts. We are not aware of any voting agreement between or among any of the Trusts and/or Howard S. Jonas, but if such a voting agreement or other similar arrangement exists or were to be consummated, if all or several or all of the Trusts were to act in concert, or if we issued additional Class C common stock, certain or all of the Trusts and/or Howard S. Jonas along with holders of the Class C common stock would be able to control matters requiring approval by our stockholders, including the election of all of the directors, amendment of organizational documents and the approval of significant corporate transactions, including any merger, consolidation or sale of all or substantially all of our assets. As a result, the ability of any of our other stockholders to influence our management may be limited. In addition, our dual class structure has an anti-takeover effect, and accordingly, the holders of the shares of Class C common stock have the ability to prevent any change in control transactions that may otherwise be in the best interest of stockholders.
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.
