Air T Inc 8-K, filed Jul 27, 2023
Air T Inc (AIRT)
8-K
2023-07-27
For: 2023-07-27
View Original
Added on
April 09, 2026
About this 8-K
Air T Inc filed this 8-K on July 27, 2023.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
______________________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 27, 2023
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(Exact Name of Registrant as Specified in Charter)
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(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices, and Zip Code)
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Registrant’s Telephone Number, Including Area Code
Not applicable___
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). | |||||
Emerging growth company | |||||
| ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ||||
Item 7.01 Regulation FD Disclosure
Updated Investor Presentation. The Company updated its investor presentation to potential investor groups. A copy of the updated PowerPoint Presentation to be used by the Company for such presentations is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information contained in Item 7.01 to this Current Report on Form 8-K (including Exhibits 99.1) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise be subject to the liabilities of that section. The information in this Item 7.01 (including Exhibits 99.1) shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, except as otherwise expressly stated in such filing.
Item 8.01 Other Events
For questions related to this release or other Air T matters, please use the Company’s interactive Q&A capability, through Slido.com, accessible from our website, to submit any questions. Questions submitted through Slido will be answered “live” and in writing at the Company’s Annual Meeting, and via a written response on a quarterly basis. Note that legal and pragmatic requirements restrict us from answering every question posted, yet we intend to address all reasonable and relevant questions with a written answer.
Item 9.01 Financial Statements and Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 27, 2023
AIR T, INC.
By: /s/ Brian Ochocki
Brian Ochocki, Chief Financial Officer
NASDAQ: AIRT FY23 Year-End Update JUL 2023 A PORTFOLIO OF POWERFUL COMPANIES
Statements in this document, which contain more than historical information, may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties. Actual results may differ materially from those expressed in the forward-looking statements because of important potential risks and uncertainties, including, but not limited to, economic and industry conditions in the Company’s markets, the risk that contracts with FedEx could be terminated or adversely modified, the risk that the number of aircraft operated for FedEx will be reduced, the risk that GGS customers will defer or reduce significant orders for deicing equipment, the impact of any terrorist activities on United States soil or abroad; the Company’s ability to manage its cost structure for operating expenses, or unanticipated capital requirements, and match them to shifting customer service requirements and production volume levels the Company's ability to meet debt service covenants and to refinance existing debt obligations, the risk of injury or other damage arising from accidents involving the Company’s overnight air cargo operations, equipment or parts sold and/or services provided, market acceptance of the Company’s commercial and military equipment and services, competition from other providers of similar equipment and services, changes in government regulation and technology, changes in the value of marketable securities held as investments, mild winter weather conditions reducing the demand for deicing equipment, and market acceptance and operational success of the Company’s relatively new aircraft asset management business and related aircraft capital joint venture. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. The Company is under no obligation, and it expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. Potential investors should review the Company’s risk factors contained in its reports filed with the Securities and Exchange Commission, as well as the summary Risk Factors contained herein, prior to investing. 2 SAFE HARBOR
3 ■ AIR T, INC. (NASDAQ: AIRT) is an industrious American company focused on generating after tax cash flow per share. ■ Founded in 1980, our businesses have a history of growth and cash flow generation. ■ Current management has been in place since 2013. The two largest shareholders have seats on the Board of Directors. WHO WE ARE OPERATING HIGHLIGHTS EXECUTIVE SUMMARY ■ AIR T, INC. operates 14 companies with 500+ employees. ■ For fiscal year-ended 3/31/2023, Revenues were $247.3 million, and Adjusted EBITDA was $6.0 million. ■ Since 9/30/13, shares outstanding have declined from 3.7m* to 2.9m or 22.7%. *Adjusted for 3/2 stock split
1. About AIR T, INC. 2. Performance 3. Our Growth Strategies 4. Appendix - Risk Factors 4 CONTENTS
5 ABOUT AIR T, INC.
We are an industrious American company established 40+ years and growing. 6 ■ Our businesses have a history of growth and cash flow generation. ■ We seek to identify and empower individuals and teams who will operate businesses well, increasing value over time. ■ We work to activate growth and overcome challenges, ultimately building businesses that flourish over the long term. ■ Management has purchased a significant % of AIRT common stock in the open market, demonstrating real alignment with all common shareholders. ■ AIRT’s management team has a track record of successfully allocating capital.
“Investor-Operator Partnership” is designed to drive short and long-term value creation. 7 “We want our businesses to be managed by dynamic individuals within high-performance teams. We are set up to make space for dynamos and support their enterprises. The holding company team seeks to focus resources, activate growth and deliver long-term value for everyone associated with AIR T, INC.” - Nick Swenson
8 identify good ideas match with capital partners secure and empower dynamic management generate extremely attractive returns on capital build an investor brand and network FLYWHEEL
$247M 9 FY23 Revenue $6.0M FY23 Adj. EBITDA* 3 CORE SEGMENTS 14 COMPANIES 584 EMPLOYEES OVERNIGHT AIR CARGO COMMERCIAL JET ENGINES AND PARTS GROUND EQUIPMENT SALES *See Adjusted EBITDA reconciliation on slide 31
AIR T, INC. Financial Highlights (For the Twelve-Month Period Ended 3/31/23) 10 FY Results ■ FY23 saw a 40% revenue increase across all segments. This includes a $44.0M increase in Commercial Jet Engines and Parts, which was driven by higher component sales due to more activity in the aviation industry. Overnight Air Cargo increased by $16.1M, mainly due to higher pass-through revenues and admin fees. A higher volume of trucks to the military and commercial customers led to Ground Equipment Sales increase by $6.2M. ■ FY23 operating income decreased by $13.1M. The decrease was primarily driven by $9.1M of ERC credits received in FY22 and increases of $7.0M in inventory write-downs and impairment. Overnight Air Cargo increased $1.3M year-over- year due to higher revenues offset by higher pilot salaries and aircraft lease costs. In addition, Commercial Jet Engines and Parts increased by $2.0M (excluding the inventory write-down and impairment) due to high component sales. FY23 FY22 FY21 FY20 Revenue $247.3M $177.1M $175.1M $236.8M Operating Income ($4.4M) $8.8M ($9.2M) $7.3M Adjusted EBITDA* $6.0M $11.4M ($1.3M) $9.0M *See Adjusted EBITDA reconciliation on slide 31
Commercial Jet Engines and Parts 11 SEGMENT 1 ■ We buy aircraft and engines, then either lease, trade, or send them to part out. ■ We supply parts to maintenance, repair, and overhaul facilities (MRO). ■ Companies in this segment include Contrail, AirCo, AirCo Services, Worthington, Jet Yard, Air’Zona, and LGSS. ■ Sales rebounded with the additional activity in the aviation industry while operating income was down primarily due to the $6.6M increase in the write-down of inventory. A niche between aircraft owners and MRO shops, this segment will seek to grow by coordinating activities and raising investment capital. FY23 FY22 Revenue $101.7M $57.7M Operating Income ($1.0M) $3.6M
Overnight Air Cargo 12 SEGMENT 2 ■ We operate two of the seven FedEx feeder airlines. ■ Business units Mountain Air Cargo and CSA Air have a 41-year history with FedEx. ■ Air T Companies since 1982, 1983 ■ Air T added Worldwide Aircraft Services to this segment in Q4 FY23. ■ Revenues and operating income increased due to an increased fleet and despite higher pilot salaries and aircraft lease costs. An asset-light, predictable business. FY23 FY22 Revenue $90.5M $74.4M Operating Income $4.0M $2.8M
Ground Equipment Sales 13 SEGMENT 3 ■ We manufacture deicing equipment, scissor lift trucks, and other ground support equipment. ■ Sole-source deicer supplier to the US Air Force for 19 years. ■ Highly efficient light manufacturing facility. ■ The segment is comprised of Global Ground Support LLC. ■ Air T Company since 1998. Segment’s order backlog was $13.6 million as of 3/31/23 compared to $14.0 million as of 3/31/22 FY23 FY22 Revenue $48.5M $42.2M Operating Income $3.1M $3.2M
14 Investment manager focused on unearthing fundamentally attractive small and mid-cap opportunities. Allows us to further expand upon our idea generation capabilities to identify, analyze, develop and execute innovative investment strategies that are aimed at building better financial futures for all our stakeholders. Air T company since 2017. Digital inkjet press designer and manufacturer, delivering color presses that produce high-quality output without compromising efficiency or budgets. Air T company since 2017. Software developer and solution provider focused on the Aviation MRO and aftermarket community. Developed a suite of cloud-based and mobile applications to provide affordable, common-sense solutions. Air T company since 2018. Investing For Growth
Air T Digital 15 ■ We invest in companies that provide digital aviation business services which generate recurring subscription revenues. As of March 31 2023 2022 ARR1 $4.7M $3.9M 1ARR, or Annual Recurring Revenue, is defined as the monthly recurring revenue as of March 31, 2023 and March 31, 2022, multiplied by 12
Air T Asset Management 16 ■ We manage assets for our investor partners. The asset types include leased aircraft, consignments, teardowns as well as domestic and African equities. ■ Through fiscal year-end 2023, Air T’s asset management activities have not generated positive Adjusted EBITDA. As of March 31 2023 2022 Assets Managed for Investor Partners $183M $126M
■ On January 31, 2023, we completed the acquisition of Worldwide Aircraft Services (“WASI”), an aircraft repair station that begin operations in 1986 located in Springfield, MO, for $3.1M. 17 WASI Acquisition NEWS
FY14 FY23 Commercial Aircraft & Engines Overnight Air Cargo Ground Support Equipment FINANCIAL HIGHLIGHTS Over the last ten years, revenue has increased 187% and is more diversified. 18 +187% $240M* $84M SEGMENTS REVENUE 62% 38% 43% 33% 24% *Excludes revenue in FY23 earned outside of our core segments.
Non-Operating Assets 19 AIR T, Inc. owns the following public and private securities: OTHER AIR T, INC. Non-Operating Assets (In Millions) 3/31/23 3/31/22 3/31/21 3/31/20 Insignia Systems (ISIG) Stock – 0.5M Shares1 $3.8 $4.6 $4.3 $2.6 CCI Investment (20.1% as of 3/31/23)2 $3.1 $2.6 $3.8 $3.4 Oxbridge RE (OXBR) Stock – 0.5M Shares1 $0.4 Investments in BCCM Funds $0.5 $0.7 $0.9 $0.3 Aircraft Asset Management Investments $8.2 $7.0 TFS Partners LLC Investment2 $0.3 $0.3 $0.6 $0.5 Other Investments $2.2 $2.6 $2.9 $2.8 Total $18.1 $17.8 $12.5 $10.0 1 Based on the closing price at the time of investor presentation publish. 3/31/23 is as of 6/21/23 at $7.765. 2 3/31 Carrying value reflects the equity method of accounting.
20 CAPITALIZATION TABLE AIR T, INC.’s capital structure is designed to appropriately shape our bet sizes; in part by utilizing non-recourse leverage For example, AIR T guarantees Contrail’s bank loans to a maximum limit of $1.6 million. 1We entered into interest rate swaps to provide a fixed rate of 5.09% and 4.68%, respectively, for Term Notes D and G.
Calibrated Bets & Capitalization Structure 21 Risk Management: Downside Protection • Anti-fragile company • Islands of segregated assets and businesses • Market-driven and savvy risk management program that oversees all of the company STRUCTURE Tailored, Limited, Convex Exposures • Convexity-promoting organizational design • Kelly-calibrated bets: sized to edge & bankroll • Limit downside: tailored exposures
FINANCIAL HIGHLIGHTS 22 Since 9/30/2013, the share price of AIRT has increased at 14.5% per annum*+. *Reporting period 9/30/13 to 6/26/23, includes $4M Trust *Preferred dividend to common shareholders + Compares to 10.2% return of the S&P 500 over the same period $26.47
FINANCIAL HIGHLIGHTS Since 1994, our company has had a history of long-term and sustained financial health. 23 Note: FY2017 contained large non-cash impairments and inventory write-downs tied to our investment in Delphax Technologies. FY21 and FY23 results contained $6.6m and $7.8m, respectively, of non-cash impairments and inventory write-downs primarily related to our aircraft parts companies as a result of COVID-19. - 50 100 150 200 250 300 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 Revenue ($ in Millions) (15) (10) (5) - 5 10 15 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 Operating Income ($ in Millions)
24 GROWTH STRATEGIES
GROWTH STRATEGIES Our four growth strategies are... 25 ■ Invest to build our current high-performing businesses. ■ Seek to acquire new cash-flow generating businesses. ■ Identify great marketable securities or alternative assets. ■ Create unique investment products and fund alongside third- party capital partnerships.
GROWTH STRATEGY 1 We plan to reinvest in projects at our high-performing businesses by... 26 ■ Purchasing commercial aircraft for trading, leasing and part-out. ■ Purchasing engine parts inventory. ■ Funding deicer builds for Global Ground Support.
GROWTH STRATEGY 2 We seek to acquire new cash-flow generating businesses by... 27 ■ Identifying and acquiring high- performing businesses with edge in the marketplace, which either complement our current portfolio or diversify into industries beyond aviation.
GROWTH STRATEGY 3 We plan to identify great marketable securities or alternative assets by... 28 ■ Searching for another committed activist opportunity. ■ Investing in distressed and high yield securities. ■ Investing in small cap securities. ■ Further investing in our current securities portfolio.
GROWTH STRATEGY 4 We plan to create unique investment products with outside capital partners by... 29 ■ Offering thoughtful and sustainable products with attractive return profiles ■ Attracting and retaining sophisticated investment professionals and creating space for talented asset managers.
Theoretical Toy Model Public Company versus Private Equity Fund 30 TOY MODEL ASSUMPTIONS Annual Return on Investment 5% Taxes Paid by PE Fund @ 7-year Intervals 30% Year Public Company $1 Private Equity Fund $1 Taxes Paid 0 $1.00 $1.00 $0.00 7 $1.34 $1.24 $0.10 14 $1.89 $1.59 $0.15 21 $2.65 $2.04 $0.19 28 $3.73 $2.63 $0.25 35 $5.25 $3.38 $0.32 42 $7.39 $4.34 $0.41 49 $10.40 $5.57 $0.53 Total $1.96 Question: Does a permanent capital vehicle like a public company have a structural advantage compared to a 7-year PE fund vehicle? Hypothesis: For the straightforward reason that PE funds trade assets every 7 years, the public companies tend to have a significant structural advantage at every timescale. Complicating Factors: • Do annual corporate tax burdens of a public C- corporation differ from a company owned by a public company? • Does the inherent churn of buying and selling businesses within a public company overstate the advantage vs PE Fund? • Theoretically, the public company can buy and sell assets without regards to the calendar, therefore at better prices. • Cost and burden of being a public company. Note: In this model we assume that assets are sold by the private equity fund every seven years and reinvested after paying capital gains taxes on the gain on the sale. It is also assumed that the Public Company does not sell the assets and therefore does not pay capital gains tax. The model does not consider taxes paid on operational results. This projection, forecast or estimate is a forward-looking statement and is based upon certain assumptions which are speculative in nature and may vary materially from actual results.
Adjusted EBITDA Reconciliation 31 FY Results FY23 FY22 FY21 FY20 Operating Income (GAAP) ($4.4M) $8.8M* ($9.2M) 7.3M Depreciation (excluding leased engine depreciation) $2.5M $1.6M $1.2M $1.3M Asset Impairment, write-downs, restructuring $7.8M $0.8M $6.6M $0.0M Gain on sale of PP&E $0.0M $0.0M ($0.0M) ($0.0M) Security Issuance Expense $0.1M $0.3M $0.0M $0.4M Adjusted EBITDA $6.0M $11.4M* ($1.3M) $9.0M *Includes one-time ERC credit of $9.1M
32 Q&A WITH MANAGEMENT
Our interactive Q&A capability, through Slido.com, allows shareholders to ask questions of our management. Recently submitted questions have been answered below. To submit your own question, go to (https://app.sli.do/event/j8drfixw).1 33 Do you pay ordinary dividends or make partner distributions?2 No. Our value proposition to shareholders of AIR T, INC. is to be good stewards of shareholder capital. We plan to reinvest in our high-performing businesses, acquire new cash-flow generating businesses and identify other great investment opportunities. Through our acquisitions and investments, along with our ongoing support of the dynamic individuals and teams at our networked portfolio of powerful companies, we seek to deliver meaningful value for all our stakeholders. Never say never, however, we have made one special dividend to shareholders in the past. The distribution consisted of Trust Preferred securities and warrants to purchase additional trust preferred securities. The total face value of the Trust Preferred securities distributed was $4 million or approximately $1.30 per share. Investors who are interested in owning an income generating security should consider owning our Trust Preferred securities which have a $2.00 annual dividend per share. Notes: 1. We plan to present and answer all questions received in the quarter through a section in the quarterly Investor Presentation. 2. Submitted questions may be edited for spelling and/or clarity.
APPENDIX Risk Factors 34
SUMMARY RISK FACTORS 35 For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. The purchase of securities of Air T, Inc., the “Company,” is highly speculative and involves a very high degree of risk. An investment in the Company is suitable only for persons who can afford the loss of their entire investment. Accordingly, in making an investment decision with respect to the Company’s securities, investors should carefully consider all material risk factors, including the risks, uncertainties and additional information set forth below as well as set forth in (i) our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Currents Reports on Form 8-K, and our definitive proxy statements, all which are filed with the SEC, and (ii) our prospectus, filed as a part of our Registration Statement on Form S-3, which is filed with the SEC, and any supplement to the prospectus, including information in any documents subsequently incorporated by reference into the prospectus. Additional risks not presently known or are currently deemed immaterial could also materially and adversely affect our financial condition, results of operations, business and prospects. General Business Risks ● Market fluctuations may affect our operations. ● Rising inflation may result in increased costs of operations and negatively impact the credit and securities markets generally, which could have a material adverse effect on our results of operations and the market price of our common stock. ● We could experience significant increases in operating costs and reduced profitability due to competition for skilled management and staff employees in our operating businesses. ● Legacy technology systems require a unique technical skillset which is becoming scarcer. ● Security threats and other sophisticated computer intrusions could harm our information systems, which in turn could harm our business and financial results. ● We may not be able to insure certain risks adequately or economically. ● Legal liability may harm our business. ● Our business might suffer if we were to lose the services of certain key employees. ● Our business, financial condition and results of operations could be adversely affected by global public health issues or similar events. ● A pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our centers could adversely impact our business.
Risks Related to Our Segment Operations ● The operating results of our four segments may fluctuate, particularly our commercial jet engine and parts segment. ● Our Air Cargo Segment is dependent on a significant customer. ● Our dry-lease agreements with FedEx subject us to operating risks. ● Because of our dependence on FedEx, we are subject to the risks that may affect FedEx’s operations. ● A material reduction in the aircraft we fly for FedEx could materially adversely affect our business and results of operations. ● Sales of deicing equipment can be affected by weather conditions. ● We are affected by the risks faced by commercial aircraft operators and MRO companies because they are our customers. ● Our engine values and lease rates, which are dependent on the status of the types of aircraft on which engines are installed, and other factors, could decline. ● Upon termination of a lease, we may be unable to enter into new leases or sell the airframe, engine or its parts on acceptable terms. ● Failures by lessees to meet their maintenance and recordkeeping obligations under our leases could adversely affect the value of our leased engines and aircraft which could affect our ability to re-lease the engines and aircraft in a timely manner following termination of the leases. ● We may experience losses and delays in connection with repossession of engines or aircraft when a lessee defaults. ● Our commercial jet engine and parts segment and its customers operate in a highly regulated industry and changes in laws or regulations may adversely affect our ability to lease or sell our engines or aircraft. ● Our aircraft, engines and parts could cause damage resulting in liability claims. ● We have risks in managing our portfolio of aircraft and engines to meet customer needs. ● Liens on our engines or aircraft could exceed the value of such assets, which could negatively affect our ability to repossess, lease or sell a particular engine or aircraft. ● In certain countries, an engine affixed to an aircraft may become an addition to the aircraft and we may not be able to exercise our ownership rights over the engine. ● Higher or volatile fuel prices could affect the profitability of the aviation industry and our lessees’ ability to meet their lease payment obligations to us. ● Interruptions in the capital markets could impair our lessees’ ability to finance their operations, which could prevent the lessees from complying with payment obligations to us. For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS 36
Risks Related to Our Segment Operations (continued) ● Our lessees may fail to adequately insure our aircraft or engines which could subject us to additional costs. ● If our lessees fail to cooperate in returning our aircraft or engines following lease terminations, we may encounter obstacles and are likely to incur significant costs and expenses conducting repossessions. ● If our lessees fail to discharge aircraft liens for which they are responsible, we may be obligated to pay to discharge the liens. ● If our lessees encounter financial difficulties and we restructure or terminate our leases, we are likely to obtain less ● favorable lease terms. ● Withdrawal, suspension or revocation of governmental authorizations or approvals could negatively affect our business. Risks Related to Our Structure and Financing/Liquidity Risks ● Our holding company structure may increase risks related to our operations. ● A small number of stockholders has the ability to control the Company. ● Although we do not expect to rely on the “controlled company” exemption, we may soon become a “controlled company” within the meaning of the Nasdaq listing standards, and we would qualify for exemptions from certain corporate governance requirements. ● An increase in interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our cash flow and negatively affect the results of our business operations. ● Our inability to maintain sufficient liquidity could limit our operational flexibility and also impact our ability to make payments on our obligations as they come due. ● Future cash flows from operations or through financings may not be sufficient to enable the Company to meet its obligations. ● A large proportion of our capital is invested in physical assets and securities that can be hard to sell, especially if market conditions are poor. ● To service our debt and meet our other cash needs, we will require a significant amount of cash, which may not be available. ● If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to seek alternatives. ● The transition away from LIBOR may adversely affect our cost to obtain financing and may potentially negatively impact our interest rate swap agreements. ● Despite our substantial indebtedness, we may incur significantly more debt, and cash may not be available to meet our financial obligations when due or enable us to capitalize on investment opportunities when they arise. 37 For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS
Risks Related to Our Structure and Financing/Liquidity Risks (continued) ● Our current financing arrangements require compliance with financial and other covenants and a failure to comply with such covenants could adversely affect our ability to operate. ● Future acquisitions and dispositions of businesses and investments are possible, changing the components of our assets and liabilities, and if unsuccessful or unfavorable, could reduce the value of the Company and its securities. ● We face numerous risks and uncertainties as we expand our business. ● Our business strategy includes acquisitions, and acquisitions entail numerous risks, including the risk of management diversion and increased costs and expenses, all of which could negatively affect the Company’s ability to operate profitably. ● Strategic ventures may increase risks applicable to our operations. ● Rapid business expansions or new business initiatives may increase risk. ● Our policies and procedures may not be effective in ensuring compliance with applicable law. ● Compliance with the regulatory requirements imposed on us as a public company results in significant costs that may have an adverse effect on our results. ● Deficiencies in our public company financial reporting and disclosures could adversely impact our reputation. Risks Related to Environmental, Social, and Governance Issues ● Climate change, related legislative and regulatory responses to climate change, and the transition to a lower carbon economy may adversely affect our business. ● We are subject to risks from natural disasters such as earthquakes and severe weather (the frequency and severity of which may be impacted by climate change), which may include more frequent or severe storms, extreme temperatures and ambient temperature increases, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our business, results of operations, and financial condition. ● Environmentally hazardous conditions could potentially adversely affect us. ● We are subject to increasing scrutiny from investors and others regarding our environmental, social, governance, or sustainability responsibilities, which could result in additional costs or risks and adversely impact our reputation, associate retention, and ability to raise capital from such investors. 38 For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS