# Horizon Kinetics Holding Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Horizon Kinetics Holding Corp](/companies/hkhc.md) (CIK 88000)
- Form: 10-Q
- Filed: 2024-11-12
- Accepted by EDGAR: Nov 12, 2024, 17:00 ET
- Period: 2024-09-30
- Accession: 0000950170-24-125625
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/88000/000095017024125625/slgdd-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/88000/000095017024125625/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $15.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $42.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $1.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $5.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $69.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $70.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$38.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $16.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$2.07 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.92 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$2.07 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.92 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 18,415,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 18,129,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $6.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $43.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $18.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2024-09-30 | $365.1m | us-gaap:Assets |
| Total liabilities | at 2024-09-30 | $99.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $265.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 24,654 characters.

*The following discussion and analysis should be read in conjunction with the historical consolidated financial statements of HKHC and the related notes included elsewhere in this current report. The historical consolidated financial data discussed below reflect its historical results of operations and financial position. The following discussion and analysis contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those included in the section entitled “Risk Factors” contained elsewhere in this current report describing key risks associated with the business, operations and industry of HKHC. Amounts and percentages presented throughout this section may reflect rounding adjustments and consequently totals may not appear to sum. The items discussed below have had significant effects on many items within HKHC’s consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.*

### Overview

HKHC is a research driven, fundamentals-oriented asset manager serving institutions, individuals and financial professionals. It provides investment management services through its wholly-owned subsidiary and registered investment adviser, Horizon Kinetics Asset Management LLC. Through this subsidiary, it manages a number of strategies, most of which are focused on publicly-traded equity securities, but also private investments and digital assets. To accommodate different investing preferences, HKHC’s offerings can be accessed in a variety of ways, including through mutual funds, ETFs, a closed end fund, separately managed accounts that can be customized to the unique investment objectives and risk tolerances of individual clients, and, for qualified investors, via private proprietary partnerships typically known as alternative investments. HKHC raises capital for and manages these strategies, and it earns a management fee that varies among products. In certain instances, the fee it earns is tied to the performance of the account. HKHC also produces a number of research reports and compendia that are sold mainly to institutions, as it believes that the discipline required to produce written research encourages thorough qualitative and quantitative analysis. As of September 30, 2024, the Company had regulatory assets under management ("AUM") of $8.3 billion.

HKHC also manages a portfolio of investment securities for its own benefit, which has historically impacted and is expected to impact future results of operations, often significantly so. As of September 30, 2024, we held investment securities (at fair value) of $74.9 million, which represented 20.5% of total assets. In addition, we have devoted capital to a variety of the proprietary alternative investment funds it manages. As of September 30, 2024, HKHC’s investments in these proprietary funds are $177.9 million, which represented 48.7% of total assets.

In addition to investment management and research activities, HKHC operates two wholly-owned, limited purpose broker-dealers, KBD Securities LLC and Kinetics Funds Distributor LLC, both of which are only used for the marketing and promotion of its investment products. We pay a portion of the fee it earns to these and other third-party firms who assist it in marketing.

Along with investing on behalf of clients, HKHC also uses its own capital to invest along with its clients in many of its proprietary products and makes direct investments in public and private instruments including digital assets. Certain employees do, from time to time, serve as management or as a member of the board of directors of the companies in which we invest.

### Primary Sources of Revenue

Management or advisory fees are our primary source of revenue.

The management fees for separately managed accounts are generally calculated on the basis of a percentage of the value of each client’s assets (assets under management) and are charged using either an average daily balance or monthly or quarterly ending balance, and either in arrears or advance.

The Company also earns management fees in its proprietary funds (mutual funds, ETFs, closed-end funds and proprietary partnerships) as compensation for internal fund management and advisory services. The management fees for the proprietary funds vary by fund and investment strategy and are typically approximately between 0.25% and 2.00% of the net asset value of the funds’ underlying investments.

Some clients of HKHC in certain separately managed accounts may pay performance fees in addition to or in lieu of management fees, if their portfolio achieves positive investment returns, in certain cases, in excess of an agreed benchmark or hurdle rate. Typically, such fees are paid annually upon crystallization or when a client closes their investment and are not accrued prior to being earned. Unearned performance fees resulting from the performance of the Company’s proprietary funds for the nine months ended September 30, 2024 are approximately $23.3 million. These unearned performance fees are subject to change based on market prices and generally expected to be resolved during the fourth quarter of 2024 once it is probable that a significant reversal of revenue will not occur.

The Company is also entitled to receive incentive fees on proprietary partnerships if certain performance returns have been achieved as stipulated in the governing documents of the applicable fund. The incentive fees are typically calculated as a percentage of the gains experienced by each partner in the respective fund. Typically, such fees are paid annually upon crystallization or when a client closes their investment and are not accrued prior to being earned. HKHC recognizes its incentive fees when it is no longer probable that a significant reversal of revenue will occur. The Company’s incentive fees are not subject to clawback provisions. As a result of the Merger, the Company also earned revenues from sales of consumer products.

### Business Highlights in the third quarter of 2024

### Total revenue

- HKHC’s total revenues continued to grow this quarter as a result of increasing AUM at our proprietary funds, separately managed accounts and mutual funds due to their favorable 2024 performance. Total revenues were also positively impacted by two months of product sales following the acquisition of Scott’s Liquid Gold. These increases were partially offset by lower management and advisory fees due to declines in AUM at our INFL ETF products.

### Assets under management

- AUM for the three months ended September 30, 2024 increased by approximately $0.9 billion, or 12%, to $8.3 billion, due primarily to market value changes of key holdings across the Company’s mutual funds, ETFs and separately managed accounts (SMAs). The market value of Texas Pacific Land Corporation (“TPL”), which is widely held across HKHC’s proprietary funds and SMAs, increased 21% during the quarter resulting in broad increases in AUM. Those increases were partially offset by declines in Grayscale Bitcoin Trust (“GBTC”), which is also widely held across HKHC’s proprietary funds, of 5% during the third quarter.

### Investment performance

- HKHC maintains a portfolio for investment purposes and has also invested substantial capital in its proprietary funds alongside client investors. For the quarter ended September 30, 2024 there was an increase of $11.3 million in the fair value of this portfolio primarily due to the 21% increase in the TPL securities held directly by HKHC. The increase in the fair value of HKHC’s investments is reported in unrealized gain (loss) on investments, net in the accompanying Consolidated Statement of Operations. For the three months ended September 30, 2024, HKHC’s equity in earnings (losses) in proprietary funds was $20.3 million. This equity earnings is the result of several proprietary funds holding primarily TPL assets (Polestar, Horizon Kinetics Hard Assets, Kinetics Institutional Partners and Kinetics Partners). This performance was partially offset by reductions in proprietary funds holding bitcoin or related assets (Horizon Kinetics Equity Fund Opportunities and Horizon Kinetics Multi-Strategy funds).

### Results of Operations for the three months ended September 30, 2024

### Revenues

#### Management and advisory fees

The Company’s total management and advisory fees increased approximately $2.2 million, or 17%, for the three months ended September 30, 2024 compared to the prior year. The increase is due to higher management fees in proprietary funds and separately managed accounts due to higher AUM during the quarter. However, there was a decline of $0.3 million related to the INFL ETF as the AUM declined from approximately $1.2 billion in 2023 to $1.0 billion at September 30, 2024. These declines were partially offset by a $0.6 million increase in management fees related to incentive fees that were crystallized as part of investor redemptions from various proprietary funds during the quarter.

#### Other income and fees

Other income and fees during the three months ended September 30, 2024 includes primarily revenue from product sales resulting from the acquisition of Scott’s Liquid Gold. The quarter included two months of revenue from these product sales, which accounted for all of the quarterly revenue increase. Other income and fees also includes revenues resulting from the Company’s research services and digital asset mining activities.

### Operating Expenses

#### Compensation, employee benefits, and cost of goods sold

The Company’s operating expenses include employee compensation for investment professionals and other management personnel as well as cost of goods sold for consumer products acquired in the Merger with SLGD. HKHC’s compensation costs for the three months ended September 30, 2024 increased by approximately $1.1 million, or 16%, compared to the prior year, due to higher internal commissions, additional personnel, and $0.4 million of cost of products sold in the current quarter.

#### Sales, distribution and marketing expenses

For the three months ended September 30, 2024, sales, distribution and marketing expenses increased $0.6 million, or 25%, compared to the prior quarter, as the result of higher amounts of $0.1 million due to FRMO pursuant to its revenue sharing agreement with HKHC, higher platform fees, incentive fee commissions and other management fee commissions earned due to generally increasing AUM and management fees during the quarter, and fulfillment costs associated with sales of consumer products.

#### Depreciation and amortization

Depreciation and amortization increased slightly for the three months ended September 30, 2024 as compared to the prior year due to additional amortization expense of intangible assets from the Merger with SLGD.

#### General and administrative expenses

For the three months ended September 30, 2024, general and administrative expenses increased by $1.2 million, or 74%, compared to the prior quarter. The Company continued to experience certain higher accounting, professional, and legal fees during the three months September 30, 2024 in preparation and as a result of the Merger with SLGD. The Company also began incurring Director fee costs and included a partial quarter of SLGD’s general and administrative expenses subsequent to the Merger date of $0.1 million.

#### Equity in income of proprietary funds, net

The Equity in income of proprietary funds increased by $6.5 million for the three months ended September 30, 2024 compared to the prior year. The increase was due to higher net asset values at proprietary funds whose underlying assets were dominated by holdings of TPL, which increased 21% during the quarter, including Kinetics Institutional Partners, Kinetics Partners, Horizon Multi-Disciplinary Fund and others. Those increases were partially offset by other proprietary funds whose primary holding included Grayscale Bitcoin Trust, which declined approximately 5% during the quarter.

#### Interest and dividend income

Interest and dividend income increased by $0.7 million for the three months ended September 30, 2024 as compared to the prior year due to a special dividend received during the quarter from TPL.

#### Unrealized loss on digital assets, net

Unrealized loss on digital assets, net decreased by $0.1 million for the three months ended September 30, 2024, compared to the prior year, primarily due to decreases in multiple of our smaller digital asset holdings.

#### Unrealized gain (loss) on investments, net

For the three months ended September 30, 2024, unrealized gains (losses) on investments increased by $2.7 million compared to the prior year. This increase was due primarily to the $8.9 million unrealized gain on TPL stock during the three months ended September 30, 2024 resulting from its approximately 21% increase in its fair value.

#### Income tax benefit (expense)

On July 1, 2024, the Company filed to convert from an LLC to a C-Corp for federal and state income taxes. As a result, the Company recognized a deferred income tax expense of $59.7 million related to the tax basis differences for certain assets, principally unrealized gains in various investments, digital assets and indefinite lived intangible assets from the Company’s 2011 merger transaction. Due to primarily to additional unrealized gains of investment securities and proprietary funds during the quarter, the Company recorded an additional $8.9 million additional deferred tax expense.

### Results of Operations for the nine months ended September 30, 2024

### Revenues

#### Management and advisory fees

HKHC’s total revenues increased approximately $2.7 million, or increased, for the nine months ended September 30, 2024 compared to the prior year. The increase in AUM at certain funds managed by HKHC resulted in increases in the management fees from mutual funds, ETFs, proprietary funds and separately managed accounts. However, there was a decline of $2.3 million related to the INFL ETF as the AUM declined from approximately $1.2 billion in 2023 to $0.6 billion in 2024. Similarly, the Company experienced declines in the AUM at the Paradigm Fund and the Small Cap Opportunities Fund that result in lower management fees of $0.9 million as compared to the nine months ended September 30, 2023. These declines were partially offset by a $0.6 million increase in management fees related to incentive fees that were crystallized as part of investor redemptions from various proprietary funds during the nine months ended September 30, 2024.

#### Other income and fees

Other income and fees for the nine months ended September 30, 2024 includes primarily revenue from product sales resulting from the acquisition of Scott’s Liquid Gold. The quarter included two months of revenue from these product sales, which accounted for all of the quarterly revenue increase. Other income and fees also includes revenues resulting from the Company’s research services and digital asset mining activities.

### Operating Expenses

#### Compensation, employee benefits, and cost of goods sold

The Company’s operating expenses include employee compensation for investment professionals and other management personnel as well as cost of goods sold for consumer products acquired in the Merger with SLGD. The Company’s compensation costs for the nine months ended September 30, 2024 decreased by approximately $0.5 million, or 3%, compared to the prior year, due to lower internal commissions and were partially offset by additional personnel and cost of products sold.

#### Sales, distribution and marketing expenses

For the nine months ended September 30, 2024, sales, distribution and marketing expenses increased $0.2 million, or 2%, compared to the prior year, principally the result of lower external commissions with respect to separately managed accounts. The Company also experienced higher mutual fund platform fees of $0.1 million during the period as the company changed certain funds to ETFs during 2023 and a lower residual commission expenses. These decreases were partially offset by increased sub-advisory and marketing expenses at various mutual funds and ETFs managed by HKHC and certain commissions payable for incentive fees earned during the period and fulfillment costs associated with sales of consumer products.

#### Depreciation and amortization

Depreciation and amortization increased slightly for the nine months ended September 30, 2024 as compared to the prior year due to additional amortization expense of intangible assets from the Merger with SLGD.

#### General and administrative expenses

For the nine months ended September 30, 2024, general and administrative expenses increased by $1.8 million, or 31%, compared to the prior year, as a result of legal and professional liability expenses associated with a lawsuit filed on November 23, 2022 by TPL against HKHC, Horizon Kinetics Asset Management, LLC and certain other parties to resolve a disagreement over a voting commitment contained in a stockholders’ agreement between the parties. The Company continued to experience certain higher accounting, professional, and legal fees during the three months September 30, 2024 in preparation and as a result of the Merger with SLGD.

#### Equity in income of proprietary funds, net

The Equity in income of proprietary funds increased by $58.2 million for the nine months ended September 30, 2024 compared to the prior year. The increase was due to higher net asset values at proprietary funds whose underlying assets were dominated by holdings of Grayscale Bitcoin Trust, which increased approximately 46% during the nine months ended September 30, 2024, including Horizon Kinetics Equity Opportunities, Horizon Kinetics Hard Assets and Horizon Multi-Strategy Fund, as well proprietary funds whose underlying assets were dominated by holdings of Texas Pacific Land, which increased approximately 69% during the nine months ended September 30, 2024.

#### Interest and dividend income

Interest and dividend income increased by $0.8 for the nine months ended September 30, 2024 as compared to the prior year due to a special dividend received during the quarter from TPL.

#### Unrealized gain on digital assets, net

Unrealized gain on digital assets, net increased by $2.8 million for the nine months ended September 30, 2024, compared to the prior year, primarily due to the increase in the fair value of Bitcoin. In addition to the increase in the fair value of approximately 50% for the nine months ended September 30, 2024, the value of our digital assets also increased due to the adoption of ASU 2023-08, which resulted in certain expanded disclosures about cryptocurrencies and recording an increase to those digital assets and shareholders' equity of approximately $4.4 million.

#### Unrealized gain (loss) on investments, net

For the nine months ended September 30, 2024, unrealized gains (losses) on investments increased by $35.7 million compared to the prior year. This increase was due to the 69% unrealized gain on TPL stock during the nine months ended September 30, 2024 as compared to an unrealized loss for the nine months ended September 30, 2023 following TPL’s decrease in market value during the nine months ended September 30, 2023.

#### Income tax benefit (expense)

On July 1, 2024, the Company filed to convert from an LLC to a C-Corp for federal and state income taxes. As a result, the Company recognized a deferred income tax expense of $59.7 million related to deferred taxes associated with the basis differences for certain assets, principally unrealized gains in various investments, digital assets and indefinite lived intangible assets from the Company’s 2011 merger transaction. Due to primarily to additional unrealized gains of investment securities and proprietary funds during the quarter, the Company recorded an additional $8.9 million additional deferred tax expense. The provision for (benefit from) income taxes prior to the July 1, 2024 conversion to a C-Corp was not significant.

### Regulated Subsidiaries

Many of our principal subsidiaries are subject to extensive regulation in the United States and elsewhere. Horizon Kinetics Asset Management LLC, a registered U.S. investment advisor, is regulated by the SEC. Kinetics Funds Distributors LLC and KBD Securities LLC, registered U.S. limited purpose broker dealers, are regulated by the Financial Industry Regulatory Authority. The Company may also be subject to regulation in other jurisdictions where it operates.

### Liquidity and Capital Resources

At September 30, 2024, the Company had $18.1 million of cash and cash equivalents. We believe that our cash and cash equivalents at September 30, 2024 will be sufficient to fund operations for at least one year from the date of this report.

The Company also had $74.9 million of investments, at fair value. These investments include $51 million held in a single security, approximately 57,696 shares of TPL. During the nine months ended September 30, 2024 the fair value of HKHC’s TPL holdings increased due to the capital contribution on July 1 that included shares of TPL and due to the approximately 68.8% year-to-date increase in the fair value of TPL common shares. The Company may be limited in its ability to sell this security due to our status as an affiliate of TPL.

In the normal course of business, we may engage in off-balance sheet arrangements, including transactions in derivatives, guarantees, commitments, indemnifications, and potential contingent repayment obligations. We do not have any off-financial position arrangements that would require us to fund losses or guarantee target returns to clients.

The Company’s Board of Directors has determined an expected quarterly dividend policy that is based on the Company’s quarterly performance. The Board of Director’s may consider other relevant factors that are relevant to the final determination of a quarterly dividend, if any. On November 5 2024, the Company's Board of Directors declared a cash dividend of $0.053 per share, payable on December 16, 2024 to shareholders of record as of the close of business on November 25, 2024.

The following table and discussion summarize our Condensed Consolidated Statement of Cash Flows:

*(dollars in thousands)*

|  | Nine Months Ended September 30, 2024 | 2023 | Variance |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $6,425 | $11,357 | $(4,932) |
| Net cash provided by investing activities | 2,582 | 1,406 | 1,176 |
| Net cash used in financing activities | (1,413) | (9,620) | 8,207 |
|  | $7,594 | $3,143 | $4,451 |

#### Operating cash flows

Net cash provided by operating activities decreased by $4.9 million for the nine months ended September 30, 2024 compared to the prior year. The decrease was primarily the result of earnings, net of and working capital changes during the period. The net income (loss) for each of the nine month periods were largely offset by non-cash adjustments related to deferred income tax expense related to the Company’s conversion from an LLC to a C-Corp, equity in earnings (losses) of affiliates, and net unrealized gains (losses) on investments or digital assets.

#### Investing cash flows

Net cash provided by investment activities increased by $1.2 million for the nine months ended September 30, 2024 as compared to the prior year. The increase was primarily the result of cash acquired from SLGD and offset by lower levels of investment purchases and lower proceeds from the sale of certain investments compared to the prior year.

#### Financing cash flows

The Company’s cash flows from financing activities were cash contributions from affiliates and were offset by distributions paid to members of Horizon Kinetics. The Company ceased payment of distributions subsequent to the closing of the Merger.

### Contractual Cash Obligations and Other Commercial Commitments

The Company’s contractual cash obligations and other commercial commitments is limited to certain operating leases for office space as summarized below:

*(dollars in thousands)*

| Contractual Cash Obligations: | Payments Due by Period Total | 2024 (remainder) | 2025 and 2026 | 2027 and 2028 | After 2028 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Operating leases | $8,666 | $699 | $5,668 | $1,435 | $864 |
| Total contractual obligations | $8,666 | $699 | $5,668 | $1,435 | $864 |

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## Controls and procedures

As filed, 3,615 characters.

### Disclosure Controls and Procedures

As of September 30, 2024, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024 due to the material weaknesses in our internal control over financial reporting described below.

Notwithstanding the material weaknesses, which still existed as of September 30, 2024, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the condensed consolidated financial statements included in this Quarterly Report present fairly, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with accounting principles generally accepted in the United States.

### Material Weaknesses

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s financial statements will not be prevented or detected on a timely basis. The material weakness that was previously reported at Scott’s Liquid Gold was identified as of June 30, 2023 related to our finance department lacking a sufficient number of trained professionals with technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP. The material weakness was detailed in Item 4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023. Horizon Kinetics has previously identified material weaknesses related to (a) producing timely account reconciliations and valuations of certain significant accounts, including certain intercompany and related party accounts and related elimination entries, (b) a lack of segregation of duties in certain areas of the financial reporting process, including a lack of adequate supervisory review of technical accounting implementations, conclusions over critical accounting estimates, and review of the consolidated financial statements, and (c) insufficient supervisory review and approval of key controls over disbursements and accounts payable. These material weaknesses still existed as of September 30, 2024.

During 2024, the Company hired a Chief Financial Officer and other trained professionals to our finance department, who have technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP. The process of remediating these material weaknesses will continue until these staff and others operate for a period of time, our controls are tested, and the Company is able to conclude that such internal controls are operating effectively. The Company cannot provide assurance that these procedures will be successful in identifying material errors that may exist in the financial statements. The Company cannot make assurances that it will not identify additional material weaknesses in its internal control over financial reporting in the future.

### Changes in Internal Control over Financial Reporting

During 2024, the Company hired a Chief Financial Officer and other trained professionals to our finance department who have technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP.

## Risk factors

As filed, 700 characters.

In addition to the other information set forth in this Report, including the “*Cautionary Note on Forward-Looking Information,”* you should carefully consider the factors discussed in Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent quarterly reports on Form 10-Q.

In addition, you should carefully consider the factors discussed in the section “Risk Factors” in the Company’s Definitive Proxy Statement on Schedule 14A filed on May 13, 2024, which is incorporated herein by reference.

All of the factors referenced above could materially affect our, or the combined company’s, business, financial condition, or future results.

Filed Nov 12, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-125625. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.