Intelligize Report: Most Common SEC Risk Factors
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Rank Risk Factor Prevalence
---- ----------- ----------
1 Failure to Compete Successfully 73%
2 General Economic/Consumer Spending Conditions 57%
3 Dependence on Management Team 47%
4 Difficulty Raising Capital/Insufficient Funding 46%
5 Potential Share Price Volatility 43%
6 Integration Challenges from Merger/Acquisition 33%
7 Negative Impact of Changes in Regulations/Policies 33%
8 Operational Disruptions 32%
9 Failure to Successfully Implement Business Strategy 31%
10 Failure to Protect Intellectual Property Rights 31%
Precedent Check reviewed the 1,000 most recent S-1 filings and determined that the below Risk Factors are the most common Business Risks. They generally track the most common Form 10-K Risk Factors, except for a greater emphasis on future growth uncertainties and a limited track record (see capitalized Risk Factors below).
Rank Business Risk Factors Prevalence
---- --------------------- ----------
1 Failure to Compete Successfully 90%
2 Dependence on Management Team 78%
3 Difficulty Raising Capital/Insufficient Funding 74%
4 Integration Challenges from Merger/Acquisition 52%
5 Failure to Protect Intellectual Property Rights 50%
6 Limited Operating History 44%
7 FAILURE TO MANAGE GROWTH/EXPANSION COSTS 43%
8 Threat/Costs of Intellectual Property Infringement Claims 41%
9 Potential/Current Litigation/Claims 39%
10 HISTORY OF LOSSES/NO REVENUE 39%
The most common Form S-1 Offering Risks are listed below.
Rank Offering Risk Factors Prevalence
---- --------------------- ----------
1 Trading Market May Not Develop/Potential Share Price
Volatility 86%
2 Principal Shareholders/Management Will Have Significant
Control 71%
3 Future Share Sales May Depress Share Price 66%
4 Anti-Takeover Provisions May Prevent a Merger/Acquisition 57%
5 Dividends May Never Be Paid 53%
6 Immediate and Substantial Dilution Following Offering 48%
7 Dilution in Ownership Due to Future Share
Issuances/Conversions 37%
8 Failure to Maintain Effective Internal Controls 32%
9 Broad Discretion in the Use of Proceeds From the
Offering 30%
10 Stock is Subject to Penny Stock Rules 27%
The above prevalence rankings show that S-1s have significantly less variance in Risk Factors compared to 10-Ks. Ten Risk Factors appear in 50% or more S-1 filings. In contrast, only two Risk Factors appear in 50% or more Form 10-K filings.
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SOURCE Intelligize, Inc.