MoneyGram 2009 Annual Report Download - page 23

Table of Contents
known tax exposures. While we believe our reserves are adequate to cover material, known tax exposures, there can be no assurance that
an actual taxation event would not exceed our reserves.
Because we may be deemed to be a subsidiary of a financial holding company under the Bank Holding Company Act, we may be
limited in our ability to engage in other businesses.
Because Goldman Sachs is a registered bank holding company, the Federal Reserve Board has the authority to examine and supervise its
operations, including the operations of its controlled subsidiaries. We may be deemed a controlled subsidiary of Goldman Sachs. As
Goldman Sachs has been approved by the Federal Reserve Board as a financial holding company and because we may be deemed to be
an indirect subsidiary of Goldman Sachs, our ability to engage in other businesses may be limited to those permissible for a financial
holding company.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material
adverse effect on our business.
We are required to certify and report on our compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which requires
annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent
registered public accounting firm addressing the effectiveness of our internal control over financial reporting. If we fail to maintain the
adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to
ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with
Section 404. In order to achieve effective internal controls we may need to enhance our accounting systems or processes which could
increase our cost of doing business. Any failure to achieve and maintain an effective internal control environment could have a material
adverse effect on our business.
We have significant overhang of salable convertible preferred stock relative to float.
The trading market for our common stock was first established in June 2004. The float in that market now consists of approximately
82,300,000 shares out of a total of 82,515,119 shares issued and outstanding as of December 31, 2009. The Series B Stock issued to the
Investors is convertible into shares of common stock or common equivalent stock at the price of $2.50 per common share, subject to anti-
dilution rights. Under the Registration Rights Agreement entered into between the Company and the Investors at the closing of the
recapitalization, the Investors and other parties may require us to register for sale publicly (at times largely of their choosing) all of the
Series B Stock that they hold, as well as any common stock or Series D Participating Convertible Preferred Stock into which the B-1
Stock may be converted. Sales of a substantial number of shares of our common stock, or the perception that significant sales could occur
(particularly if sales are concentrated in time or amount), may depress the trading price of our common stock.
An agreement among the Investors and Walmart could prevent an acquisition of the Company.
Effective through March 17, 2010, the Investors and Walmart have an agreement that, among other things, prevents the Investors, without
the prior written consent of Walmart, from voting in favor of, consenting to or selling or transferring their equity securities in a manner
that would result in a change of control of the Company. The Investors collectively have a majority of the voting stock of the Company
and Walmart, whose interests may differ from our stockholders' interests, could prevent the Investors from agreeing to a sale of the
Company under certain circumstances.
Our capital structure, charter documents, and Delaware law could delay or prevent an acquisition of the Company, which could
inhibit your ability to receive a premium on your investment from a possible sale of the Company.
Our current capital structure and certain provisions of our charter documents may discourage third parties from seeking to acquire the
Company. The holders of the B Stock would vote as a class with the common stockholders on any proposed business combination and
would control the outcome. These matters and certain provisions of Delaware law relating to business combinations with interested
stockholders may have the effect of delaying, deterring or
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