Atlas Financial informed current and prospective investors of the receipt of notice from an existing warrantholder of the company of its intention to exercise its outstanding warrants and thereby purchase ordinary common shares of the company. As a result of this exercise, the company would be approaching a triggering event as determined under Section 382 of the Internal Revenue Code of 1986 and the use of the company's net operating loss and other carryforwards would be significantly limited in the event of an "ownership change", which is defined as a cumulative change of more than 50% during any three-year period by shareholders of the company's shares. Even small fluctuations in the ownership of shareholders owning 5% or more of the company’s stock, or new shareholders acquiring 5% or more of the company’s stock, or the issuance of new shares by the company in response to a warrant exercise, could trigger the IRC Section 382 limit, the company said. Provided there has not been an “ownership change” before December 31, 2013, the consequences of such actions are expected to be less critical to the company, it added. At December 31, 2012, Atlas had total tax effected federal net operating loss carryforwards of approximately $16.1M, or $2.62 per common share, of which the company currently has an overall allowance of $1.83 per common share with 79c net per common share currently included in book value per common share. Unless otherwise restricted, the company may utilize these tax attributes to offset future U.S. and state taxable income. If the IRC Section 382 limitation is triggered, this may decrease the after-tax cash flow generated from company profits "in a meaningful way," Atlas said.