−Removed: There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, other than the addition of the risks below related to our proposed acquisition of Heimbach.
+Added: There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, other than the addition of the risks below related to our acquisition of Heimbach.
For all other risk factors, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: Failure to consummate the acquisition within the expected timeframe or at all could adversely impact the Company’s business, financial condition and results of operations.
−Removed: On June 14, 2023 the Company entered into an agreement to acquire Heimbach, a privately-held manufacturer or paper machine clothing and technical textiles located in Düren, Germany.
−Removed: The transaction is subject to regulatory approvals and other customary closing conditions.
−Removed: If our planned acquisition of Heimbach is not completed, our share price could fall to the extent that our current price reflects an assumption that we will complete the planned acquisition.
−Removed: Furthermore, if the planned acquisition is not completed and the agreement is terminated, we may suffer other consequences that could adversely affect our business, results of operations and share price including costs incurred and time invested in the planned acquisition, which could have otherwise been devoted to our business or other opportunities, legal proceedings, negative publicity and disruptions to our business.
−Removed: The completion of the acquisition is subject to the satisfaction or waiver of certain customary mutual closing conditions, including the absence of any injunction by any court or other tribunal of competent jurisdiction, or adoption of any law, that prohibits or makes the consummation of the acquisition illegal and the receipt of certain other regulatory approvals.
−Removed: The obligation of each party to consummate the acquisition is also conditioned upon certain unilateral closing conditions, including the other party’s representations and warranties being accurate.
−Removed: There can be no assurance that these conditions will be satisfied in a timely manner or at all or that the acquisition will be completed.
−Removed: If the acquisition is not completed, the Company’s ongoing business may be materially adversely affected and the Company would be subject to a number of risks, including the following:
−Removed: • the Company may experience negative publicity, which could have an adverse effect on its ongoing operations including, but not limited to, retaining and attracting customers, suppliers, and other business partners;
−Removed: • the Company would incur significant costs in future periods relating to the acquisition, such as legal, accounting, financial advisor, printing and other professional services fees, which may relate to activities that the Company would not have undertaken other than to complete the acquisition;
−Removed: • the Company may be required to pay cash penalties as required under the Stock Purchase Agreement, which may require the Company to use available cash that would have otherwise been available for general corporate purposes or other uses and could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with the Company or deter such third party from making a competing acquisition proposal.
−Removed: If the acquisition is not consummated, the risks described above may materialize and they may have a material adverse effect on the Company’s business operations, financial condition, results of operations, and stock price, especially to the extent that the current market price of the Company’s common stock reflects an assumption that the acquisition will be completed.
+Added: Our acquisition of Heimbach involves inherent risks, and presents financial, managerial and operational challenges that may adversely affect our operating results and financial condition.
+Added: Our growth strategy includes acquisitions.
+Added: Acquisitions involve various inherent risks, such as our ability to assess accurately the value, strengths, weaknesses, internal controls, contingent and other liabilities and potential profitability of Heimbach.
+Added: Heimbach was a privately held company that only closed its books and records annually on December 31 st .
+Added: Interim financial information was limited and reproducing full historical financial records may be difficult.
+Added: As the Company integrates Heimbach, management could encounter material differences between the accounting policies of the two companies or the financial results of Heimbach for the periods after the fiscal year 2022 audited financial statements, including additional liabilities or other financial information that was not available during due diligence or at or in the initial period after the closing of the acquisition that, had we known, could have resulted in changes to financial projections, assumptions and estimates used in the fair value of assets acquired and liabilities assumed, assessments used to determine the applicability of certain SEC disclosure requirements or the expected benefit of the transaction.
+Added: While we conducted financial and other due diligence in connection with this acquisition and we generally seek some form of limited protection, such as warranties from the seller, insurance coverage, and placing a portion of the purchase price in escrow to cover potential tax liabilities, Heimbach may have liabilities that are not accurately assessed or brought to our attention at the time of the acquisition.
+Added: Further, indemnities, insurance or escrow arrangements may not fully cover such matters.
+Added: The acquisition may present financial, managerial and operational challenges, including:
+Added: • Increased foreign operations, often with unique issues relating to corporate culture, compliance with legal and regulatory requirements and other challenges;
+Added: • Assumption of known and unknown liabilities, including environmental liabilities, and exposure to litigation;
+Added: • Increased levels of debt or dilution to existing stockholders;
+Added: • New and proposed regulations limiting the enforcement of noncompetition and nonsolicitation agreements;
+Added: • Production delays associated with consolidating acquired facilities and manufacturing operations;
+Added: • Potential cybersecurity risks, as acquired systems may not possess the appropriate security measures.
+Added: We cannot assure that all potential risks or liabilities are adequately discovered, disclosed, or understood in each instance.
+Added: In addition, internal controls over financial reporting of acquired companies may not be compliant with required standards.
+Added: Issues may exist that could rise to the level of significant deficiencies or, in some cases, material
+Added: weaknesses, particularly with respect to foreign companies or non-public U.S.
+Added: Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.
+Added: In connection with our acquisition, we may incur significant transaction costs.
+Added: We are required to expense such transaction costs as incurred, which may have a material adverse impact on our financial results.
We may fail to realize all of the anticipated benefits of the acquisition of Heimbach or those benefits may take longer to realize than expected.
−Removed: We are devoting significant management attention and resources to complete the acquisition and will continue to devote significant attention to integrating the business practices and operations of Heimbach upon completion of the acquisition.
+Added: We are devoting significant management attention to integrating the business practices and operations of Heimbach.
We may experience disruptions to our business and, if implemented ineffectively, it could restrict the realization of the full expected benefits of the acquisition.
The failure to meet the challenges involved in the integration process and to realize the anticipated benefits of the acquisition of Heimbach could cause an interruption of, or loss of, momentum in our operations and could adversely affect our business, financial condition and results of operations.
+Added: Difficulties in the integration of the acquired business may include consolidating the operations, processes and systems of the acquired business, retaining and motivating key management and employees, and integrating existing business relationships with suppliers and customers.
+Added: Even if integration is successful, the financial and operational results may differ materially from our assumptions and forecasts due to unforeseen expenses, delays, conditions and liabilities.
+Added: In addition, we may incur unanticipated costs or expenses following an acquisition, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, and other liabilities.
Furthermore, the acquisition of Heimbach, may result in material unanticipated problems, expenses, charges, liabilities, competitive responses, loss of customers and other business relationships, and diversion of management’s attention.
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