What changed in this filing

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Item 1A. Risk Factors

2023-03-09 compared with 2022-03-15 · 82 added, 56 removed, 589 unchanged (19% of the section changed)

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These risks are discussed more fully in the section titled “Risk Factors.” These risks and uncertainties include, but are not limited to, the following:

● We may not achieve the anticipated benefits from our acquisition of Novitium Pharma LLC (“Novitium”) and we may face integration difficulties;

● We may not achieve the anticipated benefits from our acquisition of Novitium Pharma LLC (“Novitium”);

● The obligations and liabilities of Novitium, some of which may be unanticipated or unknown, may be greater than we have anticipated, which may diminish the value of Novitium to us;

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● Barriers in achieving anticipated revenue growth and profitability could have a material adverse effect on our business, financial position, and operating results;

● Cortrophin Gel is our first rare disease pharmaceutical product and we recently announced commercial availability of this product.

● Cortrophin Gel is our first rare disease pharmaceutical product.

To the extent we are not able to achieve commercial success with this product, including gaining market share, our business, financial condition, and results of operations will be negatively impacted;

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Several of our products are manufactured and/or packaged by third parties, which we cannot control and could result in us being unable to market and distribute products;

● The FDA does not provide guidance on safety labeling for products that are marketed without approved NDAs or ANDAs, which could increase our potential liability with respect to failure-to-warn claims for these products;

● The Food and Drug Administration (“FDA”) does not provide guidance on safety labeling for products that are marketed without approved New Drug Applications (“NDAs”) or Abbreviated New Drug Applications (“ANDAs”), which could increase our potential liability with respect to failure-to-warn claims for these products;

● If the Drug Enforcement Administration (“DEA”) does not approve supply of the API we need to manufacture our controlled substances, we may be unable to manufacture controlled substances, which would eliminate our revenue on these products.

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● We expect to spend a significant amount of resources on research and development efforts, and such efforts may not result in marketable products;

● Production at any or all of our four manufacturing facilities could be interrupted, which could cause us to fail to deliver product on a timely basis;

● Production at any or all of our four current manufacturing facilities could be interrupted, which could cause us to fail to deliver product on a timely basis;

● We rely on third parties to assist with our clinical studies.

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● Making interest and principal payments under our Credit Agreement with Truist requires a significant amount of cash;

● We identified material weaknesses in our internal control over financial reporting.

If we do not effectively remediate these material weaknesses or if we otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud;

● Our Credit Facility contains restrictive and financial covenants and if are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility;

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The risks described are not the only risks facing us.

Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may adversely affect our business, financial position, and operating results.

Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial,

also may adversely affect our business, financial position, and operating results.

If any of these risks actually occur, our business, financial position, and operating results could suffer significantly.

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Risks Related to our Business

We may not achieve the anticipated benefits from our acquisition of Novitium and we may face integration difficulties, which could have a material adverse effect on our business, financial position, and operating results.

On November 19, 2021 (the “Closing Date”), the Company completed its previously announced acquisition (the “Acquisition”) of Novitium pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021 (the “Merger Agreement”), by and among the Company, Novitium, Nile Merger Sub LLC, a Delaware limited liability company , and certain other parties, with Novitium becoming a wholly owned subsidiary of ANI.

We may not achieve the anticipated benefits from our acquisition of Novitium, which could have a material adverse effect on our business, financial position, and operating results.

On November 19, 2021, the Company completed its previously announced acquisition (the “Acquisition”) of Novitium pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021 (the “Merger Agreement”), by and among the Company, Novitium, Nile Merger Sub LLC, a Delaware limited liability company , and certain other parties, with Novitium becoming a wholly owned subsidiary of ANI.

We may not realize the potential benefits from the Acquisition that we or the market expects.

Risks associated with the Acquisition include:

• failure to successfully integrate our businesses with the business of Novitium in the expected time frame which would adversely affect our financial condition and results of operation;

• failure to effectively manage our expanded operations, which were materially increased by the Acquisition;

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Our anticipated revenue growth and profitability, if achieved, is dependent upon our ability to develop, license or acquire, and commercialize new products on a timely basis in relation to our competitors’ product introductions, and to address all regulatory requirements applicable to the development and commercialization of new products.

failure to do so successfully could impair our growth strategy and plans and could have a material adverse effect on our business, financial position, and operating results.

Our failure to do so successfully could impair our growth strategy and plans and could have a material adverse effect on our business, financial position, and operating results.

Our future revenues and profitability are dependent upon our ability to successfully develop, license or acquire, and commercialize pharmaceutical products in a timely manner.

Product development is inherently risky and time-consuming.

Likewise, product licensing involves inherent risks, including uncertainties due to matters that may affect the achievement of milestones, as well as the possibility of contractual disagreements with regard to the supply of product meeting specifications and terms such as license scope or termination rights.

product meeting specifications and terms such as license scope or termination rights.

The development and commercialization process also requires substantial time, effort, and financial resources.

Additionally, we have entered profit-sharing arrangements with third parties in which we sell products under ANDAs or NDAs owned or licenses by these third parties.

Under these agreements, we pay these third parties a specified percentage of the gross profit earned on sales of the products, and such percentages in certain cases increase as additional gross profit is earned.

Any increases in these percentages would impact our future profitability.

We may not be successful in commercializing products on a timely basis, if at all, which could adversely affect our business, financial position, and operating results.

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Promotion of a prescription drug for uses not approved by the FDA can have serious consequences and result in lawsuits by private parties, state governments and the federal government, significant civil and criminal penalties, and compliance agreements that require a company to change current practices and prevent unlawful activity in the future.

Cortrophin Gel is our first rare disease pharmaceutical product, and we are developing a sales and marketing platform to commercialize this product.

To the to the extent our efforts to commercialize this product are un successful, our business, financial condition and results of operations will be negatively impacted .

Cortrophin Gel is our first rare disease pharmaceutical product.

To the extent our efforts to commercialize this product are un successful, our business, financial condition and results of operations will be negatively impacted .

On October 29, 2021, we received approval from the FDA for our Cortrophin Gel product for the treatment of certain chronic autoimmune disorders, including acute exacerbations of multiple sclerosis (“MS”) and rheumatoid arthritis (“RA”), in addition to excess urinary protein due to nephrotic syndrome.

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We have invested and continue to invest significantly in the commercialization of this product in the U.S, including building out a sales force and developing a patient support program, with a full-scale launch in January 2022.

for us to generate significant net product revenues from Cortrophin Gel will depend upon our ability to successfully sell the product and numerous other factors, including:

The ability for us to generate significant net product revenues from Cortrophin Gel will depend upon our ability to successfully sell the product and numerous other factors, including:

● successfully establishing and maintaining effective sales, marketing, and distribution systems in jurisdictions in which Cortrophin Gel is approved for sale;

● successfully establishing and maintaining manufacturing capabilities and manufacturing adequate commercial quantities of Cortrophin Gel at acceptable cost and quality levels, including maintaining current good manufacturing practice (“cGMP”) and quality systems regulation standards required by various regulatory agencies;

● broad acceptance of Cortrophin Gel by physicians, patients and the healthcare community;

● broad acceptance of Cortrophin Gel by physicians, patients , and gaining market access share in the healthcare community;

● the acceptance of pricing and placement of Cortrophin Gel on payers’ formularies and the associated tiers;

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In addition, sales of Cortrophin Gel could be negatively affected by discovery of previously unknown problems with the product, such as adverse events of unanticipated severity or frequency, problems with the facilities where the product is manufactured, or imposition of restrictions on Cortrophin Gel, including requiring withdrawal of the product from the market, by a regulatory agency if it disagrees with the promotion, marketing, or labeling of the product.

We are developing our marketing and sales organization to support Cortrophin Gel and have no experience in marketing prescription rare disease drug products.

We are continuing to develop our marketing and sales organization to support Cortrophin Gel and have no experience in marketing prescription rare disease drug products.

If we are unable to successfully establish marketing and sales capabilities for Cortrophin Gel , our business will suffer .

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Our ability to manufacture and distribute products is dependent, in part, upon ingredients and components supplied by others, including entities based outside the U.S.

During the year ended December 31, 2022, we purchased approximately 19% of our inventory from one supplier.

During the year ended December 31, 2021, no single vendor represented at least 10% of inventory purchases.

We purchased approximately 10% and 13% of our inventory from one supplier during the years ended December 31, 2020 and 2019, respectively.

During the year ended December 31, 2020, we purchased approximately 10% of our inventory from one supplier.

Any disruption in the supply of these ingredients or components or any problems in their quality could materially affect our ability to manufacture and distribute our products and could result in legal liabilities that could materially affect our ability to realize profits or otherwise harm our business, financial, and operating results.

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Therefore, our ability to source sufficient quantities of API for manufacturing is critical.

We source the raw materials for our products from both

domestic and international suppliers.

We source the raw materials for our products from both domestic and international suppliers.

Generally, we qualify only a single source of API for use in each product due to the cost and time required to validate and qualify a second source of supply.

Any change in one of our API suppliers must usually be approved through a Prior Approval Supplement (“PAS”) by the FDA.

The process of obtaining an approval of such a PAS can require between 4 and 18 months.

The process of obtaining an approval of such a

PAS can require between four and 18 months.

While we also generally qualify a single source for non-API raw materials, the process required to qualify an alternative source of a non-API raw material is typically much less rigorous.

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As we acquire and launch additional products, many of which, are often used by patients in the 65 and older age range, our estimates of these rebates have grown.

Increases in Medicare Coverage Gap Discount rebates could decrease our revenues from product sales, which in turn could adversely affect our business, financial position, and operating results.

Increases in Medicare Coverage Gap Discount rebates, and legislative changes to the Medicare Coverage Gap Discount Program, could decrease our revenues from product sales, which in turn could adversely affect our business, financial position, and operating results.

We have entered into distribution agreements under which we market products under ANDAs and NDAs owned by third parties.

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If we spend significant resources on research and development efforts and are not able to introduce new products, our business, financial position, and operating results may be materially adversely affected.

We own four manufacturing facilities that produce the majority of our products.

We produce the majority of our products in three manufacturing facilities.

Production at any or all of these facilities could be interrupted, which could cause us to fail to deliver sufficient product to customers on a timely basis and have a material adverse effect on our business, financial position, and operating results.

Our manufacturing operations are based in four facilities.

While these facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.

Our manufacturing operations are currently based in four facilities.

We have transitioned the majority of products manufactured or packaged in Oakville to one of our three U.S.-based manufacturing sites, and we are seeking to find potential buyers for the Oakville site.

While these three remaining facilities are sufficient for our current needs, the facilities are highly specialized and any damage to or need for replacement of all or any significant function of our facilities could be very costly and time-consuming and could impair or prohibit production and shipping.

A significant disruption at any of the facilities, even on a short-term basis, whether due to a labor strike, adverse quality or compliance observation, vandalism, natural disaster, fire, storm or other environmental damage, or other events could impair our ability to produce and ship products on a timely basis and, among other consequences, could subject us to “failure to supply” claims from our customers, as discussed below.

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We rely on third parties, such as medical institutions, clinical investigators, and contract laboratories, to assist with our clinical studies.

We are responsible for confirming that our studies are conducted in accordance with applicable

regulations and that each of our clinical studies is conducted in accordance with our general investigational plan and protocol.

We are responsible for confirming that our studies are conducted in accordance with applicable regulations and that each of our clinical studies is conducted in accordance with our general investigational plan and protocol.

The FDA requires us to comply with regulations and standards, commonly referred to as good clinical practices for conducting, monitoring, recording, and reporting the results of clinical studies, to assure that data and reported results are accurate and that the clinical study participants are adequately protected.

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We do not have key person life insurance policies covering our executive and other officers or any of our other employees.

If key individuals were to leave ANI, our business could be affected adversely if suitable replacement personnel are not recruited quickly.

The population in northern Minnesota, where two of our four manufacturing facilities are located, is small, and as a result, there is a limited number of qualified personnel available in all functional areas, which could make it difficult to retain and attract the qualified personnel necessary for the development and growth of our business.

If key individuals were to leave ANI, our business could

be affected adversely if suitable replacement personnel are not recruited quickly.

The population in northern Minnesota, where two of our four current manufacturing facilities are located, is small, and as a result, there is a limited number of qualified personnel available in all functional areas, which could make it difficult to retain and attract the qualified personnel necessary for the development and growth of our business.

If we were unable to attract and retain qualified personnel, our business, financial position, and operating results could be materially adversely affected.

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A successful product liability claim that is excluded from coverage or exceeds our policy limits could require us to pay substantial sums.

Additionally, insurance coverage for product liability may become prohibitively expensive in the future or may not be available at all, and as a result, we may not be able to maintain adequate product liability insurance coverage to mitigate the risk of large claims, or we may be required to maintain a larger self-insured retention that we would otherwise choose.

Additionally, insurance coverage for product liability may become prohibitively expensive in the future or may not be available at all, and as a result, we may

not be able to maintain adequate product liability insurance coverage to mitigate the risk of large claims, or we may be required to maintain a larger self-insured retention that we would otherwise choose.

Currency fluctuations and changes in exchange rates could have a material adverse effect on our business, financial position, and operating results.

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Drug wholesalers and retail pharmacy chains, which represent an essential part of the distribution chain for generic pharmaceutical products, have undergone, and are continuing to undergo, significant consolidation.

This consolidation may result in declines in our sales volumes if a customer is consolidated into another company that purchases products from a competitor.

This consolidation may result in declines in our sales volumes if a customer is consolidated into another company that purchases products

from a competitor.

In addition, the consolidation of drug wholesalers and retail pharmacy chains could result in these groups gaining additional purchasing leverage and consequently increasing the product pricing pressures facing our business and enabling those groups to charge us increased fees.

Additionally, the emergence of large buying groups

representing independent retail pharmacies and the prevalence and influence of managed care organizations and similar institutions potentially enable those groups to extract price discounts on our products.

Additionally, the emergence of large buying groups representing independent retail pharmacies and the prevalence and influence of managed care organizations and similar institutions potentially enable those groups to extract price discounts on our products.

The result of these developments or the loss of our relationship with one or more of these wholesalers, may have a material adverse effect on our business, financial position, and operating results.

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Any determination by governmental agencies that we have failed to comply with our reporting and payment obligations could subject us to penalties and sanctions, which could have a material adverse effect on our business, financial position, and operating results.

Two of our products, which together comprised 7% of our total revenue in 2021, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S.

Two of our products, which together comprised less than 10% of our total revenue in 2022, are marketed without approved NDAs or Abbreviated New Drug Applications (“ANDAs”) and we can offer no assurances that the U.S.

Food and Drug Administration (“FDA”) will not require us to either seek approval for these products or withdraw them from the market.

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Pharmaceutical products approved prior to the implementation of new or revised quality standards, including those produced or sold by us, may not meet these standards, which could require us to discontinue marketing and/or recall such products from the market, either of which could adversely affect our business, financial position, and operating results.

In addition, results of periodic testing we conduct on our products may indicate the presence of substances at levels above which are acceptable under FDA or other standards, which will require a recall of the product.

In addition, results of periodic testing we conduct on our products may indicate the presence of substances at levels greater than those deemed acceptable under FDA or other standards, which will require a recall of the product.

For example, during the fourth quarter of 2019, testing of the API used in our ranitidine drug product, as well as testing of the drug product itself, indicated a level of a nitrosamine impurity called N-nitrosdimethylamine (“NDMA”) above acceptable thresholds.

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On March 1, 2022, Pfizer announced that it was recalling all lots and strengths (60 mg, 80 mg, 120 mg, and 160 mg) of Inderal LA in the Canadian market after engagement with Health Canada.

We are currently undertaking our own review and analysis of the nitrosamine impurity at issue, working with testing and toxicology experts, and are in active communication with the FDA on the appropriate acceptable daily intake for NNP, which has not been established.

In the interim, we have halted further sales of the product to our trade customers.

In March of 2022, we submitted our response to the FDA information request, including reference to both the evaluation performed by Pfizer and our review and evaluation to date performed with guidance from an independent third-party toxicologist.

In addition, we requested a meeting with the FDA regarding the appropriate approach for the product in the U.S.

Recently the FDA has responded and we anticipate a meeting in the near future.

The FDA has not provided public notification for a final NNP acceptable intake.

After briefly halting and then resuming further sales of the product to our trade customers, there has been no recall in the United States of Inderal LA and Propranolol ER, and the necessity for any recall has not been determined.

The discussion above illustrates the potential risk of a recall of a product due to enhanced standards, at the initiation of the Company and/or the FDA.

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We are subject to state and federal laws that govern the submission of claims for reimbursement.

The Federal False Claims Act (“FFCA”), also known as Qui Tam, imposes civil liability and criminal fines on individuals or entities that knowingly submit, or cause to be submitted, false or fraudulent claims for payment to the government.

The Federal False Claims Act (“FFCA”), also known as Qui Tam, imposes civil liability and criminal fines on individuals or entities that

knowingly submit, or cause to be submitted, false or fraudulent claims for payment to the government.

Violations of the FFCA and other similar laws may result in criminal fines, imprisonment, and civil penalties for each false claim submitted and exclusion from federally funded health care programs, including Medicare and Medicaid.

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Third-party payers are increasingly challenging the prices charged for medical products and services.

For example, third-party payers may deny coverage, choose to provide coverage for a competitor’s bioequivalent product rather than our product, or offer limited reimbursement if they determine that a prescribed product has not received appropriate clearances from the FDA, is not used in accordance with cost-effective treatment methods as determined by the third-party payer, or is experimental, unnecessary, or inappropriate.

clearances from the FDA, is not used in accordance with cost-effective treatment methods as determined by the third-party payer, or is experimental, unnecessary, or inappropriate.

Prices also could be driven down by health maintenance organizations that control or significantly influence purchases of healthcare services and products.

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Our operations in Canada and India may be adversely affected by general economic conditions and economic and fiscal policy, including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material adverse effect on our business, financial position, and operating results.

Additionally, involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.

To the extent that such disruptions result in (i) delays or cancellations of customer orders, (ii) a general decrease in consumer spending on healthcare technology, (iii) our inability to effectively market and distribute our products globally (iv) our inability to timely engage with and collect payment from our customers or (v) our inability to access capital markets, our business and results of operations could be materially and adversely affected.

For example, in response to the rapidly developing conflict between Russia and Ukraine, the United States has imposed and may further impose, and other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia.

Additionally, further escalation of geopolitical tensions could have a broader impact that extends into other markets where we do business.

We are unable to predict whether acts of international terrorism or the involvement in a war or other military actions by the United States and/or the countries in which we sell or distribute our products will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.

Continuing studies of our products could produce negative results, which could require us to implement risk management programs, or discontinue product marketing.

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States continue to look for ways to save on Medicaid spend specifically related to prescription drugs.

As such, states are increasingly expanding or change supplemental rebates programs to secure additional rebates from manufacturers in exchange for drug coverage and to limit coverage of

certain drugs for certain Medicaid patients or to all Medicaid patients.

As such, states are increasingly expanding or change supplemental rebates programs to secure additional rebates from manufacturers in exchange for drug coverage and to limit coverage of certain drugs for certain Medicaid patients or to all Medicaid patients.

To the extent the Centers for Medicare & Medicaid Services entertains waivers to federal requirements under the Medicaid program to allow states Medicaid programs such flexibility, coverage of and payment for our drugs utilized by Medicaid beneficiaries could be negatively impacted.

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Build Back Better would also re-structure the Part D benefit and replace the existing Coverage Gap Discount Program with another manufacturer-imposed rebate or discount program, which could result in additional rebates to Medicare Part D plans in order to obtain Medicare Part D coverage.

We are actively monitoring legislative developments to understand the likelihood of enactment and how such legislation would impact our business and operations, if enacted.

These concepts were included in the Inflation Reduction Act, which was signed into law on August 16, 2022.

We are actively evaluating how this legislation will impact our business and operations.

states have implemented statutes aimed at prescription drug price transparency and some of those laws would permit state run boards or agencies to cap reimbursement for certain prescription drugs in the states.

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Inflation could have a material adverse effect on our business, financial position, and operating results.

Inflationary pressures have begun to rapidly increase in the U.S.

Inflationary pressures are currently being experienced and may continue to exist in the U.S.

and key worldwide markets.

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and our compliance with Anti-Corruption Laws.

While we devote substantial resources to our global compliance programs and have implemented policies, training, and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies and with the acquisition of Novitium, our expanded

international operations would significantly increase our exposure to potential liability.

Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

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• the application of additional legal, regulatory and taxation regimes to our operations;

• political, social, and economic instability and disruptions in applicable regions;

• political, social, and economic instability and disruptions in applicable regions, including as a result of war, such as the evolving conflict between Russia and the Ukraine;

• acts of terrorism;

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We perform our review of goodwill based on our one reporting unit.

If we determine that the carrying value of our assets may not be recoverable, we assess, using judgment and estimates, the fair value of our assets and to determine the

amount of any impairment loss, if any.

If we determine that the carrying value of our assets may not be recoverable, we assess, using judgment and estimates, the fair value of our assets and to determine the amount of any impairment loss, if any.

Changes in judgments and estimates may result in the recognition of an impairment loss, which could have a material negative impact on our business, financial position, and operating results.

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Our material definite-lived intangible assets consist of ANDAs for previously marketed generic products, NDAs and product rights for our branded products, product rights related to certain generic products, and a non-compete agreement.

These assets are being amortized over their useful lives of four to 10 years.

These assets are being amortized over their useful lives of seven to 10 years.

For these definite-lived intangible assets, we perform an impairment analysis when events or circumstances indicate that the carrying value of the assets may not be recoverable.

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Our compliance with these requirements has required that we incur substantial accounting and related expenses and expend significant management efforts.

Moreover, if we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, are unable to assert that our internal controls over financial reporting are effective, or identify deficiencies that are deemed to be material weaknesses, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline and we could be subject to sanctions or investigations by The Nasdaq Stock Market, the SEC, or other regulatory authorities.

Further, if we identify any material weaknesses or deficiencies that aggregate to a material weakness in our internal controls, we will have to implement appropriate changes to these controls, which may require specific compliance training for our directors, officers and employees, require the hiring of additional finance, accounting, legal and other personnel, entail substantial costs to modify our existing accounting systems and take a significant period of time to complete.

Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis,

could increase our operating costs and could materially impair our ability to operate our business.

Any of these events could have a material adverse effect on our business, financial position, and operating results.

We identified material weaknesses in our internal control over financial reporting.

Management identified material weaknesses in our internal control over financial reporting as of December 31, 2022.

See Item 9A, “Controls and Procedures,” in this Annual Report on Form 10-K for information regarding the identified material weaknesses and our actions to date to remediate the material weaknesses.

Our policies regarding returns, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce revenues in future fiscal periods.

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A chargeback is the difference between the price at which we invoice the wholesaler and the price that the wholesaler’s end-customer pays for a product.

Although we establish reserves based on prior experience and our best estimates of the impact that these policies may have in

subsequent periods, we cannot ensure that our reserves are adequate or that actual product returns, allowances, and chargebacks will not exceed our estimates.

Although we establish reserves based on prior experience and our best estimates of the impact that these policies may have in subsequent periods, we cannot ensure that our reserves are adequate or that actual product returns, allowances, and chargebacks will not exceed our estimates.

Risks Related to our Debt

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Our Credit Agreement contains restrictive and financial covenants and if we are not in compliance with these covenants, our outstanding indebtedness under this facility could be accelerated and the lenders could terminate their commitments under the facility.

The Credit Agreement contains customary covenants that require maintenance of a leverage ratio at or below specified thresholds and restricts our ability to make certain distributions with respect to our capital stock, prepay other debt, make certain investments, encumber our assets, incur additional indebtedness, make capital expenditures, engage in certain business combinations, transfer, lease or dispose of our assets, alter the character of our business in any material respect or undertake various other corporate activities.

respect or undertake various other corporate activities.

Therefore, as a practical matter, these covenants restrict our ability to engage in or benefit from such activities.

In addition, we pledged our assets in order to secure our repayment obligations under the New Credit Agreement.

In addition, we pledged our assets in order to secure our repayment obligations under the Credit Agreement.

This pledge may reduce our operating flexibility because it restricts our ability to dispose of our assets or engage in other transactions that may be beneficial to us.

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On July 27, 2017, the Financial Conduct Authority (“FCA”) in the United Kingdom announced that it would phase out LIBOR as a benchmark by the end of 2021.

Subsequently, regulators have announced that most USD tenors of LIBOR, including LIBOR options of the New Credit Facility, will now cease on December 31, 2023.

Subsequently, recent actions taken by the U.K.

Financial Conduct Authority, which regulates LIBOR, indicate that the continuation of LIBOR on the current basis cannot and will not be guaranteed after June 30, 2023.

Moreover, it is possible that the U.S.

LIBOR will be discontinued or modified prior to June 30, 2023.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

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At this time, it is not possible to predict the effect any discontinuance, modification, or other reforms to LIBOR, or the establishment of alternative reference rates such as SOFR, or any other reference rate, will have on the Company or its borrowing costs.

Our credit agreement allows for a change to an alternate benchmark rate, including SOFR, as defined in the Credit Agreement, but no change has been made yet.

In December 2022, the Financial Accounting Standards Board issued ASU 2022-06, which extended the sunset date of the reference rate reform in ASU 848 from December 31, 2022, to December 31, 2024.

We have not adopted the guidance and are currently evaluating the impact, if any, that the adoption of this guidance will have on our consolidated financial statements.

Risks Related to our Common Stock

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors