What changed in this filing

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Item 1A. Risk Factors

2023-03-01 compared with 2022-03-01 · 139 added, 142 removed, 562 unchanged (33% of the section changed)

9 unchanged sentences

● We compete in a competitive and highly fragmented market.

● Our business may be subject to risks arising from natural disasters and epidemic diseases, such as the recent COVID-19 pandemic.

● We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business.

● Changes or delays in government regulation relating to the biopharmaceutical industry could decrease the need for some of the services we provide.

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If we are unable to raise additional capital on terms acceptable to us or at all or generate cash flows necessary to maintain or expand our operations, we may not be able to compete successfully.

● Our bookings might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflect in our backlog.

● Our bookings might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflect in our bookings.

● We rely upon third-party providers of cloud-based infrastructure to host our software solutions.

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● Our software solutions utilize third-party open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business, subject us to litigation and create potential liability.

● If our security measures are breached or unauthorized access to customer data is otherwise obtained, our solutions may be perceived as not being secure, customers may reduce the use of or stop using our solutions and we may incur significant liabilities.

● We are subject to numerous privacy and data security laws and related contractual requirements and our failure to comply with those obligations could cause us significant harm.

● If our security measures are breached or unauthorized access to customer or other proprietary data is otherwise obtained, our solutions may be perceived as not being secure, customers may reduce the use of or stop using our solutions and we may incur significant liabilities and loss of customer confidence.

● We are subject to numerous privacy and data security laws and related contractual requirements and our failure to comply with those obligations could cause us significant harm, including financial and reputational losses.

● We may be unable to adequately enforce or defend our ownership and use of our intellectual property and other proprietary rights.

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● Failure to comply with requirements to design, implement and maintain effective internal controls, or inability to timely remediate internal controls that are deemed ineffective could have a material adverse effect on our business and stock price.

● Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholder’s ability to obtain a favorable judicial forum for disputes with us or our current and former directors, officers, employees or stockholders.

of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholder’s ability to obtain a favorable judicial forum for disputes with us or our current and former directors, officers, employees or stockholders.

● Our board of directors are authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

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This, in turn, could have a material adverse impact on our revenue and future growth.

Our software products are licensed by the FDA, Japan’s Pharmaceuticals and Medical Devices Agency (“PMDA”) and 15 other regulatory authorities, who use them in assessing new drug applications.

Our software products are licensed by the FDA, Japan’s PMDA and 18 other regulatory authorities, who use them in assessing new drug applications.

These licenses, which accounted for 0.1 % of our annual revenue in 2022, are typically renewed on an annual basis, and there is no obligation for these regulatory authorities to renew these licenses at the same or any level.

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Some competing products are developed and made available at lower cost by government organizations and academic institutions, and these entities may be able to devote substantial resources to product development.

Some clinical research organizations or technology companies may decide to enter into or expand their offerings in the biosimulation area, whether through acquisition or internal development.

Some clinical research organizations or technology companies may decide to enter into or expand their offerings in the biosimulation

area, whether through acquisition or internal development.

We also face competition from open source software initiatives, in which developers provide software and intellectual property free of charge, such as R and PK-Sim software.

In addition, some of our customers spend significant internal resources in order to develop their own solutions.

There can be no assurance that our current or potential competitors will not develop products, services or technologies that are comparable, or superior to, or will render obsolete, the products, services and technologies we offer.

There can be no assurance that our

competitors will not adapt more quickly than we do to technological advances and customer demands, thereby increasing such competitors’ market share relative to ours.

Our current or potential competitors may develop products, services or technologies that are comparable, or superior to, or will render obsolete, the products, services and technologies we offer.

In addition, our competitors may adapt more quickly than we do to technological advances and customer demands, thereby increasing such competitors’ market share relative to ours.

Any material decrease in demand for our technologies or services may have a material adverse effect on our business, financial condition and results of operations.

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Governmental agencies throughout the world strictly regulate the biopharmaceutical development process.

Our business involves helping biopharmaceutical companies strategically and tactically navigate the regulatory approval process.

Our business involves assisting biopharmaceutical companies strategically and tactically navigate the regulatory approval process.

New or amended regulations are expected to result in higher regulatory standards and potentially additional revenues for companies that service these industries.

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Regulatory developments that could potentially increase demand for our services could also be postponed or not fully implemented.

For example, we provide a technology-driven service for automated redaction of these large, complex documents.

The EMA issued proposed rules that would require our customers to publish suitably redacted clinical reports submitted as part of a regulatory application.

The EMA has since delayed implementation of this requirement, reducing demand for our document redaction technology and services.

Any material decrease or delay in demand for our technologies or services may have a material adverse effect on our business, financial condition and results of operations.

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We provide biosimulation software platforms and services to the biopharmaceutical industry, both private and public companies as well as government and academic institutions.

Because our products and services depend on our customers’ research and development expenditures, our revenues may be materially negatively affected by any economic, competitive, regulatory, demand, or other market impact that decreases our customers’ profitability or causes them to decrease or delay research and development spend.

Because our products and services depend on our customers’ research and development expenditures, our revenues may be materially negatively affected by any economic, competitive, regulatory, demand, or other market impact that decreases our customers’ profitability or their ability to raise capital, which may cause them to decrease or delay research and development spend.

In such an event, our revenues may be reduced through increased downward pricing pressure, reduction in the scope of projects, delays or cancellations of ongoing projects, or our customers’ shifting away from using third parties for their modeling and simulation work.

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Government and university-based funding of scientific research can vary for a number of reasons, including general economic conditions, political priorities, changes in the number of students and other demographic changes.

Our customers’ profitability could decline as a result of efforts by government and third-party payors to reduce the cost of healthcare.

Our customers’ revenue and/or profitability could decline as a result of efforts by government and third-party payors to reduce the cost of healthcare.

Governments worldwide have increased efforts to expand healthcare coverage while at the same time curtailing and better controlling the increasing costs of healthcare.

If cost-containment efforts or other measures substantially change existing insurance models and limit our customers’ profitability, our customers may decrease research and development spending, which could decrease the demand for our services and materially adversely affect our growth prospects.

In addition, industry trends, economic factors, regulatory developments, patent protection and political and other events and circumstances that affect the biopharmaceutical industry, such as volatility or declines in securities markets limiting capital and liquidity, decreased government funding of scientific research, or other circumstances that decrease our customers’ research and development spending also affect us.

Delays in the biopharmaceutical development cycle, particularly related to clinical trials being delayed or canceled, such as those caused by the recent COVID-19 pandemic, could also impact the demand or timing for our products and services.

In addition, industry trends, economic factors, regulatory developments, patent protection and political and

other events and circumstances that affect the biopharmaceutical industry, such as volatility or declines in securities markets limiting capital and liquidity, decreased government funding of scientific research, or other circumstances that decrease our customers’ research and development spending also affect us.

Delays in the biopharmaceutical development cycle, particularly related to clinical trials being delayed or canceled, such as those caused by the ongoing COVID-19 pandemic, could also impact the demand or timing for our products and services.

Furthermore, our financial success depends upon the creditworthiness and ultimate collection of amounts due from our customers.

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And although these small biotechnology companies tend to use third parties such as Certara for many of their development activities, these smaller companies also tend to be less financially secure.

If their products are not successful or they have difficulty raising sufficient investment capital, they may not be able to timely or fully pay for our services, or they may terminate or decrease the scope of projects for which they use our products and services, which could adversely impact our revenues.

If their products are not successful or they have

difficulty raising sufficient investment capital, they may not be able to timely or fully pay for our services, or they may terminate or decrease the scope of projects for which they use our products and services, which could adversely impact our revenues.

Our strategy also includes expanding into new markets, new geographies, and new areas within our existing markets, either organically or by acquiring other companies in these markets.

If our strategies are not executed successfully, our products and services may not achieve market acceptance or penetration in targeted new departments within our existing customers

or new customers.

If our strategies are not executed successfully, our products and services may not achieve market acceptance or penetration in targeted new departments within our existing customers or new customers.

We cannot guarantee that we will be able to identify new biosimulation or regulatory and market access technologies of interest to our customers, or develop or acquire them in a timely fashion.

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If we are unable to develop or acquire new services and products and/or create demand for those newly developed services and products, accelerate the development of products where there is a market demand, or maintain or increase our historic pricing levels, our future business, results of operations, financial condition and cash flows could be adversely affected.

We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business.

Our success depends to a significant extent on the continued services of our senior management and other key contributors throughout our business.

As of December 31, 2022, 380 of our employees held PhDs.

It is challenging to attract and retain critical and qualified employees because of the specialized scientific nature of our business and significant competition for qualified personnel in the biopharmaceutical industry.

Many of our scientists also play a significant role in marketing and selling our products and services to new and existing customers.

If any of our senior scientists or members of senior management team, such as our CEO, CFO or division presidents, do not continue in their present positions, our operations could be disrupted.

Compensation for our employees makes up our most significant fixed cost.

Unexpected revenue shortfalls in the future and rapid wage inflation may make it difficult for us to retain all of our employees.

The loss of any key employee, or our inability to continue to recruit, retain, and motivate key personnel, replace departed personnel in a timely fashion, or train our scientists to develop new business, may adversely impact our ability to compete effectively and grow our business and negatively affect our ability to meet our short and long-term financial and operational objectives.

Our business may be subject to risks arising from natural disasters and epidemic diseases, including the ongoing COVID 19 pandemic.

We may be subject to risks related to natural disasters and public health crises, such as the ongoing global COVID-19 pandemic.

The COVID 19 pandemic, and the numerous variants that have emerged in the last year, such as the Delta and Omicron variants, have also had a significant and sustained negative impact on the global economy and a negative impact on many of our customers.

Some of our customers have experienced or may in the future be adversely impacted by supply chain interruptions, disruptions or delays to pipeline development and clinical trials, costs associated with the COVID 19 pandemic and interruptions or delays in regulatory approvals due to the impact of the COVID 19 pandemic on the operations of certain regulatory authorities.

These and other adverse impacts on our customers and economic conditions related to the COVID 19 pandemic may cause our customers to delay or cancel projects or significantly scale back their operations or research and development spending and limit the use of third parties, which could have a material adverse effect on our business.

We have undertaken several actions to mitigate and/or limit the spread of COVID 19 amongst our employees, including restricting employee travel, closing our offices in compliance with local guidelines and, when reopening offices, implementing a number of safety measures, such as requiring U.

employees to be fully vaccinated before returning to the office, increasing sanitation, use of personal protective equipment, and limiting the number of employees at each location.

However, even if we follow what we believe to be best practices, we may not be able to prevent the transmission of SARS-CoV 2 between employees.

Any incidents of actual or perceived transmission may expose us to liability claims, adversely impact employee productivity and morale, and result in negative publicity and reputational harm.

Travel restrictions and the cancellation of industry conferences have significantly limited face-to-face interactions with existing and potential customers, which have traditionally been an effective avenue for developing new business.

The COVID-19 pandemic, and the numerous variants that have emerged in the last two years, have had a significant and sustained negative impact on the global economy and a negative impact on many of our customers.

Some of our customers have experienced or may in the future be adversely impacted by supply chain interruptions, disruptions or delays to pipeline development and clinical trials and interruptions or delays in regulatory approvals due to the impact of the COVID-19 pandemic on the operations of certain regulatory authorities.

These and other adverse impacts on our customers and economic conditions related to COVID-19 may cause our customers to delay or cancel projects or significantly scale back their operations or research and development spending and limit the use of third parties, which could have a material adverse effect on our business.

Public health crises, such as the COVID 19 pandemic, could also impact the health of our employees and cause extensive absences from work, which may delay the completion of internal projects and lower our consultant utilization rates.

We have in the past undertaken several actions to mitigate and/or limit the spread of COVID 19 amongst our employees, including restricting employee travel, closing our offices in compliance with local guidelines and, when reopening offices,

implementing a number of safety measures, such as increasing sanitation, use of personal protective equipment, and limiting the number of employees at each location.

As the impacts of the COVID-19 pandemic have subsided, we have relaxed some of these actions, but are prepared to reimplement them as and when necessary.

However, even if we follow what we believe to be best practices, we may not be able to prevent the transmission of disease between employees.

Any incidents of actual or perceived transmission may expose us to liability claims and adversely impact employee productivity and morale.

Travel restrictions and the cancellation of industry conferences resulting from public health crises could limit face-to-face interactions with existing and potential customers, which have traditionally been an effective avenue for developing new business.

If our scientists and consultants are not able to effectively communicate and interact with our existing and potential customers remotely, a prolonged period of limited direct contact with customers could translate into reduced bookings and negatively impact our revenue generation.

In addition to the current COVID 19 pandemic, our business could be negatively impacted by other natural disasters, such as new disease epidemics, significant weather events, the outbreak of war or acts of terrorism, such as the conflict between Russia and Ukraine, or other “acts of God,” each of which may be exacerbated by the effects of global climate change.

Our business could be negatively impacted by other natural disasters, such as new disease epidemics, significant weather events, the outbreak of war or acts of terrorism, such as the war between Russia and Ukraine, or other “acts of God,” each of which may be exacerbated by the effects of global climate change.

We are a global company with offices in many countries.

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Market acceptance of our products depends upon the continuous, effective and reliable operation of our software and other biosimulation tools and models.

New or enhanced products or services can require long development and testing periods, which may result in delays in scheduled introduction.

New or enhanced products or services, whether developed internally or acquired through acquisitions, can require long development and testing periods, which may result in delays in scheduled introduction.

Our software solutions and biosimulation tools and models are inherently complex and may contain defects or errors.

The risk of errors is particularly significant when a new product is first introduced or when new versions or enhancements of existing software solutions are released.

The risk of errors is particularly significant when a new product is first introduced or when new versions or enhancements of existing software solutions are released, such as the integration of artificial intelligence technology with our existing software products.

Although we extensively test and conduct quality control on each new or enhanced biosimulation product before it is released to the market, there can be no assurance that significant errors will not be found in existing or future releases.

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We expect to continue to derive a significant portion of our software revenues from the renewal of existing license agreements.

As a result, maintaining the renewal rate of our existing customers and selling additional software solutions to them is critical to our future operating results.

As a result, maintaining the renewal rate of our existing customers and selling additional or upgraded software solutions to them is critical to our future operating results.

Factors that may affect the renewal rate for our customers and our ability to sell additional solutions to them include:

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In addition, our customers may negotiate terms less advantageous to us upon renewal, which may reduce our revenues from these customers.

Our customers depend on our support organization to resolve technical issues relating to our solutions, as our software requires expert usage to fully exploit its capabilities.

Any failure to offer high-quality technical support, or a market perception that we do not offer high-quality support, could adversely affect our renewal rates and our ability to sell our additional solutions to existing or to sell to prospective customers.

Our customers depend on our support to resolve technical issues relating to our solutions, as our software requires expert usage to fully exploit its capabilities.

Any failure to offer high-quality technical support, or a market perception that we do not offer high-quality support, could adversely affect our renewal rates and our ability to sell additional solutions to existing or to sell to prospective customers.

Factors that are not within our control may also contribute to a reduction in our software revenues.

12 unchanged sentences

● a change in customer priorities;

● Covid-19 impact on client trial operations;

● impacts to client trial operations, such as those caused by COVID-19 interruptions or other health crises;

● delay or termination of a specific product candidate development program;

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We might experience similar situations in the future, which could have a material adverse impact on our results of operations and cash flows.

We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business.

Our success depends to a significant extent on the continued services of our senior management and other key contributors throughout our business.

As of December 31, 2021, 352 of our employees held PhDs, PharmDs, or MDs.

Many of our scientists also play a significant role in marketing and selling our products and services to new and existing customers.

If any of our senior scientists or members of senior management team, such as our CEO, CFO or division presidents, do not continue in their present positions, our operations could be disrupted.

Compensation for our employees makes up our most significant fixed cost.

Unexpected revenue shortfalls in the future and rapid wage inflation may make it difficult for us to retain all of our employees.

The loss of any key employee, or our inability to continue to recruit, retain and motivate key personnel, replace departed personnel in a timely fashion, or train our scientists to develop new business, may adversely impact our ability to compete effectively and grow our business and negatively affect our ability to meet our short and long-term financial and operational objectives.

We have government customers and have received government grants, which subject us to risks including early termination, audits, investigations, sanctions, or penalties.

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We believe that our continued growth in revenue, as well as our ability to improve or maintain margins and profitability, will depend upon, among other factors, our ability to address the challenges, risks and difficulties described elsewhere in this “Risk Factors” section and the extent to which our various product offerings grow and contribute to our results of operations.

We cannot provide assurance that we will be able to successfully manage any such challenges or risks to our future growth.

In addition, our customer base may not continue to grow or may decline due to a variety of possible risks, including increased competition, changes in the regulatory landscape and the maturation of our business.

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If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations and technologies successfully, effectively manage the combined business following the acquisition or preserve the operational synergies between our business units that we underwrite at the time of the acquisition.

We cannot assure that following any acquisition we would achieve the expected synergies to justify the transaction, due to a number of factors, including:

The following factors could result in our failure to achieve the expected synergies:

● inability to integrate or benefit from acquired technologies or services in a profitable manner;

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● use of substantial portions of our available cash to consummate the acquisition.

For example, we also recently acquired Vyasa Analytics, which provides a novel deep learning AI-powered platform for organizations to integrate and analyze content across enterprise data landscape.

The planned integration of the Vyasa technology into our existing software products may be delayed or may not achieve sufficient market acceptance to justify the increase in price to our enhanced products.

Furthermore, acquired businesses may change or increase the risks to which we are exposed.

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As a result, this acquisition increased our exposure to risks related to changes in the FDA’s or the PMDA’s regulatory standards and risks related to government customers.

Some acquisitions are structured in such a way that a portion of the purchase price may be based on achieving certain post-closing conditions (i.e.

“earn-outs”), such as the Company recognizing certain levels of revenue generated by the acquired business.

Failure to achieve the expected synergies or market acceptance could also result in the failure to achieve some or all of these conditions, which could result in disputes with the seller of the applicable business.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually.

In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

In the future, if our acquisitions do not yield the expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results.

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Our TAM is based on publicly available third-party market research and internal estimates regarding the size of our markets, and is subject to significant uncertainty and is based on assumptions that may not prove to be accurate.

We base the TAM for our business off our current core markets, biosimulation, regulatory science, and market access.

We base the TAM for our business on our current core markets, biosimulation, regulatory science, and market access.

These estimates may change or prove to be inaccurate.

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In addition, our expectations, assumptions and estimates of future opportunities are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described herein.

If third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our future growth opportunities may be affected.

If third-party or internally generated data prove to be inaccurate or if we make errors in our assumptions based on that data, our future growth opportunities may be affected.

If our TAM, or the size of any of the various markets in which we operate, proves to be inaccurate, our future growth opportunities may be limited and there could be a material adverse effect on our prospects, business, financial condition and results of operations.

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Changes in the value of the U.S.

dollar relative to other currencies could result in material foreign currency exchange rate fluctuations and, as a result, our net earnings could be materially adversely affected.

dollar relative to other currencies could result in material foreign currency exchange rate fluctuations and, as a result, our revenue and net earnings could be materially adversely affected.

In addition, political and economic changes, including international conflicts and terrorist acts, throughout the world may interfere with our or our customers’ activities in particular locations and result in a material adverse effect on our business, financial condition and operating results.

Although we do not believe the current conflict between Russia and Ukraine poses any immediate material impact to our business, if the conflict intensifies or expands beyond Ukraine, it could have an adverse impact on our business, particularly our operations in Poland and our ability to use consultants in that that region of the world.

We could also experience a delay or cancellation of work orders to the extent they rely on clinical trials being conducted in Ukraine.

We could also experience a delay

or cancellation of work orders to the extent they rely on clinical trials being conducted in Ukraine.

Potential trade restrictions, exchange controls, adverse tax consequences and legal restrictions may affect our revenue from customers located outside the United States and the repatriation of funds into the United States.

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Foreign currency exchange rate hedges, transactions, re-measurements, or translations could also materially impact our financial results.

These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial.

These risks, individually or in the aggregate, could have an adverse effect on our operating and financial results.

We are subject to the FCPA and the Bribery Act and similar anti-corruption laws and regulations in other countries.

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Department of Commerce, the United Nations Security Council and other relevant sanctions authorities.

Our global operations expose us to the risk of violating, or being accused of violating, economic and trade sanctions laws and regulations.

Our global operations and use of distributors in jurisdictions outside the U.S.

expose us to the risk of violating, or being accused of violating, either directly or indirectly through our distributors, economic and trade sanctions laws and regulations.

Our failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures.

Investigations of alleged violations can be expensive and disruptive.

Despite our compliance efforts and activities we cannot assure compliance by our employees or

representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.

Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives, such as our distributors or resellers, for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.

Current and future litigation against us, which may arise in the ordinary course of our business, could be costly and time consuming to defend.

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Third parties may in the future assert intellectual property rights to technologies that are important to our business and demand back royalties or that we license their technology.

Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, overall financial condition and operating results.

Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, overall

financial condition and operating results.

Insurance may not cover such claims, may not be sufficient for one or more of such claims and may not continue to be available on terms acceptable to us.

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The extent of our insurance coverage is under continuous review and is modified as we deem it necessary.

Despite this insurance, it is possible that claims or liabilities against us may have not be fully insured, or our insurance carriers may contest coverage, which could have a material adverse impact on our financial position or results of operations.

Despite this insurance, it is possible that claims or liabilities against us may not have been fully insured, or our insurance carriers may contest coverage, which could have a material adverse impact on our financial position or results of operations.

In addition, we may not be able to obtain any insurance coverage, or adequate insurance coverage on attractive terms, or at all, when our existing insurance coverage expires and the cost of obtaining such insurance coverage may materially increase.

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The services we provide to biopharmaceutical companies and other customers are complex and subject to contractual requirements, regulatory standards and ethical considerations.

For example, some of our services must adhere to regulatory requirements of the FDA governing our activities relating to preclinical studies and clinical trials, including GLP and GCP.

For example, some of our services must adhere to the regulatory requirements of the FDA governing our activities relating to preclinical studies and clinical trials, including GLP and GCP.

Additionally, we are subject to compliance with FDA’s regulations set forth in part 11 of title 21 of the Code of Federal Regulations, which relates to the creation, modification, maintenance, storage, retrieval, or transmittal of electronic records submitted to the FDA.

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Mistakes in providing services to our customers, such as dosing models, could affect medical decisions for patients in clinical trials and create liability for personal injury.

Such actions may include sanctions, such as warning or untitled letters, injunctions or failure of such regulatory authorities to grant marketing approval of products, delay, suspension or withdrawal of approvals, license revocation, loss of accreditation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines.

Such actions may include sanctions, such as warning or untitled letters, injunctions, or failure of such regulatory authorities to grant marketing approval of products, delay, suspension, or withdrawal of approvals, license revocation, loss of accreditation;

product seizures or recalls;

operational restrictions;

civil or criminal penalties or prosecutions, damages or fines.

Customers may also bring claims against us for breach of our contractual obligations or errors in the outcomes of our products or services, may terminate their contracts with us and/or may choose not to award further work to us.

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If we are unable to raise additional capital on terms acceptable to us or at all or generate cash flows necessary to maintain or expand our operations and invest in our computational platform, we may not be able to compete successfully, which would harm our business, operations, and financial condition.

Our bookings might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflected in our backlog.

Our bookings might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflected in our bookings.

Our bookings represent anticipated revenue for work not yet completed or performed under a signed contract or purchase order where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the software or services.

Bookings vary from period to period depending on numerous factors, including sales performance and the overall health of the biopharmaceutical industry, among others.

Once work begins, we recognize direct revenue

over the life of the contract based on our performance of services under the contract.

Once work begins, we recognize direct revenue over the life of the contract based on our performance of services under the contract.

Contracts may be terminated or delayed by our customers for reasons beyond our control.

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Our bookings for the year ended December 31, 2022 were $409.0 million compared to bookings of $341.7 million for the year ended December 31, 2021 .

Although an increase in bookings will generally result in an increase in future revenue to be recognized over time (depending on future contract modifications, contract cancellations and other adjustments), an increase in bookings at a particular point in time does not necessarily correspond to an increase in revenues during a particular period.

The timing and extent to which bookings will result in direct revenue depends on many factors, including the timing of commencement of work, the rate at which we perform services, scope changes, cancellations, delays, receipt of regulatory approvals and the nature, duration, size, complexity and phase of the studies.

particular period.

The timing and extent to which bookings will result in direct revenue depend on many factors, including the timing of the commencement of work, the rate at which we perform services, scope changes, cancellations, delays, the receipt of regulatory approvals, and the nature, duration, size, complexity, and phase of the studies.

In addition, delayed projects remain in bookings until they are canceled.

As a result of these factors, our bookings are not necessarily a reliable indicator of future direct revenue and we might not realize all or any part of the revenue from the authorizations in bookings as of any point in time.

As a result of these factors, our bookings are not necessarily a reliable indicator of future direct revenue, and we might not realize all or any part of the revenue from the authorizations in bookings at any given point in time.

Risks Related to Intellectual Property, Information Technology and Data Privacy

We rely upon third-party providers of cloud-based infrastructure to host our software solutions.

Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition, and results of operations.

We rely on third-party providers of cloud-based infrastructure to host our software solutions.

We outsource substantially all of the infrastructure relating to our hosted software solutions to third-party hosting services.

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Any limitation on the capacity of our third-party hosting services could impede our ability to onboard new customers or expand the usage of our existing customers, which could adversely affect our business, financial condition and results of operations.

In addition, any incident affecting our third-party hosting services’ infrastructure that may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, terrorist or other attacks and other similar events beyond our control could negatively affect our cloud-based solutions.

In addition, any incident affecting our third-party hosting services’ infrastructure that may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, terrorist or other attacks or other similar events beyond our control could negatively affect our cloud-based solutions.

Work-from-home and other measures introduced to mitigate the spread of the COVID 19 pandemic have impacted our third-party vendors by increasing operational challenges and risks, including vulnerabilities to cybersecurity and information technology infrastructure threats.

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We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the third-party hosting services we use.

in arranging or creating new facilities and services and/or re-architecting our hosted software solutions for deployment on a different cloud infrastructure service provider, which could adversely affect our business, financial condition and results of operations.

In the event that our service agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that we utilize, interruption of internet service provider connectivity or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our hosted software solutions for deployment on a different cloud infrastructure service provider, which could adversely affect our business, financial condition and results of operations.

If we are not able to reliably meet our data storage and management requirements, or if we experience any failure or interruption in the delivery of our services over the internet, customer satisfaction and our reputation could be harmed and customer contracts may be terminated.

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Any of these events could create liability for us and damage our reputation, which could have a material adverse effect on our revenue, business, results of operations and financial condition and the market price of our shares.

If our security measures are breached or unauthorized access to customer data is otherwise obtained, our solutions may be perceived as not being secure, customers may reduce the use of or stop using our solutions and we may incur significant liabilities.

If our security measures are breached or unauthorized or unlawful access to customer or other proprietary data occurs, our solutions may be perceived as not being secure, customers may reduce the use of or stop using our solutions and we may incur significant liabilities.

The evolution of technology systems introduces ever more complex security risks that are difficult to predict and defend against.

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Our solutions involve the collection, analysis and retention of our customers’ proprietary information related to their drug development efforts, including clinical data.

Unauthorized access to this information or data, whether by third-party action or employee error, and whether deliberate or unintentional, could result in the loss of information, litigation, indemnity obligations, damage to our reputation and other liability.

Unauthorized access to this information or data, whether deliberate or unintentional, could result in the loss of information, litigation, indemnity obligations, damage to our reputation and other liability.

Our increased reliance on remote access to our information systems due to the COVID 19 pandemic has increased our exposure to potential cybersecurity breaches and the risk of loss or exposure of such information and data.

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Depending on their nature and scope, this could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties, including information about our customers and employees) and the disruption of business operations.

If there is a cybersecurity incident and we know or suspect that certain personal information has been accessed, or used inappropriately, we may need to inform the affected individuals and may be subject to significant fines and penalties.

Further, under certain regulatory schemes, such as the CCPA, individuals may bring private claims and we may be liable for statutory damages.

Further, if the technical and operational solutions we have adopted to maintain data security fail, our existing and potential customers may lose confidence in our ability to maintain the confidentiality of their intellectual property, we may be subject to breach of contract claims by our customers and we may suffer reputational and other harm as a result.

If there is a cybersecurity incident and we know or reasonably suspect that certain personal information has been subject to unauthorized or unlawful access or use, we may need to inform the affected individuals and may be subject to significant fines and penalties.

Further, under certain regulatory schemes, such as the CCPA, individual California residents may

bring private claims for our failure to deploy reasonable and appropriate cybersecurity controls and we also may be liable for statutory and multiple damages in California and other states.

Further, if our technical and operational safeguards fail, our existing and prospective customers may lose confidence in our ability to maintain the confidentiality of their intellectual property and other proprietary data, we may be subject to breach of contract claims by our customers and we may suffer reputational and other harm as a result.

Our insurance may not be adequate to cover losses associated with such events, and in any case, such insurance may not cover all of the types of costs, expenses and losses we could incur to respond to and remediate a security breach.

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The successful assertion of one or more large claims against us that exceed available insurance coverage, denial of coverage as to any specific claim, or any change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements, could have a material adverse effect on our reputation, business, financial condition and results of operations.

We are subject to numerous privacy and data security laws and related contractual requirements and our failure to comply with those obligations could cause us significant harm.

We are subject to numerous privacy and cybersecurity laws and related contractual requirements and our failure to comply with those obligations could cause us significant harm, including financial losses and reputational harm.

In the normal course of our business, we collect, process, use and disclose information about individuals, including protected health information and other patient data, as well as information relating to health professionals and our employees.

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United States state privacy, security and breach notification and healthcare information laws;

the European Union’s GDPR;

and other European privacy laws as well as privacy laws being adopted in other regions around the world.

These laws and regulations are complex and their interpretation is rapidly evolving, making implementation and enforcement, and thus compliance requirements, ambiguous, uncertain and potentially inconsistent.

In addition, our collection, processing, use, disclosure, and protection of information is subject to related contractual requirements.

Compliance with such laws and related contractual requirements may require changes to our collection, use, transfer, disclosure, or other processing of information about individuals, and may thereby increase compliance costs.

the European Union’s GDPR, UK GDPR, and other European and UK privacy laws, as well as the expanding number of privacy laws around the world, including China and Canada.

These laws are complex and their interpretation is rapidly evolving, making implementation and enforcement, and thus compliance requirements, uncertain and potentially inconsistent.

In addition, our collection, use, disclosure, protection and other processing of information is subject to related contractual requirements.

Compliance with such laws and related contractual requirements may require changes to our information processing practices, and may thereby increase compliance costs.

Failure to comply with such laws and/or related contractual obligations could result in regulatory enforcement or claims against us for breach of contract, or may lead third parties to terminate their contracts with us and/or choose not to work with us in the future.

Should this occur, there could be a material adverse effect on our reputation, business, financial condition, and results of operations.

These regulations often govern the use, handling and disclosure of information about individuals, including medical information and require the use of standard contracts, privacy and security standards and other administrative simplification provisions.

In relation to HIPAA, we do not consider our service offerings to generally cause us to be subject

as a covered entity;

These regulations often govern the handling of information about individuals, including personal health information and require the use of standard contracts, privacy and security standards and other administrative simplification provisions.

In relation to HIPAA, we do not consider our service offerings to generally cause us to be subject as a covered entity;

however, in certain circumstances, we are subject to HIPAA as a business associate and may enter into business associate agreements.

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Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.

For example, the CCPA, which took effect in 2020, imposes obligations and restrictions on businesses regarding their collection, use, and sharing of personal information and provides new and enhanced data privacy rights to California residents, such as affording them the right to access and delete their personal information and to opt out of certain sharing of personal information.

Protected health information that is subject to HIPAA is excluded from the CCPA, however, information we hold about individuals which is not subject to HIPAA would be subject to the CCPA.

For example, the California Consumer Privacy Act (“CCPA”), which took effect in 2020, imposes obligations and restrictions on businesses regarding their collection, use, and sharing of personal information and provides new and enhanced data privacy rights to California residents, such

as affording them the right to access and delete their personal information and to opt out of certain sharing of personal information.

Protected health information that is subject to HIPAA is excluded from the CCPA, however, information we hold about individuals that is not subject to HIPAA would be subject to the CCPA.

It is unclear how HIPAA and the other exceptions may be applied under the CCPA.

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The GDPR became enforceable on May 25, 2018.

The GDPR regulates our processing of personal data, and imposes stringent requirements.

The GDPR includes sanctions for violations up to the greater of €20 million or 4.0% of worldwide gross annual revenue and applies to services providers such as us.

In addition, following the transitional period following Brexit, we must comply with the GDPR and also the UK GDPR, with each regime having the ability to fine up to the greater of €20 million (£17 million) or 4% of global turnover.

The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, for example how data transfers between EU member states and the United Kingdom are treated and the role of the Information Commissioner’s Office following the end of the transitional period.

These changes will lead to additional costs and increase our overall risk exposure.

Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States, e.g.

on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S.

The GDPR and the UK’s version of the GDPR regulate our processing of personal data, and imposes stringent requirements.

Failure to comply with the GDPR or UK GDPR may result in fines up to the greater of €20 million or 4.0% of worldwide gross annual revenue and applies to services providers such as us under each of GDPR and UK GDPR.

Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States, e.g., on July 16, 2020, the Court of Justice of the European Union (“CJEU”) invalidated the EU-US Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EEA to U.S.

entities who had self-certified under the Privacy Shield scheme.

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We also currently rely on the standard contractual clauses to transfer personal data outside the EEA, including to the United States.

If all or some jurisdictions within the European Union or the United Kingdom determine that the new standard contractual clauses also cannot be used to transfer personal data to the United States, we could be left with no reasonable option for the lawful cross-border transfer of personal data.

If left with no reasonable option for the lawful cross-border transfer of personal data, and if we nonetheless continue to transfer personal data from the European Union

to the United States, that could lead to governmental enforcement actions, litigation, fines and penalties or adverse publicity, which could have an adverse effect on our reputation and business or cause us to need to establish systems to maintain certain data in the European Union, which may involve substantial expense and cause us to divert resources from other aspects of our operations, all of which may adversely affect our business.

We believe we maintain adequate processes and systems to ensure our and our customers’ compliance with the requirements of the GDPR, but it is possible that we could fail to comply or that we could incur liability due to the acts or omissions of our customers.

Further, these recent developments will require us to review and amend the legal mechanisms by which we make and/or receive personal data transfers to/ in the United States.

If all or some jurisdictions within the European Union or the United Kingdom determine that the standard contractual clauses do not provide sufficient safeguards to transfer personal data to the United States, our ability to effect cross-border transfers of personal data will be severely limited or cause us to need to establish systems to maintain certain data in the EEA or UK, and thereby divert resources from other aspects of our operations, all of which may adversely affect our business or we may face governmental enforcement actions, litigation, fines and penalties or adverse publicity, which could have an adverse effect on our reputation and business.

We believe we maintain adequate processes and systems in compliance with the requirements of the GDPR and UK GDPR, but it is possible that we could fail to comply or that we could incur liability due to the acts or omissions of our vendors.

In the event we are not able to secure indemnification or the indemnification and any insurance coverage is inadequate to cover our losses, we could suffer significant financial, operational, reputational and other harm and our business, results of operations, financial condition and/or cash flows could be materially adversely affected.

Furthermore, as supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.

The United States, the European Union, and other jurisdictions where we operate continue to issue new, and enhance existing, privacy and data security protection regulations related to the collection, use, disclosure, disposal and protection of information about individuals, including medical information.

Privacy and data security laws are rapidly evolving both in the United States and internationally, and the future interpretation of those laws is somewhat uncertain.

For example, we do not know how E.U.

regulators will interpret or enforce many aspects of the GDPR and some regulators may do so in an inconsistent manner.

In the United States, privacy and data security is an area of emphasis for some but not all state regulators, and new legislation has been and likely will continue to be introduced at the state and/or federal level.

Additional legislation or regulation might, among other things, require us to implement new security measures and processes or bring within the legislation or regulation de-identified health or other information about individuals, each of which may require substantial expenditures or limit our ability to offer some of our services.

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Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability to develop, market and sell our products and services, allowing our customers to use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual

property and proprietary rights of third parties.

There is considerable patent and other intellectual property litigation in the software, pharmaceutical and biotechnology industries.

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Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us and could require us to make substantial licensing and royalty payments.

We could be forced, including by court order, to cease developing and commercializing the infringing technology or product.

We could be forced, including by court order, to cease developing and commercializing the infringing

technology or product.

A finding of infringement could prevent us from commercializing any product candidates or force us to cease some of our business operations, which could materially harm our business.

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Our indebtedness could materially adversely affect our financial condition and our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations under our debt and could divert our cash flow from operations to debt payments.

As of December 31, 2021, we had $300.5 million in total borrowings under our credit agreement, originally dated July 15, 2017 (“Credit Agreement”) and third modification on June 17, 2021.

As of December 31, 2021, we had a $100.0 million

revolving credit facility under our Credit Agreement under which we had $99.8 million of availability after giving effect to outstanding letters of credit.

As of December 31, 2022, we had $297.5 million in total borrowings under our credit agreement, originally dated July 15, 2017, as amended (“Credit Agreement”).

As of December 31, 2022, we had a $100.0 million revolving credit facility under our Credit Agreement of which we had $99.9 million of availability after giving effect to outstanding letters of credit.

In addition, subject to restrictions governing our Credit Agreement, we may incur additional debt.

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We have pledged substantially all of our assets as collateral to secure our Credit Agreement.

In the event of an acceleration of our debt upon a default, we may not have or be able to obtain sufficient funds to make any accelerated payments.

the event of an acceleration of our debt upon a default, we may not have or be able to obtain sufficient funds to make any accelerated payments.

Furthermore, the terms of any future indebtedness we may incur could have further additional restrictive covenants.

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If we incur additional debt above the levels currently in effect, the risks associated with our leverage, including those described above, would increase.

Our Credit Agreement includes a revolving credit facility in an aggregate principal amount of $100.0 million, with a sub-commitment for issuance of letters of credit.

Under the revolving credit facility we had $99.8 million of availability as of December 31, 2021, after giving effect to outstanding letters of credit.

Risks Related to our Financial Statements and Results

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We have intangible assets, including goodwill and other finite-lived and indefinite-lived intangibles, on our balance sheet due to our acquisitions of businesses.

The initial identification and valuation of these intangible assets and the

determination of the estimated useful lives at the time of acquisition involve use of management judgments and estimates.

The initial identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition involve use of management judgments and estimates.

These estimates are based on, among other factors, input from accredited valuation consultants, reviews of projected future income cash flows and statutory regulations.

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Such an impairment charge could materially and adversely affect our operating results.

As of December 31, 2021, and 2020, the carrying amount of goodwill and other intangibles was $1.2 billion and $915.0 million, respectively, on our consolidated balance sheets.

As of December 31, 2022, and 2021, the carrying amount of goodwill and other intangibles was $1.2 billion and $1.2 billion, respectively, on our consolidated balance sheets.

Our ability to use our NOLs and R&D tax credit carryforwards to offset future taxable income may be subject to certain limitations.

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These carryforwards that may be utilized in a future period may be subject to limitations based upon changes in the ownership of our stock in a future period.

Additionally, we carried forward foreign NOLs of approximately $24.5 million which will start to expire in 2022, foreign research and development credits of $0.4 million which will start to expire in 2029, and Canadian investment tax credits of approximately $3.8 million which will expire if unused in years 2030 through 2039.

Additionally, we carried forward foreign NOLs of approximately $65.8 million which began to expire in 2022, foreign research and development credits of $0.4 million which will start to expire in 2029, and Canadian investment tax credits of approximately $3.5 million which will expire if unused in years 2030 through 2040.

Our carryforwards are subject to review and possible adjustment by the appropriate taxing authorities.

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We have performed an analysis for the period January 1, 2022 through December 31, 2022 and determined that an ownership change did not occur during this period.

In addition, we

determined that ownership changes occurred in prior periods and therefore our NOLs and R&D tax credit carryforwards reflect the amounts available after considering such limitations.

We may experience further ownership changes in the future and/or subsequent changes in our stock ownership (which may be outside our control).

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These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of December 31, 2021, shares held by EQT and our officers and directors in aggregate represented approximately 27.5% of our outstanding common stock.

The market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.

On December 8, 2022, an entity controlled by Arsenal Capital Partners (“Arsenal”) acquired all of our stock shares held by EQT Avatar Parent LP(“EQT”).

As of December 31, 2022, shares controlled by Arsenal and our officers and directors in aggregate represented approximately 25.3% of our outstanding common stock.

Although Arsenal agreed with the Company not to sell any of the shares acquired by EQT for a 2-year period (with certain limited exceptions or without the

written consent of the Company), the market price of our shares of common stock could drop significantly if Arsenal or our officers and directors sell their shares or are perceived by the market as intending to sell them.

These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

In addition, the shares of our common stock reserved for future issuance under the 2020 Incentive Plan (“Plan Share Reserve”) or our 2020 Employee Stock Purchase Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable.

A total of 19,898,104 and 1,700,000 shares of common stock have been reserved for future issuance under the 2020 Incentive Plan and our 2020 Employee Stock Purchase Plan, respectively as of December 31, 2021.

In addition, the shares of our common stock reserved for future issuance under the 2020 Incentive Plan (“Plan Share Reserve”) or our 2020 Employee Stock Purchase Plan will become eligible for resale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable.

As of December 31, 2022, a total of 19,460,378 and 1,700,000 shares of common stock have been reserved for future issuance under the 2020 Incentive Plan and our 2020 Employee Stock Purchase Plan, respectively.

Pursuant to the terms of the 2020 Incentive Plan, the Plan Share Reserve automatically increases on the first day of each fiscal year by a number of shares of common stock equal to the lesser of (i) the positive difference, if any, between (A) 4% of the Company’s outstanding common stock on the last day of the immediately preceding fiscal year, and (B) the Plan Share Reserve on the last day of the immediately preceding fiscal year, and (ii) the number of shares of common stock as may be determined by the Board.

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For example, we issued 2,239,717 shares of common stock in connection with our acquisition of Pinnacle in October 2021.

We may issue additional shares in connection with our acquisition of Vyasa Analytics, LLC based on the results of its future performance.

The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock.

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Provisions in our organizational documents could delay or prevent a change of control.

change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.

Certain provisions of our amended and restated certificate of incorporation, amended and restated bylaws and stockholders agreement may have the effect of delaying or preventing a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.

These provisions provide, among other things:

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● that special stockholder meetings may be called only by or at the direction of our board of directors or the chairman of our board of directors;

● that certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws pertaining to amendments, our board of directors, limitation of director liability, stockholder consents, annual and special stockholder meetings, competition and corporate opportunities and business combinations, may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class, which limitation may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our Company.

outstanding shares of our stock entitled to vote thereon, voting together as a single class, which limitation may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our Company.

These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.

As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

EQT holds a substantial amount of our outstanding common stock, and its interests may be different than the interests of other holders of our common stock.

As of December 31, 2021, EQT owned approximately 23.5% of our outstanding common stock.

Under the terms of our stockholders agreement, EQT and certain of its affiliates have the right to nominate to our board of directors a number of nominees equal to (x) the total number of directors comprising our board of directors at such time, multiplied by (y) the percentage of our outstanding common stock held from time to time by EQT and such affiliates (with any fractional amounts are rounded up to the nearest whole number).

As a result, EQT retains relatively significant influence over actions to be taken by us.

EQT is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

Our amended and restated certificate of incorporation provides that none of EQT, any of their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.

EQT also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

So long as EQT continues to own a significant amount of our outstanding common stock, even though such amount is less than 50%, they will be able to influence our decisions and, so long as EQT continues to own shares of our outstanding common stock, EQT will have the ability to nominate individuals to our board of directors.

In addition, EQT will have significant influence over the outcome of all matters requiring stockholder approval, including any potential change of control of our company.

Arsenal holds a substantial amount of our outstanding common stock, and its interests may be different than the interests of other holders of our common stock.

As of December 31, 2022, Arsenal owns or controls approximately 22.8% of our outstanding common stock, and subject to the terms of the Stockholder Agreement, maintains the right to nominate up to two board members.

In addition, Arsenal will have significant influence over the outcome of all matters requiring stockholder approval, including any potential change of control of our Company.

The concentration of ownership could deprive investors of an opportunity to receive a premium for shares of common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.

Arsenal is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

Our amended and restated certificate of incorporation provides that any director who is not employed by us or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.

Arsenal also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us..

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholder’s ability to obtain a favorable judicial forum for disputes with us or our current and former directors, officers, employees or stockholders.

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In addition, we are required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in our annual report.

Our management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded that our internal control over financial reporting was not effective at December 31, 2021, because of the material weakness described below.

A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is more than a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

We concluded that we did not have an effective information technology general controls over one of the information technology system that supports the project set-up and time submissions for services provided.

We believe these control deficiencies were a result of IT processes lacking adequate reviews and documentation to maintain effective controls related to access management, change management and review over third party service organization report.

The material weakness did not result in any identified misstatements and there were no changes to previously released financial result.

We are taking steps to remediate the material weakness.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may in the future identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the SOX for compliance with the requirements of Section 404.

This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

Testing internal controls may divert our management’s attention from other matters that are important to our business.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the SOX for compliance with the requirements of Section 404.

In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report.

Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses.

A material weakness in internal

controls could result in our failure to detect a material misstatement of our annual or quarterly consolidated financial statements or disclosures.

We may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404.

If we are unable to conclude that we have effective internal controls over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.

We incur substantial costs as a result of operating as a publicly traded company, and our management is required to devote substantial time to compliance initiatives.

As a publicly traded company, and a large accelerated filer, we incur material legal, accounting, and other expenses that we did not previously incur.

In addition, the SOX, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules of the SEC, and the stock exchange on which our common shares are listed, have imposed various requirements on public companies.

In addition, the Sarbanes-Oxley, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules of the SEC, and the stock exchange on which our common shares are listed, have imposed various requirements on public companies.

Our management and other personnel need to devote a substantial amount of time to these compliance initiatives as well as investor relations.

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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