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These risks include, among others, the following key risks:
−Removed: ● Deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery and development by regulatory authorities or academic institutions could damage our reputation or reduce the demand for our products and service.
+Added: • Deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery and development could reduce the demand for our products and services.
• We compete in a competitive and highly fragmented market.
−Removed: ● 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.
−Removed: ● Reduction in research and development spending by our customers for a variety of reasons, as well as delays in the drug discovery and development process, may reduce demand for our products and services and negatively impact our results of operations and financial condition.
+Added: • Reduction in R&D spending by our customers, as well as delays in the drug discovery and development process, may reduce demand for our products and services.
• Consolidation within the biopharmaceutical industry may reduce the pool of potential customers for our products and services or reduce the number of licenses for our software products.
• As customers increase their utilization of our products and services, we may be subject to additional pricing pressures.
−Removed: ● Our continued revenue growth depends on our ability to successfully enter new markets, increase our customer base and expand our relationship and the products and services we provide to our existing customers.
+Added: • Our continued revenue growth depends on our ability to successfully enter new markets, increase our customer base and expand our relationships and the products and services we provide.
+Added: • We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business.
+Added: • If our independent contractors are characterized as employees, we would be subject to adverse effects on our business and employment and withholding liabilities.
• Delays or defects in the release of new or enhanced software or other biosimulation tools may result in increased cost to us, delayed market acceptance of our products, diminished demand for our products, delayed or lost revenue, and liability.
+Added: • Issues relating to the use of artificial intelligence and machine learning in our products and services could adversely affect our business and operating results.
• If our existing customers do not renew their software licenses, do not buy additional solutions from us or renew at lower prices, our business and operating results will suffer.
−Removed: ● Our customers may delay or terminate contracts, or reduce the scope of work, for reasons beyond our control, or we may underprice or overrun cost estimates with our fixed-fee contracts, potentially resulting in financial losses.
−Removed: ● We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business.
• 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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• Our estimated addressable market is subject to inherent challenges and uncertainties.
−Removed: If we have overestimated the size of our addressable market or the various markets in which we operate, our future growth opportunities may be limited.
• We are subject to risks associated with the operation of a global business.
+Added: T able of Contents
• We are subject to the FCPA and the Bribery Act and similar anti-corruption laws and regulations in other countries.
−Removed: Violations of these laws and regulations could harm our reputation and business, or materially adversely affect our business, results of operations, financial condition and/or cash flows.
−Removed: ● Our failure to comply with trade compliance and economic sanctions laws and regulations of the United States and applicable international jurisdictions could materially adversely affect our reputation and results of operations.
−Removed: ● Current and future litigation against us, which may arise in the ordinary course of our business, could be costly and time consuming to defend.
−Removed: ● Our insurance coverage may not be sufficient to avoid material impact on our financial position resulting from claims or liabilities against us, and we may not be able to obtain insurance coverage on attractive terms, or at all, in the future.
+Added: • Our failure to comply with trade compliance and economic sanctions laws and regulations could materially adversely affect our reputation and results of operations.
+Added: • Current and future litigation against us could be costly and time consuming to defend.
+Added: • Our insurance coverage may not be sufficient to avoid material impact on our financial position resulting from claims or liabilities against us.
• If we fail to perform our services in accordance with contractual requirements, regulatory standards and ethical considerations, we could be liable for significant costs or penalties and our reputation could be harmed.
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• 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.
+Added: • Our business may be subject to risks arising from natural disasters, epidemic diseases, pandemics and public health crises.
• We rely upon third-party providers of cloud-based infrastructure to host our software solutions.
−Removed: 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.
+Added: Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business.
• 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.
−Removed: ● 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.
−Removed: ● 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.
−Removed: ● 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.
+Added: • 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.
+Added: • If our security measures are breached or unauthorized access to customer or other proprietary data is otherwise obtained, customers may reduce the use of or stop using our solutions and we may incur significant liabilities and loss of customer confidence.
+Added: • 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 may be unable to adequately enforce or defend our ownership and use of our intellectual property and other proprietary rights.
−Removed: ● 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.
−Removed: ● 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.
−Removed: ● 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
−Removed: 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.
−Removed: ● Our board of directors are authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.
+Added: • Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, which could have a material adverse effect on our business.
+Added: • Our indebtedness could materially adversely affect our financial condition and our ability to operate our business.
+Added: • Restricted covenants governing our Credit Agreement may restrict our ability to pursue our business strategies.
+Added: • Impairment of goodwill and other tangible assets may adversely impact future results of operations.
+Added: • Our ability to use our NOLs and R&D tax credits carryforwards to offset future taxable income may be subject to certain limitations.
+Added: T able of Contents
+Added: • If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
Risks Related to Our Industry
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These licenses, which accounted for 0.2 % of our annual revenue in 2023, 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.
−Removed: Although we do not believe that reduction or elimination of the use of any of our software products that are currently licensed by regulatory authorities would have a direct impact on the use of those products by our industry customers, it could diminish our reputation and negatively impact our ability to effectively market and sell our software products, particularly if such move were part of a wider reversal of government or regulatory acceptance of in silico data.
+Added: Although we do not believe that reduction or elimination of the use of any of our software products that are currently licensed by regulatory authorities would have a direct impact on the use of those products by our industry customers, it could diminish our reputation and negatively impact our ability to effectively market and sell our software products, particularly if such action were part of a wider reversal of government or regulatory acceptance of in silico data.
We also work closely with the global academic community on research, publications, and training of the next generation of biopharmaceutical scientists.
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In biosimulation software, we compete with other scientific software providers, technology companies, in-house development by biopharmaceutical companies, and certain open source solutions.
−Removed: In the technology-driven services market, we compete with specialized companies, in-house teams at biopharmaceutical companies, academic and government institutions.
+Added: In the technology-driven services market, we compete with specialized companies, in-house teams at biopharmaceutical companies, and academic and government institutions.
In some standard biosimulation services, and in regulatory, and market access, we also compete with contract research organizations.
−Removed: Some of our competitors and potential competitors have longer operating histories in certain segments of our industry than we do and could have greater financial, technical, marketing, research and development and other resources.
+Added: Some of our competitors and potential competitors have longer operating histories in certain segments of our industry than we do and could have greater financial, technical, marketing, R&D and other resources.
Some of our competitors offer products and services directed at more specific markets than those we target, enabling these competitors to focus a greater proportion of their efforts and resources on those specific markets.
−Removed: 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.
−Removed: Some clinical research organizations or technology companies may decide to enter into or expand their offerings in the biosimulation
−Removed: area, whether through acquisition or internal development.
+Added: 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
+Added: T able of Contents
+Added: product development.
+Added: 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.
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If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our business may be harmed.
−Removed: Reduction in research and development spending by our customers for a variety of reasons, as well as delays in the drug discovery and development process, may reduce demand for our products and services and negatively impact our results of operations and financial condition.
+Added: Reduction in R&D spending by our customers for a variety of reasons, as well as delays in the drug discovery and development process, may reduce demand for our products and services and negatively impact our results of operations and financial condition.
We provide biosimulation software platforms and services to the biopharmaceutical industry, both private and public companies as well as government and academic institutions.
−Removed: 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.
+Added: Because our products and services depend on our customers’ R&D 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 R&D 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.
Our customers’ expenses could continue to increase as a result of the higher costs of developing more complex drugs and biologics and complying with more onerous government regulations.
−Removed: Furthermore, our customers finance their research and development spending from both private and public sources, including the capital markets.
−Removed: As a result, our revenues and financial performance may be adversely impacted if our customers are unable to obtain sufficient capital on acceptable terms to finance their research and development spending.
+Added: Furthermore, our customers finance their R&D spending from both private and public sources, including the capital markets.
+Added: As a result, our revenues and financial performance may be adversely impacted if our customers are unable to obtain sufficient capital on acceptable terms to finance their R&D spending.
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.
+Added: T able of Contents
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.
−Removed: 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.
−Removed: In addition, industry trends, economic factors, regulatory developments, patent protection and political and
−Removed: 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.
+Added: If cost-containment efforts or other measures substantially change existing insurance models and limit our customers’ profitability, our customers may decrease R&D spending, which could decrease the demand for our services and materially adversely affect our growth prospects.
+Added: 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’ R&D 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.
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Consolidation of major biopharmaceutical companies could result in consolidation of software licenses used by those companies, reduction of the number of individual user licenses, or increased pressure to negotiate price discounts or other terms for service that are less favorable to us, which may have a material adverse effect on our revenue and financial condition.
−Removed: Personnel redundancies and layoffs by merged companies to achieve deal synergies would result in a commensurate reduction in total users of our software, reducing the license fees we charge based on number of users.
+Added: Personnel redundancies and layoffs by merged companies to achieve deal synergies would result in a commensurate reduction in total users of our software, reducing the license fees we charge based on the number of users.
As customers increase their utilization of our products and services, we may be subject to additional pricing pressures.
−Removed: One of our strategic goals is to increase the breadth and utilization of products and services we provide to our existing customers, such as increasing the number of user licenses for our software products, selling licenses for new software products and expanding the number and scope of services we provide to individual customers.
+Added: O ne of our strategic goals is to increase the breadth and utilization of products and services we provide to our existing customers, such as increasing the number of user licenses for our software products, selling licenses for new software products and expanding the number and scope of services we provide to individual customers.
As the total annual expenditure from a particular customer increases, we may experience pricing pressure, often from the customer’s procurement department, in the form of requests for discounts or rebates, price freezes and less favorable payment terms.
This could have an adverse impact on our profitability.
+Added: T able of Contents
Risks Related to Our Business
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We are also focused on increasing the number of emerging or smaller biotechnology customers that we serve.
−Removed: These small companies are increasingly responsible for much of the discovery and development of new molecules and treatments, and their share of the total industry research and development discovery and development dollars is rapidly growing.
+Added: These small companies are increasingly responsible for much of the discovery and development of new molecules and treatments, and their share of the total industry R&D discovery and development dollars is rapidly growing.
Attracting these smaller customers may require us to expend additional resources on targeted marketing, as they may not be as familiar with our Company or products.
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.
−Removed: If their products are not successful or they have
−Removed: 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.
+Added: 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.
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Unexpected revenue shortfalls in the future and rapid wage inflation may make it difficult for us to retain all of our employees.
−Removed: 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.
−Removed: Our business may be subject to risks arising from natural disasters and epidemic diseases, including the ongoing COVID 19 pandemic.
−Removed: We may be subject to risks related to natural disasters and public health crises, such as the ongoing global COVID-19 pandemic.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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,
−Removed: implementing a number of safety measures, such as increasing sanitation, use of personal protective equipment, and limiting the number of employees at each location.
−Removed: 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.
−Removed: 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.
−Removed: Any incidents of actual or perceived transmission may expose us to liability claims and adversely impact employee productivity and morale.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: We are a global company with offices in many countries.
−Removed: Disruptions in the infrastructure, either on a local or global scale, caused by these types of events could adversely affect our ability to serve our customers.
−Removed: Although we have disaster recovery plans, carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain force majeure type events, our coverage might not be adequate to compensate us for all losses that may occur.
+Added: The loss of any key employee,
+Added: T able of Contents
+Added: 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.
+Added: If our independent contractors are characterized as employees, we would be subject to adverse effects on our business and employment and withholding liabilities.
+Added: We structure the relationships with our independent contractors in a manner that we believe results in an independent contractor relationship, not an employee relationship.
+Added: An independent contractor is generally distinguished from an employee by his or her degree of autonomy and independence in providing services.
+Added: A high degree of autonomy and independence is generally indicative of a contractor relationship, while a high degree of control is generally indicative of an employment relationship.
+Added: A further complicating factor is there is no single independent contractor test or standard which applies in every jurisdiction, and the test in some jurisdictions is more stringent than in others.
+Added: Although we believe that our independent contractors are properly characterized as independent contractors, individuals, tax or other regulatory authorities may in the future challenge our characterization of these relationships.
+Added: If regulatory authorities or state or federal courts were to determine that our independent contractors are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes.
+Added: We would also be liable for unpaid past taxes, subject to penalties and increased operating costs moving forward.
+Added: As a result, any determination that our independent contractors are our employees could have a material adverse effect on our business, financial condition and results of operations.
Delays or defects in the release of new or enhanced software or other biosimulation tools may result in increased cost to us, delayed market acceptance of our products, diminished demand for our products, delayed or lost revenue, and liability .
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Our software solutions and biosimulation tools and models are inherently complex and may contain defects or errors.
−Removed: 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.
+Added: 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 AI 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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To the extent that defects or errors cause our software or other biosimulation tools to malfunction and our customers’ use of our products is interrupted, or the data derived from the use of our products is incorrect or incomplete, our customers may delay or withhold payment to us, cancel their agreements with us or elect not to renew, make service credit claims, warranty claims or other claims against us, and we could lose future sales.
−Removed: The occurrence of any of these events could result in diminishing demand for our software, a reduction of our revenues, an increase in collection cycles for accounts receivable, require us to increase our warranty provisions or incur the expense of litigation or substantial liability.
+Added: The occurrence of any of these events could result in diminishing demand for our software, a reduction of our
+Added: T able of Contents
+Added: revenues, an increase in collection cycles for accounts receivable, and require us to increase our warranty provisions or incur the expense of litigation or substantial liability.
+Added: Issues relating to the use of artificial intelligence and machine learning in our products and services could adversely affect our business and operating results.
+Added: Artificial intelligence (AI) and machine learning technologies have been incorporated across our software and services portfolios providing opportunities to expand the number of data sources utilized, better predict outcomes, and streamline reporting.
+Added: For example, we are using machine learning to automate and speed the process of biosimulation, and we have created an AI application to aid creating regulatory documents from scientific analyses and clinical data.
+Added: We believe that AI predictive models will continue to enhance the accuracy and usefulness of biosimulation models and be utilized broadly across drug development and we plan to develop and incorporate additional AI technology in future products and services.
+Added: As with many technological innovations, there are significant risks and challenges involved in maintaining and deploying these technologies, and there can be no assurance that the usage of such technologies will enhance our products or services or be beneficial to our business, including our efficiency and profitability.
+Added: In addition, issues in the development and use of AI combined with an uncertain regulatory environment may result in reputational harm, liability, or other adverse consequences to our business operations.
+Added: AI presents risks, challenges, and unintended consequences that could affect our adoption and use of this technology.
+Added: AI technologies are complex and rapidly evolving.
+Added: Further, bad actors around the world use increasingly sophisticated methods, including the use of AI, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property.
+Added: While we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying and resolving issues before they arise.
+Added: AI-related issues, deficiencies and/or failures could give rise to legal and regulatory actions, including with respect to proposed legislation regulating AI, damage our reputation or otherwise materially harm our business.
If our existing customers do not renew their software licenses, do not buy additional solutions from us or renew at lower prices, our business and operating results will suffer.
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We deliver our software through either (i) a product license that permits our customers to install the software solution directly onto their own in-house hardware and use it for a specified term, or (ii) a subscription that allows our customers to access the cloud-based software solution for a specified term.
−Removed: Our customers have no obligation to renew their product licenses or subscriptions for our software solutions after the license term expires, which are typically between one and three years, and some of our contracts may be terminated or reduced in scope either immediately or upon notice.
+Added: Our customers have no obligation to renew their product licenses or subscriptions for our software solutions after the license term expires, which are typically between one and three years, and some of our contracts may be terminated or
+Added: T able of Contents
+Added: reduced in scope either immediately or upon notice.
In addition, our customers may negotiate terms less advantageous to us upon renewal, which may reduce our revenues from these customers.
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• a change in customer priorities;
−Removed: ● impacts to client trial operations, such as those caused by COVID-19 interruptions or other health crises;
+Added: • impacts to client trial operations;
• delay or termination of a specific product candidate development program;
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Accordingly, we bear the financial risk if we initially underprice our contracts or otherwise overrun our cost estimates.
−Removed: In these situations, we attempt to revise the scope of activity from the contract specifications and negotiate contract modifications shifting the additional cost to the customer, but are not always successful.
+Added: In these situations, we attempt to revise the scope of activity from the contract specifications and
+Added: T able of Contents
+Added: negotiate contract modifications shifting the additional cost to the customer, but are not always successful.
If we fail to adequately price our contracts or if we experience significant cost overruns (including direct and indirect costs such as pass-through costs), or if we are delayed in, or fail to, execute contract modifications with customers increasing the scope of activity, our results of operations could be materially adversely affected.
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• public disclosures of certain contract, grant, and company information;
+Added: T able of Contents
• mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.
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The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
−Removed: 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.
+Added: We may not be able to successfully integrate the personnel, operations and technologies of the businesses we acquire, effectively manage the combined business following an acquisition or preserve the operational synergies between our business units that we underwrite at the time of such acquisition.
The following factors could result in our failure to achieve the expected synergies:
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• difficulty integrating the accounting systems, operations and personnel of the acquired business;
+Added: T able of Contents
• difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;
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• use of substantial portions of our available cash to consummate the acquisition.
−Removed: 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.
−Removed: 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.
−Removed: Furthermore, acquired businesses may change or increase the risks to which we are exposed.
−Removed: For example, in October 2021 we acquired Pinnacle, whose software is used by the FDA and PMDA to validate compliance with the Clinical Data Interchange Standards Consortium (CDISC) standards.
−Removed: 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.
+Added: For example, in 2023, we acquired Formedix Limited, which added a metadata repository and clinical data flow automation to our data platform.
+Added: We also acquired Applied Biomath, a company focused on quantitative systems pharmacology (QSP) to expand and complement our existing QSP capabilities.
+Added: The planned integration of these businesses into our existing product offerings may be delayed or may not achieve the expected results.
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.
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If we have overestimated the size of our addressable market or the various markets in which we operate, our future growth opportunities may be limited.
−Removed: 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.
+Added: Our Total Available Market ("TAM") is based on publicly available third-party market research and internal estimates regarding the size of our markets, is subject to significant uncertainty and is based on assumptions that may not prove to be accurate.
We base the TAM for our business on our current core markets, biosimulation, regulatory science, and market access.
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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.
−Removed: 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.
+Added: If our TAM, or the size of any of the various markets in which we
+Added: T able of Contents
+Added: 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.
We are subject to risks associated with the operation of a global business.
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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.
−Removed: 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 region of the world.
−Removed: We could also experience a delay
−Removed: or cancellation of work orders to the extent they rely on clinical trials being conducted in Ukraine.
+Added: Although we do not believe the current conflicts between Russia and Ukraine in Europe and Israel and Hamas in the Middle East pose any immediate material impact to our business, if the conflict intensifies or expands beyond Ukraine or Gaza, it could have an adverse impact on our business, particularly our operations in Poland and our ability to use consultants in that region of the world.
+Added: 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.
13 unchanged sentences
For example, violations may result in criminal or civil penalties, disgorgement of profits, related stockholder lawsuits, debarment from government contracting and other remedial measures.
+Added: T able of Contents
Our failure to comply with trade compliance and economic sanctions laws and regulations of the United States and applicable international jurisdictions could materially adversely affect our reputation and results of operations.
11 unchanged sentences
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.
−Removed: Litigation may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, overall
−Removed: financial condition and operating results.
+Added: 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.
8 unchanged sentences
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.
−Removed: 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.
+Added: 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,
+Added: T able of Contents
+Added: maintenance, storage, retrieval, or transmittal of electronic records submitted to the FDA.
FDA may also issue or finalize guidance documents that may have implications for our customers and our products, platforms, and services.
10 unchanged sentences
We derive a significant percentage of our revenues from a concentrated group of customers and the loss of more than one of our major customers could materially and adversely affect our business, results of operations and/or financial condition.
−Removed: Our ten largest customers accounted for 28% and 29% of revenues for the years ended December 31, 2022 and 2021, respectively.
+Added: Our ten largest customers accounted for 28% of revenues for each of the years ended December 31, 2023 and 2022.
The loss of any of our major customers could have a material adverse effect on our results of operations and financial condition.
12 unchanged sentences
• the growth of our employee base;
+Added: T able of Contents
• the timing and launch of new products;
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Our bookings for the year ended December 31, 2023 were $402.3 million compared to bookings of $409.0 million for the year ended December 31, 2022.
−Removed: 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
−Removed: particular period.
+Added: While bookings decreased in 2023 compared to 2022, an increase or decrease in bookings will generally result in an increase or decrease 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 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.
1 unchanged sentence
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.
+Added: T able of Contents
+Added: Our business may be subject to risks arising from natural disasters, epidemic diseases, pandemics, and public health crises.
+Added: We may be subject to risks related to natural disasters, epidemic diseases, pandemics, and public health crises, which could adversely impact supply chain interruptions, disruptions or delays to pipeline development and clinical trials and interruptions or delays in regulatory approvals.
+Added: These and other adverse impacts on our customers and economic conditions may cause our customers to delay or cancel projects or significantly scale back their operations or R&D spending and limit the use of third parties, which could have a material adverse effect on our business.
+Added: 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.
+Added: Even if we follow what we believe to be best practices, we may not be able to prevent the transmission of disease between employees.
+Added: Any incidents of actual or perceived transmission may expose us to liability claims and adversely impact employee productivity and morale.
+Added: 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.
+Added: We are a global company with offices in many countries.
+Added: Disruptions in the infrastructure, either on a local or global scale, caused by these types of events could adversely affect our ability to serve our customers.
+Added: Although we have disaster recovery plans, carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain force majeure type events, our coverage might not be adequate to compensate us for all losses that may occur.
Risks Related to Intellectual Property, Information Technology and Data Privacy
6 unchanged sentences
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.
−Removed: 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.
+Added: Work- from-home and other flexible work arrangements have impacted our third-party vendors by increasing operational challenges and risks, including vulnerabilities to cybersecurity and information technology infrastructure threats.
A prolonged service disruption affecting our cloud-based solutions for any of the foregoing reasons would negatively impact our ability to serve our customers and could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers or otherwise harm our business.
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.
+Added: T able of Contents
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.
4 unchanged sentences
If the cost of meeting these data storage and management requirements increases, our results of operations could be harmed.
−Removed: 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.
+Added: Some of 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.
Some of our software solutions utilize software covered by open source licenses, and we expect to continue to incorporate open source software in our solutions in the future.
3 unchanged sentences
If the owner of the copyright of the relevant open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our solutions that contain the open source software and required to comply with onerous conditions or restrictions on these solutions, which could disrupt the distribution and sale of these solutions.
−Removed: Litigation or other enforcement actions initiated by a copyright owner could have a negative effect on our business, financial condition and results of operations, or require us to devote additional research and development resources to change our solutions.
+Added: Litigation or other enforcement actions initiated by a copyright owner could have a negative effect on our business, financial condition and results of operations, or require us to devote additional R&D resources to change our solutions.
Moreover, we could effectively be required to publicly release the affected portions of our source code, re-engineer all or a portion of our solutions or otherwise be limited in the licensing of our solutions, each of which could reduce or eliminate the value of our solutions.
1 unchanged sentence
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.
+Added: T able of Contents
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.
2 unchanged sentences
While we believe that we have taken appropriate measures to prevent unintended access to the data we hold (including implementing security and privacy controls, training our workforce and implementing new technology) and we continue to improve and enhance our systems in this regard, our efforts may not always be successful.
−Removed: In addition, we do not know whether our current practices will be deemed sufficient under applicable laws or whether new regulatory requirements might make our current practices insufficient.
+Added: In addition, cybersecurity threats are constantly evolving, are becoming more frequent and more sophisticated and are being made by groups of individuals with a wide range of expertise and motives, which increases the difficulty of detecting and successfully defending against them.
+Added: Accordingly, we do not know whether our current practices will be deemed sufficient under applicable laws or whether new regulatory requirements might make our current practices insufficient.
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 deliberate or unintentional, could result in the loss of information, litigation, indemnity obligations, damage to our reputation and other liability.
−Removed: 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.
+Added: Our reliance on remote access to our information systems exposes us to potential cybersecurity breaches and the risk of loss or exposure of such information and data.
Additionally, we rely on third parties and their security procedures for the secure storage, processing, maintenance, and transmission of information that is critical to our operations and such third- parties may also suffer cybersecurity incidents.
1 unchanged sentence
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.
−Removed: Further, under certain regulatory schemes, such as the CCPA, individual California residents may
−Removed: 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.
+Added: 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.
2 unchanged sentences
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.
+Added: T able of Contents
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.
12 unchanged sentences
however, in certain circumstances, we are subject to HIPAA as a business associate and may enter into business associate agreements.
−Removed: Additionally, the Federal Trade Commission (the “FTC”) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online collection, use, dissemination and security of information about individuals, including health-related information.
+Added: Additionally, the FTC and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online collection, use, dissemination and security of information about individuals, including health-related information.
Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.
4 unchanged sentences
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.
−Removed: 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
−Removed: as affording them the right to access and delete their personal information and to opt out of certain sharing of personal information.
+Added: For example, the CCPA, 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.
2 unchanged sentences
Many similar privacy laws have been proposed at the federal level and in other states.
−Removed: The GDPR became enforceable on May 25, 2018.
−Removed: The GDPR and the UK’s version of the GDPR regulate our processing of personal data, and imposes stringent requirements.
+Added: T able of Contents
+Added: The GDPR and the UK 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.
−Removed: 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.
+Added: There is uncertainty regarding transfers of personal data from the EEA to the United States, including regarding the status and enforceability of 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.
−Removed: While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances;
−Removed: this has created uncertainty.
−Removed: In June 2021, the European Commission published revised standard contractual clauses, and shortly thereafter the European Data Protection Board promulgated guidance on implementation of the new clauses.
−Removed: Even with the additional clarity provided by these developments, the validity of the standard contractual clauses as a transfer mechanism remains uncertain.
−Removed: The concerns raised by the CJEU relating to the perceived risks of transferring personal data to the United States, and the ability of the standard contractual clauses to address those risks, persist under the new standard contractual clauses framework.
+Added: While the Court of Justice of the European Union (CJEU) upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances;
+Added: and the validity of the standard contractual clauses as a transfer mechanism remains uncertain.
We have previously relied on our own Privacy Shield certification and our relevant customers’ and third parties’ Privacy Shield certification(s) for the purposes of transferring personal data from the EEA to the United States in compliance with the GDPR’s data export conditions.
10 unchanged sentences
In addition, we attempt to protect our intellectual property and proprietary information by enforcing cyber and physical security measures and requiring our employees and certain of our consultants to enter into confidentiality, non-competition and assignment-of-inventions agreements.
−Removed: The steps we take to protect these rights may not be adequate to prevent misappropriation of our technology by third parties or may not be adequate under the laws of some foreign countries, which may not protect our intellectual property rights to the same extent as do the laws of the United States.
+Added: The steps we take to protect these rights may not be adequate to prevent
+Added: T able of Contents
+Added: misappropriation of our technology by third parties or may not be adequate under the laws of some foreign countries, which may not protect our intellectual property rights to the same extent as do the laws of the United States.
Our attempts to protect our intellectual property may be challenged by others or invalidated through administrative process or litigation, and agreement terms that address non-competition are difficult to enforce in many jurisdictions and may not be enforceable in any particular case.
18 unchanged sentences
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.
−Removed: We could be forced, including by court order, to cease developing and commercializing the infringing
−Removed: technology or product.
−Removed: 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.
+Added: We could be forced, including by court order, to cease developing and commercializing the infringing technology or product.
+Added: A finding of infringement could
+Added: T able of Contents
+Added: prevent us from commercializing any product candidates or force us to cease some of our business operations, which could materially harm our business.
In addition, we may be forced to redesign a product.
7 unchanged sentences
As of December 31, 2023, we had $294.5 million in total borrowings under our credit agreement, originally dated July 15, 2017, as amended (“Credit Agreement”).
−Removed: 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.
+Added: As of December 31, 2023, we had a $100.0 million revolving credit facility under our Credit Agreement.
In addition, subject to restrictions governing our Credit Agreement, we may incur additional debt.
7 unchanged sentences
Furthermore, all of our debt under our Credit Agreement bears interest at variable rates.
−Removed: If these rates were to increase significantly, whether because of an increase in market interest rates or a decrease in our creditworthiness, our ability to borrow additional funds may be reduced and the risks related to our debt would intensify.
+Added: If these rates were to increase significantly, whether because of an increase in market interest rates or a decrease in our
+Added: T able of Contents
+Added: creditworthiness, our ability to borrow additional funds may be reduced and the risks related to our debt would intensify.
Servicing our debt requires a significant amount of cash.
22 unchanged sentences
In certain circumstances, our ability to meet this financial covenant may be affected by events beyond our control.
+Added: T able of Contents
A breach of any of these covenants could result in a default under our Credit Agreement.
2 unchanged sentences
We have pledged substantially all of our assets as collateral to secure our Credit Agreement.
−Removed: 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.
+Added: 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.
Furthermore, the terms of any future indebtedness we may incur could have further additional restrictive covenants.
We may not be able to maintain compliance with these covenants in the future, and in the event that we are not able to maintain compliance, we cannot assure you that we will be able to obtain waivers from the lenders or amend the covenants.
−Removed: We and our subsidiaries may still be able to incur substantially more debt.
−Removed: This could further exacerbate the risks associated with our leverage.
+Added: We and our subsidiaries may incur substantially more debt, which could further exacerbate the risks associated with our leverage.
We and our subsidiaries may be able to incur substantial additional debt in the future.
11 unchanged sentences
Such an impairment charge could materially and adversely affect our operating results.
−Removed: 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.
+Added: During the third quarter of 2023, we performed an interim goodwill impairment test, which resulted in a $47.0 million goodwill impairment charge.
+Added: For the year ended December 31.
+Added: As each of December 31, 2023 and 2022, the carrying amount of goodwill and other intangibles was $1.2 billion 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.
As of December 31, 2023, we had federal and state NOLs of approximately $1.6 million and $0.04 million, respectively, which are available to reduce future taxable income and expire between 2035 and 2036 and 2029 and 2040, respectively.
−Removed: We had federal R&D tax credit carryforwards of approximately $0.4 million, which expire between 2025 and 2042, and state R&D tax credit carryforwards of approximately $0.1 million with indefinite carryover period, which are available to offset future income taxes.
−Removed: We also had foreign tax credits of approximately $10.6 million, which will start to expire in 2027.
−Removed: 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.
−Removed: 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.
+Added: We had federal and state R&D tax credit carryforwards of approximately $0.3 million and $0, respectively, to offset future income taxes, which expire between 2027 and 2028.
+Added: We also had foreign tax credits of approximately $13.8 million, which will start t,o expire in 2027.
+Added: 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
+Added: T able of Contents
+Added: future period.
+Added: Additionally, we carried forward foreign NOLs of approximately $81.6 million which will start to expire in 2024, foreign R&D credits of $0.3 million which expire in 2029, and Canadian investment tax credits of approximately $3.8 million which expire between 2031 and 2041.
Our carryforwards are subject to review and possible adjustment by the appropriate taxing authorities.
In addition, in general, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three year period, is subject to limitations on its ability to utilize its pre-change NOLs, R&D tax credit carryforwards and disallowed interest expense carryforwards to offset future taxable income.
−Removed: 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.
−Removed: In addition, we
−Removed: 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.
+Added: We have performed an analysis for the period January 1, 2023 through December 31, 2023 and determined no ownership change occurred during this period.
+Added: 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).
15 unchanged sentences
Certara Holdco, together with its subsidiaries, owns substantially all of our operating assets.
−Removed: As a result, we are dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations.
+Added: As a result, we are dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet
+Added: T able of Contents
+Added: our financial obligations.
Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us, including restrictions under the covenants of the agreements governing our Credit Agreement.
5 unchanged sentences
As of December 31, 2023, shares controlled by Arsenal and our officers and directors in aggregate represented approximately 24.9% of our outstanding common stock.
−Removed: 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
−Removed: 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.
+Added: Although Arsenal agreed with us not to sell any of the shares acquired by EQT for a two-year period (with certain limited exceptions or without our written consent), 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.
1 unchanged sentence
As of December 31, 2023, a total of 15,454,916 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.
−Removed: 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.
+Added: 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 our 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.
In the future, we may also issue our securities in connection with investments or acquisitions.
For example, we issued 2,239,717 shares of common stock in connection with our acquisition of Pinnacle in October 2021.
−Removed: We may issue additional shares in connection with our acquisition of Vyasa Analytics, LLC based on the results of its future performance.
+Added: We may issue additional shares in connection with our acquisition of Vyasa 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.
4 unchanged sentences
• for the division of our board of directors into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year;
+Added: T able of Contents
• that directors may only be removed for cause, and only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of stock entitled to vote thereon, voting together as a single class;
2 unchanged sentences
• 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;
−Removed: ● 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-
−Removed: 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.
+Added: • 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.
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.
8 unchanged sentences
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.
−Removed: Our amended and restated certificate of incorporation provides, subject to limited exceptions, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder of our company to the Company or our stockholders, (iii) action asserting a claim against the Company or any current or former director, officer, employee or stockholder of the Company arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), or our amended and restated certificate of incorporation or our amended and restated bylaws (as either might be amended from time to time) or (iv) action asserting a claim governed by the internal affairs doctrine of the State of Delaware.
+Added: Our amended and restated certificate of incorporation provides, subject to limited exceptions, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding
+Added: T able of Contents
+Added: brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder of our company to the Company or our stockholders, (iii) action asserting a claim against the Company or any current or former director, officer, employee or stockholder of the Company arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), or our amended and restated certificate of incorporation or our amended and restated bylaws (as either might be amended from time to time) or (iv) action asserting a claim governed by the internal affairs doctrine of the State of Delaware.
Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws of the United States of America.
6 unchanged sentences
The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.
−Removed: General Risk Factors
−Removed: Our stock price may change significantly, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.
−Removed: The trading price of our common stock is likely to be volatile.
−Removed: The stock market has experienced extreme volatility.
−Removed: This volatility often has been unrelated or disproportionate to the operating performance of particular companies.
−Removed: You may not be able to resell your shares at or above the initial price you paid due to a number of factors such as those listed in other portions of this “Risk Factors” section and the following:
−Removed: ● results of operations that vary from the expectations of securities analysts and investors;
−Removed: ● results of operations that vary from those of our competitors;
−Removed: ● changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
−Removed: ● declines in the market prices of stocks generally;
−Removed: ● strategic actions by us or our competitors;
−Removed: ● announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
−Removed: ● changes in general economic or market conditions or trends in our industry or markets;
−Removed: ● changes in business or regulatory conditions;
−Removed: ● additions or departures of key management personnel;
−Removed: ● future sales of our common stock or other securities by us or our existing stockholders, or the perception of such future sales;
−Removed: ● investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives;
−Removed: ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
−Removed: ● announcements relating to litigation;
−Removed: ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
−Removed: ● the development and sustainability of an active trading market for our stock;
−Removed: ● changes in accounting principles;
−Removed: ● other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.
−Removed: These broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance.
−Removed: In addition, price volatility may be greater if the public float and trading volume of our common stock are low.
−Removed: In the past, following periods of market volatility, stockholders have instituted securities class action litigation.
−Removed: If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
−Removed: Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could materially adversely affect our stock price.
−Removed: Our operating results have fluctuated from quarter to quarter at points in the past, and they may do so in the future.
−Removed: Therefore, results of any one fiscal quarter are not a reliable indication of results to be expected for any other fiscal quarter or for any year.
−Removed: If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance.
−Removed: Results may be affected by various factors, including those described in these risk factors.
−Removed: If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
−Removed: The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business or industry.
−Removed: We do not control these analysts.
−Removed: Furthermore, if one or more of the analysts who do cover us were to downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline.
−Removed: If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
−Removed: Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.
−Removed: As a public company, we have significant requirements for enhanced financial reporting and internal controls.
−Removed: The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
−Removed: If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations.
−Removed: 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.
−Removed: This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
−Removed: 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.
−Removed: Testing internal controls may divert our management’s attention from other matters that are important to our business.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: A material weakness in internal
−Removed: controls could result in our failure to detect a material misstatement of our annual or quarterly consolidated financial statements or disclosures.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: As a publicly traded company, and a large accelerated filer, we incur material legal, accounting, and other expenses that we did not previously incur.
−Removed: 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.
−Removed: Our management and other personnel need to devote a substantial amount of time to these compliance initiatives as well as investor relations.
−Removed: Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly.
−Removed: Unresolved Staff Comments.
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.