What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-03-16 compared with 2020-03-04 · 139 added, 83 removed, 117 unchanged (65% of the section changed)

2 unchanged sentences

Additional risks and uncertainties not currently known to us or those currently viewed by us to be immaterial may also materially and adversely affect our business, financial condition or results of operations.

Risks Related to our Business

We serve customers and have locations throughout the world and are subject to global pandemic and other similar risks, including without limitation, COVID-19, which could materially adversely affect our business, financial condition, and results of operations.

Global pandemics or other disasters or public health concerns in regions of the world where we have operations could result in the disruption of our business.

Specifically, these pandemics, disasters and health concerns can result in increased travel restrictions and extended shutdowns of certain businesses in the region, as well as social, economic, or labor instability.

Disruptions in affected regions over a prolonged period could have a material adverse impact on our business and our financial results.

In March 2020, the World Health Organization declared COVID-19 a global pandemic.

Widespread infection in the United States and abroad has the potential for catastrophic impact.

This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn.

While we offer a full suite of solutions and services that address customer priorities across the technology landscape, it is not possible for us to predict the duration or magnitude of adverse results of the outbreak and its effects on our business, liquidity or results of operations at this time.

As a result, many of the estimates and assumptions used in preparation of our financial statements required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve with respect to the pandemic, these estimates may materially change in future periods.

Changes in the information technology industry and/or economic environment may reduce demand for the products and services we sell.

2 unchanged sentences

Net sales can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material adverse effect on our net sales, and/or cause us to record write-downs of obsolete inventory, if we fail to react in a timely manner to such changes.

We rely on our suppliers for product availability, marketing funds, purchasing incentives and competitive products to sell.

We rely on our vendor partners for product availability, marketing funds, purchasing incentives and competitive products to sell.

We acquire products for resale both directly from manufacturers and indirectly from distributors.

The loss of a supplier could cause a disruption in the availability of products.

The loss of a vendor partner could cause a disruption in the availability of products.

Additionally, there is no assurance that as manufacturers continue to or increasingly sell directly to end users and through the distribution channel, that they will not limit or curtail the availability of their products to distributors/resellers like us.

For example, resellers and software vendors may attempt to increase the volume of software products distributed electronically through ESD (Electronic Software Distribution) technology, through subscription services, and through on-line shopping services, and correspondingly, decrease the volume of products sold through us.

orders in a timely manner, or at all, which could have a material adverse effect on our business, results of operations and financial condition.

We also rely on our suppliers to provide funds for us to market their products, including through our on-line marketing efforts, and to provide purchasing incentives to us.

If any of the suppliers that have historically provided these benefits to us decides to reduce such benefits, our expenses would increase, adversely affecting our results of operations.

Our inability to obtain a sufficient quantity of products, or an allocation of products from a manufacturer in a way that favors one of our competitors, or competing distribution channels, relative to us, could cause us to be unable to fill clients’ orders in a timely manner, or at all, which could have a material adverse effect on our business, results of operations and financial condition.

We also rely on our vendor partners to provide funds for us to market their products, including through our on-line marketing efforts, and to provide purchasing incentives to us.

If any of the vendor partners that have historically provided these benefits to us decides to reduce such benefits, our expenses would increase, adversely affecting our results of operations.

General economic weakness may reduce our revenues and profits.

Generally, economic downturns, may cause some of our current and potential customers to delay or reduce technology purchases, resulting in longer sales cycles, slower adoption of new technologies and increased price competition.

We may, therefore, experience a greater decline in demand for the products we sell, resulting in increased competition and pressure to reduce the cost of operations.

We may, therefore, experience a greater decline in

demand for the products we sell, resulting in increased competition and pressure to reduce the cost of operations.

Any benefits from cost reductions may take longer to realize and may not fully mitigate the impact of the reduced demand.

In addition, weak financial and credit markets heighten the risk of customer bankruptcies and create a corresponding delay in collecting receivables from those customers and may also affect our vendors’

ability to supply products, which could disrupt our operations.

The realization of any or all these risks could have a material adverse effect on our business, results of operations and financial condition.

Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price.

Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.

Macroeconomic developments like evolving trade policies between the U.S.

and international trade partners, or the occurrence of similar events in the U.S.

or other countries that lead to uncertainty or instability in economic, political or market conditions could negatively affect our business, operating results, financial condition and

outlook, which, in turn, could adversely affect our stock price.

In addition, international, regional or domestic political unrest and the related potential impact on global stability, terrorist attacks and the potential for other hostilities in various parts of the world, potential public health crises (such as the coronavirus outbreak) and natural disasters continue to contribute to a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability.

The IT products and services industry is intensely competitive and actions of competitors, including manufacturers of products we sell, can negatively affect our business.

8 unchanged sentences

There can be no assurances that software developers and vendors will continue using distributors and resellers to the same extent they currently do.

Future efforts by software developers and vendors to bypass third-party sales channels could materially and adversely affect the Company’s business, results of operations and financial condition.

In addition, resellers and software vendors may attempt to increase the volume of software products distributed electronically through ESD (Electronic Software Distribution) technology, through subscription services, and through on-line shopping services.

Any of these competitive programs, if successful, could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company’s business and results of operations may be adversely affected if the terms and conditions of the Company’s authorizations with its vendors were to be significantly modified or if certain products become unavailable to the Company.

Any of these competitive programs, if successful, could have a material adverse effect on the Company’s business, results of operations and financial condition.

We offer credit to our customers and, therefore, are subject to significant credit risk.

1 unchanged sentence

We finance a significant portion of such sales through trade credit, typically by providing 30-60-day payment terms.

In addition, we offer extended payment terms to certain customers for terms of 1-3 years.

As a result, our business could be adversely affected in the event of a deterioration of the financial condition of our customers, resulting in the customers’

inability to repay us.

In addition, we offer extended payment terms to certain customers for terms of up to 2 years.

As a result, our business could be adversely affected in the event of a deterioration of the financial condition of our customers, resulting in the customers’ inability to repay us.

This risk may increase if there is a general economic downturn affecting a large number of our customers and in the event our customers do not adequately manage their business or properly disclose their financial condition.

Also, several of our larger customers require greater than 30-day payment terms which could increase our credit risk and decrease our operating cash flow.

Also, certain of our larger customers require greater than 30-day payment terms which could increase our credit risk and decrease our operating cash flow.

We face substantial competition from other companies.

12 unchanged sentences

Sales of products purchased from our largest two vendors accounted for 32% of our 2020 purchases and sales from our largest five vendors generated approximately 49% of 2020 purchases.

As is the case with many of our vendor and customer relationships, our contractual arrangements with these large vendors are terminable by either party upon several months’

As is the case with many of our vendor and customer relationships, our contractual arrangements with these large vendors are terminable by either party upon several months’ notice.

If these contracts or our relationships with these vendors terminate for any reason, or if any of our other significant vendor relationships terminate for any reason, and we are not able to sell or procure a sufficient supply of those products from alternative sources, or at all, our financial position and results of operations would be adversely affected.

12 unchanged sentences

Moreover, the success of our operations depends upon the secure transmission of confidential and personal data over public networks, including the use of cashless payments.

Although we did not have any material cybersecurity breaches in 2019 and 2018, any failure on the part of us or our vendors to maintain the security of data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, partners’

and clients’

confidence in us and other competitive disadvantages, and thus could have a material adverse impact on our business, financial condition and results of operations.

Although we did not have any material cybersecurity breaches in 2020, any failure on the part of us or our vendors to maintain the security of data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse impact on our business, financial condition and results of operations.

We depend on certain key personnel.

4 unchanged sentences

inability to retain such personnel or to train them either rapidly enough to meet our expanding needs or in an effective manner for quickly changing market conditions could cause a decrease in the overall quality and efficiency of our sales staff, which, in turn, could have a material adverse effect on our business, results of operations and financial condition.

If the Company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal controls over financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have a material adverse effect on its business.

An effective internal control environment is necessary for the Company to produce reliable financial reports and is an important part of its effort to prevent financial fraud.

The Company is required to annually evaluate the effectiveness of the design and operation of its internal controls over financial reporting.

Based on these evaluations, the Company may conclude that enhancements, modifications, or changes to internal controls are necessary or desirable.

While management evaluates the effectiveness of the Company's internal controls on a regular basis, these controls may not always be effective.

There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure in human judgment.

In addition, control procedures are designed to reduce rather than eliminate financial statement risk.

If the Company fails to maintain an effective system of internal controls, or if management or the Company's independent registered public accounting firm discovers material weaknesses in the Company's internal controls, it may be unable to produce reliable financial reports or prevent fraud, which could have a material adverse effect on the Company's business.

In addition, the Company may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ.

Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of the Company's financial statements, which could cause the market price of its Common Stock to decline or limit the Company's access to capital.

We may explore additional growth through acquisitions.

During the year ended December 31, 2020, we completed two acquisitions to add scale, broaden our geographic footprint, expand partner relationships and add cloud support capabilities.

As part of our strategic growth plan, we may pursue the acquisition of companies that either complement or expand our existing business.

As a result, we regularly evaluate potential acquisition opportunities, which may be material in size and scope.

In addition to those risks to which our business and the acquired businesses are generally subject, the acquisition of these businesses gives rise to transactional and transitional risks, and the risk that the anticipated benefits will not be realized.

When the company makes acquisitions, it may take on additional liabilities or not be able to successfully integrate such acquisitions .

As part of the company’s history and strategic growth plan, it has acquired other businesses.

Acquisitions involve numerous risks, including the following:

● effectively combining the acquired operations, technologies, or products;

● unanticipated costs or assumed liabilities, including those associated with regulatory actions or investigations;

● not realizing the anticipated financial benefit from the acquired companies;

● diversion of management’s attention;

● negative effects on existing customer and vendor partner relationships;

● potential loss of key employees of the acquired companies.

Further, the company has made, and may continue to make acquisitions of, or investments in new services, businesses or technologies to expand its current service offerings and product lines.

Some of these may involve risks that may differ from those traditionally associated with the company’s core distribution business, including undertaking product or service warranty responsibilities that in its traditional core business would generally reside primarily with its vendor partners.

If the company is not successful in mitigating or insuring against such risks, it could have a material adverse effect on the company’s business.

Our results of operations are subject to fluctuations in foreign currency.

We have several foreign subsidiaries and conduct business in various countries and currencies.

As result of these foreign operations, we have exposure to fluctuations in foreign currency rates resulting primarily from the translation exposure associated with the preparation of our consolidated financial statements.

While our consolidated financial statements are reported in US dollars, the financial statements of our subsidiaries outside the US are prepared using the local currency as the functional currency and translated into US dollars.

As a result, fluctuations in the exchange rate of the US dollar relative to the functional currencies of our subsidiaries could cause fluctuations in our results of operations.

We also have foreign currency exposure to the extent net sales and purchases are not denominated in a subsidiary’s functional currency, which could have an adverse effect on our business, results of operations, or cash flows.

The company’s non-U.S.

sales represent an increasing portion of its revenues, and consequently, the company is exposed to risks associated with operating internationally.

In 2020 and 2019, approximately 12% and 11%, respectively, of the company’s net sales came from its operations outside the United States.

However, with the completion of the Interwork and CDF acquisition we expect sales from operations outside the United States to increase to approximately 25%.

As a result of the company’s international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following:

● import and export regulations that could erode profit margins or restrict exports;

● the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations;

● potential restrictions on transfers of funds;

● import and export tariffs, duties and value-added taxes;

● transportation delays and interruptions;

● the burden and cost of compliance with complex multi-national tax laws and regulations;

● uncertainties arising from local business practices and cultural considerations;

● foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction;

● stringent antitrust regulations in local jurisdictions;

● volatility associated with sovereign debt of certain international economies;

● the uncertainty surrounding the implementation and effects of Brexit;

● potential military conflicts and political risks;

● currency fluctuations, which the company attempts to minimize through traditional hedging instruments.

Legal and Regulatory Risks

We may be liable for misuse of our customers’ or employees’ information.

Third-parties, such as hackers, could circumvent or sabotage the security practices and products used in our product and service offerings, and/or the security practices or products used in our internal IT systems, which could result in disclosure of sensitive or personal information, unauthorized procurement, or other business interruptions that could damage our reputation and disrupt our business.

Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats.

As a high percentage of our employees are currently working from home as a result of the COVID-19 pandemic, we are highly reliant on the availability and functionality of our information systems to enable for our operations.

Working from home may increase risk of data loss, including privacy-related events.

If our information systems are not operational for reasons which may include cyber security attacks, data center failures, failures by telecom providers to provide services to our business and to our employees’ homes, power failures, or failures of off-premise software such as SaaS based software, our business and financial results may be adversely impacted.

If third-parties or our employees are able to maliciously penetrate our network security or otherwise misappropriate our customers’ information or employees’ personal information, or other information for which our customers may be responsible and for which we agree to be responsible in connection with service contracts into which we may enter, or if we give third-parties or our employees improper access to certain information, we could be subject to liability.

This liability could include claims for unauthorized access to devices on our network;

unauthorized access to our customers’ networks, hardware, applications, data, devices, or software;

unauthorized purchases with credit card information;

and identity theft or other similar fraud-related claims.

This liability could also include claims for other misuses of or inappropriate access to personal information.

Other liability could include claims alleging misrepresentation of our privacy and data security practices.

Any such liability for misappropriation of this information could decrease our profitability.

In addition, federal and state agencies have been investigating various companies regarding whether they misused or inadequately secured information.

We could incur additional expenses when new laws or regulations regarding the use, safeguarding, or privacy of information are enacted, or if governmental agencies require us to substantially modify our privacy or security practices.

We could fail to comply with international and domestic data privacy laws, the violation of which may result in audits, fines, penalties, litigation, or administrative enforcement actions with associated costs.

Our operations are subject to numerous complex federal, state, provincial, local and foreign laws and regulations in a number of areas, including labor and employment, advertising, e-commerce, tax, trade, import and export requirements, economic and trade sanctions, anti-corruption, data privacy requirements (including those under the European Union General Data Protection Regulation and the California Consumer Privacy Act), anti-competition, environmental and health and safety.

The evaluation of, and compliance with these laws, regulations and similar requirements may be onerous and expensive, and these laws and regulations may have other adverse impacts on our business, results of operations or cash flows.

Furthermore, these laws and regulations are evolving and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business, and the risk of noncompliance.

We have implemented policies and procedures designed to help ensure compliance with applicable laws and regulations, but there can be no guarantee against coworkers, contractors or agents violating such laws and regulations or

our policies and procedures.

As a public company, we also are subject to increasingly complex public disclosure, corporate governance and accounting requirements that increase compliance costs and require significant management focus.

The Company may be subject to intellectual property rights claims, which are costly to defend, could require payment of damages or licensing fees and could limit the company's ability to use certain technologies in the future.

Certain of the Company's products and services include intellectual property owned primarily by the Company's

third-party suppliers.

Certain of the Company's products and services include intellectual property owned primarily by the Company's third-party vendor partners.

Substantial litigation and threats of litigation regarding intellectual property rights exist in the software and some service industries.

From time to time, third parties (including certain companies in the business of acquiring patents not for the purpose of developing technology but with the intention of aggressively seeking licensing revenue from purported infringers) may assert patent, copyright and/or other intellectual property rights to technologies that are important to the company's business.

In some cases, depending on the nature of the claim, the company may be able to seek indemnification from its suppliers for itself and its customers against such claims, but there is no assurance that it will be successful in obtaining such indemnification or that the Company is fully protected against such claims.

In some cases, depending on the nature of the claim, the Company may be able to seek indemnification from its vendor partners for itself and its customers against such claims, but there is no assurance that it will be successful in obtaining such indemnification or that the Company is fully protected against such claims.

Any infringement claim brought against the Company, regardless of the duration, outcome, or size of damage award, could result in substantial cost to the Company, divert management's attention and resources, be time consuming to defend, result in substantial damage awards, or cause product shipment delays.

3 unchanged sentences

The Company may have to stop selling certain products or using technologies, which could affect the Company's ability to compete effectively.

We may explore additional growth through acquisitions.

As part of our growth strategy, we may pursue the acquisition of companies that either complement or expand our existing business.

As a result, we regularly evaluate potential acquisition opportunities, which may be material in size and scope.

Changes in income tax and other regulatory legislation.

14 unchanged sentences

Additionally, actions by activist shareholders may be exploited by our competitors, cause concern to our current or potential customers, make it more difficult to attract and retain qualified personnel and may create adverse uncertainty for our employees.

On December 20, 2019, Simon F.

Nynens nominated four individuals for election to our Board of Directors at the 2020 annual meeting of stockholders.

Nynens previously served as the Chairman of the Board of Directors, President and Chief Executive Officer of the Company.

According to publicly available filings made to the Securities and Exchange Commission, Mr.

Nynens granted to Shepherd Kaplan Krochuk, LLC (“SKK”) an irrevocable proxy to vote his shares of our common stock in favor of any acquisition proposal by SKK, against any third-party acquisition and as directed by SKK with respect to the election of directors nominated by persons other than the Company.

Prior to the entrance of Mr.

Nynens into such agreement with SKK, the Company had received unsolicited acquisition proposals from SKK and North & Webster SSG, LLC (“N&W”

and together with SKK, the “N&W Group”) jointly to acquire all of the outstanding shares of common stock of the Company.

The most recent unsolicited acquisition proposal from the N&W Group was received on December 10, 2019 and expired on its own terms on December 16, 2019.

While the N&W Group’s most recent proposal has expired, there can be no assurance that the N&W Group or another third party will not make another unsolicited acquisition proposal in the future and no assurance that if the four persons proposed by Mr.

Nynens for election at our 2020 annual meeting are elected, they will not attempt to influence the Company’s decision related to any future acquisition proposal made by the N&W Group or another third party.

By letter dated January 22, 2020, a shareholder of the Company demanded that the Board of Directors investigate and bring an action against Mr.

Nynens for his breaches of certain restrictive covenants contained in the separation agreement he entered into with the Company on or about May 11, 2018.

Following receipt of the shareholder demand, we filed a lawsuit on February 14, 2020, in the Superior Court of New Jersey Monmouth County, against Mr.

Nynens and the N&W Group on the grounds that Mr.

Nynens breached certain restrictive covenants in his separation agreement with the Company by seeking future employment with the Company and by sharing confidential information with the N&W Group, and that the N&W Group had tortiously induced Mr.

Nynens to commit those breaches.

In connection with the claims, we are seeking monetary damages, injunctive relief, and a declaratory judgment against Mr.

Nynens and the N&W Group.

We may choose to initiate, or may become subject to, other litigation as a result of continued or further stockholder activist campaigns, which could serve as a distraction to our Board of Directors and management and could require us to incur additional costs.

Our quarterly financial results may fluctuate, which could lead to volatility in our stock price.

Our revenue and operating results have fluctuated from quarter to quarter in the past and may continue to do so in the future.

As a result, you should not rely on quarter-to-quarter comparisons of our operating results as an indication of our future performance.

Fluctuations in our revenue and operating results could negatively affect the trading price of our stock.

In addition, our revenue and results of operations may, in the future, be below the expectations of analysts and investors, which could

cause our stock price to decline.

Factors that are likely to cause our revenue and operating results to fluctuate include the risk factors discussed throughout this section.

The elimination of LIBOR could adversely affect our business, operating results, and financial condition.

K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

Federal Reserve has begun publishing a Secured Overnight Funding Rate (“SOFR”), which is intended to replace U.S.

K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

Federal Reserve has begun publishing a Secured Overnight Funding Rate (“SOFR”), which is intended to replace U.S.

dollar LIBOR.

Plans for alternative reference rates for other currencies have also been announced.

At this time, we cannot predict how markets will respond to these proposed alternative rates or the effect of any changes to LIBOR or the discontinuation of LIBOR.

At this time, we cannot predict how markets will respond to these proposed alternative rates or the effect of any changes to LIBOR

or the discontinuation of LIBOR.

If LIBOR is no longer available or if our lenders have increased costs due to changes in LIBOR, we may experience potential increases in interest rates on our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows.

1 unchanged sentence

We prepare our financial statements in conformity with accounting principles generally accepted in the U.S.

These accounting principles are subject to interpretation by the Financial Accounting Standards Board, the Public Company Accounting Oversight Board, the SEC, the American Institute of Certified Public Accountants (“AICPA”) and various other bodies formed to interpret and create appropriate accounting policies.

Future periodic assessments required by current or new accounting standards may result in noncash charges and/or changes in presentation or disclosure.

In addition, any change in accounting standards may influence our customers’

decision to purchase from us or finance transactions with us, which could have a significant adverse effect on our financial position or results of operations.

In addition, any change in accounting standards may influence our customers’ decision to purchase from us or finance transactions with us, which could have a significant adverse effect on our financial position or results of operations.

We are required to determine if we are the principal or agent in all transactions with our customers.

3 unchanged sentences

If we are unable to accurately estimate the cost of these services or the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected.

Financial Risks and Market Risks

Our quarterly financial results may fluctuate, which could lead to volatility in our stock price.

Our revenue and operating results have fluctuated from quarter to quarter in the past and may continue to do so in the future.

As a result, you should not rely on quarter-to-quarter comparisons of our operating results as an indication of our future performance.

Fluctuations in our revenue and operating results could negatively affect the trading price of our stock.

In addition, our revenue and results of operations may, in the future, be below the expectations of analysts and investors, which could cause our stock price to decline.

Factors that are likely to cause our revenue and operating results to fluctuate include the risk factors discussed throughout this section.

The company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired.

The company also ascribes value to certain identifiable intangible assets, which consist primarily of customer relationships and trade names, among others, as a result of acquisitions.

The company may incur impairment charges on goodwill or identifiable intangible assets if it determines that the fair values of the goodwill or identifiable intangible assets are less than their current carrying values.

The company evaluates, on a regular basis, whether events or circumstances have occurred that indicate all, or a portion, of the carrying amount of goodwill or identifiable intangible assets may no longer be recoverable, in which case an impairment charge to earnings would become necessary.

A decline in general economic conditions, a substantial increase in market interest rates, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the company’s consolidated statements of operations.

If the company were required to recognize an impairment charge in the future, the charge would not impact the company’s consolidated cash flows, current liquidity, capital resources, and covenants under its existing revolving credit facility, North America asset securitization program, and other outstanding borrowings.

The inability to obtain financing on favorable terms will adversely impact our business, financial position and results of operations.

2 unchanged sentences

As the financial markets change, the cost of acquiring financing and the methods of financing may change.

Changes in our credit rating or other market factors may increase our interest expense or other costs of capital, or capital may not be available to us on competitive terms to fund our working capital needs.

Changes in our credit rating or

other market factors may increase our interest expense or other costs of capital, or capital may not be available to us on competitive terms to fund our working capital needs.

We may not be able to continue to pay dividends on our Common Stock in the future, which could impair the value of our Common Stock.

6 unchanged sentences

The exercise of options or any other issuance of shares by us may dilute your ownership of our Common Stock.

Our Common Stock is thinly traded, which may be exacerbated by our repurchases of our Common Stock.

As a result of the thin trading market for our stock, its market price may fluctuate significantly more than the stock market as a whole or of the stock prices of similar companies.

Trading volume in our Common Stock varies significantly based on a number of factors, which may be exacerbated by our repurchases of our Common Stock.

As a result of the potentially low volume trading market for our stock, its market price may fluctuate significantly more than the stock market as a whole or of the stock prices of similar companies.

Without a larger float, our Common Stock will be less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices for our Common Stock may be more volatile.

Among other things, trading of a relatively small volume of our Common Stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger.

Our Common Stock is listed on The NASDAQ Global Market, and we therefore are subject to continued listing requirements, including requirements with respect to the market value and number of publicly-held shares, number of stockholders, minimum bid price, number of market makers and either (i) stockholders’

equity or (ii) total market value of stock, total assets and total revenues.

If we fail to satisfy one or more of the requirements, we may be delisted from The NASDAQ Global Market.

If we do not qualify for listing on The NASDAQ Capital Market, and if we are not able to list our Common Stock on another exchange, our Common Stock could be quoted on the OTC Bulletin Board or on the “pink sheets”.

As a result, we could face significant adverse consequences including, among others, a limited availability of market quotations for our securities and a decreased ability to issue additional securities or obtain additional financing in the future.

General Risk Factors

Global and regional economic and political conditions may have an adverse impact on our business.

Weak economic conditions generally, sustained uncertainty about global economic and political conditions, government spending cuts and the impact of new government policies, or a tightening of credit markets, could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business, results of operations or cash flows.

For example, there continues to be substantial uncertainty regarding the economic impact of the UK's exit from the European Union ("EU"), referred to as "Brexit".

The UK formally withdrew from EU membership on January 31, 2020 and commenced a transition period during which the trading relationship between the UK and the EU will remain the same and the UK and EU will begin negotiations to determine their future relationship.

Although the full effects of Brexit are uncertain and will be dependent on the outcome of such negotiations, potential adverse consequences of Brexit include global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between the UK and other countries, and increased regulatory complexities, each of which could have a negative impact on our business, financial condition or results of operations.

These effects may be amplified if the UK and the EU fail to agree on a future trade relationship, which could result in significant market and economic disruption.

We have established a presence in the Netherlands to help address future developments, as needed, for Brexit, which could add complexity to our European operations as well as result in higher costs associated with serving our customers following the transition period.

An effective internal control environment is necessary for the Company to produce reliable financial reports and is an important part of its effort to prevent financial fraud.

The Company is required to annually evaluate the effectiveness of the design and operation of its internal controls

over financial reporting.

Based on these evaluations, the Company may conclude that enhancements, modifications, or changes to internal controls are necessary or desirable.

While management evaluates the effectiveness of the Company's internal controls on a regular basis, these controls may not always be effective.

There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure in human judgment.

In addition, control procedures are designed to reduce rather than eliminate financial statement risk.

In addition, the Company may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NASDAQ.

Unresolved Staff Comments

1 unchanged sentence

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