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Item 1A. Risk Factors

2022-03-09 compared with 2021-03-16 · 33 added, 32 removed, 224 unchanged (22% of the section changed)

3 unchanged sentences

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.

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

Terrorist attacks, acts of war, natural disasters, 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.

Such acts, including Russia’s February 2022 invasion of Ukraine, have created, and continue to create, economic and political uncertainties and have contributed to global economic instability.

Specifically, these acts, 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.

The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption, which may adversely affect our business, financial condition, liquidity or results of operations.

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.

78 unchanged sentences

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.

During the prior year, 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.

22 unchanged sentences

In 2021 and 2020, approximately 22% and 12%, 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:

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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.

As our employees continue to work on a hybrid environment, which includes splitting time between working from the office and 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.

27 unchanged sentences

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

Changes in income tax and other regulatory legislation.

We operate in compliance with applicable laws and regulations and make plans for our structure and operations based upon existing laws and anticipated future changes in the law.

When new legislation is enacted with minimal advance notice, or when new interpretations or applications of existing laws are made, we may need to implement changes in our policies or structure.

We are susceptible to unanticipated changes in legislation, especially relating to income and other taxes, import/export laws, hazardous materials and other laws related to trade, accounting and business activities.

Such changes in legislation may have an adverse effect on our business.

We may be subject to litigation.

We may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust, intellectual property and other issues.

Litigation is subject to inherent uncertainties, and unfavorable rulings could occur.

An unfavorable ruling could include monetary damages or other adverse effects.

Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our business, financial position and results of operations for the period in which the ruling occurred or future periods.

Our business could be negatively affected as a result of the actions of activist shareholders.

4 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.

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.

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.

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.

The interest rate of our credit facility is priced using LIBOR and is subject to risks associated with the transition from LIBOR to an alternative reference rate that could adversely affect our business, operating results, and financial condition.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally.

We typically use LIBOR as a reference rate in our credit facility.

In July 2017, the U.

K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021 and while the transition period for many LIBOR tenors has been extended to June 2023, the U.S.

Federal Reserve advised banks to stop new LIBOR issuances by the end 2021.

At this time, no consensus exists as to which reference rate or rates or benchmarks may become acceptable alternatives to LIBOR.

The Alternative Reference Rates Committee, a steering committee comprised of U.S.

financial market participants, has identified the secured overnight financing rate, or SOFR, as the recommended alternative rate for all LIBOR.

At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR.

Any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.

Further, the consequences of these developments, or any alternative reference rate that is adopted, cannot be entirely predicted but could include an increase in the cost of our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows.

Changes in accounting rules, or the misapplication of current accounting rules, may adversely affect our future financial results.

26 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.

24 unchanged sentences

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.

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.

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.

2 unchanged sentences

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.