Investors should carefully consider the risk factors set forth below as well as the other information contained in this report.
−Removed: Any of the following risks could materially and adversely affect our business, financial condition or results of operations.
+Added: Any of the following risks could materially and adversely affect our business, financial condition or results of operations and could cause our results to differ from the “forward-looking statements” contained in this Annual Report.
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.
−Removed: Risks Related to our Business
+Added: Risks Related to our Business and Industry
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.
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Disruptions in affected regions over a prolonged period could have a material adverse impact on our business and our financial results.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: As events continue to evolve with respect to the pandemic, these estimates may materially change in future periods.
+Added: The global COVID-19 pandemic continues to impact the Company's business, through significant shortages, disruptions, constraints, extended lead times, and unpredictability across the global supply chain;
+Added: which has resulted in rapidly changing market conditions, including frequent, and unpredictable, increases in the price of products and services the Company sells.
+Added: Further disruptions to the supply chain due to the COVID-19 pandemic and its variants, or other global or domestic events could materially adversely impact the Company’s business, and the Company may not be able to mitigate or prevent disruptions that may arise from shortages, or the other related impacts discussed above, particularly if the Company is unable to pass price increases on to customers, or if the Company experiences significant decreases in price, or other pricing pressures caused by disruption of the global markets in which it operates.
+Added: Even after the COVID-19 pandemic has subsided and the U.S.
+Added: Administration announced that the Covid public health emergency is set to expire on May 11, 2023, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.
+Added: Refer to "COVID-19 Pandemic Update"
+Added: in Management's Discussion & Analysis of Financial Condition and Results of Operations for a further discussion about the Company's description about the impacts of COVID-19.
Changes in the information technology industry and/or economic environment may reduce demand for the products and services we sell.
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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.
−Removed: 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.
+Added: For example, resellers and software vendors may attempt to increase the volume of software products distributed electronically through Electronic Software Distribution (“ESD”) technology, through subscription services, and through on-line shopping services, and correspondingly, decrease the volume of products sold through us.
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.
−Removed: 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.
+Added: We also rely on our vendor partners
+Added: 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.
−Removed: General economic weakness may reduce our revenues and profits.
−Removed: 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.
−Removed: We may, therefore, experience a greater decline in
−Removed: demand for the products we sell, resulting in increased competition and pressure to reduce the cost of operations.
−Removed: Any benefits from cost reductions may take longer to realize and may not fully mitigate the impact of the reduced demand.
−Removed: 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.
−Removed: The realization of any or all these risks could have a material adverse effect on our business, results of operations and financial condition.
The IT products and services industry is intensely competitive and actions of competitors, including manufacturers of products we sell, can negatively affect our business.
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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.
−Removed: 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.
+Added: In addition, resellers and software vendors may attempt to increase the volume of software products distributed electronically through ESD 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.
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We sell our products to a large and diverse customer base.
−Removed: We finance a significant portion of such sales through trade credit, typically by providing 30-60-day payment terms.
−Removed: In addition, we offer extended payment terms to certain customers for terms of up to 2 years.
+Added: We finance a significant portion of such sales through trade credit, typically by providing 30 to 60-day payment terms.
+Added: In addition, we offer extended payment terms to certain customers for terms of up to two 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.
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Our gross margins have declined historically and may continue to decline in the future.
−Removed: Our competitors may offer better or different products and services
−Removed: than we offer.
+Added: Our competitors may offer better or different products and services than we offer.
In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile.
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Further, we make a significant investment in the training of our sales account executives.
−Removed: 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.
+Added: Our 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.
We may explore additional growth through acquisitions.
−Removed: During the prior year, we completed two acquisitions to add scale, broaden our geographic footprint, expand partner relationships and add cloud support capabilities.
+Added: During the current year, we completed one acquisition to expand our sales presence in the United Kingdom distribution operations and bring key vendor partner relationships to our portfolio.
As part of our strategic growth plan, we may pursue the acquisition of companies that either complement or expand our existing business.
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sales represent an increasing portion of its revenues, and consequently, the company is exposed to risks associated with operating internationally.
−Removed: In 2021 and 2020, approximately 22% and 12%, respectively, of the Company’s net sales came from its operations outside the United States.
+Added: In 2022 and 2021, approximately 22% of the Company’s net sales came from its operations outside the United States.
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.
−Removed: 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.
+Added: As our employees continue to work on a hybrid environment, which includes splitting time between working from the office and working from home, 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.
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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.
−Removed: 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
−Removed: our policies and procedures.
+Added: 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.
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Certain of the Company's products and services include intellectual property owned primarily by the Company's third-party vendor partners.
−Removed: Substantial litigation and threats of litigation regarding intellectual property rights exist in the software and some service industries.
+Added: Substantial litigation and threats of litigation regarding intellectual property rights exist in the
+Added: 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.
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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.
−Removed: 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.
+Added: The interest rate of our current 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.
−Removed: We typically use LIBOR as a reference rate in our credit facility.
+Added: We use LIBOR as a reference rate in our current credit facility.
In July 2017, the U.
−Removed: 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.
−Removed: Federal Reserve advised banks to stop new LIBOR issuances by the end 2021.
−Removed: At this time, no consensus exists as to which reference rate or rates or benchmarks may become acceptable alternatives to LIBOR.
+Added: K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR and while the transition period for many LIBOR tenors has been extended to June 2023, the U.S.
+Added: Federal Reserve advised banks to stop new LIBOR issuances.
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.
−Removed: At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR.
−Removed: 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.
+Added: At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the LIBOR benchmarks is anticipated in coming years.
+Added: Accordingly, the outcome of these reforms is uncertain and 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.
+Added: The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our borrowings under the current credit facility.
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.
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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.
−Removed: 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.
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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.
−Removed: 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.
+Added: Our Common Stock is listed on The NASDAQ Global Market tier of the Nasdaq Stock 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.
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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.
+Added: General economic weakness may reduce our revenues and profits.
+Added: 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.
+Added: 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.
+Added: Any benefits from cost reductions may take longer to realize and may not fully mitigate the impact of the reduced demand.
+Added: 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.
+Added: The realization of any or all these risks 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.
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While management evaluates the effectiveness of the Company's internal controls on a regular basis, these controls may not always be effective.
−Removed: There are inherent limitations on the
−Removed: effectiveness of internal controls, including collusion, management override, and failure in human judgment.
+Added: 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.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.