CIMPRESS plc 10-Q

Item 1A. Risk Factors We are updating the COVID-19-related risk factor disclosed in our Form 10-K for the fiscal year ended June 30, 2020 as follows: The COVID-19 pandemic has had a major adverse impact on our operations, financial results, customers, markets, and employees, and these impacts could continue. The COVID-19 pandemic has negatively impacted our business in a number of material ways, including, but not limited to, the following: • material declines in demand for our products and services, leading to major adverse effects on our revenue, earnings, cash flows, and other financial results • disruptions in our operations, including at times many of our employees being subject to shelter-in-place orders and other safety measures restricting them from leaving their homes • large investments of time and resources as our management team focuses on mitigating the effects of the pandemic on our business operations while protecting the health of our employees We cannot predict how the COVID-19 pandemic will develop, how long it and its impacts on economic activity and our business, operations, and markets will continue, or whether the pandemic will lead to a prolonged economic downturn. Although the pandemic may continue to materially adversely impact our operations, financial results, customers, markets, and employees, the extent of the impacts will depend on future developments that are highly uncertain and impossible to predict. Depending on the duration and development of the pandemic, including additional "waves" of increased infection rates and new or reinstated government restrictions, we could see additional impacts in the future. For example, in reaction to the surge in online ordering, our primary delivery provider in North America, UPS, has implemented new surcharges and provided shipping thresholds that may not be sufficient to handle our potential volume during our peak holiday shopping season. As a result of greater competition for shipping capacity, we may not be able to mitigate these surcharges and reduced thresholds by engaging additional shipping partners. Constraints on our shipping capacity and higher shipping costs may result in higher expenses, delayed shipments, lost sales, and damage to our reputation and brands that may have a material adverse effect on our business and results of operations. Although we have amended our senior secured credit facility to suspend our financial maintenance covenants for a period of time, if the adverse effects of the COVID-19 pandemic on our financial results continue, we could have difficulty complying with our credit facility covenants once they are reinstated, which could have a number of negative effects on our business and operations, ranging from limitations on our ability to borrow under the facility to causing us to default under our indebtedness.