What changed in this filing

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Item 1A. Risk Factors

2022-12-05 compared with 2021-12-06 · 41 added, 13 removed, 330 unchanged (14% of the section changed)

8 unchanged sentences

The coronavirus (COVID-19) pandemic and the mitigation efforts to control its spread have created significant volatility, uncertainty and economic disruption.

The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:

The extent to which the coronavirus pandemic and recovery activity impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including:

the duration and scope of the pandemic;

18 unchanged sentences

There can be no assurance as to the actual amount of services that we will ultimately provide to VA and HHS under our current contracts, or that we will be successful in recompete efforts.

As described in greater detail above in "Item 1 - Business - Major Contracts", our contracts with the VA for the provision of services to its CMOP operations are currently subject to renewal solicitations.

As described in greater detail above in "Item 1 - Business - Major Contracts", our contracts with the VA for the provision of services to its CMOP operations are expected to be subject to renewal solicitations.

We believe that our strong working relationships and effective service delivery support ongoing performance for the terms of the contracts and recompete efforts as a prime or subcontractor.

Our results of operations, cash flows and financial condition would be materially adversely affected if we were unable to continue our relationship with either of these customers, if we were to lose any of our material current contracts, or if the amount of services we provide to them is materially reduced.

government may prefer veteran-owned, minority-owned, small and small disadvantaged businesses;

government may prefer veteran-owned, minority-owned, women-owned and small disadvantaged businesses;

therefore, we may have fewer opportunities to bid for or could lose a portion of our existing work to small businesses.

As a result of the Small Business Administration ("SBA") set-aside program, the U.S.

government may decide to restrict certain procurements only to bidders that qualify as veteran owned, minority-owned, small, or small disadvantaged businesses.

government may decide to restrict certain procurement activity only to bidders that qualify as veteran owned, minority-owned, small, or small disadvantaged businesses.

In such cases, we would not be eligible to perform as a prime contractor on those programs and would be limited to work as a subcontractor on those programs.

17 unchanged sentences

VA programs, which accounted for approximately 32% and 45% of Company revenue for the years ended September 30, 2022 and 2021, respectively, were exempt from the spending caps established under Federal government sequestration targets enacted in 2013.

The government is currently operating under a continuing resolution (CR) which expires February 18, 2021.

The government is currently operating under a continuing resolution (CR) which expires December 16, 2022.

When a CR expires, unless appropriations bills have been passed by Congress and signed by the President, or a new CR is passed and signed into law, the government must cease operations, or shutdown, except in certain emergency situations or when the law authorizes continued activity.

39 unchanged sentences

They also evaluate the adequacy of internal controls over our business systems, including our purchasing, accounting, estimating, earned value management, and government property systems.

Any costs found to be improperly allocated or assigned to contracts will not be reimbursed, and any such costs already reimbursed must be refunded and certain penalties may be imposed.

Moreover, if any of the administrative processes and systems are found not to comply with requirements, we may be subjected to increased government scrutiny and approval that could delay or otherwise adversely affect our ability to compete for or perform contracts or collect our revenues in a timely manner.

Therefore, an unfavorable outcome of an audit could cause actual results to differ materially and adversely from those anticipated.

If a government review or investigation uncovers illegal activities or activities not in compliance with a particular contract's terms or conditions, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, harm to our reputation, suspension of payments, fines, and suspension or debarment from doing business with Federal government agencies.

14 unchanged sentences

Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated.

Certain contracts also contain organizational conflict of interest (OCI) clauses that limit our ability to compete for or perform certain other contracts.

OCIs arise any time we engage in activities that (i) make us unable or potentially unable to render impartial assistance or advice to the government;

(ii) impair or might impair our objectivity in performing contract work;

or (iii) provide us with an unfair competitive advantage.

For example, when we work on the design of a particular system, we may be precluded from competing for the contract to develop and install that system.

Depending upon the value of the matters affected, an OCI issue that precludes our participation in or performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.

We may not receive the full amounts authorized under the contracts included in our backlog, which could reduce our revenue in future periods below the levels anticipated.

19 unchanged sentences

Our earnings and margins may vary based on the mix of our contracts and programs.

At September 30, 2021, our backlog includes cost reimbursable, time-and-materials, and fixed-price contracts.

At September 30, 2022, our backlog includes cost reimbursable, time-and-materials, and firm-fixed-price contracts.

Our earnings and margins may vary depending on the relative mix of contract types, the costs incurred in their performance, the achievement of other performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined.

22 unchanged sentences

Consistent with guidance from the SEC, our consolidated financial statements reflect our estimates of the tax effects of the current tax laws and regulation.

The federal government’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner.

We depend on the collection of our receivables to generate cash flow, provide working capital, pay debt and continue our business operations.

If the federal government or any prime contractor for whom we are a subcontractor fails to pay or delays the payment of their outstanding invoices for any reason, our business and financial condition may be materially and adversely affected.

The government may fail to pay outstanding invoices for a number of reasons, including lack of appropriated funds or lack of an approved budget.

Contracting officers have the authority to impose contractual withholdings, which can also adversely affect our ability to collect timely.

If we experience difficulties collecting receivables, it could cause our actual results to differ materially and adversely from those anticipated.

In addition, from time to time, when we are awarded a contract, we incur significant expenses before we receive any contract payments.

These expenses include leasing and outfitting office space, purchasing office equipment, and hiring personnel.

In other situations, contract terms provide for billing upon achievement of specified project milestones.

As a result, in these situations, we are required to expend significant sums of money before receiving related contract payments.

In addition, payments due to us from government agencies may be delayed due to billing cycles or as a result of failures by the government to approve governmental budgets in a timely manner.

In addition to these factors, poor execution on project startups could impact us by increasing our use of cash.

In certain circumstances, we may defer recognition of costs incurred at the inception of a contract.

Such action assumes that we will be able to recover these costs over the life of the contract.

To the extent that a project does not perform as anticipated, these deferred costs may not be considered recoverable resulting in an impairment charge.

Risks Relating to Our Information Technology Systems and Intellectual Property

72 unchanged sentences

The indebtedness outstanding under the Credit Agreement initially incurs interest based on LIBOR.

In March 2021, the Financial Conduct Authority of the

United Kingdom has announced that LIBOR will no longer be provided for the one-week and two-month U.S.

In March 2021, the Financial Conduct Authority of the United Kingdom has announced that LIBOR will no longer be provided for the one-week and two-month U.S.

dollar settings after December 31, 2021 and that publication of the U.S.

18 unchanged sentences

In addition, we may determine to issue preferred stock in connection with capital raising efforts and the terms of the stock so issued could have special voting rights or rights related to the composition of our Board.

The exercise of our outstanding common stock options and warrants may depress our stock price and dilute your ownership of the Company.

To the extent that options and warrants are exercised or the restricted stock units vest, dilution to our shareholders will occur.

The exercise or vesting of our outstanding common stock options and restricted stock units may depress our stock price and dilute your ownership of the Company.

To the extent that options are exercised or restricted stock units vest, dilution to our shareholders will occur.

We cannot foresee the impact of any potential sales of our common shares on the market, but it is possible that if a significant percentage of such available shares were attempted to be sold within a short period of time, the market for our shares would be adversely affected.

16 unchanged sentences

This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of the Company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale or merger of our company and may negatively affect the market price of our common stock.

These transactions might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock.

These matters might include proxy contests, tender offers, mergers or other purchases of common stock that could give our stockholders the opportunity to realize a premium over the then-prevailing market price for shares of our common stock.

In addition, persons associated with Wynnefield Capital, Inc.

20 unchanged sentences

Therefore, period-to-period comparisons of our operating results may not be a good indication of our future performance.

An increase in the prices of goods and services could raise the costs associated with providing our services, diminish our ability to compete for new contracts or task orders and/or reduce customer buying power.

We may experience an increase in the costs in our supply and labor markets due to global inflationary pressures and other various geopolitical factors.

We generate a portion of our revenues through various fixed price and multi-year government contracts which anticipate moderate increases in costs over the term of the contract.

With the current pace of inflation our standard approach to moderate annual price escalations in our bids for multi-year work may be insufficient to counter inflationary cost pressures.

This could result in reduced profits, or even losses, as inflation increases, particularly for fixed priced contracts and our longer-term multi-year contracts.

In the competitive environment in which we operate as a government contractor, the lack of pricing leverage and ability to renegotiate long-term, multi-year contracts, could reduce our profits, disrupt our business, or otherwise materially adversely affect our results of operations.

Our profits and revenues could suffer if we are involved in legal proceedings, investigations, and disputes.

31 unchanged sentences

Any adverse determination could adversely impact our ability to bid in response to RFPs in one or more jurisdictions.

sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

Further, as a government contractor subject to the types of regulatory schemes described above, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which private sector companies are not, the result of which could have a material adverse effect on our operating results, cash flows and financial condition.

We are exposed to increased costs and risks associated with complying with increasing and new regulation of corporate governance and disclosure standards.

8 unchanged sentences

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