What changed in this filing

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Item 1A. Risk Factors

2024-02-28 compared with 2023-02-21 · 549 added, 597 removed, 690 unchanged (62% of the section changed)

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COMPANY RISKS

Our business, results of operations, cash flows, financial condition and

liquidity may be negatively impacted by

the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread public health

concerns and other

natural disasters

The COVID-19 pandemic and the responses of governments

to it had, and may again have, a

material adverse effect on our business, results of operations and cash flows and may result

in a material

adverse effect on our financial condition and liquidity.

Our business, results of operations, cash flows, financial condition and

liquidity may be negatively impacted by the

effects of disease outbreaks, epidemics, pandemics, similar wide-spread public health concerns

and other natural

The COVID-19 pandemic has had, and continues to have, an

unprecedented impact on society, worldwide

economic activity, and the health care sector (particularly, the dental market).

As a global healthcare solutions

company, the COVID-19 pandemic and the governmental responses to it had, and may again have, a material

adverse effect on our business, results of operations and cash flows and may result

in a material adverse effect on

our financial condition and liquidity.

Even after the COVID-19 pandemic has begun to subside, we may again

experience material adverse impacts to our business, results of operations

and cash flows as a result of, among other

things, its global economic impact, including any recession that

may occur in the future, or a prolonged period of

economic slowdown or the reluctance of patients to return for elective dental

or medical care.

The impacts and

potential impacts from the COVID-19 pandemic include, but are not

Significant volatility in supply, demand and selling prices for personal protective equipment (PPE), COVID-19

tests and other COVID-19 related products.

Available supply,

customer demand and selling prices for PPE,

COVID-19 tests and other COVID-19 related products

fluctuated in fiscal 2022 and we expect such volatility to

continue for the duration of the COVID-19 pandemic.

This has resulted

in inventory reserves, fluctuating margins

and increased revenue related to such products.

The volatility in sales of COVID-19 test kits has moderated,

at a significantly lower level of sales compared with 2021, resulting in

us recording an inventory obsolescence

reserve of $17 million for COVID-19 test kits during the year

ended December 31, 2022 and we expect further

declines in sales volumes.

Our estimates for supply, demand and selling prices are inherently uncertain and if

supply, demand, selling prices or other market dynamics significantly fluctuate in the future beyond our current

assumptions, additional inventory reserves may be required, margins may be reduced and/or

revenue may decline

for such products, each which could materially adversely impact our business,

results of operations and cash flows.

Additionally, governmental policies designed to reduce the transmission of COVID-19 and variants thereof could

once again lead to the closure of dental offices or deferral of elective procedures and

wellness exams by medical

and dental patients.

Such previous closures and restrictions impacted our

customers’ spending with us and had, and

if reinstated may again have, a material adverse effect on our business, results of operations

and cash flows.

Although we believe that most practices currently are able to access

adequate supply, we still may be unable to

supply our customers with the specific brand and/or quantity of certain PPE products,

COVID-19 tests and other

COVID-19 related products they demand, which may lead to our

customers seeking alternative sources of supply.

Healthcare professionals’ inability to obtain a sufficient quantity and/or brand of certain PPE, COVID-19

other COVID-19 related products would adversely impact our business,

results of operations and cash flows, and

could materially adversely affect our financial condition and liquidity;

Reduction in Peoples’ Ability and Willingness to be in Public.

Restrictions recommended by several public health

organizations, and implemented, from time to time, by federal, state and local governments,

to slow and limit the

transmission of COVID-19 and variants thereof has caused and may in

the future cause some people to be less

willing to go to elective medical and dental appointments, which could

again materially adversely affect demand

for our products.

A lengthened period of materially suppressed demand could again cause

material adverse impacts

on our business, results of operations and cash flows and could materially

adversely affect our financial condition

and liquidity;

Negative impact on our workforce and impact of adapted business practices.

The spread of COVID-19 and

variants thereof caused us to modify our business practices (including

employee travel, employee work locations,

and physical participation in meetings, events and conferences), and

we may take further actions as may be required

by government authorities or our customers or that we determine are in the

best interests of our employees.

COVID-19 pandemic continues to unfold, we continue to evaluate

appropriate actions for our business.

of the COVID-19 pandemic, many of our office-based workers shifted abruptly to

working remotely.

COVID-19 pandemic has evolved, we have modified our work

arrangements to implement more flexible working

arrangements for our office-based workers, including permanent work from home,

hybrid and office-based

arrangements.

Implementing these modified business practices

to include remote work arrangements could have a

negative impact on employee morale, strain our business continuity plans,

introduce operational risk (including but

not limited to cybersecurity risks), and impair our ability

to efficiently operate our business;

Significant changes in political conditions.

Significant changes in political conditions in markets in which

purchase and distribute our products have occurred and are expected to

continue at least during the pendency of the

pandemic, including quarantines, governmental or regulatory actions, closures

or other restrictions that limit or

close our operating facilities, restrict our employees’ ability to

travel or perform necessary business functions, or

otherwise constrain the operations of our business partners, suppliers or

customers, which may materially adversely

affect our business, results of operations, cash flows, financial condition

and liquidity;

in the financial markets.

in the financial markets may materially adversely affect the

availability and cost of credit to us;

The impact of the COVID-19 pandemic may also exacerbate other risks discussed

below, any of which could have

a material adverse effect on us.

We are dependent upon third parties for the manufacture and supply of a significant volume of our products.

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interruption in supply, particularly of

a high sales volume product, could result in a significant disruption

in our sales and operations, as well as damage

a high-sales volume product, could result in a significant disruption in our

sales and operations, as well as damage

to our relationships with customers and our reputation.

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of allegations of forced labor in their supply

Forced labor legislation affecting the supply chain has increased around the

world, and the United States

Forced labor legislation affecting the supply chain has increased around

the world, and the United States

recently passed the Uyghur Forced Labor Prevention Act.

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resources, including employees

with the requisite skills, experience and expertise, particularly in our technology

segment, including dental practice

with the requisite skills, experience and expertise, particularly in our

technology segment, including dental practice

management, patient engagement and demand creation software solutions.

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like software products generally, may contain undetected errors or bugs when introduced or as new versions are

Any such defective software may result in increased expenses related

to the software and could adversely

Any such defective software may result in increased expenses

related to the software and could adversely

affect our relationships with customers as well as our reputation.

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our software or e-services products.

Risks inherent in acquisitions,

dispositions and joint ventures could offset the anticipated benefits.

Risks inherent in acquisitions, dispositions and joint ventures could

offset the anticipated benefits.

One of our business strategies has been to expand our domestic and

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may place significant demands on our

operations, information systems, legal, regulatory, compliance-functions and financial resources, and there is risk

that one or more may not succeed.

We cannot be sure, for example, that we will achieve the benefits of revenue

growth that we expect from these acquisitions or joint ventures or

that we will avoid unforeseen additional costs,

taxes or expenses.

Our ability to successfully implement our acquisition

and joint venture strategy depends upon,

among other things, the following:

operations, information systems, legal, regulatory, compliance, financial, and human resources functions, and

is risk that one or more may not succeed.

We cannot be sure, for example, that we will achieve the benefits of

revenue growth that we expect from these acquisitions or joint ventures

or that we will avoid unforeseen additional

costs, taxes, or expenses.

Our ability to successfully implement our acquisition and joint venture

strategy depends

upon, among other things, the following:

the availability of suitable acquisition or joint venture candidates at

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products and personnel with

our culture, management policies, legal, regulatory and compliance policies,

cybersecurity systems and

our culture, management policies, legal, regulatory, and compliance policies, cybersecurity systems and

policies, internal procedures, working capital management, financial,

and operational controls and

Furthermore, some of our acquisitions and future acquisitions may give rise to

an obligation to make contingent

Furthermore, some of our acquisitions and future acquisitions may give

rise to an obligation to make contingent

payments or to satisfy certain repurchase obligations, which payments

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of our strategic objectives.

Alternatively, we may dispose of assets or a business at a price or on terms that are

Alternatively, we may dispose of assets or a business at a price or on terms that are less

than we had anticipated.

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control, could affect our future financial results.

Certain provisions in our governing documents and other documents to which we

are a party may discourage

Certain provisions in our governing documents and other documents to

which we are a party may discourage

third parties from seeking to acquire us that might otherwise result in

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and (ii) the affirmative vote of the holders

of at least 66 2/3% of our common stock entitled to vote to (a) remove

of at least 66 2/3% of our common stock entitled to vote to (a)

remove a director;

and (b) to amend or repeal our

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In addition, certain of our employee incentive plans provide

accelerated vesting of stock options and other awards upon termination without cause

within two years following a

accelerated vesting of stock options and other awards upon termination without

cause within two years following a

change in control, or grant the plan committee discretion to accelerate

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many suppliers

purchasing incentive based on

the attainment of

certain growth goals.

Suppliers may

reduce or eliminate rebates

purchasing incentive based on the attainment of certain growth

Suppliers may reduce or eliminate rebates or

branded products

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growth goals.

Additionally,

factors outside of

our control, such

as customer preferences,

consolidation of suppliers

Additionally, factors outside

of our control, such as customer

preferences, consolidation of suppliers

or supply issues, can have a material impact on

our ability to achieve the growth goals established

by our suppliers,

which may reduce the amount of rebates or incentives we receive.

The occurrence of any of these events

an adverse impact on our business, financial condition or operating

our ability to achieve the growth goals established by

our suppliers,

incentives we

have an adverse impact on our business, financial condition or operating

Sales of corporate brand products entail additional risks, including the risk that such sales could

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our relationships with suppliers.

offer certain corporate brand products that are available exclusively from us.

of such products subjects

certain corporate brand products that are available exclusively from us.

The sale of such products subjects

us to the risks generally encountered by entities that source, market and sell corporate brand products, including but

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business, financial

consequently,

relationships.

requirements,

products owned by our

suppliers which, consequently,

could adversely impact certain

of our supplier relationships.

Our ability to locate qualified, economically stable suppliers who satisfy our requirements, and to

acquire sufficient

and effective

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not diminished.

sourcing relationships

deep supplier

adverse effect on our business, financial condition or operating results.

In addition, we

are exposed to

that our competitors

customers may introduce

private label,

low-cost products

products could

capture significant

market prices

overall, eroding

to develop sourcing

relationships with a

broad and deep

supplier base could

have an adverse

our business, financial condition or operating results.

INDUSTRY RISKS

Security risks generally associated with our information systems and our

technology products and services have

in the recent past adversely affected our business and results of operations, and could

in the future materially

adversely affect our business and our results of operations if such products, services,

or systems (or third-party

systems we rely on) are interrupted, damaged by unforeseen events, are subject

to cyberattacks or fail for any

extended period of time.

We rely on information systems (“IS”) in our business to obtain, rapidly process, analyze, manage and store

customer, product, supplier and employee data to, among other things:

maintain and manage worldwide systems to facilitate the purchase and

distribution of thousands of

inventory items from numerous distribution centers;

receive, process and ship orders on a timely basis;

manage the accurate billing and collections for our customers;

process payments to suppliers;

provide products and services that maintain certain of our customers’ electronic

medical or dental

records (including protected health information of their patients);

maintain and manage global human resources, compensation and payroll

In addition to health information in our customers’ electronic

medical and dental records, certain of our IS stores

other sensitive personal and financial information, such as healthcare

and other information related to our

employees, as well as other sensitive information such as credit card

information from our third-party business

partners, that is confidential,

and in many cases subject to privacy laws.

Our IS are vulnerable to, among other things, natural disasters,

power losses, computer viruses, telecommunication

failures, cybersecurity threats and other criminal activity.

Information security risks have significantly increased

recent years in part because of an overall increase in cyber incidents,

their increased sophistication, and the

involvement of organized crime, hackers, terrorists and foreign state agents.

The healthcare

industry in particular

has been targeted by threat actors seeking to undermine companies’ cybersecurity

defensive measures.

We have processes in place intended to ensure that our security measures keep pace with new and emerging risks.

We regularly review,

monitor and implement multiple layers of security through technology, processes and our

We utilize security technologies designed to protect and maintain the integrity of our IS and data, and our

defenses are monitored and routinely tested internally and by external

Despite these efforts, our facilities

and systems and those of our third-party service providers have been,

and may in the future be, vulnerable to

privacy and security incidents, cybersecurity attacks and data breaches,

acts of vandalism or theft, computer viruses

and other malicious code, misplaced or lost data, programming and/or human

attacks or other acts

undermining IS of third party business partners including our customers,

or other similar events that could impact

the security, reliability and availability of our systems.

In addition, hardware, software or applications developed

internally or procured from third parties may contain defects

in design or manufacture or other problems that could

unexpectedly compromise information security.

As a practical matter, so long as we depend on IS to operate our

business, and our business partners do the same, there can be no guaranty

that such measures will successfully stop

any one particular cybersecurity incident given the constantly evolving

nature of the threat.

We may also incur

substantial costs as we update our cybersecurity defense systems and our general

computer controls to meet

evolving challenges, and legislative or regulatory action related to cybersecurity

may increase our costs to develop

or implement new technology products and services.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

information technology (“IT”)

controls (including third-party systems we rely on) causing an IS security breach

may lead, and has in the past led,

to a disruption of our IS business systems (including third-party systems we

rely on), interruption of operations

(including, without limitation, receiving, verifying, and processing customer orders,

customer service, accounts

payable, warehouse management and shipping, and systems tied to internal

controls over financial reporting), the

loss or alteration of business, financial, and other protected information,

a negative impact on our financial

performance, and to an adverse impact on our financial accounting

and reporting controls.

A cyberattack that bypasses or compromises our IS cybersecurity / or general

computer controls or those of third

parties with whom we engage may also lead to claims against us by

affected parties and/or governmental agencies,

and involve fines and penalties, as well as substantial defense and settlement

Any of these impacts may

alone, or collectively, have a material impact on our business.

A successful cyberattack has, and may again in the

future, disrupt our business operations, adversely impact our financial

accounting and reporting of results of

operations, divert the attention of management, and adversely impact

our results of operations.

In addition, we develop products and provide services to our customers

that are technology-based, and a

cyberattack that bypasses the IS supporting our products or services causing

a security breach and/or perceived

security vulnerabilities in our products or services could also cause significant

loss of business and reputational

harm, and actual or perceived vulnerabilities may lead to claims against

us by our customers and/or governmental

In addition, certain of our practice management products and services

purchased by health care

providers, such as physicians and dentists, are used to store and manage patient

medical or dental records.

customers are subject to laws and regulations which require that they

protect the privacy and security of those

records, and our products may be used as part of these customers’ comprehensive

data security programs, including

in connection with their efforts to comply with applicable privacy and security laws.

In addition to immaterial and unrelated prior incidents at certain of

our subsidiaries, in October 2023, Henry Schein

experienced a cybersecurity incident that primarily affected the operations of our

North American and European

dental and medical distribution businesses.

Henry Schein One, our practice management software, revenue

management and patient relationship management solutions business was

not affected, and our manufacturing

businesses were mostly unaffected.

Once we became aware of the issue, we took steps to assess, contain

remediate this incident.

We restored affected systems and applications, our distribution operations resumed and we

reactivated our ecommerce platform.

We also notified law enforcement and our employees, customers, suppliers

and investors, informing them of both the incident and management’s efforts to mitigate its impact on our daily

operations and data maintained on the Company’s systems.

Subsequently, on or about November 8, 2023, we

determined that the threat actor obtained personal and sensitive information

maintained on our systems belonging to

certain third parties and since that date we have notified affected parties and potentially

affected parties as

The scope of personal and sensitive data impacted is still under investigation.

On November 22, 2023,

we experienced a related disruption to our ecommerce platform and

related applications, which has since been

The October 2023 cybersecurity incident disrupted key

business operations, adversely impacted our

financial results for the fourth quarter and full year 2023, diverted

attention of management, and caused the

Company to incur significant remediation costs.

We continue to review the effects of the incident on the

Company’s business as we do expect some short-term residual impact on our financial results in 2024.

2024, two putative class actions were filed against us based on the incident

and one of these actions is still pending.

We are spending, and plan to expend in the future, additional resources to continue to protect against, or to address

problems caused by, business interruptions, and data security breaches.

In addition, customers and suppliers may impose additional cybersecurity

requirements on us as a result of the

incident we experienced in October 2023, and some customers and suppliers

have made such requests to date.

cannot guarantee that we will be able to satisfy such additional requirements,

and failure to satisfy such

requirements could result in a loss of revenue or diminished product

availability that could materially affect our

business adversely.

We also may be perceived as a more vulnerable target of the cyber hackers as a result of the

October 2023 incident.

If the Company is subject to more attacks in the future as a result of

the recent incident, this

could materially affect our business adversely.

We maintain cyber insurance, subject to certain retentions and policy limitations.

With respect to the October 2023

cybersecurity incident, we have a $60 million insurance policy, following a $5 million retention.

The health care products distribution industry is highly competitive

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then be unable to market.

Manufacturers also could increase their

efforts to sell directly to end-users and thereby

Manufacturers also could increase their efforts to sell directly to end-users and

eliminate or reduce our role in distribution.

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timely basis could have a material adverse effect on our business.

The repeal or judicial prohibition on implementation of the Affordable Care Act

could materially adversely

affect our business.

The ACA greatly expanded health insurance coverage in the United States

and has been the target of litigation and

Congressional reform efforts since its adoption.

Supreme Court, in upholding the constitutionality of the

ACA and its individual mandate provision in 2012, simultaneously

limited ACA provisions requiring Medicaid

expansion, making such expansion a state-by-state decision.

In 2017, the U.S.

Congress effectively repealed the

individual mandate provision by eliminating the financial penalty for non-compliance.

In the most recent

ACA litigation, a federal appeals court found the individual mandate to be unconstitutional,

and returned the case to

a lower federal court for consideration of whether the remainder of the ACA

could survive the excision of the

individual mandate.

This decision was appealed to the U.S.

Supreme Court, and the Supreme

Court issued a

decision on June 17, 2021.

Without reaching the merits of the case, the Supreme Court held that the plaintiffs in

the case did not have standing to challenge the ACA.

Any outcome of future cases that change the ACA, in

addition to future legislation, regulation, guidance and/or Executive Orders

that do the same, could have a

significant impact on the U.S.

healthcare industry.

For instance, the American Rescue Plan Act of 2021 enhanced

premium tax credits, which has resulted in an expansion of the number of people

covered under the ACA.

changes are time-limited, with some enhancements in place for 2021

only and others available through the end of

The health care industry is experiencing changes due to political, economic and

regulatory influences that could

The health care industry is experiencing changes due to political, economic

and regulatory influences that could

materially adversely affect our business.

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these and other changes in the health care industry, our business could be materially adversely affected.

Expansion of group purchasing organizations (“GPO”), dental support organizations

(“DSO”) or provider

networks and the multi-tiered costing structure may place us at a competitive

disadvantage.

greatly expanded health insurance coverage in the United States and has been

the target of litigation and

Congressional reform efforts since its adoption.

Any outcome of future court cases that change the ACA, in

addition to future legislation, regulation, guidance and/or Executive Orders

that do the same, could have a

significant impact on the U.S.

healthcare industry and the ability or willingness

of individuals to engage with it.

Expansion of GPOs, DSOs or provider networks and the multi-tiered

costing structure may place us at a

competitive disadvantage.

The health care products industry is subject to a multi-tiered costing structure, which

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effectively, which could in turn negatively impact our financial results.

Although we are seeking to obtain similar

terms from manufacturers to access lower prices demanded by GPO and

DSO contracts or other contracts, and to

develop relationships with existing and emerging provider networks, GPOs and DSOs,

we cannot guarantee that

such terms will be obtained or contracts executed.

In addition, such organizations may

establish direct relationships with manufacturers, thereby either eliminating

or reducing the services historically

provided by distributors.

Although we are seeking to obtain similar terms from manufacturers

to access lower

prices demanded by GPO and DSO contracts or other contracts,

and to develop relationships with existing and

emerging provider networks, GPOs and DSOs, we cannot guarantee that such terms will

be obtained or contracts

Increases in shipping costs or service issues with our third-party shippers

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election results;

changes to laws and policies governing foreign trade (including, without

limitation, the United States-

Mexico-Canada Agreement (USMCA), the EU-UK Trade and Cooperation Agreement of December

2020 (that went into effect in 2021) and other international trade agreements);

greater restrictions on imports and exports;

changes to laws and policies governing foreign trade, tariffs and sanctions, or greater

restrictions on

imports and exports;

supply chain disruptions;

changes in laws and policies governing health care or data privacy;

tariffs and sanctions;

changes to the relationship between the United States and China;

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changes in regulatory and tax regulations;

interest rate fluctuations,

and strengthening of the dollar, which have and will continue to impact our

interest rate fluctuations, and strengthening of the dollar, which have and will continue to

results of operations;

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changes in tax rates and the availability of certain tax deductions;

increases in labor costs;

increases in health care costs;

our aspirations, goals and disclosures related to environmental, social and

governance (ESG) matters;

increases in labor costs or health care costs;

the threat or outbreak of war, terrorism or public unrest (including, without limitation, the war in

Ukraine and the possibility of a wider European or global conflict);

Ukraine, the Israel-Gaza war and other unrest and threats in the Middle East,

and the possibility of a

wider European or global conflict);

changes in laws and policies governing manufacturing, development, and

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consumer and commercial spending may also cause customers to

reduce, modify, delay or cancel plans to purchase

reduce, modify, delay,

or cancel plans to purchase

our products and may cause suppliers to reduce their output or change

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The strengthening of the dollar, likewise, has impacted

our revenues and costs, but neither inflation nor exchange rates have materially

impacted our results of operations

our revenues and costs, but neither inflation nor exchange rates have

materially impacted our results of operations

in fiscal year 2023.

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If customers’ cash flow or

operating and financial performance deteriorate, or if they are unable to make scheduled

payments or obtain credit,

operating and financial performance deteriorate, or if they are unable to

make scheduled payments or obtain credit,

they may not be able to, or may delay, payment to us.

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the affected area back into compliance.

Administration has indicated that it will be more aggressive in its pursuing

alleged violations of law, and it has

revoked certain guidance that would have limited governmental use of informal

agency guidance to pursue such

violations, as well as indicating it was more prepared to pursue individuals

for corporate law violations, including

an aggressive approach to anti-corruption activities.

Changes with respect to the applicable laws, regulations and

guidance described below may require us to update or revise our operations,

services, marketing practices, and

compliance programs and controls, and may impose additional and unforeseen

costs on us, pose new or previously

immaterial risks to us, or may otherwise have a material adverse effect on our business.

There can be no assurance

that current and future government regulations will not adversely

affect our business, and we cannot predict new

regulatory priorities, the form, content or timing of regulatory actions,

and their impact on the health care industry

and on our business and operations.

with respect to the applicable laws, regulations and guidance described below

may require us to update or revise

our operations, services, marketing practices, and compliance programs

and controls, and may impose additional

and unforeseen costs on us, pose new or previously immaterial risks to us, or

may otherwise have a material

adverse effect on our business.

There can be no assurance that current and future government

regulations will not

adversely affect our business, and we cannot predict new regulatory priorities, the

form, content or timing of

regulatory actions, and their impact on the health care industry and on our

business and operations.

Global efforts toward healthcare cost containment continue to exert pressure on

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In the United

States, in addition to other government efforts to control health care costs, there has been increased

scrutiny on drug

States, in addition to other government efforts to control health care costs, there has been

increased scrutiny on drug

pricing and concurrent efforts to control or reduce drug costs by Congress, the President,

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and various states.

At the state level, several states have adopted laws that require drug manufacturers

advance notice of certain price increases and to report information

relating to those price increases, while others

have taken legislative or administrative action to establish prescription drug

affordability boards or multi-payer

purchasing pools to reduce the cost of prescription drugs.

At the federal level, several related bills have been

introduced and regulations proposed which, if enacted or finalized,

respectively, would impact drug pricing and

related costs.

We and our subsidiaries may be required to report drug pricing data under federal laws and

At the state level, several states have adopted laws, that may

apply to some of our operations, that

require drug manufacturers, including re-packagers or re-labelers, to provide

advance notice of certain price

increases and to report information relating to those price increases, while

others have taken legislative or

administrative action to establish prescription drug affordability boards or

multi-payer purchasing pools to reduce

the cost of prescription drugs.

At the federal level, several related bills have been introduced

and regulations

proposed which, if enacted or finalized, respectively, would impact drug pricing and related costs.

Under the Sunshine Act, we are required to collect and report detailed

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While we believe we have substantially compliant programs

and controls in place satisfying the above laws and requirements, such

compliance imposes additional costs on us

and controls in place satisfying the above laws and requirements,

such compliance imposes additional costs on us

and the requirements are sometimes unclear.

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serious illness, injury or death;

require manufacturers, wholesalers, repackagers and dispensers of prescription

require manufacturers, wholesalers, re-packagers and dispensers of prescription

drugs to identify and

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respect to these products.

imaging software is regulated as a medical device which subjects our businesses

to substantial additional

requirements, costs and potential enforcement actions or liabilities for noncompliance

with respect to these

Applicable federal, state, local, and foreign laws and regulations also may require

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relating to, among other things, licensure or registration, program eligibility, procurement, third-party

reimbursement, sales and marketing practices, product integrity and

supply tracking to product manufacturers,

reimbursement, sales and marketing practices, product integrity, and supply tracking to product manufacturers,

product labeling, personnel, privacy and security of health or other personal

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applicable to our specialty home medical

supplies business), have recently increased their regulatory and enforcement

activities and, in particular, the DEA

has heightened enforcement activities due to the opioid crisis in the United States.

One of our businesses was

suspended in October 2021 by CMS from receiving payments from

Medicare, although it was permitted to continue

to perform and bill for Medicare services.

On September 30, 2022, CMS terminated the suspension of Medicare

As a result of the termination of the suspension, we recognized $4

million of previously deferred

revenue during the year ended December 31, 2022.

Our business is also subject to requirements of similar and

other foreign governmental laws and regulations affecting our operations abroad.

supplies business) and state Medicaid agencies, have recently increased

their regulatory and enforcement activities

and, in particular, the DEA has heightened enforcement activities due to the opioid crisis in the United States.

business is also subject to requirements of similar and other foreign governmental

laws and regulations affecting

our operations abroad.

The failure to comply with any of these laws or regulations, or new interpretations

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may be modified, could be material.

Allegations by a governmental body that we have not complied with

Allegations by a governmental body that we have not complied

laws could have a material adverse effect on our businesses.

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could be required to make settlement

payments or be subject to civil and criminal penalties, including fines

and the loss of licenses.

payments or be subject to civil and criminal penalties, including

fines and the loss of licenses.

Non-compliance

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and damage our reputation.

The EU Medical Device Regulation may adversely affect our business.

The EU Medical Device Regulation (“MDR”) may adversely affect our business.

The EU MDR, applicable since May 26, 2021, significantly modifies and intensifies

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Among other things, the EU MDR:

strengthens the rules on placing devices on the market and reinforce surveillance once

establishes explicit provisions on manufacturers’

responsibilities for the follow-up of the quality,

strengthens the rules on placing devices on the market and reinforces surveillance

once they are

establishes explicit provisions on manufacturers’ responsibilities

for the follow-up of the quality,

performance and safety of devices placed on the market;

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registration in a database

(EUDAMED not due until 2024 and after as mentioned above).

(EUDAMED not due, for the time being, until the end of 2027 at

the earliest, as mentioned above).

In particular, the EU MDR imposes strict requirements for the confirmation that a product

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distribution, marketing and sale of medical devices, including post-market surveillance.

Medical devices that have

been assessed and/or certified under the EU Medical Device Directive

may continue to be placed on the market

until 2024 (or until the expiry of their certificates, if applicable and earlier).

However, on January 6, 2023, the EU

Commission submitted a proposed amendment to extend the MDR transitional

periods until December 31, 2028,

for certain medical devices to ensure continued access to medical devices

for patients and to allow medical devices

already placed on the market in accordance with the current legal framework

to remain on the market.

to monitor developments and whether the proposed amendment and

new deadlines will be approved by the

European Parliament and Council.

Nevertheless, EU MDR requirements

regarding the distribution, marketing and

sale including quality systems and post-market surveillance have to be observed

by manufacturers, importers and

distributors as of the application date (i.e., May 26, 2021).

The modifications created by the EU MDR may have an impact on the

way we design and manufacture products

and the way we conduct our business in the European Economic Area.

As mentioned above,

pursuant to Regulation 2023/607 and subject to certain conditions, medical devices

that (i) obtained a certificate

under the EU Medical Device Directive from May 25, 2017, (ii) which was

still valid on May 26, 2021, and (iii)

has not been subsequently withdrawn may, for the moment, continue to be placed on the market or put into service

until December 31, 2027 for higher risk devices or December 31, 2028 for medium

and lower risk devices.

Nevertheless, EU MDR requirements regarding the distribution,

marketing and sale including quality systems and

post-market surveillance have to be observed by manufacturers, importers

and distributors as of the application date

(i.e., May 26, 2021).

The modifications created by the EU MDR may have an impact

on the way we design and

manufacture products and the way we conduct our business in

If we fail to comply with laws and regulations relating to health care

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foreign) health care fraud and abuse, referral

and reimbursement laws and regulations with

respect to their operations.

and reimbursement laws and regulations with respect to their operations.

Some of these laws, referred to as “false

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Other laws, referred to as “anti-kickback laws,” prohibit

soliciting, offering, receiving or paying remuneration in order to induce the referral

of a patient or ordering,

purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of, items or services

paid for by federal, state and other health care payers and programs.

Certain additional state and federal laws, such

as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit physicians and other

health professionals from referring a patient to an entity with which the

physician (or family member) has a

financial relationship, for the furnishing of certain designated health services

(for example, durable medical

equipment and medical supplies), unless an exception applies.

Violations of Anti-Kickback statutes or the Stark

Law may be enforced as violations of the federal False Claims Act.

soliciting, offering, receiving or paying remuneration in order to induce or reward

the referral of a patient or

ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of,

services that are paid for by federal, state and other health care payers and programs.

Certain additional state and

federal laws, such as the federal Physician Self-Referral Law, commonly known as the “Stark Law,” prohibit

physicians and other health care professionals from referring a patient

to an entity with which the physician (or

family member) has a financial relationship, for the furnishing of certain designated

health services (for example,

durable medical equipment and medical supplies), unless an exception applies.

Violations of Anti-Kickback

statutes or the Stark Law may be enforced as violations of the federal False Claims

The fraud and abuse laws and regulations have been subject to heightened

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as necessary to facilitate

Our aspirations, goals and disclosures related to environmental, social

and governance matters and the focus on

regulators and private litigants among other things on related claims made

by companies and funds expose us to

numerous risks, including reputational, financial, legal and other risks,

that could have an adverse impact on us,

including on our stock price.

California has adopted stringent new climate disclosure requirements,

as has the EU,

and the SEC appears about to adopt expansive new disclosure requirements

on climate change.

In the EU, the Directive No.

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organizes the legal protection of whistleblowers.

This Directive covers whistleblowers

This Directive covers whistleblowers reporting

breaches of certain EU laws, in particular as regards public health, the above-mentioned

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726/2004 or, as regards data protection, the GDPR.

The Directive protects a wide range of

The Directive protects a wide range of people

and includes former employees.

All private companies with 50 or

more employees are required to create effective

All private companies with 50 or more employees are required

to create effective

internal reporting channels.

Though it was required before December 17, 2021,

at the latest, the implementation of

this Directive by EU member states is still underway for some of

At the end of January 2023 and according

to information available on public sources, sixteen EU member states have

fully implemented it (France, Belgium,

Denmark, Finland, Latvia, The Netherlands, Ireland, Croatia, Cyprus, Greece, Lithuania,

Romania, Malta, Portugal,

Sweden and Bulgaria) while the process is ongoing in the others with varying

degrees of progress.

All EU Member States other than Poland and Estonia have now implemented

We also are subject to the requirements of the new Directive No.

2022/2464 on corporate sustainability reporting

("CSR Directive") adopted on December 14, 2022 and has to be

(“CSR Directive”) adopted on December 14, 2022 and which has to be

implemented by EU members states by July

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537/2014, the CSR Directive strengthens the existing rules on non-financial

reporting by setting new requirements for large

companies to publish sustainability-related information and, in particular, disclose details about their

impacts on environmental matters.

reporting by setting new requirements

for large companies to publish sustainability-related information and, in particular, disclose details about

and impacts on environmental matters.

also are subject to certain United States and foreign laws and regulations

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resolve such matters.

Intentional or unintentional failure to comply with consent decrees could

materially adversely

affect our business.

Intentional or unintentional failure to comply with settlement agreements

or consent decrees

could materially adversely affect our business.

While we believe that we are substantially compliant with applicable fraud and

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products, and our specialty home medical

supply business, include electronic information technology systems that

store and process personal health, clinical,

financial and other sensitive information of individuals.

These information technology systems may be vulnerable

to breakdown, wrongful intrusions, data breaches and malicious attack,

which could require us to expend

significant resources to eliminate these problems and address related security

concerns, and could involve claims

against us by private parties and/or governmental agencies.

supply businesses, include electronic information technology systems

that store and process personal health,

clinical, financial, and other sensitive information of individuals.

These information technology systems may be

vulnerable to breakdown, wrongful intrusions, data breaches and

malicious attack, which could require us to

expend significant resources to eliminate these problems and address

related security concerns, and could involve

claims against us by private parties and/or governmental agencies.

We are directly or indirectly subject to numerous and evolving federal, state, local and foreign laws and regulations

that protect the privacy and security of personal information, such as HIPAA, the Controlling the Assault of Non-

Solicited Pornography and Marketing Act, the Telephone Consumer Protection Act of 1991, Section 5 of the

Federal Trade Commission Act, the CCPA, and the CPRA that becomes effective on January 1, 2023.

regulations relating to privacy and data protection are continually evolving

and subject to potentially differing

interpretations.

These requirements

may not be harmonized, may be interpreted and applied in a

manner that is

inconsistent from one jurisdiction to another or may conflict with other

rules or our practices.

Our businesses’

failure to comply with these laws and regulations could expose us to breach of

contract claims, substantial fines,

penalties and other liabilities and expenses, costs for remediation and harm to

our reputation.

Also, evolving laws

and regulations in this area could restrict the ability of our customers to obtain,

use or disseminate patient

information, or could require us to incur significant additional costs to

re-design our products to reflect these legal

requirements, which could have a material adverse effect on our operations.

that protect the privacy and security of personal information, such as HIPAA, CAN-SPAM, TCPA,

Section 5 of the

FTC Act, the CCPA, and the CPRA that became effective on January 1, 2023.

Laws and regulations relating to

privacy and data protection are continually evolving and subject to

potentially differing interpretations.

requirements may not be harmonized, may be interpreted and applied in

a manner that is inconsistent from one

jurisdiction to another or may conflict with other rules or our practices.

Our businesses’ failure to comply with

these laws and regulations could expose us to breach of contract claims, substantial

fines, penalties and other

liabilities and expenses, costs for remediation and harm to our reputation.

Also, evolving laws and regulations in

this area could restrict the ability of our customers to obtain, use or disseminate patient

information, or could

require us to incur significant additional costs to re-design our products

to reflect these legal requirements, which

could have a material adverse effect on our operations.

In addition, the European Parliament and the Council of the EU adopted

the GDPR effective from May 25, 2018,

which increased privacy rights for individuals (“Data Subjects”), including

individuals who are our customers,

suppliers and employees.

The GDPR extended the scope of responsibilities for data controllers and data

processors, and generally imposes increased requirements and potential

penalties on companies, such as us, that are

either established in the EU and process personal data of Data Subjects

(regardless the Data Subject location), or

that are not established in the EU but that offer goods or services to Data Subjects

in the EU or monitor their

behavior in the EU.

Noncompliance can result in penalties of up to

the greater of EUR 20 million, or 4% of global

company revenues (sanction that may be public), and Data Subjects may

seek damages.

Member states may

individually impose additional requirements and penalties regarding certain

limited matters (for which the GDPR

left some room of flexibility), such as employee personal data.

With respect to the personal data it protects,

GDPR requires, among other things, controller accountability, consents from Data Subjects or another acceptable

legal basis to process the personal data, notification within 72 hours of

a personal data breach where required, data

which increased privacy rights for Data Subjects, including individuals

who are our customers, suppliers and

The GDPR extended the scope of responsibilities for data controllers

and data processors, and

generally imposes increased requirements and potential penalties on companies,

such as us, that are either

established in the EU and process personal data of Data Subjects (regardless

the Data Subject location), or that are

not established in the EU but that offer goods or services to Data Subjects in the EU

or monitor their behavior in the

Noncompliance can result in penalties of up to the greater of EUR 20

million, or 4% of global company

revenues (sanction that may be public), and Data Subjects may seek damages.

Member states may individually

impose additional requirements and penalties regarding certain limited

matters (for which the GDPR left some

room of flexibility), such as employee personal data.

With respect to the personal data it protects, the GDPR

requires, among other things, controller accountability, consents from Data Subjects or another acceptable legal

basis to process the personal data, notification within 72 hours

of a personal data breach where required, data

integrity and security, and fairness and transparency regarding the storage, use or other processing of the personal

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of operations.

carries maximum penalties of CNY50 million or 5% of the annual revenue of

entities that process personal data.

carries maximum penalties of CNY50 million or 5% of the annual revenue

of entities that process personal data.

In the United States, the CCPA, which increases the privacy protections afforded California residents, became

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considered the adoption of similarly expansive

personal privacy laws, backed

by significant civil penalties for non-compliance.

Virginia and Colorado were both

successful in passing privacy legislation in 2021, becoming effective on January

1, 2023 and July 1, 2023,

respectively.

Connecticut and Utah also passed comprehensive privacy laws

that will go into effect in July 1, 2023

and December 31, 2023.

While we believe we have substantially compliant programs and controls

comply with the GDPR, CCPA, PIPL and CPRA requirements, our compliance with data privacy and cybersecurity

laws is likely to impose additional costs on us, and we cannot predict whether

the interpretations of the

requirements, or changes in our practices in response to new requirements

or interpretations of the requirements,

could have a material adverse effect on our business.

personal privacy laws, backed by significant civil penalties for non-compliance.

While we believe we have

substantially compliant programs and controls in place to comply with

the GDPR, CCPA, PIPL and CPRA

requirements, our compliance with data privacy and cybersecurity laws

is likely to impose additional costs on us,

and we cannot predict whether the interpretations of the requirements, or

changes in our practices in response to

new requirements or interpretations of the requirements, could have a

material adverse effect on our business.

We also sell products and services that health care providers, such as physicians and dentists, use to store and

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Our products or services may be used as part of these customers’

comprehensive data security programs, including in connection with their efforts to comply with

applicable data

comprehensive data security programs, including in connection with their

efforts to comply with applicable data

privacy and security laws and contractual requirements.

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and costs for remediation.

Under the GDPR, health data belong to the category of “sensitive data” and benefit

from specific protections.

Processing of such data is generally prohibited, except for specific exceptions.

Certain of our businesses involve the manufacture and sale of EHR systems

and other products linked to

government supported incentive programs, where the EHR systems

must be certified as having certain capabilities

designated in evolving standards, such as those adopted by CMS and ONC.

In order to maintain certification of our

EHR products, we must satisfy the changing governmental standards.

If any of our EHR systems do not meet these

standards, yet have been relied upon by health care providers to receive

federal incentive payments, we may be

exposed to risk, such as under federal health care fraud and abuse

laws, including the False Claims Act.

believe we are substantially in compliance with such certifications and with applicable

fraud and abuse laws and

regulations and that we have adequate compliance programs and controls

in place to ensure substantial compliance,

we cannot predict whether changes in applicable law, or interpretation of laws, or resulting changes in our, could

have a material adverse effect on our business.

Additionally, under

the GDPR, health data belong to the category of “sensitive data” and benefit

from specific protection.

of such data is generally prohibited, except for specific exceptions.

Certain of our businesses involve the manufacture and sale of electronic

health record (EHR) systems and other

products linked to government supported incentive programs, where

the EHR systems must be certified as having

certain capabilities designated in evolving standards, such as those adopted

by CMS and ONC.

In order to maintain

certification of our EHR products, we must satisfy the changing governmental

If any other EHR systems

do not meet these standards, yet have been relied upon by health care providers

to receive federal incentive

payments, we may be exposed to risk, such as under federal health care

fraud and abuse laws, including the False

Additionally, effective September 1, 2023, the OIG for HHS issued a final rule implementing civil

money penalties for information blocking as established by the Cures Act.

OIG incorporated regulations published

by ONC as the basis for enforcing information blocking penalties.

Each information blocking violation carries a $1

million penalty.

While we believe we are substantially in compliance with such certifications

and with applicable

fraud and abuse laws and regulations and that we have adequate compliance

programs and controls in place to

ensure substantial compliance, we cannot predict whether changes in

applicable law, or interpretation of laws, or

resulting changes in our compliance programs and controls, could have a

material adverse effect on our business.

Moreover, in order to satisfy our customers and comply with evolving legal requirements, our products

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there can be no assurance that our tax positions

will not be challenged by relevant tax authorities or that we would be successful

in any such challenge.

will not be challenged by relevant tax authorities or that we would be

successful in any such challenge.

We face inherent risk of exposure to product liability, intellectual property infringement and other claims in the

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in cases as a result of our distribution of

Additionally, we own interests in companies that manufacture certain dental products.

As a result, we

could be subject to the potential risk of product liability, intellectual property infringement or other claims relating

to the manufacture and distribution of products by those entities.

In addition, as our corporate brand business

continues to grow, purchasers of such products may increasingly seek recourse directly from us, rather than the

ultimate product manufacturer, for product-related claims.

Another potential risk we face in the distribution of our

products is liability resulting from counterfeit or tainted products infiltrating

the supply chain.

In addition, some of

the products that we transport and sell are considered hazardous materials.

The improper handling of such

materials or accidents involving the transportation of such materials could

subject us to liability or at least legal

action that could harm our reputation.

Additionally, we own interests in companies that manufacture certain dental and medical products.

result, we could be subject to the potential risk of product liability, intellectual property infringement or other

claims relating to the manufacture and distribution of products by

those entities.

In addition, as our corporate brand

business continues to grow, purchasers of such products may increasingly seek recourse directly from us, rather

than the ultimate product manufacturer, for product-related claims.

Another potential risk we face in the

distribution of our products is liability resulting from counterfeit or tainted products

infiltrating the supply chain.

addition, some of the products that we transport and sell are considered hazardous

handling of such materials or accidents involving the transportation

of such materials could subject us to liability or

at least legal action that could harm our reputation.

Customs policies or legislative import restrictions could hinder the Company’s ability to import goods necessary

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labor or through human trafficking,

as a result of legislative and governmental policy initiatives, we may be subject

to increasing potential delays,

as a result of legislative and governmental policy initiatives, we may be

subject to increasing potential delays,

added costs, supply chain disruption and other restrictions.

GENERAL RISKS

Security risks generally associated with our information systems and our

technology products and services could

materially adversely affect our business, and our results of operations could be

materially adversely affected if

such products, services or systems (or third-party systems we rely on) are

interrupted, damaged by unforeseen

events, are subject to cyberattacks or fail for any extended period

We rely on information systems (IS) in our business to obtain, rapidly process, analyze, manage and store customer,

product, supplier and employee data to, among other things:

maintain and manage worldwide systems to facilitate the purchase and

distribution of thousands of

inventory items from numerous distribution centers;

receive, process and ship orders on a timely basis;

manage the accurate billing and collections for thousands of

process payments to suppliers;

provide products and services that maintain certain of our customers’ electronic

medical or dental

records (including protected health information of their patients).

Information security risks have generally increased in recent years, and a cyberattack

that bypasses our IS security

systems (including third-party systems we rely on) causing an IS security breach

may lead to a material disruption

of our IS business systems (including third-party systems we rely on) and/or

the loss of business information, as

well as claims against us by affected parties and/or governmental agencies, and involve

fines and penalties, costs

for remediation, and substantial defense and settlement expenses.

In addition, we develop products and provide

services to our customers that are technology-based, and a cyberattack

that bypasses the IS security systems of our

products or services causing a security breach and/or perceived security

vulnerabilities in our products or services

could also cause significant loss of business and reputational harm, and actual

or perceived vulnerabilities may lead

to claims against us by our customers and/or governmental agencies.

In particular, certain of our practice

management products and services purchased by health care providers, such

as physicians and dentists, are used to

store and manage patient medical or dental records.

These customers are subject to laws and regulations which

require that they protect the privacy and security of those records, and our

products may be used as part of these

customers’ comprehensive data security programs, including in connection

with their efforts to comply with

applicable privacy and security laws.

Perceived or actual security vulnerabilities in our products or services,

perceived or actual failure by us or our customers who use our products

to comply with applicable legal

requirements, may not only cause reputational harm and loss of business,

but may also lead to claims against us by

our customers and/or governmental agencies and involve damages, fines and

penalties, costs for remediation, and

substantial defense and settlement expenses.

In addition, a cyberattack on a third-party that we use to manage

portion of our information systems could result in the same effects.

Additionally, legislative or regulatory action

related to cybersecurity may increase our costs to develop or implement

new technology products and services.

From time to time, we have had to address immaterial security incidents

(“security incidents”).

There can be no

assurance that we will not experience material security incidents in the future.

incidents can be difficult to

detect and any delay in identifying them could increase their harm.

While we have implemented measures to

protect our IS systems, such measures may not prevent these events.

Any such security incidents could disrupt our

operations, harm our reputation or otherwise have a material adverse effect on our

We have various

insurance policies, including cybersecurity insurance, covering risks and

in amounts that we consider adequate.

There can be no assurance that the insurance coverage we maintain is sufficient or

will be available in adequate

amounts or at a reasonable cost to cover costs and expenses related

to security incidents.

Furthermore, procedures and safeguards must continually evolve to meet new

IS challenges, and enhancing

protections, and conducting investigations and remediation, may impose additional

Finally, our business may be interrupted by shortfalls of IS systems providers engaged by our customers, such

Internet-based services upon which our customers depend to access certain of

our products.

Our global operations are subject to inherent risks that could materially adversely

affect our business.

Our business operations, results of operations, cash flows, financial condition

and liquidity may be negatively

impacted by the effects of disease outbreaks, epidemics, pandemics, or similar wide-spread

public health

concerns and other natural or man-made disasters, such as terrorism, civil

unrest, fire, and extreme weather

Our business operations, results of operations, cash flows, financial condition

and liquidity may be negatively

impacted by the effects of disease outbreaks, epidemics, pandemics, similar wide-spread

public health concerns and

other natural or man-made disasters, such as terrorism, civil unrest, fire,

and extreme weather (“disasters”).

example, as a global healthcare solutions company, the COVID-19 pandemic and the governmental responses

had, and may again have, a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

The impacts and potential impacts from

the COVID-19 pandemic included, and could include as a result of other disasters,

the following, among other

significant volatility in supply, demand and selling prices for personal protective equipment (PPE), test

kits and related products;

reduction in peoples’ ability and willingness to be in public;

reduction in peoples’ ability and willingness to seek elective care;

interrupted operations of industries that use or manufacture the products

we distribute;

impact of adapted business practices;

significant changes in political conditions;

volatility in the financial market;

unavailability or impairment of our manufacturing, distribution, or other

facilities, or firmwide systems

such as our information systems.

The impact from disasters may also exacerbate other risks discussed herein,

any of which could have a material

adverse effect on us.

Our global operations are subject to inherent risks that could materially

adversely affect our business.

Our global operations are subject to risks that could materially adversely affect our business.

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manufacturing in foreign markets;

fluctuations in the value of foreign currencies (including, without limitation,

in connection with

uncertainties relating to the EU-UK Trade and Cooperation Agreement of December 2020, which

into effect in 2021, including for example potential implementation issues, potential

disputes over the

interpretation of the provisions of the Agreement and possible changes

to the Agreement restricting the

free movement of goods between the U.K.

and the European Union;

fluctuations in the value of foreign currencies;

uncertainties relating to trade agreements and international trade relationships;

longer payment cycles of foreign customers and difficulty of collecting receivables

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repatriation of cash from our foreign operations to the United States;

regulatory requirements, including,

without limitation, anti-bribery, anti-corruption and laws pertaining

regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining

to the accuracy of our internal books and records;

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sanctions or penalties;

limitations on our ability under local laws to protect our intellectual property;

limitations on our ability under local laws to protect our intellectual

unexpected regulatory, legal, economic and political changes in foreign markets;

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developments, stakeholder expectations and reputational risk.

public health emergencies, including COVID-19.

Our future success is substantially dependent upon our senior

management, and our revenues and profitability

depend on our relationships with capable sales personnel as well as

customers, suppliers and manufacturers of

the products that we distribute.

Our future success is substantially dependent upon the efforts and abilities of members

of our existing senior

depend on our relationships with capable sales representatives,

service technicians, and other personnel who

interact directly with our customers, as well as customers, suppliers

and manufacturers of the products that we

Our future success is substantially dependent upon the efforts and abilities of

members of our existing senior

management, particularly Stanley M.

Bergman, Chairman and Chief Executive Officer.

The loss of the services of

In November 2022, Mr.

Bergman’s employment agreement was extended through December 31, 2025.

Although the Company has an

internal succession plan for its senior leadership team, including Mr.

Bergman, the loss of the services of Mr.

Bergman could have a material adverse effect on our business.

We have an employment agreement with Mr.

We do not currently have “key man” life insurance policies on any of our employees.

Competition for

senior management is intense, burnout and turn-over rates are increasing workplace

concerns during and after the

COVID-19 pandemic, and we may not be successful in attracting and

retaining key personnel.

Additionally, our

future revenues and profitability depend on our ability to maintain satisfactory

relationships with qualified sales

personnel as well as customers, suppliers and manufacturers.

If we fail to maintain our existing relationships with

such persons or fail to acquire relationships with such key persons in the

future, our business may be materially

adversely affected.

Disruptions in the financial markets may materially adversely affect the availability

and cost of credit to us.

We do not currently have “key man” life insurance

policies on any of our employees.

Competition for senior management is intense, burnout and turn-over rates

increasing workplace concerns, and we may not be successful in

attracting and retaining key personnel.

Additionally, our future revenues and profitability depend on our ability to maintain satisfactory relationships with

qualified sales representatives, service technicians, and other personnel

who interact directly with our customers, as

well as customers, suppliers, and manufacturers.

If we fail to maintain our existing relationships with such persons

or fail to acquire relationships with such key persons in the future,

our business may be materially adversely

Disruptions in the financial markets may materially adversely

affect the availability and cost of credit to us.

Our ability to make scheduled payments or refinance our obligations with

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the availability and cost of credit to us.

Unresolved Staff Comments

We have no unresolved comments from the staff of the SEC that were issued 180 days or more preceding the end of

our 2022 fiscal year.

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