Item 1A. Risk Factors
Item 1A. Risk Factors
Risks Related to Russian Invasion of Ukraine.
On February 24, 2022, Russian forces invaded Ukraine, and sustained conflict and disruption in the region is likely. Impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the United States and other nations against officials, individuals, regions, and industries in Russia, Ukraine, and Belarus, could adversely affect the global economy and financial markets and thus adversely affect our business, financial condition and results of operations as well as the price of our common stock. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.
Total revenues directly associated with Russia and Ukraine are not material to our consolidated financial results. However, our business is exposed to the broader economic volatility associated with the invasion. For example, increased volatility in energy, steel and other metal scrap prices caused several clients to delay scheduled projects or suspend them indefinitely. In addition, some clients in Europe have suspended asset sales out of concern for increased scarcity of parts and other resources. To the extent the broader economic volatility associated with the invasion continues affecting project timelines and asset values, particularly in Europe and in the energy market globally, our results of operations could be adversely affected.
Our Machinio segment uses a small number of independent contractors based in Ukraine and Russia. If these independent contractors are unable to perform their duties due to local instability or political, economic or military conditions, then our Machinio segment’s ability to provide certain services and the development of new services or enhancement of existing services could be delayed, and our results of operations could be adversely affected.
The conflict and related sanctions could also increase the risk of cyber-attacks launched against businesses based in the countries which have imposed sanctions, including the United States. We are based in the United States and have business interests around the world. An increase in the prevalence of cyber-attacks increases the risk that our e-commerce marketplaces, information technology systems, networks, and services could be affected, magnifying the cyber-related risks described in our Annual Report on Form 10-K for fiscal year ended September 30, 2021.
Turbulent economic conditions may negatively affect our business and results of operations.
Our business may be adversely affected by turbulence in economic conditions such as employment levels, wage and salary levels, global supply chain constraints, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, foreign exchange rate fluctuations, the availability of consumer credit and taxation policies. Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower.
In addition to the other information set forth in this report, you should carefully consider the factors set forth in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
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