What changed in this filing

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Item 1A. Risk Factors

2022-12-08 compared with 2021-12-09 · 89 added, 75 removed, 319 unchanged (34% of the section changed)

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Business and Operating Risks

The success of our business depends on our ability to source a sufficient supply of assets from sellers to attract and retain active professional buyers;

then more buyers attract more sellers in a virtuous cycle of growth.

The success of our business depends on our ability to source a sufficient supply of assets from sellers to attract and retain active professional buyers, who in turn attract more sellers.

Our ability to increase our revenue and earn profits depends on whether we can successfully retain existing sellers, attract new sellers, expand the supply of assets available for sale on our e-commerce marketplaces and, at the same time, attract and retain active professional buyers to purchase the assets in the categories we sell.

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comply with regulatory and corporate seller requirements affecting marketing and disposition of certain assets;

• efficiently catalogue, handle, store, ship, and track deliver of assets;

• achieve high levels of seller and buyer satisfaction.

efficiently catalogue, handle, store, ship, and track delivery of assets;

and achieve high levels of seller and buyer satisfaction.

Failure to continue to offer competitive assets to the marketplace, to supply assets that meet applicable regulatory requirements, or to predict market demands for, or gain market acceptance of, such assets, would have a negative impact on our business, results of operations and financial condition.

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Similarly, if our buyers and sellers fail to accept our new platform or our new unified process for handling transactions across our marketplaces, it could materially adversely affect our business and results of operations.

The information technology and digital marketing improvements that are core to our RISE strategy place a significant strain on our management, operational, financial and other resources.

The information technology and digital marketing improvements that are core to our strategy place a significant strain on our management, operational, financial and other resources.

We continue to decommission non-scalable legacy IT platform technology with modular technology including key modules for unified management of sellers and buyers, property handling, transaction processing and finance functions across our entire company.

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Our AllSurplus marketplace is designed to provide our buyers with access to all the property available in our CAG and GovDeals marketplaces, provides a common account experience for sellers and simplifies our operations.

We are now expanding our AllSurplus marketplace to include an online, direct-to-consumer channel for returned and overstock inventory from retailers and manufacturers.

We expanded our AllSurplus marketplace to include an online, direct-to-consumer channel for returned and overstock inventory from retailers and manufacturers.

This expansion of our AllSurplus marketplace capabilities places significant strain on our management, personnel, operations, systems, technical performance and financial resources and internal financial control and reporting function.

Iterative information technology and digital marketing improvements require management time and resources to educate employees, redesign internal processes and implement new ways of conducting business with our sellers and buyers.

If we do not effectively manage improvements to our marketplaces, including consolidation of our GoIndustry DoveBid marketplace onto our AllSurplus marketplace, digital marketing and data driven improvements or the timing, costs, and adoption by sellers and buyers, it could negatively affect our business and our operating results, as well as damage our reputation and our prospects.

If we do not effectively manage improvements to our marketplaces, including digital marketing and data driven improvements or the timing, costs, and adoption by sellers and buyers, it could negatively affect our business and our operating results, as well as damage our reputation and our prospects.

In addition, the dedication of resources to sustain and enhance our existing sites constrains the ability to undertake transformation initiatives focused on growth opportunities.

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We have vendor contracts with Amazon.com, Inc.

in our RSCG segment under which we acquire a significant portion of our purchased inventory, and if our relationship with Amazon is disrupted, we would experience a significant decrease in revenue and income.

We have multiple vendor contracts with Amazon.com, Inc., under which we acquire then resell assets.

The property we purchased under these contracts represented approximately 60.7%, 55.1% and 43.6% of cost of goods sold for the years ended September 30, 2021, 2020 and 2019, respectively.

If Amazon stopped selling inventory to us on acceptable terms or adversely changed the mix and quantity of the inventory that we purchase from Amazon, we likely could not procure alternative inventory from other vendors in a timely and efficient manner and on acceptable terms, or at all, and would therefore experience a significant decrease in revenue and have difficulty generating income.

in our RSCG segment under which we acquire a significant portion of our purchased inventory, and if our relationship with Amazon is disrupted, there could be a material adverse effect on our revenues and operating results.

We have multiple vendor contracts with Amazon.com, Inc., under which we acquire and then resell assets.

The property we purchased under these contracts represented 55%, 61%, and 55% of cost of goods sold for the years ended September 30, 2022, 2021, and 2020, respectively.

If Amazon stopped selling inventory to us on acceptable terms or adversely changed the mix and quantity of the inventory that they make available to us for purchase, we likely could not procure alternative inventory from other vendors in a timely and efficient manner and on acceptable terms, or at all, which could have a material adverse effect on our revenues and operating results.

If we do not retain our senior management and other highly skilled employees, we may not achieve our business objectives.

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If we cannot attract, assimilate and retain employees with the skills we require, we may not grow our business and revenue as expected and we could experience increased turnover, decreased levels of buyer and seller service, low morale, inefficiency or internal control failures.

We rely on attracting, training and retaining highly qualified employees at our RSCG warehouses and a loss of RSCG warehouse employees could adversely impact our business, financial condition and results of operations.

We must attract, train and retain a large and growing number of qualified employees in our RSCG warehouses while controlling related labor costs and maintaining our core values.

Our ability to control labor and benefit costs is subject to numerous internal and external factors, including the continuing impacts of the Pandemic, regulatory changes, prevailing wage rates, and healthcare and other insurance costs.

We must also attract, train and retain a large and growing number of qualified employees in our RSCG warehouses while controlling related labor costs and maintaining our core values.

Our ability to control labor and benefit costs is subject to numerous internal and external factors, regulatory changes, prevailing wage rates, and healthcare and other insurance costs.

We compete with other retail and non-retail businesses for these employees and invest significant resources in training and motivating them.

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They may devote greater financial resources to marketing and promotional campaigns, secure better terms from sellers and vendors, adopt more aggressive pricing or inventory availability policies and devote substantially more resources to technology and infrastructure than we do.

During the course of the Pandemic, several of our competitors were driven to upgrade aspects of their core information and marketing technology stacks.

During the course of the COVID-19 pandemic, several of our competitors were driven to upgrade aspects of their core information and marketing technology stacks.

This heightened focus on e-commerce has increased the competition we face.

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Additionally, our marketing technology relies heavily on our ability to track our promotional campaign performance across marketing channels (i.e., email, search engines, social media and third-party banner ads).

If industry leading software browsers, such as Google Chrome or Apple Safari, disable user analytics tracking or other similar capabilities, our ability to track our promotional campaign performance could be affected, which could in turn prevent us from fully optimizing the marketing spend associated with our promotional campaigns.

If industry leading software browsers, such as Google Chrome, Microsoft Edge, or Apple Safari, disable user analytics tracking or other similar capabilities, our ability to track our promotional campaign performance could be affected, which could in turn prevent us from fully optimizing the marketing spend associated with our promotional campaigns.

Like many other e-commerce marketplaces, Apple’s recent upgrades to provide greater transparency as to Identifier for Advertisers (IDFA) has, with respect to some categories of assets, made it harder and more expensive for us to target customers with the interest in purchasing those categories of assets.

We are required to maintain the privacy and security of personal and business information amidst multiplying threat landscapes and in compliance with privacy and data protection regulations globally.

Failure to do so could damage our business, including our reputation with sellers, buyers and employees, cause us to incur substantial additional costs, and become subject to litigation and regulatory action.

Failure to do so could damage our business, including our reputation with sellers, buyers and employees, cause us to incur substantial additional costs, and make us subject to litigation and regulatory action.

Increased security threats and more sophisticated cyber misconduct pose a risk to our e-commerce marketplaces, information technology systems, networks, and services.

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In addition, if there is any perception that we cannot protect our users’ confidential information, we may lose the ability to retain existing, and attract new, sellers and buyers, and therefore our revenue could decline.

Increased remote work due to the Pandemic has also increased the possible attack surfaces.

Increased remote work due to the COVID-19 pandemic has also increased the possible attack surfaces.

Threats designed to gain unauthorized access to systems, networks and data, both ours and third parties with whom we work, are increasing in frequency and sophistication.

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If we fail to accurately predict our ability to sell assets in which we take inventory risk and credit risk our margins may decline.

Under our purchase transaction model, we purchase assets and assume the risk that the assets may sell for less than we paid for it.

We assume general and physical inventory and credit risk.

Under our purchase transaction model, we purchase assets and assume the risk that the assets may sell for less than we paid for them.

We assume general and physical inventory and credit risk with respect to these assets.

These risks are especially significant because some of the goods we purchase and resell on our websites are impacted by rapid technological change, obsolescence and price erosion, and because we sometimes make large purchases of particular types of inventory or industrial equipment when manufacturing facilities or campuses close.

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To manage our inventory successfully, we must maintain enough buyer demand to sell assets for a reasonable financial return.

We may overpay for the acquired assets if we miscalculate buyer demand or the acquired assets is not as desirable as we predicted.

We may overpay for the acquired assets if we miscalculate buyer demand or if the acquired assets are not as desirable as we predicted.

If assets are not attractive to our buyer base, we may have to take significant losses resulting from lower sale prices, which could reduce our revenue and margins.

Occasionally, in our capital assets marketplace, we make very significant inventory acquisitions, such as the purchase of semi-conductor and oil and gas equipment and biopharma and metal-working machinery, for later resale on our energy and industrial marketplaces.

Occasionally, in our CAG marketplace, we make very significant inventory acquisitions, such as the purchase of semi-conductor and oil and gas equipment and biopharma and metal-working machinery, for later resale on our energy and industrial marketplaces.

We plan to continue to opportunistically make such acquisitions.

The risks described above are heightened in these acquisitions due to their size and, at times, the limited market for the assets we acquire.

If we obtain financing to fund such acquisitions, such financing will increase our costs, which will decrease any profits we receive from the sale of the acquired assets.

Obtaining financing to fund such acquisitions will increase our costs, which will decrease any profits we receive from the sale of the acquired assets.

As we grow our business, we may increase the assets we purchase directly from sellers, resulting in increased inventory levels and related risks, including increased risk of losses on the sale of the inventory acquired.

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If this occurs, even temporarily, it could cause volatility in our stock price.

Our stock price has been volatile, and your investment in our common stock could decline in value.

Worldwide financial crises have led to an increase in the overall volatility of the stock market.

Increased volatility and other broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance.

Other factors that could cause fluctuation in our stock price may include:

• actual or anticipated variations in quarterly operating results;

• changes in financial estimates by us or by a securities analyst who covers our stock;

• publication of research reports about our company or industry;

• conditions or trends in our industry;

• stock market price and volume fluctuations of other publicly traded companies and, in particular, those whose business involves the Internet and e-commerce;

• announcements by us or our competitors of significant contracts (or the amendment or loss of such contracts), acquisitions, commercial relationships, strategic partnerships or divestitures;

• announcements by us or our competitors of technological innovations, new services or service enhancements;

• announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

• the passage of legislation or other regulatory developments that adversely affect us, our sellers or buyers, or our industry;

• additions or departures of key personnel;

• sales of our common stock, including sales of our common stock by our directors and officers or specific stockholders;

• general global economic and/or political conditions and slow or negative growth of related markets.

Volatility in the market price of shares may prevent investors from being able to sell their shares of common stock at prices they view as attractive.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.

This type of litigation could result in substantial costs and divert our management's attention and resources.

The seasonality of our business places increased strain on our operations.

We experience seasonality in each portion of our business.

We expect a disproportionate amount of transactions on our marketplaces to occur at certain times during the year.

We experience seasonality in each portion of our business at various times during the year.

As a result, we expect a disproportionate amount of transactions on our marketplaces to occur at certain times during the year.

If we cannot effectively manage increased demand, or the increased flow of goods we typically experience during these times, it could adversely affect our revenue and our future growth.

If too many buyers and sellers access our websites within a short period of time due to increased demand, we may experience system interruptions that make our websites unavailable or prevent us from providing efficient service, which may reduce our GMV and the attractiveness of our value-added services.

If too many buyers and sellers access our websites within a short period of time due to increased demand, we may experience system interruptions that make our websites unavailable or prevent us from providing efficient service, which may reduce our financial and operational results and the attractiveness of our value-added services.

In addition, we may not adequately staff our distribution centers during these peak periods.

If we cannot staff warehouses adequately, we may not be able to process assets quickly enough which, in turn, could mean dissatisfaction of sellers and reduced GMV or increased third party storage costs and reduced profitability.

If we cannot staff warehouses adequately, we may not be able to process assets quickly enough which, in turn, could mean dissatisfaction of sellers or increased third party storage costs and reduced profitability.

If we fail to identify, finance and integrate acquisitions, our future operating results may be materially adversely affected.

We have expanded our business in part through acquisitions such as the most recent acquisition of Bid4Assets, Inc.

We have expanded our business in part through acquisitions such as the acquisition of Bid4Assets, Inc in November 2021.

We may continue to do so.

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Further, certain acquisitions may be subject to regulatory approval, which can be time-consuming and costly to obtain, and the terms of such regulatory approvals may impose limitations on our ongoing operations or require us to divest assets or lines of business.

Damage to our reputation could harm our business.

Our positive reputation is based on our core values of integrity, customer focus, relentless improvement, innovation to support leadership, mutual trust and accountability, shared success and doing well and doing good.

Our ability to attract and retain highly skilled employees, clients and buyers, and to successfully do business would be harmed if our reputation was damaged.

Harm to our reputation can arise from numerous sources, including, among others, employee misconduct, security breaches, compliance failures, litigation or regulatory outcomes or governmental investigations.

Our reputation could also be harmed by the failure or perceived failure of an affiliate, joint-venture, or a vendor or other third party with which we do business, to comply with laws or regulations.

In addition, our reputation or prospects may be significantly damaged by adverse publicity or negative information regarding us, whether or not true, that may be posted on social media, non-mainstream news services or other parts of the internet, and this risk can be magnified by the speed and pervasiveness with which information is disseminated through those channels.

Should any of these or other events or factors that can undermine our reputation occur, the additional costs and expenses that we may need to incur to address the issues giving rise to the damage to our reputation may adversely affect our earnings and results of operations.

Any damage to our reputation could impair our ability to retain existing or attract new customers, investors and employees.

Our international operations expose us to several risks.

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In addition, currency exchange rates may negatively affect our results if we pay for inventory using a different currency than we receive when we sell the inventory.

Our stock price has been volatile, and your investment in our common stock could decline in value.

Worldwide financial crises have led to an increase in the overall volatility of the stock market.

Increased volatility and other broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance.

Other factors that could cause fluctuation in our stock price may include:

• actual or anticipated variations in quarterly operating results;

• changes in financial estimates by us or by a securities analyst who covers our stock;

• publication of research reports about our company or industry;

• conditions or trends in our industry;

• stock market price and volume fluctuations of other publicly traded companies and, in particular, those whose business involves the Internet and e-commerce;

• announcements by us or our competitors of significant contracts (or the amendment or loss of such contracts), acquisitions, commercial relationships, strategic partnerships or divestitures;

• announcements by us or our competitors of technological innovations, new services or service enhancements;

• announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

• the passage of legislation or other regulatory developments that adversely affect us, our sellers or buyers, or our industry;

• additions or departures of key personnel;

• sales of our common stock, including sales of our common stock by our directors and officers or specific stockholders;

• general economic conditions and slow or negative growth of related markets;

• the continued global spread of COVID-19 and related measures to contain its spread (such as government mandated business closures and shelter in-place guidelines).

Volatility in the market price of shares may prevent investors from being able to sell their shares of common stock at prices they view as attractive.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.

This type of litigation could result in substantial costs and divert our management's attention and resources.

We may need additional financing in the future, which may not be available on favorable terms, if at all.

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Our business may not generate the cash needed to finance such requirements.

We do not have a credit facility with third-party lenders from which we may draw funds.

Although we do have an existing credit facility with Wells Fargo Bank, National Association from which we may draw funds, there may be situations in which we seek funding through other sources.

If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our existing stockholders would be reduced, and these securities may have rights, preferences or privileges senior to those of our common stock.

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If adequate funds are not available or are not available on acceptable terms, our ability to enhance our services, fund strategic initiatives, respond to competitive pressures, take advantage of business opportunities or grow our business would be limited, and we might need to restrict our operations and initiatives.

The global COVID-19 pandemic could harm our business and results of operations.

The global spread of COVID-19 (the “Pandemic”) and related measures to contain its spread (such as government mandated business closures and shelter in-place guidelines experienced in Q2 and Q3 of FY2020) have created significant volatility, uncertainty and economic disruption.

Although the Pandemic and the related measures to contain its spread have not had a material adverse effect on our consolidated results of operations to date, they have adversely affected certain components of our business, particularly revenues during times and in places in which governments ordered business and governmental closures and issued the most restrictive shelter in-place guidelines.

The extent to which the Pandemic impacts our business, results of operations, financial condition and liquidity in the future will depend on numerous evolving factors that we cannot predict, including the severity and duration of future mutations or related variants of the virus in areas in which we operate for which there may not be an effective vaccine.

Global and regional economic conditions.

Our operations and performance depend significantly on global and economic conditions.

Adverse economic conditions and events include, but are not limited to, uncertainties and instability due to the Pandemic and its impact on global macroeconomic economic trends.

These conditions could have a material adverse effect on our business by reducing the ability of international buyers and sellers to conduct businesses due to travel restrictions impacting the ability of:

Global economic conditions, including those from macro-trends, global events and the COVID-19 pandemic, may harm our business and results of operations.

Our overall performance depends in part on worldwide economic conditions.

Global financial developments, downturns and global health crises or pandemics may harm us, including due to disruptions or restrictions on our employees’ ability to work and travel.

The United States and other key international economies have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, outbreaks of COVID-19 and the resulting impact on business continuity and travel, supply chain disruptions, inflation and overall uncertainty with respect to the economy, including with respect to tariff and trade issues.

For example, inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs).

In addition, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.

Additionally, financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022, a conflict which continues to contribute to uncertainty and financial market volatility.

In response to the invasion, the United States, the United Kingdom and the European Union, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain;

however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability and/or supply chain continuity, in both Europe and globally, and has introduced significant uncertainty into global markets.

Our business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

If global economic conditions remain uncertain or deteriorate further, including as a result of the Russia-Ukraine conflict, COVID-19 or other disruptions, we could see a reduction in the ability of international buyers and sellers to conduct business due to travel restrictions impacting the ability of:

sellers and their agents to travel to prepare assets for sale;

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and the overall willingness of sellers and buyers to decommission capital assets and engage in cross-border transactions.

These potential scenarios could have a material advise effect on our business.

Separately, any factors that reduce cross border trade or make such trade more difficult could harm our business.

Increasing costs, such as increasing tariffs and trade wars between nations, may make international trade less profitable and adversely affect our global business.

Decreases in the supply of, demand for, or market values of surplus and salvage assets, could harm our business.

Our revenues could decrease if there was significant erosion in the supply of, demand for, or market values of surplus and salvage assets, which could adversely affect our financial condition and results of operations.

We have no control over any of the factors that affect the supply of, and demand for, surplus and salvage assets, and the circumstances that cause market values to fluctuate - including, among other things, economic uncertainty, global geopolitical climate, disruptions to credit and financial markets, lower commodity prices, and our buyers’ restricted access to capital - are beyond our control.

Recent economic conditions have caused fluctuations in the supply, mix and market values of surplus and salvage assets available for sale, which has a direct impact on our revenues.

In addition, price competition and the availability of surplus and salvage assets directly affect the supply of, demand for, and market value of such assets.

For example, when the demand for used vehicles increases, the prices are also likely to increase, making it more costly for potential buyers to find suitable replacements for their existing vehicles.

As a result, potential buyers may retain their existing vehicles for longer periods of time, further decreasing supply.

These factors could impact the overall profitability of used vehicle sales on our marketplaces because although used vehicles are selling for higher prices, fewer vehicles are being sold.

Climate change initiatives, including significant changes to engine emission standards applicable to certain types of assets, may also adversely affect the supply of, demand for and the market values of such assets.

Legal and Regulatory Risks

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We expect to continue to incur costs in complying with these laws and could be subject to fines or other penalties for any failure to comply with these laws.

We may be required to make changes in our business to comply with these laws, which could increase our costs, reduce our revenue, cause us to prohibit the listing of certain items or restrict certain listing formats in some locations, which may adversely affect our financial condition or operating results.

We may be required to make changes in our business to comply with these laws, which could increase our costs, reduce our revenue, cause us to prohibit the listing of certain items or restrict certain listing formats in some locations, any of which may adversely affect our financial condition or operating results.

In addition, the body of law regarding the potential liability of an online auction service for the activities of its users is not clear.

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Certain categories of assets sold on our marketplaces are subject to government restrictions.

We sell assets, such as scientific instruments, information technology equipment and aircraft parts, that is subject to export control and economic sanctions laws, among other laws, imposed by the United States and other governments.

We sell assets, such as scientific instruments, information technology equipment and aircraft parts, that are subject to export control and economic sanctions laws, among other laws, imposed by the United States and other governments.

Such restrictions include the U.S.

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Defense of any such actions could be costly and involve significant time and attention of our management and commitment of other resources, may cause us to incur monetary liabilities or penalties, and may require us to change our business in ways adverse to us.

We cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.

We cannot be certain that our insurance coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on commercially reasonable terms, or at all.

In addition, some of our agreements with our vendors and sellers do not indemnify us against product liability.

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Any adverse findings from audits or reviews of our performance could result in a significant adjustment to our previously reported operating results.

The results of an audit could significantly limit the volume and type of assets made available to us, resulting in lower GMV, revenue and profitability.

The results of an audit could significantly limit the volume and type of assets made available to us, resulting in lower revenue and profitability.

If such an audit uncovers improper or illegal activities, we could be subject to civil and criminal penalties, administrative sanctions and could suffer serious harm to our reputation.

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Negative publicity generated because of fraudulent conduct by third parties or failure to satisfactorily settle disputes related to transactions on our websites could damage our reputation, cause us to lose sellers and buyers and hurt our ability to grow our business.

Some provisions of our charter, bylaws and Delaware law inhibit potential acquisition bids that some investors may consider favorable to management.

Some provisions of our charter, bylaws and Delaware law inhibit potential acquisition bids.

Our corporate documents and Delaware law contain provisions that may enable our board of directors to resist a change in control of our company even if a change in control were to be considered favorable by you and other stockholders.

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Assertions that we infringe on intellectual property rights of others could result in significant costs and substantially harm our business and operating results.

Third parties may assert that we have infringed their intellectual property rights in technology or otherwise.

We use internally developed systems and licensed technology to operate our online auction platform and related websites.

Third parties could assert intellectual property infringement claims against us based on our internally developed systems or use of licensed third-party technology.

Third parties also could assert intellectual property infringement claims against parties from whom we license technology.

Third parties may assert that we have infringed their intellectual property rights in technology or otherwise based on our internally developed systems or use of licensed third-party technology to operate our online auction platform and related websites.

Third parties also could assert intellectual property infringement claims against the parties from whom we license technology.

If we are forced to defend against any infringement claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel and/or delays in completion of sales.

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Factors may arise over time that lead us to change our estimates and judgments.

Sometimes, our management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet may cause us to report materially different results than would have been reported under a different alternative.

Sometimes, our management must use judgment to select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet may cause us to report materially different results than would have been reported under a different alternative.

Any changes in accounting policies or methods could reduce our net income, which reductions may be independent of changes in our operations.

These reductions in reported net income could cause our stock price to decline.

Damage to our reputation could harm our business.

Our positive reputation is based on our core values of integrity, customer focus, continuous improvement, innovation, mutual trust and accountability, shared success and doing well and doing good.

Our ability to attract and retain highly skilled employees, clients and buyers, and to successfully do business would be harmed if our reputation was damaged.

Our reputation could also be harmed by the failure or perceived failure of an affiliate, joint-venture, or a vendor or other third party with which we do business, to comply with laws or regulations.

Any damage to our reputation could impair our ability to retain existing or attract new customers, investors and employees.

We carry a significant amount of goodwill on our balance sheet.

As of September 30, 2022, we had goodwill of $88.9 million .

The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with significant customers, strategic decisions made in response to economic or competitive conditions, loss of key personnel, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could result in goodwill impairment charges.

We have recorded goodwill impairment charges in the past, and such charges materially affected our historical results of operations.

For additional information, see Note 7 - Goodwill , to the accompanying consolidated financial statements.

Unresolved Staff Comments.

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