What changed in this filing

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Item 1A. Risk Factors

2023-09-08 compared with 2022-09-09 · 34 added, 64 removed, 195 unchanged (33% of the section changed)

5 unchanged sentences

Risks Related to Our Strategy

Our financial condition and results of operations for future periods may be adversely impacted by epidemics, pandemics, outbreaks of infectious disease or similar public health threats and the resulting economic impact.

Lower levels of economic activity in our end markets could adversely affect our operating results. 

Our business is cyclical and seasonal, and in downward economic cycles our operating profits and cash flows could be adversely affected. 

Our operating results may be adversely affected by unfavorable economic, political and market conditions. 

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The markets in which we operate are subject to competitive pressures that could affect selling prices, and therefore could adversely affect our operating results. 

We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in this market could have an adverse effect on our business. 

We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in these markets could have an adverse effect on our business. 

The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits.

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Price increases, significant shortages of raw materials and components, shortages in transportation and an increase in fuel prices could adversely affect our operating margin. 

Our information technology systems are subject to certain cyber risks and could be subject to disasters that are beyond our control .

Our information technology systems are subject to certain cyber risks and could be subject to interruptions that are beyond our control .

Labor shortages or increases in labor costs could adversely impact our business and results of operations.

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We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts.

We may be required to write-off or impair capitalized costs or intangible assets in the future, or we may incur restructuring costs or other charges, each of which could harm our earnings.

Risks Related to Legal and Regulatory Matters

The costs of litigation and compliance with environmental regulations, if significantly increased, could have an adverse effect on our operating profits.

Potential changes in U.S.

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A significant decline in our stock price could adversely affect our ability to raise additional capital.

Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business.

Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price.

RISKS RELATED TO OUR STRATEGY

The occurrence of regional epidemics or a global pandemic such as COVID-19 may adversely affect our operations, financial condition, and results of operations.

The COVID-19 pandemic has had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic;

governmental, business, and individuals' actions in response to the pandemic;

and the impact on economic activity including the possibility of recession or financial market instability.

Infectious diseases, including COVID-19 and its variants, continue to spread globally, resulting in authorities implementing numerous measures to try to contain them, including but not limited to, travel bans and restrictions, quarantines, shelter in place orders, and shutdowns.

These measures have impacted previous operating results and may continue to impact our workforce and operations, the operations of our customers, and those of our respective vendors and suppliers if the diseases continues to spread resulting in further mandated actions.

We have experienced some limited disruptions in supply from some of our suppliers, although the disruptions to date have not been significant.

Additionally, infectious diseases cause disruption to the construction markets, as well as inventory de-stocking by our distributors, both of which had a negative impact on our sales.

Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could limit our capacity to meet customer demand, lead to increased costs and have a material adverse effect on our financial condition and results of operations.

Lower levels of economic activity in our end markets could adversely affect our operating results.

Our businesses operate in several market segments including the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports complex market, to name a few.

Operating results can be negatively impacted by volatility in these markets.

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In addition, customer difficulties in the future could result from economic declines or issues arising from the cyclical nature of their business and, in turn, result in decreases in product demand, increases in bad debt write-offs, decreases in timely collection of accounts receivable and adjustments to our allowance for credit losses, resulting in material reductions to our revenues and net earnings.

Our business is cyclical and seasonal, and in downward economic cycles our operating profits and cash flows could be adversely affected.

Historically, sales of our products have been subject to cyclical variations caused by changes in general economic conditions.

The demand for our products reflects the capital investment decisions of our customers, which depend upon the general economic conditions of the markets that our customers serve.

During periods of expansion in construction and industrial activity, we generally have benefited from increased demand for our products.

Conversely, downward economic cycles in these industries result in reductions in sales and pricing of our products, which may reduce our profits and cash flow.

During economic downturns, customers also tend to delay purchases of new products.

The cyclical and seasonal nature of our business could at times adversely affect our liquidity and financial results.

Our operating results may be adversely affected by unfavorable economic, political and market conditions.

Economic and political conditions worldwide have from time to time contributed to slowdowns in our industry at large, as well as to the specific markets in which we operate.

When combined with ongoing customer consolidation activity and periodic manufacturing and inventory initiatives, an uncertain macro-economic and political climate, including but not limited to a recession or inflationary pressures, and the effects of possible weakness in domestic and foreign financial and credit markets, could lead to reduced demand from our customers and increased price competition for our products, increased risk of excess and obsolete inventories and uncollectible receivables, and higher overhead costs as a percentage of revenue.

When combined with ongoing customer consolidation activity, an uncertain macro-economic and political climate, including but not limited to a recession or inflationary pressures, and the effects of possible weakness in domestic and foreign financial and credit markets, could lead to reduced demand from our customers and increased price competition for our products, increased risk of excess and obsolete inventories and uncollectible receivables, and higher overhead costs as a percentage of revenue.

If the markets in which we participate experience further economic downturns, as well as a slow recovery period, this could negatively impact our sales and revenue generation, margins, and operating expenses, and consequently have a material adverse effect on our business, financial condition and results of operations.

The inability to effectively execute our business strategies could adversely affect our financial condition and results of operations.

Various uncertainties and risks are associated with our approach to strategically penetrate certain market verticals, including but not limited to, the development, marketing and selling of new products and solutions, new product development, and the overall development, marketing, and selling of lighting and display solutions.

Various uncertainties and risks are associated with our approach to strategically penetrate existing and new market verticals, including but not limited to, the development, marketing and selling of new products and solutions, new product development, and the overall development, marketing, and selling of lighting and display solutions.

Those uncertainties and risks include but are not limited to diversion of management’s attention;

difficulty in retaining or attracting employees;

negative impact on relationships and customers;

negative impact on business relationships and customers;

obsolescence of current products and slow new product development;

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products which are priced in other currencies.

Competitive pressures could affect prices we charge our customers or demand for our products, which could adversely affect our operating results.

Aggressive pricing actions of our competitors could affect prices we charge our customers or demand for our products, which could adversely affect our operating results.

Additionally, customers for our products may attempt to reduce the number of vendors from which they purchase in order to reduce the size and diversity of their inventories and their transaction costs.

To remain competitive, we will need to invest continuously in research and development, manufacturing, marketing, customer service and support, and our distribution networks.

To remain competitive, we will need to invest continuously in research and development, manufacturing, marketing, and customer service and support.

We may not have sufficient resources to continue to make such investments and we may be unable to maintain our competitive position.

We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in this market could have an adverse effect on our business.

We have a concentration of net sales to the refueling and convenience store and grocery markets, and any substantial change in these markets could have an adverse effect on our business.

The Company has a concentration of sales in the refueling and convenience store and grocery markets.

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The operating environment for the grocery market continues to be characterized by the fragmentation of local, regional, and national retailers, including both retail and digital formats, market consolidation, intense competition, and entry of non-traditional competitors.

Customer behavior shifted quickly and considerably during the pandemic, including a shift from food away from home to food at home.

Customer behavior shifted quickly and considerably during the pandemic, including a shift from dining away from home to food at home.

The changing operating environment along with changes in customer behaviors within the grocery market could have an adverse impact on the purchasing decisions by one or more of our larger customers in this market.

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The Company may pursue future growth through strategic acquisitions and investments, which may not yield anticipated benefits

The Company has strengthened its business through strategic acquisitions including the fiscal 2021 acquisition of JSI and may continue to do so as opportunities arise in the future.

The Company has grown and strengthened its business through strategic acquisitions and will continue to do so as opportunities arise in the future in order to meet the Company’s growth objectives.

The Company will benefit from such activity only to the extent that it can effectively leverage and integrate the assets or capabilities of the acquired businesses including, but not limited to, personnel, technology, and operating processes.

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Although an interruption of these supplies and components could disrupt our operations, we believe generally that alternative sources of supply exist and could be readily arranged.

To mitigate the risk of disruptions in the supply chain, we have increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.

To mitigate the risk of disruptions in the supply chain, we have on occasion increased our safety stock in certain components in order to mitigate a potential disruption to our operations resulting from an anticipated shortage of these same components.

With regard to price fluctuations of our raw material and component purchases, the price risk for materials the Company purchases is related to price increases in commodity items that affect all users of the materials, including the Company’s competitors.

Significant tariffs or increases in the price of these raw materials and components could further increase the Company’s operating costs and materially adversely affect margins.

The Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arranges stocking agreements to mitigate risk of supply and price increases.

The Company is also impacted by shortages and the availability of transportation of our products to our customers, in addition to rising fuel prices.

The Company’s Lighting Segment has implemented price increases and surcharges with customers to offset raw material price increases along, rising transportation costs, and to mitigate the impact of trade tariffs.

The Company does, however, seek and qualify new suppliers, negotiate with existing suppliers, and arrange stocking agreements to mitigate risk of supply and price increases.

The Company can also be impacted by shortages and the availability of transportation of our products to our customers, in addition to rising fuel prices.

The Company’s Lighting Segment has implemented price increases with customers to offset raw material price increases along, rising transportation costs, and to mitigate the impact of trade tariffs.

The Company’s Display Solutions Segment generally establishes new sales prices, reflective of the then current raw material prices and transportation costs, for each program as it begins with further price increases throughout the life of the program when warranted.

Although the Company attempts to pass along increased costs in the form of price increases or surcharges to its customers, the Company may be unsuccessful in doing so for competitive reasons.

Although the Company attempts to pass along increased costs in the form of price increases to its customers, the Company may be unsuccessful in doing so for competitive reasons.

Even when price increases are successful, the timing of such price increases may lag significantly behind the incurrence of higher costs.

Our information technology systems are subject to certain cyber risks and could be subject to disasters that are beyond our control .

Our information technology systems are subject to certain cyber risks and could be subject to interruptions that are beyond our control .

We depend heavily on the proper functioning and availability of our information, communications, and data processing systems, including operating and financial reporting systems, in operating our business.

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Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.

We have been, and in the future may be, subject to cybersecurity and malware attacks and other intentional hacking.

Any failure to identify and address or to prevent a cyber- or malware-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs.

We have significantly enhanced and will continue to improve our cybersecurity controls in order to minimize the likelihood or impact of a cybersecurity or malware attack.

We have been, and in the future may be, targeted by malicious cyber activity.

Any failure to identify address or prevent malicious cyber activity could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs.

We have significantly enhanced and will continue to improve our cybersecurity controls in order to minimize the likelihood or impact of a malicious cyber activity.

Our information systems are protected through physical and software security as well as redundant backup systems, however, as cyber-attacks continue to evolve, we are committed to investing in our cyber defenses in order to mitigate the risks.

Some of our software systems are utilized by third parties who provide outsourced processing services which may increase the risk of a cyber-security incident.

We have invested and continue to invest in technology security initiatives, employee training, information technology risk management and disaster recovery plans.

Some of our software systems are provided and/or utilized by third parties who maintain responsibility for mitigating cybersecurity risk We have invested and continue to invest in technology security initiatives, employee training, information technology risk management and disaster recovery plans.

The development and maintenance of these measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly more sophisticated.

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Many of the Company's products and solutions have become complex and include sophisticated and sensitive electronic components.

The Company has increasingly manufactured certain of those components and products in its own facilities.

The Company has manufactured certain of those components and products in its own facilities.

Widespread product recalls could result in significant losses due to the costs of a recall, the destruction of product inventory, penalties, and lost sales due to the unavailability of a product for a period of time.

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Commissioned sales representatives are critical to generating business in the Lighting Segment.

From time to time, commissioned sales representatives representing a particular region resign or are terminated and replaced with new commissioned sales representatives.

From time to time, commissioned sales representatives representing a particular region resign, are terminated and replaced with new commissioned sales representatives, or consolidated with another local firm.

During this period of transition from the previous agency to the new one, sales in the particular region will likely fall as business is disrupted.

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We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts.

We had backlog of orders of approximately $112.4 million and $89.7 million, as of June 30, 2022, and June 30, 2021, respectively, with respect to expected future revenues.

Our customers have the right under some circumstances to terminate contracts or defer the timing of our shipments or installments and their payments to us.

We may not receive all of the revenues from our backlog.

If we do not receive all of the revenues we currently expect to receive, our future operating results will be adversely affected.

If we do not receive all of the revenues we currently expect to receive, our future operating results could be adversely affected.

In addition, a delay in the receipt of revenues, even if such revenues are eventually received, may cause our operating results for a particular quarter to fall below our expectations.

We may be required to write-off or impair capitalized costs or intangible assets in the future, or we may incur restructuring costs or other changes, each of which could harm our earnings.

In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our acquisitions, pending acquisitions, project development costs, interest costs related to project financing and certain other assets.

In addition, we have considerable unamortized assets.

From time to time in future periods, we may be required to incur a charge against earnings in an amount equal to any unamortized capitalized expenditures and advances, net of any portion thereof that we estimate will be recoverable, through sale or otherwise, relating to:

(i) any operation or other asset that is being sold, permanently shut down, impaired or has not generated or is not expected to generate sufficient cash flow;

(ii) any project that is not expected to be successfully completed;

and (iii) any goodwill or other intangible assets that are determined to be impaired.

As a result of such actions, we would expect to incur restructuring expenses and accounting charges which may be material and may have a material effect on our financial condition.

RISKS RELATED TO LEGAL AND REGULATORY MATTERS

The costs of litigation and compliance with environmental regulations, if significantly increased, could have an adverse effect on our operating profits.

We are, and may in the future be, a party to any number of legal proceedings and claims, including those involving patent litigation, product liability, employment matters, and environmental matters, which could be significant.

Given the inherent uncertainty of litigation, we can offer no assurance that existing litigation or a future adverse development will not have a material adverse impact.

We are also subject to various laws and regulations relating to environmental protection and the discharge of materials into the environment, and it could potentially be possible we could incur substantial costs as a result of the noncompliance with or liability for clean up or other costs or damages under environmental laws.

Potential changes in U.S.

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social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently purchase component parts and sell products, and any resulting negative sentiments towards the United States as a result of such changes, could have an adverse effect on our business.

We rely on purchased components that are sourced from or manufactured in foreign countries.

Some of our purchased components are sourced from or manufactured in foreign countries.

Import tariffs and potential import tariffs have resulted or may result in increased prices for these imported goods and materials and, in some cases, may result or have resulted in price increases for domestically sourced goods and materials.

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A significant decline in our stock price could adversely affect our ability to raise additional capital.

The market price of our common stock has experienced fluctuations in fiscal 2021 and prior years.

The market price of our common stock can experience significant fluctuations.

Our progress in developing and commercializing our products, our quarterly operating results, announcements of new products by us or our competitors, our perceived prospects, changes in general conditions in the economy or the financial markets, adverse events related to our strategic relationships, and other developments affecting us, or our competitors could cause the market price of our common stock to fluctuate substantially.

In addition, in recent years, including in fiscal 2021, the stock market has experienced significant price and volume fluctuations.

This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance.

This volatility of the stock market has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance.

These market fluctuations, regardless of the cause, may materially and adversely affect our stock price, regardless of our operating results, and this could impact our ability to raise capital.

Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business.

We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition, and results of operations.

The United States and other jurisdictions have recently experienced high levels of inflation.

If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses along with the cost of various goods and services the Company purchases, and we may not be successful in offsetting such cost increases.

In addition, a continued increase in interest rates will further result in increased interest expense.

Anti-takeover provisions in our organizational documents and in Ohio law could make difficult or delay a change in management or negatively impact our share price.

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UNRESOLVED STAFF COMMENTS

We have received no written comments regarding our periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of our fiscal year 2023 that remain unresolved.

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