What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-03-31 · 94 added, 73 removed, 207 unchanged (45% of the section changed)

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• political conditions in or affecting oil and natural gas producing countries;

• terrorist activities in the United States and elsewhere;

• terrorist activities affecting traditional supply routes and other possible terrorist activities in the United States and elsewhere;

• the cost of developing alternative energy sources;

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• tax policies.

Our rental contracts are generally short-term, and oil and natural gas companies tend to respond quickly to upward or downward changes in prices.

Any prolonged reduction in drilling and production activities historically has reduced our compressor sales and materially eroded both rental pricing and utilization rates for our equipment and services and adversely affects our financial results.

As a result of any such prolonged reductions, we may suffer losses, be unable to make necessary capital expenditures and be unable to meet our financial obligations.

The rental contracts of many of our operating compressor units have a short-term duration, and oil and natural gas companies tend to respond quickly to upward or downward changes in prices.

As a result of any such prolonged reductions, we may suffer losses, be unable to make necessary capital expenditures or be unable to meet our financial obligations.

The intense competition in our industry could result in reduced profitability and loss of market share for us.

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These companies also have substantially greater financial resources, larger operations and greater budgets for marketing, research and development than we do.

They may be better able to compete because of their broader geographic dispersion and ability to take advantage of international opportunities, the greater number of compressors in their fleet or their product and service diversity.

As a result, we could lose customers and market share to those competitors.

These companies may also be better positioned than us to successfully endure downturns in the oil and natural gas industry.

Our operations may be adversely affected if our current competitors or new market entrants introduce new products or services with better prices, features, performance or other competitive characteristics than our products and

Competitive pressures or other factors also may result in significant price competition that could harm our revenue and our business.

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Adverse macroeconomic and business conditions may significantly and negatively affect our results of operations.

As a result of the COVID-19 outbreak and other economic conditions in the United States and abroad, our revenue and profitability has been adversely affected.

As a result of the COVID-19 outbreak and other economic conditions in the United States and abroad, our revenue and profitability were adversely affected in the ensuing years.

The condition of domestic and global financial markets and the potential for disruption and illiquidity in the credit markets could have an adverse effect on our operating results and financial condition, and if sustained for an extended period, such adverse effects could also become significant.

Uncertainty and turmoil in the credit markets may negatively impact the ability of our customers to finance purchases of our products and services and could result in a decrease in, or cancellation of, orders included in our backlog or adversely affect the collectability of our receivables.

Uncertainty and turmoil in the credit markets may negatively impact the ability of our customers to finance utilization of our products and services and could result in a decrease in, or cancellation of, orders or adversely affect the collectability of our receivables.

If the availability of credit to our customers is reduced, they may reduce their drilling and production expenditures, thereby decreasing demand for our products and services, which could have a negative impact on our financial condition.

A prolonged period of depressed prices for oil and natural gas would likely result in delays or cancellation of projects by our customers, reducing the demand for our products and services.

Additionally, if we are not able to pass along increases to our costs due to inflation on parts, fluids, labor and other aspects of our business, it may adversely affect our results of operations and cash flows.

Continued elevated levels of inflation could have an adverse impact on our operating results.

economy has experienced elevated levels of inflation since early 2022.

While such levels of inflation have moderated in recent months, uncertainty remains on expectations of inflation during 2024.

Should inflationary pressures return or increase, the result will be an increase in our cost structure, including labor costs, parts costs, lubricants and other items used in our operations.

If such cost increases occur, we may be unable to pass along such increases to our customers in the form of higher rental rates for our compressor units.

Increases in inflation could also increase the costs of new compressor units, making them less attractive and decreasing the demand from our customers for such assets.

Should any of these items occur, they could negatively impact the results of our operations.

A reduction in demand for oil could adversely affect our business.

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Oil and natural gas prices and the level of drilling and exploration activity can be volatile.

As a result, the demand for our natural gas compression services will be adversely affected.

A reduction in demand has, and could continue to, force us to reduce our pricing substantially.

As a result, the demand for our natural gas compression services can be adversely affected.

A reduction in demand has, and could in the future continue to, force us to reduce our pricing substantially.

Additionally, our customers’ production from oil-weighted reserves constitutes the majority percentage of our business.

These unconventional sources are generally less economically feasible to be developed in low oil price environments.

These are considered unconventional sources and are generally less economically feasible to be developed in low oil price environments.

A decline in demand for oil and natural gas generally has an adverse effect on our business, financial condition and results of operations.

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Expanded regulations are likely to introduce a period of uncertainty as companies determine ways to proceed.

Any curtailment could result in a reduction of demand for our compressors, potentially affecting both sales and rentals of our units.

Any curtailment could result in a reduction in demand for our compressors, potentially affecting both sales and rentals of our units.

We are subject to extensive environmental laws and regulations that could require us to take costly compliance actions that could harm our financial condition.

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Based on the nature of the industry, however, hydrocarbons or other wastes may have been disposed of or released on or under properties owned or leased by us or on or under other locations where such wastes have been taken for disposal.

The waste on these properties may be subject to federal or state environmental laws that could require us to remove the wastes or remediate sites where they have been released.

The waste on these properties may be subject to federal or state environmental laws that could require us to remove the waste or remediate sites where they have been released.

We could be exposed to liability for cleanup costs, natural resource and other damages as a result of our conduct or the conduct of, or conditions caused by, prior owners, lessees or other third parties.

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A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, public pension funds, universities and other members of the investing community.

These activities include increasing attention and demands for action related to climate change and energy transition matters, such as promoting the use of substitutes to fossil fuel products and encouraging the divestment of fossil fuel equities, as well as pressuring lenders and other financial services companies to limit or curtail activities with fossil fuel companies.

These activities include increasing attention and demands for action related to climate change and energy transition matters, such as promoting the use of substitutes to fossil fuel products

and encouraging the divestment of fossil fuel equities, as well as pressuring lenders and other financial services companies to limit or curtail activities with fossil fuel companies.

Members of the investment community have begun to screen companies for sustainability performance, including practices related to climate change.

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Caps or fees on carbon emissions, including in the U.S., have been and may continue to be established and the cost of such caps or fees could disproportionately affect the fossil fuel sectors.

We are unable to predict whether and when the proposed changes in laws or regulations ultimately will occur or what they ultimately will require, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.

Other developments focused on restricting GHG emissions include the Regional Greenhouse Gas Initiative, the Western Climate Action initiative, and various state programs implementing the California Global Warming Solutions Act of 2006 (known as Assembly Bill 32).

Requirements and voluntary initiatives to reduce greenhouse gas emissions, as well as increased climate change awareness, may result in increased costs for the oil and gas industry to curb greenhouse gas emissions and could have an adverse impact on demand for oil and natural gas.

International, national, and state governments, agencies and bodies continue to evaluate and promulgate regulations and voluntary initiatives that are focused on restricting GHG emissions.

These requirements and initiatives are likely to become more stringent over time and to result in increased costs for the oil and gas industry to curb GHG emissions.

In addition, these developments, and public perception relating to climate change, may curtail production and demand for hydrocarbons such as oil and natural gas by shifting demand towards and investment in relatively lower carbon energy sources such as wind, solar and alternative energy solutions.

If renewable energy becomes more competitive than fossil-fuel energy globally, it could have a material effect on our results of operations.

The potential for climate related changes may pose future risks to our operations and those of our customers.

These changes can include extreme variability in weather patterns such as increased frequency and severity of significant weather events (e.g.

flooding, hurricanes and tropical storms), natural hazards (e.g., increased wildfire risk), rising mean temperature and sea levels, and long-term changes in precipitation patterns (e.g.

drought, desertification, or poor water quality).

Such changes have the potential to affect business continuity and operating results, particularly at facilities in coastal areas or areas prone to chronic water scarcity.

Risks Associated With Our Company

A significant majority of our compressor rentals are for terms of six months or less which, if terminated or not renewed, would adversely impact our revenue and our ability to recover our initial equipment costs.

A significant majority of our compressor unit rental agreements are either month-to-month or short-term in duration.

which, if terminated or not renewed, would adversely impact our revenue and our ability to recover our initial equipment costs.

The length of our compressor rental agreements with our customers varies based on customer needs, equipment configurations and geographic area.

In most cases, under currently prevailing rental rates, the initial rental periods are not long enough to enable us to fully recoup the average cost of acquiring or fabricating the equipment.

Of the 1,221 compressors rented at December 31, 2022, 841 were rented on a month-to-month basis.

Given the volatility of the oil and gas market, we cannot be sure that a substantial number of our customers will continue to renew their rental agreements or that we will be able to re-rent the equipment to new customers or that any renewals or re-rentals will be at comparable rental rates.

The inability to timely renew or re-rent a substantial portion of our compressor rental fleet has and will have a material adverse effect upon our business, financial condition, results of operations and cash flows.

On a unit basis, of the 1,247 compressors rented at December 31, 2023, 773 were rented on a month-to-month basis.

On a horsepower basis, of the 420,432 total rented horsepower, we had 141,194 of that total rented on a month-to-month basis, with the remainder on contracts expiring between 2024 and 2028.

Given the volatility of the oil and gas market, we cannot be sure that a substantial number of our customers will continue their rental agreements or that, if such agreements were terminated we will be able to re-rent the equipment to new customers or that any re-rentals would be at comparable rental rates.

The inability to timely renegotiate or re-rent a substantial portion of our compressor rental fleet could have a material adverse effect upon our business, financial condition, results of operations and cash flows.

We could be subject to substantial liability claims that could harm our financial condition.

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Loss of key members of our management could adversely affect our business.

In keeping with our streamlined approach to our business, our executive management team consists of three officers:

our (i) Chief Executive Officer, (ii) Chief Financial Officer and (iii) Vice President of Technical Services.

Taylor, our Interim President and Chief Executive Officer who has been our President, Chief Executive Officer and Board member since 2004, has announced his intention to retire as an officer from the Company effective June 30, 2023.

We currently have an Interim Chief Financial Officer after the resignation of our prior Chief Financial Officer on February 28, 2023.

If either of these positions are not adequately or timely replaced, our business operations could be materially adversely affected.

In keeping with our streamlined approach to our business, our executive management team consists of four officers:

our (i) Chief Executive Officer, (ii) Chief Financial Officer (iii) Chief Technical Officer and (iv) President and Chief Operating Officer.

On February 1, 2024, Justin Jacobs, a member of our board of directors, was named as Chief Executive Officer and assumed these duties beginning on February 12, 2024.

We have had two Interim Chief Financial Officers since the resignation of our prior Chief Financial Officer on February 28, 2023.

While there is an ongoing search for a permanent Chief Financial Officer, if this position is not adequately or timely replaced, our business operations could be materially adversely affected.

In addition, we rely on James Hazlett, our long-time Chief Technical Officer, in connection with the design and engineering of our compressor lines.

While we have recently hired Brian Tucker as our Chief Operating Officer, we expect that Mr.

Hazlett’s services will also continue to be available to us in the foreseeable future.

However, the complete loss of either Messrs.

Tucker’s or Hazlett’s services could have an adverse impact on our business.

We do not carry any key-man insurance on any of our officers or directors.

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Many of our customers finance their exploration and development activities through cash flow from operations, the incurrence of debt or the issuance of equity.

During times when the oil or natural gas markets are weak, our customers are more likely to experience a downturn in their financial condition.

Many of our customers’ equity values and liquidity substantially declined during the most recent fall in oil and natural gas prices, and in some cases access to capital markets may be an unreliable source of financing for some customers.

The combination of a reduction in cash flow resulting from declines in commodity prices, an increase in the interest rates charged for debt incurrence, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in a reduction in our customers’ spending for our products and services in 2023.

During times when the oil or natural gas markets are weak, our customers are more likely to experience a deterioration in their financial condition.

Many of our customers’ equity values and liquidity substantially decline during declines in oil and natural gas prices, and in some cases access to capital markets may be an unreliable source of financing for some customers.

The combination of a reduction in cash flow resulting from declines in commodity prices, an increase in the interest rates charged for debt financing, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in a reduction in our customers’ spending for our products and services.

For example, our customers could seek to preserve capital by canceling month-to-month contracts, canceling or delaying scheduled maintenance of their existing natural gas compression equipment or determining not to enter into any new natural gas compression service contracts or purchase new compression equipment.

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We may require a substantial amount of capital to expand our compressor rental fleet and grow our business.

During 2023, the amount we will spend on capital expenditures related to rental compression equipment will be determined primarily by the activity of our customers, our financial resources and access to capital.

In late 2022 and for 2023, we significantly expanded and borrowed under our bank credit facility in order to finance the growth of our large horsepower compressor fleet, increasing the outstanding balance on our facility from $25 million at December 31, 2022, to $164 million at December 31, 2023.

The current commitment on our credit facility is $225 million, subject to borrowing base limitations.

At December 31, 2023, our borrowing base under the credit facility was approximately $219.7 million, leaving approximately $55.7 million available for future borrowing.

During 2024, the amount we will spend on capital expenditures related to compression equipment will be determined primarily by the activity of our customers, our financial resources and access to capital.

The amount and timing of any capital expenditures may vary depending on a variety of factors, including the level of activity in the oil and natural gas exploration and production industry and the presence of alternative uses for our capital, including any acquisitions that we may pursue.

In addition, although a significant portion of the value of a new compressor increases our borrowing base under our credit facility once it has been fully constructed and put into service, we generally have an approximate lag of 9 to 12 months between borrowing money under the credit facility to fund progress payments to build a compressor and the time it becomes eligible for inclusion in our borrowing base.

This lag can reduce the amount of future borrowings available for working capital purposes and new compressor unit acquisition until the unit is placed into service.

During the past year, we funded our capital expenditures through cash flows from operations and borrowings from our revolving credit facility.

Although we believe that cash on hand, cash flows from our operations and bank borrowing from revolving credit facility will provide us with sufficient cash to fund our planned capital expenditures for 2023, we cannot assure you that these sources will be sufficient.

We may require additional capital to fund any significant unanticipated capital expenditures, such as a material acquisition.

To the extent we would require any necessary capital, it may not be available to us when we need it or on acceptable terms.

Although we believe that cash on hand, cash flows from our operations and bank borrowing from our revolving credit facility will provide us with sufficient cash to fund our planned capital expenditures for 2024, we cannot provide assurance that these sources will be sufficient considering the factors and limitations noted above.

In addition to expanding our existing business through organic growth opportunities, we may require additional capital to fund any significant unanticipated capital expenditures, such as a material acquisition.

To the extent we would require any necessary capital, due to the existing constraints noted above and any issues or limitations in the equity and debt capital markets, such capital, may not be available to us when we need it or on acceptable terms.

Our ability to raise additional capital will depend on the results of our operations and the status of various capital and industry markets at the time we seek such capital.

Failure to generate sufficient cash flow, together with the absence of alternative sources of capital, could have a material adverse effect on our business, financial condition, results of operations or cash flow.

Failure to generate sufficient cash flow, together with the absence of alternative sources of capital, could stagnate our growth and have a material adverse effect on our business, financial condition, results of operations or cash flow.

Our debt levels may negatively impact our current and future financial stability.

In February 2023, we significantly increased the borrowing commitment of our revolving credit facility from $50 million to $175 million (subject to borrowing base limitation and customary covenants) and at December 31, 2022 we had $25 million outstanding on the revolving credit facility and anticipate additional significant borrowing on the facility through 2023.

In November 2023, we increased the borrowing commitment of our revolving credit facility from $175 million to $225 million (subject to borrowing base limitation and customary covenants) and at December 31, 2023, we had $164 million outstanding on the revolving credit facility and anticipate additional borrowing on the facility through 2024.

Should we utilize our full debt capacity growth beyond that point could be impacted.

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If we borrow under our credit line and are unable to service our debt, we will likely be forced to take remedial steps that are contrary to our business plan.

If we were to materially borrow under our line of credit or other borrowing arrangements, it is possible that our business will not generate sufficient cash flow from operations to meet any debt service requirements and the payment of principal when due depending on the amount of borrowings at any given time.

If we were to materially borrow further under our line of credit or other borrowing arrangements, it is possible that our business will not generate sufficient cash flow from operations to meet any debt service requirements and the payment of principal when due depending on the amount of borrowings at any given time.

If this were to occur, we may be forced to:

• sell assets at disadvantageous prices;

• obtain additional financing;

• obtain additional financing on less favorable terms;

• refinance all or a portion of our indebtedness on terms that may be less favorable to us.

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Under the terms of our current credit agreement, we must:

• comply with various leverage, commitment coverage and other customary ratios;

• comply with various leverage, commitment coverage and other customary financial ratios;

• not exceed specified levels of debt;

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• comply with limits on cash dividends;

• and other customary limitations.

• other customary financial and operational limitations.

Our ability to meet the financial ratios and tests under our credit agreement can be affected by events beyond our control, and we may not be able to satisfy those ratios and tests.

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If we are unable to repay any outstanding amounts, the lending organization could proceed against and foreclose on the assets we pledged as collateral to secure payment of our indebtedness.

Our current credit agreement contains a variable interest rate and increases to such rate may increase our borrowing cost.

The interest expense charged on our outstanding borrowings under our current credit agreement is based upon a variable rate which fluctuates as interest rates change.

Changes in macroeconomic conditions outside of our control could result in a higher interest rate being charged on our outstanding borrowings and an increase in the overall interest costs charged.

This could have an adverse impact on our operations, our free cash flow and our ability to invest in future growth.

If we fail to acquire or successfully integrate additional businesses, our growth may be limited and our results of operations may suffer.

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However, there can be no assurance that we will be successful in consummating any such acquisitions.

Successful acquisition of businesses or assets will depend on various factors, including, but not limited to, our ability to obtain financing and the competitive environment for acquisitions.

The successful acquisition of businesses or assets will depend on various factors, including, but not limited to, our ability to obtain financing and the competitive environment for acquisitions.

In addition, we may not be able to successfully integrate any businesses or assets that we acquire in the future.

The integration of acquired businesses is likely to be complex and time consuming and place a significant strain on management and may disrupt our business.

The integration of acquired businesses is likely to be complex and time-consuming, place a significant strain on management and may disrupt our business.

We also may be adversely impacted by any unknown liabilities of acquired businesses, including environmental liabilities.

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Failure to effectively manage our business and growth could adversely affect our operating results and our internal controls.

Our strategy envisions the expansion and growth of our business, subject to the demand for oil and gas and the impact of the other risks set forth in this risk factor section and elsewhere in this Report.

Growth may place a strain on our management systems and resources.

We must continue to refine and expand our business capabilities, our systems and processes, and our access to financing sources.

If we expand, we must continue to hire, train, supervise and manage new employees.

In 2023, we had significant growth in our revenue and operations.

Our strategy envisions the continued expansion and growth of our business, subject to the demand for oil and gas and the impact of the other risks set forth in this risk factor section and elsewhere in this Report.

Continued rapid growth will likely challenge and place a strain on our management systems and

resources if we are unable to timely adapt and expand such systems and resources.

Many of our ongoing reporting functions rely on data capture and recording using manual entry of transaction data.

In order to efficiently and effectively manage our planned growth, we will need to continue to analyze and upgrade our use of technology, including our ERP and other operating systems and this will likely require future capital investment.

We must continue to refine and expand our business capabilities, our workforce, our systems and processes, and our access to financing sources.

As we continue to grow, we must continue to hire, train, supervise and manage new employees.

We cannot assure that we will be able to:

• meet our capital needs;

• upgrade and expand our office and manufacturing infrastructure so that it is appropriate for our level of activity;

• expand our systems effectively or efficiently or in a timely manner, including financial and management controls, reporting systems and procedures;

• attract, hire, train and retain additional highly skilled and motivated officers and employees and allocate our human resources optimally.

• upgrade and expand our office and field management infrastructure so that it is appropriate for our level of activity;

• continue to improve our systems effectively or efficiently and in a timely manner, including financial and management controls, reporting systems and procedures;

• attract, hire, train and retain additional highly skilled and motivated officers, sales staff, district managers and employees and allocate our human resources optimally.

If we are unable to manage our growth, our financial conditions and results of operations may be adversely affected.

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Under some of our rental and sales contracts, liability with respect to personnel and property is customarily assigned on a “knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel and property.

However, in certain rental and sales contracts we assume liability for damage to our customer’s property and other third-party on the site resulting from our negligence.

Since our products are used in production applications in the energy industry, expenses and liabilities in connection with accidents involving our products and services could be extensive and may exceed our insurance coverages.

However, in certain rental and sales contracts we assume liability for damage to our customer’s property as well as the property of certain other third parties on the site resulting from our negligence.

Our income taxes may change.

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Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting.

If we fail to maintain effective internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

If we fail to remediate our material weakness or maintain effective internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and to help prevent financial fraud.

If, as a result of deficiencies in our internal controls, we cannot provide reliable financial reports or prevent fraud, our business decision process may be adversely affected, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the price of our stock could decrease as a result.

We are exposed to risks related to computer systems failures or cyber security threats

In the conduct of our business we are dependent upon our computing systems and those of third parties to collect, store, transmit and process data used in our operational activities and to record, process and track financial transactions.

If interruptions were to occur we would be unable to access these systems for a period of time and there is a risk of data loss.

Data backup and storage measures are in place that would allow recovery in a time frame that we believe would not materially impact our ability to conduct business.

We are also subject to cyber security attacks and have taken steps to minimize the probability of an attack penetrating our systems.

These include network security, virus protection, filtering software and intrusion protection measures.

We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations and/or financial loss.

In the conduct of our business, we rely heavily on information technology systems(“digital technology”), including internet-based systems, to process, transmit and store electronic information.

In particular, we depend upon our digital technology for supply chain management, inventory management, payment processing and data storage.

Like many companies, we have become increasingly dependent upon digital technology to conduct daily operations.

Our business partners, including vendors, service providers and financial institutions, are also dependent upon digital technology.

We are continually exposed to various cybersecurity risks, including but not limited to, unauthorized access to our systems or data, malware and ransomware attacks, denial-of-service attacks, phishing, theft or loss of intellectual property, and data breaches.

These risks could result from malicious actors, employee error, malfeasance, or other operational vulnerabilities.

A cybersecurity attack could have a significant adverse impact on our business operations, financial condition and reputation.

Potential consequences include loss of sensitive or proprietary information, disruption of business operations, financial losses from remedial actions, litigation and potential legal liabilities and damage to customer and investor confidence.

We have taken steps to protect against cyber-attacks to minimize the risk of our systems being penetrated and compromised by implementing a comprehensive cybersecurity program, such as regular risk assessments and penetration testing, deployment of firewalls and intrusion detection systems, deployment of encryption technologies, implementation of access controls and the development of incident response and recovery plans.

Additionally, we have employed data backup and storage measures that could allow for recovery of our data.

However, we cannot assure that our efforts to prevent such an attack or, that if an attack were to occur, that we would be able to access our data in a timely fashion.

Risks Associated With Our Common Stock

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Substantial sales of our common stock in the public market, or the perception by the market that those sales could occur, may lower our stock price or make it difficult for us to raise additional equity capital in the future.

According to filings made with the Securities and Exchange Commission in February 2022, an aggregate of approximately 38.1% of the outstanding shares of our common stock are owned by five institutional investors, each of which owns more than 5% of our outstanding shares as of the date of their respective filings in February 2022.

According to filings made with the Securities and Exchange Commission as of March 28, 2024, an aggregate of approximately 37.1% of the outstanding shares of our common stock are owned by five institutional investors, each of which owns more than 5% of our outstanding shares as of the date of their respective filings.

Potential sales of large amounts of these shares in a short period of time by one or more of these significant investors could have a negative impact on our stock price.

In addition, potential sales of our common stock by our directors and officers, who beneficially own approximately 7.3% of the outstanding shares of our common stock as of March 28, 2024, and because of the negative perception of sales by insiders, could also have a negative impact on our stock price.

We have a comparatively low number of shares of common stock outstanding and, therefore, our common stock may suffer from limited liquidity and its prices will likely be volatile and its value may be adversely affected.

We have a comparatively low number of shares of common stock outstanding and, therefore, our common stock may suffer from limited liquidity and its price will likely be volatile and its value may be adversely affected.

Because of our relatively low number of outstanding shares of common stock, the trading price of our common stock will likely be subject to significant price fluctuations and limited liquidity.

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If we raise funds in the future through the issuance of debt or equity securities, the securities issued may have rights and preferences and privileges senior to those of holders of our common stock, and the terms of the securities may impose restrictions on our operations or dilute your ownership in our Company.

We currently have on file with the SEC an effective "universal" shelf registration statement on Form S-3, which enables us to sell, from time to time, our common stock and other securities covered by the registration statement in one or more public offerings.

We currently have on file with the SEC an effective "universal" shelf registration statement on Form S-3, which enables us to sell, from time to time, our common stock and other securities, including debt securities, covered by the registration statement in one or more public offerings.

The shelf registration statement allows us to enter the public markets and consummate sales of the registered securities in rapid fashion and with little or no notice.

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If one or more of the analysts who do cover us downgrade our stock, our stock price would likely decline rapidly.

If one or more of these analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline.

Provisions contained in our governing documents could hinder a change in control of us.

If one or more of these analysts cease coverage, we could lose visibility in the market, which in turn could cause our stock price to decline.

Provisions contained in our governing documents could hinder a change in control.

Our articles of incorporation and bylaws contain provisions that may discourage acquisition bids and may limit the price investors are willing to pay for our common stock.

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This may adversely affect the market price and interfere with the voting and other rights of our common stock.

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